The Year is New… But the Housing Hype is the Same Old Thing



Just a couple of weeks ago, after RealtyTrac’s U.S. Foreclosure Market Report™ was published, it was pure jubilation that filled the air as the headlines proclaimed foreclosure starts for November were down by 15 percent… putting their number at a 95-month low.  Listening to the talking heads talk, I thought they might actually be scheduling some sort of ticker tape parade.  Recovery was everywhere… so they said.

I saw the headline in the top right-hand corner of my computer’s screen and said aloud to myself, “Damn it, Durwood… I really don’t have time for you right now.”

The “Durwood” to whom I was referring was, of course, Daren Blomquist, RealtyTrac’s VP and Chief Cheerleader for all things housing… a man who has never seen a housing market he wasn’t positively enthralled by… to Daren, there were only fleeting moments when the news of home prices was not worthy of 76 trombones in front and a hundred and ten cornets right behind.

My phone rang seconds later.  “Did you see RealtyTrac’s…”

“Yes,” I told the caller, cutting him short.  “I saw it.”

“Well, are you going to do anything about it?”  The caller was sincere.

“Actually, I was planning to ignore it this time around… the holidays are coming up fast and our daughter is coming home from Cal in a couple of days, and I really can’t drop what I’m doing every time Blomquist drops another Blom.  Just ignore him and he’ll evaporate in a day or two like Frosty on a sunny day.  Or try scotch, that often makes him seem funnier so you want to kill him less.”

“I really think you should do something about it.”  He was clearly distraught.

“Call Bob Hockett over at Cornell Law,” I offered.  “Tell him I said it’s his turn to do something about Dum Dum’s latest delusions.  I’m sure Bob’s got a white paper laying around that you can roll up and use to debunk Dumpkin.”

I emailed Bob, but he replied that he was swamped grading papers.  Academics and their grades… I thought to myself… like it would kill those over-achievers at Cornell to take home a Pass/Fail once in their lives.

“Okay, I’ll try to get to it as soon as I can,” I assured my concerned caller as I hung up and returned to my work.  My phone went off before I could even set it down… oh, come on…

“Hello,” I was rubbing my temples, trying to avoid bright light.  “You don’t say… no, I hadn’t heard.  Well, it sounds like awfully good news.  Listen, I’ve gotta’ run… I have to tell my wife to get our home listed before dinner, so we can flip it over Christmas.  I’ll call you later… no, I’m not going to write about it… I would, but I’m running out of names for Durweed.”

I glanced at my email… already there were three forwarding me the link to RealtyTrac’s positively ebullient housing market report… and then four… five… good Lord… “While some of the decrease in November can be attributed to seasonality, the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed.”  No question about it… Doorknob was on a roll.

“While foreclosures will likely continue to stage a weak rally in certain markets next year as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold.”

Blomquist was once again proving himself a graduate of the TAFT School of Communications… TAFT… It stands for: Tell-em Any F#@king Thing.



I got up from my desk wandering towards the scotch.  Passing the living room and it was Blomquist on CNBC… scotch for sure.  With my glass in hand, I clicked the channel… Blomquist again.  Oh my God… I’d seen this Twilight Zone episode before… had Rod Serling come out of our bathroom… I swear I would have beat him to death with the plunger.

I decided to grab something to eat at my favorite local pub.  Turned the key in the ignition and it was NPR… “Foreclosures are in the ninth inning, says RealtyTrac’s Vice President… CLICK… Oh no you don’t, Dumbo.  Ninth inning?  Boy, that foreclosure crisis sure wrapped up in a hurry… ninth inning… such a sycophant I have never seen.

And for the next several days the news was everywhere… and it was getting better and better.  You see, that’s the problem with these guys… they don’t know when to stop… I fell asleep one night around midnight and when I awoke the next morning my house was appraised at more than it did in late 2005.  I made coffee and there were already three all cash offers… one guy just dropped off a blank check.

I answered my phone early one morning… it wasn’t quite 6:00 AM.  “What do you mean, am I going to do anything about it… why don’t you do something about it?”  CLICK.  I hated to talk to my mother that way, but enough was enough.

Then there were the calls asking for… what’s that stuff called again… that stuff you can’t get from the media… oh yeah, I remember… the truth.  And I’d direct each caller to my blog… “Okay, read this one, and this one, and then this one… and this one too.  That should cover the last month’s worth of misreported and mistaken mishigas.  Yeah, and Merry Christmas to you too.”  (You goyishe-schmuck.)





I haven’t seen a P.R. campaign this tightly coordinated or thinly veiled since Goebbels was working with Riefenstahl.  (Torches… that’s what’s missing… you need more torches.)

