On A Daily Basis Prices Are Dropping In California
The Press Enterprise reports from California. “End-of-the-year deals on a glut of built but unsold homes are in full swing in the Inland counties, as builders slash prices, subsidize mortgage rates and sometimes help to sell their customers’ existing houses. Borre Winckel, executive director of the Riverside County chapter of the Building Industry Association of Southern California, said the price discounting on new homes is the steepest the industry has ever seen.”
“‘Very few (builders) are making money on any of the homes and a lot are taking losses,’ Winckel said.”
“A measure of how deep the housing market has sunk in a year is that builders are now routinely forfeiting profit by cutting prices, often by 20 percent or as much as $100,000 and more per house, industry consultants say.”
“Many builders last year predicted buyer incentives would no longer be needed in the spring, when they expected home sales would rebound. But sales plunged further. So this year, as the holiday slowdown approaches, many builders are including yesterday’s designer upgrades as standard features and concentrating on making their homes more affordable by discounting prices and buying down mortgage interest rates.”
“‘It is more about price and monthly payments than about granite countertops now,’ said John Burns, president of Irvine-based John Burns Real Estate Consulting.”
“Recently there were 5,221 newly built and unsold houses in Riverside and San Bernardino counties and another 7,790 houses under construction, said Steve Johnson, a director with MetroStudy.”
“Winckel said builders slashed prices quickly and aggressively with the aim of pushing the market to a bottom that would draw buyers back. ‘They wanted to create a bottom of the market. But it hasn’t happened yet,’ Winckel said. Instead, he said, price cuts have fueled consumers’ worries that any house they purchase now could decline in value, prompting many to wait for an even better deal.”
“On Sunday afternoon, Brian and Renee Katayama were visiting the model homes at Gavilan Springs Ranch, a community of large single-story homes on 2- to 2 ½-acre lots. The subdivision was part of Century Vintage Homes’ advertised ‘One week only! Huge Inventory Reduction Sale.’”
“It was the last day of the sale offering up to $200,000 in reductions off the original sales prices, but the couple said they were in no hurry to buy.”
“Renee Katayama said they are expecting the Federal Reserve will take further steps that could lead to lower mortgage rates, and that an explosion in foreclosures next year could cause home prices to ‘tank’ even more.”
“‘We are hoping it all comes together,’ she said.”
“At the Main Street townhouses Sunday in Corona’s Dos Lagos development, Dave Corbet said he would buy a home if he could get a deal a bit better than the discounts of up to $102,000 outlined on the price sheet.”
“‘I’m going to negotiate big time, or I’m not going to do it,’ Corbet said.”
“‘Most of us will be flexible,’ said Mike Dwight, VP of marketing for Ontario-based Frontier Homes. ‘When somebody walks into the sales office the first thing they ask is ‘What do you have for incentives?’ Our sales people…respond, ‘What do you need?’”
The Orange County Register. “ResMae Mortgage Corp., a Brea-based subprime lender, stopped funding new loans on Tuesday, citing ‘unprecedented’ market conditions, according to an e-mail sent to mortgage brokers and its Web site. The company, which emerged from bankruptcy in June, said the move is temporary.”
“Lou Pacific, a mortgage broker and consultant in Mission Viejo, said he expects ResMae to ‘lay low,’ cut staff and see if the market rebounds.”
“But the housing market will get worse before it gets better, Pacific said. ‘I honestly feel like with the amount of foreclosures on the market on a daily basis prices are dropping,’ Pacific said.”
“According to a state employment site, ResMae plans to cut 72 jobs in Brea on Nov. 18. That follows 185 cuts in May. ResMae filed for Chapter 11 bankruptcy on Feb. 12 after Merrill Lynch demanded it buy back $308 million in loans.”
“Lennar Corp. is slowing development of two major projects in Irvine and Anaheim, holding some homes back from the market until conditions and prices improve, a company official said Tuesday.”
“The Miami-based company, which has about two dozen developments in Orange County, will halt sales of 259 low-rise condos in its Central Park West development in Irvine, said Emile Haddad, Lennar’s chief investment officer.”
“The company will take orders on the 240 high-rise units there, but won’t offer discounts to encourage sales, he said.”
“The company had completed the infrastructure in the A-Town Metro project, west of Angel Stadium, and had planned to start construction in January on 2,681 homes in up to 11 high-rise towers. The size of the A-Town Stadium project…also has been downsized.”
