There’s always something to howl about.
I have a dummy version of the People’s Choice voting interface for the Odysseus Medal competition up and running. I used five of my recent posts for examples, since I’m excluded from the competition. Play with it, if you’re of a mind to. See if it makes sense to you. See if you can get it to break. The live version will go up later today.
Technorati Tags: blogging, real estate, real estate marketing
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I pulled a Cramer today. The pressure has been mounting for some time, now.
Roberta Lee, a real estate broker in Norco, CA left a comment on an article I wrote on Active Rain:
My son is in the mortgage industry. He took the time….. 🙂 to enlighten me…..”Mom this isn’t a buyers market or a sellers market, it’s a lenders market.”
Ain’t that the truth, Roberta? I had two, um, situations this week that influenced the Cramer that erupted at 3PM this afternoon. Both involved incompetence and arrogance by the wholesale lending “professionals”. THAT is going to be a problem that needs to be addressed immediately.
Customers are scared. I know and you know that this stuff happens every ten years or so but it’s pretty scary when it’s happening to you. I do a fair amount of business in negative amortization loans. That product has been repriced to reflect the investor’s perception of increased risk but the portfolio lenders are still in the game. I’ve come full circle and have started placing loans with the banks I used in the 90s. None of my old friends are there, anymore. They’ve been replaced with the cast of High School Musical.
One rep doesn’t truly understand her products. She parroted the sales manager’s script when I questioned about a recast and argued relentlessly while I did the math. She was off by about nine months…those nine months matter to an engineer (my customer). When I asked her to be more precise with her answers, that customers’ financial futures were at stake, she flippantly replied that it wasn’t her problem these “morons” are in trouble. She lacks what business school professors might call, um, a “consumer-centric” philosophy.
Another bank rep couldn’t understand why my customer was nervous when she broke a promise to me. The problem was exacerbated by her poor knowledge of her bank’s closing process, so she told another little white lie. This delayed the closing another day. When I explained why customers were stressing in this Read more
Hoover Institute Economist Thomas Sowell:
Amid all the hand-wringing and finger-pointing as housing markets collapse, mortgage foreclosures skyrocket, and financial markets panic, there is very little attention being paid to the fundamental economic and political decisions that led to this mess.
The growth in risky “sub-prime” mortgage loans by people buying homes they could not really afford has been a key factor in the collapse of housing markets, when the risks caught up with both borrowers and lenders.
But why were home buyers suddenly taking out so many risky loans and lenders suddenly arranging so much “creative” financing for these borrowers?
One clue is the concentration of such risky behavior in particular places and times.
Interest-only mortgages, where nothing is being paid on the principal for the first few years, enable many people to get started on buying a home with lower mortgage payments at the outset.
But of course it is only a matter of time before the mortgage payments go up and, unless their income has gone up enough in the meantime for them to be able to afford the new and higher payments, such borrowers can end up losing their homes.
Such risky mortgage loans were rare just a few years ago. As of 2002, fewer than 10 percent of the new mortgages in the United States were of this type. But, by 2006, 31 percent of all new mortgages were of this “creative” or risky type.
In the San Francisco Bay Area, 66 percent of the new mortgages were of this type.
Why this difference in times and places? Because housing prices were skyrocketing in some places and times, so that people of modest incomes had to go out on a limb to buy a house, if they expected to buy a house at all.
But why were housing prices going up so fast, in the first place? A number of studies of communities across the United States and in countries overseas turned up the same conclusion: Government restrictions on building.
While many other factors can be involved — rising incomes, population growth, construction costs — a scrutiny of the times and places where housing prices doubled, tripled, Read more
Cited by BusinessWeek Online, a very eye-opening analysis of the sub-prime mess from National Review Online:
I’ve thought a lot about Rain Man over the past few months as I’ve been following the press coverage of the sub-prime mortgage crisis. The story’s been on the front page of the Wall Street Journal nearly every day. Pretty much every show on CNBC — except Kudlow & Co. and one or two others — has been obsessed with the topic. Yet no one seems to be asking the Rain Man question: “How big is the sub-prime mortgage market?”
