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Friday, January 22, 2010
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81 comments:
This would be big news if Bernanke does not get reconfirmed.
Too few Dems?
This is the first time I have heard it might be a problem. You can debate whether this is good or bad news, but it would surely rock the boat.
Wow....
Watch Unemployment march across the USA from 2007 to 2009
Texas Native,
Wow. That's a lot of black and purple. If unemployment spread like a disease the "coming in on us" would be even scarier.
Not to be insanely parochial, but I though the NoVa unemployment has been getting better since about July, but that's not what it looked like in the movie....
The total number at the top also looks wrong. It says that unemployment in November was 9%, I thought it was closer to 10%, I wonder if somehow the data has the wrong dates and is off by 6 months or something like that.
EXAMPLE OF SHADOW INVENTORY COMING INTO THE LIGHT?
According to the Redfin figures, looks like the bank took possession of this Ashburn house back in August, and it has just come onto the market.
REdealseeker,
I've seen timeframes as short as 2 weeks to as long as 1 year (still sitting in bank possession). So, August to January doesn't seem out of the norm to me. Sometimes it just takes time, and the reasons aren't always obvious.
So I'd call that the continuation of the trickle.
it may be that they started out at WTF prices, or it may be that expectations have shifted, but check out these relists:
#1
original price: 10/15/2009 $1,795,000
new price: $1,529,900
#2
original price: 9/11/2009 $599,900
new price: $564,900
#3
original price: 10/24/2009 $519,000
(actually it started at $549K i believe)
new price: $499,000
#4
original price: 5/1/2009 $650,000
new price: $555,000
but there're unchanged or even increased relists as well...
Yes, one example does not a trend make. We'd have to see many of those in one timeframe before we could talk about shadow inventory being released.
I think I'm just hoping....that's why I had anthropology and Chinese lit. profs who shook their heads at political scientists and economists in the business of forecasting (one called it "hocus pocus" and "wizardry"). Too many of their own wishes and biases are wrapped up in their forecasts to make them of any use in really understanding what is happening.
hb, anonymous, spider,
Going back to inventory...
If you do the MRIS stats for NVAR, with the simplest categories (virginia standard) then Dec 2008 to Dec 2009 is down across the board in inventory
Residential only:
2009 2008 diff
>450k 2129 3036 -30%
350-450 519 844 -40%
250-350 676 1023 -34%
180-250 312 508 -39%
sure the 350-450 sweet spot is the most decimated but they are all down.
If you added back in the condo/coop& ground rent, the numbers would change slightly, but that's enough math for me. It's not just the sub-450k bracket that's way down YoY in inventory, it's the whole darn thing.
REdealSeeker,
Well, in your defense, what one example does show, is that the shadow inventory hasn't dried up yet. There will continue to be REOs for sale...
Something I posted couple of months back - that it would happen earlier than most think.
House Panel May Recommend Abolishing Fannie, Freddie, Frank Says
This one is priceless for greater NoVA metro area. If we see this happen, we will see a normal, intervention-free market that will reflect "correct" prices that are well-overdue.
I would let Robert evaluate the employment impact on this region - as he loves touting employment numbers for this region!!!
So, my agent just called. I find this short sale thing so confusing. While the owner of the house has signed our offer, he can apparently sign as many offers as he wants to (like, all of them). We're not on the hook until the bank chooses our offer. So, we still not might be the offer chosen. In the meantime, we can put in other offers on other homes.
RE & Cara-
I don't 5 months surprising at all. It takes time to kick the people out of the home get all the paperwork done, have someone clean up the property to make it sellable and get an agent. Banks surely are not known for their quickness. Hopefully you are right, but my guess is we will just see a slow trickle over the next ~4-5 years. Banks have been liquidating REOs at basically the same pace for a couple of years. The problem is this pace is slower than they are foreclosing so the shadow inventory keeps on growing. At some point foreclosures will slow to a pace below the REO drip and then after a couple of years like this they will work down the excess inventory.
HB,
Finally some good news. Bernanke must go for his role during greenspan era & bail-outs.
