Housing: 2006 thread, use the 2007 thread instead.

[Vic]

Originally posted by: LegendKiller
I work in securitization, I deal with the messes everybody else creates in the asset pools by poor lending practices.

Just because *you* experience those problems does not mean that everybody else doesn't fudge the numbers. It doesn't have to be a huge increase over the previous house, small incremental ones have a large impact over time, a compounding one at that.

Okay, you work due diligence. Dealing with the messes is your job. And of course, they exist, perfection is impossible. Even more so in lending. If every loan was perfect, loan officers wouldn't have a job (the loans would close themselves). I think this is more a case of where *you* are focusing on the negatives that you see.

I'm still waiting to hear where on the grid is a spot for appraisers to pump value over a comparable house based on market assumptions. And are you saying that lenders don't closely scrutinize appraisals? No desk and/or field reviews, no BPO's, no AVM's?

The simple fact of the matter is that appraisers appraise and lenders lend based on current market values, not future market values. The buyers get the equity if the home appreciates, likewise they lose out if for some reason the home depreciates. That's just part of home ownership. Don't like it? Rent.

 

[Vic]

Originally posted by: Slew Foot

Originally posted by: Vic

Originally posted by: Slew Foot
IMO from reading your many posts on this subject, you represent that that issue as bad as all the others, but you're just bitter you missed out on the action.

I made 500K when I sold my house in San Francisco last year (which is earning me about 30K/yr) , Im currently renting while watching prices tumble and laughing at the suckers who held on too long.

And once again, who cares about California's real estate market? Not a decade goes by but they don't have a bubble (last one was in the early '90s with ~25% depreciation in 3 years). CA's boom-and-bust market does not represent the national market and never has.

 

[Vic]

Originally posted by: Satchel

Originally posted by: Tango

Originally posted by: Satchel

Originally posted by: Tango

Originally posted by: Vic

Originally posted by: Slew Foot
Of course when you sell you have to move somewhere else (or rent), and every other house is just as expensive as the one you sold, oops. Unless you're downsizing or moving to a less desireable location, then you might make out ahead. People who bought in the last 3-4 years are about to get slammed, especially those without equity or with HELOCs.

You are correct that property appreciation of one's primary residence is essentially "paper wealth."

However, even if there is a bubble, why would people who bought in the last 3-4 years get slammed like you describe? The value of a property you own is only important if you intend to sell it. Having negative equity doesn't stop one from living in a house anymore than being "upside down" in a car keeps one from driving it. HELOCs are fine at this point because the Fed is very likely to stop raising rates (they are not going up, they have gone up).

I have long felt that the issue with real estate over the past few years is that people started becoming homeowners for the wrong reasons. It's not about making money. It's about owning your home. IMO from reading your many posts on this subject, you represent that that issue as bad as all the others, but you're just bitter you missed out on the action. Consider that people like you, hoping that prices will fall so that you can reclaim your lost opportunity, are a powerful force that will keep values up (although no longer rising). Every time prices slip just a little bit, one of you will jump in to buy.

Uncorrect. The value of a real estate property is significant even if you don't sell, exactly like any other asset. Otherwise only cash would be worth something. But cash is, well, just another asset, and as such fluctuates in price.

Based on the present value of your real estate properties you can obtain credit to acquire other assets or simply use th equity accumulated to, again, obtain other assets.

If you know the correct financial instruments cash, real estate, commodities, stocks, bonds or options are just the same things. Of course different markets have different timing and liquidity carachteristics and so they DO provide different investing solutions. But for some reason people tend to think of real estate as something somewhat different from other markets. It's not. It's just a market with its own characteristics not dissimilar, for example, to fine art or antiques.

How is this done without increasing your debt? Equity is not a liquid asset. Are you suggesting that people should take out a second mortgage to purchase something that might appreciate at a higher rate and have a better return? If so, what do you suggest?

I am not suggesting anything, of course. I would never leverage on real estate, because it does not fit my investing strategies. But I am just saying that you can leverage your portfolio on real estate equity as you could on any other class of assets.

If you want to widen your portfolio, no matter what assets it is composed of, you just need to beat the interest rates you would be paying on the financing operation. In fact you could do less than that, cause you keep the privilege of enjoying both the gains (or losses of course) of thenew asset you bought and keep the gain (or losses) of the asset you are leveraging on.

