]]>“The Beginning Of The Domino” In California
The Contra Costa Times reports from California. “Housing production slumped in San Mateo, the East Bay and California during November, according to a report. The number of building permits pulled in the San Francisco-San Mateo-Redwood City area by developers plunged by 77 percent in November 2006 compared with the same month in 2005. In the East Bay, the number of building permits fell by 43 percent during that period.”
“Statewide, the number of building permits issued in November lurched lower by 34 percent year-to-year, the California Building Industry Association reported.”
The North County Times. “A statewide building trade association reported that building permits for single-family and multifamily homes plummeted by 58 percent in November over October in the San Diego-Carlsbad-San Marcos metropolitan area. The number of permits fell 57 percent from November 2005 to November 2006.”
“For the first 11 months of last year, permits in the area were down 30 percent from the same period a year earlier, the association said.”
The Fresno Bee. “The housing downturn was not unexpected in 2006. But the severity of the fall was a surprise to some real estate agents. ‘The sudden screeching of the brakes caught people by surprise,’ said Joan Jolly, president of the Fresno Association of Realtors. ‘We expected slowing appreciation, but it was not expected to come to such a grinding halt.’”
“Through Dec. 20, 3,648 homes had changed hands in Fresno and Clovis, a 30% fall from the 5,204 transactions in all of 2005, according to association figures. Prices held their own, and even climbed some early in the year before heading down. Values fell by some estimates up to 15% in some neighborhoods and price ranges over a period of three to four months later in the year.”
“Home builders also suffered this year. Investors, sensing appreciation was running its course, pulled out in late 2005 and early 2006. ‘They pulled back, and that was the beginning of the domino,’ said Mitch Covington, president of the Building Industry Association of the San Joaquin Valley.”
“‘It was a year of adjustments,’ Jolly said of 2006. ‘Homeownership was never meant to be a commodity where you buy today and sell tomorrow, expecting to make a killing,’ Jolly added.”
The Lodi News. “Sellers will be adjusting home prices to accommodate for a slowing housing market in the coming year. And buyers will have more options than they’ve had in nearly a decade, according to analysts.”
“For renters and landlords, a similar slowdown is expected, according to Eileen St. Yves, who sits on the board of the San Joaquin County Rental Property Association. She said it can be difficult to find qualified tenants because lower income families are buying homes.”
“In addition, there are more rental properties available because those who can’t sell their homes often turn their home into a rental property as a way out. St. Yves said that just as with selling a home, landlords should price their rentals for a slowing market.”
“‘In 2007, the most important thing anyone can do is price right,’ she said.”
From KCBS AM. “This year is predicted to be a bad one for those either looking to buy or sell a home in California. Construction, sales and prices will keep plunging, according to economist Chris Thornberg.”
“‘I am extremely negative about 2007,’ Thornberg said. ‘I see foreclosures going up in 2007.’”
“Thornberg said those in the most trouble are newer home owners whose mortgages will re-set this year. ‘There are a lot of people out there who are in trouble, who were promised that real estate could be a no-lose investment,’ he said.”
“In fact, Thornberg sees the entire California economy for 2007 in a negative light. When asked why, he said the state is in a completely unsustainable situation. ‘Consumers cannot continue to spend more than they earn,’ he said.”
The Sierra Sun. “The number of property foreclosures in the Truckee-Tahoe area is lower than state and countywide trends, but experts say the market is vulnerable to outside influences.”
“Area homes repossessed by lenders are few compared to the western portions of Nevada and Placer counties, which have seen foreclosure rates grow in the last year by 165 percent and 320 percent respectively.”
“Truckee-Tahoe’s isolation is not complete, however, as fluctuating loan rates, the San Francisco bay area economy and real estate values all influence the local housing market. ‘The foreclosure issue up here has — and will continue to be — linked to the economy of the Bay Area,’ said John Falk, spokesman for the Tahoe Sierra Board of Realtors. ‘It has a ripple effect up here, not only for second homeowners but also on resale values.’”
“‘In a normal market, foreclosure bodes for a market under a degree of strain — but with the local values it just bodes well for the buyer,’ Falk said. ‘It may even enter the affordable realm.’”
“Dave Giacomini, broker and owner of Sierra Mountain Mortgage, said they now have their first foreclosure in four years, but he expects to see an increasing trend. He said adjustable rate mortgages have allowed people to pay less than the interest the loan is gathering, and said the rates are adjusting higher.”
“When a property stops appreciating in value, the buyer no longer has the ability to pay the loan, Giacomini said. ‘The amount they owe goes up instead of down,’ Giacomini said. ‘When they owe more than the house is worth they walk away.’”
“‘I think it has to do with the slow housing market — they can’t sell if they are having problems paying and have to let the lenders take it back,’ Giacomini said.”
Some detail on the starts numbers:
‘ In the Central Valley, most markets saw sharp declines in single-family housing starts in November, compared to a year earlier:’
• Bakersfield, down 51.4 percent
• Chico, down 48.5 percent
• Fresno, down 61.6 percent
• Hanford, down 13.2 percent
• Madera, down 64.1 percent
• Merced, down 70.2 percent
• Modesto, down 43.8 percent
• Sacramento, down 42.1 percent
• Stockton, down 3.3 percent
• Visalia-Porterville, down 4.2 percent
• Yuba City-Marysville, up 24.6 percent
–
The poor starts number should affect the economy 3-6 months down the road. I think that completions are still close to the highs. 2006Q3 had the highest completions as reported in New_Privately OwnedHousingUnitsCompleted data in more than 30 years. Yes, higher than 2005Q3. I was surprised.
Jas
“2006Q3 had the highest completions as reported in New_Privately OwnedHousingUnitsCompleted data in more than 30 years. Yes, higher than 2005Q3. I was surprised.”
I was unsurprised when the MSM saw that and just shrugged. But you can’t hide an elephant under the living room rug indefinitely.
It’s already affecting the economy.
Stupid stupid really really stupid stupid bankers.
Read this. It’s soo ironic. It’s just the beginning.
There seems somewhere a whiff or a fragrance of ENRON.
Happy New Year: Another Sub-Prime Lender Cuts its Workforce By Steve Christ
Baltimore, MD * Jackson, WY * Missoula, MT Thursday, January 4th, 2007
The New Year got off to rough start for the employees of Mortgage Lender’s Network (MLN) yesterday, when the Connecticut-based sub-prime lender announced that it was no longer in the business of funding or originating loans.
MLN announced that some 1,440 employees or nearly 80% of its workforce would immediately be placed on “temporary furlough” as the company continues to struggle under the weight of “deteriorating market conditions.”
Outside the company’s Rocky Hill, Conn. office, hundreds of teary-eyed employees were seen leaving the complex with nothing but boxes of belongings in their hands.
The news amounted to a stunning reversal of fortune for the privately held multibillion-dollar company. In fact, the company had recently broken ground for a new $100 million Connecticut headquarters and also announced plans for major expansions into the Phoenix, Atlanta, and Philadelphia markets.
Primarily a wholesaler, the company specialized in funding sub-prime loans to the broker end of the business. But the slowdown in the housing market led to a string of defaults and late payments that ultimately forced the lender to cease its wholesale operations, which accounted for about 90% of its loans.
In a press release, CEO Mitchell Heffernan said, “Until we see that credit quality and margins return to acceptable levels we have determined that MLN needs to pause from wholesale broker originations.”
This cutback is just the latest sign of trouble in the sub-prime mortgage business.
Last week another sub prime giant, Ownit Mortgage Solutions Inc., filed for Chapter 11 bankruptcy protection. Earlier in the month the company had laid off some 800 employees nationwide when it announced that it was closing its doors immediately and had no money to pay its employees.
The bankruptcy filing revealed that Merrill Lynch & Co., JPMorgan Chase & Co., Credit Suisse First Boston and other mortgage purchasers were demanding that Ownit buy back more than $165 million in loans on which borrowers had missed payments.
But the pain in the industry hardly ends there. Numerous other sub-prime lenders have closed their doors, including Harbourton Mortgage Investment Corporation (HMIC), which ceased operations on December 20.
Like Ownit, Harburton was forced to take action when it was unable to satisfactorily resolve mortgage repurchase claims asserted by investors that had purchased mortgage loans from HMIC.
Even beyond that, numerous sub-prime companies are also reportedly on the auction block, including Irvine-based Option One Mortgage, a unit of H&R Block Inc., and ACC Capital Corp., the private holding company for Ameriquest Mortgage Co. and affiliates.
Sadly, for those still employed in the business it is just a sign of things to come. Issuance of sub-prime mortgage bonds jumped from less than $13 billion in 1995 to $594 billion in 2005, according to analyst Michael Youngblood at Friedman, Billings & Ramsey Inc., with a slight dip to $521 billion expected in 2006.
Given those monumental figures it is only a matter of time before more of these risky loans begin to go into default, forcing their originators to buy them back.
The banking debacle continues.
And meanwhile in the land of the crackpot BRITS!
