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Month: September 2008 (page 3 of 7)

September 21, 2008

San Diego Housing Industry Outlook For 2009

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I’m going to republish a little forecasting I did, about ten months ago, on Active Rain.  I’ll offer some comments in italics (discussing 2009) and welcome yours in the comments section:

Lenn Harley caught something I said a year ago and found it to be prescient (her word); I wish I were wrong.   The comments in her post suggest that I should talk about the upcoming year; I really don’t want to do that because I don’t have great “visions” for 2008.  Some thoughts about the next 12-18 months:

1- More not less of the foreclosure activity we saw these past 5-6 months will continue through 2008.  A combination of ARM resets, tightened loan guidelines, and affordability problems will affect American homeowners in a  dramatic way.  It’s easy to levy the blame on Greenspan, mortgage originators, Wall Street, or REALTORS but at the end of the day, the “greed” ultimately came from the homeowners.  The American homeowner, aided by some opportunistic market participants, got drunk on the drug of materialism, financed by a world wide capital glut.He partied up the profits while the clock struck twelve.  The foreclosures and continued short sales will be the hangover from the five year orgy we had in the first part of the decade.

Well, duh.  I didn’t need a looking glass to see that.  It now looks like Wall Street was the sugardaddy that financed this party, by borrowing from foreign investors.  They’re paying dearly for it today.  The good news for 2009 is that those drunken sailors from Wall Street (my apologies to beer-sipping Navy veterans) are getting rounded up and placed in rehab programs.  We might see some stability after this most recent intervention.

2- The housing recession will extend to the American economy. Homeowners drew upon home equity like a a high-roller draws chips at the Venetian hotel in Vegas.  Nobody will “stand up” for them with the bookies anymore.  The money spigot is shut and won’t be turned on no matter what the Fed does to interest rates.  Less money means less disposable spending dollars.  While, Virginia, there still is a Santa Claus, he Read more

September 21, 2008

This endless election season may give the real estate market time to self-correct before new legislation can make things worse

by

Suburban Phoenix Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
This endless election season may give the real estate market time to self-correct before new legislation can make things worse

Looking for a silver lining amidst the black clouds of financial news? Here’s one: The fact that we’re in the middle of an election campaign gives us at least a fighting chance of solving our own problems without more government interference in the real estate market.

Everything that’s happened so far has been a triumph for the government approach to what should be free markets. Since the 1930s, the Federal government has been guaranteeing home loans. That made it easier for Americans to buy homes, but it dulled that flinty due diligence we expect in bankers.

Our tax laws favor homeownership with deductions, credits, capital gains exclusions and favorable loan terms. It’s nice to save on taxes, but these incentives induce us to own homes where we might otherwise do something else with our money.

In the recent past, the Federal government decided everyone should own a home, no matter what. After 9/11, the Federal Reserve Bank reduced the cost of money to almost nothing. Hundreds of different arms of government at all levels gave away financial incentives to homeownership. And the U.S. Treasury seemed to hint that American mortgage-backed securities were as safe as houses.

This has turned out to have unhappy consequences. That old-style flinty banker could never conceive of houses losing even 20% of their value, where the Phoenix market has given back twice that much since the market peaked.

Even so, the sky has not fallen. Wealth is not dollars, wealth is the productive power of the American economy. The majority of Americans still have significant equity in their homes, with many of them being owned outright.

What’s happened is that lenders and their financiers and, unfortunately, the American taxpayer, have taken a hit to the wallet. If the Federal government can restrain itself from overreacting, we’ll dig ourselves out in due course. And that’s why we’re blessed by this election: It will be at a least a year before the Feds Read more

September 20, 2008

Outwit. Outplay. Outlast. Hmmm…

by

The Real Estate Group, Virginia Beach and Chesapeake VA

Author website

On my way back from British Columbia this past week, I had time to think. (Truly a dangerous thing…). This is a difficult market. We live in difficult economic times. To win, we (and our businesses) have to be survivors. That brings to my mind THIS:

Yeah, I know a cheap spoof off of the series. Then came an interesting question into my mind. WHO? Who are we supposed to Outwit? Outplay? Outlast? It, in my opinion is not Who. It is what. It is the marketplace.

Sometimes when times are tough our character comes out as we lash out. We let ourselves think that other REALTORS in our market are our competition. We try to Outwit. Outplay and Outlast them. Bloggers do the same. So do SEO folks. (I claim citizenship in all three of those countries…and each is the same iin this regard.)