But this is not the point, the point is increased assets value does matter regardless of the fact that you plan or not to use this increased equity for other purposes. Otherwise we all wouldn't care of stock prices unless we plan to sell them. We check stock prices every day because that is the current value, and depending on that valuation we acquire or lose investing capacity.

To answer your question: I would follow the track you suggested if your financial situation allows you to consider your house as any other asset. If it's the house you are living in, then I would never do it. But that's just me.
Pure rationality would tell you it doesn't matter. A good investment is a good investment no matter how you financed it. Of course life is not always pure rationality and the risk of losing your home is perceived as much more tragic than losing on mutual funds or stocks or bonds.

Also real estate is not a fungible asset. You can't just buy the same house again. If now you are forced to sell your home, it's not granted that you might be able to buy it again in the future, like you could with bonds or stocks. That's why the real estate market is much less liquid than other markets. It is quite close to the art market. Sell a Modigliani today, it's gone forever.

I'm sorry, I thought we were discussing primary residences. It goes without saying that real estate can be used for investment purposes.

The post I originally responded to, and which prompted this little exchange, was clearly in regards to primary residences.

 

[dullard]

Originally posted by: Vic
I'm still waiting to hear where on the grid is a spot for appraisers to pump value over a comparable house based on market assumptions. And are you saying that lenders don't closely scrutinize appraisals? No desk and/or field reviews, no BPO's, no AVM's?

I feel the blame is ~95% on the new home buyers. Some buyers are just plain stupid. It is almost all their fault. But, a great appraiser and a great broker/lender will be able to stop that stupidity. When that doesn't happen, often times the appraiser walks away unknowing, the buyer gets forclosed, and the lender is the one who is harmed. ~5% of the blame lands on appraisers and/or lenders who let stupid buyers buy houses far above market value.

Where on the grid can appraisers pump the value? They do it by letting stupid buyers buy houses far above market value (by appraising it higher than market value). Good, honest appraisers won't do that. Maybe, Vic, you have been lucky and have only dealt with the good, honest appraisers. But there are those out there who aren't good and who aren't honest.

What is so stupid about the idea that there are crooks in all businesses and that appraising isn't exempt? If there were no bad appraisals, banks wouldn't lose money on foreclosures.

 

[LegendKiller]

Originally posted by: Vic
Okay, you work due diligence. Dealing with the messes is your job. And of course, they exist, perfection is impossible. Even more so in lending. If every loan was perfect, loan officers wouldn't have a job (the loans would close themselves). I think this is more a case of where *you* are focusing on the negatives that you see.

I'm still waiting to hear where on the grid is a spot for appraisers to pump value over a comparable house based on market assumptions. And are you saying that lenders don't closely scrutinize appraisals? No desk and/or field reviews, no BPO's, no AVM's?

The simple fact of the matter is that appraisers appraise and lenders lend based on current market values, not future market values. The buyers get the equity if the home appreciates, likewise they lose out if for some reason the home depreciates. That's just part of home ownership. Don't like it? Rent.

No, I dont do Due Diligence, I am several levels above that. I actually on the teams that do the deals, analyze the collateral, run stratifications and rep lines to determine what the real value of all of the crap that is originated is. I see the fallout of bad lending practices, missing documents, reps and warrants breaches, and deals going south as bondholders get pissed.

This is truly my worry about the capital markets. Since securitization began in 1970, they were largely conforming loans issued by GSEs. However, in the past 5 years that model has been tossed out, Countrywide and others gobble up non-conforming and then pass them out to the market using FAS 140 off balance sheet treatement. Thus, the market takes the risks while the banks keep churning. This is great on one hand, since it drastically lowers capital costs and allows for much higher borrowing at much cheaper rates.

However, it also somewhat "hides" the bigger picture. Since banks used to have to issue unsecured debt to finance mortgage receivables, which has changed with securitization, they also had to report portfolio status. Furthermore, the number of lenders who were big were limited and the risks they took even more so, because they had to balance their cost of funds and risks.