– If you want to see British banking desperation leading to sheer banking stupidity, then you need go no further than FT.com, where you learn “Abbey, the UK’s second-largest home loans provider, has raised the standard amount it will lend homebuyers to five times either their single or joint salaries, eclipsing the traditional borrowing levels of around three and a half times salary. In some cases Abbey will now lend couples five times each of their salaries without requiring confirmation of earnings.” Hahaha! Madness!
The article goes on to say “Income multiples of four times or more are now becoming commonplace” and last week Bank of Ireland Mortgages and Bristol and West decided “to increase standard salary multiples from four to 4.5 times. Mortgage brokers say other lenders are set to follow suit for fear of being left behind.”
As absolutely stupefying as that is, it gets more bizarre when it goes on to say “in some exceptional cases”, this “equates to income multiples of up to seven times salary multiples.” Banks are loaning up to seven times income, so that people can buy a grossly-overvalued asset! Seven times! Insane!
Banks must be anticipating a global inflation.
December Fed minutes show ben and the gang are worried about the housing “crisis”. Everytime there is a “crisis”, Greenspan broke out the printing press (mexico, SE asia, LTCM, Y2K, dot.com bust, 9/11).
Now, what do you think “helicoptor ben” will do? Who has openly flaunted his printing press in the basement? Read the speech he gave as fed governor, not some “hack”, but as a full voting member of the Federal Reserve Bank.
And this time, it won’t be different.
The printing press is already red hot.
M3 is up 11,5% the last 3 months compared to last year !!!!!
Don’t expect hearing that on Bloomberg, MNBC or CNBC.
Lies, darn lies and missing statistics.
That’s why the crooks at the FED removed the M3 measure from circulation. Bandits from the FED will continue with impunity deceiving almost everyone.
Kaizatsu!!! Banzai!!!
Hussman has said he is not seeing a flood of money. I respect Hussman a great deal. What are you looking at that he does not see?
This seems to be THE question of the day. Is this a fed created money flood–or something else (Hussman says risk blindness by private money?)
Consider the evidence:
State pension shortfalls running towards a trillion dollars
Municipal pension shortfalls in the hundreds of billions of dollars
Corporate pension and healthcare deficits of one-and-a-half trillion dollars
401K savings of only $53k per 55 year old worker
A national savings rate that has steadily eroded since the early 1990s falling from 10% to negative 1.5%, a condition last seen at the depths of the great depression in 1933
What’s funny is that the total morons at the FED create all this money and it goes always to same stupid places and the same stupid people.Meanwhile the holes that should be filled aren’t. The FED is really a cesspool of
sh-t.
Can’t find any other word for them. A cesspool of stinking manure. Even manure is more competent that the folks at the FED and at the BOJ.
Can you explain GS. Value your view and I’m in a learning mode.
High rates of (real) housing price inflation from 1998-2005 kept default rates atypically low on loans to people who bought houses they could not afford (on the basis of their labor incomes). For example, if I bought a $1m home in PV (desirable coastal part of LA) that went up in value by 23% for year forever, that would be another $230K+ / year to help me pay off the loan, plus the SUV, plus the Hawaii vacation, plus the charge card, etc.
So one scenario under which it makes sense for lenders to loan lots of money to people to buy homes they cannot afford is if high rates of home price appreciation (no matter whether real or nominal) make it easier in the future to pay off the nominal principle amount borrowed, especially if interest rates stay conundrumishly low. Now that home prices have leveled off or started to fall in many parts of the US, it is a whole different ball game. I am not sure whether UK is quarantined against what happens in the US real estate market.
Thanks GS. Only had to look up a couple things to follow the lesson. My field is marketing psychology — lost as a goose in economics. Appreciate the patience.
ISOLDEARLY,
Don’t sweat it — psychology is ultimately the key to economics, anyway.
The dismal science is all about the madness of crowds.
Yes but it’s a the best kept secret in the west.
Hush hush.
You musn’t mention dirty words like inflation.
You didn’t know?
Inflation is dead and burried.
There is no horrible money printing going on.
Monetary mass is up 13% in the UK this year.
Probably much more but hey, who cares ?
The boom must continue.
This is very true, and very interesting.
The inflation figures that are quoted by teh government in the UK are absolutely ridiculous - anyone actually paying for things will know this, as will anyone in the US filling up their car, for example.
In my view, real inflation is probably rising at roughly half money supply - the question is how long can that last…?
Loafer
How long can that last ? Quite a long time. The politicians and their friends from Goldman Sachs thrive on it.
36 billion paid in bonuses to the employees last year. Do you know of an industry in the US that has it good as these crooks at Goldman Sachs ?
Answer: NO surry! The bubble must continue and will continue. What the FED is trying to do is to bust a couple of people real bad, but without touching their crooks from banking. Nothing new under the sun.
However, The Daily Telegraph (one of the more conservative newspapers in the UK) had a headline a few days ago which showed a lot of concern for a serious UK property price crash.
Professor Didier Sornette of UCLA and his partner Professor Wong, drew up a graph a few years ago based on financial stress as related to earthquake stress. The model predicted that the first property bubble to crash would be the UK market. However, it didn’t seem to pan out (because of liquidity I suspect) and I think they abandoned the experiment. Btw, they predicted the US property market would decline but NOT crash. Now we see that the US market is in decline and the UK market is suffering from some real stress cracks. Could be Professor Sornette’s model was correct - but before it’s time.
Yes he is correct. Bur you won’t here about his predictions. I have his book on Chaos Theory and Markets. Really fascinating and interesting book. The problem with all these non-linear models, is that the timing is always difficult to predict. Mike you are right. I think that Sornette was correct.
You won’t hear In the real important mass media called TV. You will only hear about the bull junk. Buy Google etc…..
Professor Didier Sornette of UCLA = chaos theory expert (understands the sand pile effect well)
Check out:
http://www.amazon.com/Why-Stock-Markets-Crash-Financial/dp/0691118507
P.S. The effect of artificial (non-market-based) controls on asset prices’ ability to respond to changing fundamentals is analogous to the problems along the San Andreas fault in the vicinities of SF and LA, where the fault is “locked up” despite the incessant movement of the Pacific Plate to the north relative to the North American plate. Eventually, such the stress load created by a disconnect between shifting fundamentals (tectonic plate movements) which are inhibited from strike slippage along the fault line resolves in an event like the 1906 quake, when the fault’s rupture spontaneously moved the earth by 20 feet in some places. Nonmarket price controls invite similar earthquakes in the financial markets.
Hey you are talking about California real estate ?
Of course…
However, it didn’t seem to pan out (because of liquidity I suspect)
The obvious reason that the US is tanking first is the avalanche of new inventory, particularly in places like Florida, Arizona, etc. The UK has very very strict development controls, which mean supply is very inelastic. I’m amazed someone from the UK would not have taken this into account.
It’s doesn’t explain everything. Britain is a little bit like a big Monaco, with all it’s russian gansters. A lot of money comes in and is parked in Britain from tax evasion and from corruption from the Middle East, Africa, Eastern Europe and South America. Russkis mobster like Berezovski and other global scumbags with 5 passports, just love the place.
Strange and questionnable liquidity from capital flight, from places like Russia, Nigeria, Zimbabwe, Angola, India, Libya, Africa, the Middle East, Columbia etc…..
Suspicious liquidity like in Monaco, Switzerland and Cyprus. That’s the real secret of ever lasting real estate bubble. Gangsters like Boris Berezovshy and the family of the Shah of Iran, just adore the place.
A common factor in Abbey & Bristol and West, is that they are organizations previously called “Building societies”. see http://en.wikipedia.org/wiki/Building_society
Their original raison d’etre being mortgages for their working class savers. However, they all went public on the stock exchange in the 90’s UK financial revolution and became 2nd class banks without the expertise.
In the US, it would like be a credit union becoming listed on NYSE, talking over competitors and re-inventing themsleves as another ‘countrywide’.
It will be analogous of post-Y2k Marconi plc. (A “moreband management” / fiscally adverse electronics company who loose their leader due to retirement, suddely get a new whiz mgt who leverage the company in internet and broadband and find no profits in that, then go bankrupt !).
To come back to the article : Funny to note is involvement of “Bank of Ireland” in the UK. Eire has boomed but also overextended itself with going into the Euro. Naturally, it should have cranked down it’s interest rates years ago but since it’s involvement in the central currency, it has lost that lever.
If you want to see a major housing super-nova, watch the Emerald Isle.
Nothing to see here, move along.
Sounds like when the Savings and Loans were being deregulated and allowed to compete with banks in the US during the 80s. That ended…not so good.
How true!
Ben,
Descriptive adjectives are beginning to get “Bubbly” 3 days into the New Year of 2007
Copied & pasted from the text: “The Beginning Of The Domino” In California
“Plummeted”, “severity of the fall was a surprise”, “the sudden screeching of the brakes”, “a grinding halt”, “beginning of the domino”, “a year of adjustments”, “sales and prices will keep plunging”, “vulnerable to outside influences”.
