The Worst of the Mortgage Mess is Yet to Come

[hausdok]

By Mike O'Handley, TIJ Editor

If you thought things have been tough recently, you haven't seen anything yet.

Like many of you, I thought that the market had nearly bottomed out, that before too long the economy would begin to recover and that within a year or two things would get back to normal. Well, according to a segment on the December 14th edition of 60 Minutes on CBS, a second round of mortgage meltdowns is on the way and things are about to get a whole lot worse.

It seems that, besides the sub-prime mortgage mess, there are a couple of even more exotic types of mortgages called "option arm" and "alt-A's" and experts quoted in that segment predict that many of those are going to go into foreclosure too - one expert in the segment predicted as many as 70% - and that it's going to be as many as five years before we begin to see a housing recovery. Geez, just when I was starting to feel a little bit optimistic about the future.

To watch the entire segment on your computer, click here. If you don't feel like enduring the first segment, which is an interview between Diane Sawyer and Barney Frank, just fast forward to the second segment by dragging the gray bar that appears on the bottom of your screen when you pass your cursor over the viewer to the 15:18 point.

Looks like it's time to batten down the hatches; this is going to be a long and severe storm!

[Jerry Simon]

Why did I watch that!? Was gonna go down & clean my guns, but better wait a bit (at least a week).

[Steven Hockstein]

It sucks that those of us that have lived within our means, saved for a rainy day, and worked hard to grow our nest egg now have to suffer because of this mess.

[hausdok]

Originally posted by Jerry Simon

Why did I watch that!? Was gonna go down & clean my guns, but better wait a bit (at least a week).

Hi Jerry,

Yeah, I know, for a home inspector that is a pretty depressing piece. However, best to get that kind of thing out there in front of folks so they know about it. We still have a lot of very naive folks who've just gotten laid off from the construction sector trying to jump into this business as a backup plan; they need to know that they are probably jumping from the pan into the fire.

My wife told me yesterday that a realtor at her church told her about a brand new shake-n-bake inspector who is making the rounds of Seattle's various real estate offices and promising to do all inspections for a flat fee of $200 each. I wonder if he realizes that by doing so he's already got one business foot in the grave and is only forestalling the inevitable?

The poor schmuck probably shelled out what little bit of savings he had left for one of those 10-day courses and now he's trying to compete with very experienced long-term inspectors in a market that has an inventory glut 'cuz almost nobody is buying right now. It's getting scary. I'm prepared though; I've already got a tent and have spotted a pretty good spot beneath an overpass that nobody has staked out yet.

ONE TEAM - ONE FIGHT!!!

Mike

[jferry]

I am having my doubts about just how widespread this pain actually is.

I drove up to Fordham on Saturday morning to pick up my son for Christmas vacation. [Curiously, an electronic sign at Fordham University was wishing everyone "Happy Holidays" - go figure.]

Traffic on the NJ Turnpike was bumper to bumper - literally, in a few instances. When we got to the Bronx, the streets were crowded with shoppers.

After lunch, we took the Metro North into town and had to stand. Got to the city, Grand Central Terminal was bustling. Checked into the hotel. "Do you have a full house?" I inquired of the desk clerk. "Pretty much. It's starting to fill up."

Walked over to Times Square to see if The Naked Cowboy was braving the very inclement elements. He wasn't. But more appropriately clothed citizens were. And it was, as my mother used to say, "bickering". ["It's bickerin', Joe, put a hat on ye!"]

Bryant Park was hosting an ad hoc collection of Christmas kiosks that were hawking all manner of Christmas tchochkes - an oxymoron, if ever there was one, I know - and the skating rink was clotted with skaters.

No one at the hotel bar seemed worried about . . . anything.

And I don't think that that is a skewed sample. I have made similar observations here.

You?

[Steven Hockstein]

Originally posted by jferry

I am having my doubts about just how widespread this pain actually is.

I drove up to Fordham on Saturday morning to pick up my son for Christmas vacation. [Curiously, an electronic sign at Fordham University was wishing everyone "Happy Holidays" - go figure.]

Traffic on the NJ Turnpike was bumper to bumper - literally, in a few instances. When we got to the Bronx, the streets were crowded with shoppers.

After lunch, we took the Metro North into town and had to stand. Got to the city, Grand Central Terminal was bustling. Checked into the hotel. "Do you have a full house?" I inquired of the desk clerk. "Pretty much. It's starting to fill up."

Walked over to Times Square to see if The Naked Cowboy was braving the very inclement elements. He wasn't. But more appropriately clothed citizens were. And it was, as my mother used to say, "bickering". ["It's bickerin', Joe, put a hat on ye!"]

Bryant Park was hosting an ad hoc collection of Christmas kiosks that were hawking all manner of Christmas tchochkes - an oxymoron, if ever there was one, I know - and the skating rink was clotted with skaters.

No one at the hotel bar seemed worried about . . . anything.

And I don't think that that is a skewed sample. I have made similar observations here.

You?