Again, that all changed. Now, with those assets being sold off to investors utilizing FAS 140, the risk is "distributed" but is still there nonetheless. If the market turns south and people start foreclosing, you could see one of the biggest capital market metldowns in history. We are talking in the neighborhood of SIX TRILLION dollars worth of MBS outstanding, of which more than 1/3 is non-conforming and questionable.
---------

As far as appraisals. as I have stated before, it is a feedback loop. The market depends on the appraisers (analysts in the stock market) and the appraisers depend on the market (investors). One feeds off of the other and while you may say the banks have ultimate oversight, they are at the market/appraiser's mercy.

 

[Vic]

Originally posted by: dullard

Originally posted by: Vic
I'm still waiting to hear where on the grid is a spot for appraisers to pump value over a comparable house based on market assumptions. And are you saying that lenders don't closely scrutinize appraisals? No desk and/or field reviews, no BPO's, no AVM's?

I feel the blame is ~95% on the new home buyers. Some buyers are just plain stupid. It is almost all their fault. But, a great appraiser and a great broker/lender will be able to stop that stupidity. When that doesn't happen, often times the appraiser walks away unknowing, the buyer gets forclosed, and the lender is the one who is harmed. ~5% of the blame lands on appraisers and/or lenders who let stupid buyers buy houses far above market value.

Where on the grid can appraisers pump the value? They do it by letting stupid buyers buy houses far above market value (by appraising it higher than market value). Good, honest appraisers won't do that. Maybe, Vic, you have been lucky and have only dealt with the good, honest appraisers. But there are those out there who aren't good and who aren't honest.

What is so stupid about the idea that there are crooks in all businesses and that appraising isn't exempt? If there were no bad appraisals, banks wouldn't lose money on foreclosures.

Lenders do try to put on check on this "stupidity," with intense intense appraisal review processes. However, lending is also an extremely competitive business. They have to be flexible in order to stay in business. Too conservative and borrowers will go elsewhere. Failure to originate is death is the mortgage business. There is a known element of risk involved here, which is calculated into every loan.

This argument is not about specific crooks or specific bad appraisers and appraisals, and I was never arguing that bad apples don't exist. Quite the opposite! This argument is about seeking to blame lenders and appraisers for the irrational exuberences of the actual buyers and sellers in the marketplace. Kindly don't red herring.

 

[Vic]

Originally posted by: LegendKiller
No, I dont do Due Diligence, I am several levels above that. I actually on the teams that do the deals, analyze the collateral, run stratifications and rep lines to determine what the real value of all of the crap that is originated is. I see the fallout of bad lending practices, missing documents, reps and warrants breaches, and deals going south as bondholders get pissed.

This is truly my worry about the capital markets. Since securitization began in 1970, they were largely conforming loans issued by GSEs. However, in the past 5 years that model has been tossed out, Countrywide and others gobble up non-conforming and then pass them out to the market using FAS 140 off balance sheet treatement. Thus, the market takes the risks while the banks keep churning. This is great on one hand, since it drastically lowers capital costs and allows for much higher borrowing at much cheaper rates.

However, it also somewhat "hides" the bigger picture. Since banks used to have to issue unsecured debt to finance mortgage receivables, which has changed with securitization, they also had to report portfolio status. Furthermore, the number of lenders who were big were limited and the risks they took even more so, because they had to balance their cost of funds and risks.

Again, that all changed. Now, with those assets being sold off to investors utilizing FAS 140, the risk is "distributed" but is still there nonetheless. If the market turns south and people start foreclosing, you could see one of the biggest capital market metldowns in history. We are talking in the neighborhood of SIX TRILLION dollars worth of MBS outstanding, of which more than 1/3 is non-conforming and questionable.
---------

As far as appraisals. as I have stated before, it is a feedback loop. The market depends on the appraisers (analysts in the stock market) and the appraisers depend on the market (investors). One feeds off of the other and while you may say the banks have ultimate oversight, they are at the market/appraiser's mercy.

Non-conforming is non-conforming. Literally speaking, every non-conforming loan is unapprovable for some reason or another. In the interests of extending homeownership to a wider group of buyers, lenders are willing to overlook certain otherwise unapprovable characteristics of the loan package in return for higher income from the loan in accordance with the increased risks. Thus far, it has worked perfectly, and homeownership rates are the highest in history. Naturally, mistakes have been made, as the market is still experimenting as to what works and what does not, but that's nothing new in lending (or in anything else for that matter).