Even if anything being said about the foreclosure crisis were true, which it’s not, it still couldn’t possibly be as good as you’re making it out to be… nothing is as good as you’re describing it.  Silicon Valley during dot-com days didn’t have housing markets as hot as you’re claiming this one has inexplicably become in a hurry.  Dutch tulips saw slower growth in 1637.

According to RealtyTrac, and others in the liars’ choir, I went from being hopelessly underwater to retiring on my equity in less time than it took Obama to completely wreck health care in this country.  And I understand that sentence makes no sense in terms of one thing being compared to another, but in this discussion that sort of flawed logic should go entirely unnoticed.

Consider this gem of a report from an Ohio real estate brokerage offered by RealtyTrac’s report…


“Most of the shadow inventory has been worked through in the Ohio housing market, and this inventory is being absorbed quickly,” said Michael Mahon, Executive Vice President/Broker at HER Realtors, which covers the Dayton, Columbus and Cincinnati, Ohio markets. 

Wow… that’s pretty amazing considering that Cincinnati, Dayton, Youngstown and Cleveland are four on the list of the top 15 population losers in the U.S.  The only city in the country competing with Ohio’s numbers for declining populations is… Detroit, which is down 61 percent since 1950.  Has the shadow inventory been gobbled up in Detroit over this past summer too?

And RealtyTrac still rates Ohio in the top ten foreclosure states in the country at one in every 757 housing units… so, go figure.

RealtyTrac also provided an upbeat quote from a broker in Oklahoma, although I can’t imagine why.  The guy said, “Foreclosures continue to steadily decrease every month as the banks are catching up with their ghost and zombie foreclosure properties,” but so-what-and-who-cares was all I could muster as a response to that statement.  Since when is the foreclosure crisis in the Dust Bowl nationally relevant?  Couldn’t they have a tornado there this year and solve quite a few foreclosures in Oklahoma that way?

The fundamental fuzziness inherent to RealtyTrac’s report is what’s being measured in the first place… some combination of default notices, scheduled auctions and bank repossessions… three events, some potentially overlapping, that are all entirely within the control of servicers.  Sending out fewer NODs, for example, only means that servicers sent out fewer NODs… it means nothing as far as assessing which inning of the crisis we’re in or not in.

RealtyTrac says that these “foreclosure filings,” in November were 37 percent lower as a national average than they were a year ago… and that’s only slightly more informative than telling me that 4 out of 5 dentists recommend Trident for their patients that chew gum.

As an example, RealtyTrac’s report also showed that “scheduled foreclosure auctions,” which are “foreclosure starts” in some states, in November increased from a year ago in 19 states… and 19 states is not an insignificant number of states especially when you consider that they are probably the states where most people live.  I mean, some people would consider 19 states about the half the country, right?

The 19 states reporting these increases included: Oregon (a 726 percent increase), Massachusetts (a 217 percent increase), Utah (a 214 percent increase), Connecticut (a 199 percent increase), Delaware (a 141 percent increase), and New York (a 34 percent increase).

And Florida is still taking home the gold, coming in first place nationally for “foreclosure activity.”  RealtyTrac reported a decrease in Florida foreclosure “starts,” and bank repossessions, but if I had to guess, it’s more the ebbs and flows of servicers adjusting to new laws than anything else… and that might also be true in several other states too.

Foreclosure defense attorneys predicted new filings would increase as banks grew more comfortable with the Florida law, which requires lenders to have specific documents with sworn affidavits when filing a foreclosure. The legislation also allows any lienholder to request a foreclosure be processed more quickly through a special court order.

“Any time a new law comes out it takes time for clients to adjust,” said West Palm Beach attorney Adam Seligman, whose law firm represents lenders in foreclosure cases. “In this case, they were trying to decide how the law worked out and now that they see some progress they may be pushing forward.”

RealtyTrac also reported that November’s “foreclosure starts” increased from a year ago in 15 states, including Pennsylvania (up 233 percent), Delaware (up 104 percent), Maryland (up 74 percent), Oregon (up 38 percent), and Connecticut (up 37 percent).

Now do you see why I make fun of Dimwad the way I do… he looks at this report and deems it the 9th inning of the game… I look at the same report and conclude that he was hit in the head by a foul ball during the 7th inning stretch.

Case-Shiller’s Home Price Index showed that home sales slowed in October of this year, and so did home price growth in several U.S. cities.  According to the index, home values slipped in nine of 20 tracked markets in this quarter’s first month.  And as far as any supposed home price appreciation, Case-Shiller’s “Top-gaining markets” in October included Las Vegas, Nevada (+1.2%); Miami, Florida (+1.1%); and, Los Angeles and Phoenix, Arizona (+0.9%).

