Housing Bubble Bursting?

[hastalavista]

Moh and Randolph, You guys are obviusly posting without any regards to my over/under prediction on this thread. I hope the equity in your homes disappears!.

Too late, Mark. I have the over!!!

 

[MARK JOLLIFF]

Okay Mark, you got the attention that you obviously want. It won't matter if it is over or under, to me.
[/SIZE]

Hey buddy just havin fun. Little tongue in cheek. I don't know how to place the little emoticans at the end of my statements so I rely on people to recognize a dry sense of humor.

 

[Randolph Kinney]

Trouble coming for the Stanley Johnsons

http://www.marketwatch.com/News/Story/Story.aspx?guid={CE3CB76A-388F-4E11-B6A1-14D1C3AA9F2D}&siteid=mktw&dist=nbk

SAN DIEGO (MarketWatch) -- You may have seen that LendingTree commercial with a happy-go-lucky guy named Stanley Johnson, who brags about his big house, his new car and how, "I even belong to the local golf club. How do I do it?" he continues with a big, dumb smile, "I'm in debt up to my eyeballs." Lowering his voice, but still smiling, he adds, "I can barely pay my finance charges." The smile doesn't leave his face as he drives a riding lawn mower, saying, "Somebody help me."


Thanks to easy credit, many Americans have been living well beyond their means. But that credit picture is beginning to change. And when you think about where the U.S. economy might be a quarter or two from now, you have to wonder how many Stanley Johnsons are out there. This isn't the stereotypical subprime borrower, with a spotty credit history and low credit score, but instead people perceived by friends and neighbors to be living the good life, some even sporting good credit scores.


With the mortgage markets tightening, especially as certain types of adjustable-rate mortgages face a wave of forced refinancings, we will know soon enough. For a preview, all you really need to do is check with someone like R. Douglas Ley, a certified public accountant and certified financial planner in Macungie, Pa.

"I am shocked," he said at the time, "by the bad and deteriorating financial condition of many of my clients."


Much of what Ley said was merely anecdotes. Still, such stories suggest there are more Stanley Johnsons among us than we may think. There are plenty of people who are doing just fine. In fact, it appears, based on reports from some CPAs, that many who created wealth in recent years through wise investments or high-paying jobs still are genuinely wealthy. But it is the tales of trouble that resonate for anybody trying to figure out whether the equity in overinflated homes really was a large driver of the economy in the past few years. Based on conversations with CPAs, mortgage brokers, financial planners and others from all parts of this country, there is little doubt it played an important role.

He adds that it wasn't the expansion of mortgage balances that was so alarming. "It was all the new, expensive cars being purchased and added on to their auto insurance," he says. "Often people were calling to replace a Honda Accord with a new BMW or Mercedes.

If CPAs and insurance agents are among the first to spot the problems while they are occurring, divorce attorneys like Bruce Hughes, also of Orange County, are among the first to see the actual fallout. "We see it as it happens," he says. "From industry to industry over the years, they come in groups when various industries go through turmoil. Now it's real estate's turn. I can't tell you how many mortgage brokers, builders, developers and others associated with the building industry have come in for a divorce in the past six months and it's increasing." Those not associated with real estate, but hurt by the false sense of financial security because of it, are no doubt next.

Calling Stanley Johnson.

 

[Greg Bell]

Stanley Johnson is the every man for todays society.How many refi's have we done with the new BMW in the driveway and new Riding mower in the garage.The homedebters are never home and both are working to pay the financing .You meet the homedebter at the door and they are sweating , gotta have 230K to make the deal.Both are in hurry , must get back to work.
Value comes in low , Katy bar the door , we are idiots because the House down the street sold for $240K and their Real Estate Agent Friend said its worth 250K.......
SEE BELOW...SEE WHATS COMING..

Kenneth Heebner, manager of the top-performing real-estate fund over the past decade, said U.S. home prices may plunge as much as 20 percent because of rising defaults on riskier mortgages.

