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A mortuary of 7,000,000 foreclosures and counting

drhousingbubble's picture




 

If a foreclosure happens in the wilderness, does it make a sound? It seems like people have conveniently forgotten that since the housing crisis hit we have witnessed more than 7,000,000+ foreclosures. Do you think these people believe the Fed is almighty and can stop a speeding train or turn water into wine? Apparently some people forget that the Fed failed to prevent the tech bust or the housing bust in the first place. Now, the Fed is somehow the cult leader and the leader will not let housing values fall. The nation still has 9.1 million seriously underwater homeowners on top of the more than 7 million that have gone through foreclosure. It is abundantly clear that the mindless drivel of “buying is always a good decision” is just that. Investors are starting to pull back in expensive states because value is harder to find. I see the lemmings at open houses and you can see the drool at the side of their mouths hoping for a morsel of real estate. The Fed, for better or worse, has turned us all into speculators. Simply putting your money in a bank is a losing battle because inflation is eroding your buying power. Yet wages are not keeping up. What you have is people competing with investors, foreign money, and a market with low inventory and trying to guess the next move from the Fed. Yet the tech bust and housing crash (keep in mind these happened only since 2000) were major events not prevented by the Fed.

 

Does buying today make sense?

The big question for many is whether buying today makes sense. Hopefully the 7 million foreclosures within the last decade highlights that housing isn’t always a simple buying decision. Investors have been dominant in the market since 2009. Big money is clearly pulling back from inflated markets like those in California. This trend is fairly new but even with this minor twist, inventory is picking up and sales are still very low.

It helps to understand that many foreclosures are happening because people are spread thin. People are still maxed out. Unlike big banks with sophisticated deals and systems in place, most households are living paycheck to paycheck even those with higher incomes. First, take a look at some foreclosure history:

foreclosure-completions

Print this chart out and just remember that housing is a big freaking purchase. Probably the biggest you will ever make. Just because someone is house horny doesn’t mean they should act on it. What fascinates me is that late in 2012, most of those in the housing industry failed to see the big run-up in prices for 2013. Most were predicting 2 to 5 percent price gains. Instead, we saw double-digit gains. At the end of 2013, the predictions were incredibly optimistic for 2014.

If the trend is so obvious and clear, why do we see low volume in housing sales?

existing home sales

Existing home sales are down more than 35 percent from their peak reached in 2006. Our population is growing and prices are going up. Yet the push for higher prices has come from Wall Street, low rates, and normal buyers competing with the investor group. A big question that many are wondering is what will happen when big money starts to flow out of real estate. We are starting to find out slowly. Rates are also likely to go up – so for those that believe the almighty Fed can do anything they should listen to their leader that is utterly telling the market rates will go in one direction.

What we don’t have to guess on is that this recent trend has made it tougher for first time buyers:

first-time-home-buyer

First-time home buyers are a small portion of the market today because of investors crowding them out. We also have a large number of young ones living in the basement of their parent’s granite countertop sarcophagus.

Still underwater

Despite the recent rise in home prices we still have 9.1 million home owners seriously underwater. What this tells us is that many people pushed their budgets to the financial limits merely to squeeze in. If this were truly a solid housing uptrend we would be seeing home builders doing what they do, building homes. We would also see existing home sales kicking butt. Yet we have a juiced up system with countless forms of accounting shenanigans. Some try to make it out as if economics and finance are somehow a new science. Unlike Newtonian physics on Earth, the Fed can act like a deus ex machina and literally change the rules for a brief period of time. And people are emotional and the reptilian part of our brain goes haywire when you talk about the “nest” – you need only go to an open house to see the house horny folks battle it out.

We’ve been adding many more rental households over the last few years, just in line with the big investor buying (those 7 million foreclosures have to move somewhere but foreclosures are also slowing down):

rentals-vs-households

 

What is telling about this chart is that we have never had a sustained period of actually losing home owner households since, well this last crisis. Why? Take a look at the graveyard of 7,000,000 foreclosures. The Fed has turned the housing market into a speculative vehicle and with this volume of investor buying, you should proceed with the caution of buying a stock. This is another critical point here in regards to perceived risk. You have people staying miles away from stocks (which are up 170+ percent since 2009) yet are more than willing to stuff their entire $100,000 or $200,000 down payment into a highly priced piece of property that just went up by double-digits courtesy of investor fever. Yet they feel this is safer! California was a big chunk of the 7,000,000 foreclosures folks. You have people with pathetic 401ks and retirement funds yet 80 to 90 percent of their wealth tied up in one piece of real estate.