I am sure, Geithner is going to go as well. As much as I hate corporate-run, corrupt republican party, I am starting to like their MA win more & more.
REdealSEEKER,
What if you put another offer & your SS offer gets accepted by bank. Can you be on the hook for two properties if timing is real close?
Or is it that you have to re-confirm the offer once bank gets back to you?
Spider-
I think your article is a little misleading. full comment
It looks more like he wants to replace these with a new system to fund housing. So until we determine what the new system is, I imagine this isn't that important.
spider-
On the short sale. As soon as you signed another contract you can cancel your short sale contract. So unless they happen within the 5 minutes it takes to cancel the contract you are ok. You can always get out of the short sale contract based on one of the other contingencies anyways.
Getting out a contract really isn't a problem
REdealSeeker,
Um, that makes no sense. I'm not sure that passes the sniff test. Yes, sure there can be back-up offers... You need to be or have a real estate lawyer to sort this one out.
I'll sign all of these, but the bank will only approve one of them anyway thereby legitimately voiding my contract on all the others, unless that buyer doesn't like the bank's counter, in which case I can present it to the next offer? I guess, but wow is that incredibly sucky.
No big deal if you're an investor who will bid on multiple properties anyway, not cool at all if you're an owner occupant.
HB,
The obvious reason they are abolishing them is they were responsible to create the bubble in a large way. So, even if there is some replacement - it would be very likely to support very very low-end housing.
In any case, I see zero reason for government financing/insuring mortgages in this country.
spider,
That new entity to replace the GSEs could be purely governmental eliminate the private MBS market entirely, and could in fact be the mechanism behind permanently artificially low interest rates. Now that sounds like something Barney Frank would like.
spider,
"The obvious reason they are abolishing them is they were responsible to create the bubble in a large way. So, even if there is some replacement - it would be very likely to support very very low-end housing.
In any case, I see zero reason for government financing/insuring mortgages in this country. "
I assume you recognize that both those points are a matter of opinion. Hotly contested opinion at that.
Thanks, Cara. No wonder I'm confused.
Paul Volcker for Fed.
REDeal-
I think this is the case with any short. I believe that legally the owners needs to show all contracts to the bank so the fact that they signed yours really does not mean very much.
Cara,
What happened with your short sale? You were clearly under the impression that the current owner at the time had signed only your offer, as yours was the one chosen?
Spider-
I think he would be a good fed president, although I think you would be soarly disappointed at the rate he would move fed funds. He moved rates to "crush inflation." We do not have this issue now. Do you see wages growing at 15% a year, how about cars, TVs, clothing... Inflation is pretty tame right now. I don't think his legacy shows that he would crush the economy to insure inflation does not come in the future. All his legacy says is that he will crush the economy if inflation ever gets bad.
if they get rid of gse's it will definitely affect local housing market --- 12000 full-time jobs get eliminated and almost as many consultants that used to work for them will be gone.
not very likely that is will happen short-term, given the blank check from the administration for the next 3 years.
The Listing Agent for the Short Sale I Have a Contract on Doesn't Seem to be Doing the Right Thing
Assuming that the realtor is correct, my situation certainly is fishy.
In other words, you can't have two fully signed offers sitting with the bank.
Konstantin-
My guess is if they get rid of them they would create similar companies that would probably be structured somewhat similarly and they would just use predominantly the same people. I will be amazed if they just several huge government entities and just tell the employees sorry about the fact you lost your job.
Although this would help all of us looking for places in Vienna/Tysons, because I have to imagine a lot of the people working on the Freddie Campus live in these areas
HB,
In response to a gigantic bubble we had - you don't go back to the same policy of ultra-low interest rates that actually created the monster.
Volcker is what we need who will make sure interest rates are not kept at zero. I am not arguing for very high interest rates. But, we do need to be between 1-2% right now to reflect economic reality of real growth.
Fed has to be forward-looking as it takes about 6 months to absorb interest rate changes.
