The market is hotter than it looks, because when a decent property in a superior location gets listed for an attractive price, the buyers come running – there just aren’t that many that fall into this category.
How many sellers are willing to list for an attractive price give them away?
Here’s one:
From NMN:
For the past year, Wells has grappled with the $119 billion portfolio of Pick-a-Pay loans it inherited from Wachovia. Amid grim news about option adjustable-rate mortgages in general, investors and analysts worried that losses on the portfolio would overwhelm even the $26.5 billion of reserves set aside at the time of the deal. While Pick-a-Pay was far from the only troubled asset that felled Wachovia, it was hard to estimate the extent of the portfolio’s damage at the beginning of 2009, when the housing market was still in free fall.
A year later, the portfolio is still widely reviled, but analysts and other observers predict the worst of the danger from Pick-a-Pay has passed.
“I think the product stinks,” said Nancy Bush of NAB Research LLC. “And Wells Fargo thinks the product stinks. But compared to the other option ARMs, [Pick-a-Pays] were pretty well underwritten, by and large.”
Over the past few months, Wells has been relatively upbeat about the portfolio. Chairman and chief executive John Stumpf said at a Goldman Sachs conference last month that it has been performing better than expected.
“I don’t think they would have made the statements they did unless you saw continued improvement,” said Joe Morford, an analyst at RBC Capital Markets.
Much of this optimism is a function of the banking sector’s gradually improving expectations for consumer credit losses. Wells now expects them to peak before midyear.
That would allow the bank to take some accounting gains on the impaired portion of a major portfolio.
After writedowns, modifications and repayments, the Pick-a-Pay portfolio’s carrying value is down to $88 billion. And negative amortization, the bete noire of the portfolio, has been dropping.
In Wells’ prerecorded third-quarter earnings call in October, Howard Atkins, Wells’ chief financial officer, raised the prospect that, beginning in the fourth quarter, Wells could begin “recapturing a portion of the life-of-loan purchase accounting marks” it took on the impaired portfolio.
Bush and other analysts said this quarter is likely too soon for Wells to “declare victory” on Pick-a-Pay — because of both macro concerns about the housing market and the difficulty of predicting how the $50 billion unimpaired portion of the portfolio will perform.
While those loans are still performing according to plan, she said, “If they’re over-reserved, they’re going to stay over-reserved over the next couple quarters.”
Given Wells’ credit issues on other fronts, however, taking out much of the uncertainty over Pick-a-Pay should be welcome news.
At the beginning of the quarter, commercial real estate loans from the Wachovia legacy portfolio were deteriorating at a significantly increasing rate, with Wells having already run through $3.9 billion of $10.4 billion of reserves that, at the time of the acquisition, were intended to cover 24 months of writedowns.
Wow, didnt you show us one a few weeks ago, for 1.2m on the beach, with a pool. That one seemed like a steal, this one seems like a bust.
People falling over each other to buy that one at $1M+ means I’ll look elsewhere. Old DM is really nice, the views from the hill are amazing, the waves are great and it’s very mellow, but prices are insane. I see a lot of people asking for 4-5x year 2000 SPs. FWIW you can rent something better in that area for ~$3k, although they don’t come up very often.
OT: Anyone have any input on Sorrento Valley, Mira Mesa, University City, Clairemont or Pacific Beach? I know LJ is awesome, but know very little about the surrounding towns.
Go Chargers! The Jets are soft and their QB went to a terrible college.
Right Kieth. The 19 folks that made offers on a holiday weekend all made the same mistake. AND, there are $1.2m properties available “on the beach”.
http://www.sdlookup.com/MLS-090070711-1382_Via_Alta_Del_Mar_CA_92014
Jim, nice Video update on old DM. The house sold for 905k in March 2001. The area has definitely come down a lot. But no question this one was priced to generate excitement.
I went to the video tape, to make sure I was not losing my marbles. It was this home, although now I see it is 2b/2ba. 🙁
https://www.bubbleinfo.com/2009/12/08/sunset-solana/
Although from NY originally, I am a Chargers fan! Go Chargers.
