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A mortuary of 7,000,000 foreclosures and counting
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:
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 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 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):
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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I have a friend doing it now.
He confided that he was struggling and worried about continuing to deplete his savings in attempt to stay afloat.
First I showed him how the banksters stole from him and all the rest of us. Then I counseled that if he uses all of his savings and then still sinks he will be in a very bad situation. I recommended that he stop paying his mortgage and put the monthly payments into gold and silver. If his situation changes he can cash in and right things. So he quit paying.
He reports that, 8 months along, he now has much less stress, as when they send him nasty letters, he just ignores them and goes and checks the "piles."
He went looking at rental houses recently and couldn't believe how much cheaper he can live one community over. It will probably take another 6 months to a year for him to be ousted, by which time he will not be broke and destitute, but presumably moved and living elsewhere with "piles" hidden away.
And he has now also made his first "steel and lead" investment. Now, if I can only teach him how to make a guillotine.
The American people's first and foremost weapon is to just quit paying, Let them try to maintain their house of cards ponzi without the stolen labor and wealth of their victims, the American people. They can't. And if one understands how the fraudulent-reserve banks work, they will realize that they stole the money they "loaned" you in the first place.
Then just quit paying, obeying and playing.
The Four Rs
Rejection: Quit paying, quit obeying, quit playing.
Revolution: It is inevitable, so prepare, as they are.
Retribution: Is there really any place for these sociopaths and criminals in a
restored civil and Constitutional society?!
Restoration: Restore the Constitutional republic.
I did. Took some guts but when I found the banksters could not validate the debt why pay? Still in home three years later and the banks are on the run. I asked for sanctions against them as they used forged docs in complaint.
all well and good but largely dependent on what state you live in and what judge hears your case.
most judges are well within the matrix of corporate welfare (donations to being reelected or to their retirement). my judge's eyes simply glazed over and dismissed my arguments about broken chain.
mers and banks have a way of persuading with donero
congrats tho on your success
Everyone is focused on mortgage - rightly BUT what about RE taxes???...
The corrupt politicians in lib states giving away everything to their union coronies which turns your house into a tax mailing stall in the corrupt politician's barn.
And the unions - who stuff ballot boxes and contribute to the biggest promiser du jour get big pensions, obama exempt cadilac healthcare, dental, eye glass plans that are breaking the backs cities, counties and states.
Consider where these insolvent entities will be WHEN the world throws up on the T Bill...interest payments at all levels of these pandering socialist states/counties/cities will soar and so will the costs of living in your Real Estate milking stalls.
ARM's UPJUST UPWARD, TAXES ADJUST UPWARD AND TAKE-HOME PAY DECLINES. THROW AN AGING BABY BOOM IN ROLLED-UP MCMANSIONS THAT HAVE BEEN USED AS ATM's ON THE PILE...BANG. WAIT FOR THE 55-65 YEAR OLDS TO WAKE UP AND DECIDE THEY HAVE TO DOWNSIZE. THE PEAK YEAR OF THE BABYBOOMERS IS 57 THIS YEAR.
MILLIONS WILL BE LOOKING TO DOWNSIZE OVER THE NEXT 5 TO 10 YEARS AS TAXES GO UP AND SUPPLY INCREASES. We are so far from a bottom it is a joke.
Any bets Yellen knows this full well? Taper ends in June July...watch gold then. After all both banksters and politicians hate deflation. So do you think they will stop buying and printing. 2014 is a nexus on that decision. We will see. Until then...I ain't buying anything but Au, Ag, Pb, brass and blued steel.
Half of my $10k property taxes goes to the useless public education system that goes up and up every year. Part of that goes to Newark school budget of $1 billion!
Good luck trying bring down taxes and pensions. It'll never happen because people are too dumb and believe that this education system great for them...
Jersey - great analogy: Real Estate Milking Stall. I dream of the "million man march" only this time a general strike against RE taxes.
You sign up to honor the bankster interest on money created out of thin air (your mortgage loan). You do NOT sign up to be levied arbitrary tax increases in perpetuity.
Pitchforks!!
Upstate NY is a perfect example of out of control property tax. The houses are dirt cheap, from $30K to $100K, and the seller can't give it away due to out of control property tax.
Convince the masses to do it at once? That's the key... I work in Title Insurance. Foreclosure proceedings typically take 2-3 years so you can basically live rent free and the more of a stink you make with legal arguments the longer you can delay the proceeding. I've seen cases take up to 6 years.
