The fact is you’re talking about short sales and forclosure. Ardell is talking about short sales and foreclosure and has a thread going since 2007 that is still going.

I can’t think of a time in history when the American people were interested in short sales or foreclosures let alone talking about it. The entire Real Estate Industry seems to be talking about it. That’s debt in the first degree and the Real Estate Industry is pulling for banks to sell for below the debt.

I can’t imagine that is good.

RE: Scotsman @ 24 – First, you can use graphs in a way to distort the data, and still have raw data.

Second, you apparently missed my post this weekend explaining that debt is wealth for those on the other side of the transaction. ;-)

You mean the chinese? Isn’t that how it works in the new world order, you borrow from the bank, the bank borrows from the Treasury via Fannie and Freddie and the Treasury borrows from the chinese with the intent that we all pay or new chinese lords back with taxes. Sweet transfer of weatlh…

I went to Canada this weekend through the Peace Arch. Anyone been there lately? It feels like you enter a 3rd world country going back to the US instead of leaving as it used to be. The Canadian crossing is well manned with a super hight tech brand new building. The US side had one lane open and a buidling that looks like it was purchased from the inventory of the old East Germany or something. Thanx bankers, Paulson ,Benranke and co. for this.

At least the BC mountains are still as beauitiful and fun as ever.

Second, you apparently missed my post this weekend explaining that debt is wealth for those on the other side of the transaction. ;-)

Kary, it’s just raw data- there’s no “bias” at all in breaking out categories. And the point is simple- you can’t have a growing economy when you’ve got to service- that is pay interest and perhaps some principle reductions, total debt beyond some critical level as a percentage of GNP.

Here’s the second factor to consider: when debt grows, it’s because consumers at all levels are pulling forward what normally would be future demand to have things “now,” That means there will be less to spend in the future, because its been spent now… along with the interest required to finance it. It’s a double whammy- we’ll have less in the future because we couldn’t post pone the gratification, and we’ll pay the additional expense of the carrying or interest cost. This pulling forward at the expense of reduced future demand means the “recovery engine” will be missing a few cylinders and only limping along.

I’d recommend check your web CC statement several times a week too.

You can do that relatively easy through Quicken on all your accounts, although I do wonder what type of security risk that poses.

HI KARY

I use the websites too, for just the individual bill paying; but with the bills in the mail [I never cancel them, if asked on website], at least I get a reminder to pay on time [email reminders can work too, if they don't end up trashed from your bulk mail]. I don’t do automatic bill paying with CC because I change my CC # periodically to avoid American Organised Crime [LOL] from ID thefting on them [its was always under a $100 per theft and happenned around Christmas when there's lot on the CC too, to make you miss it?....LOL]….did you know the Credit Bureaus give out your CC # [Citi Bank told me this in a letter BTW] to American organised crime companies when asked?…..I put a stop to this BS by turning one Organised Crime company into the FBI, IRS, and local police with clear email evidence of the ID theft fraud too….it was like $80 in theft from a product that wasn’t even on their website [but how many other thousands like me did they bilk?]…LOL

Apparently, the Credit Bureaus don’t give out my CC # anymore…I wonder why?….LOL…I heard the very rich have attorneys write letters to the Credit Bureaus to keep this from happenning, but I did it on the cheap.

The CC ID theft is another reason to just activate by phone one CC you use at a time….its easy to check one CC on the website for ID theft, horrifying to check a handful of activated ones. I’d recommend check your web CC statement several times a week too.

Debt default is getting more prevalent as short sales and foreclosure become a part of the daily American economy. Even Kary is complaining about banks dragging their feet on approving short sales. Ardell has a post with 300 comments dating back to 2007 concerning if buying a short sale is right for you. These are people in the Real Estate business hoping for or encouraging people to walk away from debt or forgiving debt, or restructuring debt.

The stress and worry of the home mortgage may start it, but debt is the ultimate enemy.

Tightening of credit will have less impact than a slight rise in interest rates. Debt servicing has become the number one concern of the American consumer. So if the poll included a rise in interest rates that would be number one.

Credit ratings are something designed to let banks know whether they’re likely to make money issuing someone a credit card or approving a car loan. And entirely different tool is needed for mortgages–and I think at least one of the credit rating agencies has developed one, but I’m not sure it’s much better.