One of the things that I enjoyed most on my trip to Canada was that everyone was willing to share ideas and help each other. The synergy I found shored up my belief that by finding those that are trustworthy and sharing with them, one can survive difficult times more easily. The arena of ideas in blogging is a big place. So is the real estate marketplace. SEO likewise.

We can Outwit. Outplay. and Outlast the market more easily…if we Wit. Play. and Last. Together.

(Hint: the TOGETHER part is the key…)

September 19, 2008

… Reality Steps into View … No Longer Living Lies in Paradise

by

Realtor, Rabble-Rouser

Author website

You never know when inspiration will strike you … for me – in the strangest places.

In a comment I posted to Greg’s latest post regarding the irony of our President’s administration’s policies and actions regarding the current financial meltdown, I lamented that when I read the news, blogs and watch the news regarding this domino-effect collapse of our financial markets, I get so angry I can’t see straight.

My partner has banned me from CNN, NPR and talk radio.   This is not good for me – I am not one to sit in silence – at least not for long.

Banned from the TV and radio BUT not the PC!

Okay – to avoid driving everyone crazy, I decided to put my mad DJ skillz to work on Blip.fm – frequented by my fellow Twitterers.  Mindless entertainment – for me an opportunity not to sit in silence.   I love the fact that I can create my own playlist of favorite songs – my own virtual radio station.  Why can’t I download this list directly to my iPod?

Twitter has opened my eyes to so many new tools and sites – time vacuum is the technical classification for toys ..er tools like Blip.fm.

Anyway – in an attempt to clear my mind of the thoughts of politics and dreams lost while living under a sham, socially conservative, laissez-faire regime masked as a wholesale broker, casting a blind eye while stuffing the pockets of special interest, I decided to search for happy, uplifting songs written and sung by my favorite artists – armed with a double single malt scotch on the rocks parked next to the mouse.

My music taste is varied to say the least – open and non-judgmental – truly all inclusive really.  From good ol’ country to techno-80s – classical to jazz.  I mean – come on – how can you not like a song with words like “… I can’t get no satisfaction and my tractor don’t get no traction?”

Okay – maybe it’s just me.

** searching for happy and uplifting songs **

So – I come across a song titled “Fairy Tales” – sung by one Read more

September 19, 2008

Mortgage Market Week in Review

by

Mortgage Officer

Author website

I’ve got to tell you, I’d love to be able to write one of my Friday updates and tell you about some good news or tell you, “You know, the week was very non-eventful and everything just flowed on quite smoothly.”      That certainly didn’t happen this week!    To attempt to bring/keep you up to speed on what’s going on in the mortgage market, I’m going to first attempt to tell you a bit about what has happened this week, then do a little question and answer session (I know, kind of scary when I answer my own questions!) and end up with some thoughts about what it means and how things look going from here.

So, what happened this week?   Well, frankly, the financial systems of the world almost had a total meltdown.   Let me explain.   There’s essentially two “main parts” to the financial markets.   There’s the equity side (the stock markets) and the debt side (bonds, loans, mortgages, Fed Funds, and all other types of borrowings).   The equity portion of the markets got hammered, but it wasn’t, with the exception of a few firms, a total meltdown.    On the debt side, it really was very close to a nuclear reactor meltdown.   I could go on and on with details of how the Fed Funds rate (supposed to be 2.0%) jumped to 6.0%.   I could tell you how some treasury bonds were selling for less than what they were worth (meaning someone who bought them was guaranteed to lose money.   I could tell you how there were auctions for certain financial instruments and no one showed up (AT ANY PRICE.)   I could tell you the details about how AIG got basically an $85,000,000,000 margin call and the only way they could avoid defaulting on it and bringing down the entire financial markets was by giving 80% of the firm to the government and paying over 12% interest on the money. AIG is basically paying credit card rates!   Let’s put it this way, I’ve had people ask me, “Was it really that bad out there?”   Short answer, yes, it really was that Read more

September 19, 2008

Alex, I’ll Take “Terrifying” for $1000

by

Real Estate Renaissance Man

Author website

Even with all the financial failure that surrounds us, I still find myself loathe to accept any type of government intervention.  We throw around comments like “too big to fail” but rarely examine the end game.  Greg Swann recently reposted a very intelligent treatise on something he likes to call Rotarian Socialism and how each “fix” only begets a greater problem down the road.  As a matter of fact, Mr. Swann and I share a healthy fear of government and the implied force of violence that backstops all regulations and laws.