Subprime loans, made to borrowers with a history of missed payments or untested credit, and ``Alt-A'' loans, which require little or no documentation, account for about $2.5 trillion of the $10 trillion in outstanding mortgages, according to Moody's Economy.com. As much as 40 percent of these loans may default, flooding the real estate market, Heebner said.

``It will be the biggest housing-price decline since the Great Depression,'' Heebner, 66, said today in an interview in Boston. Prices may fall by a fifth in some markets, he said.

 

[Brad Ellis]

Greg,

Don't worry about it. Heebner will be long dead before that happens. Heck - he is 7 years older than even ME!

Randolph,

Now that last post was a truly scientific study!!!!!!!

Brad

 

[Greg Bell]

Hebner will be dead and and we will have no cash to bury him...

 

[Randolph Kinney]

Subprime meltdown shakes builders' confidence

http://www.marketwatch.com/news/story/subprime-meltdown-shakes-builders-confidence/story.aspx?guid=%7BE2ABA5FE%2DE9C1%2D4DD0%2D956A%2D4C00677DE455%7D

WASHINGTON (MarketWatch) -- Tightening lending standards in the subprime-mortgage market have shaken the confidence of U.S. home builders, according to a survey released Monday by the National Association of Home Builders.


The Wells Fargo/NAHB housing-market index fell from 36 in March to 33 in April, the lowest level since December. Builders were significantly more pessimistic about future sales than they were in March.

Economists surveyed by MarketWatch are expecting starts to fall about 2.6% to a seasonally adjusted annual rate of 1.49 million from 1.53 million in February. Permits are expected to fall marginally to 1.52 million from 1.53 million.

The downside risks and uncertainties surrounding that forecast are considerable.

— David Seiders, NAHB

 

[Randolph Kinney]

U.S. Foreclosures Double as Refinancing Gets Tougher

http://www.bloomberg.com/apps/news?pid=20601103&sid=aUih6TnKypEg&refer=us

April 16 (Bloomberg) -- The number of U.S. homes entering foreclosure in the first quarter doubled from a year earlier as property prices stagnated and owners struggled to refinance mortgages.


Owners of 168,829 homes in the first three months of 2007 received notice that lenders had filed for foreclosure due to failure to pay loans or liens, Foreclosures.com said today in a statement. That compares with 83,154 homes in the same period of 2006, the Sacramento, California-based research firm said.


A four-year high in mortgage payment delinquencies and the failure or sale of 50 subprime mortgage companies, which provide loans to people with poor or limited credit histories, have made credit less available. The inability of homeowners to refinance their debt has added to the rise in foreclosures.


``A lot of folks have been borrowing and borrowing and borrowing to stay out of trouble,'' Foreclosures.com President Alexis McGee said in an interview. ``Now that there are less borrowers in the marketplace, where are they going to go? Unless lenders step up and offer money to these people, they'll be locked out.''


Riverside County, California, had a 172 percent rise in the number of homes entering the foreclosure process in the first quarter, the biggest increase of any county in the U.S., the company said.

Foreclosures.com said other counties showing big increases were Clark County, Nevada, which includes Las Vegas (143 percent); Los Angeles County, California, (92 percent); Miami- Dade, Florida (90 percent) and Cook County, Illinois, where Chicago is located (44 percent).


The findings come as the National Association of Home Builders/Wells Fargo index of U.S. homebuilders' confidence fell to the lowest level of the year in April. The index dropped to 33 from 36 in March, the Washington-based association said today. A reading below 50 means most respondents view conditions as poor.

Slowing home sales in the first quarter contributed to California's highest number of missed mortgage payments since the second quarter of 1997, according to DataQuick Information Systems, a La Jolla, California-based research company.


Lenders sent 46,760 default notices to California homeowners in the first three months of 2007, an increase of 148 percent from the same period last year, DataQuick said.