Opps, forgot to ask my question, since I know nothing of the areas, what is making ODM a better location than Solana? Schools?
Mira Mesa has its nice spots, but it’s a middle class neighborhood. Other parts of it, I probably wouldn’t want to live in. It’s a pretty big area, so you can’t completely generalize it.
Clairemont has nice areas, especially on the canyons and closer to 5. However, the houses here are generally older and there are strange renovations/additions on a lot of houses that I saw. I like the location of it (close to beaches, downtown and sorrento valley jobs) but there’s definitely parts that are not nice.
Pacific Beach can be loud due to all the bars. If you’re young it’s a great place to party, but in some areas it could get tiresome if you’re older. The beach is nice, it’s all sand. The summers are crowded due to tourists. I think that North PB/Bird Rock (the parts south of what’s considered La Jolla). The further north the quieter it gets. It’s definitely much more expensive than Mira Mesa and Clairemont due to the proximity to the beach.
Maybe I’m crazy but SD just doesn’t do it for me. I like bay living more than being close to a beach…SF, Vancouver, etc…so much more appealing. There’s something about SD that doesn’t sit right with me for some reason. I couldn’t dream of spending that much there. Perhaps it’s the military presence…can’t stand it.
@9 SD in a lot of ways is low energy. If your perfect weekend is sitting on the beach or lizard-style chilling out, it’s a good place. But it’s not a very dynamic city
To each their own
Genius – I live in University city (hence my moniker). It’s got very good schools – comparable to La Jolla and Scripps Ranch (two other neighborhoods within SDUSD). There are two parts of UC – the south side – which is single family homes built between the early 60’s and early 80’s. Lots of community involvement – like concerts in the park during the summer.
The north part is more condos/townhouses, much denser, and newer… The elementary school on that side is also very good (same middle and high school.)
Clairemont, just south of UC, has one of the best locations in San Diego for getting anywhere – close to the beach, but still semi-affordable. The western parts of clairemont, along with the areas along the canyons, can be pretty nice. I also like the “Mt.” streets near Balboa and Genessee.
Mira Mesa was developed starting in the late 60’s early 70’s. The Sorrento Valley end of it (west) still feeds into the same schools, but the houses are newer. Very convenient if you work for any of the tech companies in the area. Mira Mesa has seen a big improvement in their school’s API scores over the past few years.
I have friends who live in North PB – it can make a big difference what block you live on as some 92109 addresses are part of La Jolla High School’s boundary. (Best high school in SDUSD as far as test scores.) My friends joke that they live in “Baja La Jolla”… It’s a nice area. Down on the flat part it’s definitely a younger, louder group… more partying.
“The market is hotter than it looks, because when a decent property in a superior location gets listed for an attractive price, the buyers come running – there just aren’t that many that fall into this category. ”
I don’t agree Jim, the result is right, the reason isn’t. I think the the sad state of affairs is that 90% of the market is swill.
Frankly, when you combine the state of our infrastructure with the state and construction of neighborhoods, the lack of walk-ability, accessbility, green space, etc, for typical American personal space and material requirements. The vast majority of housing units are simply unsatisfactory for family, community and employment balance.
The reality is a settling for the mediocre. The subsequent dysfunction in our behavior, socialization and sense of community is adirect out-take of the poor quality of housing and community construction and opportunity.
What people won’t do to live in a shack kinda close to the beach, packed in with all the other sardines. Hello neighbor!
A million bucks is still alot of money unless your rich.
Out of those 19 people, how many do you think would be getting in over there heads? Some of the best dressed flashy people around southern CA are just pretending to be rich.
If you can really afford it, go for it, but why stretch for such a small house.
It’s mostly because of it’s location just off 15th Street, you can walk to the Del Mar Plaza and the beach. Location………
…and the sales they won’t stop rolling – no way to slow down.
The guys running Well Fargo/Wachovia better talk to the Chase/Wamu guys who keep taking big hits on their dumping of property.
Wells Fargo the past two years have been saying no problems. With $86 Billion 2nd on their books with probably 60% in California. Somebody must be the luckiest bankers with the average home down 35% in California.
Thanks, JordanT and UCGal. That was very helpful.