On the payment issue, I’ve gone to using each company’s website to make the payment. That way if there’s a problem, it’s the bank’s fault.

HI DAVE

You’re right about CCs. They say our credit ratings go up [even our car insurance rates ride this rating, LOL] if we have lots of CCs; but get this [LOL], don’t use them, then our credit rating rises….if we pay the CC’s balance off in full each month, that doesn’t matter either, its the percentage of available credit we don’t use that drives our credit rating, not fiscal mindedness. Obama was going to fix CCs, but I doubt he’ll touch any of this important stuff.

Pay [mail] your CCs off at least 1 week before the bill is due, or they’ll possibly mark you late. The post mark on the bill used to be adequate, not any more.

Have any of you bloggers ever used a CC for a cash advance?….LOL….you pay the bill off for the advance [plus about 50% in fees, etc] then receive another bill for interest on the advance the next billing period, pay that, then get another interest bill, etc, etc….when you pay off a cash advance, over pay the 1st bill by 20%, then the fun doesn’t go on and on….

It would be better to just have a graph with a line for each category, and then perhaps a separate line for total debt. Also, in this case it would be better to have more of a breakdown of the non-financial debt category, at least into government and non-government components.

I’ve never said no one would go the ruthless default route on their house. I said they would be stupid to do so (default and go into foreclosure if that wasn’t necessary), and I said most people would not, because most people go to extremes to try to save their house.

On the credit card front, I’ve said that few people will go to the extra effort to go the Chapter 13 route to pay off unsecured debt. That’s been true for decades. That’s basically what this article says, but you somehow consider this news. Except for the rather pointless Countrywide survey, the article you posted is nothing new news to me, nothing that I didn’t already know. And it’s not inconsistent with what I’ve said in the past.

The difference between you and me is that when I say something, it’s actually based on something, not secondhand BS based on something I’ve read from a reporter who doesn’t know his own butt from a hole in the ground. But you’re free to ignore what I think and pretend the press understands the issues on which it reports.

http://market-ticker.org/uploads/debtt0gdp1q09_7981_image001.gif

– Tim, I think that interest rates should get at least a mention. Nothing rattles the market like rates. I also think if people want to discuss psychology, I think that the psychology of those that work in the industry is an important component. A shift in agent thinking from one spectrum to the other (seller market to buyer market) can also impact prices because they are the ones writing the transactions.

I wonder what ALL SORT OF CREDIT means exactly… hmmm… credit cards perhaps?

“And quite frankly, I sort of doubt it changed their behavior much, other than perhaps speeding up a default that was inevitable.”

Yes, we know that you doubt that you are wrong, all evidence to the contrary. There has been no fundamental behavioral change. There has been no change in social penalties associated with foreclosure, bankruptcy, or default. How do I know, Mr. Kary told me so! :-)

Yes, some debtors can use the excuse that corporate bailouts give them more justification to default, and some undoubtedly think that way. But in the end it still comes down to blaming others for your own shortcomings or mistakes. And quite frankly, I sort of doubt it changed their behavior much, other than perhaps speeding up a default that was inevitable.

On the other hand, the way the credit card companies will increase rates for a default on another account–that practically forces the issue from the debtor’s point of view. It’s one thing if one credit card increases your interest $100 a month, but if 5 or 10 do that, your situation can instantly become hopeless, resulting in what can only be considered a logical default.

Had you read the article, you would know that the central point was that there has been a dramatic change in the way people view defaulting on debt… with credit card debt being the main but not sole example. But of course Kary always knows best and his personal experience from the past will always be the only valid data point on human financial behavior both now and in the future. ;-)

Today is worse than any other time I can remember. My personal story started when we sold a house and paid debt. Chase was number one on my list. I hate Chase. I asked at escrow to telephone to get the account pay off balance to be sure we covered enough to pay for the closed account. We did close the account and were making payments on the account. Let me say again the account was closed and we were trying to settle it in full with the proceeds of the sale of the house.

I even checked a couple of weeks after the check was sent to be sure that the full amount was paid to the bank. They assured me the account was closed and the balance paid in full.

Great!!!