The 2007 antidote: NAR: “Never a better time to buy a house” or get a “tickle-me-Elmo”
American Heritage Dictionary - Cite This Source
an·ti·dote (ān’tĭ-dōt’) Pronunciation Key
n.
1. A remedy or other agent used to neutralize or counteract the effects of a poison.
Face it Ben, you’ve got a logo that looks like “Target stores” on your blog.
great point about the sudden change in language
Good ‘ol Hanford…! Lived and worked for the city a few years ago when we were processing tract maps like mad… spoke to some former colleagues lately, and things have certainly slowed down to a trickle there, as well as the rest of the Central Valley.
You can actually find up-to-date annual and monthly permit information on the Census website (type “building permits” in the search box on the site), and I’ve verified the information with data from the city I currently work for and it’s fairly accurate. For many cities, you will find a gradual decline in 2006 for single family permits pulled.
From the KCBS story: “This year is predicted to be a bad one for those either looking to buy or sell a home in California.”
Oh, the irony!!!!!
buying looks easy- not smart,but easy
?? how hard and fast did starts fall in 1990 ?
Thought you’d never ask.
These links are worth a re-run. Bubble headlines from the 80s-90s. (credit given to Marinite (Marin Cty, CA, and J. Bednar of NJ):
Of Bubbles Past: Chronological Listing of News Headlines…Last Housing Bubble
http://marinrealestatebubble.blogspot.com/2005/09/of-bubbles-past-chronological-listing.html
Home Prices Do Fall
http://www.youdovoodoo.com/80sbubble.htm
Enjoy!
BayQT~
What’s interesting this time is that the Internet allows information to distribute itself faster and farther then ever before. In the late 80’s early 90’s realtors were knowledge brokers. Now anybody with a computer can access Zip Realty and see what’s for sale. With Zillow you can also see what the seller before paid for it.
I was thinking the same thing. Hopefully this precipitates the pending crash and helps prices fall faster.
I’m speechless. I mean, when stuff like this gets spewn out and we all know the context, is there anything any of us can possibly add?
I bought a house in january 91 so I lived through the last downturn in LA. (and how, experience is the dearest of teachers) and I can tell you that I think the internet and blogs GREATLY amplify the bad news. Before it was just basically the LA Times. Not much reporting or conjecture on other areas that were going to feed the fire in LA. It’s much more intense and immediate than the 1990’s IMHO.
Now it’s more like everyone’ suddenly screaming:
“Da roof, Da roof, Da roof is on fire,
We don’t give a sh#t, just let the motherfu@ker burn….”
Nice… Old school rap and the housing bubble. A new juxtaposition.
Many Bloodhound Gang songs would go well with the current housing trend… but I think the line that song went: “we don’t need no water, let the m–f– burn, burn m–f–, burn” …anyway
Wait, this can’t be right. The NAR campaign recently said it’s a great time to buy or sell. Who you gonna trust? Some economist with a bunch of fancy degrees, or your local Realtor (TM)?
BTW, Thornberg has been awesome since leaving UCLA. I’m becoming convinced he’s a reader here.
It is either or neither a great or bad time to buy or sell a house or condo. If you do or don’t buy now or later you will or won’t sooner or later or never get priced in or out. Or not.
Well put. Have you considered running for office?
I can neither confirm nor deny that I may or may not be forming or disbanding an exploratory committee and/or clearing my record of any right or wrongdoings I or my associates may or may not have committed.
“What didn’t you know…and when didn’t you know it?”
Bubbly, you’re making me lonesome for Rummy’s poetry. The literary world lost an important voice when he stepped down:
http://www.slate.com/id/2081042/
LOL. Been spending some time with DL lately?
Thornberg must have been on this blog….hmmmm… skulking about or posting????
Bubbly, the spinmeister…
Oh dear, oh dear, didn’t our hero Liar Lereah tell us ‘not to worry’. We’re just going through a period of inverted appreciation. Where is Suzanne or Nina when we need her???
Wow next time I lose money! I remember what to say.
“Don’t worry honey. I am just having a period of inverted appreciation.”
Similarly, the home mortgage market is currently enjoying a period of “inverted qualification standards.”
“I am just having a period of inverted appreciation.”
You can only tell that to a woman so many times (in the bedroom) before they start catching on as to your always “working late.”
He expects the market to bottom this year and begin to recover in 2008. This prediction flies in the face of common sense, not to mention historical precedent. I would say that he’s improving, but still falls short of the “awesome” mark.
I have yet to read about anyone who said the turnaround will arrive in 2008 or sooner offering a single reason why it is different this time, which leads me to strongly suspect it is not. If it is not different, then a recovery by 2008 would mean the largest bubble in US (world?) real estate history was followed by the shortest bust on record.
Impossible? Well, I suppose if we could somehow ask David Hume (or, more conveniently, ask David Lereah), they would explain how it is possible the sun will not rise tomorrow morning. Just having seen it rise every other day since the dawn of recorded history doesn’t rule out this possibility.
Likely? You decide.
That one caught my eye too. If the NAR says something, do the exact opposite. The problem this time is they said do both - buy & sell - so there no way for stranded FBs to avoid their advice except sit there and watch values drop a few %pts/wk…
Renting is the new black.
Renting is the way to avoid throwing money away on purchasing an unaffordable house.
GS, what you should have said is that “renting is the way to avoid throwing money away on purchasing an unaffordable, depreciating house!”
amen, brother. Commencing 2007: Year of Carnage…
Pass. The. POPCORN!
OCDan –
Agreed, brother! A “plummeting” market value does tend to make home ownership more expensive, at least for those foolish enough to try and catch themselves a falling knife.
lol
stop throwing money away on a sub prime mortgage
i can’t wait for those summer bbq’s!!!
“Renting is the new black.”
TexasChk’s was the best:
“Broke is the new Black.”
For what it’s worth, here’s some interesting anecdotal evidence from the front lines–my step-dad has been selling (mostly commercial) real estate in the Fresno area for 40 years. When I saw him last week he said he has cut back his hours drastically and that the market practically dropped off a cliff in June and has stunk ever since. He’s obviously been through a lot of cycles but has never seen it turn this abruptly and dramatically.
Thornberg continues to be bearish, while his former colleagues at UCLA’s Anderson school see a positive economy and housing market for ‘07; one wonders if this was a factor in his leaving that institute.
Gee, you think? Thornberg leaves and basically says the same things he’s said for years - and the Anderson School makes a hard turn and declares the housing market peachy. Where’s the trout?
a fine institution…
sarcasm off
The Super Bowl will make every better. Don’t worry.
Only if the Chargers win it. At least those FBs in SD will have a huge parade to attend. Hell, it might go right the the epicenter - downtown. Anyway, go Bolts!
Maybe they’ll all go nuts and burn the joint down.
Doesn’t rioting normally happen in cities with crap weather?
Josh
“The housing downturn was not unexpected in 2006. But the severity of the fall was a surprise to some real estate agents. ‘The sudden screeching of the brakes caught people by surprise,’ said Joan Jolly, president of the Fresno Association of Realtors. ‘We expected slowing appreciation, but it was not expected to come to such a grinding halt.’”
Anyone who paid attention to the housing market and used some common sense could see this coming. How could it have caught people IN the business by surprise? All the numbers indicated this thing was correcting, these people just chose to turn a blind eye. Anyone in the RE business that didn’t see this or something similar coming should not be in the business. And we have to pay them tens of thousands? For what?
Because a bunch of people did not bother to figure out the amount of speculation that went on. The low range is 30% nationwide and 80% in some Florida condo developments. Here in Sacramento there are some areas that were up to 40%.
So if the real demand for homes was not that high, the runup of the last few years had no basis on reality and were nothing more than phantom gains.
Still having heard any reports that more housing was built than people to occupy them, so even when (not if) prices bottom out, there will be some that will have no buyers for them.
“How could it have caught people IN the business by surprise?”
Some of the most severe cases of myopia are suffered by insiders.
It was no surpise….Never in history has so few made so much without results, or consequences. All the insiders bailed out in 2005, and just cleaning out their dsks to hand over the mess to whoever will have to clean up…..
“Speculation buys up, in a very practical way, the intelligence of those involved.”
-Galbraith
Your right…I dont think I would be telling the world that I am a
Jolly idiot!
Oh ??? The insiders did not see it coming HA! Right … Ask Robert & Bruce Toll when the started dumping their shares in May - June of ‘05. Oh surprise, surprise the market is falling (Pooh there goes my GOLDEN Parachute )
“‘It was a year of adjustments,’ Jolly said of 2006. ‘Homeownership was never meant to be a commodity where you buy today and sell tomorrow, expecting to make a killing,’ Jolly added.”
Thanks for the advance warning, Jolly.
That statement got my nerves. It should have never got this out of control.
‘Homeownership was never meant to be a commodity where you buy today and sell tomorrow, expecting to make a killing,’ Jolly added.”
—————————————————————————
do ya think a single RE agent said that to a single flipper during the boom? And risk her commission? Not. But now that this comment is self serving we will be hearing it over and over.