Hmm, I wonder how many of your parents or grandparents would have been homeowners without the government insuring and inserting itself in the mortgage market. I know my maternal grandparents wouldn't have become homeowners in 1950 without that a California Veterans loan with a 2% interest rate.
Can someone give me the link to the Washington Post real estate search page where homes can be looked up by last name.
REdealSeeker,
I'm certain we were the only offer on that short. It went back out from under contract when we dropped it, and hasn't gone back under since. It's now been an unoccupied short for over a year. Talk about shadow inventory.
After our 45 days were up we gave it another month before coming to the realization that as cheap as it was, and as great of a value for the money, we wanted a basement. They begged us to extend so that they could get a real offer from the bank, but that smelled of fraud to me since we had no intention of buying it after reaching that decision.
(and then of course when we hated almost all the THs that were actually less expensive than SFHs, we went with a SFH 40% more expensive than the original piggyback TH condo...)
"HB said...My guess is if they get rid of them they would create similar companies that would probably be structured somewhat similarly and they would just use predominantly the same people."
Yeah -- that whole "abolish" the GSEs and put nothing else in their place is the same sort of glug glug glug thinking that Contrarian has been pimping here for years.
Tom Lawler explained it best. We know the GSEs have a bunch of toxic assets which will go belly up in the years ahead, and this is one of the things keeping them from raising new investment capital.
However, if you simply wind them down, and restart a new batch of GSEs with a clean slate, you can attract investment capital alot easier. (kinda like they did with the RTC back in the 80s).
Ironically, this could actually be a bit of a boost to local employment. As they wind down, a handful of F&F employees stay on board to minimize losses for the govt in the years ahead. Meanwhile all the rest of the F&F employees, plus some new ones to replace the skeleton crew left behind run the new GSEs as they did before.
Robert,
http://www.washingtonpost.com/ac2/wp-dyn/admin/homepricereports?includePage=/jsp/hsales/html/advancedSearch.jsp?nid=roll_propvalues
REdealseeker,
Did they escrow your earnest money?
Did you have any earnest money?
Hayfieldgrad,
It's worse than that. If at any point in time your parents or grandparents loan got sold to one of the GSE's, they benifitted from the implicit government backing which kept interest rates lower than they would otherwise have been. So even without a VA loan or FHA loan, your family has probably benefitted.
(my dad used his VA benefit to pay for college, but at that time it was an either or thing, is my recollection).
yeah, i would not worry to much if i worked for frannie. they may change these companies a lot if they wanted, e.g. less accounting and IT needed if they are not public companies anymore though.
Thanks Konstantin - I was actually able to find it with google.
ok.....so....the listing agent should not have notified us and sent the contract with the seller's signatures on it. A minor mistake, as she did not intend to tell us that ours was the offer selected. At this point, our offer is just that, an offer.
We only provided a copy of the check, and not the escrow check itself.
Nothing lost, nothing really gained.
REdealseeker,
But if it's a real ratified contract then the escrow must be deposited in the escrow account specified within the contract within something like 48 hours.
So... you getting the ratified contract back means you're supposed to mail off that escrow check...
See I told you you need a lawyer. At a minimum you need a buyer's agent who knows what they're doing, but agents are not lawyers and do not give legal advice. And I'm neither a lawyer nor a short-sale expert.
My agent just told me that other parts of the contract are being withheld, so I don't know if it's considered a complete contract at this point, anyway....
REdealseeker,
Ah, so like they signed the front page but haven't initialed everything yet. Yeah, this may indeed just be a "mistake" on the part of the LA. At a guess yours was the highest offer and isn't anymore.
after our last contract was ratified my agent never deposited the check because, yup, she misplaced it. few weeks later after we backed out she found it behind the photo copier...
MM-
Ouch. She's lucky you didn't need the check after all.
and that's when i decided she's of no help of me...
Va_Investor/HayfieldGrad,
If you *read* what I wrote I did not call for tougher down payment requirements then what existed in the past.
As for people I know - most did have 20% dp when they bought. A few had loans (not gifts) from relatives to get to 20%. A lucky few had outright gifts for the 20%.
