Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Friday, July 27, 2007

it's Not Foreclosure, It's Just A Little Gas!!

Foreclosure as part of the digestive process?? What a novel way of stating things. That's is however just what was said today by one of the RE Economic gurus who's been telling us that there was no bubble.

G.U. Krueger, an Irvine-based economist, said default activity may slow once weak subprime loans work their way through the system. There could be “a quick kind of flushing out, a kind of a storm that passes quickly.”

Dude, ever hear of the concept Binge and Purge. He needs to talk to the Olsen Twins.

The San Diego Union Tribune, is telling "homeowners", not to panic. Sure things, look a little "worrisome" right now but they'll soon clear up. Sort of like that worrisome little hole on the good ship Titanic, or those worrisome little ice caps that're watering down the ocean.

Home foreclosures in San Diego County continued a troublesome climb into record territory in June, but analysts say the number has yet to reach a threshold that creates a drag on real estate prices or the economy.
DataQuick Information Systems reported yesterday that during the first half of 2007, San Diego County had 2,896 foreclosures compared with 445 during the first half of 2006, a 551 percent increase.

That sets a record dating to 1988, when DataQuick began tracking foreclosures, researcher John Karevoll said. “A steadily increasing portion of those who get notices of default now are being foreclosed on.”

If they don't consider a 551% increase in foreclosures a sign that there's gonna be a lot of property to move then I've got a bridge to sell them.....,plus a few thousand condos.

Of course they love to brush all of this off as just a small glitch, nothing to see here folks, just move along .
University of San Diego economist Alan Gin said a recession could make the foreclosure problem much worse, but he said there is less than a 50 percent chance that one will occur. While foreclosures are “still a small part of market,” the spike in defaults is worrisome, he said.

After all, though housing may be hurting everything else is ok.....right?...right? RIGHT??!!

Stocks plunge; Dow down more than 310,

Whoopsiedaisy, guess he didn't see that article.

Wall Street suffered one of its worst losses of 2007 Thursday, leading a global stock market plunge as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones industrials closed down more than 310 points after earlier skidding nearly 450.

Investors who had been able for months to largely shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing finally decided it was time to sell after the Commerce Department issued another disappointing home sales report.

Recession, recession, did anybody order a recession?

Wall Street extended its steep decline Friday, propelling the Dow Jones industrials down more than 500 points over two days after investors gave in to mounting concerns that borrowing costs would climb for both companies and homeowners. It was the worst week for the Dow and the Standard & Poor's 500 index in five years.
Investors cast aside a stronger-than-expected read on the economy and maintained negative sentiment that dominated Thursday when the market shuddered amid worries over the U.S. mortgage and corporate lending markets. Investors globally took flight from equities, shifting cash into safer investments in Treasury bonds.

The pullback Thursday and Friday wiped out $526.1 billion in shareholder wealth from the stocks in the Standard & Poor's 500 index.

But I thought the GDP sounded so good, I mean sturdy, robust, encouraging. What happened? Could it be that maybe people like, just stopped believing them, cause maybe they were, oh I don't know, say....LYING?! After all these were the guys that though housing was so cool, condos were so cool, irrational exhuberance was so coooooooooool.

"I think we're going to have continued sideways movement with 100 point up-and-down days," said Frederick, referring to the Dow's back-and-forth movements.

"The 14,000 level is going to be tough for this market to get back above," Frederick said.

I hate to break it to you Freddie my man but the only thing that moves sideways is a dead fish as it circles the drain...oh yeah, and a snake. But I guess that wouldn't really apply , would it?

More wisdom from Freddie.
"You look at a 300-point Dow day and it seems like a big day but from a percentage viewpoint it's not a big move," Frederick said
Right, like standing on the ledge 5 stories up, is nothing like standing on the ledge 30 stories up, really it's not that big a move.

Labels: , ,

Wednesday, July 25, 2007

You've Got Mail!!!

that's what a lot of Californians are finding in their In Boxes as Foreclosure Rates Soar.

Not since the bad old days of the early/mid ninties have so many hit the bricks with so much bad debt. All that buying frenzy that was pumped up last summer is now coming home to roost, or not home, since most of the buyers are soon going to be out of their houses. For those on the things are looking up bandwagon, waiting for that biiiiiig bounce back to the glory days..well don't count on it since 53 THOUSAND foreclosed houses is butt load of inventory to unload.

A total of 53,943 "notices of default" were recorded statewide last quarter, up 15.4 percent from first quarter, and 158 percent from the April-to-June period in 2006, according to DataQuick Information Systems. The notices are the first step in the foreclosure process, and are typically sent to homeowners who've failed to make their mortgage payments for a few consecutive months.
"A lot of the loans that went bad last quarter were made at or just beyond the cycle's peak," between summer 2005 and summer 2006, said Marshall Prentice, DataQuick's president. "Appreciation rates for most of that period were in the double digits and lenders let many households stretch their finances to the max, and beyond. It's that pool of `beyond' mortgages that the market is working its way through."

Yeah, in other words look for prices to go back up sometime around the time of the next Ice Age.

So what exactly is the percentage of rise in those little pink notices tacked to the door? Try 799% more than this time last year. That's what the LA Times is reporting.

That's a hella lotta homes just sitting out there, and it isn't just the housing market that's feeling the pinch. It was more than Rupert Murdochs' pending take over of the Dow-Jones and the WSJ that sent the market into free fall yesterday.

A sagging real estate market and tighter lending standards are exacting a growing toll on Californians, forcing them from their homes in record numbers, figures released Tuesday show.

Foreclosures soared to 17,408 for the three months ended June 30, an increase of 799 percent from the same period last year. The current rate handily exceeds the previous foreclosure peak set in 1996, when the state was in the final throes of six-year slump.

Separately, Countrywide Financial Corp. -- the nation's largest mortgage lender -- reported a sharp rise in delinquencies, even among customers with good credit. That sent shivers down Wall Street, helping to trigger a 226-point plunge in the Dow Jones industrial average.

So what will all this mean for the rest of us out there who may not have participated in this bubble? Nothing good I venture to say.

"The economy will bend further under the weight of the mounting housing and mortgage problems, but it will not break," said Mark Zandi, chief economist at Moody's

That's what passes for optimism these days. Others are more downbeat.

"All the artificial stimulus housing gave the economy is going to go away," said Rich Toscano, a financial adviser with Pacific Capital Associates in San Diego who runs the popular real estate Web site. "There will be individual pain for people who made the wrong decisions. We all may end up in a recession."

Hey, don't sugar coat it or anything.

The good news, as seen by Toscano: "I don't envision a 'Grapes of Wrath' scenario where we all have to pile in the family car and look for harvesting work."

Wow, I like feel sooooo much better.

The other factor at play here, is this doesn't just affect the high risk borrower, it goes waaaaaaaay beyond that, as many have said it's moving into Alt A paper.

"In the beginning, we were thinking the foreclosures were going to be limited to low-income, high-minority neighborhoods targeted by predatory lenders," Cadavid said. "Now we're seeing a shift to the middle class."

That assessment was bolstered by Countrywide's warning that a rising number of its mortgage customers were behind in their payments, including mainstream borrowers.

The Calabasas-based company said that 4.6 percent of its good-credit customers with lines of credit or home equity loans were at least 30 days delinquent, up sharply from 3.8 percent three months ago. A year ago, the rate was 1.8 percent.

So for those who have been talking about a "soft landing" and things "rebounding", look out below!

My Zimbio
Top Stories Bloggapedia - Find It!

Estate Real, House New

Housing Crisis

Free Site Submit by