7 million foreclosures and currently 9.1 million seriously underwater home owners. It should be apparent that when it comes to buying a house, you really need to run the numbers. Investors have and they are pulling back from certain markets.

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Wed, 04/30/2014 - 16:45 | 4713675 dexter_morgan
dexter_morgan's picture

Who could have known..............

Wed, 04/30/2014 - 15:36 | 4713424 kurt
kurt's picture

Nice work

Wed, 04/30/2014 - 13:26 | 4712754 Smiley
Smiley's picture

What is the point of having a mortgage?  You are making a payment to the bank AND paying taxes on the property to the local and federal governments indefinitely.  You pay the note off to the bank, BIG DEAL, you still owe taxes on the property in perpetuity and the state and federal authorities are free to appraise your property to any value they deem fit as a guise to pry more taxes out of you; IN PERPETUITY.  Pay off all the crap you want, YOU DO NOT OWN A FUCKING THING IN AMERICA.  The United States is nothing but a giant hamster wheel anymore.  Run you rodents, RUN!

Wed, 04/30/2014 - 17:42 | 4713871 plane jain
plane jain's picture

Because the rent is too damn high.  3 bedroom apartment here $1500, 3 bedroom house for rent $1800 to $2000.  There are very few houses for rent.  We went to see one this weekend and there was someone leaving as we entered and waiting to enter as we were leaving...non-stop showing according to the agent and the owners were going to review all the applications and interview their top applicants.  Not that nice of a house, very creaky loud floors so we didn't even apply.

Wed, 04/30/2014 - 17:08 | 4713752 EON
EON's picture

You make a great point. If i paid off my house it would still cost me $24k to live there. But Agenda 21 and the progressives will put the final period on anyone owning anything, but for their elites. If you don't own property you are property.

Wed, 04/30/2014 - 13:04 | 4712668 Never One Roach
Never One Roach's picture

"No one saw this coming...."

Wed, 04/30/2014 - 13:13 | 4712709 El Hosel
El Hosel's picture

Cash buyers holding the bags that used to belong to the TBTF?... Nice.

Wed, 04/30/2014 - 11:56 | 4712346 Ban KKiller
Ban KKiller's picture

Can your "creditor, servicer, lender, banker" validate the alleged debt according to your states Uniform Commercial Code regarding who has the right to enforce a note? 

I dare you to try and validate your mortgage debt. You WILL NOT get a straight answer from your servicer as they know there is not a clear chain of title as your "beneficial rights" were sold one way and the mortgage/deed went the other way. 

So after a zillion letters trying to validate the mortgage debt...nope, could not validate the debt so I quit paying. 

Doing fine as...NO ONE can come forward to show they have a legitimate claim! THANK YOU WALL STREET BANKSTERS AND YOUR BROKEN SCHEME OF SECURITIZATION! 

See ROMERO V. BONY. New Mexico Supreme Court Decision. Awesome. 

Oh, and YOU can fuck Yellen, I am staying clear of men. HA-HA. 

Wed, 04/30/2014 - 13:22 | 4712742 JRobby
JRobby's picture

Good info, thanks. It is quite an experience to talk to the various "departments" at a TBTF mortgage servicing "group". The training in double speak must be extensive (I hear they run old videos of Greenspan testifying before Congress for inspiration AND instructional value) 

They will file documents with the IRS that are incorrect. To the point of fantasy where market values are concerned. But they will not discuss or change anything. Oh BTW, they do not dispense tax advice either. That one actually had me laughing out loud. 

Wed, 04/30/2014 - 10:37 | 4711938 the grateful un...
the grateful unemployed's picture

no word on the new housing industry. don't forget this is the engine of economic growth (like IPOs in the stock market) and the current Fed policy discourages buyers in existing housing, and gives an advantage to new housing builders (whose value has not been artificially levitated). this is governments role, in stimulating the economy, new production, is always the key to growth. when all else fails try channel stuffing, GM does it, and then the USG figures out ways to get those old cars off the road, (cash for clunkers). its the old shell game, existing housing is priced too high for average buyer looking to gain entry into the market, and needing a mortgage. of course if you have cash existing housing is the place for you but most don't.