What’s next? Human body parts trader. A pound of flesh for my pound of bricks.
SURE.
Yet they have several shows on TV that promote this whole buy sell and make a killing agenda. What BS.
those shows will go the way of the spray paint baldness cure
As they should.
Those shows were another indicator of a peak in housing prices.
In 1989 a starting to flounder Sitcom on Fox “Duets” changed it’s format, and it’s name to “Open Houses” where the main characters go from struggling musicians to sardonic Real Estate Agents… it ran from the Summer of 89′ to the Summer of 90′… the audience lost interest after that. I wonder why…
(P.S. the lead girl was kind of funny in it, in a sarcastic kinda way… gee maybe thats why I bought…)
“Truckee-Tahoe’s isolation is not complete, however, as fluctuating loan rates, the San Francisco bay area economy and real estate values all influence the local housing market. ‘The foreclosure issue up here has — and will continue to be — linked to the economy of the Bay Area,’ said John Falk, spokesman for the Tahoe Sierra Board of Realtors. ‘It has a ripple effect up here, not only for second homeowners but also on resale values.’”
And here’s another one. I thought Tahoe was different, and special, and everyone wanted to live there, and was thus immune to housing bubububblublublulubbles.
I lived in Stateline, NV for a few years and I couldn’t tell you the number of people that told me it’s different in Tahoe because the lack of building permits, pricing, blah, blah, blah. It seemed like only a matter of time. I am still amazed at what the houses sold for in Tahoe. Especially the crappy-built, 70’s-style places that were never meant to be lived in year-round or broken into multiple units. We used to call the style “tacky-rustic-Brady Bunch.”
You mean you don’t want to buy this cute little ski closet, er I mean, (choke) cabin??
http://reno.craigslist.org/rfs/256000947.html
Wow. Prices have come down since i left. A house that size used to sell for a quarter mil.
wtf? my shed to store my lawnmower is larger than that….
You have got to be kidding. You could just build that yourself for a couple of hundred, put it on a trailer and just take it wherever you want. $200K for that outhouse! The world is truly NUTSO!
I can buy a 8 X 8 storage shed at Costco more tasteful that this POS for $599
Bwaaaahaaaahahaaaaahaaaahaaaa!!!!
Like the weather and the bankers.
looks like an outhouse
Dude, at least an outhouse has a Sh#tter!
Hey, how “quaint”!
–
The shock to the California economy of the Housing Bubble burst would be greater during 2007-08 than the shock during 2001-02, which was due to the bursting of the tech Scams bubble.
Like in 2001-02, Silly.con Valley bubbleheads will suffer more than the rest. Those who don’t learn from history…
Jas
I think you’re right. The rampant speculation in real estate by a lot of these “wealthy” types will not end quite as they had expected.
“For renters and landlords, a similar slowdown is expected, according to Eileen St. Yves, who sits on the board of the San Joaquin County Rental Property Association. She said it can be difficult to find qualified tenants because lower income families are buying homes.”
——————————————————————–
Among the potential renter pool, the creme of the crap is “buying.” The remaining renters are what’s left after scraping the creme off the crap. Good luck flippers after these people get done with your property.
“the creme of the crap”
“scraping the creme off the crap”
Was your use of the word “crap” intentional? Makes for an interesting visual.
“‘I am extremely negative about 2007,’ Thornberg said. ‘I see foreclosures going up in 2007.’”
No really, wow you are so smart.
Right, he’s really going out on a limb with that prediction.
They’ve been going up for a year with Qtr/Qtr increases approaching 100% in many CA counties, ARM resets have barely started and YoY appreciation is only beginning to turn negative. Think he could have at least attempted to quantify it?
Thornberg was negative a long time ago. He was very pessimistic about the market at least two years ago and one of the few saying anything negative in the MSM - at least until muzzled by UCLA.
Yeah, But larry kuntlow says we have a goldilocks economy.
What is he sniffing? Oh yeah, right, coke.
I think he gets all coked up before going on the air. The guy is totally incompetent.He would fit in great within Mr Bush’s cabinet. Him and condi would be a great cheerleading squad.
He actually has KudBlowed in the Whitehouse. From his bio…
“Recently, Mr. Kudlow was a member of the Bush-Cheney Transition Advisory Committee. During President Reagan’s first term, Mr. Kudlow was the associate director for economics and planning, Office of Management and Budget, Executive Office of the President, where he was engaged in the development of the administration’s economic and budget policy.”
I love the gangster suits.
He should be in a straightjacket. Imagine listening to him and making financial decisions based on his goldilocks polyanna outlook. His advice is on par with the NAR.
A coke snorting ex-drunk that got religion with the neo-cons.
Ain’t that special.
Hey his name is George W. Bush and he’ss the president. WOW ! There is redemption after all ! Except for Bill and Monica. Praise the Lord and pass the amunition! AMEN !
“Except for Bill and Monica.”
Well, they did the evilest, most impeachable, thing a man and a woman can do… Dress Dribbled.
ain’t that ordinary…..
His name is larry Kudblow. He blows all his favorite guests after the show.
You guys are too funny
From 26 miles in a geo-stationary orbit it look like a goldilock economy.
Most people who make a few million dollars a year aren’t necessarily in touch with the working mans reality.
“Housing production slumped in San Mateo, the East Bay and California during November, according to a report. The number of building permits pulled in the San Francisco-San Mateo-Redwood City area by developers plunged by 77 percent in November 2006 compared with the same month in 2005. In the East Bay, the number of building permits fell by 43 percent during that period.”
Contrast those percentage declines in permits with this news item posted on another thread today. Does anyone else sense a disconnect between the magnitude of the percentage drops in building permits reported above and the 1.6 percent “plunge” in home construction reported below?
“Construction activity showed further weakness as spending on homes dropped for a record eighth consecutive month. The Commerce Department reported Wednesday that building activity edged down 0.2 percent in November. That followed declines of 0.3 percent in October and 0.8 percent in September. The weakness was led by a 1.6 percent plunge in home construction, which followed an even bigger 1.7 percent drop in October.”
Thornburg a reader here? I wonder which handle he is posting with.
IAmSorryIFlipFlopSoMuch
LOL! Good one, Crispy.
“When a property stops appreciating in value, the buyer no longer has the ability to pay the loan, Giacomini said. ‘The amount they owe goes up instead of down,’ Giacomini said. ‘When they owe more than the house is worth they walk away.’”
I loved the stupidity of that quote.
How does the house not increasing in value have anything to do with the ability of the owner to PAY?
Correct. None whatsoever.
It does however, make one loose the incentive to pay when you bought as an investment, with no money down and expect to make no gains.
This guy is an idiot, but he sees the end result…..buyers walking away from their loan OBLIGATIONS.
This is the quote that got me, too. Giacomini is basically admitting that the FBs could not afford the house in the first place, and needed appreciation so that they could make a withdrawal from the house ATM just to pay for the house. Hmm, borrowing more against an already leveraged asset in order to keep current with the payments. Genius.
And why would “The amount they owe” go “up instead of down”? Of course, they’re using an option ARM. So, appreciation has nothing to do with whether their loan balance is increasing or decreasing. And with so many FBs putting little or nothing down, how many are going to walk away as prices fall and loans reset? A whole lot more than the last time because back then most had some skin in the game and were not facing loan resets.
Thinking the same thing. How do these losers get quoted in the MSM?
Oh yeah, the MSM is a sham. Propaganda Ministry for Corporate America. Nothing more.
It’s not so much that the MSM are a “sham” — knowing shills for “corporate America” — as that most journalists of recent vintage are undereducated, overconfident, lazy [bleeping] idiots. Who couldn’t competently report a story requiring a basic grasp of economics if their lives depended on it.
“…the FBs could not afford the house in the first place, and needed appreciation so that they could make a withdrawal from the house ATM just to pay for the house.”
That is the story of this bubble. In fact, I was watching Flip this or that House (who can keep track?) the other evening, and after sinking a bunch of dough into the place (along with crappy workmanship), the FB’s could not unload it for their outrageous price. So, the solution was to refi or HELOC the place for carrying costs until the market “turned around.” Yeah, that’s gonna work. Multiply that by tens or hundreds of thousands of people and one gets a real good sense of the market and it’s prices these days.
That’s the trouble with timing the market. There is a crapload of latency built in, especially this time. When the music finally stops I think even the bears might be surprised by the extent of the wreckage…
I can’t WAIT to see the new Flipper shows!
“…the FBs could not afford the house in the first place, and needed appreciation so that they could make a withdrawal from the house ATM just to pay for the house.”
That’s like eating your own feces and drinking your own urine to try to stay alive!!
Excellent feces to house comparison. We love those here!
You can drink your own urine. It is sterile.
If you are lost in the desert, dying of thirst, with someone else, survivalist recommend that you drink each others urine.
This because what ever that person has excess of vitamin and mineral wise, they’re body is getting rid of and your body might need to survive.
You should not eat feces.
I know… Thanks for sharing, Imploder.
