Archive for 2010

Some people ain't no damn good. You're going to meet some of them in today's post. For those of us who didn't participate in the housing bubble, no good deed goes unpunished. I have been the whippin' boy for kool aid intoxicated fools who can't deal with the inconvenient truths I display on a daily basis. I've had that pleasure for years and years. Second best is all we seem to get by playing by the rules. Irresponsible homedebtors get loan modifications, no-interest loans, and principal forgiveness, and we have to pay for it! And the irresponsible get to walk away from their debts with no repercussions, and many don't think they did anything wrong. They're victims of circumstance so they say. Everyone else did it,…[READ MORE]

Every homeowner loves their property. As the foreclosures pile up and homeowners are forced into a life of rentership, many will come to question their love affair with homeownership. Was it really about owning the home, or was it about having their own private ATM machine? Whatever the reason, these properties are a source of pain, and may just want the pain to end. Apartment Rentals Hit Record Highs in 2010, as More Americans Shun Homeownership by CHRISTINE RICCIARDI -- Friday, August 6th, 2010 The National Multi Housing Council (NMHC) reported results of its latest Quarterly Survey of Apartment Market Conditions Friday, stating the industry is on the rise, improving in all four indices surveyed and setting an index average record for…[READ MORE]

When the Clash wrote their smash hit about a relationship on the rocks, they had no idea they would be speaking to the fortunes of millions of homeowners in the aftermath of the housing bubble. The question posed by this song, "Should I Stay or Should I Go?" is on every struggling homeowner's mind. If they go there will be trouble, but if they stay it could be double. With the fate of so many borrowers now in the hands of their lenders, most just want to know, "Should I Stay or Should I Go?" Many Bay Area homeowners in real estate limbo By Sue McAllister and Eve Mitchell Posted: 07/25/2010 12:01:00 AM PDT Updated: 07/25/2010 07:18:28 AM PDT Tens…[READ MORE]

The FHA has to navigate the waters between qualifying enough borrowers to absorb the foreclosure inventory and qualifying too many borrowers who fail to make their payments and end up as foreclosures. If they error to the conservative, house prices fall because demand is curtailed. If they error to the permissive, the government is going to pay for a huge bailout. The FHA stabilized the housing market by providing low-interest and low down payment loans to buyers when private institutions were unable and unwilling to do so. The FHA's market share typically runs from 8%-10% of the market, but it fell to 2% during the housing bubble as asset-backed security (ABS) loans took its market share. In the aftermath of the credit crunch and the withdrawal…[READ MORE]

For someone who writes bearishly about real estate almost daily, it will surprise some to hear me be completely and unabashedly bullish. I am very bullish on Las Vegas. I will put my money down there, and let it ride. Booming Vegas or Real Estate Bust? By Eric Fry -- Aug 3, 2010, 2:03 PM Over the weekend, your California editor jumped the border into Nevada. He took a spur-of-the-moment road trip to Las Vegas with his co-editor, Joel Bowman. During their two-day romp in Sin City, neither editor engaged in any activities that needed to “stay in Vegas.” No drunken debauchery to report…or not report. No big-ticket gambling losses…or small-ticket moral lapses. Just the same old wholesome living with which they…[READ MORE]

Everyone in California loves that Piggy Bank in their house. Most people here are so kool aid intoxicated that they take the free money for granted. It is just another California entitlement. Americans Tap $8.3 Billion in Home Equity, Least in a Decade By Bob Willis - Jul 28, 2010 7:26 AM PDT Americans in the second quarter tapped the smallest amount of home equity in a decade, showing households are focused on repairing tattered finances. No. It shows that households don't have any home equity left and that the housing ATM has been turned off. The writer of this article is implying the lack of mortgage equity withdrawal is a prudent choice of wise financial managers. Do any of you believe that? Owners…[READ MORE]

Government subsidies are spending someone else's hard earned pay. All of us who work are paying for McMansions everywhere through the home-mortgage interest deduction that subsidizes the McMansion owner's loan. It's time we stopped these subsidies, allowed housing prices to fall to their natural market levels, and released trapped capital currently tied up in real estate to more productive uses. We Can't Afford This House Christopher Papagianis and Reihan Salam -- July 20, 2010 Part 2 -- Admittedly, ending the subsidies would probably depress housing prices overall. Since most homebuyers base their purchase decisions on the monthly after-tax cost of housing, reducing the deduction for mortgage interest would mean that the same monthly payment would buy “less house.” For example,…[READ MORE]

Does everyone really need to own a home? Our government, which rarely acts with a single mind, certainly seems to think we all need to own a home. Of course, to accomplish that feat, we have so perverted the meaning of home ownership that people with no equity -- those merely renting money from a bank to occupy property -- are considered homeowners. They aren't. They don't own anything -- except perhaps a loan. As a nation we can't all afford to be homeowners. Some people are not up to the task. It requires the ability to save and to consistently make payments. Home ownership reduces mobility, and some people have careers that require them to move. During the housing bubble, we were selling…[READ MORE]

The Marquee at Park Place: The North Korea Towers: The Beautiful Loser. Every original owner has lost a fortune. Some have realized their losses and given up, and some are still holding on waiting for 20 years when prices come back. Today's featured property transacted for 63% off the peak. That is quite a fall. Was the housing bubble foreseeable? Did buyers like those profiled below simply get caught up in an unusual event, or was their foolishness obvious to anyone willing to examine the costs and benefits to make a rational decision? I take you back to the prime of the housing bubble. In June of 2004 the kool aid was free flowing, people believed prices could only go up, and everyone who bought real estate was…[READ MORE]

Everyone who participated in the Great Housing Bubble wants to go back to the way things were before. That is the problem with Ponzi schemes; once they collapse, you can't rebuild them. Borrowers were only making their debt-service payments by borrowing more money. When faced with the prospect of paying their debts without continued borrowing, Ponzis can't do it. Loan modifications seem like a great idea: borrowers resume making payments and get to keep their houses, and lenders don't have to foreclose and recognize any losses. In other circumstances, this solution may have worked, but with recidivism rates exceeding 50%, these programs are largely a failure. Imagine a residential real estate market where all the owners borrowed using fixed-rate financing with at least 20% down and reasonable debt-to-income ratios and there was limited mortgage equity…[READ MORE]

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