Ït's ãll ábout housing local, state & national.

[texasredneck]

This message has been deleted.

[itstippy]

When we say or read the term "housing recovery" we have to be sure what is meant. There are multiple definitions floating around:

1) To economists "housing recovery" means, "Prices and sales volumes stop falling, stabilize, and begin to slowly creep up at normal and sustainable rates. Delinquency rates drop to historical levels. The free fall ends. We finally establish plausible values on all these freaky Mortgage Backed Securities created during the bubble".

2) To builders and developers "housing recovery" means, "We once again make a decent living building new houses and renovating existing houses. We put our equipment and employees back to work. Our business returns to profitability."

3) To real estate agents and mortgage brokers "housing recovery" means, "Sales volumes pick up and we again make decent livings arranging the sales and financing of houses."

4) To millions of homeowners "housing recovery" means, "We are made whole again and the house turns out to be a profitable investment after all."

The Federal government has pumped jaw-dropping piles of cash into the financial system trying to achieve recovery definition #1. They really, really want to show progress toward attaining that goal. Definitions #2, #3, and #4 would be nice, but they are NOT the focus of the government's efforts. #1 is. It's a Herculean effort; we've never seen one like it. The outcome is uncertain and the unintended consequences of all this infusion of cash are yet to be seen. Time will tell.

[vl]

There is a huge problem with how we view housing. A home in the suburbs with a lawn, yard and many rooms requires-- constant care and upkeep. These collective costs no longer align with our lifestyles. This is why landscaping businesses are so common. Also, what created the premise for tract housing (the Industrial Age) is all screwed up. Lastly, the Housing Boom was more than 50 years ago. While desirable homes were reconstituted through the years, many were not and either succumbed to blight or are in prestigious areas where they were kept up by laborers not invested in as a homestead. All of these conditions and our national failure to recognize the compromise of depending on automobiles and roads for logistics and transport instead of transit lines and affordable urban living with complete amenities-- leads us here.

Forget about a credit recovery. As Fannie and Freddie are wound down, banks and Wall Street will attempt to control the whole sector. Banks created Subprime. Subprime is not Remedy Lending. The difference is-- Subprime charges a higher and riskier rate for blemished credit. It generally creates perpetually deteriorated conditions and increases the likelihood of more and costlier problems. Remedy Lending- babysits chronic or circumstantial issues through a series of corrective actions based on the psychology of the Risk, not the blemishes. If you were given a remedy loan prior to Subprime, you explained your situation and your credit was designed to bring you back to good graces. You paid penalties if you faltered, while the credit itself was so well assembled that it protected the investor from failure.
Banks have no clue how to do any of this and are not structured for doing it. LOOK at how they handled the debacle period. Now understand... of Americans who would have the need to be borrowers--- at least 50% fall below Agency guidelines. FHA and VA will be used as the new sewer for blemished credit until they are destroyed by toxic bank use.
There is a way to recover all of us. It has nothing to do with banks or Wall Street. If given the chance to compete with banks, Wall Street would abandon banks for this better system. Once the hybrid credit system was initiated, banks would attempt to compete using Federal Reserve discounts to underscore non-bank rates. They would create a servicing nightmare they could not recover from.

I'm not crazy or a fanatic. We have NO MORE USE for banks. They should be shuttered in favor of complete financial segregation. If we eliminate the GSE's and banks overtake the entire credit industry, we will see temporary relief and then a deeper problem AGAIN before the end of 2012. Using my alternative system, we would have steady recovery consistent with jobs and household income recovery.

Which would you favor?

[itstippy]

Traditional banks didn't create subprime, or adjustable rate, or 80-20, or any of the myriad of other weirdo "alternative" mortgage products. Securitization created that crap, and the financial behemoths that now call themselves banks created the securitization process. Complete with "credit default swaps" and all the other hopeless "financial innovations".

JP Morgan (the man, not the "bank") was a true banker. He would never have participated in any of that nonsense. He would never have let a borrower over-extend his credit. There's a valid reason for having traditional banks and bankers. They are to assess risk, and steer available capital to where it will make profitable return with minimum of risk. Bring back the core mission of banks and we'll be OK.

The GSE's were and are an abomination. I have no problem with the Federal Government promoting home ownership via cash grants for qualified first-time starter-home buyers, or offering low-cost mortgage insurance for qualified first-time starter-home buyers, or some other transparent means. Play a role similar to the VA loans the vets got after WW2.

The GSE's in their present form need to GO. Why in Hades are they providing financing for people to purchase mid- and high- level homes? Bankrolling people to move up the "real estate ladder" into more expensive homes? That has NOTHING to do with "increasing the level of American home ownership". Those folks are ALREADY home owners. The GSE's were simply increasing the level of asinine speculation in real estate by Americans who didn't know any better and were greedy and thought they'd get rich by buying an expensive house on credit. Aargh!