(but if your dying in the desert some day you may thank me)
That is all
Another lovely visual.
Drinking your own urine might keep you going for a little while, but eventually it will kill you. Just like taking a bigger loan to make your loan payments! Also your breath will be very bad.
“Also your breath will be very bad”
I know I shouldn’t have laughed at this but I couldn’t help myself!
I know this is an educational blog, but really there is some education I just don’t need!
“She said it can be difficult to find qualified tenants because lower income families are buying homes.”
But this is nothing new and has been going on for several years now with EZ credit. The problem is not finding qualified tenants, there is always people who would rather rent, the problem is the market is saturated with rentals and you can’t get positive cash flow. Hopefully the accidental landlords get driven out of the market by the rash of foreclosures.
“In fact, Thornberg sees the entire California economy for 2007 in a negative light. When asked why, he said the state is in a completely unsustainable situation. ‘Consumers cannot continue to spend more than they earn,’ he said.”
What will stop them?
Yes, Arnold tried to stop them last year and the Clownifornian voters handed him his ass on a platter. Now they just float more bonds to fund infrastructure that should have been funded through current operating funds.
Following the dot.com bust, Californians in general and the legislature specifically saw the light - that funding state government on the backs of high-rolling techies and their bloated earning was a disaster in the making. And while that lesson did produce some changes, the hard stuff that Arnie proposed was just too much to bear, so effectively the hardest problems were rolled under a very big rug. CA runs a 5-6B dollar deficits a year for the next 5 (minimum, and that doesn’t count the 40 billion in on-going bond debt) and when housing takes the wheel off this time, there will be no easy outs.
it is too bad that they did not take the bitter pill earlier
You gotta be kidding. Too much to bear? No. The bonds passing are too much to bear. I voted a resounding NO on each and every spending bill.
I guess it didn’t resound very loudly.
When will anyone or the government, learn not to spend money that is non-existent or to not borrow against the future?! I voted No on anything that required spending of money that wasn’t available.
Probably not. We voted alike but unfortunatley, the spendaholics outvoted us.
I thought all governments operated by spending now and paying later?
You think the whole planet operates like the US? Hint: for every borrower, there has to be a lender. Go buy a copy of the “Economist”, look at the tables in the back, and find out who’s who.
Nah, that’s the old paradigm. Currently it’s spend and borrow now, borrow more later. You see paying off principal is bad public policy…… (I have to stop before I start screaming and get spittle on my monitor)
I do think folks will have to slow down with the home ATM shut down, credit cards maxed out, boat, car, and plasma TV payments due and the salaries flat or declining. I think folks rode the plastic for the last quarter of 2006. Unless there is some other way to make money out of thin air, put a fork in it, this spree is done…2007 is when the state runs out of checks.
Christmas 2007 at FB’s house: “Sorry kids, I thought there would be something in that box of Trix I could give you guys.”
Nothing will stop them from going to walmart everyday. It is their duty as americans to consume as much as possible. They do not know what to do otherwise. They are part of the Ipod follower crowd.My neighbor can blow 300-500 / day on sh@t. It is crazy folks.
My daughter used emotional blackmail to force my wife into “letting” her drop $150 on a IPod last week. My vote was overruled…
Yep, this happened to a friend of mine.
She was totally against it but eventually gave in.
The kid is 8.
I don’t know how you all deal with that kind of stuff (no kids here).
I find it amusing that you guys think it’s hard to deal with kids begging for stuff. How do I deal with it? Ask them to fork the money and I will drive them to the store. I have a 9 and a 6 year old. Stops them cold all the time, that they don’t bother asking for unnecessary stuff. CONSUMER NATION, WE ARE (Yoda).
hey i bought one for my wife for x-mas
but we rent and pay our bills in full so
hey she needs it for her gym workout
so i get to see the benefits also
Good return on the money.
GS,
Tell the wife that daughter is taking notes on what works on Mom. The next time it won’t be a $150 toy. And you two will have to put your heads together to head off the next “attack”.
BayQT~
It is truly more hopeless than you think. One minute I thought I had convinced the wife to hold her ground, the next minute I am notified the IPod was purchased. (The same sort of situation played out on a far more gargantuan scale last month, when my sister paid almost $300K for a home a couple of days after I thought I had convinced her to walk away from the deal.)
You can lead a horse to water…
3 years ago my then 19 yo son got talked into a 12K Mustang he in no way could afford. I was pissed, but he’s made the payments (nickel to nickel). Now he has seen the freaking light bigtime, and hates the thought of debt. Maybe it wasn’t such a bad deal after all…
GS,
Forget about getting a house in San Diego…prepare for the wedding at Hotel Del Coronado!
hwy50 –
I am not worried about that one. We can’t even afford to dine there…
GS,
You may not be able to afford to dine there but the wife may rack up debt behind your back so that your daughter can have her wedding there. Now an iPod, next a Coronado wedding.
I am starting to wonder whether I will have to buy a home in order to tap future home equity wealth gains to pay for my daughter’s Coronado wedding.
GS—cut your wife off - unless she makes the $$$
Sadly prenups are almost impossible to enforce for debt and screw up by spouse during marriage…
In a marriage the money belongs to both.
oh boy the wife and i spent 3 days at the “del” in september, being a nyer i found it amusing
the people whose lips don’t move when they talk
you had to see the looks on these geezers when my wife comes to the lobby in her sundress
that place reminded me of the hotel in the shining
and the elevator attendent looked like froto
san diego is beautiful next time i go back i won’t stay at the del although it was great right on the beach
Danger WIll Robinson!!!!
Mid-summer 2000 I paid off all credit card debt run up by female spouse unit. (talking $50k here!!!)
By March 5th, 2001, a mere 8 months later and the legal “Date of Separation”, soon to be ex spouse unit had run the debt on her cards to $10k - which was now half my debt too!!!
Danger Will (GS) Robinson!!! Initiate BOUNDARY PROTOCOL and reaign in financial misconduct by spouse and child units with all deliberate speed.
My ex used to do that as well. Better that she is the ex
Cripes! Did we all have the same ex-wife?
We may have
I’ll buy you both a beer at the party!
“the wife and i spent 3 days at the “del””
Big deal, imploder is at the “del” at least 3 times a week. Imploder loves their soft chicken taco, and it stays fresh even if it’s been in the dumpster for most of the day.
Not just the chicks, thank you. My ex-HUSBAND spent my money and money we didn’t have. I think I’m the only woman to come out of a divorce in debt.
“I think I’m the only woman to come out of a divorce in debt.”
Not by a long shot. I’ve worked with women who have been worked over by hubby in the financial arena. Men who spend and run up debt without care or thought than get abusive when questioned. Unfortunately, you cannot even get those guys to come into the office to try to work through a solution. Even more unfortunately, you can’t get the wife to leave the no-good spendthrift even though her financial future is in danger.
Interestingly enough, men can get spendthrift wives into the office, they just don’t like and ignore what I say when I side with the husband.
Moral: Pick your spouse very, very carefully!
Huh. While my hubby has a little problem keeping track of money, he is perfectly amenable to the solution— no credit cards, and I’m the one that pays off the bills.
He’s even suggested a time or two that he turns over all his money to me and I put him on an allowance. The reason we haven’t done this yet is A. He’s not that bad (and he is learning) and B. We’re procrastinators.
I figure the next time he gets a financial shock he’ll be making the arrangements that night.
That’s what my (first) wife did to me. I finally caught on, and then she left! Didn’t want our house… instead, bought a new one, bought a new car, all on credit - then BK’d before the law changed, and moved away. Best birthday present I ever had, though I didn’t think so at the time.
A beer for you too Mac! I agree, best thing that ever happened was my ex leaving. Now I am the captian of my own ship with no one drilling holes below the waterline.
got my iPod last year - I have gotten way more use out of it than the price I paid, thank you very much!
waiting_in_la,
Are yo going to upgrade to the ipodaphone?
I get tons of use on my iPod too — it’s my second one and I bought one for my nephew and niece. But they are paid for and I didn’t use (future) equity to buy them. (I rent!)
All residents of Seattle have been told to pump the Zune…but it is a POS (they even made a brown one…LOL)…so I bought my wife an iPod Nano for Xmas…she loves it.
Used the money we are saving by RENTING to purchase it.
My parents deprived me of everything. I was playing a hand-me-down Atari in 1992, and not because it was “retro.” I wore four tennis shoes between Grade 1 through 12. But they taught me great lessons - even with a decent income, I’ve learned to make great 72 cent meals of rice and vegetables. My sister is more extreme - she’s a medical doctor who drives a beater Honda and shops at Goodwill. My wife pities our behavior.
I went to Walmart once. It was filled with Mexicans. Never heard English spoken. Never shopped there again.
Damn, where do you live?
The Walmart is in Salinas. I don’t live there, but it’s typical in the CA, AZ, NM TX states.
Stop eating lettuce…this minute. Don’t poison yourself.
My parents both work in Bentonville, Arkansas, the home of Wal-Mart. You would be run out of town for even thinking what you posted.
