Housing Crash of 2007 Deepens in 2008 for Realtors Who See Record Declines

[Purveyor]

Source: Bloomberg News

Dec. 14 (Bloomberg) -- For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008.

Everyone from mortgage-finance company Fannie Mae to Lehman Brothers Holdings Inc. expects declines next year. Existing home sales will drop 12 percent and existing home prices will fall 4.5 percent, Washington-based Fannie Mae says. Lehman analysts estimate almost 1 million mortgage loans will default in 2008, up from about 300,000 this year.

``We're only halfway through the housing shock,'' said Ethan Harris, chief U.S. economist at New York-based Lehman, the fourth-biggest U.S. securities firm by market value. ``It's just a matter of time before the weakness spreads to the rest of the economy.''

The housing market collapse has been anything but the ``soft landing'' that Federal Reserve Bank of San Francisco President Janet Yellen and David Lereah, former chief economist at the National Association of Realtors in Chicago, predicted for real estate at the start of 2007.

Median home prices declined in the U.S. this year, the first annual drop since the Great Depression, according to forecasts from the National Association of Realtors.


Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=aFG...

[tularetom]

1. This bad news is probably good news for the Dems

As more and more middle class people lose their jobs, homes, cars, retirement, and health care, they will begin to connect the dots and come to the realization that maybe this all had something to do with cheney's dumbass war and tax cuts for the wealthy. Too fuckin bad people have to be hurt so badly to learn this, but I guess it's human nature.

[David__77]

11. Price declines aren't bad for everyone.

Many working people cannot currently afford homes whose price has been pushed so high due to speculation and loose credit. Declines in price will help these people.

[heliarc]

16. They are bad for people who saw

Flipping homes as the only way to supplement their stagnant earnings. I know a lot of people in the middle class whose standards of living wouldn't support having a child or starting a family in a larger home without the income created by a successful flip. They have seen their health insurance go up, their utilities go up, gas go up, mortgage rates go up. Everything, and some banked on the runaway housing market. However foolhardy it may seem folks were trying to make a better life for themselves when salaries were going south or their jobs were. Some of them even pouring their own efforts into renovating their flip properties themselves in spare time or time off from work. Blood from a stone nowadays.

I do hope that this is a positive thing for the majority of working people because there sure won't be any construction work for a while.

[customerserviceguy]

20. Flipping = Finding the next fool stupider than you

No, wait, it's way more than that--it's counting on the fact that some stupid buyer can find a stupid lender who can find a stupid appraiser, who can give you a stupefying profit for doing pretty much nothing but some cosmetic gussy up stuff. It indicates contempt for your fellow man, and anybody who lost their ass because they didn't unload their last flip fast enough gets zero sympathy from me.

Wait, its way more than that, I revile the flippers for driving the market way up in their mad dash to find flippable houses, and creating the house of cards that is about to fall on us all. Sure glad I don't work in the real estate industry (former title examiner) anymore, there are a lot of decent people out of honest jobs in that business. No, I'm not talking about high-falutin' realtors driving gas-guzzling cars from place to place with lookie-lous in the back seat, but folks who just pushed a pencil (or a computer keyboard) so that all the brokers, agents, and lenders could make big bucks during the feeding frenzy. They're out in the cold now, too, without having had more than a relative few years of job security during the boom.

[progressive_realist]

24. If you excuse misbehavior on the basis of perceived need...

You destroy the very concepts of ethics and morality. The whole point of ethics is to say that some behaviors are not acceptable, no matter what benefit you may get from them. And furthermore, if people are shielded from the consequences of their poor behavior, it sends a clear signal to the rest of us that we will effectively be punished for behaving ethically.

[Skittles]

34. flipping homes = G R E E D

they were a big part of the problem

[progressivebydesign]

27. There are thousands of affordable homes for working familes... please. n/t

[Hydra]

31. Where?

I need one of those. Been on the list for years. No dice, no raises, and now a sick relative that lives with me.

Yeah, there are PLENTY of affordable homes.

[kestrel91316]

2. As a sign of how our LA housing market has tanked......

the builder/developer who bought the house I was renting may be coming to regret his ill-timed purchase. He bought in 9-06, and gave me notice to vacate in 7-07, specifying that he was going to demolish (to build a Persian Palace). I moved out in 10-07.

When he FINALLY refunded my deposit he thoughtfully deducted $475 for cleaning and repainting (because one always cleans carpets and repaints a house that one is going to promptly demolish, right?). My theory is that he changed his mind and now wants to rent it out while he sees what the market does. There's just one teeny weeny problem. It's illegal. He got me out only because of the pending demolition, and if he doesn't demolish it's basically fraudulent inducement or some such. He also lied to the city. They are gonna want to prosecute him is my guess.

Oy. Time to talk to the client who's a landlord-tenant law attorney AGAIN (this guy tried to evict me illegally in the spring and I won/he lost - he just doesn't learn, does he???).

Anyway, the bad housing market is having real-life repurcussions all around.

Note: the house was under rent control and he couldn't jack my rent up, but with me out he will probably try to DOUBLE the rent, and he'll get it, too. Can we say "ILLEGAL"?

[Demeter]

3. Wishing You Luck in the Courts

You have been poorly done by.

[kestrel91316]

5. I'll win in small claims. He may as well just pay me now, lol.

What I think of this man would get me banned for life from DU if I typed it here, lol.

Thing is, he already has wound up having to pay thousands more in relocation expenses to me than if he had just followed my advice last Feb. While he was violating my rights, the clock was ticking and a new set of rules came into effect, so when he had to start all over, it was $9k instead of $3700 he had to give me, lol. Dumbass.

I found a clause in CA state law where if a landlord applies for a demo permit without informing the tenant in writing, in advance, he is liable for $2500. Do not pass go. Do not collect $200. Just go to small claims and get told to pay up, lol. I'm about to blindside him with THAT one. He'll rue the day he ever saw the place and thought to make a fast buck off putting me out of my home.

[mikita]

7. clearly you've done your homework --

I love that. Snakeoil people are so used to just rolling over people. Every once in a great while, they roll over someone who will stand up to them. It take time and effort on your part, but it sure does feel good. good on ya!

Mikita

[kestrel91316]

6. Oh, and BTW. His company grossed $45 MILLION in 2005 or 2006.

So for him to be nickel-and-diming me like this is beyond petty. It's sick. And he doesn't even know me - he has no reason to be this way. He was just a cheating snake from Day One.

[tom_paine]

18. Give him hell, kestrel! Take his Bushie Ass to the CLEANERS!

him.

Usually I would never suggest the route of suing, but you should also sue him for mental anguish caused by illegally turning you out of your home and upside down.

No mercy for Cheating Bushie Scum. NO FUCKING MERCY!

Plus, in LA, you could get a million bucks for your pain and suffering. I say GO FOR IT! Go get a consult and find out if and how much you can sue for. It sounds like there is a wide paper trail indicating you were wronged.

[kestrel91316]

22. This should come as no surprise - he's a BIG Republican donor.

BTW, I have a client who is a landlord/tenant law attorney and she has been advising me for free all along (can't take my case, she represents landlords, lol).

[tom_paine]

28. Then by suing him, you are not only doing a service for yourself, but the country.

And THAT is the rare confluence of doing what is right for yourself, and what is just plain right.

Pain and suffering awards in California, baby!

[kestrel91316]

29. I'll consider it my patriotic duty to give him his comeuppance!

[Hugin]

8. Interesting story kestrel!

Here's hoping that slumlord wannabe gets what's coming.

I hope it has a good ending for you.

[kestrel91316]

23. Thanks!

[On the Road]

4. It's All Over the Place

Even in resurgent markets like Baltimore, where people have been scooping up cheap properties for the last four years. Everyone's dumping and prices are way down over a year ago.

[closeupready]

9. "Only halfway through..." Ha! You only wish.

This has just gotten started, IMO.

[Clairez]

10. long road ahead

This will drive up other costs also. Not only will the rental market be loaded with people who have lost their homes and have to find another place to live, this is also going to affect all those who make a living off the building and selling of homes.

The stresses to our economy from this fall out is just beginning.

[closeupready]

13. Scary, but true. This is why regulation has to be strong and effective.

and welcome to DU.

[Clairez]

19. Thanks for the welcome :)

Also wanted to add that if you have been watching the financial sector of the market, this mess has been really hurting the banks etc. because of all their bad paper. Most of them can't even evaluate yet how much of a loss they will have to take.

Sadly, many people have 401k's and an investment through these. in the market. As the markets reacts, they are taking a hit to their retirement savings. The impact of this in both consumer confidence and spending has yet to even begun to be realized yet.

[NickB79]

14. "Baby, that was just foreplay"

"Now we're gonna get real freaky-deaky!"

[killbotfactory]

12. Now the big question

was this a deliberate or just the end result of runaway greed and "republican-style" regulation (criminal negligence)?

[stimbox]

15. Yes.

Probably both. Brought to us by the same people who did the S&L scandals...

[SoCalDem]

17. and the same people who knew just when the boomers would start to try to sell their homes

and downsize.. Reagan screwed us when we were starting out in real estate and now another republican is screwing us again as we ease out of the housing market.

[ozone_man]

21. "half-way" is being very optimistic.

Economists.

[gristy]

25. casue and consequence

The Hickses refinanced the mortgage on their four-bedroom, 1,300-square foot home two years ago. Their $237,000 adjustable- rate loan resets every month, and now their monthly payment has jumped 50 percent to $2,700. The couple can't afford it.

"It looks like we're going to have to let the house go,'' said C.W. Hicks, 65, a long-haul truck driver who has kept working past retirement age to help pay medical bills for his wife Sandy, 59, who has heart problems. ``I guess we'll try to rent a house or something."

The Hickses aren't the only ones grappling with the consequences of this year's housing market. The number of Americans behind on their mortgage payments rose to a 20-year high in the third quarter, the Washington-based Mortgage Bankers Association said earlier this month.

Interest rates have gone up just 0.7 percentage points in the past two years, so there's really nothing indicated in that paragraph that couldn't have been foreseen. Did they read the contract?

What this is an example of is a borrower who should not have been taking out that loan, a lender that should not have been making the loan, and a regulatory agency (do we have those any more?) that should not have been letting the lender make the loan.

The Hickses (and people and their lenders like them) aren't just grappling with the consequences of this year's housing market, they are the cause of this year's housing market.

[progressivebydesign]

26. Hmm.. the NAR came out the other day and said 2008 will be better.

Oooh.. gotta have more scary articles to continue depressign the market, apparently. Guess not one of these media brain surgeons have figured out that whole 'consumer confidence' thing and how it drives the economy. The media is culpable in a lot of this mess.. with their breathless and pointless stories daily. Real estate problems is the new bird flu. Seriously.

[QC]

30. The NAR has had to revise their projections down the past 9 months in a row.

They are a trade group, so of course they will say whatever they need to in order to get people to buy what they're selling. Salesmen think it's always a good time for someone to give them a commission.

The crash has mostly to do with greed and corruption, not accurate news reporting.

[midnight armadillo]

32. 4.5% is just the beginning

I've seen price drops from $20k-$100k in listings here in eastern MA, in some of the wealthiest and most desirable towns in the state. Those are drops from 5-15%, and the houses still aren't moving.

That's right, price drops of 15% from a year ago aren't enough to trigger sales! Granted, some of the houses may be shit, but that wouldn't be true for all of the ones I've been eyeballing.

[Skittles]

33. good

houses were way, WAY overvalued and EVERYONE KNEW IT