August 24, 2013

Internet hasn’t obsoleted Realtards. Why not?

Perhaps they will always be with us.

Here’s why real estate agents are still around

130823-realtards-picBy Lydia DePillis, The Washington Post
POSTED:   08/23/2013 09:25:43 AM PDT

In this Tuesday April 2, 2013, photo, Christian Bell and his wife Beth Heinen Bell view a home for sale with real estate agent Becky Dickenson, left, in Grand Rapids, Mich. (Paul Sancya/AP)

The quintessentially mainstream American real-estate brokerage — Re/Max — went public Tuesday. The housing market is hot enough, its initial filing explained, that raising investor cash could launch it into markets around the country it hadn’t yet reached.

But wait — real estate agents? Wasn’t the Internet supposed to drive them out of business?

The online age has been hard on all kinds of middlemen, after all. Travel agents, for example, were rendered obsolete by Orbitz and Expedia. Soft-goods retailers were outpaced by Amazon. The effect should be similar with people who sell homes: What do they have but what they know? And what of that can’t be better figured out through unbiased, publicly available data, crunched and presented free on websites such as Zillow and Trulia?

This is a piece that asks many questions yet delivers few answers. “It’s complicated” is not really an explanation.  And what the heck is Jason’s House?  Shouldn’t he be more original and call it Jason’s List?  It’s mentioned in a Washington Post article and there’s mentions in Texas media, so it should be really helpful to all our Northern California readership.

It’s Weekend Open Thread time, too. Met any helpful real estate agents lately?

Comments (3) -- Posted by: madhaus @ 7:03 am






April 8, 2012

Lights Out for Los Gatos Painter Thomas Kinkade

Here’s something to deepen your observation of Easter.  While devout Christians celebrate the resurrection of Jesus today, this man’s passing on Good Friday leads to a kind of different kind of immortality, and we are not talking about paintings.

Thomas Kinkade, one of nation’s most popular painters, dies suddenly in Los Gatos at 54

120407-kinkade-2002By Mike Rosenberg, San Jose Mercury News
Posted:  04/06/2012 06:43:30 PM PDT; Updated:  04/07/2012 03:41:26 AM PDT

Thomas Kinkade, the “Painter of Light” and one of the most popular artists in America, died suddenly Friday at his Los Gatos home. He was 54.

His family said in a statement that his death appeared to be from natural causes.

“Thom provided a wonderful life for his family,” his wife, Nanette, said in a statement. “We are shocked and saddened by his death.”

120407-kinkade-tasteHis paintings are hanging in an estimated one of every 20 homes in the United States. Fans cite the warm, familiar feeling of his mass-produced works of art, while it has become fashionable for art critics to dismiss his pieces as tacky. In any event, his prints of idyllic cottages and bucolic garden gates helped establish a brand — famed for their painted highlights — not commonly seen in the art world.

“I’m a warrior for light,” Kinkade told the Mercury News in 2002, alluding not just to his technical skill at creating light on canvas but to the medieval practice of using light to symbolize the divine. “With whatever talent and resources I have, I’m trying to bring light to penetrate the darkness many people feel.”

120407-kinkade-products

Now, if you want to instead refer to the Los Gatos Patch (an AOL-owned series of hyperlocal blogs), Kinkade actually died in Monte Sereno, while with his live-in girlfriend, as he had been estranged from his wife for two years.  That would explain why his family was in Australia at the time of his death.  Kincade’s passing is indeed relevant to the Real Bay Area, since he lived in Los Gatos.  Or Monte Sereno, depending on which reported version you prefer.  But this scan of the firefighters’ frequency shows an engine was dispatched to 16342 Ridgecrest Ave, due to a 54 year old male “drinking all night, not moving.”  That address is owned by someone named Kinkade, and also had an “under influence of drugs/alcohol” arrest there last year.  The address is missing from most property databases, though, including the Recorder’s Office.

