Saturday, May 19, 2007

Sticky Home Prices

"Stickiness" and unwinding were the pattern. I believe that much of that had to do with borrower equity exposure and the price of alternatives. This time with little/no equity and the alternative (walk and rent) costing 1/2 or less of "holding on" there is far less stickiness. I would additionally suggest that the shift to multiple mortgages will also contribute to instances of stairstep pricing instead of stickiness. When the 1st forecloses the 2nd takes a 100% hit and the 1st has no incentive to price higher than their being made whole; typically 80%. A stairstep. Besides, it provides the opportunity to revisit our friend the enchanting Pangolin. [Which is an animal which has a sticky tongue much like some award winning blogs which are not animals but are sometimes run by them. P.S. There is no truth to the rumor that Pangolins are endangered due to the insatiable demand for their pleather hides.]

28 comments:

The Dude said...

FIRST!

Anonymous said...

First in Phoenix again!

Rob Dawg said...

Phoenix is one of the places where I expect my theory to first get validation.

TV Rots Your Brain said...

Murst!

Not to get too off-topic but Rob Dawg how much $$$ have we haterz raised for HtH? Could we have a post on that please?

Thanks!

Arthur Wankspittle said...

Presumably one of the first things that happens in this situation is that the 2nds start to cut back on lending or tighten their criteria. We don't get much of a 2nd market in the UK (if I'm understanding things correctly) at least not at purchase.

lurker said...

I am still trying to make my donation, but everytime I go to Habitat, I get

Arithmetic operation resulted in an overflow.

Rob Dawg said...

Arthur,
The demand for creative financing is insatiable from both sides. Yes, the providers of secondary financing did not price their risk correctly but then they don't care as much as you might think. It isn't as if they hold the note to maturity. They have passed most of the bad paper on to the markets where it is stripped, tranched, bundled and sold and re-sold. Originators of second mortgages are just going to reprice their products and consumers will put up with it. Their addiction to the concept of homeownership and credit won't go away just because it is expensive. Somewhere the buck has to stop but where is anyone's guess but I've got that uncomfortable feeling in my wallet who will end up paying for it.

flailing forward said...
This comment has been removed by the author.
Anonymous said...

Anyways,

I like Casey's drone comment:

"We have negative $200 in our bank account, and thats not acceptable."

That pretty much sums up his reaction to debt - it's not acceptable but it will stay that way.

Arthur Wankspittle said...

Here, at purchase, you tend only to get one lender. They may go to 100% (or in some cases 125% yes scary!) but they tend to insure the top 20% against loss. So somewhere in the "closing" (which we don't have in the UK, it's less complicated I think) there is several hundred £ for a one off insurance policy which the purchaser has paid for.

flailing forward said...

IAFF xpost:

As far as Casey’s repeated complaints that haterz are “digging up dirt” on him, the only info that I’ve seen posted that struck me as not being particularly cool was his mom’s email address. Other than that it’s just been names, addresses, company names, websites, and the like. All of the information was already available as public information.

If it wasn’t for people digging up stuff on him, we would have never seen his high school chain letter scam, his involvement with RESCOM (interesting read), found out about Hammar Investments (his corporate credit vehicle, purchased from Corporate Brokers Inc.), his involvement with Nouveau Riche (check them out at John T. Reed’s site, Piccolo is the chancellor), and the like. Also, if it weren’t for people digging up stuff, we would have no way of knowing whether the entire site was really just an elaborate hoax. After reading the C|Net article, it’s apparent that many of the things he tells us are just trolls intended to drive traffic.

For all of his talk about being transparent, Casey only tells us what he wants us to hear. And he has an awful lot of dirt in his past. All of this info is relevant because it provides readers with a more accurate picture of who Casey really is.

Nigel's Guest Blogger said...

Rob, I agree with you about the lack of stickiness we will see over the coming years.

I found the Cult of Casey because I wanted to buy a home this year. I quickly realized that while I make an above average income, the prices I was comfortably willing to pay would land me a condo (sorry Nigel, i'll never buy one) or crappy townhouses in not-so-good areas.

It didn't make sense to me, last time I was looking to buy a home was years ago and before the bubble. So I guess I had pre-bubble expectations. I was shocked at what happened to prices in my area, i quickly found the bubble blogs (and ultimately found Casey).

I can buy, I would like to buy, but i'm not buying anytime soon because it doesn't make financial sense at this point and I don't have the Housing Fever that struck so many people.

Prices are completely unsustainable (even at current levels). I can still rent a quality house in a great location for 30-50% less than the costs of buying the same home. (The house next door is for sale for about 600k, my rent is $1500 locked in about 3+ years ago after negotiating down).

The ARM resets are just beginning to hit hard for the next few years (see that great Credit Suisse chart). We had panic buying in 04-06, as foreclosures rise and ARMS reset we'll get the same type of action just as quick on the way down.

Later today, i'm going to look at a rental in a very nice neighborhood who's prices have been in 3/4 of a million dollar range. The rental is going for $1800.

Where's my motivation to ruin my lifestyle? I can pay a little more in rent for a much nicer house or $750k to "own" in the same location.

flailing forward said...

another xpost:

As far as Casey’s defense of NRU on last night’s call, keep in mind that Casey paid them $16k for his 1 week of training in December (while he was facing foreclosure on 5 homes!), and has since signed up two additional people for NRU.
He earns a commission on any other others he signs up. (See Declan’s comments after the C|Net article.) Expecting an unbiased opinion from Casey about NRU is like asking a realtor for a straight answer on the housing market. They’re going to say what’s in their best interest.