[neohguy]

This is what you should NOT do if you have an underwater mortgage:
www.wkyc.com/news/regional/akron_article.aspx?storyid=175341
AKRON -- Raymond Stewart, 38, was sentenced to eight years in prison Tuesday for deliberately burning down his house on Augusta Lane in Sagamore Hills on March 30, 2009.


Summit County Common Pleas Judge Thomas Parker found him guilty of aggravated arson and insurance fraud in January. He was facing up to 15 years in prison.

Stewart set his own home on fire, a house he lived in with his two children, then six and eight years old. He bought the home in 2006 but had been in foreclosure once and had refinanced the mortgage four times.

Each time he refinanced, he increased the amount he owed on the principal. On the day of the fire, Stewart left with the kids and set it on fire, returning several times to check on its progress, the prosecutor said.

Parker also ordered Stewart to pay more than $68,000.00 in restitution to AllState Insurance company, and $2,645.76 to the state fire marshal's office for the cost of its investigation.

[kman]

At least another decade before real estate does a turn around. Mr. Buffett has already divested himself from Lowes and Home Depot...long term investments are his thing. That should say something.

[texasredneck]

This message has been deleted.

[scaredshirtless]

No bottom in 2011 either.

Not there yet. Too much:

1) Properties still in distress.
2) Properties in arrears - seriously arrears even.
3) Shadow inventory.
4) Mortgage activity dropping through the floor - due to a sudden question of mortgage title ownership.
5) Continued high unemployment.
6) Under water homeowners - still out there!
7) Homeowners allowed to live payment free - for years?

8) How about the organic seller? You know - the person who just wanted to sell for whatever reason? Most of those are on the sidelines - have been for quite awhile now. Gotta be a pool of those.

Whew.

That's an awful lot of selling interest for the foreseeable future.

Prices have further to fall and plenty of time yet to do it.

However - the government continues to try to spur new home building and cheers at every miniscule increase. (Like we need more housing inventory - brilliant government thinking. Seems idiotic to me.)

No bottom yet. But you do see it working its way up the asset classes to ever pricier housing. Thus the increase in median sales price - not to mention its migration to new neighborhoods.. Cities... States... Just shows we've migrated to more and more expensive housing. Don't get fooled on any story of price recovery. Its just the bust moving around inside our housing inventory. Will be for a while yet.

Cinch that saddle tight. Keep the spurs handy. Pay attention.

[neohguy]

Patstab, have you run into any issues that require you to sign an agreement with the seller stating that you won't rent or sell the home for a year. I have with Fanny and HUD single family properties.
The idea behind the policy is to keep owner occupied neighborhoods intact. The down side, at least presently, is that it drives down property values since the brokers want cash sales.

[vl]

Enjoy those rentals, Pat, but a better move would be to rent-to-own them and sell them on Land Contract to the renter who pays consistently. As we watch this budget dialog unfold, guess wisely that the name of the game is revenues and those don't come from the wealthy. I'm fairly confident that non-owner occupied housing TAXES will go wildly upward. A sale on contract sidesteps that non-owner component and still yields the monthly income. Knowing that banks are manipulating the credit industry, there is little chance for refinance without a) job creation at b) family-sustaining wages and c) seasoning in excess of a year or two. I can tell you that banks and other slumlords who own hundreds of properties will be getting it stuck to them by the replacement administration to this one, so, know your time line.

[usaone]

I guess you mean 2016 because odds are..about 80% that we will have Obama and crew 4 more years.

[texasredneck]

This message has been deleted.

[nicomachus]

It varies from state to state. According my very quick Google search, it looks like Texas recently passed one of the stricter laws against it.

[texasredneck]

This message has been deleted.

[frankq]

On the filp side, new construction is up 14%, mostly rental. In addition, rents are up over 5% this year. As that trend continues, home buying will make more sense from a monthly expense point of view as rent becomes more costly than a mortgage payment. The larger demand on available leases virtually guarantees this at some point. A home is becoming just that, as opposed to a perceived 401K. This is healthy. The large homebuilders have rehab arms that are accounting for increasing share of total company business that are rehabing and recommissioning forclosed homes. I have no doubt that you will soon see advertisements for these "rebranded" homes soon. For those with families, there is no substitute for the space and freedom of single family ownership. Also, there will always be a large segment of buyers that will only build new, so the inventory of existing homes means nothing to them. Home construction recovery will probably never be what it was, and probably shouldn't given the financing "tools" previously employed, but I'm betting that we've bottomed and an upswing will begin in 2012.

