Real Estate bubble bust may be worse than Dot Com bubble bust

wikipedia:
According to the U.S. Department of Commerce's Bureau of Economic Analysis, in 2005 construction and real estate accounted for 17.3% of all jobs in the Bend metropolitan statistical area (MSA), which constitutes all of Deschutes County.

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?

this thing fucking rules!!!
apparently there is no way on god's green earth I should buy this year unless I find an absolute steal that I'm in love with. Wow, I feel kind of dumb for needing that confirmed, but goes to show how sentimental people are abt property

With all the dough sharp renters save after using that tool, there needs to be another that graphs hookers vs. blow.

lol buyerz remorse

i feel dirty playing with the home appreciation slider

"Did you touch it...there?"

if you enter inflation you can make it look like a butt

lol absolute steal for me = begins something around about 250K and below...

exactly. I would need to find something with the kind of amenities which beat my current address at $310K or below to make it seem remotely worthwhile at this point. buyer's market my ass, we have a long way to go

lol absolute steal for me = begins something around about 250K and below...

good luck finding THAT in the NYC metro area ... at least anywhere WORTH living anyway.

I think that is both of our points

omfg
http://bigpicture.typepad.com/comments/images/2008/06/02/bogof_flyer1.jpg

lol ... of course, you have to buy a (grossly-overpriced) mcmansion ($1.6M upwards) to get an (otherwise grossly-overpriced) townhouse gratis:

Buy a Home Get One Free

Yeah there were roffles about this elsewhere this week. I love SoCal. It's so wrong at times.

i can hardly wait for similar "deals" to start popping up here in NYC, too.

That's really just incredible. So, what's the word, though: imagine, for the sake of imagining, that you have 20 mil lying around. Isn't getting two of these babies for one a sound investment - is the market not expected to turn around within 20-30 years? Or what?

Not necessarily. You still have to look at what you're getting for what you're paying. I could sell you a Toyota Corolla for $28,000 and throw in a free scooter, after all.

here's the problem. If the developer has managed to already offload any of his units in prior years, than I can probably get two idiotic/misinformed/out-and-out-scammed families to let me take their properties off their hands for less than 1.6M combined. So as an investment, yes, that's a bad deal.
And if I'm going to go long on something with an eye for 20-30 years, socal real estate is not fucking it, to be kind of blunt.

lol my payment just went down $30 a month.

(mortgage unchanged; surplus in taxes/insurance escrow acct)

http://www.elliottwave.com/images/marketwatch/figure5.JPG

For those that still think this is a US problem

Wow, if I understood that graph I bet I would be really shocked about something.

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?

this thing fucking rules!!!
apparently there is no way on god's green earth I should buy this year unless I find an absolute steal that I'm in love with. Wow, I feel kind of dumb for needing that confirmed, but goes to show how sentimental people are abt property

-- El Tomboto, Wednesday, May 28, 2008 12:44 AM (3 weeks ago) Bookmark Link

one thing thats not being appreciated in this equation is the forced fiscal discipline associated w/home ownership - people will do a lot of things to hang on to their homes that they wouldnt do in other investment situations

but basically im psyched to see tools like this that contradict the omg real estate is always a good investment conventional wisdom

also lol UK ^^

I admit to also being confused by that chart. Does it refer to securities backed by mortgages in the respective countries? Like does the Portugal graph equal securities linked to Portuguese mortgages?

I think the graph is just the average amplitude level of the parties that happen in each country celebrating the debt.

Meaning the UK is just off the fucking script right now. Party central!

"OI DEBT. KEEP THE FEEL FLOW. OI DEBT! DEBT! KINGSTON HOLLA! THIS IS THE SHIT!"

do you guys fuck with bloodhoundblog? It's a collective of seller's agents mostly.some good writers on there.

http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2181

this guy reminds me of tombot in a good way. he fucking hates redfin and then the redfin founder joined the collective, should be interesting.

http://farm4.static.flickr.com/3031/3026233313_08c9bf0fdd_b.jpg

this is from the british pavillion at the Venice Architecture Biennale. It shows average room sizes for new construction. The UK is the smallest and the biggest three are Denmark, Austria and The Netherlands.

http://www.theage.com.au/national/housing-prices-its-all-relative-20090125-7pgu.html

Australia has among the least affordable houses in the world, according to an international study that suggests (its) price "bubble" is due to burst.

A comparison of median house prices with median household incomes in Australia, Canada, Ireland, New Zealand, Britain and the United States found that Australia had the most cities in the "severely unaffordable" bracket — in which prices are more than five times incomes.

The Sunshine Coast in Queensland was the least affordable area, ahead of the Gold Coast, ranked third, Sydney, in fifth place, and Melbourne in 12th place.

These were all deemed less affordable than New York, London, Dublin and Miami.

The report, by international public policy group Demographia, said affordability in Australia was worsening relative to Britain, Ireland and New Zealand — where prices had collapsed recently. Australia would be next.

