July Home Sale Surge, But Market Worsens (Existing Home Sales Preview)

Posted on August 21st, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

**8/21…7pm pst Note – I just uploaded the updated chart below because the one earlier had an error. Please disgregard previous chart.

Next weeks ‘official’ existing home sales report may show a surge. Beware. This post is to show you the micro aspects and many moving parts of the market and why beneath the headlines conditions are actually worsening. Remember when reading: a) never underestimate seasonality – sales should increase in the peak summer months.  b) prices should stabalize or rise when sales increase signifcantly, not fall.  c) if defaults and foreclosures rise incrementally along with sales inventory will not clear.  d) two years ago foreclosure sales as a percentage of total sales ran about 5%, now 45%. e) bank owned properties and short-sales do count as ‘organic’ sales. f) organic sales getting squeezed out of the market will lead to even more loan defaults and subsequent supply.

When it comes to housing and finance, you can’t read headlines.  Most are either outright lies or written by those who do not have a grasp of the topic.  You have all learned this hard lesson over the past year and a half.  In July, the CA home sales number released yesterday by DataQuick and next week’s national ‘existing’ and ‘new’ home sales reports are no exception. 

For the past many months, my monthly ‘CA Home Sales Report’  has (on the surface) very closely mirrored the monthly existing home sales report from NAR (due next Monday 25th). But the ‘official’ monthly reports do not analyze and break down the market in the manner needed for you to get thereal story. That’s what I am here for.

If you are a home owner or potential buyer, knowing what lies beneath the headline number is key.  If you are a financial market participant, you know that themonthly existing and new home sales reports get the markets very hot and bothered. Perhaps this will give you a heads-up to next Monday’s and Tuesday’s existing and new home sales reports released by NAR and theCensus Bureau respectively.

‘More Homes Sold’ is once again theheadline, but in reality thepurchase and overall housing market worsened again in July and the numbers were far from jovial.  The real news is once again that:

  • inventory is not being absorbed due to foreclosures surging in July with only 10,712 homes  leaving the inventory pool.  This is less than last month and represents nearly 43 months supply.
  • Ma and Pa Homeowner (organic sale) are being squeezed out and can’t compete with bank REO sales or refinance.
  • organic sales (total sales less foreclosure-related sales) were at theslowest pace for any July on record.
  • values continue to tumble pushing all homeowner’s net-worth lower and many into an even deeper negative-equity position and a an exponentially greater chance of loan default.
  • foreclosure related sales reached a record 44.8% of total sales.

Below are some sample headlines I tossed around for this story, all of which are true, believe it or not.

  • Home Sales Soar in July
  • Slowest July Sales Pace in Decades
  • House Values Continue to Drop Sharply
  • Foreclosure Sales Carry the CA Real Estate Market
  • Home Owners Are Stuck…Can’t Sell or Refinance

Despite what themajor media headlines say, the housing market is worsening. The facts are right here. This report makes it more evident than ever that ‘the foreclosure market is now the Real Estate market and the banks are the market makers.’

Please show me a month where sales are up, foreclosures are flat or down and prices are flat or up. That would represent an improvement. Sales going up while foreclosures surge and prices crash scream loudly about where we are headed.

In order to get a handle on the inventory, true burn-rate and the market in general, you have to track and separate every piece of the market, which I have done in my ‘CA Housing Market Nightmare Chart’at bottom of this page.

For example, if you back out foreclosure-related sales, which were 44.8% of total sales, the picture is especially bleak due to banks taking back 6990 more homes than sold ‘organically’.  An organic sale is a transaction between two private parties and not from the foreclosure stock.

I think ’organic sales’ are especially significant becuase they (resales) have always made up most of the market. New home sales and foreclosure resales have always placed a distant second and third. 