[Vegas Realtor]

You have to be careful with a lease to own or land contract.

I can not speak for all states but in Nevada, a non judicial foreclosure state you can have a bad tenant removed in about a month but if they have a lease option it will take you more than 3 times as long if you do everything correctly.

If you were in a judicial foreclosure state it could break you before you remove a bad tenant with an option to buy lease.

The main danger being that the courts can rule that a tenant has an ownership interest if he has option to buy in his lease

[Virgil Showlion]

Just in case anybody wonders why the CPI is in "la la land" as far as the price of anything-but-housing:

Case Shiller Confirms Housing Double Dip Accelerated, 20-City Composite At Lowest Since June 2009

As of December, so almost three months ago, the housing double dip was getting increasingly worse. This was confirmed by the latest Case Shiller data, according to which the 10- and 20-City Composites posted annual rates of decline of 1.2% and 2.4%, respectively. The 20 City Composite printed at 142.16, the lowest since June 2009 when it was 141.75. ...

[neohguy]

Most people don't know what their house is worth unless they are trying to sell it. Most of them think they can sell it for 40% more than what they would actually get. I've been watching the following home for about a year. It's located in a good Akron neighborhood and last sold for $117,500 in 2001. It was listed as a short sale this past summer for 80k. It recently was foreclosed and the asking price is $54,900. It's in move in condition and could probably be bought for 49k cash. This one will move quick but others like it are being listed every day (literally) in this zip.

www.trulia.com/property/3043359419-2652-Graham-Ave-Akron-OH-44312

[usaone]

Housing will turn in March.

[neohguy]

Of what year?

[usaone]

Toll Brothers Reports profit.


money.msn.com/market-news/post.aspx?post=a86b1dc0-551f-4d8e-bb44-1c308cf41244


Been buying housing stocks the last few months.

[bimetalaupt]

Feb 23, 2011 9:27:59 GMT -5 usaone said:

Toll Brothers Reports profit.


money.msn.com/market-news/post.aspx?post=a86b1dc0-551f-4d8e-bb44-1c308cf41244


Been buying housing stocks the last few months.

No they did not make money .. this is a rebate from past due taxes.. they lost about $18 million last quarter in operating income.. That is what you need to use for analysis.
Sorry,
Bruce
".Included in the latest quarter's results was a tax benefit of $20.4 million, primarily due to the reversal of previously accrued taxes, penalties and interest, compared with a $16 million tax benefit last year."

[usaone]

Thanks Bruce.

I did not dig deep enough.

Still buying though.

[bimetalaupt]

negative EBITDA = -16.23 Million.. Warring sign .. When things turn it will turn at the high end first.. I was also looking at this in December for those tax sales!!!!

Are you and the Mrs going to join us at the 21 Club!!

[usaone]

I will be in California. Bummer.

I'll have to send over a bottle of wine.

[usaone]

I'm getting in early but it will get crowded quick!

[bimetalaupt]

Feb 23, 2011 10:42:28 GMT -5 usaone said:

I'm getting in early but it will get crowded quick!

Robert Toll is making sure there will be enough stock for all your needs.. He has options at $4.35 a share and selling at 21..

He has sold over half million shares this year and last year you do the math..
Bruce

[usaone]

I have bought some. Toll Brothers has also been buying land again at a good clip.

My opinion....its hard to get a good read on housing during the winter. Especially like the one we are having.

March..April...May will tell us a lot! ;D

No housing tax credit this year.

[lifewasgood]

Existing Home Sales Continue to Strengthen

Sales of existing homes rose 2.7% in January, from 5.22 million in December to 5.36 million. The Briefing.com consensus expected sales of 5.23 million.

Demand for homes has increased for five out of the last six months. Excluding the months influenced by the homebuyer tax credit, demand is at its strongest level since August 2007.

While it is hard to deny that the demand for homes is strengthening, the details still paint a struggling picture for homebuilders.

The problem lies with pricing power.

Sales of new homes have to compete against all existing properties, including distressed homes. In January, distressed properties accounted for 37% of all existing home sales, a 12-month high, and put tremendous negative stress on home prices.

In fact, the number of distressed properties sold in January is being blamed for the 3.7% y/y tumble in median home prices. At only $158,800, the median home price is at its lowest level since April 2002.

New home builders may need to drop the price of their current stock of unsold homes in order to attract prospective buyers or risk being uncompetitive in the marketplace. Since these homes were already built, the costs involved in building the home cannot be altered and the drop in price will lower the builder's potential profit on each sale.

[usaone]

Considering we had the tax break end last year, I dont think 3.7% year over year is that bad at all.