I see the feedback loop as being from the market. Remember, an appraisal is not even ordered for a purchase transaction until after buyer and seller have executed the purchase agreement.

 

[dmcowen674]

Originally posted by: LegendKiller

Originally posted by: dmcowen674

It's hysterical yet so sad watching you two spew absolute rubbish.

The banks control the Market, period.

You can fire all Appraisers today, they mean nothing.

Again, how does the bank increase prices?

Lets think about this for a minute, perhaps we can apply it to brokerage accounts.


1. Investor A thinks that AMD stock is going to shoot through the roof. Since he doesn't have enough money, he decides to lever himself up with margin from his brokerage house.

2. The brokerage house, assuming that Investor A can handle the margin requirements gives the guy enough to buy what he wants.

3. Investor A buys in to all sorts of hype surrounding AMD, including investor reports and analyst reports. The analysts set a price target for AMD, 20% more than current. So investor A takes out the leverage. Now, anybody who is an independant thinker will acknowledge sticking everything you have into AMD and AMD alone *AND* levering up is damn risky, yet INvesor A ignores this, meanwhile, he flips burgers as McDonalds dreaming of when he will get rich off of AMD and it's Athlon processors.

4. Everybody keeps going, happy as a lark, until AMD's profits fall and go into negative territory.

Now Dave, of course, will blame everybody else. However, who's fault is it if Investor A loses his shorts? Sure, you can blame some of it on the brokerage for giving him credit. You can blame some on the analysts. However, the majority, vast majority even, goes to Investor A. Why? Because he wasn't rational and bought in to stupidity.


Who sets the price for houses? The market. Who helps the market set prices, appraisers. Who helps the appraisers, the market. Who issues the loan so people can afford a house, the banks.

Now, if the banks controlled the appraisers and demanded they jack up the price beyond market, then why doesn't the investor realize this? Why buy if fundamentals are out of whack? If nobody buys at the market level, then the market level *MUST* come down to rational levels right? Well, only if people were rational and thought before they bought. However, they don't. WHY?

Because they are stupid. Of course, Dave, having gone to Suffolk Community College, will immediately blame all of his woes on externalities rather than himself. After all, isn't everybody else to blame for his lack of education and critical thought?

I may have gone to a podunk College on Long Ilsand but I can read.

The banks are driving down the prices for used houses not raising them.

They are in cohoots with Developers for raising the prices on new homes.

 

[Vic]

Dave, your betters are speaking about things you don't understand. Kindly don't interrupt. Banks have a significant vested interest in making sure that housing prices, for both new and existing homes, do not decline. The idea that they would drive the values of existing homes down for the benefit of developers is so absurb it's laughable, especially if you would actually open your eyes and see that existing home prices have appreciated dramatically in the past few years. Oh yeah, but banks are driving them down! :roll:

 

[dullard]

Originally posted by: Vic
This argument is not about specific crooks or specific bad appraisers and appraisals, and I was never arguing that bad apples don't exist. Quite the opposite! This argument is about seeking to blame lenders and appraisers for the irrational exuberences of the actual buyers and sellers in the marketplace. Kindly don't red herring.

You seem to be the only one who keeps up the idea of blaming lenders and appraisers. All parties involved have some blame, but it is the buyers who should bear most of the blame. However, you can't fix bad buyers without severely restrictive laws (I think you'll agree with me that any law with severe restrictions is probably a bad law). You can fix most bad appraisers without severely restrictive laws. There are things that can be done in that area where the good outweighs the bad.

I think it was me who first started the discussion about bad appraisers in this thread (after seeing you post something on appraisers). Thus, by definition I can't be a red herring about my own idea.

 

[LegendKiller]

Originally posted by: dmcowen674

I may have gone to a podunk College on Long Ilsand but I can read.

The banks are driving down the prices for used houses not raising them.

They are in cohoots with Developers for raising the prices on new homes.

It's really not the fact that you went to podunk College on Long Island that makes you a danger to society, it's the fact that you went there and all you can do is rubber stamp articles and create conspiracy theories to forward your own hatred agenda. You are ignorant and poorly educated in these topics, blissyfully so. I am not going to say you aren't smart enough to understand them, as I think anybody can. However, the willfull ignorance that you display and the obvious lack of education is staggering, especially when you try to opine on things that are way beyond your depth to grasp, at least at your knowledge level.

