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Home Loans, Bitchez! (had to do it just once before I die).
Hah! My first Junk! Boy, what a great Monday. I'm *somebody* now!
According to some people, that means you are "right".
Yeah, typically the people with the most sense get the most junks on ZH.
As of this moment, you have none. Corroboration!
Banks sell more homes than builders: http://www.housingintelligence.com/economics/banks-sell-more-homes-than-builders-do.html
#1 Problem: To many houses. So banks sell them.
#2 Problem: Too many stocks, (Supply). So MM's sell them.
#1 & #2 Solution for both. Simply economic rule of supply and demand.
* If their is less demand and too much inventory, the price must come down.
Existing homeowners with a mortgage have a minimum they can sell their house for. Builders who have to cover their costs and run their businesses have a minimum they can sell their houses for. Banks who are writing off the loan anyway, not so much. As a result, there is absolutely no price resiliency when banks dump these distressed properties on the market. And since the prevailing appraisal model relies on comparable sales, a bank sale is akin to dropping a bomb on that neighborhood when it comes to home values.
true, but there is still descretion on part of the appraiser to pick 3-5 out of the mix and drop off some of the worst offending sales.. as long as your area is not rife with foreclosures they won't nose dive the neighborhood
I hope you're right. I'm selling my condo and waiting for the appraiser to come back with a number, one at least as high as the agreed price, I hope.
But there was one sale in the complex for less than my price 3 months ago by a guy who had had an intent to foreclose filed against him by Wells Fargo in addition to a complaint by the condo association that he was something like $3,500 behind on his condo fees, just over a year's worth at our fees.
Take that sale out of the picture and all the other sales are for more than I'm getting. Include it and things become dicey.
Negatory on that one, there's no longer any incentive for them to get the best value. Appraisers have to go through an exchange now, so from their perspective it is to their advantage to be conservative so they don't get blackballed by underwriters. If anything that means making sure they don't submit a value that isn't supportable under the most pessimistic review conditions.
I don't see how all these numbers account for all the new "tent cities" popping up all over America...?
My guess is that would also be considered "supply"....?
"tent cities"= temporary housing....
"tent cities"= temporary housing....
With pretty pretty picture
that's some top-notch research by BOA-ML to put that first chart together. good thing they made sure to name themselves as the source on it, given it doesn't appear in every economics textbook on the planet.
that's some kinda funny
And what's with the Harvard shill picking 2013 for the turn? Bullshit always comes with a 2-3 year horizon.
You sure this isn't just "economic hypochondria"? FASB accounting rules will prove you wrong!
If you look at each aspect of this depression in isolation, the analysis is depressing. Another 20-25% drop in housing prices.
If you look at how that will feed back (did this analyst recursively revise upwards the number of homeowners who would be underwater with another 20% decline in prices, vs. today? And if so, then estimate how many additional would walk away? And this would recursively feed back into prices, etc.)
But few are looking at the sum total of all of these vignettes in concert. There are non-linean synergies. Just look at the banks' dire predicament in light of this housing analysis.
The banks have exactly how much tangible common equity right now? As Mish keeps pointing out, they are not admitting what their assets are really worth, and the ratio of loan loss reserves to non-performing loans is at a low point. So the banks already are facing more losses that they haven't written down yet.
And this housing discussion suggests a lot more pain to come to banks, as the gross price of the houses declines by 20%, what does that do to the value of the loan? Obviously it goes down more than 20%, and in many cases will go down to zero (certainly any second mortagages and HELOCs will).
What does this mean to shareholders of banks? Likely they take big losses, if they don't get wiped out altogether. And further losses in 401K's and other accounts will do what to the consumer's willingness (and ability) to spend?
This will drive down retail sales further...
We had one heckuva ascending spiral on the way up over the past 28 years. But all of those dynamics are now turned into reverse, and it promises to be one heckuva ride down.
Speaking of banks. I haven't seen any updates on banks closed by the FDIC last week. They closed down 8 on August 20, I have a hard time believing they didn't close down any last week.
Yep, no banks. Shorebank is taking all Sheila's resources.
can't close any banks when Benny Baby is talking at J-Hole
+1 to both of you -- Sheila is out of money, and can't do anything with B-Hole at J-Hole.
Will they hit any before Labor day weekend? They usually don't close just before a holiday.
Does that mean if two weeks are missed they close three times the usual when they return?
"If you look at each aspect of this depression in isolation, the analysis is depressing. Another 20-25% drop in housing prices."
WHY is this depressing again? Why does everyone want homes to be expensive?
Bearster at car dealership: 'Alright, I take the red 323 - let's do the paperwork.'
Car salesman: 'Excellent choice, sir! I have that one on special for only $19,500'.
Bearster: 'What are you talking about? I came here to spend money! I'm not spending a penny below $40,000 - is that clear?