Wed, 04/30/2014 - 10:03 | 4711790 blue gkm
blue gkm's picture

I am a 31 year old african american father from the south side of chicago. I bought my house cash at the bottom of the real estate crash for 15000. I now live rent free (mortgage) no student loans(truck driver) and no car notes or credit cards (cash only.) Work, save your money and buy a fixer upper. Stop becomeing shadow agents of the bank!!

Wed, 04/30/2014 - 21:02 | 4714468 ltsgt1
ltsgt1's picture

I own a residential property in a middle class neighborhood in NYC, Sheephead Bay in Brooklyn South. Three houses on the block were sold for around $560K recently and they are all fixer upper which would easily cost the new owner another $100K easily. The kicker is that two of these house are across the street from a homeless occupied forecloser -refinanced for $700K before the crash- which was owned by Bank of America since 2008. I tried to buy that 4 years ago for the asking price of $380K but BAC was not interested. That house is now owned by the tax payers via Fanni Mae. Oh, btw, I heard all those homeless people have Obama phones.

Wed, 04/30/2014 - 12:05 | 4712395 SmittyinLA
SmittyinLA's picture

I live in LA, the bottom of the market dropped our ghetto shack prices to a low of $375,000 in the worst gang areas of LA you can't even buy a trailer in CA for less than 25k

Wed, 04/30/2014 - 13:28 | 4712778 the grateful un...
the grateful unemployed's picture

should the value fall far enough your city council will declare you a blighted area and force you to move. should values remain artificially high, cash buyers with hedge fund logos on their shirt will keep buying up property (with their prospectus written in mandarin) there is no economic viability between those two extremes, or no real economy. whats a condo at the old hollywood park going to price at?

Wed, 04/30/2014 - 11:27 | 4712193 Ban KKiller
Ban KKiller's picture

Do you grow some of your own food? You are subversive sir. Independence is frowned upon! 

 

Wed, 04/30/2014 - 10:51 | 4711991 Cpl Hicks
Cpl Hicks's picture

Good luck to you trying to defend yourself from the Chicago Machine.

Wed, 04/30/2014 - 10:24 | 4711875 Double.Eagle.Gold
Double.Eagle.Gold's picture

Well done.

 

 

Wed, 04/30/2014 - 09:56 | 4711760 moneybots
moneybots's picture

"we have witnessed more than 7,000,000+ foreclosures"

 

But Greenspan said in 2005, that the bankers helped people get into homes that they otherwise could not afford.

 

Which means Greenspan was lying when he said that.

Wed, 04/30/2014 - 11:01 | 4712052 forwardho
forwardho's picture

Re;  Which means Greenspan was lying when he said that.

No, it means that they really could not afford those houses. As is shown to be true since they have since lost them.

He said the bankers could help get them in. Not keep them.

 

Wed, 04/30/2014 - 15:38 | 4713428 kurt
kurt's picture

Yes, they were "happy to help them...out."

Wed, 04/30/2014 - 11:39 | 4712259 Ban KKiller
Ban KKiller's picture

When I found out the banksters broke the chain of title with  their securitization scheme I quit paying my mortgage even though the money was not the issue. Took a chance...waited to see what they would do when they could not validate the debt, by state law. So they decided to TRY to foreclose. Well using forged, fraudulent paperwork does not work with an educated deadbeat like me. So years later...still in my home, no problem. Just paid my RE taxes too! 

See Romero VS. BONY New Mexico Supreme Court Decision. It is awesome! 

Wed, 04/30/2014 - 13:29 | 4712782 JRobby
JRobby's picture

Excellent! My loan was FNMA and fannie Foreclosed and repurchased so I was outside the opportunity box. 

Wed, 04/30/2014 - 12:05 | 4712392 novictim
novictim's picture

You are a ROCK STAR!

Wed, 04/30/2014 - 09:50 | 4711718 JRobby
JRobby's picture

Yet the tech bust and housing crash (keep in mind these happened only since 2000) were major events not prevented by the Fed.