How are banks driving down prices? How can they possibly do this? By selling repo'd property? They sell it at-market or slightly below to exit out of the asset ASAP, which they *MUST* do according to FASB regulations (you can only hold a non-cash financial asset for a very short period if it is included in a FAS 140 compliant sale transaction).

Furthermore, your argument is even more illogical in the sense that if banks drove down prices, then that would incentivise purchasers to buy USED houses which are cheaper, thus driving DOWN prices of new houses to an equalibrium, adjusting for a new-house premium of course. However, that premium is set by the market, not by banks or developers.


Seriously dude, you really need to get an education on some of these things. You depend *WAY* too much on ill-educated reporters who are out of depth in these areas.

 

[Vic]

Originally posted by: dullard
You seem to be the only one who keeps up the idea of blaming lenders and appraisers. All parties involved have some blame, but it is the buyers who should bear most of the blame. However, you can't fix bad buyers without severely restrictive laws (I think you'll agree with me that any law with severe restrictions is probably a bad law). You can fix most bad appraisers without severely restrictive laws. There are things that can be done in that area where the good outweighs the bad.

I think it was me who first started the discussion about bad appraisers in this thread (after seeing you post something on appraisers). Thus, by definition I can't be a red herring about my own idea.

The discussion was that (and I do quote) "appraisers fix the prices" in the marketplace. I was countering that discussion. The existence of "bad appraisers" is a given, there are always bad apples. I don't do business with them, as their appraisals rarely hold up to lender review, and it never takes too long before they are blacklisted and/or lose their license. Keep in mind that an inflated appraisal that leads to a non-performing loan and a subsequent foreclosure to the investor can lead to a "buyback," where the originating party is forced to take back the paper at considerable loss. The loan officer on the deal can then kiss his job goodbye and (in states with stricter licensing standards) can even find himself out of the business.

And to further illustrate your lack of information on this subject, appraisers already do operate under several restrictive laws, as does the rest of the mortgage lending industry.

USPAP FIRREA RESPA HOEPA

And countless more...

 

[dullard]

Originally posted by: Vic
The discussion was that (and I do quote) "appraisers fix the prices" in the marketplace. I was countering that discussion.

Could you please help me out. Who are you quoting and where was it said? I've searched this thread 3 times and the only time I see that quote is in your post that I'm replying to. Maybe I'm just blind and my computer can't do a search properly on this thread.

The existence of "bad appraisers" is a given, there are always bad apples. I don't do business with them, as their appraisals rarely hold up to lender review, and it never takes too long before they are blacklisted and/or lose their license.

Good for you. I hope you keep it up.

And to further illustrate your lack of information on this subject, appraisers already do operate under several restrictive laws, as does the rest of the mortgage lending industry.

USPAP FIRREA RESPA HOEPA

And countless more...

Please stop with the strawman arguments. I never said they don't have laws guiding their practice. I just said that the laws that do exist need a little tweaking. And I don't appreciate the insulting attitude you use: "obtuse" and "your lack of information". You know nothing about the information I know. To avoid turning this into an even more personal attack, I'll bow out of this discussion for now. I can't promise that I'll never complain about bad appraisers and how I think some tweaking needs to be done on the laws that govern them. But I will promise to not mention it for quite a while.

 

[zendari]

Originally posted by: dullard

Where on the grid can appraisers pump the value? They do it by letting stupid buyers buy houses far above market value (by appraising it higher than market value). Good, honest appraisers won't do that. Maybe, Vic, you have been lucky and have only dealt with the good, honest appraisers. But there are those out there who aren't good and who aren't honest.

By definition, isn't the price a buyer pays for something the market value? If someone buys something at the appraised price, the appraisal was accurate.

 

[dullard]

Originally posted by: zendari
By definition, isn't the price a buyer pays for something the market value?

No. Not in the case of fraud or stupidity. If I paid you $10,000 for the next dump you take does not mean that dump is worth $10,000. It means I am stupid. If I pay you $10,000 for that dump because you fraudulently said it was a Rolex, it does not mean that dump is worth $10,000. It means you are a thief.