And the answer, as Ben Stein makes clear, is not very big at all.
Currently there are about 44 million mortgages in the U.S., and less than 14 percent of them are sub-prime. And only about 13 percent of those are late on payments, with the majority of late payers working through their problems with the banks.
So, all in all, when you work through the details and get down to the number that really matters, only about 0.6 percent of U.S. mortgages are currently in foreclosure. That’s up a hair from roughly 0.5 percent last year. That’s it.
Actually, that’s not it. Things are actually better than the numbers suggest, since sub-prime-mortgage homes are less expensive than prime-mortgage homes. This makes sense. Wealthier people, generally, can afford costlier homes than less-wealthy people. The recent sub-prime surge brought large numbers of moderate-income families into the home-ownership market, and their houses are less expensive than most. Therefore, the dollar impact of the sub-prime default is smaller than if it were a prime default.
With approximately 254,000 mortgages in foreclosure at the moment — up from roughly 219,000 last year — the sub-prime meltdown has given us an increase of 35,000 mortgage foreclosures over the last quarter. Since the average sub-prime mortgage clocks in at almost exactly $200,000, we’re looking at an approximate $7 billion increase in foreclosed value in the first quarter of this year.
Raymond, how big is household net worth in the U.S.? About a hundred dollars?
Actually, it’s a lot bigger than that — about $53 trillion. In other words, the Read more
I’ve posted the rules for The Odysseus Medal competition, but there aren’t so many that I can’t also show them here:
The Rules (few and fair):
- The entry must have been posted within the two weeks before the entry deadline
- The entrant must be the author of the post
- More than one entry from the same weblog is fine
- More than one entry from the same person is also fine, provided that you have multiple personality disorder
- No second-guessing, no do-overs, no cry-babies
The Prizes:
Three awards will be given weekly:
- The Odysseus Medal, for the overall best post of the week
- The Black Pearl, for the best practical, technical or marketing idea of the week
- The People’s Choice Award, selected by popular voting on Sunday evenings
The Deadline: Sunday at 12 Noon MST — which is 12 Noon PDT, 3 pm EDT, etc.
Entry form: It’s here.
No doubt this will change somewhat with time, but probably not by much. I really don’t like rules, making them or, especially, complying with them. Entries that I’ve already received will be grandfathered, of course. Fair is fair.
Anyway, get crackin’. Either Cameron or I will build a voting bot for the People’s Choice Award, and I’ll put together graphic trophies for the winners. I want for this to be an enduring tribute to quality weblogging. But the truth is, I’ve got the easy job. You’re the one whose going to have to do the hard work…
Technorati Tags: blogging, real estate, real estate marketing
This is me from the Arizona Republic (permanent link):
Mortgage meltdown? The end of the world has been delayed again
If you watch the TV news, you can’t miss the video clips of financial pundits screeching about the imminent collapse of the mortgage industry. In fact, the world probably cannot end more often than once or twice a day, but it’s worthwhile to remember that television is an entertainment medium. Financial news is inherently boring — unless it’s reported by a shrill demagogue.
So what’s really going on?
Investors are pulling the plug on the most liberal — or most willfully gullible — mortgage underwriting firms. Investment banks that bought or brokered portfolios of shaky loans are also suffering.
Does this mean you can’t get a home loan? Not at all. You just need verifiable income, good credit and a down payment. That wouldn’t even sound odd if we had not lived through 2005, when all you needed was a reliable pulse.
What really happened in the home loan market? There was so much money available, and homes were appreciating so quickly, that some lenders stopped worrying about the financial qualifications of borrowers.
Has there been a surge in foreclosures? Yes. Had there been a substantial number of loans made to high-risk borrowers? Yes. We’re paying the piper now, that’s all.
There is still plenty of money in the mortgage market, but guidelines are stricter. Nothing-down loans are harder to obtain, as are stated-income loans. Some lenders are charging higher rates for jumbo loans — amounts over $417,000. But the rates for a 30-year conforming fixed-rate mortgage — the bread-and-butter home loan — are actually down. This fact will have been omitted by the demagogues on TV.