I live near NYC and here are some of my recent observations:

Black Friday- got a close parking spot in the Short Hills Mall and did not have to wait to sit down for dinner in a restaurant that is usually packed, even off season.

I went into a local Staples store on Black Friday at 4PM and the "Doorbuster" specials that were in limited quantity since 7 AM were almost all still available. The manager told me that sales were way down.

Drove into NYC on the Sunday after Black Friday to pick-up my son expecting to hit mobs of people but there was - no traffic- .

Many Broadway Shows are closing. A family friend went to see Spamalot and the balcony was empty. Who can afford to bring a family of four to the theater? The tickets are over $100 each, plus dinner, plus parking, and whatever else you buy.

Yankee Stadium, Giant Stadium, Shea (Citibank?) are all having issues with selling season seats because of the costs. Typically, there are waiting lists for Giant season tickets.

I think the big money spenders don't have it to spare this year. Thet hedge fund money has dried-up. The Walmarts, Targets, Costco, etc.. are OK, but not as busy.

None of my home inspector or real estate friends are busy.

Hope it gets better soon.

[jferry]

Originally posted by Steven Hockstein

Originally posted by jferry

I am having my doubts about just how widespread this pain actually is.

I drove up to Fordham on Saturday morning to pick up my son for Christmas vacation. [Curiously, an electronic sign at Fordham University was wishing everyone "Happy Holidays" - go figure.]

Traffic on the NJ Turnpike was bumper to bumper - literally, in a few instances. When we got to the Bronx, the streets were crowded with shoppers.

After lunch, we took the Metro North into town and had to stand. Got to the city, Grand Central Terminal was bustling. Checked into the hotel. "Do you have a full house?" I inquired of the desk clerk. "Pretty much. It's starting to fill up."

Walked over to Times Square to see if The Naked Cowboy was braving the very inclement elements. He wasn't. But more appropriately clothed citizens were. And it was, as my mother used to say, "bickering". ["It's bickerin', Joe, put a hat on ye!"]

Bryant Park was hosting an ad hoc collection of Christmas kiosks that were hawking all manner of Christmas tchochkes - an oxymoron, if ever there was one, I know - and the skating rink was clotted with skaters.

No one at the hotel bar seemed worried about . . . anything.

And I don't think that that is a skewed sample. I have made similar observations here.

You?

I live near NYC and here are some of my recent observations:

Black Friday- got a close parking spot in the Short Hills Mall and did not have to wait to sit down for dinner in a restaurant that is usually packed, even off season.

I went into a local Staples store on Black Friday at 4PM and the "Doorbuster" specials that were in limited quantity since 7 AM were almost all still available. The manager told me that sales were way down.

Drove into NYC on the Sunday after Black Friday to pick-up my son expecting to hit mobs of people but there was - no traffic- .

Many Broadway Shows are closing. A family friend went to see Spamalot and the balcony was empty. Who can afford to bring a family of four to the theater? The tickets are over $100 each, plus dinner, plus parking, and whatever else you buy.

Yankee Stadium, Giant Stadium, Shea (Citibank?) are all having issues with selling season seats because of the costs. Typically, there are waiting lists for Giant season tickets.

I think the big money spenders don't have it to spare this year. Thet hedge fund money has dried-up. The Walmarts, Targets, Costco, etc.. are OK, but not as busy.

None of my home inspector or real estate friends are busy.

Hope it gets better soon.

I had a similar Black Friday experience. Back in May I switched over to Apple after finally tiring of the multiple screen freezes, the lost data, the interminable boot up sequence and the frequent CTRL-ALT-DEL chords.

I signed up for the weekly classes to learn all the things that the MacBook can do. A lot, it turns out.

The Apple Store is in Suburban Square an upscale mall in Ardmore, PA. The class was at 10:00 a. m. on Black Friday - what was I thinking? - and I expected to find parking a tough ticket. Normally, you have to stalk someone who appears to be leaving so you can commandeer his space before someone else. But that day, I had my pick of dozens. The Apple Store was jammed, however, so people are buying some high ticket gadgets.

But other than the counterintuitive ease of parking, I've seen no other index of people cutting back. Keep in mind that a lot of folks have gone online for shopping. And the newspapers were curiously lacking in retail doomsday stories. At least around here.

Once he takes office, President-elect Obama may, by sheer dint of his charismatic persona, help restore the confidence in the future that the nation allegedly no longer has.

Regardless, I continue to think that predictions of a long-term economic malaise will prove false. Much like the predictions of global warming and permanent $4.00/gallon gasoline. On Saturday, I paid $1.579/gallon. This time last year, it was a dollar/gallon higher.

[Phillip]

The house sales in my area are down 50%. My inspections are down 40%.

Some of the agents I know have taken another job.

I went with my son-in-law shopping yesterday and had no problems finding a parking place or getting out of the store we went to. Sam's, Walmart, Target, and the Mall.

The city school system has put off starting building a new school and has shut down one that was being built.

I hope this turn down doesn't last long.