Ignoring fraud or stupidity, then yes you are correct.

 

[LegendKiller]

Originally posted by: zendari
By definition, isn't the price a buyer pays for something the market value? If someone buys something at the appraised price, the appraisal was accurate.

You are assuming that the market has "baked in" all known and relavent information *and* processes that information in a logical and organized fashion. However, as we have seen in past bubbles, fundamentals are tossed out the window when it comes to good ole fashion greed and irrational exuberance.

Logically, if the market has not baked in all of that information, arbitrageurs can enter the market that has deviated from fundamental equalibrium levels, short-selling the asset, therefore driving the price down.

However, that also assumes that short-selling is allowed, is cheap, and is easy to gain access to. All three of those are only in existance in a vacuum in the best circumstances, such as the stock market.

In the worst circumstance, impossible in the housing market, since you cannot short-sell a house. There are housing futures that can be sold short, but they do not have a price-feedback mechanism that can be tied to the financial markets in conjunction with the housing market.

Therefore, while the stock market *has* mechanisms in place to return to fundamental levels, they are difficult to access and only those who are smart and have the ability can do so. They earn the windfall profit off of the "dumb money". Houses are the worst circumstance, since they have no equalibrium causing mechanism, which means that the market can deviate from fundamentals to a huge extent and not be corrected for quite some time.

 

[Genx87]

Originally posted by: Vic
Dave, your betters are speaking about things you don't understand. Kindly don't interrupt. Banks have a significant vested interest in making sure that housing prices, for both new and existing homes, do not decline. The idea that they would drive the values of existing homes down for the benefit of developers is so absurb it's laughable, especially if you would actually open your eyes and see that existing home prices have appreciated dramatically in the past few years. Oh yeah, but banks are driving them down! :roll:

It does make you wonder if there is anything functioning in that head of his. What benefit would banks have in driving the price down if it were possible? If the price of homes contiunally went down year after year, nobody would buy a home and instead rent. Renters dont usually pay the bank a monthly payment on principal + interest.

 

[zendari]

Originally posted by: dullard

Originally posted by: zendari
By definition, isn't the price a buyer pays for something the market value?

No. Not in the case of fraud or stupidity. If I paid you $10,000 for the next dump you take does not mean that dump is worth $10,000. It means I am stupid. If I pay you $10,000 for that dump because you fraudulently said it was a Rolex, it does not mean that dump is worth $10,000. It means you are a thief.

Ignoring fraud or stupidity, then yes you are correct.

Who defines stupidity? What one man considers stupidity, another man considers a treasure.

 

[LegendKiller]

Originally posted by: zendari


Who defines stupidity? What one man considers stupidity, another man considers a treasure.

It's plainly evident that you are way out of your depth and would rather resort to cliche statements, waxing philosophy, and playing some sort of perceived equalibrium role as a devils advocate.

It's obvious the market isn't very good at policing itself and efficient market hypothesis is just that, a hypothesis. Otherwise we wouldn't have peaks and valleys that significantly deviate from fundamentals in the typical human psychological snake-bite/euphoric response.

Your lack of education and logical thought in this area relegates you to statements like above, further proving that you lack any sort of critical analysis in this area. Much like Dave, you lack the will to educate yourself and engage in any reasonable discussion from a position of knowledge.

 

[LegendKiller]

Originally posted by: Genx87
It does make you wonder if there is anything functioning in that head of his. What benefit would banks have in driving the price down if it were possible? If the price of homes contiunally went down year after year, nobody would buy a home and instead rent. Renters dont usually pay the bank a monthly payment on principal + interest.

They have no interest or power to drive down prices like Dave implies. Yet another foolish conspiracy theory propegated by those who would rather be ignorant and spread FUDD than be educated and spread reason.

 

[dullard]

Originally posted by: zendari
Who defines stupidity? What one man considers stupidity, another man considers a treasure.

In this circumstance there must be a minimum of two people willing to pay at or near that price. If not it is stupidity to use it as an investment. If I cannot turn around and sell the item the day I bought it for roughly the same price (or more), then it is stupidity and/or fraud. If I can turn around and sell it for roughly the same price, then that is the true market value of the item.

