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Boy I Should Have Sold

A report from Bloomberg. “A decade ago, Angelo Mozilo was the face of the housing bust that preceded the financial crisis. Now the former chief executive officer of Countrywide Financial Corp. is predicting another drop, and for some homeowners it may be even worse. High-end properties in coastal U.S. states may fall as much as 40% from their peak value because many people can no longer afford them after losing deductions in the U.S. tax overhaul that passed in late 2017, Mozilo said.”

“‘There’s too much inventory in the market, and there’s going to be more inventory because this tax bill was devastating to the middle-to-higher-income homeowner who can’t deduct anything except $10,000,’ said Mozilo, who’s attending the SALT Conference in Las Vegas. ‘The volume of sales has dropped dramatically, and values are coming down dramatically, particularly on the upper end.'”

“While wealthy residents in the Northeast and on the West Coast may be directly affected by a drop in high-end home prices, Mozilo also predicted that the impact will reverberate throughout the economy. Housekeeping staff and gardeners will be fired, restaurants will lose business and the banks that own those mortgages will have to take writedowns and begin foreclosures, he said.”

“‘The moral of the story is when you see things inflated and things look so good, it’s time to pull back and worry,’ Mozilo said. ‘When you sense it, if that’s one of the options, get out.'”

From Mansion Global on Florida. “Jorge Pérez, the billionaire real-estate developer widely referred to as Miami’s ‘condo king,’ is having a bit of trouble selling his own: He is relisting his Miami condo for $10.95 million, or 45% off what he first sought three years ago.”

“Mr. Pérez, CEO of the Related Group, said he first listed the property at One Ocean for $20 million in 2016, when the rise of the Miami market looked unstoppable. He received an offer of $15 million, which he rejected. ‘My expectations were way too high, I admit,’ he said. ‘But I was responding to what I saw in that moment in the market, without any immediate need to sell. Now, I’m saying, ‘Boy I should have sold.'”

“Mr. Pérez is not the only big-name owner to get caught by the Miami downturn. Art dealer Larry Gagosian and investor Leon Black, both of whom owned at nearby Faena House, recently suffered losses selling their units, The Wall Street Journal reported.”

From Chicago Magazine in Illinois. “In many ways, the recession catalyzed an awakening about using homeownership as a stand-in for financial security — and a greater debate regarding what types of residences younger generations will value. No other structures illustrate this cautionary tale quite like the McMansion.”

“The homes weren’t just a showcase of wealth, but the owner’s piggy bank. Of course, when the market crashed, the inflated prices on these newly constructed structures plummeted.”

“In South Barrington, home to swathes of McMansions, the market has been slow to recover. There, large single family homes regularly hit the market at the same prices they sold for in the ’00s, indicating an enduring lack of demand in the northwestern suburb.”

The Orange County Register in California. “Homebuying in what we’ll call the ‘Beach Blvd. Corridor’ — in and around Huntington Beach, Fountain Valley, Garden Grove and Westminster — fell 21% in what was Orange County homebuying’s slowest start to a year since 2009.”

“CoreLogic stats show the lowest countywide sales count for any first three months of a year since the Great Recession. It also was the third-slowest-selling first quarter in the real estate tracker’s database that dates to 1988. At the community level, sales rose in only one-sixth of Orange County’s 83 ZIP codes. With the slump, prices fell countywide, too.”

From Realtor.com. “When Michael J. Bennett decided to buy a $350,000 condo for his retirement in the Gulf beach town of Placida, FL, in 2006, he saw nothing but blue skies ahead. After all, he had good credit, experience investing in real estate, and 20% in cash to put down. What could go wrong?”

“Then the bottom fell out of the housing market and Bennett was left holding the bag. He struggled to rent out the place, about an hour south of Sarasota. But empty apartments glutted the market, and there were no buyers. Bennett lost his condo as well as his primary residence, about 40 minutes away in Punta Gorda, FL.”