From what I understand until the 2000s if you did not have 20% you paid PMI. Then in the 2000s banks did piggyback loans to help buyers avoid PMI.
From what I understand piggyback loans are once again disfavored since second lien holders have been getting screwed when home values go down.
Yes in the past you could get a home loan for less than 20%. But there were substantial PMI costs.
As for my savings example -- the point was not that banks have to go back to 20% dp requirements. The point was that everyone can save enough for 20% if they really want to.
As for HayfieldGrad's data that most people save for ~3 years. That sounds about right. My guess is a lot of people really scrimp and save for those three years and usually start thinking home purchase when they have a decent income for the area they live in.
Nothing either of you has said has disputed that between 2003-07 we had especially loose lending. Or that current loan lending is as tight as it was in 1975-1998.
spider,
Good find re Fannie/Freddie.
It sounds like they would "abolish" both and possibly create one new agency to replace it with probably 75-100% of the employees from the two in the new agency. So I think possibly fewer employees out of this.
The bigger issue would be where the new HQ would be. Fannie Mae is in upper NW mostly convenient to the I-270 corridor and upper NW DC residents. Freddie Mac is in Tysons Corner.
If the new agency were at Fannie's HQ then that obviously is going to favor DC and MD over VA. If the new agency were at Freddie's HQ then that favors VA.
Obviously anyone can commute to either from any of the three jurisdictions but I think we can all agree that home prices in VA would be much less if there were fewer jobs in VA and more in DC.
HayfieldGrad said
Hmm, I wonder how many of your parents or grandparents would have been homeowners without the government insuring and inserting itself in the mortgage market. I know my maternal grandparents wouldn't have become homeowners in 1950 without that a California Veterans loan with a 2% interest rate.
No one here has an issue with veterans receiving a government benefit. Veterans got those benefits by serving in the military during a war and putting their life in danger.
What we are opposing was non-veterans getting the same deal without having done anything to deserve it. I would have thought you would want veterans to get special treatment, not the same treatment as everyone else.
And loose lending standards has *harmed* minority communities and working class communities, not helped them.
Study
The newest data shows a lost decade for homeownership for African Americans. Since the start of the recession in 2007, their homeownership rate has declined by 0.7 percentage points annually. Homeownership for African Americans is now lower than it was at the start of the decade. In 2000, 47.2 percent of African Americans owned homes—eight years later, only 46.4 percent owned homes.
When the pain is over all signs point to homeownership rates in the black community being lower than they were in 1990. That will be two decades of lost growth. It's the same in the Latino and Asian communities.
Loose lending did not help these communities. It is widening the already large gap between whites and minority homeownership rates.
So enough of this canard that those of you who want loose lending are more charitable. You are not helping people out by putting them in a mortgage they cannot afford.
REDealSeeker, what does your written document with your offer say? Does it say you have a contract if the bank approves? Does it have a clause allowing you to escape? This would worry me until I saw in writing who has what rights and responsibilities.
"That new entity to replace the GSEs could be purely governmental eliminate the private MBS market entirely, and could in fact be the mechanism behind permanently artificially low interest rates. Now that sounds like something Barney Frank would like."
The one thing we can be sure they aren't going to do is break them up and replace them with nothing.
I don't know the details of what Franks wants to do, but I am sure that I will disagree with them once I hear them...
(Honestly, has this guy made one good call yet on the housing market?)
Leroy,
Yeah I find it ironic that the calls were for "Kerry next" not "Frank next". I mean, really, which one has done more harm?
Senate seat, bah, do something useful, oust Frank.
This link made me think that Frank just wants to get rid of the fact they were public and were supposed to try and create profits. So if anything this may have the opposite impact, because now they could just try and support housing rather than just shareholders
Sorry I forgot to post the link
link
Here is an interesting study about the rise of the poor in the suburbs.
On page 9 there is a chart noting what percentage of a metro areas poor lived in the suburbs in 2000 and 2008. For the DC area it went from 60.9% to 67.5% (partly the poverty rate in DC went down.)