120407-kinkade-vallejo-village-at-hiddenbrookeKinkade certainly has his staunch supporters and determined detractors.  This Mercury News article generated 150 comments in just a few hours and had more than 250 by the following afternoon.  Most Merc articles draw under 20 comments.  The NY Times obituary generated an even more derisive stream of criticism, while the Washington Post put the negative commentary in the article itself.  The daddy of all Kinkade-dissing news items has to go to this 2006 Los Angeles Times piece, though.

But there’s an aspect of Thomas Kinkade that had managed to elude us all this time.  It turns out that his kitschy paintings of cottages in the woods inspired multiple housing developments.

That’s right, for the fan who isn’t content with buying a snowglobe or a throw rug, there were plans for actual tract houses trying to look like his paintings.    And one of the first such developments, the Village at Hiddenbrooke, was built in Vallejo right as dot.com went dot.bomb in 2001.  4259 Andover, The Villages at HiddenbrookeThe homes were 1800-2600 square feet on 4000 square foot lots.  The large photo above is interior décor from one of those model homes.  Most of the links to the builder and the development in the Salon article are now defunct.

It’s not easy figuring out which streets in Hiddenbrooke are part of The Village.  And given that the builder was London-based, that’s a particularly interesting name for a community accused of being somewhat, um, ersatz.  Here’s a home that sold last year, and do check out its history, because it sold for less in 2011 than when it was sold new nine years beforehand.  You can check out the neighborhood on Redfin but nothing seems to be for sale there now.

However, Kinkade did not stop with just the one housing development in Vallejo.

Architect Rann Haight, left, financier Roger Stewart, center, and builder Steve Torres have signed a deal to build luxury homes that will be based on the Thomas Kinkade paintings on the table in front of them in Coeur D'Alene, Idaho, April 21, 2006. The luxury homes, to be built around Lake Coeur d'Alene, will cost $4 million to $6 million. (AP Photo/SPOKESMAN-REVIEW, Jesse Tinsley)The photo at right shows the team planning for five Kinkade-inspired $4 to $6 million luxury homes around Lake Coeur d’Alene in Idaho named The Gates of Coeur d’Alene.  This project was launched in (of course) 2006, at the height of bubblicious housing insanity.

Plans for 100 homes based on the cottage paintings were being developed later that winter for a project in Columbia, Missouri called The Gates at Old Hawthorne.  Prices were expected to come in at $500,000 to $1 million.  It’s not clear if any of these plans came to fruition, as the builder’s website no longer seems to exist.  This 2007 article reflects the typical attitude of housing boosters, acknowledging the slowdown but insisting that It’s Special Here and full steam ahead for the Kinkade development:

120407-kinkade--missouriThe homes are being built at a time when the U.S. home market is declining. However, Columbia and Boone County have been able to avoid the national trend. The median price for new single-family homes in Boone County has steadily increased, going from around $136,000 in May 2003 to a little over $188,000 in May of this year. And while the price of new homes is rising, the number of homes being built has decreased from 79 single-family units in May 2003 to 52 this May.

“In general, our home market is good, (but) it’s not as good as last year’s,” said Brent Jones, president of the Columbia Board of Realtors. According to Jones, the present home market is a buyer’s market. The effects of the market are even more apparent in the sale of high-end houses, like the Kinkade homes. […]

“News stories give the idea that the market is homogenous,” Jones said. He cited cities that have experienced extreme home appreciation, and are now experiencing just as extreme depreciation. The Columbia market is relatively stable and hasn’t had the appreciation that other markets have experienced, .

However, market fluctuations are not a concern for HST.

“One of the reasons we came to Columbia is because Columbia’s economy is so strong,” Stewart said. Sales of the Kinkade houses are surpassing the inventory, Stewart added.

120407-kinkade-empty-caveThere is no evidence that either of these Kinkade-inspired home developments were ever built.  Most references to them are from 2006, when everyone was drunk on Kool-aid.  Here’s an application for an alternative use for the Missouri land, which suggests nothing was ever built from the Kinkade project.  The Gates of Old Hawthorne website is gone, and here are some empty lots for sale from that project.