“And, sadly, he had plenty of company in his misfortune. Vacation destinations were particularly hard-hit during the past recession. While the nation’s housing market has made a roaring comeback in recent years, an overall slowdown has now taken hold, marked by lower annual price acceleration and more properties on the market. With some forecasters predicting a recession on the horizon, buying a second home in an idyllic location may seem like a dicier-than-ever prospect.”

“The crash was especially hard on some of the most alluring vacation spots. In Pensacola, FL, median annual condo prices fell as much as 62% from 2007 to 2010, according to ATTOM Data Solutions. They fell 40% in just one ZIP code in Sedona, AZ. Meanwhile, in Bennett’s Placida community, foreclosure filings soared to 16% of all housing units in 2010. That was more than seven times the national average.”

“‘You keep thinking it will level out, like the stock market,’ says Bennett, a retired firefighter who’s now 59 and living outside Nashville, TN. ‘And it kept going down and down and down.'”

“Some vacation hot spots still haven’t recovered. A condo in the building where Bennett once owned a similar unit was recently sold for about $100,000 less than what he had paid 13 years ago.”

From Housing Wire. “It’s getting harder and harder for smaller lenders to make money in the mortgage business, as independent mortgage banks and mortgage subsidiaries of chartered banks recently reported that they lost $200 per loan on every loan they originated in the fourth quarter of 2018.”

“Earlier this week, it was Live Well Financial that announced it was terminating its mortgage origination business. Now, for the second time in less than a week, another lender is abandoning their mortgage business as well. Bank 34, which operates nine loan production offices in the western part of the U.S., announced this week that it is shuttering its mortgage business.”

“According to the bank, the move will include shutting down its nine loan productions offices, which are located in El Paso, Texas; Scottsdale, Arizona; Gilbert, Arizona; Tubac, Arizona; Albuquerque, New Mexico; Medford, Oregon; West Linn, Oregon; Puyallup, Washington; and Lynnwood, Washington.”  

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This Post Has 69 Comments

  1. And this 2-fer is what many of us did not understand about the buyers in 2016 and 2017. They got to show off …. and at the same time their $M 1.X would ‘appreciate’ at the same 20%/year as a $500K house.

    Apparently it was just a matter of getting into the right subdivsion and in the right school district
    —–
    “The homes weren’t just a showcase of wealth, but the owner’s piggy bank. Of course, when the market crashed, the inflated prices on these newly constructed structures plummeted.”

    1. IIRC, 2015 (might have been 2014) was the highest number of second shack purchases since the UHS started records.

      1. They better dump it for whatever it will fetch.

        As a wise man eloquently stated, Get what you can get for your house today because it’s going to be less tomorrow for decades to come.”

        He’s right.

  2. ‘Now, for the second time in less than a week, another lender is abandoning their mortgage business’

    And massive ponzi schemes, flippers getting an ass-pounding, fraud popping up left and right.

    Are we there yet?

    1. ‘He received an offer of $15 million, which he rejected. ‘My expectations were way too high, I admit’

      Condo king laments not taking lowball offer – check!

    2. I’ll be curious whether the real estate investment Ponzi scheme that ensnared my 80-ish year old dad a few years ago will blow up in the present downturn.

    3. I haven’t yet seen any appreciable price drop in the area I’m looking at. So I would say the answer is no.

  3. My, what a difference a day makes.

    For, just yesterday, this McShack was listed for $212,000:

    https://www.zillow.com/homedetails/138-Kola-St-Henderson-NV-89015/7210699_zpid/

    And today, a mere 24-hours later?

    Well, the proud owner just lopped NINETY-TWO GRAND off of the price!!!

    That said, I still stand by my comments yesterday:

    Sin City is still way over-priced, and Uncle Thug and his “Captive Finance Arm” central bank will only tolerate a twenty-five percent nationwide McMansion price crash before swooping in and re-propping up the entire sector.