In addition, organic sales languishing is a leading indicator of mortgage loan defaults across all paper types continuing to increase in thefuture, far in advance of actual events or published data. If individualscan’t sell their homes or refinance and are stuck, perhaps with an exotic/unaffordable mortgage or a negative equity position, they are at an exponentially greater risk of loan default. This of course will add further pressure to the housing market.

Last September at the end of the summer selling season, CA values began their plummet. If sales do not surge this month through the end of theyear, which is historically a slow season, foreclosure starts already in thepipeline will overrun sales and inventories will continue to grow further depressing the market.

In July, only 10,712 homes were taken out of inventory. Year-to-date only 52,147, or 7450 homes per month, have been taken out. The numbers are not good. Similar stats can be found in other foreclosure-heavy states. 

One would hope that with the number of  REO sales increasing, prices continuing to drop and being in a peak sales month that sales would have been much stronger in July. While total sales were up the market worsened from last month and organicsales fell, which makes for the slowest July since DataQuick began tracking in 1988. 

With bank’shadow inventory’ hovering at record levels, sales need to double from here in order to chew through theinventory already in the‘MLS Listed’ channel and bring the “month’s supply” figures down to the10-11 months that is thought to be accurate for CA.  This will be impossible. Remember, this is thefirst Spring/Summer selling season in five years without a full menu of “exotic/affordable” loan programs to drive affordability and interest only, Pay Option ARMs, stated income and 100%second mortgages are not coming back anytime soon.

In the month of July, the key stats are:

  • 39,507 Total Sales;up 12.2% over June’s 35,202 but still the slowest July for organic sales since DataQuick began reporting in 1988.
  • 44.8% of Total Sales (17,699) were Foreclosure Resales; up 16.65% from last month and 1100% from two years ago.
  • 21,808 ‘Organic Sales’  (Total Sales less Foreclosure Resales). This is up 1376 homes fromJuly.
  • $318k median price; down 3% in a single month and a whopping 34.3% from last summer. As expected long ago, prices are gravitatingtowards the most readily available financing: Agency <=$417 conforming.
  • 40,219 new Notice-of-Defaults,which will result in 33,500 new foreclosures 4-5 months from now.
  • 169,500k new  Notice-of-Defaults in past 4-months= 135,600k new REO from 3-7 months out as they move through the system
  • 28,795 homes went back to the bank as REO (shadow inventory) totalling $12.55 Billion…an all-time record.
  • Only 10,712 units left inventory  (Total Sales less New Bank REO)
  • Total MLS-Listed Inventory grew  to around 320k units from approximately 275k at the beginning of the Spring/Summer selling season. 

On Monday, we get the NAR Existing Home Sales Report, which may show a similar headline…”Existing Home Sales Rise.”  The markets like to get all hot and bothered over this number. But, unless you look at all thedata and take it in context, the number is deceiving.

FORECLOSURE-RELATED / BANK REO SALES

Bank REO sales are counted in themonthly Existing Home Sales official report making things appear better than they are.  When you compare year-over-year sales, last year’s foreclosure resales were only about 7% of total and the year before that it was less than 5%. It is an apples-to-oranges comparison.

This shadow inventory is being sold at massive discountsto the note amount and recentcomparable sales in any given neighborhood.  Foreclosure resales pose theprimary threat to home prices across the nation, followed closely by the lack of affordable loan programs. All over the country, neighborhoods are being marked-to-market overnight due to shadow inventorybeing dumped that was never shown as part of thelisted housing stock in the first place.

You may think that as prices fall, more homes will sell and that will solve the inventory problem. That is not totally correct.  As prices fall, more homes sell but more homeowners are thrown into a negative equity position exponentially increasing their chance of loan default.  This leads to more defaults and even more Bank REO. It is a vicious cycle; a feedback loop fromwhich there is no  Negative-equity is now the leading cause of loan default.