Earlier this week I followed a story out of Spokane, WA.  It centers around a Mr. Kevin Coe, convicted rapist and suspected serial rapist.  For the relevant details and background on this story click here.  Mr. Coe, however, is not the scary part of this story:

Coe has completed his sentence of 25 years in prison, but he is not getting out of jail yet.  Starting tomorrow, Coe faces a civil trial as the state tries to keep him locked up indefinitely as a violent sexual predator.

“We think he’s mentally ill and dangerous,” said Todd Bowers of the state Attorney General’s Office.

In 1990, Washington became the first state to create a program to keep behind bars people determined to be at risk of committing more sex crimes even after they have completed their sentences. A special facility near Tacoma holds about 300 of them, including Coe, whose sentence was completed in 2006.

A person is convicted of a crime and sentenced.  He never allocutes; he maintains his innocence throughout (despite the government’s repeated attempts at blackmail offered in the form of early parole) and he serves his FULL TERM.  At which time the government continues to keep him locked up; found guilty by a jury of legislators, of having the potential to commit another crime.

The state reserves the power to take away your property, your liberty and your very life.  They enforce this power at the tip of a gun.  All laws, all regulations (and, apparently now, all judgment on potential) is maintained by the government, ultimately, on penalty of death.  The abrogation Read more

September 19, 2008

Will The Democrats Endorse Hank Paulson’s Mortgage Bailout Plan?

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

This Presidential election campaign is exciting to watch.  Team Obama benefits from the continued free fall on Wall Street.  Sean Purcell reminds us that folks on that side of the aisle like to say “I’m from the government, we’re here to help you” yet the other side is the one proposing massive government intervention by purchasing defaulted mortgage loans from troubled banks.

This is a rework of the RTC plan.  I speculated that it might happen, after reading this article, on Wednesday:

There is something we can do to resolve the problem. We should move decisively to create a new, temporary resolution mechanism. There are precedents — such as the Resolution Trust Corporation of the late 1980s and early 1990s, as well as the Home Owners Loan Corporation of the 1930s. This new governmental body would be able to buy up the troubled paper at fair market values, where possible keeping people in their homes and businesses operating. Like the RTC, this mechanism should have a limited life and be run by nonpartisan professional management.

Sounds like a plausible emergency stabilization plan, right?  Will Congress fast-track this through or will we see Nancy Pelosi go against what Congressman Frank believes, and start saying that the government should not be interfering in financial markets?

Disarray favors Obama.  Stabilization favors Mc Cain.  Will Congress do everything they can to delay this emergency plan until after the election.  After all, they are the government; they’re here to help (if you vote for them).

Point of Disclosure:  In all fairness, Barack Obama conditionally endorsed the Paulson Plan this morning.  The question is , “Can he get Pelosi to play along?”

September 19, 2008

How Wall Street’s Meltdown Helps Main Street’s Housing

by

Real Estate Renaissance Man

Author website

Just for fun, let’s imagine a possible silver lining to the complete melt down on Wall Street.  In this scenario, the next big shoe to drop will be access to consumer debt.  No one is going to extend car loans, credit card debt, retail debt and so on.  But this may not be all bad for our industry.

Imagine John & Mary Homeowner talking about their day.  John says gas prices are up and his long commute is killing them.  They need to buy a different car.  “But no one is lending money for new cars,” Mary replies.  John decides that if he can not have a better ride, he will have a better destination.  “Let’s add on a nice deck for me to enjoy after my long commute.”  Mary smiles pleasantly and reminds John that no one will extend an equity line for home improvement.  Exasperated, John suggests they just buy a jacuzzi and settle for some easy relaxation.  But Mary points out that no store is offering credit, so large purchases are largely impossible.

What do you suppose John and Mary do?  What about next Sunday, out for a drive, when they see a nicer home, closer to work, with more square footage – and they realize they can own it for the same payments they are making now.  What happens when the only money available is purchase money? Thanks to Fannie & Freddie (and FHA, VA) home loans will be plentiful while every other kind of debt will disappear for a while.

Supply and demand… the meltdown might be just what we needed.

September 18, 2008

Nice going: Richard Nixon gave us wage and price controls, George Herbert Walker Bush brought us the Americans with Disabilities Act and George Walker Bush has unleashed unrepentant Fascism upon America

by

Suburban Phoenix Real Estate Broker

Author website

Matthew Yglesias:

Everyone in the policy community seems semi-paralyzed by the sheer scale of recent news and the volume of demands for basic explanations of what, exactly, is happening. But looking a bit past all that, isn’t there an enormous progressive opportunity here?