Nigel's Guest Blogger said...

Flail,

You're doing better than me. Casey quickly deleted my request for him to take a personality test based on my latest post.

The Original Kevin™ said...

So, Galina gave BACK to Casey the corporate credit card, & Casey is getting BACK his Google Ads....

Legion said...

@Flailing

Oh I'm sure Casey got some kickback for plugging NRU (Just a few comments about it my ass, he pretty much gave a commercial), and if no one noticed, he plugged wheatgrass shots and jamba juice as well.
I was really dissappointed with the guy who praised him for buying 8 houses then getting all this PR for it...the same guy probably thought the same thing about OJ and the book he was coming out with. "If I did it"

Anonymous said...

NRU is nothing more than a vocational school.

And as far as the marketing scheme that Casey says any University takes to reach new "students": the signs and websites labeled "Real Estate Investor Seeks Apprentice" are often used to find new students for Nouveau Riche University.

I think the "Now paying $8.50/hr" was the sign that motivated me to sign up for the UC Davis Engineering Program.

Legion said...

I know it's been said before

But DHC has been dormant since may 14th, also all the comments are gone (trying to hide his tracks I guess, as well as his pictures) Nigel must be running pretty scared, especially after last night when he realizes Casey is pissed at him.
I also see that RCS has been dormant since May 13th...coincidence?
Damn, don't tell me we are gonna need to get a new sidekick for CAsey. Brian S. Nick should apply, he was almost a navy seal ya know, it's on his resume, so's the fact that he was on the losing team of a championship game...remarkably, that's on his resume as well. Nothing to boost the confidence of a potential employer than to hear about a potential employee having a history of not quite reaching that golden ring.

TK said...

$0/$1000

6 days 11 hours 36 minutes...

Tick tock.

So where do you all think the money out of his ass will come from THIS time?

This is a straight out of hollywood cliffhanger.

Legion said...

Actually NRU is a multilevelmarketing scam...Casey only makes money by bringing in new suckers. If it is such a great place and puts deals on a silver platter for him..why hasn't he bought anything and made money? Oh, I forgot he's broke right? Then why the hell did he spend more money on it if he can't even buy more real estate?

Legion said...

@TK

It would be better if it was like the running man, you know he has a choke collar around his neck that will tighten if he gets down to zero and he doesn't have the 1000 dollars. If he does make it for the week it resets and we can watch the hilarity of him scorounging for dollars again. Maybe that was his idea with the video camera. Film himself going into his relatives houses looking under the sofa seats, their cars....

Stephanie J. said...

AAAwww... Armadilloey guy... Soo cute.

I'll take two please.

I'm off to carshop.

Smooches;

CHJTS... thanks again for the prose. It was funny because I got home, found the link, opened up the audio file and seconds after that I hear you say that you wanted to read a poem. The timing was exquisite. I laughed so hard. :)

Anonymous said...

This guy pretty much did his homework outing NRU on being a MLM and a scam... Here

or

http://www.cockeyed.com/citizen/nouveauriche/nouveau_riche_toc.shtml

Funny as sh@t!!

flailing forward said...

@ NGB
If it isn't one of those four letter personality designations, Casey doesn't want to hear it.

@ anon 9:29
That was a good expose. I especially like the photo of the NRU sign in front of the Extended Stay America. "Invest in our classes and this can be your future home." Or maybe they have a program for flipping hotel rooms.

Legion said...

@anon 9:26

Thanks for the link. Figures Casey would swallow this thing hook, line, and sinker. If it's a scam, Casey will be sure to jump in head first. If it's legit and actually requires work..he'll avoid it like he does showers.

Anonymous said...

AP 5/19/07 12:30 EST:

AWARD WINNING BLOGGER MISSING:

Salt Lake City, Utah:
An aspiring web journalist and award winning blogger has been missing since late Tuesday, authorities say.

Nigel Swaby's whereabouts remain a mystery and no one has come forward with any leads that could aide the search. Divers were brought in Friday morning to search a massive koi pond on Swaby's property but they turned up nothing other than koi (which are fish). A large, indoor pool was also being drained but it could take a several days to remove the water due to the unusually large size of the pool.

There was no sign of struggle in the home but sources close to the investigation say that someone may have stolen parts of his blogs.

"It's like he evaporated" a neighbor said as she watched police remove computer equipment, Olympic Pins and a door size Backstreet Boys poster from the Swaby home. "He was always a little bit different. I don't think he had any friends. Whenever anyone spoke to him he never had a comment" said a neighbor who watched the scene from her driveway.

Investigator's seek to interview several persons of interest. The Jamaican Bobsled team has been contacted, as well as several Celebrity entertainers who Swaby had spent time with.

Authorities are not ruling out foul play. A police investigator, who spoke on the condition of anonymity was quoted a saying, "It will be difficult to pin this on anyone. At this point we have 2759 possible suspects and it will be hard to make any charges stick. There are just so many links in this case and none of them appear to amount to anything."

Swaby's wife had no comments.

WeWantTheFunk said...

@anon 10:17:

Keep up the good work and you'll have your own byline, someday.

mejustme said...

wwtf:

How did you make that? That was cool.