TOTAL CA HOUSING SALES AND FORECLOSURE MARKET

The Quickening

First, the FDIC said it would be liquidating IndyMac’s REO and distressed mortgage portfolio.  Then, Merrill dumps $30 billion in ‘assets’ on the market. Last week both Fannie and Lehman threatened to do major liquidating. If I were the CEO of a bank holding sizeable real estate assets, I would want to get ahead of these large players and dump at any cost right now. Look out, a massive amount of inventory may be headed for the pipe.  It is the liquidating of bank owned real estate, which now makes up nearly half of all home sales, that is responsible in part for such massive price drops around the nation, especially in the bubble states, over the past year.  WIth foreclosures continuing to increase, the last thing this fragile market needs right now is more supply.

SUMMARY

In July there were 39,507 total sales, 17,699 (44.8%) of which were foreclosure resales, leaving only 21,808 organic sales. This is a multi-decade low for  July. There were 28,795 homes totaling $12.55 billion that went back to banks and 40,219 new Notices-Of-Default. July NOD’s alone will bring about 32,250  additional homes that will go back to the banks as shadow inventory 4-5 months from now.

The median price dropped once again to $318k and stands 34.3% below its 2007 all-time price peak.  In the past 4 months, 169,500k Notices-Of-Default were filed, meaning 135,600k homes will go back to thebank as shadow inventory in the next 6 months. Finally, only 10,712 homes left the inventory pool based on how many homes came back to the banks vs. total sales. None of these figures includemost FSBO or home builder inventory. To cap it off, massive supply from banks may be on the way.

If sales do grow into the Winter, which would be historic and the number of foreclosure sales continues to grow as a percentage of total sales, where does this leave Joe and Jane Homeowner and the builders?  If sales do not grow and foreclosure sales continue to grow as a percentage of total sales, we remain on track for an absolute housing downside overshoot and subsequent total meltdown. -Best, Mr Mortgage

OTHER MR MORTGAGE RELATED STORIES

Record Foreclosures Sweep CA in July – Breaking News

Pending Home Sales Number NOT Positive – Explained

Pay Option ARMs – Up to 48% Default Rate! First Federal Featu

Mr Mortgage on Fannie/Freddie Massively Underestimated Risks

Mr Mortgage: May CA Home Sales Report – Conditions Worsening

Look OUt! Here Comes the Alt-A Implosion

Mr Mortgage on Mortgage Modifications – You May Qualify!

Mr Mortgage onMortgage Modifications Part 2 – BEING FORWARD THINKING

47 Responses to “July Home Sale Surge, But Market Worsens (Existing Home Sales Preview)”

  1. IMHO we will see short term deflation which will wipe out most of the current wealth held by regular folk “home equity”. Followed by inflationairy pressures. This order of events will compound matters as most wealth “equity” will have been lost during this deflationairy period and therefore not available to re-invest once housing prices have stabilized.

    Even though housing prices will have dropped dramatically due to deflationairy pressures, eventually inflationairy pressures will make interest rates higher, thus even after this “correction” of house pricing, making housing still unaffordable for most individuals.

  2. Mark – thank you for your wonderful insight and critical analysis of the data. Your analysis certainly paints a very different picture to that being thrown around by the mainstream media. I think I better defer my home purchase to next year 🙂
    Thanks again
    Mickey

  3. This is why Cash is King.

  4. Mr. Mortgage-

    What is the fastest and quickest way to track shadow inventory?

    That seems like such a critical component of everything housing related here and it would be nice to have a chart of its course.

    Thanks!

    Tony

  5. we remain on track for an absolute housing downside overshoot and subsequent total meltdown

    holy cow! this is the most compelling blog. Mr. Mortgage describes in real-time how middle-class America is being wiped out, the end of a way of life. 30% year-over-year decline is huge for the housing market. I think that during the Great Depression house price declined 10% in 1934.

    God bless America!

  6. yeah, but you have to remember, it was over inflated more than any other time in history.

    I wonder how much the market will over correct itself?

    If you don’t own your place outright, you better soon.

  7. Great ( a bit old) article by PAUL B. FARREL.

    A mind-blowing machine:
    In America, land of the bubbles, the next pop will be the biggest:

    http://www.marketwatch.com/news/story/america-land-bubbles-next-pop/story.aspx?guid=%7B60CE4669-6814-4A48-A555-BE998EC6FC58%7D

  8. Another great article on : America’s Outrageous War Economy

    http://www.marketwatch.com/news/story/why-we-love-americas-outrageous/story.aspx?guid=%7B0D31C880%2D32CD%2D4BA1%2D8133%2D329EA57CB069%7D&dist=morenews

    We are so screwed.

  9. MAY show a surge???

    Well, what’s it going to be DOROTHY?

    a SURGE or a DROP?

    Some of us already know the numbers… we get leading data… are you on the inside or not?

    Take my advice…

    FOLLOW THE YELLOW BRICK ROAD, DOROTHY!

    FIND THAT WIZARD OF OZ!!!

  10. It amazes those of us outside the USA at the lack of direct action against the elected officials.The inability of ordinary decent people to remove corrupt members of congress,representative and even presidents would strongly argue that the press is no longer free.Instead,the press is a mechanism of oppression against the populace,nice turnaround.All this,so that an elite may get wealth-tragic.Yet more silence and more resignation-even from the populace in Europe as well as the USA.

  11. Maria…your on the right track…This is a plan from the top money elite global village…The US is the black sheep in the global plan…America must bow to the system of unification ( google the worg “Amero” guys ,that is the new currency for the US, Canada, and Mexico. Get out of the box your thinking in…you really believe this is all happenstance? The methodology is:… First Create a problem….get a reaction from the populace…then supply the solution. Get out of debt…Simplify your life and get MAD…

    The US needs an enema and the orifice to stick it in would be Washington DC

  12. What would the data look like for each state in the continental United States? And how long would it take to make a (spread)sheet for each state to match that of what Mr. Mortgage has done for Cali?

  13. I’m wondering if the “Shadow Inventory” is actually 100s of times worse than what we even know? Here’s why I say this – My wife and I are/were both in real estate and have gotten completely wiped out. I mean scrapping pennies type of wiped out. Well, we own 4 properties of which we have been unable to pay mortgages on for easily 8 months. Well, of the 4 we’ve only seen 1 notice of foreclosure and literally nothing at all on the others. All Countrywide loans too.

    Could this be the silver bullet that will kill this economy for good? This is worse than any “shadow inventory” because nobody sees these coming. We cannot be the only ones in this position either. You just know there’s tens of thousands of other just like us out there.

    Talk about “Shadow Inventory”!

  14. ME,

    I think so.
    How does it feel to take the bait? Hook line and sinker.

    I have a lot of friends like you. They jumped into real estate and are foreclosing all their properties as well.

    Yes, I still call them my friends, but I have absolutely no remorse for them. Only their kids and others who’s lives they affected by knowingly selling overpriced properties. GREED.

    I doubt this will kill the economy. But it sure will teach people like you a lesson. Maybe a lesson learned too late.

    Welcome to the bottom my friend. Make the most of it. Your going to be there for a while. In fact, if this does kill the economy, you may never climb your way out.

  15. Come on down to the USA yard sale!
    Everything has got to go!!

    We’ve got,

    Infrastructure!
    Real estate!
    Industries!
    Companies!

    SALE SALE SALE!!

    We can’t pay back our debt, so come and pick up your equity at rock bottom prices world!

    Sale ends as soon as Americans get responsible!

