• Welcome to AppraisersForum.com, the premier online community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Housing Bubble Bursting?

Status
Not open for further replies.
Holy cow.The NAR sahould published previous home sales and they were
way UP.I guess we as appraisers and Real Esate agents have it all wrong.
According to the best cooked books since Enron , the sales are booming and we just..well we know nuuuuthing..(Thanks Schultzie).So don't worry , the boom is back on so go out and buy , buy , buy.No money down would be my guess for the best terms , after all , you might miss the next big price increase..
 
Greg,

While it is possible that you are right abut the top forming, my investment advisors disagree with that. They base it upon other historical indicators like the movement of the industrial average sector that finally started to catch up. Yes, we had our correction recently but that historically means that the bull market will continue for some time.

I'd be interested in knowing what you are seeing in terms of the formation type- head and shoulders, flag, what?

My guess- and that is all it is- is that the market will continue a modest upward climb for most of this year. Then later in the year, after the econo-moguls see actual economic performance, if we end up with a rate increase I'd agree with your asesssment. However, the talking heads are saying there is as much of a chance of a rate decrease as there is of an increase. if that happens the market may not take a dive at all. Just remains to be seen.

One big factor (since Ben is a disciple of Alan- strict monetarists) is employment. So long as it stays strong and unemployment does not spike, I think there is little chance of a decrease. This factor, if you will remember, was Alan's mantra for many years. I would not expect Ben to vary from that based upon comments he has made.

Should be an interesting year.

Austin,

I think the most interestng part of that q's quote is the paragraph that blames Wall St.'s appetite for excesses. The simple fact of the matter is that if I can sell the loan for a profit and do not have recourse attached, I'll lend money to anyone for anything (legal, anyway !)

But please do watch the actions of the major banks and Wall St. firms. What is fairly clear now is that some (not all for sure, but some) of this is being caused by the Wall St. investors themselves.

By decreasing or cancelling credit lines (warhouse lines) they are forcing some otherwise "reasonable" sub-prime lenders into a liquidity crisis. Perhaps the best example is Option One who took a charge of $100M+ in reserves for bad loans- they were the first but this is really a minor charege compared to others like HSBC's Decision One group.

The recent layoffs at Argent/Ameriquest were due in part to Citi doing this to them- but Citi has an option to buy them. Citi is also sniffing around other firms with an acquisition eye. New Century is a different situation since they have criminal investigations underway. Impac bought ResMae. Private investors are buying GMAC (GM has to toss in $1B more to maintain its net worth in the firm and the reported purchase price is $14B). Numerous other firms are "in play".

Still, the sub-prime market will not disappear entirely. There ARE ways to do this responsibly and profitably. For one thing, our bank is going to institute a suitability test for borrowers to try our best to make sure we do not put folks into situations wherein they cannot afford the mortgage type. While we do very little sub-prime, I am sure we will continue or modest efforts- so long as Wall St. will buy the paper. And, as of now, they ARE still buying.

But the street appears to be manipulating at least some of this- not ready to call it a conspiracy, but not ready to say it is not either.

Brad
 
NAR previous data shows changes

I wonder how reliable NAR's data is on median sales price? I am examining the most recent Excel spread sheet for February 2007 and January 2007. Looking at the data and comparing, I see some prior months have a little "r" by them, indicating revised. Therefore when the next month data is released, you get a comparison to the revised number of the previous month and possibly even the year ago month. I have saved a spread sheet from August 2006. It shows the January 2006 median sales price to be $220,000. The January 2007 spread sheet shows the the January 2006 median sales price $217,400 with a little "r". The February 2007 spread sheet shows the the January 2006 median sales price $215,700 with a little "r".

No one goes back and looks at or for these revisions, after the initial report and headlines. But it is very clear to me that if NAR did not see fit to revise the January 2006 median sales price in August 2006 but revised January 2006 downward when reporting January 2007 data, it makes the comparison smaller in the way of decline, year over year month. There is no explanation for this.

For one thing, the February 2007 release does not show the February 2006 median sales price; it goes from January right to March with no February. Obviously a mistake but it makes you wonder about the data and the reporting. See the link:

http://www.realtor.org/Research.nsf/files/EHSreport.XLS/$FILE/EHSreport.XLS
 
There ARE ways to do this responsibly and profitably. For one thing, our bank is going to institute a suitability test for borrowers to try our best to make sure we do not put folks into situations wherein they cannot afford the mortgage type. While we do very little sub-prime, I am sure we will continue or modest efforts- so long as Wall St. will buy the paper. And, as of now, they ARE still buying.
Click to expand...
Brad,

Isn't it a little late for your bank to do a suitability test now after the damge has been done. I don't say they sould'nt but they didn't have to wait that long till things get so bad that they had to be forced to do qualification test.
I have one of your bank's borrower listing that I am going to use it or make a comment on it because it is in my subject neighborhood that I am appraising. The borrower is already short $100,000 on a $635,000 that your bank has financed it few months ago. It is very sad but I don't know who has to or is going to pay for it. The owner still lives there. It seems that the owner is not able to pay the mortgage otherwise why he is selling at this price. I don't know why there hasn't been any offer on it if the price was right.
 