Just like the empty cave in today’s Holiday Story.

Have yourselves a Happy Easter, and remember: This means Spring Bounce has begun!

Comments (19) -- Posted by: madhaus @ 5:09 am

November 19, 2011

FICO Now Predicting Mortgage Walkaway Likelihood

imageOwe more than your house is worth?  Is your credit otherwise good?  Do you have few credit cards but pay them on time?

Congrats.  You’re a likely candidate for strategic default, according to FICO (formerly Fair, Isaac), the company synonymous with credit scoring.  And now Moody’s took a look at the mortgage market and said the most likely homeloaner to default is sitting on an upside down jumbo mortgage.  Why?  Because the subprime mortgages already shook out the people who couldn’t pay, the prime market has some risk of strategic default, but the Jumbo pool lost the highest quality mortgages due to refinancing.  Most mortgages left didn’t refinance because they couldn’t.  And this is spooking the PrimeX, the index fund of prime RMBS (Residential Mortgage Backed Securities).

Given how Special it is here with our high prices, we have plenty of Jumbos both in the Real Bay Area and outside it.  That means Walking Away all around the Bay.

Jumbo mortgages may be next in line to default

By Kenneth R. Harney, Washington Post, Published: November 11

Do you have a big mortgage and good credit scores but not much equity — maybe you’re even underwater? Do you see little chance that your home’s market value will improve much during the coming three to seven years?

If you answered yes to both questions — and thousands of homeowners across the country could do so — new research suggests that you are in a category that lenders need to worry about most: prime jumbo borrowers who once were thought to be among the safest bets but who now are the most likely to opt for a strategic default and walk away from their homes.

In a study released Oct. 31, the ratings agency Moody’s said that based on its analysis of mortgage-backed bond portfolios, homeowners with jumbos now constitute “greater strategic default risk” than any other type of borrowers, including subprime. That’s because an exceptionally high number of jumbo owners — many in high-cost markets hit by real estate deflation over the past several years — are stuck with persistent negative equity. More than half of the jumbos analyzed by Moody’s where owners are still making payments have home market values lower than their outstanding loan balances.

Whoa.  More than half the current jumbos are on upside down homes?  Good thing that doesn’t happen in the RBA!  Instead, we concentrate the upside down jumbos in subprime territory: Vallejo, Oakland, Antioch, Concord, Salinas, Fremont, Hayward, East Palo Alto and Redwood City!  And South San Francisco and Daly City and most of San Jose and half of Sunnyvale and three-quarters of Santa Clara and San Mateo, but it’s not like you should be worried, I am sure your house  is just fine!  And if it isn’t, let’s find out what FICO is doing to predict your behavior so you can stay a few steps ahead of them.

imageFICO says 67% of strategic defaulters are within the bottom quintile of nondelinquent mortgage holders, and 76% within the bottom 30% of late payers, ranked according to their model.  Obviously they’re not going to give away their Secret Formula of Doom, but they admit defaulters have high FICO scores.  That’s right, the more likely their other model says you’re a great credit risk, the more likely you are to be a terrible mortgage risk to the innocent dupes at the hapless bank.  Although this isn’t exactly rocket science here: why would someone default on their mortgage for nonstrategic reasons if they have a FICO of 845?  A high score means excellent ability to pay, so this chart really says among mortgage deadbeats, the better your credit, the more likely you’re playing the bank instead of vice versa.  I think Occupy Wall Street has been telling us the same thing for a couple of months now.

Here are the other “red flags” FICO admits to using in creating their new predictive model:

  • Lower utilization, as shown in the chart below. We also saw less overlimits on credit cards, reflecting better credit management behavior.

imageThis means, duh, people with high credit scores don’t use more credit than they need, which is, duh, why they have high credit scores in the first place (see above).  This also means that Joanne Gaskin, who developed this model, doesn’t understand the difference between less and fewer

(Free grammar clue: Use fewer for quantifiable amounts and less for amorphous abstracts.  Example: FICO has fewer exogenous variables in this model than the blog entry suggests, as utilization is directly linked to FICO score.  That makes their claims of this Predictive Deadbeat Model’s awesomeness less believable.)