While things shake out, sellers will want to stay on top of their buyers’ loans, and buyers might want to ask their lenders to submit their files to more than one underwriter. Some parts of the Valley are suffering more than others, but buyers are buying, sellers are selling and home values are holding up fairly well through the down-turn. It would seem that the end of the world, contrary to televised reports, Read more
Jeff Brown’s, Real Estate Bloggers — Why Are You Blogging? What Currency Does Your Banker Accept?, has evoke a ton of comments and emotion over the past few days. As an outside observer I find it interesting during these crazy times in the real estate market, people get so worked up over SEO, but don’t seem to carry that same passion over to the market.
While I have no real interest in SEO, I thought I would mention that if (and when) the real estate market tanks, it wont matter how many people are coming to your site if they aren’t able to buy. While the point of Jeff’s article got lost after about the 20th comment, I think that it is really unfortunate. Blogging for business is fine by me, but what about the consumer? There will be a point very soon when consumers will be looking for advice on how to approach and handle a down market. It would seem like everyone’s time would be better spent having these discussions.
I am probably one of the few non-real estate agents writing/reading here, but as a current home shopper, a Realtor could really differentiate themselves by understanding the market and providing helpful advice. In a world where good content is king, I am spending my time reading and understanding where the market is going, so that I can provide readers support as things go from bad to worse.
A major knock on Realtors is the fact that they are always selling, not necessarily with their client’s best interest in mind. The National Association of Realtors makes this perception worse with every rosy real estate forecast they send out to the market in spite of overwhelmingly negative information. Interestingly, two days after I wrote this piece about the NAR forecast, the stock market had the second worse day of the year.
Looking at a variety of the real estate bloggers blogs, who have been commenting here, I have seen very little content on many sites that could really help consumers deal with this changing market. Now Read more
To be fair, Sweet Digs in its current form is innocuous enough. It didn’t begin that way, but that’s where it has landed.
And, to be fair, my mini-eruption this morning had nothing to do with Sweet Digs but everything to do with the role Redfin has assumed of industry hate monger. Take the Forums.
I made reference to a comment posted on the Redfin Forums in which the writer referred to traditional agents as conniving and greedy con artists. I had seen this remark a week ago and the words had been on a slow boil in my brain since. Redfin the Real Estate Company didn’t pen these words, but in effect they did. Their rhetoric from inception has been carefully crafted to incite riot. When I go to an appointment with a buyer or seller, I go intent on demonstrating how I bring more value than my competitors. What I do not do is attempt to elevate my position in their minds by criticizing and demeaning others whom they may be considering.
And, now we have gotten to the bottom of my recent attack on their little locally focused blog, and my sudden unease with even talking about this Redfin stuff at all. I listened to Glenn himself say recently that you should never promote yourself; let others do it, and it becomes viral. Is cancer a virus? By just “putting it out there”, I am giving their business model and their business practices (which I find offensive on many levels) increased exposure and credibility. By lambasting that with which I am in disagreement, I do them one better. I set myself up to be portrayed as that agent living in fear of their “new and better way”, the personification of the old industry guard which has become their poster child for all that is evil in the world.
Traditional agents hate us, traditional agents fear us, traditional agents are pond scum – These are the battle cries of a Redfin trying to get noticed. While they are so obviously wrong on each count, every Redfin rant I post will suggest otherwise to Read more
About fifteen months ago, we were preparing to list a home for someone we had known for quite a while. The house was a cosmetic flip in an excellent location. We had been consulting with the seller for months to get the repairs and upgrades done the way we wanted them. The seller had great equity, even if he were to sell it at the fix-up price. But he kept trying to cheap out the remodeling, which we thought was the wrong thing to do in a luxury location.
We even paid to have the home inspected, pre-listing, to get another set of eyes on the problems we had identified. The major items on the punch-list were addressed, but not in a way appropriate to the price-range of the neighborhood.
Okayfine. There are listings you can’t get away from — family, old friends, past clients. So knowing that close-enough was going to have to be good-enough, we priced the house as it would be delivered into a buyer’s market: $425,000.
