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Expired & canceled listings soar in MA as Petitions to Foreclose approach MLS sales

Posted in Foreclosures, Market trends, Real Estate Bubble

NPR Talkshow Alert: The Subprime Mop-up

OnPointRadio.org, a nationally syndicated talkshow on NPR, is hosting a program NOW entitled, "The Subprime Mop-Up."
If you live in Greater Boston, you can listen to 90.9FM from 9-10am
this morning, Thursday, September 6, 2007, or the rebroadcast tonight
from 7-8pm. Beyond Boston, you can also listen to the program LIVE
online
now or access the audio anytime later at your convenience:
   
Aired: Thursday, September 06, 2007 10-11AM ET

Program description:  The Subprime Mop-up

If
you thought the subprime mortgage mess was behind us, think again. In
the next year, another two million adjustable-rate mortgages are
scheduled to reset from low "teaser" rates to household budget-busting
new highs.

Foreclosure rates are already soaring. In some
regions, whole neighborhoods risk going under. A credit crunch backlash
has markets around the world in turmoil.

Now Washington is girding to weigh in.  But who, if anyone, should be bailed out?  Who punished?  Who reined in?

This hour On Point:  homes, high-rollers, and moral hazards in the subprime mop-up.

—–

Housing economist Karl Case just ducked a question on the implications of the subprime crisis on housing prices nationwide and Congressman Barney Frank just finished speaking.  The complete line-up of guests include:

  • Rep. Barney Frank, Democrat from Massachusetts, chairman of the House Financial Services Committee
  • Karl Case, professor of economics at Wellesley College and co-author,
    with Yale’s Robert Shiller, of the Case-Shiller Index, the leading
    database of U.S. housing sales
  • Michael Mussa, former chief
    economist at the International Monetary Fund and former member of
    President Ronald Reagan’s Council of Economic Advisers
  • Michael G. Ciaravino, Mayor of Maple Heights, Ohio, a city hit hard by foreclosures

Posted in Foreclosures, Real Estate Bubble, RECALL: Real Estate Consumer Alliance

Will social networking make “negative cycle” more vicious?

Economy.com’s Mark Zandi is no zealot, so if he is using terms like this "negative cycle" homebuyers ought to take note:

"There is a substantial risk that the mortgage market will devolve into
a self-reinforcing negative cycle," Zandi said in a release this
morning. "Mounting credit problems could beget more restrictive
underwriting standards, which would weigh heavily on the fragile
housing market as potential borrowers become unable to obtain credit,
and existing borrowers facing large payment resets are unable to
refinance. Foreclosures would mount, leading to weaker house prices,
falling homeowners’ equity and even more substantial credit problems.
The cycle repeats with more intensity and the mortgage market
corrections unravel into a crash."

Thanks to the Boston.com’s new real estate blog for posting the quote above.  We discussed the same worse-case scenario yesterday with NECN, but used the word — "vicious cycle" — an economic term some might substitute for the "negative cycle" above. 

My question is whether social networking and unfiltered consumer
access to real estate data make the downcycle more vicious?"  Not
through lack of civility, but data transparency that allows home buyers to
make more informed decisions, putting further downward pressure on prices.  To see what I mean, visit our new MLS access which allows users to easily compare asking prices to price trends and more on Zillow.com.

Here’s what we wrote two years ago about the coming negative cycle before Economy.com issued it’s warning today:  From froth to foreclosures:  You ain’t seen nothing
yet
!"

When the market really cools, things will get worse, potentially
much worse.  A recent New York Times article called the magnitude of
interest-only and adjustable rate mortgages "The Trillion-Dollar Bet" because "$1 trillion of the nation’s mortgage
debt – or about 12 percent of it – [will] switch to adjustable payments in 2007."  Will foreclosures spike then?

An upcoming article in the July / August 2005 issue of The Atlantic Monthly, entitled "Countdown to a Meltdown,
speculates that the situation could become so bad that "repossession
riots" will occur in some areas.  Do you think that fictitious forecast
is irresponsible fear mongering, or foreshadowing a falling market that
will make current home buyers look foolish; or worse, candidates for
foreclosure in the future?

Cross-posted in the forum of The Real Estate Cafe’s social networking site.  Please join the discussion with other home buyers and sellers there.

