Piranha Posted November 6, 2007 Share Posted November 6, 2007 In the greater L.A. area we have been feeling the pinch of the sub prime fallout for a few months. And now the WGA is on strike. If that strike goes on for an extended length of time, it wil also have a serious impact on the local economy as so many people in the L.A. basin are either directly or indirectly linked to the WGA. To make matters worse, we hear that crude is going to $100 a barrel and upwards. This is not good news at all. [] Quote Link to comment Share on other sites More sharing options...
Daddy Dee Posted November 6, 2007 Share Posted November 6, 2007 Yeh, the housing market may still be a ways off from hitting bottom. Some genuinely adverse times for lots of folks. Quote Link to comment Share on other sites More sharing options...
Piranha Posted November 7, 2007 Author Share Posted November 7, 2007 So, what's the housing market/economy like in Arkansas Dee? I am curious to know if people in other areas around the country are experiencing what we're experiencing. I felt this was coming several years ago when I saw data that showed over 50% of the median priced home sold were 100% financing. If you did a little digging, you'd often find it was actually more that 100% with cash back at recording to help with the closing costs. WTF??? That sure smelt like a recipe for disaster to me. Quote Link to comment Share on other sites More sharing options...
Daddy Dee Posted November 7, 2007 Share Posted November 7, 2007 My take on Arkansas is that the impact is not as severe as CA. A couple of thoughts here, things are slower to get to Arkansas and slower to leave the picture, too. Everything is a smaller scale, too. Arkansas has maybe 2.5 million in population and income is about 75% of the national average, I think. The cost of living is less and the square foot cost of housing is modest compared to CA. Heck, in 1987 Paul Harvey announced that Fayetteville, AR was the best city in the nation in which to live. Arkansas is a well kept secret. In two NW Arkansas counties, Benton and Washington, where things have been booming economically for years have had a surge in forclosures in the first three quarters of 2007. 85% and 130% respectively. However, over all, as the nation has an average of 80% increase in forclosures Arkansas on average has 20%, so statewide average is comparatively modest. Arkansas has not been able to locate any of the new Honda, Nissan, or Toyota plants here, but have been trying on that. Keep getting beat out by other southern states. Though Hino truck manufacturing is tentatively (I think) planning for an Arkansas plant contingent on their own sales growth. Pundits are always saying Arkansas is desperately in need of "new economy" jobs, whatever those are. No doubt true. For lots of folks looking, it's hard to go out and find decent work and compensation. Arkansas politicians are hoping to ride it out without calling it a crisis. So far, tax revenue is strong enough set aside many concerns. Pretty fortunate. Hopefully Arkansas will get through this o.k. Part of that will depend on how much worse it gets in other states. Everything is interrelated. Yeh, the mortgage market is a real head scratcher. I've seen TV ads for years advertising equity lending up to 125% of the value of your home. In what universe does that make sense. The whole debacle seems to be generated by sloppy greed on the part of lenders. Some loans were made without even verifying the income or credit worthiness of the borrowers. What has happened though, is the lenders didn't care because as soon as the loans were made they'd sell the paper to some other idiot also expecting to make a cash in on returns from high interest rates. Lots of poor people pay more for the same stuff like "pay by the week" rentals on TV's, washer dryer, even weekly car payments. Trying to expand that fat cat market to real estate was simple insanity. I think the disconnect between the lenders and the eventual owners of the paper was the killer. If the lenders thought they would have to collect on all these crap loans, they would never have made them in the first place. One thjing sort of amazing was that there was all this money available to lend. Where does that come from? No better options for investors? That's sort of an odd part of the mix as well. Quote Link to comment Share on other sites More sharing options...
garymd Posted November 7, 2007 Share Posted November 7, 2007 We do a quarterly peer analysis of banks our size ($10 to $30 billion) and the Sept 30 numbers coming in for banks that rely heavily on the mortgage business are just staggering. I'm looking at CA based Downey right now and they're just getting smoked. They increased their loan loss reserve from $69 million to $142 million during the quarter. Ouch! They booked actual net chargeoffs of only $8.3 million but they usually average just a couple hundred grand (can you say Monthly Adjustable Rate Mortgages?). Downey will weather the storm because they're a highly capitalized institution but others won't be so lucky as we've already seen. We've had some problems ourselves and like many of the others, we're just waiting it out, trying to focus on our other business lines, cutting expenses and hoping the market rebounds sooner rather than later. If things get a whole lot worse before they get better.....................oh well. Time to sell a few records Quote Link to comment Share on other sites More sharing options...
Piranha Posted November 7, 2007 Author Share Posted November 7, 2007 I know quite a few people that have recently been laid of from banks. Downey being one of them. Wow, loan loss reserves increased from 69 to 142M?? This WGA strike could get really bad. I am hoping it doesn't go on for very long. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.