    For those who can’t accept this reality, I point you to this post:

    https://www.zerohedge.com/news/2019-05-01/new-housing-data-warns-era-double-digit-home-price-gains-over

    …and specifically to this graph contained within:

    https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/2019-05-01_14-21-49.png?itok=tSHDlrCP

    Now, be honest: how many here believed back in 2008 that Uncle and the Fedge would be able to re-blow a McBubble that was actually LARGER than the one that had just collapsed?

    Anybody? Bueller?

    So, trust me when I tell you that they CAN and WILL do it again.

    Meanwhile, enjoy this mini-collapse while it lasts. Because it won’t be allowed to go on for much longer.

    1. So, trust me when I tell you that they CAN and WILL do it again.

      Meanwhile, enjoy this mini-collapse while it lasts. Because it won’t be allowed to go on for much longer.

      I agree that at some point they will go all in on stopping it again. And we’ll see how effective it is this time. But there’s a time delay between when that decision gets made and when the momentum gets arrested. And for now, despite all the talk, QT is still going on. Once you see that reversed, THEN in a year or two maybe we’ll see things go back up. But in the meantime I doubt there’ll be anything “mini” about this collapse.

  4. ‘in Bennett’s Placida community, foreclosure filings soared to 16% of all housing units in 2010. That was more than seven times the national average’

    Hmmm, this means foreclosures are higher now than 2010. You know, this is the game the GSE’s play. They’ll report, foreclosures are down! But then look at their loan modifications – through the roof and never ending. So what this amounts to is, “we back a bad loan, we use gubernment money to kick the can down the road, we are doing a swell job!”

    Jeebus, anybody could look like a rock star with that crooked setup.

  7. My expectations were way too high, I admit,’ he said. ‘But I was responding to what I saw in that moment in the market, without any immediate need to sell. Now, I’m saying, ‘Boy I should have sold.’”

    The greedheads’ lament. Don’t worry, Jorge, you’re soon going to have lots of company in the Great Dismal Swamp of Shack-Related Bitterness and Woe.

  8. According to the bank, the move will include shutting down its nine loan productions offices, which are located in El Paso, Texas; Scottsdale, Arizona; Gilbert, Arizona; Tubac, Arizona; Albuquerque, New Mexico; Medford, Oregon; West Linn, Oregon; Puyallup, Washington; and Lynnwood, Washington.”

    Oh dear. How are the employees at those shuttered offices going to keep up with their shack, car, and credit card payments?

  9. Will the DOW test the Dec lows? I am sure China reads the NYT’s, they are in no rush.

  12. Farmer: What’s that, Lassie?
    Lassie: Woof woof woof!
    Farmer: Timmy is in foreclosure again?!
    Lassie: Woof!
    Farmer: That’s the second time in ten years, right?
    Lassie: Woof woof woof woof woof. Woof woof, woof woof.

    2. Ah, Lassie. Another fond memory from the simple days of my youth. 🙂

  13. “‘There’s too much inventory in the market, and there’s going to be more inventory because this tax bill was devastating to the middle-to-higher-income homeowner who can’t deduct anything except $10,000,’ said Mozilo, who’s attending the SALT Conference in Las Vegas. ‘The volume of sales has dropped dramatically, and values are coming down dramatically, particularly on the upper end.’”

    It’s a mix problem.

    -Chris “No Bubble” Thornberg

  14. “A decade ago, Angelo Mozilo was the face of the housing bust that preceded the financial crisis. Now the former chief executive officer of Countrywide Financial Corp. is predicting another drop, and for some homeowners it may be even worse. High-end properties in coastal U.S. states may fall as much as 40% from their peak value because many people can no longer afford them after losing deductions in the U.S. tax overhaul that passed in late 2017, Mozilo said.”

    But but but utility bills ,grass cutting, etc? Surely if you can afford $2+ Millions house you can handle the taxes

    1. “But but but utility bills ,grass cutting, etc? Surely if you can afford $2+ Millions house you can handle the taxes”

      Those California utility bills are going to soar (double?) due to the PG&E bailout being rigged behind the curtains.