Posted in Foreclosures, Housing forecasts, Market trends, Price trends, Real Estate Bubble, Social Networking, Timing the market

Double Bubble: How counterfeit buyer agents inflated the housing bubble

Doublebubble1_2
Yesterday we blogged about the "Mortgage Meltdown" and record number of foreclosures, challenging the media and regulators to investigate how counterfeit buyer agents (a.k.a. double agents) helped inflate the housing bubble.  If they do, here’s the kind of "glaring" case study they may find:

My so-called buyer’s agent (who promptly switched roles at contract
signing without explanation), initially advised me to bid $750,000 for
my house of choice, which was listed at $699,900. When I told her that
such an offer was beyond my price range, she was quite adamant that I
not offer anything under the list price. When I finally backed out the
deal because of her bait and switch scam, I later heard that the house
in question sold shortly afterwards for $682,000–in other words,
nearly $70,000 less than the bid suggested by my so-called buyer agent.

This type of price inflation (caused by seller’s agents masquerading
as buyer’s representatives) must have a very distorting impact on
housing costs.  The economic fallout is enormous: ordinary citizens are
forced to move out farther in search of decent, affordable places to
live, which  leads to a host of problems connected with traffic
congrestion, suburban sprawl, etc.

As I perceive it, the real estate cartel’s use of dual agency
[a.k.a. "designated agency"], which works to the detriment of the
average consumer while enriching dishonest agents through the practice
of double-dipping, contributes significantly to the manifold problems
we see in the residential housing market and therefore should be fully
exposed.

The homebuyer above concluded, "Isn’t there any investigative team or media personage with the courage and tenacity to shed light on this problem?"  We’d like to ask how homebuyer and sellers who have been victims of dual agency, designated agency, or faulty agency disclosure can use social networking tools, like blogs, wikis, and interactive mapping, to expose the problem and prevent other consumers from being harmed?  Does anyone know if such an organizing effort is already underway, or have ideas about how to get one started?

Posted in Defensive Homebuying, Dual Agency Detective, Foreclosures, RECALL: Real Estate Consumer Alliance

Friday Link-O-Rama

Sameoffice1
Tuesday’s announcement that "lenders began
foreclosure against more than one of every 200 U.S. mortgage borrowers
in the fourth quarter," has the media tracking the "Mortgage Meltdown" and record number of foreclosures, and industry pundits predicting widespread ripple effects from the "Subprime Panic."

Steven Pearlstein of the Washington Post estimates that "…1.5 million Americans may lose their homes to foreclosure and …hundreds of thousands of homes could be dumped on an already glutted
market."  Pearlstein concludes, "What we have here is a failure of common
sense. …It’s not a whole lot more complicated than that." 

But some
real estate consumer advocates say the story is more complex. They’re calling for the media and regulators to investigate the role dual agents (a.k.a. designated agents) played in creating the real estate bubble and the growing foreclosure problem.  During the housing boom, little attention was paid to the conflicts of
interest
which occur when large real estate agencies try to represent both home buyers and sellers in the same transaction. But one leading consumer advocate predicts homebuyers will take legal action when they realize they have been betrayed by counterfeit buyer agents:

As some home owners get
"upside down" on their equity, or lose their homes by foreclosure, you
may start to see a rash of litigation against the real estate "agents"
who sold them their homes.  Probably the vast majority of real estate
agents acted as "buyer’s agents" in the transactions, so there is
likely the possibility some of these "buyer’s agents" didn’t really
perform up to their expectation of "protecting" the interests of their
"buyer clients." 

In coming days, we’ll expose the conflicts of interest designated agents would prefer to paper over and the heartbreaking failure of the real estate regulatory system to protect ordinary homebuyers and sellers.  If you’ve been a victim of dual agency, designated agency, or other deceptive real estate practice, or know someone who is writing about the same subjects, please let us know.  If you are in the housing market now, BEWARE designated agents; and demand a real buyer agent, like The Real Estate Cafe, who can help you save tens of thousands of dollars.

Posted in Defensive Homebuying, Dual Agency Detective, Foreclosures, RECALL: Real Estate Consumer Alliance

Platial Allows You to Map Your World

The map may take a couple seconds to load.

UPDATE: Added wiki-version of national RealEstateBubbleMap.com. Contributors welcome.