 

[Randolph Kinney]

California Home Foreclosures Rise Ninefold as Adjustable Mortgages Reset

http://www.bloomberg.com/apps/news?pid=20601206&sid=a3zcodNqS5ZA&refer=realestate

April 16 (Bloomberg) -- Californians lost their homes in record numbers in the first quarter, as adjustable mortgage rates reset and home sales slowed, making it harder for owners to pay off their loans.


More than 11,000 homes were lost to foreclosure in the first quarter, a nine-fold increase over the same period last year and an 82 percent rise since the fourth quarter, when 6,078 homes were lost, La Jolla,
California-based DataQuick Information Systems reported. There are more than eight million houses and condominiums in California.


Home loan defaults in California, the first step toward foreclosure, rose 148 percent to the highest level in a decade as lenders sent 46,760 notices of default to homeowners in the first quarter. In the second quarter of 1997, some 47,912 notices were recorded, according to DataQuick.


``Defaults tend to happen after a certain length of time and today's activity reflects a peak in the number of home loans made back in the summer of 2005,'' Marshall Prentice, DataQuick's president, said in a statement.


Loans made in 2005 are particularly vulnerable to default, because of the wide availability of subprime loans, made at high interest rates to people with poor or limited credit histories, said Prentice.


Rapidly rising sale prices at the time also led many borrowers to believe they could meet the increased payments now coming due by selling their homes or refinancing them.

Most of the loans that went into default last quarter were originated from April 2005 to May 2006, with adjustable rate mortgages peaking at 77.8 percent of all mortgages originated in California in May 2005, according to DataQuick, a unit of Vancouver, British Columbia-based MacDonald Dettwiler and Associates.


Twenty-five of the California's 58 counties recorded the highest number of home loan defaults since DataQuick began tracking the category in 1992. Defaults in Contra Costa County rose 226 percent to 1,969, and in Sacramento they rose 185 percent to 3,234. In Riverside, they were up 168 percent to 5,750.

Other big jumps in home-loan defaults include increases of 310 percent in Yolo County, 305 percent in El Dorado, 255 percent in Monterey, 234 percent in Merced and 214 percent in Yuba.

Don't forget, according to DataQuick, the latest median price for California homes rose to its highest level, ever.

And there is no problem with resetting ARMs.

The bulk of ARM resets happen in 2nd and 3rd quarter of this year. Oh boy, can't wait to see the NAR data. :new_all_coholic:

I wonder if the FED will blink? :new_smile-l:

 

[Greg Bell]

The sky is falling...oh my.....

No one wants to say it, preferring to call it a slowdown. But I’ll say it:

The United States is in recession now.

Last week, MarineMax - the largest recreational boat dealer in the United States - said earnings would come in at 45 to 65 cents. In January…January, mind you… it said it would earn USD$1.40 to USD$1.50. Last November - only five months ago - it forecast USD$2.05 to USD$2.15.

The reason: Call it fallout from the housing boom. CEO Bill McGill made no effort to hide behind any fig leaves in his conference call: ‘While most of our customers [have] the ability to purchase a boat, they have lost their appetite to pull the trigger when uncertainty enters the equation.’

What uncertainty? ‘Perceived loss in value of their home, the loss in the investment property value, or the perceived or actual trickle-down effect that the housing market may have on their own business or their financial picture.’

Note to sellers of big-ticket items: Batten down the hatches, boys!

Last month, I met with John Williams, the sharp economist behind Shadow Government Statistics. Williams is one of the few economists to call the old hag that is the U.S. economy an old hag.

‘We are in an inflationary recession now,’ he says.

Williams ticks off the data that confirm a recession in progress: Much weaker-than-expected housing starts, retail sales and industrial production.

Also, a weak manufacturing survey, sluggish annual growth in durable goods orders, rising new claims for unemployment insurance, and anemic employment growth.

There is a playbook for dealing with this kind of environment, based on old highlight reels from the 1970s. I can sum it up thusly: Buy tangible things; sell paper.