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Increasing bank failures mean it's going to take a while!

By
Industry Observer with Responsive Pest Control

Hello all: I was reading this morning that the number of banks on the FDIC's watch list increased to 117 from 90. Expect that number to go higher still. So far, 9 banks have failed this year, which is twice as many since 2005. I think this goes to show that we're not our of the woods yet. The last time there were this many banks with problems was in the early '80's when the savings and loan crisis caused over 2,000 banks to fail.

As with anything, it's going to take a while for things to run their course. I'm thinking at least another year. Even up here in the Pacific Northwest, there are signs of trouble. Every bank has bad loans on their books from real estate builders and developers. And their stock prices reflect that. We're pretty slow up here with purchase activity. It's like the buyer is waiting for some good news before jumping back in.

How is it in your neck of the woods? I know some areas such as Las Vegas and Los Angeles are seeing increased sales activity. Up here I think there might be more sales starting either Spring or Summer of next year. Until then, it's imperative that we do everything we can to let the customer know that it's a great time to buy! Have a wonderful day!

Posted by

Paul McFadden

Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota/Wisconsin Real Estate Expert

banks run on a tight profit margin so a few too many bad loans and they get in trouble

Aug 28, 2008 12:03 PM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Thanks, Chuck. So true!

 

Paul

Aug 28, 2008 12:08 PM
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

I heard on a news show yesterday that the number of bank failures is low compared to the Savings and Loan crisis of the 1980's where 1400 institutions failed!

Aug 28, 2008 12:19 PM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Vicky: That's true. Actually I heard over 2,000. When it was all said and done, there were no S&L's left! Pretty amazing, huh? This time, the carnage has been with the mortgage lenders. There are probably 30 wholesale lenders my company still works with. That is down from a high of probably 90 even up to a year or so ago! Have a great day!

 

Paul

Aug 28, 2008 12:29 PM
Tara Camp
Keller Williams Western Realty - Bellingham, WA

Paul, It's sad but true.  The Pacific Northwest has been slow the show weakness, but it's becoming increasing more noticeable.  I agree that the winter months will only make it more apparent.  It's a great time to buy!

Thanks for the post.

Tara

Sep 02, 2008 03:58 PM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Tara: you're welcome! Good luck in your business in beautiful Bellingham!

 

Paul

Sep 03, 2008 02:09 AM
Deborah Huffert
Ace Mobile Notary, LLC - Phoenix, AZ

Gosh that's so bleak sounding.  It's terribly slow here in the Phoenix area.  My signing business is down 70%.  I did just sell a house only because a friend was ready to buy so I got the sale.  We still have about 6500 foreclosed homes on MLS and numerous short sales but inventory is moving.  There's a projected 10K foreclosures to hit AZ by the end of the year but I'm hoping now that more lenders are working on modifications it may save some homes. 

Sep 04, 2008 06:30 PM
Ann Casey
John L Scott - Bothell, WA

I'm still holding on to the rumors that the Pacific Northwest is fairing well in comparison. I hope we don't have to wait for things to get as bad as they were in the 80's before our market rebounds.

Sep 04, 2008 07:02 PM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Thanks, Deborah. Sorry to be such a downer! I have heard good news out of California. Home sales are up markedly in the most depressed areas. Granted, alot of it is REO stuff, but still the market is moving better! I wish you success in Arizona.

Ann: I agree with you although we both know things are awfully slow up here. I'll probably do a little better than last year but not significantly. The exciting thing is when the market improves sometime next year, the ones left should reap the rewards. Take care.

 

Paul

Sep 05, 2008 02:20 AM
Bo Hussung
Bell Title /Triserv LLC - Nashvle, TN

Paul, well said and all good points. The industry is in for a hurtin' and 2010 is the magic year. These banks have to sluff off the excess baggage and they have almost been in denial that it is happening. There will be alot of cutting back on expenses and overhead to accomodate the losses and write downs and so the August jobless rates that came out yesterday are simply goinng to be harder.

Hang on my friend

Bo

Sep 05, 2008 03:17 AM
Deborah Huffert
Ace Mobile Notary, LLC - Phoenix, AZ

Well if any one has any investors out there this is the place to look and buy.  Great low prices for rental props or for first time buyers if they have some skills to fix a place up.  Oh, and don't forget I have a real estate license, shamless, but true.

Just a reminder too to let your legislature know that the AmeraDream and Nehemia down payment assit programs should not be abolished.  I personally don't think the problem is not enough vested interest with a down payment.  I think the culprit was bad loans, putting people in a home they couldn't affod and inflated appraisals.  If someone can afford an $800 rent payment then put them in a home with an $800 mortgage.  Maybe they just don't have the extra every month to save for a 10 - 20% downpayment but they can make the mortgage if it's priced right.

Sep 05, 2008 04:44 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Thanks, Bo. I agree with you. There may be light next summer but probably not much before then.

Deborah: Thank you! I agree with you. Let's keep our fingers crossed that they'll start easing up a bit and making our job easier!

 

Paul

Sep 05, 2008 09:25 AM