The Fed does not even function as the bastard it was created to be. Lets be clear if possible: The Fed = Greenspan = Toolbox

This time frame was Greenspan time. Borrowing from the toolbox is Benny with that special wrench used for opening fire hydrants.

Still vomiting from the term genius in connection with Greenspan.

 

 

Wed, 04/30/2014 - 10:03 | 4711785 moneybots
moneybots's picture

"Still vomiting from the term genius in connection with Greenspan."

 

Greenspan never was a maestro, He was a charlatan.  Nor is he the only one.  Global debt has grown from 70 trillion to 100 trillion.  It is the greatest financial fraud in history.

Wed, 04/30/2014 - 10:37 | 4711942 SAT 800
SAT 800's picture

He was a helpless retard who was in love with the publicicty he got; but then who else would take the job?

Wed, 04/30/2014 - 07:37 | 4711255 snodgrass
snodgrass's picture

All part of the plan to destroy the American middle class. Most of the middle class have as their key asset a home. First destroy the job base that allows them to pay the mortgage by shipping the jobs to China. Next take that one remaining asset and leave people with nothing but their SNAP card. Third sell those homes to Chinese buyers, thus further displacing the American population.

Wed, 04/30/2014 - 10:20 | 4711858 corporatewhore
corporatewhore's picture

Snap is an interesting animal.

Although it is a national program it is administered by the states.  I still, after reading all the gobbligook can't tell where you apply for assistance.  Is it your state of residence where you pay taxes, have voted, car registration, send bank statements?  Or is it, if you are a snowbird, in the state where you reside on occasion?   There doesn't seem a definitive answer and state bureaucrats will penalize you if they determine you aren't eligible.  But their decision seems based on the personal whim of a bureacrat.

 

Anyone with expertise or history with this creature?

Wed, 04/30/2014 - 08:12 | 4711310 adr
adr's picture

In New England it is all about turning the region into New Mexico. Cities have been invaded. What were middle class white towns ten years ago are now latino slums.

You can thank our wonderful government for giving the Sinola drug cartel carte blanche to take over the country as long as the wave of immigrants, legal or not, vote for who they are told.

Fitchburg MA might as well hoist Mexican flags.

Wed, 04/30/2014 - 13:58 | 4712883 clawsthatscratch
clawsthatscratch's picture

make that Puerto Rican Flags, 21% of your pop is latino with the majority, 15% being from there. 

Wed, 04/30/2014 - 10:31 | 4711906 SAT 800
SAT 800's picture

That is so sick. That makes me feel like vomiting. And we know the crappy bastards did it on purpose to insure that wages can never rise. Boy do we need a target list.

Wed, 04/30/2014 - 15:15 | 4713333 SilverSavant
SilverSavant's picture

Yes, Yes, we need a target list.   Then we can start removing names from the top and adding new ones at the bottom.  We can sell the good organs to pay for the whole thing. 

Wed, 04/30/2014 - 07:30 | 4711244 Straw Dog
Wed, 04/30/2014 - 06:59 | 4711208 JerseyJoe
JerseyJoe's picture

"Watch me pull a rabbit out of my hat."  Bullwinkle

Wed, 04/30/2014 - 09:15 | 4711526 Cpl Hicks
Cpl Hicks's picture

"Aww, Bullwinkle, that trick never works"
Rocky

Wed, 04/30/2014 - 10:18 | 4711850 TrulyStupid
TrulyStupid's picture

"Got to get me another hat"

Wed, 04/30/2014 - 06:31 | 4711184 AdvancingTime
AdvancingTime's picture

I have owned an apartment complex for many years and we are currently experiencing the largest number of vacancies we have ever had. Many houses in the area are empty or under leased. In 2005 and 2006 prior to the housing collapse many people were looking at second homes, for investments or as a vacation getaway.

Today not only have many people shed the extra home many have doubled up with family or friends reducing the need for housing. We are pushing on a string and calling it demand when someone who can barely pay the rent is encouraged by the government to buy a house they can neither afford or maintain. We have a shortage of "qualified" buyers and renters. More on how low interest rates are hurting housing in the article below,

http://brucewilds.blogspot.com/2013/12/super-low-interest-rates-disservi...