The seller wanted $475,000, which would have been easy to get if the home had been improved to the quality of the location. But it hadn’t. Whoever bought it was going to live in it as-is, or, more likely, they were going to spend that extra $50,000 to bring the house up to its true potential. Ether way, there were competing listings at both prices points, so no one was going to confuse the one for the other.
At $425,000, we could have sold that house in 30 days or fewer, even against all the competition. Lucky us, the seller let us off the hook. He insisted on $475,000, by phone, and he got so mad that he hung up on me.
Dang! I lost a $475,000 listing, which at 3% of never-ever-sold would only have netted out to a loss of around $2,500 for us, not counting our labor.
It takes us a solid week to get a home on the market — photos, floorplans, signs, web site, open house cards, etc. The house was listed the next day — for $479,000. The extra $4,000 might Read more
And for the record, Redfin, the title was a quote taken from one of your Southern California Forum posters, and it was directed at me, or rather my ilk. I started writing this with every intention of giving you the publicity you asked for, the “don’t promote yourself, let others do it, and it will become viral” marketing which has been your hallmark. I changed my mind.
This morning Redfin issued a press release announcing expansion of the “Online Magazine Formerly Known As”, well, something else.
SEATTLE — August 9, 2007: Online real estate broker Redfin Corporation today launched its online real estate magazine, “Sweet Digs,” for Southern California. Home-buyers in Los Angeles, Orange County and San Diego neighborhoods can read daily, local real estate market information via the Sweet Digs blog or email newsletter.
The new Southern California Sweet Digs will offer as many as 40 candid, saucy and analytical write-ups each week of recent sales, price reductions, open houses and real estate trends in local areas, including Beverly Hills, Irvine, Newport Beach, Ocean Beach and Westwood. Southern California already boasts some of the top real estate blogs, and Sweet Digs complements them with its hyper-local, data-driven format written by real estate fanatics, not agents.
We are talking about real estate fanatics here, as in, people marked by extreme enthusiasm for real estate, not agents, since we all know real estate agents have little interest in real estate. Fanatics, as in people being paid to show extreme enthusiasm for that for which they were paid. One of my first jobs was at Bob’s Big Boy (during the Steel Age). I was fanatical about the Big Boy Combo, but this was in large part due to the fact that the Big Boy cut my paycheck.
Okay, in all fairness, I know what you were trying to say. The newsletter-blog thingy will be written by non-industry professionals. I get that, and I can see an appeal. And, in the name of fairness, I wouldn’t enlist contributors to my Blog who were Redfin disciples.
Sweet Digs launched December 2006 in Seattle and February 2007 in San Francisco to provide Read more
Some odds and ends here. (now isn’t that a compelling make-you-want-to-read-it opening?) I got a call today from my friend and fellow agent, JoAnn Calloway. She had been getting conflicting information regarding what is likely to happen with interest rates and the immediate possible changes to our marketplace. She was pretty sure I would know what was going to happen next. I don’t like to disappoint, so I want ahead and knew (no major changes to her market due to the sub-prime fallout). After I told her, she wanted to know how I knew. I told her I read BloodhoundBlog. That is how I knew. Yes, there are other posts on other blogs, but I find out about those posts and blogs by reading BloodhoundBlog. In this case, it was just a few posts, this one, this one and this one. Okay, it wasn’t just those posts – it was those posts, in combination with the comments to those posts. For example, when Greg showed the graph in this post and I saw Dan Green’s comments linking to this graph I was able to get a pretty good idea of what was going on as a result of what was being heralded by some as the end of the world as we know it. Long term (over the past five years) rates are slowly moving up. Short term, they are dropping a bit.
Prediction: the world will not end right away. I have seen the future and it is a lot like the past, only longer.
_____
Today, I finally ordered the external microphone for the digital video camera I have had for some time. This is for the coaching / mentoring I have been talking about making available here on BHB. So soon. Very soon, that will start for real.
