Usually I have to think long and hard on what I'm going to say. Fortunately today I don't have to. This article about values pretty much agrees with what I've been saying.
Values
We haven't quite hit bottom yet. In some of the lower valued area, maybe, but the higher end is starting to feel the pain. You'll see the upper level homes starting to take some real hits, more than what they've already seen.
Then next.... Commercial. I really think that in the next few years, investors with the cash are going to find so great deals in commercial investments. If you own commercial now, get it rented for at least the next couple of years and don't worry about making money, just be happy to break even and not loose cash each month or the property all together.
Wednesday, August 26, 2009
Thursday, August 20, 2009
Funny, but it's not
As I rise and shine today I look at the headlines and it says, "U.S. Jobless Claims Unexpectedly Rise."
Without even reading the article I just can't believe that any job losses are unexpected. I've been saying for months that this "recovery" doesn't make sense. Just from talking to my friends and people that I know, there are no jobs out there. The people that do happen to find something, usually consists of Sales jobs or part time or underpaid jobs that when they take it, it's better than nothing.
I never understood what wizards think of the number that is OK for unemployment to be at. Why is it OK for 450,000 new claims but 475,000 is a surprise and sends the markets spinning. WHAT IS IT ABOUT THAT 25,000?? And like wise the other way, when the claims come in at 425,000, well then the recession must be over. Never mind that this is still 400k+ people that have lost their jobs. And this is only the 10th or 20th straight month.
It's just funny to me that We who work with the people on the ground see what happens when people don't have money and find jobs. But for the DOW to move or interest rates to change, it's unimaginable numbers that make them go up and down. For people to sit in little cubicles writing about the state of the economy, only able to do so because the Fed has dumped billions into their company (AIG, WELLS FARGO, CITI....). I wonder how many of these headline writers would say the same thing if they where fired like the workers at GM? When the number 1 means more than the number 450,000.
I've not heard one scenario for a long term recovery. Even when they report of possible recovery, I'm not hearing of any long term stability to go with it. All of this is still rattling in my head so hopefully I'll clear it up and post again, for my one reader to hear :)
Without even reading the article I just can't believe that any job losses are unexpected. I've been saying for months that this "recovery" doesn't make sense. Just from talking to my friends and people that I know, there are no jobs out there. The people that do happen to find something, usually consists of Sales jobs or part time or underpaid jobs that when they take it, it's better than nothing.
I never understood what wizards think of the number that is OK for unemployment to be at. Why is it OK for 450,000 new claims but 475,000 is a surprise and sends the markets spinning. WHAT IS IT ABOUT THAT 25,000?? And like wise the other way, when the claims come in at 425,000, well then the recession must be over. Never mind that this is still 400k+ people that have lost their jobs. And this is only the 10th or 20th straight month.
It's just funny to me that We who work with the people on the ground see what happens when people don't have money and find jobs. But for the DOW to move or interest rates to change, it's unimaginable numbers that make them go up and down. For people to sit in little cubicles writing about the state of the economy, only able to do so because the Fed has dumped billions into their company (AIG, WELLS FARGO, CITI....). I wonder how many of these headline writers would say the same thing if they where fired like the workers at GM? When the number 1 means more than the number 450,000.
I've not heard one scenario for a long term recovery. Even when they report of possible recovery, I'm not hearing of any long term stability to go with it. All of this is still rattling in my head so hopefully I'll clear it up and post again, for my one reader to hear :)
Thursday, August 13, 2009
home values
Here is an interesting article that backs up what I've been saying. I wonder how long it will take to have them bury this article.
"Underwater values"
It's not like I want this to happen or continue to 50%, it's just what the numbers are showing. The truth sucks but you should know it.
"Underwater values"
It's not like I want this to happen or continue to 50%, it's just what the numbers are showing. The truth sucks but you should know it.
Loan mods and values
The little under stated fact that I hear is that by the end of the year 50% of all home owners will be upside down on their mortgage. This includes A paper / Prime borrowers.
As always, I'm not trying to scare you but inform. This will certainly lead to more foreclosures and rate mods. I've made it a point not to get in the rate mod business because I see it as a short term dying business AND most people can do it themselves. I've helped a few people, including myself, work on their mortgage modifications. They're a pain in the ass, mainly because no one at these banks talk to each other. One side never knows what the other is doing.