Thought this was interesting:
NYC 31.8% suburban poverty rate
Dallas 46.6%
Philly 48.4%
Houston 49.2%
Baltimore 50.4%
DC 67.5%
We house a lot of poor in our suburbs in this area. Some other cities on the list are like DC but many are not. The numbers I think pretty vividly show that it's not hyperbole to feel that we have some poor suburban neighborhoods.
Sorry I was probably unclear. By suburban poverty rate I mean the percentage of the poor that live in the suburbs instead of the city.
tbw,
VA_Investor and I have never advocated for "loose lending". I think both of us have advocated that low downpayment loans with good underwriting(credit check, verifiable income, accurate apprasials) can be just as safe as those loans with much larger downpayments.
The people I know that bought in 1999-2001 with 3.5% down, didn't get piggyback loans. They all got 1 loan from a credit union with 7-8% interest rates and they paid PMI for several years. They eventually refinanced when their houses appreciated and got lower interest rates. You shouldn't assume that all lenders were handing out crazy loans.
housebuyer,
Yeah, if Frank's leading it, my guess is he wants to socialize home financing not re-privatize it.
I'm not sure that this is such a terrible plan. The GSE's historically have set the industry standard for high underwriting levels, and they only weakened as their market-share was reduced. IF one outlawed many of the exotic loan products and replaced everything with fully amoritizing loans (they don't HAVE to be fixed rate, ARMs have their uses, like say when rates are high...) then much of the bubble could have been avoided. There would still be bubbles, they just wouldn't have gotten re-energized exactly when they should have popped.
Keeping MBS's as nice secure investment vehicles for retirement funds and pension plans, rather than sliced and diced into hedge-fund worthy products would be nice too.
I know. Un-american. Where's my capitalist spirit?
I think if Bernanke is not re-appointed then it puts egg on Time Magazine's face for naming him Man of the Year.
HayfieldGrad said
If that's what you are arguing for that is fine. As I said I just want us to go back to the pre-2002 era of lending or whenever things got crazy.
For the record, the FHA head Stevens notes that a large portion of the recent defaults comes from a few lenders. So I think it's clear there are still a few crazy lenders. And thankfully FHA is not letting them get FHA insurance anymore.
Probably LendingTree and the internet fueled the housing bubble. In the past some crazy lender in Ohio or whatever was irrelevant to a homebuyer here. Now with the internet you can easily go to the lender with the loosest lending standards if you need them.
[Typo -- I had a quote from HayfieldGrad but took it down. Those are my words.]
tbw,
Sure...
But given that the DC MSA is still in the bottom 10 MSA's for suburban poverty rates at 5.8%, which is still well under the lowest city-based poverty rates of ~10%, I'm not too concerned....
So, yes, the poverty DC residents suffer from is wide-spread throughout the region, but it's pretty low and the city, at least, is improving.
Yes, there are rougher parts of NoVa and MD. Indeed. There are also lower cost of living parts of the same.
TBW-
Isn't part of that just the fact that DC has a much lower percentage of people living in the city vs. the burbs. If you look at the percentage of millionaires you would also see that DC probably has the highest percentage in the suburbs. There is just very little housing inside the city.
Cara,
Agree. I'm not saying we have overwhelming poverty here. Obviously we are doing better than many cities.
I just feel like there is this mindset out there that the only impoverished communities in this metro area are in DC. And I think these numbers show how wrong/outdated that mindset is.
tbw,
I think there's a distinction to be made between impoverished and crime-ridden. I think the impression may be that the only crime-ridden places are in DC.
That may also be untrue. I haven't attempted to check outside of those places I was actually considering.
housebuyer,
Yes, size of the city certainly plays a role. I suspect NYC's rate is artificially low because what would be inner suburbs in other areas (Bronx, Brooklyn, Queens, Staten Island) were merged into one mega-city. And Texas cities are notorious for expanding further and further out.
Cara,
Agree. Poverty is one of many factors that affect the crime rate.