Some of you guys need to have your head examined. Especially if you bought a home at the peak of the housing bubble. Unfortunately some people never learn...
Oh I agree with you, to the buyer it's better if prices are cheaper.
Let's see how that will look in this case. Homebuyer Joe has been saving his money in a bank account. Prices fall to the level where he wants to buy. He goes to "withdraw" his money and that's where the problems begin.
He does not "have" "money" "in" a bank. He has lent money to a bank and now he has a piece of paper that says they will pay him on demand. But the banks are already drowning, and that's before we took into account another 20% drop in home prices!
So where is the money going to come from to pay off Joe so he can buy the house?
Right, from the taxpayers.
Bearster at car dealership: wow, the price is only $20,000. Good thing molecool is paying for it anyways! :)
lets not forget..Carpenters, bricklayers, plumbers, electricians,roofers, carpet layers, gardeners, earth movers,Glass installers, supply stores, carpet suppliers and suppliers and manufacturers of all other goods going into a house. There is a huge amount of jobs lost until housing restarts.
cars arent pushing along either, and again a huge amount of jobs involved.
Contractor 30+ years, now i garden and enjoy the fruit of my labor. Government has not found a way to tax my garden produce..yet
...other than the fact that you can't sell one ear of corn or a tomato without collecting sales tax. My wife does ceramics for a hobby and went to a local craft show with some of her wares. No go. She didn't have a sales tax permit. Sonsabitches.
Craft shows are big business. People can make their profit in a few weeks hitting the seasonal circuit.
This was a local yokel deal, people selling off card tables. No big air-conditioned arena thingie. It was patrolled by folks from the State!
There is no federal sales tax. Yet. Here in California, grocery type food is not taxed. Take out is, but not groceries.
"Government has not found a way to tax my garden produce..yet"
Um, property tax and tax on things like fertilizer and water, tax on the tools purshases, tax on the energy used to can or freeze.
Only way to avoid tax is live naked in some tropical paradise where the fruit falls into your hands.
That supply and demand graph is all wrong. Shouldn't S1 be to the right instead of to the left?
How can you have an increase in supply AND a decrease in demand, and have equilibrium equal to the old equilibrium price before the supply increased and the demand decreased?
28 years ride is correct - 401k programs started in 1982 and set the ball rolling for a phony middle class prosperity charade.
Yup, more and more people living with people that they would rather not live with.
Assaults and murders skyrocket this Christmas.
I blame this on Rosie O'Donnell.
Whole families are moving housing to Walton's Mountain. Here comes the kiddies and grandkiddies. G'night Grandpa. G'night Granma. G'night John Boy. McMansions bought on the cheap can house 12.
"McMansions bought on the cheap can house 12".........Americans...........144 illegals.......
RE: two junks......Well....there's two illegals....142 to go.........
What do we consider a mansion? Nothing over $750K sold in the last 2 months.....
long on bunkbeds?
Careful there, no new home construction over $750k sold in the last 2 months. This little omission caused me some embarrassment over the weekend while arguing/discussing with a friend.
Oooops, thanks for setting me straight on that.
My tax dollars will be used to tear down houses to temporarily prop up the construction industry and lower unemployment stats in order to jack up the price of a house I might buy!!
Yep, just like the Agricultural Adjustment Act during the first Depression.
Entire fields of crops were plowed under, and millions of pigs, chickens, etc were bought by the gov't at premium prices to be slaughtered and removed from the market.
Keynesianism in a nut shell. The problem wasn't that people were broke (some starving), with prices falling as a consequence, the problem was "overproduction". Their perverse solution was to destroy stuff (in this case food), so that they'd have to outbid each other for the diminishing supply, pushing prices back up where they were during the bubble.
So everyone is poor and hungry, being taxed to have their food prices forced back up to levels they never should've reached to begin with. Problem solved.
I have heard that there was some sort of program [in the very recent past] to encourage dairy farmers in the midwest to do this sort of thing, but I didn't catch the details.
What's this ten year outlook thing? Does anyone really expect this whole farce to even last more than two years?
Bullshit is always in a bull market.
VK said it best first (itchy comment finger by me).
It took 30 years to get here....do you really think this is going to end in a year or two??
"What's this ten year outlook thing?"
Isn't that the average lifespan of an American house before it's crunched and hauled away to the landfill?
Maybe a Toll Brothers house. They're a huge real estate company that started in Pennsylvania or Maryland and invaded Massachusetts about 12 or so years ago. They built big $900,000 status boxes.
A small independent house builder explained to me, several years ago, all the ways that Toll Brothers houses are shoddily made. If my alternative was a hovel carved out of peat, I'd take the peat hovel over a Toll Brothers house. If you ever consider buying a house and find that the title traces back to Toll Brothers or one of their corporate subsidiaries, I strongly advise that you don't purchase.
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