I do not recommend anyway do this especially as certain lending institutions hunt for potential foreclosures and then buy them from the lenders who want out of it... wah-lah... the lender you signed up with isn't even the one coming for your house. The little guy stands no chance. Fight it and then use the time arguing to prepare for losing it. That's the only advice I can give. If it looks like you're going to lose try to agree on a deed in lieu of foreclosure with the bank to avoid a large personal judgment that will follow you and also help your credit hit.
No one holds a gun to your head to sign the mortgage agreement. It's a contract. You're telling people to breach their contracts. Why? Dishonor is ok with you SilverIsMoney?
The same folks here who rail against the FSA are downvoting the guy who says honor your word. ???
Living mtg pymt free sounds good but a man's word is his bond. You sign a contract, honor it or give it back and walk. jmho but it is how Dad raised me.
It's a contract.
Enforced by a third party that is partner with the money lenders. Any approved mortgage is a criminal game.
When the bank can not validate the debt why should I pay? I don't. Still in home 3 years later and bank is on the run. I expect them to change plaintiffs. The first attorney firm wants out as I asked for sanctions against them.
I am little guy who can read and write. Case law, research...no problem.
See Romero VS BONY. New Mexico Supreme Court Decision. Awesome!
I agree with you personally, and I act accordingly. However, how many contracts that you are a party to have been unilaterally changed (or abrogated) by the other party? The lawyerly notion that a contract is merely the basis for further negotiation has completely taken over America.
SIV, I notice more and more renters are telling Landlords where to go in my area. Eviction is backed up quite a bit but I do not know the exact figures. The smarter renters ask for the Landlord for all the paperwork and threaten defammation actions if the Landlord threatens suit or turning the renter over to the collection agency.
Also, if the Landlord cannot produce the proper proof/documents, the renter can threaten a "False Claims" action, both federal and State.
Lanlord business is not easy. Ask me; I tried it and it sucks!
"Lanlord (sic) business is not easy."
Most of the troubles of so-called "landlords" these days happen because these individuals have little or no equity in the homes they are renting to others. If you are nearly as financially insecure as your tenants, you are not really a landlord at all. You are another muppet who thinks he's clever.
I smell a business opportunity here. Eviction services for hire. Paid goons (ex-football jocks with no degrees) to run the deadbeats out for you; strictly cash, no contracts, no phone records, no traceability, gaurenteed. Our word is our bond, and we'll swear under oath we don't know nuthin.
Dirty jobs r a path to wealth.
Arguing over semantics is fun.
If the so-called 'landlord' fails to make his mortgage payment (or worse, his TAX payment), I wonder who comes and takes his so-called 'property' and evicts HIM.
LORDS they are, and everyone else is a SERF, you know. There IS NO LANDLORD except the bank and the tax collector. The GOAL is the acheivement of one of the ten planks of the Communist manifesto... the abolition of the ownership of 'private' property. DAMN, it's SO OBVIOUS now!
DrHB,
I popped on to say your blog was the first financial blog I hooked up with way back when my head was up my ass in 2008. I went from your blog to Patrick.net and then I found ZH where I tried to keep up ever since. So, a big fat thank you.
<aside>that makes you a gateway drug.</aside>
I bought in 2007. I divorced in 2010. And in 2013 I stopped paying the mortgage (I live in AK now and you can't blast my ass out of here with dynamite). Off to foreclosure we went. I FINALLY got the property sold/auctioned (I was going to finance my own short sale - ex wife torpedoed those plans - fucking disaster). I am now waiting on Fannie to figure out what I owe them (2 months now - they still don't know). I got lawyers in the wings. I want my repayment plan and I am out.
I buy 10 year + old cars (both good deals), I pay with cash for everything (still put certain purcahses on card due to lack of fat cash savings, but recently had a zero balance across the board), and think labor liquidity (i.e. pack my shit and move for a job) is greater than home ownership.
For what it is worth, I am deleveraging and look forward to never borrowing again. Money as debt may very well have a dim future. If you can get a handle on how money habits are changing with those who are EMPLOYED (professional engineer here), but got SCREWED in this fiasco due to lack of financial education (ignorant, not stupid) then you sir will have a window into the future. Please submit to the ZH Tylers, because I can barely keep up with a few blogs with my very busy life (working + school).
Regards,
Cooter
CrazyCooter
My feelings exactly. I had to look back-we joined ZH 1 week apart. ZH-the only sanity in a world of madness.
The producers of this world, unlike the parasites and financial criminals, all need to step back, slow down, do less and live with less. Most of us are now aware it is our skills and efforts which support the current system; everyone else lives off the value added from your production. So the less you do/produce, the quicker this morally and financiallly bankrupt system collapses. I see it every day- more useless, costly government and fewer people/businesses to carry the impossible load.