Look, I’m a Shiller fan… but I just don’t think a one percent price increase in any of those places is statistically meaningful.  And not all cities made gains in October according to Case-Shiller. The index showed slowing home price growth in Chicago, which fell one-half percent to start the last quarter; and in Seattle, Washington, where they fell 0.4 percent.

I don’t know about you, but that whole paragraph was so boring that I think I nodded off while I was typing it.


January is here.  Be afraid… be very afraid.

The reality is that starting in January, fewer Americans will qualify for home mortgages because of the new lending rules, and that will hurt home sales to some degree, which can’t lead to home prices rising.  The new qualified mortgage rules potentially expose loan originators to increased legal liabilities that are understandably leaving some originators feeling like Christian Scientists with appendicitis.

Signs of a coming mortgage collapse are ubiquitous. Some banks are exiting the mortgage business simply because home mortgage origination — and refinancing — have fallen off a cliff recently as interest rates have gone up.  Firms have cut tens of thousands of jobs… the sector announced 57,591 layoffs since January of 2013, according to a report from Challenger Gray & Christmas.

Regardless of what RealtyTrac would have us believe, the mortgage slowdown is already showing up in the housing data.  October marks the fifth month that pending home sales have fallen. The National Association of Realtors says low inventory and affordability are to blame… and those are certainly two of the factors involved.


The Investor Effect of 2013…


No one saw 2013’s home price appreciation coming, so it shouldn’t be any surprise that few are noticing that it’s leaving in 2014 either.

In 2013, private equity funds raised billions that were supposed to be used to buy up the misfortunes of others in order to rent them out to… well, someone else… they weren’t entirely sure of that part.  That situation created investors bidding up home prices on scarce inventories… is it really hard to imagine that a few guys with a billion in their checkbooks would be likely to bid up a $200,000 home to $240,000?

But, just because that happens a few thousand times one year, does that mean home prices went up by 20 percent in those areas?  If it makes you feel better to think so… fine.  But what happens when those investors go elsewhere, or decide they don’t want to invest in homes anymore?

Historically, investors have represented 10 percent of home sales, but last year, states like California, Arizona and Nevada saw investors pick up half of all the homes sold.  Who’s going to step in to pick up that demand?   What would last year’s housing market have looked like without those investors bidding up and buying?


Inventories are down for the count…


Inventory levels are low and for good reason.  Far too many homes are either still underwater, or they’re effectively underwater, meaning that their owners can’t sell at a price that would cover sales commissions… or at a price that would allow them to put a down payment on their next home.  Others simply don’t want to move… they’re baby boomers who are moving less as they get older, and there’s just not much anyone can do to change that.

First time buyers are fewer and further between for a number of reasons, not the least of which is that although prices are lower than they were six years ago, they also require higher down payments and documented incomes that support fully amortizing mortgage payments.  If you look at it from those perspectives, it costs more to buy your first home today than it did during the bubble.  So, shouldn’t we see first time demand lower today than when the affordability was less of an issue?



The fundamentals aren’t better, so RealtyTrac is fundamentally wrong…

The National Association of Realtors reported that its seasonally adjusted pending home sales index dropped 5.6 percent in September from August to a reading of 101.6. That also pushed the index below its year-ago level, which is the first time that’s happened in almost three years.  If you assume a 30-60 day lag between a signed contract and a completed sale, then the drop is likely to mean that actual sales are sure to decline in the coming months.  And prices will follow… more will be underwater… and foreclosures come next… we know that by now, don’t we?

And I could certainly go on… and on… and on.  The Consumer Price Index shows our economy is growing at roughly 2.5 percent annually… which is the reported rate of inflation.  Or, in other words, at best we continue to run in place.  And if we look at inflation more appropriately, we’re shrinking.

Median incomes have declined for the last five years and unemployment and underemployment is just a nightmare for tens of millions of Americans who see no light at the end of their tunnels.  And then there’s Obamacare that’s sure as heck made my family health plan premium poorer.

Blomquist you are an infomercial… you should have to wear a sign around your neck so as not to confuse consumers who are trying to find the truth about things that matter to their lives… not a brochure masquerading as news and information.

And Durwood… if this is the 9th inning… then perhaps you should mention that the game we’re playing is at least a double header.


Mandelman out.



The only way to look inside the actual trust that holds your securitized mortgage to see what’s allowed and what’s not as far as a modification goes… an invaluable tool that’s now available at a very reasonable cost.  


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