    2. “… Surely if you can afford $2+ Millions house you can handle the taxes…”

      Could it be that the “super rich” are in reality “wannabe pretend super rich” and are actually living paycheck to paycheck?

      No. Can’t be. I am shocked I tell you. Shocked.

    3. Just for example, a $2M home in NJ would have a tax bill of close to $50K per year. So the lost tax savings is about $16K per year. Assuming the owners are mortgaged to the hilt (43% of earnings seems to be standard), then an additional $16K per year, plus no prospect of ever breaking even, might be enough.

      Interestingly, when I was looking for a $2M home in NJ on Zillow, all of those close to $2M in asking price were estimated by zillow to be worth 30-40% less. Apparently there are a lot of flippers out there who need to get their money back.

  15. WHY IS HE NOT IN JAIL?

    “Mozilo rejects the notion that Countrywide or even subprime lending played a major role in the economic downturn and swoon in financial markets. In the interview, he said the blame lies with everyone from banks to politicians and bond-rating companies.”

    “Let them believe what they want to believe,” he said. “I never saw it coming. Never.”

    1. “WHY IS HE NOT IN JAIL?”

      Didn’t “too orange to jail” invoke his servitude to the people in the interests of the lord?

      1. “WHY IS HE NOT IN JAIL?”

        Countrywide issued hundreds of VIP loans to buy influence, report says

        By Les Christie and Rebecca Stewart, CNN Congressional Producer @CNNMoney July 5, 2012: 6:11 PM ET

        Referred to as the “VIP program” or the “Friends of Angelo” program

        The VIP program first made headlines in June 2008 when it was revealed that many influential policy makers, including former Senate Banking Committee Chairman Christopher Dodd, D-Conn., and current Senate Budget Committee Chairman Kent Conrad, D-N.D., received special terms on mortgages from Countrywide.

        https://money.cnn.com/2012/07/05/real_estate/countrywide-mortgage/index.htm

      3. Corrupt AGs Holder and Lynch made sure that none of the people responsible for causing the 2008 financial crisis went to jail.

  16. The crash was especially hard on some of the most alluring vacation spots. Then they talk about Flori-duh. The words alluring and Flori-duh should never be in the same sentence.

  17. “High-end properties in coastal U.S. states may fall as much as 40% from their peak value because many people can no longer afford them after losing deductions in the U.S. tax overhaul that passed in late 2017, Mozilo said.”

    5/7/2019 Price change $1,799,000
    5/19/2018 Listed for sale $2,999,000

    https://www.zillow.com/homes/for_sale/Santa-Cruz-CA-95062/house,mobile,land_type/16129736_zpid/97960_rid/3-_beds/300000-2074272_price/1155-7983_mp/36.977375,-121.954122,36.947679,-122.000256_rect/14_zm/0_mmm/1_fr/

    40% reduction: CHECK!

  18. 22151 inventory
    11 vs 35 for par
    buyers going wild as fed gov keeps hiring,spending and having a ball

  19. Many other sites that pay Real Journalists have this story, but none that I have seen show or talk about the kids marching out in the middle of the made for tv gun control infomercial chanting “mental health” “mental health”.

    They get it.

    STUDENTS WALK OUT ON DEM POLITICIANS PUSHING GUN CONTROL SCHOOL SHOOTING VIGIL

    Students said their grief was being politicized and chanted “mental health”

    Kelen McBreen | Infowars.com – MAY 9, 2019

    https://www.infowars.com/

    2. “I want them shut down. I want them silenced. I want them muted.” – Ana Navarro (ABC’s The View) on Infowar. Facebook has since de-platformed Alex Jones and Infowars as part of the oligarchy’s ruthless campaign to silence and censor all non-approved (read: oligarch-owned) media outlets or personalities who challenge The Narrative.