Basically, I feel that one transaction alone isn't a sufficient determination of an item's value. There must be at least the realistic possibility for another transaction of roughly equal value for the same item to be a sufficient determination of that item's value.

 

[Slew Foot]

Not a whole lot of news that came out last week, but Ill present to you, my Quotes of the Week, Aug 1- Aug 6.

According to LoanPerformance, a San Francisco-based company that tracks interest-only and negative amortization loans, called exotic loans, the East Bay?s consumption of negative amortization loans rose from 0.8 percent in 2003 to 39.3 percent of all new loans in the first four months of 2006.

Paul Muolo, ?This past week Merrill Lynch declared that housing is in a bear market and that a ?buyer?s market? for homes should last for ?years.?

the lay person might conclude that the June home appreciation figures were down approximately 1 percent as compared to June 2005. The reality is the decline is probably much closer to three or five times the published figures. -Bob Schwartz at Realty Times

?Drew Matus, senior financial economist at Lehman Brothers, said that while the indexes are volatile on a weekly basis, they point to a sector that is softening. ?The data suggest that the housing market is cooling and it?s cooling pretty substantially,? he said.?

Ron Cutler, broker-owner of Suntec Financial, Stockton, said he "believes there?s a nationwide problem developing with foreclosures resulting from questionable mortgage loan deals that allowed people to buy in a pricey housing market.?

?Weimer says the housing market is 15-percent off right now from the all-time high and we should expect to see resale home price come down further.? -Investor and realtor Don Weimer (las Vegas)

Ryland CEO Chad Dreier said that selling homes is now a challenge in nearly every market. ?While we knew that eventually there would be a slowdown in housing, this downturn happened quicker than expected,? he said.?

 

[dullard]

Toll Brothers said this is the biggest housing slump in 40 years they've been in business.

The slowdown "is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors," Toll said in his statement.

"Instead, it seems to be the result of an oversupply of inventory and a decline in confidence," he added. "Speculative buyers who spurred demand in 2004 and 2005 are now sellers; builders that built speculative homes must now move their specs; and nervous buyers are canceling contracts for homes already under construction."
...
The Pennsylvania-based builder said it expects to deliver 2,500 to 2,800 homes in the current quarter, a cut of at least 14 percent from its previous guidance of 2,900 to 3,300. And the company announced signed contracts in the just completed quarter plunged 45 percent to $1.05 billion from a record of $1.92 billion a year earlier.

 

[dmcowen674]

Originally posted by: dullard
Topic Title: Housing: Official thread. Now with more data.
Topic Summary: Aug 9: Builders - worst slump in 40+ years

:laugh:

That can't be. The Republicans on here said so.

 

[Vic]

Originally posted by: dmcowen674

Originally posted by: dullard
Topic Title: Housing: Official thread. Now with more data.
Topic Summary: Aug 9: Builders - worst slump in 40+ years

:laugh:

That can't be. The Republicans on here said so.

Which Republicans, Dave?


BTW, I'm more than a bit dissapointed with dullard here. He pulled a you with the thread title and summary. The article he posted does not say anywhere that this is the "worst slump in 40+ years."

What it does say is:

Homebuilder Toll Brothers said the current slump in residential construction is unlike any it has seen in 40 years...

...

The slowdown "is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors," Toll said in his statement.

...

The company said it is not under as much pressure as many builders to cut prices because it builds relatively few homes on spec. But Toll said that much of the supply of finished and near-finished product is being marketed using advertised price reductions and increased sales incentives, which in turn is leading many potential buyers to delay their purchase decisions as they wonder about the direction of home prices.

...

The company said it is not under as much pressure as many builders to cut prices because it builds relatively few homes on spec. But Toll said that much of the supply of finished and near-finished product is being marketed using advertised price reductions and increased sales incentives, which in turn is leading many potential buyers to delay their purchase decisions as they wonder about the direction of home prices.

...

But Toll said the company believes that, as there is a cutback in supply by builders, the housing market should be able get back on the growth track of recent years.

...

"But the market isn't dead," Toll said. "It's concerned with the direction of home prices and if it has reached the bottom. You might argue that this is the best time to buy a home, with comparatively low mortgage rates and incentives. It's very hard to pick a bottom and anyone who tries will probably have a problem."

So yeah, thanks for trolling and encouraging others to troll.

:roll: