Thursday, November 29, 2007

Craigslist Trolling

(Normally I don't do this, but I couldn't help myself.) One outgrowth of the credit crisis is the need for house-poor mortgage debtors to raise cash quickly. What better way than to sell those toys they bought so easily with their HELOC in 2005? Here are just a few examples:

new suede couch and love seat for sale - $1500: "I Just need to get rid of them as money is tight right now and my house payment is more important."

Newer 2006 Honda CRF250X in TOP CONDITION: "My mortgage is going up and I need to sell my bike... My asking price is pretty firm due to its new condition."

1968 Camaro - $5000:
"Definitely a fixer. I have spent way too much money and I have a mortgage. I am firm on the price."

2001 jeep grand cherokee TAKE OVER PAYMENTS - $282: "must sell, have new mortgage, 11 month old and baby on the way, can't afford the payments, MUST FIND SOMEONE TO TAKE OVER, ASAP"


Mercedes Benz 190e loaded very clean $2799 obo: "Need to pay my mortgage. SERIOUS CALLERS ONLY PLEASE I REALLY NEED TO SELL ASAP."

2006 Lexus IS350 - $33450:
"I love this car but must sell - mortgage industry casualty!"

And the saddest ones of all:

We are looking for FREE firewood...: "
We are looking for firewood. Due to our $2700 month mortgage, cannot afford to buy any, much less the 1000 electric bill.....BUT... We can come get it!! :)"

Beautiful burial plot location at Valley Memorial Park - $3000: "I am selling this for $3000 obo due to the fact that I must pay my mortgage."


Gwynster said...

Really good post.

More and more, I'm am reminded of the depression era stories of my mother.

... said...

My insurance guy used to not like it when I called Fall "boat burning season"

patient renter said...

Ouch! 1000 electric bill? i dunno what to say to that.

DrDoom said...

Regarding the question of evidence for the bottom of the decline from the prior post, the OFHEO house price index for 3rd quarter 2007 (, HPI, Sac) was released yesterday and showed the largest decline in house prices in Sacramento MSA since the index orgin in 1977. The prior record was a year over year decline of 7.71% set in 3rd quarter of 1983. The new record is an 8.41% decline for 3rd quarter 2007.

Worse there appears to be no evidence of a bottom. Sacramento is different from San Jose, San Francisco, San Luis which did not have increased declines. The Bay Area actually showed some price improvement but not enough to keep up with inflation.

Foreclosures notices for Sacto county are constant as reported by and bank REO is increasing at a constant rate with no evidence of a slow down in foreclosurers yet (but also no increase in the rate). Subprime resets remain at the current levels until mid 2008 and then only decline slightly.

Inventory by itself is not as important as seasonally adjusted inventory and compared to seasonal sales. Months of inventory must drop below 9 months (absorption be above 11% a month) before prices will stabilize.

Anonymous said...

Dr. Doom,

There is a difference between reaching a bottom and seeing evidence of a bottom. The numbers from Max's previous post suggested a slowing trend in SIT inventory. That is the first time this has happened since the market bubble over. I did not suggest we are at the bottom. Only that it may be possible to see it from here. If you check my post, the money quote is...

"It is very hard to tell if the light at the end of the tunnel is the breaking dawn, or an oncoming train. Patient Renter has it right. The results in the spring will tell the story...."

In 1990, the market "turned" in June. The market reached a bottom in mid 1995 and stagnated for 3 more years. In 2005, the market turned in June. I don't expect this time to be any different than the last one, so the bottom may be reached in 2010. That is two years away. Real estate is a slow moving cargo ship that takes a long time to turn around. The fact we have seem some improvement in SIT numbers indicates the ballast is being equalized. It does not mean the ship is watertight yet and it is certainly still in danger of listing further or sinking outright.

head.attached said...

Surely you don't seriously think that parting with the Lexus and refusing to pay $1,000 for utility bills constitutes anything that approximates the depression.

I agree that this is a hard time. But not at all as hard as it was for people who thought "credit" meant the general store cutting you $10 worth of slack a year. They lived more prudently than we do now, and despite that they fell harder and farther.

I really appreciate your yeoman's work beating up on Davis RE types, but sometimes the schadenfreude is too much.

Gwynster said...


My mother lived through the depression in germany and I have been collection her stories for years. While we haven't reached the same level or duration, the themes are certainly similar.

Does that make better sense now?

head.attached said...


The themes are not similar. The only thing that's the same is hardship. Stop shaking your head in horror. It gets old. We've many more years of fun yet.

Max said...

The themes are not similar. The only thing that's the same is hardship.

It seems like hardship is the theme. We can debate national economic policy and geopolitics until we're blue in the face, but the end result is pain for those who are overextended.

DrDoom said...

Bubble sitter,

Thanks for the feedback. Got some questions but first a story.

When I was a kid we would play in the train tunnels on the north end of Lake Oroville. Often we could not tell daylight from the train. The first thing we would notice is the wind as the train pushed in to the tunnel. It was very exciting. Love to see the next train go by just don't want to step out in front of it.

I see the dip in SIT inventory on the Sac Trouble Inventory Graphs but it looks like the seasonal drop last year in December. It may just be Xmas is early this year.

Would you expect things to improve when foreclosures are about the same as sales? Do you think we will see foreclosures roll over first?

What is the data you use to say that the market turned in June of 1990? Hit bottom in mid-1995? Sounds correct just wonder what you are looking at.

Anonymous said...

You're right, the firewood is by far the saddest. At the very least, we can each say a short prayer. Hope the best for those people. I work in Mill Valley, but I have yet to see that kind of trouble yet.