HURRY THE FUCK UP THEN

Well one area of the real estate market is booming again:

http://www.buzzfeed.com/mjs538/zombie-proof-condos-sell-out-in-kansas

Bottom floor, our in-house scientists from the Umbrella corporation will be working around the clock to find a cure!

last-resort-style amenities

Damn. Looking back at my contributions to this thread, I was wrong enough to feel pretty ridiculous. (puts on his dunce cap)

This thread is kind of fascinating to read with hindsight. And I was mostly OTM in 2005.

BTW, I will make another call right now: there is a mini-bubble in Brooklyn condos, fueled by low rates and tax abatements. Prices will momentarily appear to be heating up, but then will slow down again (although I don't expect a huge drop either).

I am guessing same is true in some other markets as well -- low rates are enticing buyers but overall credit is not flowing like it used to and any bump will be shortlived.

IT IS HAPPENING...AGAIN

http://online.wsj.com/article/SB10001424052702303296604577450810342727388.html

By NICK TIMIRAOS
Federal officials are broadening their investigations of mortgage lenders that use a popular federally backed mortgage program, a move that could force more banks to pick up some of the rising tab for losses at the Federal Housing Administration.

U.S. attorneys already have reached settlements with four banks, Bank of America Corp., BAC -1.48%Deutsche Bank AG, Citigroup Inc. C +0.37%and Flagstar Bancorp Inc., FBC +0.13%recouping $1 billion for the FHA.

Last month, the inspector general for the Department of Housing and Urban Development, which oversees the FHA, issued subpoenas seeking information from additional lenders, including MetLife Inc., MET -0.17%SunTrust Banks Inc. STI -0.09%and U.S. Bancorp, USB +0.24%among others, according to people in the banking industry.

The FHA doesn't make loans but instead insures lenders against losses on mortgages that meet its standards. In the past, the FHA has looked into whether lenders ignored cases of potential fraud and failed to properly verify borrowers ability to pay. The subpoenas could be used to uncover potential violations of FHA program rules. If they discover violations, the findings could be used to strike a financial settlement with the lenders.

The moves are the latest sign that officials are trying to protect the FHA from needing a taxpayer bailout by recouping losses from lenders. Representatives for HUD and the inspector general's office declined to comment.

Representatives for the banks declined to comment. MetLife, which disclosed the receipt of two subpoenas in a federal filing last month, earlier this year said that it would exit the mortgage business.

The scrutiny also raises the possibility that lenders will become more cautious when underwriting government-backed loans. "Lenders are practicing the mortgage equivalent of defensive medicine," said Brian Chappelle, a former FHA official who runs Potomac Partners, a mortgage consultant. "Instead of requiring more tests, lenders are excluding more borrowers to protect themselves from liability that they feel they could not otherwise protect themselves from."

Last month, Wells Fargo WFC -1.12%& Co. told lenders that it would no longer purchase FHA-backed loans with credit scores below 640 beginning June 11, though it continues to make those loans available through its retail division. A bank spokesman said the change was the result of regular adjustments of credit policies.

U.S. Bancorp originated $3.3 billion in government-insured mortgages during the fourth quarter, making it the fourth-largest lender of government-insured loans during that period, according to Inside Mortgage Finance, an industry newsletter. MetLife and SunTrust ranked 12th and 15th, respectively.

The FHA wasn't heavily involved in the mortgage bubble because private lenders provided credit on easier terms. But the agency saw a surge in business beginning as the private market seized up in 2007 and later as Fannie Mae and Freddie Mac tightened standards. The FHA allows buyers to make down payments of just 3.5%, which has made it the last major outlet of low-down-payment mortgages.

Fannie and Freddie can more easily force banks to buy back delinquent loans that are found to run afoul of their lending standards, and banks have imposed tougher lending standards than what the mortgage companies require in order to deter against those costly buybacks, which have cost lenders billions of dollars.

The FHA insured more than 700,000 mortgages that were 90 days or more past due or in foreclosure at the end of March, representing about 9.4% of all mortgages it guarantees.

While the agency had $32.3 billion in reserve at the end of March, its independent audit last fall estimated that after expected losses on its current business, it would have just $2.7 billion to cover unexpected losses on more than $1 trillion in loan guarantees.

A more conservative forecast by the White House's budget office in February found that without the recent settlements, the FHA would have been short nearly $700 million, requiring a taxpayer infusion for the first time in its 78-year history.

great

From 2009:

http://www.nuwireinvestor.com/articles/the-next-subprime-mortgage-bubble-courtesy-of-the-fha-53733.aspx

This seems really, really fucking bad. FHA is propping up the housing market. FHA takes huge losses on its insured loans = double whammy. (1) Taxpayers on the hook for bad loans.(2) No more FHA propping up housing market = further price declines, further defaults, same shit all over again.

FFS