Besides check this ARTICLE out about the CA gov trying to crack down on rate mod scams.
I'd much rather charge $500 for a few hours of my time and tell the borrowers how to set it up and do the mods themselves. For the average person it's not really that hard once you get a little advice. So if you know someone who's thinking of do a rate mod, have them call me first. I might save them from a scam and / or show them how they can do it themselves for a fraction of the going rate.
Bear Financial
818 264-0999
As always, I'm not trying to scare you but inform. This will certainly lead to more foreclosures and rate mods. I've made it a point not to get in the rate mod business because I see it as a short term dying business AND most people can do it themselves. I've helped a few people, including myself, work on their mortgage modifications. They're a pain in the ass, mainly because no one at these banks talk to each other. One side never knows what the other is doing.
Besides check this ARTICLE out about the CA gov trying to crack down on rate mod scams.
I'd much rather charge $500 for a few hours of my time and tell the borrowers how to set it up and do the mods themselves. For the average person it's not really that hard once you get a little advice. So if you know someone who's thinking of do a rate mod, have them call me first. I might save them from a scam and / or show them how they can do it themselves for a fraction of the going rate.
Bear Financial
818 264-0999
August info
I find it strange that all of the sudden things don't look as good as the headlines made the economy seem to be for the last few weeks. Headlines like the FOMC sees a leveling out. That sounds good but even if we are leveling out, we're leveling out with unemployment around 10%+ nationally!! How long will we stay at that. Some states are as high as mid 20% for un and under employed.
The worst news and what seems to be buried when it comes out is that we're starting to see the mortgage mess hit A paper / prime borrowers. I read a scary stat that said that by the end of the year 50% of the homeowners, 50%!!!, will be upside down across the country.
The DOW might be up, but these are speculative indicators. It's up because people have thought or have been lead to believe things are getting better. For example; Cash for Clunkers. The program is already out of money and needed more. The government is basically giving down payments for new cars to be bought off of lots that the existing cars where just sitting.
This made auto sales look good. Cars are moving off lots and then the lots need to replenish their inventory. But will the auto makers hire back full timers or just seasonal part timers to pump out what they need to until the Cash for Clunkers run is over. There never seems to be a shortage of people when the government is handing out free money. What happens when that ends. Cars will sit again.
The worst news and what seems to be buried when it comes out is that we're starting to see the mortgage mess hit A paper / prime borrowers. I read a scary stat that said that by the end of the year 50% of the homeowners, 50%!!!, will be upside down across the country.
The DOW might be up, but these are speculative indicators. It's up because people have thought or have been lead to believe things are getting better. For example; Cash for Clunkers. The program is already out of money and needed more. The government is basically giving down payments for new cars to be bought off of lots that the existing cars where just sitting.
This made auto sales look good. Cars are moving off lots and then the lots need to replenish their inventory. But will the auto makers hire back full timers or just seasonal part timers to pump out what they need to until the Cash for Clunkers run is over. There never seems to be a shortage of people when the government is handing out free money. What happens when that ends. Cars will sit again.
Friday, August 7, 2009
Jobs and Losses
I've come to believe that the reports of job losses and unemployment really mean nothing these days. A week like we've had would point to a turning economy but from the average man / woman, times suck. I don't know people that are doing better or their job prospects are turning around.
This article is interesting to read and gives a little bit better explanation of what these numbers actually mean.
Krugman
By the end I think he sums it up well (and I'll paraphrase), the crap storm might be slowing down but we're still standing and sinking in crap.
This article is interesting to read and gives a little bit better explanation of what these numbers actually mean.
Krugman
By the end I think he sums it up well (and I'll paraphrase), the crap storm might be slowing down but we're still standing and sinking in crap.
Wednesday, August 5, 2009
Values to A paper
I don't need to get into a lecture of what the subprime markets have done to values. I think we all know where we sit with that. This is about disturbing news that almost 50% of home owners are or will be "underwater" in the next year.
This INCLUDES the A paper and Jumbo loans that many thought had no problems. I don't know why people would think that an overall drop in value wouldn't eventually catch up to the Prime borrowers? I've got 5 - 10 loans that I can think of off the top of my head that would refi today if they could but we can't because of value issues. These are not subprime borrowers. These are grade A Prime borrowers. They're truly stuck. Luckily when dealing with Prime borrowers they have good jobs and savings to dip into to make sure they pay the mortgage but at anytime people can loose their jobs. If they're self employed their customers could stop coming back. We're over 10% unemployment and I believe over 20% if you add the under-employed to that.