If you have been waiting for that to get started, here is a little something that you might like. It is scheduled for 1 PM (Phoenix time) on Tuesday the 14th. The call will last less than an hour. For those reading this after the specific event I’m doing, but wanting to know about Read more
Since BloodhoundBlog isn’t about blogging for its owner’s business — the following doesn’t apply. In fact, Greg seems to abhor even the suggestion this blog might be construed as financially beneficial to him. He wants Bloodhound to be the best place to go when you want real estate information or expertise. His mission is to inform and educate — period. I’m sure there are other blogs who also exist only to distribute valuable information to their readers. This isn’t aimed at them either.
Let’s begin with what everyone who knows me realizes pretty quickly — I’m not a tech guy, and surely not a blogging expert. However, after blogging for a year now, I’ve noticed a few things in the so called blogging world. Wanna be a blogging expert? Just call yourself one. No kiddin’, that’s just about all you need to do.
In my first few months these so-called experts would write blogging commandments as if they’d found them on the third tablet Moses lost on his way down the mountain. You would have thought the 11th commandment was for blogging experts only — hidden in a secret place known only to them. At first I took them seriously. My mistake. My audience started to ask me what was up. What was up? I was listening to the experts, that’s what.
Kris Berg’s post on this subject was spectacularly on point. She then followed it up with the perfect satirical application of what she learned from the experts in San Francisco.
Since I’m not in the house side of the business my subjects are……..different. They’re like a full dinner. They involve, at least much of the time, some relatively complex principles and concepts. They can’t be half a small bowl of broth. Uh, usually it’s the principles adding up that make a concept. Duh. Yet, I was constantly feeling like I was being criticized by the experts because my posts were too long. They said I needed to be short and snappy. As Kris quoted the experts: “Readers are scanners…….five paragraphs……max.”
Here’s some exaggerated examples of what they wished I would adhere to. Read more
After reading BENN‘s, Michael‘s and Greg‘s articles today, my ears were uber-perked regarding the current market conditions. In preparing to blog today, I had Fox News on in the background and loved Cavuto’s analysis of the current conditions so much that I cared enough to pause, play, pause, play and transcribe his “Common Sense” piece. Do you agree or disagree with the following?
“Sometimes, the toughest thing about freedom is recognizing that you are also free to screw up, to make mistakes, to not read mortgage fine print or to understand that adjustable rates can also adjust up. In a free society, you are also free not to learn these things; you are free to assume that when you make the biggest purchase in your life, you do not have to do the most amount of research on the purchase in your life. You are free to study everything, or study nothing. You are free to be duped. It is not fair, my friends, it is not right.
I think the President in his discussions with me today cut to the core of the problem in some mortgages today. Some didn’t know what they were getting into. Some buyers didn’t read, some did not care, some stories did not end well. Some presidential candidates say ‘make the government make them well. Help them out, bail them out.’
But, the President today offering me a not so politically correct answer- “no.” No bailouts, no gains, no money for the very same folks who some say created the mess in the first place. FORCE them to be transparent? Yes. Force them to write in English? Yes. Forcing them to do everything to help borrowers before dumping them on Uncle Sam? Yes. But, you don’t correct a problem by throwing more money at the problem. I think that what the President was saying is that in the end, it is up to US to know when we’re getting in too deep.”
Source: Bankrate.com. The rain it raineth every day, but it’s not the same rain everywhere.
Technorati Tags: real estate, real estate marketing
This title truly comes from the heart. Reading the Wall Street Journal today, I stumbled across the latest report from the lead economist at the National Association of Realtors. In the face of overwhelming negative information and despite their own lowered forecasts, Mr. Lawrence Yun states,
Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines.” He continues on to say, “A modest upturn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008
Perhaps he considers the third time he tries to shovel this to the markets will be the charm. I am not sure what it takes to be an economist, let alone head of economic research at the National Association of Realtors, but the first interview question must be “Do you have a pair of unbreakable, impenetrable, gigantic Rose Colored glasses?”
Before I move forward, I want to say that I understand that there are many different economic philosophies out there. From Regan’s supply side economics to our own Jeff Brown’s interesting economic theories, there can be many ways to interpret various economic indicators. Instead of spouting my own point of view, I will layout simple economic trends and let you the reader be the judge of where you think the market will go.
The Current Market Climate:
