The shadow that looms over the economic recovery is made up of many parts of disorder and uncertainty, but certainly the most obvious are Fannie and Freddie and the $12 trillion residential mortgage market, a quarter of which may already be underwater. The video above by the trenchant Jim Klinge (a/k/a "Jim the Realtor" from the vibrant and transparently rueful http://www.calculatedriskblog.com/Calculated Risk site) illustrates the challenge for San Diego County, and in doing so represents the top of the pile of the challenge. This Carmel Valley (below) location, location, location is the best of the national mess. A 2005-built house that goes into foreclosure and goes back to the bank, is then listed by the indifferent and cautious bank with an out-of-town broker (Sacramento?) at $789,900, and is then dumped after 58 days on an FHA loan bid at $650K. This is a 17% discount for a newer home in an attractive neighborhood of an active and far from abandoned-all-hope city. Use this formula for all the housing out there. We are now down 30% from the peak, with another 17% AND HIGHER to go. Whole neighborhoods must be marked down before we can start repairing the black holes of Fan and Fred. So far, in the extend and pretend fiasco engineered by the Obama administration and Congress, we see just one-offs, rogue listings, more of the wait-until-prices-recover. "This was the REO listed by a Sacramento broker," Jim explains on the video. "... listed this for $789,900, I believe, and just showed up closed, 58 days on the market...get this, $650,000 FHA... ...650 FHA for 3700 square feet... it's a great time to look, good time to be a looker. It took somebody to have the guts to make an offer to FHA to get this deal....I don't think we're going to see the whole market dump like this...tract homes built in '05. ..we'll see.."
How are people going to buy houses if they don’t have jobs or nest eggs? Why would anybody even think about getting a house when all they can think about is getting the present administration out of office? Why would anybody buy a house with an eye towards appreciation when their present abode is underwater?
The more the government screws with the housing market, the more it’ll get screwed up. Unfortunately it’s so screwed up already, it’ll take some time to recover. The main ingredient that’s missing right now is trust. We do not believe that our elected officials have our best interest at heart. There’s ample reason to believe that they distain us. Any words we might hear to the contrary, we know are lies.
Until trust can be restored, nothing in this country will work as it should. I don’t even think that just any new president will solve our problem. Until we see politicians make an effort to remember that it is we who employ them, commerce in this country will lag. We, the citizens of this great country of ours, will never consent to be treated as second class. We will fight it all the way - with peaceful marches on Washington if need be.
It is breathtaking to read stuff from the liberal side this morning. They are truly in a tizzy. Glenn Beck has scored big. … and the whole country knows it.
http://peterkoelliker.blogspot.com/
http://pkoelliker.blogspot.com/
Animal Spirits still perceive weakness in the housing market. We all know there is a lot of overpriced real estate in Cali. LA and SFO/Silicon Valley will retain some value, I'm not sure about the rest of the state.
Retirees who bought 8-10 years ago may be deeply underwater or undervalued.
Colleague bought a house outside Orlando, 3 miles away the orange groves still grow.