Housing Bubble Bursting?

[Steve Owen]

The housing bust is so bad...

...it's even getting the income tax guys down.

http://www.kansascity.com/mld/kansascity/business/15364245.htm

 

[Dee Dee]

As a recovering "stable" check boxer, may I turn to all as a support group. This is going to get more nastier, isn't it?

Probably so.

Lately there's been a serious lack of appraisers on this forum saying that inventory is decreasing and prices rising in their neighborhood. Contrary to what many wanted to believe, this does appear to be a fairly widespread national "adjustment". Now it's a matter of figuring out which regions are going to get their butts kicked the worst.

The part that really stinks is that by telling the truth you will probably start losing clients. Lenders don't like to lend in declining markets unless the borrower has lots of equity and/or downpayment. Most appraisers know this, and some will stall at disclosing the facts in order to keep business coming in. I'm sure you already know that there will be some very, very desperate mortgage brokers out there who will be seeking appraisers who will do whatever it takes to close their deals.
Can we say SUCKERS????

 

[Randolph Kinney]

What Constitutes Over Supply & Declining?

As a recovering "stable" check boxer, may I turn to all as a support group. This is going to get more nastier, isn't it?

It is like a nightmare, and suddenly you wake up, only it isn't a dream, it is real. Sales volume has declined, listings are increasing and staying on market longer, seller concessions are normal, and now prices are giving way.

I suspect there will be a day, soon, where I will have to check the boxes:

PROPERTY VALUES - declining
DEMAND / SUPPLY - over supply
MARKETING TIME - ?

Marketing time here is a myth; Realtors re-list the property under a different listing number when the listing is expired, canceled or is withdrawn. So one can't reasonably extract the true marketing time in bulk from the MLS.

Demand as determined by job creation is not the problem. Affordability is a big problem and buyers with lower credit scores are the bulk of the demand. Investor demand and second home demand has declined. I suspect when layoffs and negative economic growth happen, I can say demand is declining.

Over supply is not really defined as I can determine. How many months of inventory?

Property values are declining from peak but what percentage drop over what time frame constitutes a declining property value market? I know I can grid sales from 12 months, 9 months, 6 months, 3 months, and current to see if a pattern exists that is monotonic and decreasing. I can also look to see if listings exist that are below contract price of a current sale or past sales. If both of the above conditions exist, I would say the market has declined or is declining. However, what percentage constitutes a definite declining market?

I am flying by the seat of my pants on this. I don't have any history with appraising in a market that is turning down and what constitutes "declining", and "over supply". Fannie Mae does not define these terms. Anyone want to offer up a definition or test for same?

 

[Randolph Kinney]

Sub-Prime Market Defaulting

Sub-Prime Lenders' Shares Fall

http://www.latimes.com/business/la-fi-subprime26aug26,1,1004953.story

Option One caters to riskier borrowers who must pay higher interest rates and fees because their credit is flawed or their income and equity levels aren't high enough to qualify for lower-cost prime loans.

The company and other so-called sub-prime lenders transfer the risks by selling loans or mortgage-backed securities to other firms and investors. But if the loans quickly fall into default, or if they have been misrepresented to borrowers or investors, the originators can be forced to repurchase them.

Several sub-prime lenders in addition to Option One have reported having to repurchase higher quantities of loans, Friedman, Billings, Ramsey Group Inc. analyst Scott Valentin noted in a recent report.

Much of the recent worry over mortgages has focused on adjustable-rate loans with artificially low starting payments — and whether borrowers would become deadbeats when the rates adjusted sharply higher.

But H&R's statement indicated problems of another kind: borrowers failing to make even the first few payments.

In addition to "an increase in early-payment delinquencies," it said loan buyers were becoming less tolerant of problems and quicker to demand repayment when something goes amiss, Flynn noted.

The company declined to elaborate about its lending problems, saying it would discuss the issues with analysts when it reports earnings Thursday.

Other Southland lenders that saw their stock prices retreat Friday included IndyMac Bancorp Inc. of Pasadena, down $1.99 to $39.46, and Downey Financial Corp., which fell $1.39 to $59.84.

Countrywide Financial fell 81 cents to $32.45. The firm writes prime and sub-prime loans.

 

[Randolph Kinney]

California Home Sales Take a Plunge

California Home Sales Take a Plunge

By Jesus Sanchez, Times Staff Writer
2:25 PM PDT, August 24, 2006


July sales of existing homes in California plunged nearly 30% from year-ago levels and prices in once red-hot markets such as San Diego and Sacramento dropped, according to a report today that provided yet more evidence of a housing market cool down.

The California Assn. of Realtors said that July sales of existing, single-family homes dropped 29.9% from the same month last year to a seasonally adjusted, annual rate of 453,980 properties. Existing, single-family sales slipped 6.1% compared to the previous month. (Condominiums and new construction are not included.)

Some parts of the state suffered even steeper sales declines, with Riverside and San Bernardino counties posting a 42% drop in activity and Santa Clara (Silicon Valley) reporting a 31.3% fall.

Prices continued to climb from year-ago levels but slipped in more recent comparisons. In July, the median sales price of an existing home was $567,360, up 5.1% from the same month last year. However, the July median sales price declined 1.5% from June's results.

Meanwhile, prices slipped 0.7% in San Diego; 2.4% in Sacramento and 3.7% in the Palm Springs area.

http://www.latimes.com/news/local/la-082406homes,1,3139818.story

 

[Greg Bell]

You know whats really spooky.I went to Wal Mart on a Friday afternoon and the place was half empty.eeeeeeeeeeeeek..It's over.Next will be a loss for Star Bucks.We need Jimmy Carter to save us.

 

[Randolph Kinney]

NAR Admits Housing Bust Likely

NAR has published a Power Point Presentation that is eye-popping of what they really think. Take a look quick before this is taken down.

http://www.realtor.org/Research.nsf/files/Leadership%20Summit%20%28August%202006%29.ppt/$FILE/Leadership%20Summit%20%28August%202006%29.ppt

Although not a total capitulation, this must be, at the very least, an indication that the data supporting a collapsing housing market has reached such a crescendo that even the most passionate real estate bulls can no longer continue to spin an optimistic picture.

 

[Wil in Norcal]

That was great Randolph

 

[Terrel L. Shields]

really stinks is that by telling the truth you will probably start losing clients

amen. And the UWs are now making even more unreasonable demands. I finally asked one if they wanted me to just lie about it or what.

 

[Greg Bell]

More bad news cookie sales are way down in shopping malls.When cookie sales drop , it's recession time...