  16. Od,

    I really cannot get enough of nitwits like you. You think the people being affected are only the stupid and criminal borrowers. Really idiot?? You think that my family DESERVES this? We went from making hundreds of thousands of dollars to damn near zero overnight thanks to the Wall St and Bank perpetrated bull#$@!. We drained every single dollar we had trying to keep these things above water for months. Not one loan on any of our properties was done with a Subprime, ALT-A, or Option Arm loan genius. We were Prime borrowers with 20% down on our primary residenence, 25% down on our investment properties, had decades of proven success in our professions, and 800+ credit scores. Yeah, we had it comin’ to us right Od! You richies are gettin’ just what you deserve, “pwetding” as your chew spit hits the brass spitoon.

    The market caves in by 30-40% because of this BS, our renters cannot pay us because of job losses to this criminally destroyed economy, we cannot sell, cannot refinance, cannot renegotiate, nor will the banks accept partial payments and it’s our fault?! Screw you asshole!! We serviced our debt on every property the REAL WAY for years you half-witted idiot.

    This is worldwide Einstein. It’s affected more than just the stupid sub-prime borrower and criminal profiteers. This has affected every single person on the planet Earth!!

    Let us hope that old “Od” and his friend Cooter and Roscoe aren’t the future of this nation moving forward. Grow up you uninformed, unintelligent hick.

    Watch this….here comes ol’ Od with the predictable – You don’t know who I am. I make millions of dollars dribble…..here it comes….

  17. ME,

    You had 4 properties?! Sorry, but you are exactly the type of idiots that need to lose their shirt. So what if you put 20%+ down, you think that means you’re undeserving of losses? It’s called investing/speculating. You put all your eggs in one basket, and it seems like the basket got crushed. Being in “real estate” is/was the biggest ponzi scheme and the fools who bought too many houses are/were at considerable risk.

    Something doesn’t add up though.. you had “proven success for decades” yet your investment properties aren’t paid off already? Something stinks.. My mom has had several rental properties “for decades” and guess what, they’re all paid off. It sounds like you bought places recently.. that’s your own fault.

    Does it suck and do I feel compassion for you? Sure.. but spare us the “woe is me” crap. You rolled the dice, and got snake eyes. That’s how the game goes.

  18. Me,

    If you think I’m envious of all the money you lost I’m not. You drank too much cool aid and now you are having a bad hang over. Go ahead, blame the guy who threw the party. Your hands are clean.

    Admit it, you got greedy and believed the B.S. that prices could never go down.
    I don’t blame your family for this. I blame you and your wife. I really do feel sorry for your family. No kid should ever have to deal with this.

    You drank the cool-aid and that is your problem. But the fact that you convinced other buyers to do the same is what pisses me off.

    You say you didn’t take a toxic loan? The why are you foreclosing? You took a fixed and were happy to pay it.
    you could easily afford it right?
    Oh wait, real estate is crashing! Buy how? Mr.Cool Aid convinced you prices would never go down, and they could only go up.

    Your a genius.

  19. I love it. ME thinks I’m envious of all the artificial wealth in equity he had. LOL.

    Hey real estate expert. Real estate is only an asset when it is putting money in your pocket. Equity is not income.

    I don’t know, but it looks like you are the hick who put his eggs all in one basket.

  20. Who in the hell said we are Realtors? Assumptions like that are exactely why people like you will never be taken seriously. You immediately jump to conclusions before you even know what your spewing. I said we were in real estate. I never said in what capacity. We we’re not selling or loaning anything buttplug.

    We bought our properties one by one over a 5 year period as we could afford them. An investment by its very nature is a risk or it wouldn’t be called an investment would it? You want it to “vest” thereby making it an investment. But what you don’t expect is for it all to come crashing down because of total criminality on the part of our government, politicians, banks, and wall st brokerages. We could have weathered a NORMAL ebb and flow in the market as we’ve done so many times before. But, who in the hell is expecting to have to weather a storm of shit like this perpetration?!

    By the way genius (that’s your new nickname instead of Od), by your line of reasoning, anyone who invested in the stock market, by 401k or other means, and who’s now lost 20% of their retirement are total idiots who deserve to be battered around verbally by the likes of back-woods hicks such as yourself.

    I seriously couldn’t have made you look like a bigger dickhead than you’ve already made yourself out to be. It’s fun quite honestly. The more you type, the more people laugh at you.

    By the way brilliant mind of our time, it’s “Kool-Aid”, not “cool-aid”.

  21. “you’re” (in place of your) & ommission of “we”

  22. “My wife and I are/were both in real estate and have gotten completely wiped out.”

    -ME

  23. I’m totally with you on the criminality of the whole fiasco ME. I am truly sorry for your loss. But when I hear people say “they are in real estate” it usually means they either sell it,flip it, or both.

    If you were in it for the long run, had fixed loans, didn’t bite off more than you could afford..then I still don’t know why you had to foreclose?

  24. As far who is looking stupid here…it’s your lovely mouth. Maybe living in a trailer park does that to you?

  25. “anyone who invested in the stock market, by 401k or other means, and who’s now lost 20% of their retirement are total idiots”

    YUP!

    As you said, investing is a risky game and if invest your retirement in the stock market in a 401k..through mutual funds where you have no control or say in the investment matter…yeah…I’d say that is kind of foolish.

    But your an idiot if you think values only go up in markets.

  26. Like I indicated in the prior post, we had/have renters in each of the 3 investment properties and low-and-behold, nobody is able to pay their rent anymore because of job losses. They don’t pay their rent, we cannot get them out, we keep paying all of the mortgages because renters are not paying. After 6 months of that, including legal costs, you soon lose EVERYTHING. Portland, OR market, and employment market, has been ravaged by this criminality.

    We own (owned you could say) a commercial, and very limited residential, property management firm.

  27. Ok..enough of the trash talk. I apologize for assuming you were a real(tard).

    Is Organ’s market as bad as CA or Florida? I’m sure there ar epeople willing to buy still in Or?

    But I still don’t know why you would buy something that you couldn’t afford? You sound like you were expecting to have reliable renters forever.

    Maybe this is where you went wrong?

  28. I didn’t realize Organ and it’s laws were so f@#&%’d up.

  29. The only people I ever choose to go after are uninformed, uneducated idiots such as yourself “genius”. You say shit just to say it with no regard for what reality may be. You don’t give a rats ass about what reality is. You just seem to think everyone is a scumbag and you’re the “genius”.

    So you’re telling all of us here that you have zero investments, pay for everything in cash, keep all of your money at home under the mattress (keeping anything in a bank would be stupid too by your reasoning), and you have no retirement at all other than cash under your mattress?

    If I’m wrong about any of the above, then please enlighten us oh enlightened one.

  30. “Oregon” ..sorry

  31. You make informed decisions based on market information. Market rents have NEVER been above 10-15% vacancy rates for decades. Like I said, we could have weathered normal market reactions. This is not normal market reactions. This was created. This was manufactured. Portland, OR has 30-40% vacancy rates. You don;t get vacancy rates like that unless you have criminals behind the scenes pulling the rug out from under everyone, period.

    We’ve never gotten a Sup-Prime loan, an ALT-A loan, an Option Arm loan so how the hell would we know what kind of criminal bulls#$! was going on behind everyone’s back for the past 8-10 years? I RENT property, not buy and sell property. It wasn’t our business to know residential purchase money, it was our business to know commercial rental markets.

    Look, I really dono’t give a crap what the hell you think of me and my family. We tried everything we could, followed all the rules, and we constantly get people like you painting us with the same brush as every one of the stupid sub-prime borrowers and other criminals.

    You have yourself a great weekend Od. Hope you feel good about yourself. Something tells me you always do.

  32. Almost ME,

    I’ve got real estate. Both commercial and res.90% of it is paid off.

    I am completely financially independent.

    I “invest” through my Roth IRA (to avoid capital gains, and I only invest in things I know.) This is my riskiest area.

    I have over 3 years worth of liquidity in various banks in the event of an “emergency”.

    I have absolutely no debt. (except for the 10% I still have in mortgages.)

    Will I lose a lot of equity from this crash? Of course. But I don’t bank or pull loans from it either. So this doesn’t even concern me.

    Even though I have a nice cash flow from all of this, none of this is even my primary income.

    So when I hear stories of people who believed that real estate could never go down (or crash)it bothers me. It’s this kind of ignroance that is burning so many people today.

    Mind you ignorance is not the same as stupidity. Most Americans are ignorant because they have been taught to believe in “good” debt. There is no such thing.

  33. Come on, give ME a break. Yeah, he and his wife made some investment decisions that didn’t pan out. But, ME was kind enough to share his difficult story for the good of the community. I don’t think he deserves to be beaten down.

    I think the major point ME was trying to make here is that the banks haven’t foreclosed despite months of not paying for 8 months! Perhaps this is a Countrywide specific phenomenon, but he’s right, this represents yet another shadow inventory dimension.

    Thanks for sharing your story and good luck with your situation.

  34. ME-

    In the thread previous to this, OD stated that the Federal Government has NEVER paid any of its debts….his words, not yours or mine.

    No response when I pointed out that there have been TRILLIONS of dollars of federal T-bills expiring in less than one year and T-Notes that were paid off in a year, paid in full.

    That small exchange should cast a small light on the credibility of the fellow you are spending so much time on.

    Just my opinion. Nothing more. Nothing less.

  35. Yeah well, Mr. Smarty Pants Tony Buzan, you’re nose is to big, and you’re dog is ugly to.

  36. I don’t get this whole “criminals pulling out the rug” deal. Sure, there are some greedy and bad actors out there who flooded the market and gave out stupid loans, but anyone who didn’t see this coming is either naive or incompetent.

    I liken some of this to the reactions that you get when a company like Enron or even New Century goes down – everyone bitches and moans about how their lives and jobs are ruined but no one ever makes an objective analysis of whether or not they may have had it too good – I call it the “pepetuality of entitlement”. When many of the Enron folks were laid off and looking for jobs, all of them (and I mean ALL of THEM in Houston) were overpaid and underqualified and couldn’t figure out why they couldn’t get hired or at the salary they wanted. They were so divorced from reality they didn’t realize that administrative assistants making twice the market wage were not going to find that everywhere.

    It’s like everyone who is being hit hard now in real estate was somehow blindsided by the fact that anyone with a pulse and SSN could get a big house loan. In almost every corner of the U.S. you had folks in houses that I call “headscratchers” – as in, “how can those folks afford to be here?”

    When we sold our last/first house, it was to a family that gave out mixed signals in terms of their income levels and ability to buy the house, but they got a loan approval and had a decent offer and we had been listed for 45 days so we took it. Of course, after 2 aborted closings, an incompetent mortgage broker, and various discovered legal and credit problems we got the house sold after Lehman came in with a nice fat ALT-A loan for them. I took my cash and got the hell out of there. Three months later after a job loss, they had to sell the house. This was early 2007, after it was apparent that loans were being given out way too easy to too many folks. At that point, my reality hit that this was going to be a giant implosion if the economy ever slowed, and we have hit that point.

  37. I don’t see REO being massively discounted.

  38. So does the foreclosure related sales include short sales? If not te percentage of distressed sales is much higher. 90% of the deals I do in FL are purchases now. 90% of those are short sales or REO purchases. The vast majority of those deals are short sales though.

  39. I nailed this one ey.

    Mtg911 – no, short sales are not in the ‘foreclosure-related’ category.

  40. Linda – you can buy vacant REO from bank in bulk from 25-30 cents nationally to 45-60 cent in CA.

  41. Quote from my post predicting what Od would say:
    “Watch this….here comes ol’ Od with the predictable – You don’t know who I am. I make millions of dollars dribble…..here it comes….”