Now the Prime borrower's who are at 100% or more on their Loan to Values are finding out that it's not so simple to just get a loan. This is the start of another dip in housing and if nothing is seriously done to work down the principal of the loans, we're going to have real problems in the future.
A normal rate mod will give you a few years of a low interest rate and make it easier, but the fact could remain the same for some time that the loans are higher than the values. what happens in 3 years when that lower rate comes back up? Are we going to see people walking again? Other than the "unfair" argument that I've heard, it seems that if you where to use the stimulus money to lower people's principals, that would help in the short them (because the payment would be less) and in the long term by allowing the markets to move because houses will have equity.
This INCLUDES the A paper and Jumbo loans that many thought had no problems. I don't know why people would think that an overall drop in value wouldn't eventually catch up to the Prime borrowers? I've got 5 - 10 loans that I can think of off the top of my head that would refi today if they could but we can't because of value issues. These are not subprime borrowers. These are grade A Prime borrowers. They're truly stuck. Luckily when dealing with Prime borrowers they have good jobs and savings to dip into to make sure they pay the mortgage but at anytime people can loose their jobs. If they're self employed their customers could stop coming back. We're over 10% unemployment and I believe over 20% if you add the under-employed to that.
Now the Prime borrower's who are at 100% or more on their Loan to Values are finding out that it's not so simple to just get a loan. This is the start of another dip in housing and if nothing is seriously done to work down the principal of the loans, we're going to have real problems in the future.
A normal rate mod will give you a few years of a low interest rate and make it easier, but the fact could remain the same for some time that the loans are higher than the values. what happens in 3 years when that lower rate comes back up? Are we going to see people walking again? Other than the "unfair" argument that I've heard, it seems that if you where to use the stimulus money to lower people's principals, that would help in the short them (because the payment would be less) and in the long term by allowing the markets to move because houses will have equity.
Demand?
I'm reading a lot today about the demand for products was up slightly more than expected. Some people will rally behind the fact that this has to do with the housing market possibly finding a bottom and people are spending more money. These would all be great things if they where true.
I personally see things a little different. It's always curious to me to hear people speculate on the market off of pure numbers and no where do they bring the human element into their calculations.
Let's touch on auto demand. Cash for Clunkers. Auto makers basically shut down production because no one wanted to buy cars. This in turn left a ton of cars on your local lot just sitting. All of the sudden the government comes out with this plan to give people free money for their old cars, which just happens to be enough for a down payment on a new car (when I say new, I mean one that's been sitting because no one else wants or can afford to buy it). Now you see a short term gain and demand for autos. Car lots are starting to need to refill their inventory. So car companies need to crank out some new cars again. Is this a long term solution or a short term fix. Will the people that they hire back be full time or only last a few months until the Cash for Clunkers is over, which that program has run out of money and the senate needs to approve another 2 billion dollars to keep it going.
This shows where you can have profits but in reality they are fake profits. This doesn't seem like a sustainable demand source. So I question the fact that this small spike in sales and demand is really a sign of an improving economy.
I personally see things a little different. It's always curious to me to hear people speculate on the market off of pure numbers and no where do they bring the human element into their calculations.
Let's touch on auto demand. Cash for Clunkers. Auto makers basically shut down production because no one wanted to buy cars. This in turn left a ton of cars on your local lot just sitting. All of the sudden the government comes out with this plan to give people free money for their old cars, which just happens to be enough for a down payment on a new car (when I say new, I mean one that's been sitting because no one else wants or can afford to buy it). Now you see a short term gain and demand for autos. Car lots are starting to need to refill their inventory. So car companies need to crank out some new cars again. Is this a long term solution or a short term fix. Will the people that they hire back be full time or only last a few months until the Cash for Clunkers is over, which that program has run out of money and the senate needs to approve another 2 billion dollars to keep it going.
This shows where you can have profits but in reality they are fake profits. This doesn't seem like a sustainable demand source. So I question the fact that this small spike in sales and demand is really a sign of an improving economy.
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