The free riders are now eating themselves alive- raising prices via the Fed and spending the inflation. Nothing more of value has been created but the appearance is being spent. Real capital isn't money; money is the result of it.
You, sir, have my respect. Good luck in choosing a new partner. The scars will heal and while you can't turn the clock back, you can rewind it.
K
Cooter, You now have wisdom and knowledge that are priceless.
Maverick
Banks in the State of Maryland are just beginning to foreclose. They voluntarily placed a moratorium on foreclosures for several years. But no more. This year they begin foreclosing on all the folks who have been living rent free for years.
ES or WS?
Does buying today make sense?
Fck Yeah! There has NEVER been a better time to buy!
Berry isn't the only one suffering from homebuyer's remorse. One out of four homeowners admit they wouldn’t buy their home again if they had the chance, according to a recent survey by real estate brokerage Redfin.
The biggest factor contributing to homebuyers’ remorse appeared to be affordability. Nearly one-third of homeowners who reported a household income of less than $100,000 said they were unhappy with their decision. In contrast, just 14% of homeowners who earned more than $100,000 said they were unhappy, according to the survey.
http://finance.yahoo.com/news/homeowners-regrets-buying-a-house-redfin-1...
Yup. Help the fat cat out, buy. Keep the ponzi perpectuated.
"the Fed is almighty and can stop a speeding train or turn water into wine? "
Yes, they can de-rail a train...and they have used additives in the water !
Almighty, they think.
What the author seems to ignore is that people generally want a place to call home; and they want to own it if they can. I know, you never really 'own' it because of taxes, but you do come really close. We're a few years away from having our mortgage paid off and heading into our mid-60's, it is a good feeling. It will coincide with retirement.
I wanted a place called home ... I bought it, paid it off ... now the County keeps either raising the valuation or the millage rate .. the GD insurance keeps going up .... I have not bee able to increase what I charge for my services since 2007 ... just replaced the 15 year old roof $7.5k ... repairs on the 15 year old AC $3.5k ... owning is a suckers game.
dontgoforit
Good sentiments. But when did you buy your home and what was your income relative to the price of the house? It is the Fed's loose money policy that has screwed up price discovery and today prices could go up/down/sideways and incomes are stagnant or declining for most of the country.
Hey, Kayman - We sold the 'big house' in 2007 just before things started to get hairy here. We bought 3 months later (kids are grown/gone) - a much smaller place, 4.25%, 30-yr. The price of this place about 40% of the last one. Income is another story. When we had the house on the golf course, I was making more than 3 times what I make now. In my late 50's at the time it was hard to find a job of similar renumeration, so I 'settled' for something with great perks, time-off and a pension at 10. We were lucky. I'm not bitter so much as incredulous. What we see happening is disheartening. Our leadership is non-existent and we are paying a heavy price for it - in a number of ways.
The stock market might seem overvalued, but housing is far more so in comparison. Too many ignorant people out there claiming that stocks are just abstractions, rather than actual ownership interests in businesses.
My cunt sister in law bought a house in 2008 she couldnt afford.
She stopped paying the mortgage in 2009.
She still has not been kicked out of her house.
I aint buying a house when they reward poor decison makers.
I just will not do it !!!
So FUCK YOU FEDERAL RESERVE !!!
With respect, but the banksters stole people's deposits and then pyramided counterfeit "loan" currency, inflation, on top of that so as to enable them to "loan" your sister-in-law funds for the home.
That she has not paid on it in years is AWESOME. More power to her.
"If I rob Peter to buy a press to print counterfeit money on that I then loan to Paul, and Paul doesn't pay me back, who gets hurt?! Not me, and not Paul."
"cunt sister in law"
Wow
You sound jealous, maybe you should deal with that brother.
u know her or something?
why act like a little biatch?
bitch.
I have a friend in Miami that has not made a payment since 2008....still living there rent free six freaking years and not a peep from the bank after she said show me the title.
They keep trying to tell us there is a housing shortage. LOL millions of homes in a backlogged never never land.
Also the sitting President or Congress has not done anything with FRE or FNM govt recievership for going on two terms. And 95% of all new mortgages are still being crammed into them.
Housing recovery my ARSE.
My very own son took a duplex that I gave the equity to him to take the paments over, moved out and is renting the POS to some lady who gets section 8 housing for 1400 a month.
He takes that money plus his VA education money and enrolled in an ART degree. Is sitting his lazy arse in college painting freakin pictures. At least he is not in my garage and is taking care of himself. This country is screwed up on so many levels it is beyond repair.
Art degree's are highly valued in Computer Design field. If he graduates with a degree, he could easily make $125,000.
Yes.
Over the course of his lifetime.
Unless, of course, he wins the .gov employment lottery.