Last edited:
Freddie Reports Fourth Quarter Loss of $480 Million

http://www.bloomberg.com/apps/news?pid=20601087&sid=alwra91MiPrI&refer=worldwide

March 23 (Bloomberg) -- Freddie Mac, the second-largest U.S. mortgage finance company, had a $480 million net loss in the fourth quarter as fees from providing guarantees for bonds fell and it lost money on derivatives.


The loss was narrower than the $500 million posted in the third quarter.


The company had a loss in the quarter of $1.03 billion on derivatives used to hedge against interest rate risk.

Net interest income for the year declined by $1.2 billion to $4.2 billion.

Freddie Mac said today it plans to buy back $1 billion in stock.
Click to expand...
 
Brad Ellis said:
Still, the sub-prime market will not disappear entirely. There ARE ways to do this responsibly and profitably. For one thing, our bank is going to institute a suitability test for borrowers to try our best to make sure we do not put folks into situations wherein they cannot afford the mortgage type. While we do very little sub-prime, I am sure we will continue or modest efforts- so long as Wall St. will buy the paper. And, as of now, they ARE still buying.
Click to expand...
I wonder if the Congress will be successful in their attempts to reign in the subprime lending with new controls and standards set by law? Or do you think the lending industry has enough clout to prevent that from happening?

But the street appears to be manipulating at least some of this- not ready to call it a conspiracy, but not ready to say it is not either.

Brad
Click to expand...
Oh the "Street" is a player. If there are not independent pure subprime lenders, and they need the subprime paper to sell or bundle with derivatives, they will fill the void. That is, providing Congress does not close that off with the fiat of law.

I conclude that for such a non-problem, the subprime borrowers are getting way too much attention and the "Street" is over reacting to some breach of payment on subprime loans.
 
Foreclosures Force Suburbs to Fight Blight

http://www.nytimes.com/2007/03/23/us/23vacant.html?_r=1&th&emc=th&oref=slogin

SHAKER HEIGHTS, Ohio — In a sign of the spreading economic fallout of mortgage foreclosures, several suburbs of Cleveland, one of the nation’s hardest-hit cities, are spending millions of dollars to maintain vacant houses as they try to contain blight and real-estate panic.


Cuyahoga County, including Cleveland and 58 suburbs, has one of the country’s highest foreclosure rates, and officials say the worst is yet to come. In 1995, the county had 2,500 foreclosures; last year there were 15,000. Officials blame the weak economy and housing market and a rash of subprime loans for the high numbers, and the unusual prevalence of vacant houses.

“What makes the subprime mortgages so devastating from a community perspective is that they’re so concentrated geographically,” said Dan Immergluck, a professor of city planning at the Georgia Institute of Technology.


Mr. Rokakis estimated that more than three-fourths of the current foreclosures in Cuyahoga County involved subprime loans, some of them blatantly unwise or dishonestly portrayed to buyers. Only last year did Ohio tighten its laws to require more complete disclosures to borrowers.


With so many homeowners running into trouble, the City of Cleveland has been unable to keep track of the number of vacant houses, said Mark N. Wiseman, director of the county prevention program. He estimates that 10,000 of the city’s 84,000 single-family houses are empty.
Click to expand...
 
What I see is something I have been through before.The numbers released from Government and other entities are usually self serving.Take Enron , Global Crossing as such huge examples.The NAR presents self serving infomation with a heavy tendency to cook the books in favor of the industry.
Everyone knows there is a serious down turn in Real Estate that is perhaps
something we have not seen before.With the country at almost full employment , what can we expect when unemployment numbers like 1981
start showing up.This is not a typical downturn , this downturn has come from business decisions and not the general good employment numbers.When this crash plays out it will be about as ugly as ugly can get.This will not be a fast downturn like the stock market , this will be slow and very painful because it includes the Amercian Dream of home ownership.I expect the next six months will show up and down numbers with the big bang sometime by the end of the year.Maybe some really bad numbers from FNMA which has closed it's books for the last two years , I wonder why???
 
NAR corrects the February 2007 spread sheet

For one thing, the February 2007 release does not show the February 2006 median sales price; it goes from January right to March with no February. Obviously a mistake but it makes you wonder about the data and the reporting. See the link:

http://www.realtor.org/Research.nsf/files/EHSreport.XLS/$FILE/EHSreport.XLS
progress.gif
Click to expand...
FYI - the spread sheet for February 2007 is now "fixed" with January 2006 deleted and replaced with February 2006 but now shows the median sales price to be $215,700 for February 2006. There is no little "r" next to this entry.

The January 2007 report show the median sales price for February 2006 to be $217,800.

Now what am I to believe? Do I believe last month's report for February 2006 median sales price of $217,800 or this month's report for February 2006 median sales price of $215,700?

Lets see, if I believe January 2007 report, and the median sales price for February 2007 is $212,800 - the year over year month decline for February 2007 is ... 2.35% - not the reported 1.3% decline from NAR and all the news media.

I don't know that I can believe the data or trust the data reporting by NAR. This makes tracking median sales price month to month or year over year futile.

Why should I believe NAR that existing homes sales are increasing? :rof:
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com
Back
Top