  • Less retail balance—chances are that they spend money carefully.

Does spending less than the typical But I Want It Now consumer contribute to a higher or a lower credit score?  I’ll give you three guesses here.  (This is also an exception to the fewer vs. less rule. Time, money, and distance, while countable, use the term less because they still have abstract tendencies as opposed to, say, the 14.6 million underwater houses in this country.)

  • Shorter length of residence in the property—and thus, likely less attachment to that property.

The real estate market peaking between 2005-2008 (depending on where the house is) should have absolutely nothing to do with this brilliant insight (which only coincidentally has a high correlation with an individual’s Loan to Value ratio).

  • More open credit in the past six months—perhaps in anticipation of damaging their credit?

imageOkay, this one makes complete sense.  If you’re going to Walk Away on purpose, you might as well be ready for it by piling up on credit, because it’s going to dry up as soon as the first NOD hits.  Renting an alternate place to live before pulling the trigger is another thing to look for. 

If I were coming up with a model for strategic defaulters, I’d just look at the advice on the Walk Away discussion boards and see how many can be quantified via credit reporting tools. Opened new lines of credit in the last six months? You’re giving FICO too much lead time. Better open them in the last week if you’re going to walk.


Comments (33) -- Posted by: madhaus @ 5:14 am

May 21, 2008

Luxury Foreclosures – can it happen in the Bay Area?

Luxury Foreclosures – washingtonpost.com

The foreclosure signs that have been sprouting up in less-affluent communities since 2006 are beginning to appear in the well-off suburbs, attached to houses that once cost $1 million or more. Although those kinds of homes are in the minority now, real estate agents predict the numbers will swell.

In Loudoun County, 60 houses priced over $750,000 are among the 932 foreclosures and short sales — an exit strategy of selling the house at a loss with the bank’s blessing to avoid foreclosure.

Affluent neighborhoods have been able to stave off foreclosure longer, but the effects of once-popular loans, such as adjustable-rate and interest-only mortgages, are beginning to take their toll, economists and real estate agents said. The consequences are being seen in places such as Loudoun County, where the rapidly expanding population and income levels meant razing dairy farms for new subdivisions over the past two decades, as well as Fairfax and Montgomery counties, where new subdivisions proliferated and demand drove up prices.

[snip]

While the expanding subprime market enabled lower-income borrowers with uncertain credit histories to buy and refinance property, interest-only mortgages allowed middle- and upper-income home buyers — and investors — to buy beyond their purchasing power, said Robert E. Lang, director of the Metropolitan Institute at Virginia Tech in Alexandria.

“Who would have imagined that people would use this as an excuse to heavily leverage themselves?” said Lang, noting that higher-income people found ways to buy bigger, more expensive houses, endangering themselves just as lower-income, first-time buyers did. “And now they’re caught in the same way.”

[snip]

After six years of record-shattering growth and building boom, Loudoun County faced one of the region’s steepest declines in home prices last year. The median price of single-family houses and townhouses sold last year was $492,000, down 8 percent from $535,000 in 2006, according to a Washington Post analysis.

Madhaus sent this in the other day. Could this happen in the Bay Area? Well… maybe. But in the Real Bay Area? Nah.

Let’s face it, this article was about Norther Virginia. And let’s face it, which company was the shining star of that area? Yep: AOL.

Is AOL the same as Google, Apple, VMWare, Facebook, Twitter, and all the other amazing Web 2.0 startups we have here? Nope. And that’s why Loudoun County is dying. Heck, they also don’t have the amazing GreenTech jobs that are about to explode here, nor do they have Biotech. And what’s Tyson’s Corner compared to the hot new Cupertino Square?

So this article is complete bunk. It’s comparing rotten bananas with amazingly beautiful and ripe CJ Olson cherries.

Comments (29) -- Posted by: burbed @ 4:01 am