    Quote from Od’s post:
    I’ve got real estate. Both commercial and res.90% of it is paid off.

    I am completely financially independent.

    I “invest” through my Roth IRA (to avoid capital gains, and I only invest in things I know.) This is my riskiest area.

    I have over 3 years worth of liquidity in various banks in the event of an “emergency”.

    I have absolutely no debt. (except for the 10% I still have in mortgages.)

    Will I lose a lot of equity from this crash? Of course. But I don’t bank or pull loans from it either. So this doesn’t even concern me.

    Even though I have a nice cash flow from all of this, none of this is even my primary income.

    So when I hear stories of people who believed that real estate could never go down (or crash)it bothers me. It’s this kind of ignroance that is burning so many people today.

    Mind you ignorance is not the same as stupidity. Most Americans are ignorant because they have been taught to believe in “good” debt. There is no such thing.

    I can smell bullshit artists like you from a state away. Predictable is an understatement. Go home Od. Seriously, spare all of us any further idiocy, please.

    Quote from JJ:
    “I don’t get this whole “criminals pulling out the rug” deal.”

    JJ – Really? You don’t get that these loan programs were created with one thing in mind – put every stupid idiot who agrees to the terms (knowingly or otherwise) into these loans in order to make unheard of profits with literally no regard for the consequences, and all with the express consent of our lovely government. Come on, I know for a fact that you’re smarter than that.

    We had reserves for each of the properties for substantial vacancy rates, more than triple what any bank requires actually. This means that we had the ability to weather each of the properties being vacant 3 months of every year without adversely affecting our reserve requirements set by the banks. Well, this shit comes down the pike, raising vacacny rates to 30-40% and I’m somehow an asshole and deserve what I get? The ONLY thing I cry foul on is this crap is criminally created and certainly not standard market ebb and flow. YOU KNOW IT AND SO DOES EVERYONE ELSE WITH A SINGLE BRAIN CELL.

    Quote from Guy”
    “Something doesn’t add up though.. you had “proven success for decades” yet your investment properties aren’t paid off already? Something stinks.. My mom has had several rental properties “for decades” and guess what, they’re all paid off. It sounds like you bought places recently.. that’s your own fault.”

    Quote from my post:
    “We were Prime borrowers with 20% down on our primary residenence, 25% down on our investment properties, had decades of proven success in our professions, and 800+ credit scores.”

    Guy, you and Od should go drink yourselves into oblivion, please. Two bedfellows making one “Od Guy”. Read the post dildo. I was making the point that we are not the Sub-Prime or Alt-A borrowers. By your (and Od’s) logic, it’s the woman’s fault for getting raped because she wore sexy clothing.

    You and Od are exactely why the US has now become regarded as the most pompous, short-sighted, ignorant society in the world. you care about nothing and nobody but yourselves and you make it wholly apparent to anyone who wastes their time to read your uneducated BS. It’s sad and unfortunate. Keep revelling in your self-rightous worlds of “hypocrazy” Od-Guy.

  42. Do you have any input on the housing market in New York City. They claim that Manhattan isn’t feeling what the rest of the country is feeling. I don’t buy it! What do you think?

    Thank you

  43. […] July Home Sale Surge, But Market Worsens (Existing Home Sales Preview) […]

  44. […] me, this means that the overall housing market continues to worsen. (Please see my July CA Home Sales Report).  Show me a month where sales do well but prices are stable and foreclosures decline and that is […]

  45. […] July Home Sale Surge, But Market Worsens (Existing Home Sales Preview) (44) […]

  46. […] July Home Sale Surge, But Market Worsens (Existing Home Sales Preview) (45) Posted on August 21, 2008 6:53 PM […]

  47. […] will also likely show a fall unlike last month’s false-bottom surge that I warned you about in my July CA Home Sales Report. This post is meant to identify the micro aspects and many moving parts of the market and why […]

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