Yes I know, there’s a huge double standard, it’s here too.
“I went to Walmart once. It was filled with Mexicans. Never heard English spoken. Never shopped there again.”
I guess 100 years ago you would of never shopped at a store again cause you heard some Irishmen speaking in Gaelic, right?
Salinas is so Mexican the government decided to close all the libraries; no one went there any more.
After it made all the news, some kind of compromise was made.
I see you understand.
ruth are you a mormon? from utah perhaps?
And what the *bleep* was that last line supposed to mean?
Word from the street:
Don’t have the exact number but a very upscale development in So. Cal named Lake Sherwood has shut down its construction unit and will only build to order. Seems they have enough houses (million dollars ones) in “inventory” to stop building.
Some may recall that the last down turn Lake Sherwood (Rupert Murdock) was hit hard.
So much for the Uber Rich will keep on buying.
The insanity continues:
http://dallas.craigslist.org/rts/257148768.html
I smell desperation (and stupidity), big time.
BayQT~
http://www.ablebuyer.com
Mister Casey Serin of iamfacingforeclosure.com fame
i see crap like this all the time come over the fax. These are not the conditions for 1 loan program but, a conglomerate of all of the highlights of many, many programs. Still i agree the add and it’s implications are outrageous.
500 fico?
got a pulse will lend!
i hope that is a joke but sadly it is probably not
“No Minimum to $417,000.00 Maximum.”
Full Doc required. The loan will be sold to Fannie Mae.
I don’t think I posted this yet re the Cali market. Good stuff
http://www.itulip.com/forums/showthread.php?t=714
you’re right. good stuff. always appreciated.
“The problem is not the affordability of the mortgage, the problem is that in the Frankenstein Economy they lent money to borrowers who do not have the income to pay and, with little or no equity in their homes, have little motivation to try. If lenders attempt to get even more creative to make these “affordable” mortgages even more affordable, such as by tacking defaulted payments and penalties on to the end of a mortgage, the banks do not solve their problem. Their problem is not only how best to unload properties in a declining market but how to avoid technical insolvency, as has already driven a few canary-in-the-coal-mine sub-prime lenders, such as Ownit Mortgage Solutions, out of business over the past few weeks.”
This came from itulip. The problem is not the affordability of the mortgage - go figure!!!!!!!!!!!!
Strange stuff there. I guess in their world, every mortgage is affordable if the dolt that takes it can just find the money. You see, everyone should be a millionaire, and it’s just not their fault an FB is too stupid not to be one.
Goldilocks Economy I think not. How about:
Franken-Green/stein Economy?
Just for those who say the high end is immune…
“Finally, the 48% decline I mentioned on one property was an upper income property. The high end of the market seemed to take it in the shorts more so than the median stock. Why might that be?
Signed,
Northern California Residential Realtor Agency Owner”
As the Grateful Dead pointed out in its popular song, Uncle John’s Band, “When life looks like Easy Street, there is danger at your door.”
if it is a fb grateful dead reference point
you are looking for
it is without a doubt “i need a miracle”
What do those amoral drug heads know but drug induced stupors, rock and roll. Were they ever sober in their lives at al?
a ruth? many people loved the grateful dead and we were not all “amoral drug addicts”
if you were serious please remove your head from your
a**
ruth posts “What do those amoral drug heads know but drug induced stupors, rock and roll. Were they ever sober in their lives at al? ”
Who cares? Look at GWBush he gave up John Barleycorn and look what it got us? That boy needs a serious drink.
Ruth is acting paranoid. she must be a meth user.
“What do those amoral drug heads know but drug induced stupors, rock and roll. Were they ever sober in their lives at all? ”
Cut her a break. I’m sure she’s not serious.
Grateful Dead are as American as Apple High!
Ruth Doyle never bothered to listen to, and enjoy their music. She labels all of us who love and respect the Grateful Dead with the same swath she condemns each band member. No differentiation.
Maybe they own homes and are smart because they bought long ago. Maybe they rent now and are smart because they are not FBs. I was a sound engineer and a
night club manager in the past. Some, not all, musicians, are the most brilliant peopole I have ever met. Have you mastered the autoharp yet? -
Shame on you, Ruth Doyle (or whomever you really are)!
Keep On Truckin’ !
I’ just not a fan or a groupie of the drug induced music crowd, pop culture or smut.
Dude, surely you make an exception for internet porn. It’s the last great American art form.
“What do those amoral drug heads know but drug induced stupors, rock and roll. Were they ever sober in their lives at al?”
Some of the nicest people I have known have been Dead Heads. Amoral is not a word I would use for them. As for the extreme soft drug use - many of us with libertarian leanings believe things like pot and ’shrooms should be legal. Personally I would rather deal with someone who was high than who was drunk. And this in spite of the fact I avoid all drugs (including aspirin unless an emergency) and basically don’t drink. Cut the DH’s a break - some of us like being around them even if they don’t understand our “straight and narrow” ways.
BTW Ruth, you have said you will NEVER buy a house. As have several others on here. Why do people who never plan to buy spend a lot of time following this board? Not meant negatively - I really am wondering.
The grateful dead and their groupies are the paranoid ones. I haven’t listened to their discordant music for more than three minutes. How about a quote from a Rishi, a yogi, a statesman, or a high thinker with morals? Noooooooooo this pop culture of extremes thinks it’s drugville or the harp. Well , if that’s the choice, which it isn’t, but I’d take the harp every day and any day. The demoralization of society is not just financial, I see from the touchie feelie nerves of one or two.
Free speech?
Free thought?
Nooooooooottttttt tolerated by the pop culture.
hey ruth hit that yoga class and meditate
“or a high thinker with morals?”
You mean like a RE agent?
I guess she really couldn’t master the autoharp! -
How come when someone disagrees with you it’s intolerance (unlike your hateful speaking against dead heads?) Free speech goes both ways dear. Get over yourself.
slightly OT, but does anyone else remember the partial ownership spiel during the last down turn? I have been trying to find articles with no luck, my memory is that POS where foisted off on FB’s as an 80% ownership (bypassing required downpayments and god knows what elses) I would not be surprised to see this again, (particulary in overpriced condos) as well as the 100% owner financing etc. garbage, btw, here there have been adverts for 4 years no payment, no HOA etc.. how is that even legal?????
ok, from the MSNBC board,
Mortgage BankerMessage #25
01/02/07 12:06 PM There really is only one way to speed up a potential recovery of the housing market in major U.S. markets. It is not brain surgery. There just needs to be some creative thinking by some of the builders and real estate companies, big and small. Interest rates and mortgage programs are not going to fuel a reversal of housing fortunes.
The answer comes in the form of affordability…..duh, huh? Real estate markets operate like dominoes when things are rolling smoothly. Push the first domino and the rest fall in succession. As a result of the run-away pricing that occurred, the first domino has disappeared. There is no affordable entry level market that allows first time buyers to enter, thereby allowing the next level of buyer to move up and on and so on.
We have not seen a new type of ownership of housing hit the markets since condominium ownership exploded. Because of the cost of land builders used to achieve affordability by putting more homes on smaller lots. Today, even that doesn’t work.
Because land and house prices have gone up exponentially, it would take years for the cost of living to catch up with the inflation that occurred in four years in housing. One way to accelerate a balance of family income available for housing with the cost of housing is to consider changes in how people own property. Certainly there are many issues (some social) with multiple ownership of housing, but given how many individuals in their twenties and thirties are a function of the “Friends” type of living arrangements, some creative thinking and creative marketing could be developed to take advantage of the acceptance that comes with a more communal type of living and ownership.
Real estate needs to find a way to place more people into less space. We need to adjust the way people think about ownership. We can continue to plug along trying to fix the problem with yesterday’s solutions….or we can be creative and find creative ways to change the pace at which the market recovers
Is this guy serious? they tried that in Tokyo, they sold by the cubic foot and we all know how that turned out…
“Real estate needs to find a way to place more people into less space.”
Honey, I Shrunk the Buyers…
LOL, how about daily time shares, get buyers to pair up with folks on opposing shifts like they manage bunk space on submarines?
yeah - but underground…why mess with the view?! lol
GS
“Real estate needs to find a way to place more people into less space.”
Think outside the box…”think immigrant” and give them cash back with a loan from: http://www.cashcall.com
There are already multiple families of immigrants, illegal and legal but mostly illegal, who are buying houses in Salinas, CA and other places.
100 sq.ft allowance per person like in China.
The Japanese figured it out: Rememeber the capsule hotels?
Ha ha, I do! About the size of a tube like coffin. Those were just before their (ongoing) 15 year deflation. Think anyone still rents them?
My Japanese wife says they still do. If you take a late train, apparently it’s cheaper than the average taxi fare to get home. - : )
And when will you shrink the federal government, the “FED up”, the “Penta-gone” and that biggy wiggy government that is growing like a big fat cancer ? Looking at what is going on from Canada, the US is clearly getting a big corrupt, stupid and incompetent government roman or USSR style.