A year after The Real Estate Cafe speculated about whether bloggers would help pop the real estate bubble,
househunters turned citizen journalists now have the opportunity to use
online maps to move past theories and debates, to document price reductions, pre-foreclosure notices, and properties selling for below their assessed value.  This map, for example, shows some of the largest recent savings in Greater Boston.  Interested in using Platial to create real estate bubble maps in "overpriced" housing markets across the nation? Here are three options: 

1.  Register to use Platial so you can add "Places" to the Boston regional map above.  It’s easy to add a new property, post comments on an existing one, and upload photos to any Place whether it is yours or not.  Videos and audio clips can be embedded in the descriptions of the Places you add.  To republish this map on your website, click here and simply cut and paste the html. The map can be re-sized to fit any page layout.  Contributions from fellow bubble bloggers and their readers, particularly those in 71 cities called "extremely overvalued" by USA Today are welcome.  Want to correspond with each other and become bubble buddies?  Start by adding your comments to the Boston bubble map or this national map / wiki of overvalued housing markets.

Posted in "We" companies, ASAP: AIDS Shelter Alliance Partners, Bubble map, Foreclosures, Mapping, Market trends, Moblogging in Real Estate, Real Estate Bubble, Savings & Rebates

Massachusetts housing calendar online

CHAPA housing Calendar, note flyer on learning from past Foreclosures.

Posted in Foreclosures

Real estate bubble: Top news story of 2005?

Bostoncom_010106_1For the past month, two Boston Globe real estate articles, one on falling prices and the other on rising foreclosures, have topped their list of "Most Popular Stories" (click on image for larger view).  Now, guess what their cross-town rival, the Boston Herald, has listed as #1 on their "top business and economics highlights of 2005"?

1. Pop goes the bubble — The state’s housing bubble finally sprang a leak this year, with a noticeable slowdown in sales, a falling off in prices and long waits to sell homes. Partly brought about by rising interest rates, the slowdown was evident by May, when housing sales fell by 11 percent over the prior year. The market hasn’t shown much improvement since.

The rest of the Herald’s list includes factors that have contributed to the end of the real estate bubble and will continue to pull down housing prices in coming months and years:  slow job growth in the state, rising gas and energy prices, and loss of major Massachusetts employers through mergers, acquisitions, and relocations. 

Posted in "We" companies, Do-it-yourself, Foreclosures, In the News, Inside The Real Estate Cafe, Price trends, Real Estate Bubble, Social Networking, Timing the market

Spring forward, fall back: Resetting the Foreclosure Clock

There was a time when CENTURY 21, the world’s largest real estate organization with 110,000 brokers and agents in more than 25 countries, used the slogan, "We sell a home every minute of every day."  On the day after Halloween, transactions per minute have come back into the real estate vocabulary with a frightening, downward spin that could make recent and potential homebuyers run for cover, at least in the UK.  There, an article entitled, Increase in repossessions show housing bubble is close to bursting, published this stunning statement and the statistics on the link below:  "in England and Wales a repossession order is made every seven minutes and an action is entered into every four minutes."

Think It could never happen here?  Don’t be so sure… check out the nearly 1.5 million foreclosures, foreclosures, bankruptcies, and tax liens already recorded nationwide on Foreclosure.com and speculation earlier this summer about the prospect of "repossession riots" in the future.  (The Real Estate Cafe’s predecessor, the Massachusetts Homebuyers Club helped the federal government sell foreclosed properties in 50 major cities across 25 states in the last real estate recession from 1991 to 1995.)

Posted in Foreclosures, Real Estate Bubble, RECALL: Real Estate Consumer Alliance

Countdown to Meltdown: Doomsday scenarios for “Hallucinating Homebuyers”

Long_emergency1This doomsday scenario is worth
scanning, not just because the author — a former editor of Rolling
Stone magazine
and author of three books on suburban sprawl — calls the
real estate bubble the “last act in the sorry drama of the hallucinated
economy” but because it’s the second economic doomsday scenario we’ve heard in 36 hours and offers some potential decision-making criteria for home buyers.  Writing about James Howard Kunstler’s new book The Long Emergency,the Santa Cruz Sentinel says:   

"Understanding the deep changes the United States and the rest of the
world will experience as early as this decade, he said, could be the
deciding factor in which thriving communities of today become the ghost
towns of tomorrow."

"The middle
class will become distressed, the construction industry flat,
interstate hauling will disappear, airlines will become toast and our
daily lives will be defined by what’s within walking distance."

"Suburbs, large cities and McMansions will become slums."

The
good news is that “Some communities will fair better than others during
the “Long Emergency.” So how do you find one if you are planning on buying a home this year despite repeated warnings of the real estate bubble? 

Posted in Book reviews, Foreclosures, In the News, Real Estate Bubble
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