Wed, 04/30/2014 - 10:35 | 4711928 SAT 800
SAT 800's picture

You're telling me. The local Housing Development here in Hawaii looks like a Neutron Bomb movie. Nobody home. In another few years serious deterioration will set in in these properties. No one can afford to maintain them; the owners have gone back to live on Mom's farm when they found out they weren't retired, after all.

Wed, 04/30/2014 - 08:12 | 4711309 Gameon
Gameon's picture

What city do you rent in?

Wed, 04/30/2014 - 07:09 | 4711222 JerseyJoe
JerseyJoe's picture

Don't forget, Section 7 housing can use the rent checks WE PAY FOR to make mortgage payments.   Still Federal law passed under Clinton by none other than the current mafia backed gov of NY.  Mario Jr.  (There use to be a couple of whistleblowers out there on Andy's scam but they are pushing up daisies now.) 

The Fed's loved it when the mob ran section 7 housing...enforcement but then they evolved the idea of rolling section 7's into "homes" ie tax milking stalls.   The NY/NJ mob flocked to Vegas to throw-up housing. 

Wed, 04/30/2014 - 00:24 | 4710879 bjfish
bjfish's picture

That should be the modern revolution war cry - Everyone Stop Paying Your Mortgage All at Once - and Demand our 'bail-out' through force of numbers.

 

We don't have the time to gather in the streets like the Egyptians.

Wed, 04/30/2014 - 11:41 | 4712270 Ban KKiller
Ban KKiller's picture

That is what I did. Still in my home as bank/plaintiff has no standing to foreclose. Why? Broken chain of title. AND the judges get it!

Wed, 04/30/2014 - 02:45 | 4711028 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

I wonder how many of those 7M foreclosures is still "paying in" to an MBS, now owned by the Fed, that the Fed intends to A. sell (LOL), or B. (double LOL) hold until maturity? 

Wed, 04/30/2014 - 10:43 | 4711961 waterhorse
waterhorse's picture

Yeah, lol, and never mind most of the MBS are actually "nothing-backed" securities, due to the intentional control-fraud design features.

Tue, 04/29/2014 - 23:53 | 4710837 earl swagger
earl swagger's picture

What is the performance standard for paying rent ?

The rent is due, right?

Tue, 04/29/2014 - 23:21 | 4710775 Colonel Klink
Colonel Klink's picture

Fuck the Fed and fuck buying a house until the next market collapse.  It's comin'!

Wed, 04/30/2014 - 02:55 | 4711033 The Navigator
The Navigator's picture

Mon Colonel, you are quite right - the next market collapse in RE is coming soon.

Prices have almost reached the 2006 BUBBLE prices - in my area (SoCalUSSA), we are about at 90-95% of 2006 bubble prices.

But answer me this - in almost 8 years, has ANYONES income gone up enough to be able to afford these ridiculous (bubble) prices?

Sure, the 1% has but not the working middle class AND these are the ones going out and buying at record level highs.

It's the greater fool theory all over again.

Pay off your mortgage if you are close to doing so, if not, and if you put down 3.5%, ATM your property and STACK AU/AG.

Personally, I play all the angles - I own RE, I own AG AU, am long Pb (especially .22LR), long on exit plans B, C & D.

There are too many bad winds blowing (Iran, Russia/Ukraine, Isreal, China) and just 1 little misfire and the whole thing errupts.

The rule of 3's should help everyone in prepping

3 minutes for air, 3 days for water, 30 days for food - gas mask, stored water or lake/river/desalinization unit, 6 months of stored food.

After that, start stacking.

Wed, 04/30/2014 - 20:39 | 4714376 newworldorder
newworldorder's picture

Dont forget the rule of 4.

Find a rural county with water, farm land, family, and a good Sheriff. If anything survives it will be the rural county as a functioning government entity.

Forget every urban county attached to a large city. There will be nothing left there.

Thu, 05/01/2014 - 03:13 | 4715102 The Navigator
The Navigator's picture

Quite correct.

If you haven't heard about The American Redoubt, google it, see the maps.

Hopefully a (John Galt) rebuilding can start there.

Tue, 04/29/2014 - 22:54 | 4710700 Seasmoke
Seasmoke's picture

Everyone stop paying the mortgages....it needs to happen. 

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