Hey watch it…Our government is not like the Romans…Just
big, corrupt, stupid and incompetent
Shrinkage is already here! Here’s to hoping all the Liliputians enjoy their Mini-Me McMansions…
————————————————————————–
It’s a Small World After All
Building a Mini-Me McMansion isn’t the only way for homeowners to indulge their passion for property. Below, a few examples of companies that make custom miniatures and other products.
COMPANY/WEBSITE: Architectural models Howard Digital howardmodels.com
PRICE: $5,000-$30,000
COMMENTS: This firm specializes in models for developers and architects but has also created custom replicas, including several based on Mies Van Der Rohe designs.
COMPANY/WEBSITE: Urban landscapes Downtown Deco downtowndeco.com
PRICE: $40-$100
COMMENTS: Former Hollywood scenic artist Randy Pepprock creates 10-inch-high replicas of gritty residences and streetscapes like row houses, strip clubs and liquor stores. “We shy away from the cutesy stuff,” Mr. Pepprock says.
COMPANY/WEBSITE: DIY dollhouses Fingertip Fantasies dollhouseminiatures.com
PRICE: $100-$1,000+
COMMENTS: This company says all of its DIY dollhouse kits are made in Colchester, England. Its Windsor dollhouse, $624, about 36 inches high, has arched decorative lintels, detailed bargeboards and a Georgian front entrance.
COMPANY/WEBSITE: Colonials and Victorians Lawbre Company Miniatures lawbre.com
PRICE: $500-$10,000+
COMMENTS: This company specializes in reproductions of 18th- and 19th-century homes. It has also created replicas of Monticello and, at the suggestion of Justice Sandra Day O’Connor, the chambers of the Supreme Court.
COMPANY/WEBSITE: Tree ornaments Real Little Realty reallittlerealty.com
PRICE: $15-$40
COMMENTS: Send a photograph of your home and this company will create a tree-ornament-size replica. Owner Linda Barclay says she uses a special laser technique for intricate detailing.
http://www.post-gazette.com/pg/06364/749946-30.stm
“Because land and house prices have gone up exponentially, it would take years for the cost of living to catch up with the inflation that occurred in four years in housing.”
Exactly, now stop and think what two things could happen for a recovery. Incomes increase or housing prices fall.
Instead he suggests that people - “take advantage of the acceptance that comes with a more communal type of living and ownership.”
What is this guy a communist?
What is this guy a communist?
“take advantage of the acceptance that comes with a more communal type of living and ownership.”
Well if you look at the template of the O.C., where (in new 600K+ developments) you…A.) Cannot park you VW beetle on the street because it would block traffic. B.) Park your VW beetle in the driveway because it would cause power-walkers on the sidewalk to negotiate in disgust around it. C.) Leave you garage door open for more than 45 minutes. D.) Get approval from the CC&R committee to approve your Spice channel Satellite feed dish. E.) Be fined for planting the wrong type of annuals in your front lawn. F.) Be fined for installing a child’s playground swing set in view of a neighbor vantage point. G.) Be fined for painting your house “eggshell white” …a “non-conforming” community color. H. Oh heck, you get the point…fu*king communist!
why would one buy a home where they have to conform
to so much bs? hoa=power trip freaks
The idea is to keep everyone’s property values up by not allowing your neighbor to become a nuisance or an eyesore. What does it do to your property value when the house next door is bought by immigrants who move in with their 16 relatives, paint the house bright red with blue and green trim, and stay up all night blasting salsa music? Ever been to Santa Ana?
Of course, the flipside is the nosy busybody who gets on the homeowners association board and spends their free time spying on the neighbors to “keep everyone in line.” A ton of prevention being worth an ounce of cure.
Well, for me, the choices are A. Cramped new homes with really weird floorplans (such as microwaves at knee level) on tiny lots or B. Nasty 1970s Brady Bunch houses. There are just no other options within a reasonable commute from my office. Oh wait, scratch that, there are some very nicely designed new homes on good-sized lots in ideal locations for me…but since they start at about 1.1 million, I am too poor to consider these as an option (I only earn 120k a year, with 150k in a 5% CD as downpayment)…
There were two unalterables that I gave my RE agent when I was looking in 1999. 4 walls all my own and no HOA. I wanted a garage, but sometimes you can’t always get what you want….
my ideal home….I own it (I do), and it’s small enough to easily clean (it is). and oh, it’s a 1970’s open floor plan, great for entertaining.
“Real estate needs to find a way to place more people into less space.”
We are already practicing this……it’s called immigration.
“We need to adjust the way people think about ownership.”
Think about the his motivation and I believe you can see where he’s heading. Different thinking about ownership is getting people to go I/O, live there a couple of years, buy a slightly larger and live a couple of years, and buy another….and so on. Continuous buying and selling of houses will accomplish his goal of mortgage brokers without end and a safety net for the entire real estate community.
Great analysis there.
There’s a massive oversupply, enormous demand has been borrowed from the future, and he wants to put more families and individuals into a single unit, thereby reducing demand/unit even further.
Be my guest, Mr. MortgageBroker.
“Real estate needs to find a way to place more people into less space. We need to adjust the way people think about ownership”
Translation: Let’s not allow market forces correct prices that have become out of balance. Let’s try to find way’s to prop up prices for our benefit and to hell with the the younger generations.
“We need to adjust the way people think about ownership.”
Yeah, it’s called renting.
Ownership? What ownership?
You owe nothing. Ask the Comptroller General what he thinks you own. Anyways you owe as a country 54 trillion dollars.
Soon China, Japan and Saudi Arabia will own you.
Real estate needs to find a way to place more people into less space.
Let’s see, option 1 is to rent a place of my own for about the same price it has always cost (inflation-adjusted).
Option 2 is to spend at least that much to secure a space in a shared-living commune? I thought the whole point of staying in youth hostels is that they’re dirt cheap. And most of us outgrow them eventually.
Spring is here early in SD — 64 degrees F on January 3, and already over 200 new listings on ziprealty.com for 2007 (over 1% of current inventory newly listed since yesterday).
And this summer it will be 140!:)
140 F in the shade.
Is that 140 factorial?
Good one, my fellow geek!
spring is here in CT - will be upper 50s….we have not had snow yet..
ot - i would like to hear your thoughts on global warming and real estate, ie. florida is submerged….etc…
Food shortages starting this year after disastrous crops and locust invasion… Suburbia inhabitable once fuel is rationned to 10 gallons per vehicle per month after the Iranians block Ormuz and peak oil/lack of maintenance on oil facilities takes its toll.
Some floridians defect to Cuba…
Gracias El Nino PLUS global warming.
Montréal, Québec tomorrow morning 16 Celsius !
Are any of you interested in buying a bankrupted ski resort ?
Everybody will have to switch to golf.
Many golf courses are open.
Guys, before you start blaming local weather on global warming, keep in mind that Colorado is still trying to dig itself out from under like ninety feet of snow from a couple of big-league blizzards in the last few weeks.
When the West is cold, the East is warm, and vice versa.
As long as it doesn’t affect Venice Beach, I’m okay with global warming.
Just watch out for the killer raccoons in the canals.
how do you get your numbers? I check the “normal” sites for new listings and the numbers are always odd, same zip, same requirements etc. I would like to track actual new listings, (understanding that some listings are recycled…
Early evening update — a few hours after my previous post, sdzip shows 16,465 homes for sale, with 182 (=1.1 percent of the number of current listings) with today (1/3/07) as the listing date. It looks like quite a few sellers are having a hard time sitting on their hands until after the Souper Bowl.
Truckee? Lodi? Fresno? No offense, but who cares.
Feeling a bit snobbish tonight, are we?
I live in Lodi and I don’t even care!
LOL
A little OT, but still related, esp. here in California. A patron came into where I worked earlier today and mentioned something had been thinking about for awhile and I think it is related to housing, just like everything else in this economy. That being overproduction of stuff, esp. that which is not really needed. What I mean is that not only do we make crap and import other crap, but we do it on a scale that just doesn’t lend itself to selling the numbers needed to make anything valuable or at least profitable. Therefore, the only way to push this sh*t, esp. expensive stuff like homes and cars, is to offer incredible finance terms that would never have been considered before. Case in point the guy who I was talking to mentioned shirts. He said how many different kinds of men’s shirts can one own or make? I think this is what happened with housing. Too many starts, too much development. So what do you do to keep moving product? Start financing those with
shaky or piss-poor credit. Bottom line is you have to keep moving product and the only ones left to buy are those with bad credit!
well, when I read about a new service that allows you to “rent” expensive handbags I began to wonder what in the *(&O was up???, There is a business model that basically states that small fee on a periodic basis will yield more profit than an outright sale of a product, in part I actually think it can be a good thing for a consumer I.e. buy one song vs the whole album etc. the trouble in my mind is when people finance, this is a fine line, when is it a service, vs. when are you financing? In my mind, if there is an interest rate or long term contract, you are financing, and that is a poor choice. However renting something for a specific term may be a good choice, I think the whole issue boils down to consumer education, what the cost benefit/ROI etc. and it appears that a vast number of consumers don’t care what there personal balance sheet is/will be…
why rent a high end bag we have chinatown in nyc where you can purchase a coach or prada bag for $10
as well as $2 cd’s or dvd’s
that is piracy,worthy of a whole seperate board, personally I don’t think ANY handbag is worth more than a nice lunch, but good code or music on the other hand;-)
Yeah, like these travesties are the same.