In November, there’s going to be an election. And in January, there’ll be a new President. And in the interim, progressive groups will probably come up with a lot of “ten ways to make everything awesome” proposals. And it’ll take 41 conservative senators to filibuster them all, and so they’ll all be filibustered. But if the government directly controls major financial institutions, that would give the new administration extraordinary leverage over the national economy. Suppose the new CEO of AIG decided he didn’t want to insure assets of companies whose executives make unseemly multiples of the national median income? There are all kinds of crazy things you could do. And of course not all of them would be good ideas. But some of them would! And the smart folks on our side need to be figuring out which ones they are. It seems doubtful to me that a progressive administration would ever be able to get away with this much nationalizing of everything, but what’s done is done and I think it creates a real opportunity for “socially conscious insurance underwriting” or whatever you care to call it.

September 18, 2008

Like Drunks In A Singles Bar, Right Before Closing Time…

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

banks and securities firms look to “hook-up” with each other:

Morgan Stanley slumped more than 46 percent in early trading as investors fretted about its ability to quickly find a buyer or cash infusion from a foreign investor. Rival Goldman Sachs Group Inc. skidded 25 percent.

Morgan Stanley shares rallied to close up about 4 percent while Goldman Sach’s stock was lower by almost 6 percent. And Washington Mutual Inc. shares soared more than 48 percent.

The next hangover is gonna be even worse…cuz when the lights come on, we’re all gonna be ugly.

September 18, 2008

Alex, I’ll Take “Hypocrisy” for $800

by

Real Estate Renaissance Man

Author website

Numerous stories in the press the past two days regarding the government bailout of AIG as well as the various financial sector failures.  There were many talking heads and an even greater number of vacuous comments.  But one quote stood out among all others.  In relation to the AIG bailout, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee said:

This is one more affirmation that the lack of regulation has caused serious problems. That the private market screwed itself up and they need the government to come help them unscrew it.

Thank God for the Nanny State.  Big-daddy government is going to ride in and “unscrew” all the problems arising from our lack of responsibility.  This would be the same government, I might add, that bankrupted Social Security with criminal accounting practices, finds 44,000 pages of tax code reasonable, considers limiting their spending to their income irresponsible fiscal management, thinks nothing of paying $600 for toilet seats and bases most of its really, really important personnel decisions – not on talent or ability – but rather a thorough investigation into a person’s opinions on abortion!

Hypocrisy, thy name is government.

September 18, 2008

Pressing news from the world at large: We will survive

by

Suburban Phoenix Real Estate Broker

Author website

One:

If we go back to 20 percent down payments, the market will be more stable. I’m sure that in a free market we would see 20 percent down payments. Barney Frank is the only person I can think of who still wants to lend with little or no money down. He’s welcome to do it, but I dare him to use his own money instead of ours. –Arnold Kling, EconLog, via Cafe Hayek

Two, Donald Luskin at Poor and Stupid:

I’m quoted extensively in Debra Saunders’ column in today’s San Francisco Examiner.

On the campaign trail Wednesday, Obama bemoaned “the most serious financial crisis in generations.” He said the exact same words the day before…

“The most serious financial crisis in generations?”

Donald Luskin, a chief investment officer with the Menlo Park investment research firm TrendMacrolytics and an economic adviser to McCain – who tells me he has never talked to McCain – remarked that if Obama “had a little bit more experience,” he would “put these things in more context.” Luskin has lived through five or six recessions, and “this ain’t one.”

It isn’t a recession because the U.S. economy has grown in both of the last two quarters. Read: It is not receding. And while Luskin sees the unemployment rate as “a little high,” it is “not as high as it typically is in a recession.” Yes, Luskin is concerned about inflation, now at 5.4 percent. The drop in oil prices may help…

Luskin questioned what has happened to politics, when a candidate “must pretend this is a recession or you’re seen as hard-hearted.” And: “What does it say when we can’t be nuanced? And we can’t say, ‘Look, we’re in a little bit of a slowdown, but the fundamentals are strong’?”

The answer, of course, is that Democrats can’t win without trashing the economy. As Luskin pointed out in a piece in Sunday’s Washington Post, in Obama’s famed anti-Iraq war speech back in 2002, the then-Illinois state senator suggested the war was waged “to distract us from corporate scandals and a stock market that has just gone through the worst month since the Great Read more

September 18, 2008

I’m off to see the wizards, the wonderful wizards of blogs

by

Rust Belt Realtor

Author website

Oz is calling. My aversion to conferences has been pushed aside, and in the middle of the night I’ll be boarding a plane for Blog World in Vegas– possible only with the help of Dramamine and Pepto Bismol. It means that Friday morning I will land in Las Vegas loopy and stoopid, with drool stains on my shirt, but I was assured that I’d fit in just fine.