We applied for another loan to purchase a house about six months later. My lender quoted me a rate I thought was high so asked about that. He told me that due to the derogatory scoring on my credit report my rate had gone up. I said, Scott, what are you talking about? He said that my Chase account was seriously delinquent. I pointed out the account number was the same as we had paid off. He checked into it.

Even though the account balance was paid off we had closed after the 15th of the month so there was a $6 service fee that was still outstanding. I said this was the first I had heard of it. They said they had a ploicy of not sending out billings on a closed account. The balance due was now over $120 with late fees.

Don’t even get me started talking about my Home Dopey account. I would be here all day and night and most of the day again.

My rational as stupid as it was, because I am an idiot, was that I got pretty statements that could track my spending. We routinely would run up tens of thousands of dollars in expenses on a project. Over the past ten years I have carried about $35K that was paid off with Real Estate commissions or from proceeds of houses we sold. I am also guilty of floating pay roll and taxes with credit.

As many have noticed, this year I am going back to all cash. It’s a challenge. It took us nine months to increase business so that it covers the nut. In the past couple of months we have increased income to float all expenses. Next I will pay down debt, and I mean all the debt, and will not use credit again.

I mean I will never use credit again. I will never take out another mortgage. I will pay off everything and go back to investing in projects i believe in. That’s one of my interests in the internet. It is a cash business that can be contracted out.

In my opnion there are individuals, and investment groups, more interested in cash as opposed to leverage. If the investor market continues in that way it will seriously impact the flow of property. As we have been talking the consumers still rely on sales data. if the data is weak or worse, based on cash pricing, the sales prices will go down.

RE: Softwarengineer @ 4 – I like what are you saying.The poll should allow more than one answer.All of the above!smile

Well given the way the question is posed, that would require a six way tie, which is rather unlikely. ;-)

Second, it seems to be taking the position that they’re blaming others for their own mistakes. Very American of them. ;-)

Third, that is an area I dealt with a lot (people with too much credit card debt). Even back then there were a lot of people that couldn’t pay off their credit card debt in five years. There were some that couldn’t even pay it off in five years with concessions made by the lenders. And some that couldn’t pay if off in five years even with zero interest. IMHO, if you have more credit card debt than what you can pay off in three years, without any lender concessions, then you owe too much. And depending on what you incurred the debt for, carrying any monthly balance is too much.

http://www.calculatedriskblog.com/2009/07/credit-card-debtors-embracing-darkness.html

YES SNIGLET

All of the above are inter-related and none of the outcomes is a root cause. The root cause is too much debt and not enough income. GD II as you put it.

If you look at the increase in prices, it was only marginally related to income. The driving factor was a herd mentality of what people thought they could get away with. This is why places in California had a bigger bubble than here despite a weaker jobs base – the state is much bigger and the domino effect took over. Places like LA and SF had a lot of people thinking that they were worth huge sums of money, so basically new forms of financing were invented every year to keep the bubble inflating. The bigger you inflate the bubble, the further out from the epicenter that the prices are affected.

The real thing that will kill RE for good is if the government lenders go under or tighten up. This country basically has a socialized lending program for residential RE, and it controls the lending conditions. Having these lenders go under would be healthy for the market because it would create a real market for mortgages again. Right now the banks basically just package everything.

I don’t think that foreclosures will have a huge impact on prices on the Eastside. It might offer some lower comps, but there is a huge variety of housing to look at and appraisers know this. If a bank forecloses on a whole plat full of houses on 116th though, that will change my mind a little but apparently the banks are controlling the pricing strategy of all of the new construction in Redmond already.

I don’t think inventory is a primary factor in pricing right now. Inventory has been piling up the past year and pricing barely moved. The builders have already responded by pulling back as far as I can see.

I don’t think that the tax credit ever affected anything in a measurable way. Nobody can prove it either way though in a double blind sense of the word.

Layoffs have a lot of secondary effects and some of those become primary effects for cost of housing. But more research needs to be done here. What percentage of layoffs are renters, for example? The last round of MS layoffs did not budge pricing around here at all yet.

Asking about specifc factors that influence prices is a bit like asking whether the initial blast wave, pyroplostic cloud, or lava flows will kill you in a volcanic eruption. Regardless of which volcanic action actually results in causing death is irrelevant, the ultimate cause was the volcanic eruption.