I just get the vibe sometimes that people are confused I do not think every suburb of DC is a white picket fence cookie cutter suburb. I do think it's fair to say some are a little blighted.
I think some places are unfairly maligned. But many are fairly maligned.
From Restonian.
Some random development news: Reston Excelsior has filed an "application for construction" to build two multifamily residential buildings at the intersection of Reston Parkway and Sunset Hills Drive -- near the Oracle building if memory serves. This was actually approved by planners back in 2006, but it's yet another hint at the construction to come. With a fancy name like Excelsior, we're guessing it's not going to be Section 8 housing and have a high coriander-to-wood ratio in the kitchens.
These will be pretty close to the future Silver Line stop at 267/Reston Parkway. I wonder how much the CRE strips on Sunrise Valley and Sunset Hills will change over the next few years.
Well, there is no wonder that the poverty distribution moved from DC towards suburbs. Throwing poor people out of DC is an unofficial goal of the DC government, pretty stupid in my opinion, shifting the ghetto from one area to another.
The idea of keeping the rates relatively low using the government guarantee that never needs execution is good, just need to forget about profit-making, otherwise it can be a little bit tricky, as we saw last couple of years.
I think those same people imagining a cookie-cutter perfect DC suburbia would also be surprised about gang influence in Fairfax and Loudoun County public schools, as well, regularly reported in local papers.
I've run into lawyers working in my same department who have shown that thinly veiled discriminatory look of surprise when they find out that I, who was once administrative staff, live in Leesburg (as in, "you live in Leesburg, and you're a secretary?!", meaning, "gee, I thought I lived far away from the poor and huddled masses"). Yet some Leesburg schools are noted for their gang activity, obviously influenced by pockets of poverty.
(Not to rail against lawyers, because I admire the hard work it takes to get through law school and to work in the legal field; I'm just railing against individuals who discriminate against those who did not make the same choices that they themselves did.)
Apparently now is a pretty good time to become a landlord national. Price to rent is basically at an average level, but lot mortgage rates make your funding costs very favorable. price to rent
obviously this is national so is is not necessarily representative of this area.
tbw,
There will be dramatic change along the silver line. This is why I am buying so much close by.
Much of the new zoning has not even been determined yet.
p.s. none of any new residential will be cheap. That you can take to the bank.
Hey Cowboy,
What about all that unemployment in Texas?
What was that song about hard working texans and their layabout neighbors?
Unemployment reached a record 12.1 percent in the District in December, keeping the city's jobless rate well above national levels and much higher than in Virginia and Maryland.
The District's unemployment rose from 11.8 percent in November, according to the Bureau of Labor Statistics, even as the nation's jobless rate stabilized at 10 percent in December. Maryland's unemployment level increased to 7.5 percent from 7.3 percent, and Virginia's rate rose to 6.9 percent after remaining at 6.6 percent for four straight months.
I will be doing my part by patronizing DC businesses tonight and stimulating the local economy.
I believe in a week or so we see how this broke down at a local level in VA and MD.
manassas park has always been drugs and dysfunction, as a friend of mine once said "A triler park with townhouses".
Woodbridge has lots of dysfunctional areas.
PG county, particularly the southern end has been rough. Fort Washington,
the areas near rhode island avenue.
when I said in DC i was seeing a lot of inventory, i was seeing things like this.
http://franklymls.com/DC7240303
empty, locked up, sitting a half block from this one
http://franklymls.com/DC7157647
205 R has been up since the fall, it's gorgeous in terms of finish.
i didn't like it's layout
but it was clean
but i walked the block and found 3 other foreclosures sitting there.
I love this place from the outside, i think it's overpriced, especially as it needs some work but,
it''s part of that shadow inventory coming out.
Pat, I'm not sure why your links aren't working, but you might try following this format (all of it goes in one line but I can't put all of this on one line or it will be read as a link here):
<
a
space
href=
url of the place you're linking to
>
click here (or other phrase)
<
/
a
>
where the url is the url of the house to which you're linking.
Here's one of your links:
click here
see also:
http://www.quackit.com/html/codes/html_link_code.cfm
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