Eric Blackwell says that relationships are at the heart of these things, so I’m embracing my inner warm and fuzzy person and plan on saying Howdy to quite a few RE.net peeps that I’ve never met. Well worth the trip. At Blog World there will be plenty of self-proclaimed gurus with which I can mix and mingle. Me, being the eternal optimistic cynic, am wary of anyone who willingly takes on the title of Social Media Guru, but I understand that it’s Blog World, so I’m bound to run into a few.

BloodhoundBlog is the house: Dan Green is speaking, Brad Coy is speaking, Bawld Guy is marking territory on a dance floor somewhere. There is a gross of squirt guns winging their way to a Vegas pool party and, as if that wasn’t enough, someone has promised to wear a kilt and pull a mooning, a la Braveheart. See what you miss if you aren’t Twittering?

That’s fun! But still. The not so warm and fuzzy part of my brain keeps reminding me that I paid good money for this and I’m taking time away from income producing work. Friday is REBlogWorld, and Saturday and Sunday is the BlogWorld conference. I’m going to go and soak up the atmosphere, the information, the guruliciousness and hopefully learn a couple hundred dollars worth of bloggy goodness.

How do I do that? I’m suspending my disbelief, but I’m clueless. If you were going to BlogWorld, what would be the one don’t miss ticket for you? What would you want to see and why? I’m going, I want to learn, but I’ve not yet made any plans to hear anything specific. I was thinking of going where the wind takes me, but Read more

September 17, 2008

Project Bloodhound – Advice Needed

by

Mortgage Officer

Author website

I figured we haven’t had a Project Bloodhound post in a while and I can use some advice, so I thought I’d throw it up for discussion. Here’s the scenario first and then, after that, I’ll throw out my questions:

I’ve been asked to give a presentation to the board of Directors for the local board of Realtors next week Tuesday on the state of the mortgage market. The person who asked me is one of the owners of a local real estate firm and he’s been reading my Mortgage Market Week in Review for a long time. Without sounding like I’m patting myself on the back, I would have no problem putting together a 20 to 30 minute presentation on what’s happening in the mortgage market. But Greg Swan has taught me that that’s not good enough.

Using Greg’s analogy, I want to set the bar so high that my competition can’t compete. I want to set the bar so high that all of the members of the board (or at least most of them) go back to their firms and tells their agents that they need to at least talk to that “Vanderwell guy” because he’s where it’s at.

So, here are my questions (for those of you who are real estate agents, especially):
1. If you were going to be at the presentation what would you like to hear?
2. Is there anything that a mortgage lender can say about today’s market that will help you do your job better?
3. What else should I do or attempt to do in the 30 minutes that I’ll have?
4. What should I avoid doing?  I’ve already learned (or relearned from Greg and the Gang) that I need to make something  like this about the industry and my knowledge of it, not about me or my bank.   So, if you were reading this and thinking that, we’re on the same page.

Thank you in advance for being willing to share the collective wisdom of the Bloodhound Gang. I’ll do another post and report back in afterwards as Read more

September 17, 2008

Bloodhound Blog Radio Hosts Matthew Padilla

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Have you been listening to Mortgage Mondays on Bloodhound Blog Radio?  Each Monday afternoon, at 4PM, we invite  REALTORs to listen to and participate in our 40-60 minute “radio broadcast”.

Our guest this Monday (September 22) is Matt Padilla.  Matt is a regular business and finance columnist with OC Register.  He co-authored a book about the mortgage crisis, Chain of Blame- How Wall Street Caused the Mortgage Crisis.  Needless to say, Matt’s appearance on Radio Mortgage is timely.

California REALTORs do NOT want to miss this broadcast.  Matt’s knowledge and experience is unparalleled in the media.  He’s interviewed Angelo Mozilo among other industry leaders.  We’ll spend 20-30 minutes with Matt and open the show for questions.

To participate or listen to the teleconference:

Scheduled Time:

Date: Mon, September 22, 2008
Time: 4:00 PM PDT

How to participate:

Call in:

  1. Dial: (724) 444-7444
  2. Enter: 81328 # (Call ID)
  3. Enter: 1 # or your PIN

Join from your computer:

  1. Click here to join the call or just listen along
  2. (Optional) Become a TalkShoe member

Facebook user? You can join this Call Read more

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