      1. Why don’t they just set up their own websites? Then they can post what they want and wouldn’t have to go through these dramas. Perhaps because these public dramas bring them extra attention? And it plays well to their base, who buy the “censorship!” narrative. When it’s simply a case of someone not wanting to host them anymore.

  20. If taxpayers have/had to pay for “too big to fail” (GOP) why can’t they get a 15% cap on CC rates as payback?

    1. I call that overconfidence. The real number should be about 80 percent, 99 percent for advanced degree graduates.

        1. Lucky you! What do you think is the potential downside in the Seattle market if there’s a housing bust/recession? What was it like there in 2009-2011?

          1. MGSpiffy, not rms, lives on Mercer Island. IMO, you’re best chance of getting an answer to your question would be by responding to one of his posts.

          2. If you can afford it California along the coast from San Francisco to Santa Barbara cannot be beat for quality of life. That said, from San Francisco to Portland the public IQ sinks into double digits, no stimulation whatsoever. From Portland to Seattle there are a variety of industries from high tech to heavy industrial, so the region will never fold like a mining town. The weather is the huge issue from Portland to Seattle; think long overcast winters. Washington state does not have an income tax, so it attracts many retirees from California and Oregon. I am retired now, and I hate the Pacific Northwest winters. However, I am supporting two kids in college, so no moving back to California for now.

    2. Don’t forget, Drumminj, our Joshua Tree developer. He’s out on the east-side, Bellevue area I believe.

    3. the Seattle area?

      Are you confused as to where dissipate your savings near the top of the mania?

      1. Not savings. I’ve done really well in the stock market. No kids, no obligations. What, you want me to die with it?

    1. That used to happen to a friend of mine on the subway all the time. We’re on the train, discussing her bad luck, and we get to the next station. The doors open and right in front of us there’s a guy on the platform with his pants around his ankles and he’s waving the flag. I asked her, “What do you do? Phone ahead?”

          2. “I think public transport is painful. It sucks. Why do you want to get on something with a lot of other people, that doesn’t leave where you want it to leave, doesn’t start where you want it to start, doesn’t end where you want it to end? And it doesn’t go all the time.”

            “It’s a pain in the ***,” he continued. “That’s why everyone doesn’t like it. And there’s like a bunch of random strangers, one of who might be a serial killer, OK, great. And so that’s why people like individualized transport, that goes where you want, when you want.” – Elon Musk

  27. The New York Post
    Countrywide founder Angelo Mozilo says ‘for some unknown reason, I got blamed’ for subprime crisis
    By Carleton English
    Published: May 9, 2019 5:05 p.m. ET
    Angelo Mozilo, founder and former CEO, Countrywide Financial Corporation, testifies during a House Oversight and Government Reform hearing on Capitol Hill March 7, 2008 in Washington, DC.

    Angelo Mozilo is done being the villain.

    Speaking at an exclusive hedge fund conference in Las Vegas this week, the disgraced former head of Countrywide Financial said he doesn’t understand — and doesn’t care to understand — why he is still being held responsible for the 2008 financial meltdown, driven by a collapse in shoddy subprime loans, many of them sold by Countrywide.

    “A lot of years went by, my wife passed away, I turned 80 years old, and now I don’t care,” Mozilo said, eliciting nervous laughter from the crowd gathered at the SALT Conference in Las Vegas.

    “There’s other things more important in life,” said Mozilo, 81, wearing his trademark tan with stiff white-collared shirt.

    “Somehow, for some unknown reason, I got blamed for it,” said Mozilo, who was charged with insider trading and securities fraud in 2009 tied to his Countrywide stock sales and emails detailing concerns about the company’s subprime products at a time when he was publicly touting the stock.

    He settled the case for $67.5 million and accepted a lifetime ban from serving as an officer or director of a public company, but didn’t admit any wrongdoing.
    …

    1. This crook sold 120 millions of shares while at the same time telling everyone things will be fine.

  28. settled the case for $67.5 million and accepted a lifetime ban from serving as an officer or director of a public company

    Tacit admission

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