I don’t see what cross dressers have to do with this.
it’s a model used elsewhere - e.g. Rent-A-Center - and it rips people off…. the poorest. if you bought the item outright it would be much cheaper
One of my wife’s friends buys designer everything, wears it a few times, and sells it on EBay. It seems like renting to me: or at least getting the worst of depreciation.
“There is a business model that basically states that small fee on a periodic basis will yield more profit than an outright sale of a product”
This is “core” of our current economic model since the easy payment plan started after WWI. That’s the basis of the credit cards and the Bankruptcy Bill. They know they’ll never get it “all back.” It’s the continuous “stream” of income that’s wanted.
I noticed software began as a consumer item but quickly morphed into a cashflow game of continuous updates, etc.
OCDan, you just defined our whole economy. It’s no longer about savings and investment, it’s become debt based consumption. Requiring easier and cheaper financing to keep the ball rolling. As the Japenese found out, eventually, even free money won’t work.
It’s all about managing the sheeple. Keeping them borrowing and spending and servicing the debt. A lifelong cycle of debt servitude.
Back in the good old days, only rich people squandered money on entire shirts. Most would buy just the front and collar of the shirt, as everything else would be covered by a jacket anyway.
The Contra Costa Times article was speaking of my neighborhood. We will get slammed just like everyone else. Tons of RE dependent jobs in east Alameda County. Title companies, mortgages, brokers, contractors, etc. It is pretty staggering when you start noticing how much square footage these businesses occupy. The builder in the article says they are actively looking for land, but they did not say they were actually going to put their money where there mouth is. Yes, there is lots less competition for it than two years ago, but it is still overpriced. We have hit the ceiling here with regards to prices. I posted this yesterday, but on the current MLS lots of houses are listed as vacant, and many said motivated seller. Gosh, could it be speculators (FBs)? Properties take several months and several price cuts before they are selling. One decent older home I liked last sold in July 2000 for $368K. New asking price? $600K after a $100K reduction. Yep, no bubble here. As the building industry spin doctor pointed out, we have good job growth. Too bad there has been no wage inflation to accompany it. What a joke. Once again our POS local media gives free print space to the industry hacks.
CA Guy, are you near Pleasanton? Sales slowing definitely in San Ramon, Danville the last 5 months.
LA Times Letters to the Editor:
Your article on the front page of the Real Estate section this Sunday, about all the cute, young 20-something real estate agents was laughable considering we are now probably in the end stages of the biggest bubble in real estate history.
Why don’t you use your considerable public influence to spread some useful information, like the dangers of negative amortization loans, which are now being sold to thousands of unsuspecting homebuyers. Why don’t you do a front page article about how house prices are way out of line with average incomes. How about a front page article about the recent bankruptcy of mortgage broker Ownit. How about an article about all the families that are having to leave the area because a combination of commission-hungry realtors and fly by night mortgage brokers offering loose credit have driven up the price of a starter home through the stratosphere.
Any of the above would be far superior to looking at the front of your Real Estate section and seeing kids that resemble the cast of Friends making six figures by putting homebuyers deeper and deeper into debt.
Do you think I got my point across?
Nice!!
Agreed. Very nice LAinvestorgirl! I hope you post a sample of the flamage coming your way from the realtwhores, flippers, and morgage jokers..It should be entertaining!!
laivestor i hope they print it!
but it may upset their advertisers with the full page ads
I also hope they print it, but “sigh” would bet against it… well said in any case, we appreciate it.
YES and no.
If someone offered you heroin would you consume it?
Well, again, no one forced the greedy buyers into signing. The buyers are not victims.
The would-be buyers are, since we have to wait for the monkeys to fall out of the trees now.
ruth what is your obsession with drugs?
do you have a kid on drugs? ex-husband? let it go lady
lainvestorgirl,
You go girl! As the Hummer ad say’s: “Put your girl on!”
Go Dog Go!: by P.D. Eastman,
“Do you like the price of my house?”
“No, No, I do not like the price of your house!”
“Goodbye!”
“Goodbye”!
“You go girl”? “Get your girl on!”?
I see the vaccuousness of popular culture has even seeped into this fine blog.
Appropriate because at this rate alot of FBs will end up living in trees when this is all done.
go girl!!!
lainvestorgirl
That was well written and to the point.
WOW!! Are you sure you live in Venice? I thought those who live there were too stoned to have any real conviction!!: )
Well done lainvestorgirl!
Your letter was concise and to the point. Will they publish it? Doubtful. Will they take it to heart? Probably not. But, it puts the writer and her editor on notice that not everyone out there among the stupified masses is prepared to overlook the media’s abject failure to perform the Forth Estate’s most vital role: to give the public the information they need to make sound and appropriate decisions. Well done, LAinvestergirl!
Finally an awesome outlet for your complantive nature. I stand impressed and in awe.
very well stated
I like it lainvestorgirl. Believe it or not, the Times called me today to ask permission to print my letter.
I’m sorry to hear that. The belittling of women was unnecessary. Too bad they didn’t catch it either.
His comment about “old ladies investment clubs” referred to this:
http://en.wikipedia.org/wiki/Beardstown_Ladies
They lied about their investment return rates and sold thousands of books because of it. Anyone with even a passing knowledge of stock market financial history of the past 30 years would know about it. I’m sure the Times will… even if you don’t.
The Beardstown Ladies was an investment club in which several older women got together to invest in stocks. They become very popular in the late 90’s and further hyped the Nasdaq bubbleby publishing a book and becoming media darlings. Later it turned out there was a lot of faulty math in their book. I don’t think he/she meant to belittle women as much as point to a “realtor” of the late 90’s. (No, I will not capitalize it or put a TM next to it. Sue me!)
“Hopefully the accidental landlords get driven out of the market by the rash of foreclosures”
this is my very favorite quote for today. im so hoping my landlord defaults on his three properties. one in bradendon,fl. waiting…
Did anyone see this?
“I am extremely negative about 2007,” Thornberg said. “I see foreclosures going up in 2007. I think prices are definitely not going to bottom out. I think prices will continue to go down slowly.”
“He expects the real estate market to bottom out this year and start to recover in 2008.”
Well which one is it? Noted it appears somebody is putting words into Thornberg’s mouth.
It can be a good time to neither buy nor sell … can it …
Lets See prices dropping = good time to sell, before you lose your ass, not a great time to buy cos you’d then proceed to lose your ass.
Prices going up could be a good time to do both. Just make sure you’re not buying at the top or are left holding on to it at the top. Time to look for a GF.
Cool.
Cow_tipping.
SECURED FUNDING GOES DOWN!:
http://bakersfieldbubble.blogspot.com
Great! now where am I going to find my neg-am, pay option, no-doc loan with my 510 fico score???
Heard of a new sub prime Loan product!!!!!
They lend you the price of the house AND enough to pay the minimum payment for one year. They hold the extra cash and make the payments for you for one year. FB gets to live in the house for one year without spending a penny, Lender can sell the mortgage to a MBS and not have to worry about forced buyback because all payments the first year are on time.
These guys are pretty smart
So you Americans think you know it all about financial bubbles……..check this out…….
http://news.ninemsn.com.au/article.aspx?id=175134&rss=yes
“Married With Children” showed “BUCK” getting a credit card 20 yrs ago. For those not familiar with the show, Buck was the Bundy’s dog. Al ran up the balance and then had to pay it. Was hilarious.
need to leave ca posts ““Married With Children” showed “BUCK” getting a credit card 20 yrs ago.”
Old Buck was the brains of the show!
The exodus of CEO’s is a clue.
Now Home Depot CEO abruptly leaves.
The end is here.
He leaves with a nice pack of money for doing a crappy job. What’s the amount again? 235 million dollars. Nice.
Imagine what the Monsignore would have received if he had done a great job ! I am sure that the “associates” paid at 7,50$ an hour appreciate their great heroic boss that worked 6 years for 235 millions. That’s supposed to be capitalism? Oh yeah? What risks this “fine fellow” for all this money? Answer: NONE ! Corporate America stinks even more than the politicians !
Yep, the CEO sucks at some companies. The Home Depot CEO had no risks and make a lot of big bucks. He didn’t start a company. In fact the founders of Home Depot are only worth $1.2 to 1.7 billion each. But they started the company. The Home Depot CEO should of only gotten $ 20 Million max. He is full of SH_t!
went to Walmart once. It was filled with Mexicans. Never heard English spoken. Never shopped there again.
What does that have to do with shopping at Walmart? Are you by chance a “racist” Ruth? Was the problem that the checkers only spoke Spanish and you could not understand what they were saying?