“The delays, in place at least until next spring, and possibly extended after that, are to reduce the number of unsold homes being added to an already sluggish housing market, Haddad said. The company wants to hold out for prices it envisioned for the projects, he said. The delays could stay in place until 2009 if the market doesn’t improve.”
“Haddad said the company also is considering the conversion of A-Town Stadium condos into apartments, or it could sell the project to an apartment developer.”
“‘It’s hard for me to imagine that they’d leave newly built buildings unoccupied,’ Irvine Councilman Larry Agran said when told about the delay.”
The Gazettes. “It’s back to square one for Lennar Homes, the developer seeking to replace SeaPort Marina Hotel with a mixed-use project at the corner of Second Street and Pacific Coast Highway.”
“In a letter dated Oct. 22, Lennar project manager Bea Bea Jiménez formally withdrew the project from the city’s entitlement process. Lennar representatives had been scheduled to go before the City Council next Tuesday, Nov. 5.”
“That hearing was to decide an appeal of a March 15 approval from a split (3-2) Planning Commission for the project to raze the hotel and replace it with 425 for-sale lofts and townhomes, with 170,000 square feet of retail and restaurant space.”
“‘We have decided at this time that we need to continue to refine our proposal. Among the refinements under consideration are integrating a boutique hotel into the mix of uses and reducing the number of condominiums,’ spokesman Glenn Bunting said.”
Inside Bay Area. “The party may be over for those using vacant homes as gathering spots. The Manteca City Council approved a series of ordinances aimed at regulating residential noise at certain times of night and keeping vacant homes secure by fining property owners.”
“City leaders pointed to foreclosures as the major reason for the vacant home ordinance.”
“The foreclosure homes are being used for teen parties, homeless squatting and drug use, according to police reports. ‘(The ordinances) should greatly reduce the locations that are attractive nuisances in our neighborhoods and turn into party houses,’ said Manteca Police Capt. Dave Bricker.”
“The vacant home ordinances give Manteca the ability to dole out civil penalties of $1,000 per violation per day, or up to $100,000 per structure per year. Manteca also now has authority to abate a home by keeping it properly boarded or maintained at the property owners expense.”
“‘It’s been my experience, a good deterrent is hitting someone in their wallet,’ Councilman John Harris said.”
The Desert Sun. “He talked about the ‘R’ word and advised 150 business professionals and academics attending the Urban Land Institute conference on the economy to brace for a long, turbulent ride in the real estate market.”
“‘Worse years in housing are not behind us, but in front of us,’ said Christopher Thornberg, president of Beacon Economics. He predicted it would be 2009 till the tide turns on the housing market.”
Hey, Jas . . . Cisco down big AH on reduced guidance. NDX futs down 26. It’s all good in Kalleefornia!
Hey txchick,
What trading software do you use? Wizetrade? ChannelTrading? Gorilla Trades?
hahahahahahahahahahahaha
Pen
Realtick. It’s kind of a dino but I’ve used it for 11 years now. Great charts.
txchick57,
are you net short the market?
Y, covered half of today’s at the close and held the rest. Cisco downer is interesting. Big cap tech has been the latest hiding place. Wonder what happens if that goes away.
True story: A college friend had quite a talent for computing. In the late 1990s, he and three friends started a company that they later sold to Cisco Systems.
Although Cisco paid them quite handsomely, they did have to work there for three years. During that time, Cisco’s stock price headed south in a major way.
Being programmers with a sense of humor, they decided that the news about their stock options was better than a sharp stick in the eye. They also created a program called Sharp Stick that tracked CSCO in real time.
I’m not surprised about Cisco. They have quite a bit of competition in the server biz these days, which doesn’t place them anywhere near the situation they were in during the 90’s when they had a larger market share.
“It’s back to square one for Lennar Homes, the developer seeking to replace SeaPort Marina Hotel with a mixed-use project at the corner of Second Street and Pacific Coast Highway”
Anyone want to guess in what city/region this proposed project is-or being proposed? The linked article dosen’t mention the city or region.
I already know!
“It’s back to square one for Lennar Homes, the developer seeking to replace SeaPort Marina Hotel with a mixed-use project at the corner of Second Street and Pacific Coast Highway”
Isn’t that the Hotel behind the old 76 station in Long Beach. Very close to the power plant.
At least the In-n-Out is close. LOL
AIG dropped a big turd on the market AH also. S&P futures were down around 15 at one point AH. Great day for da Bears!
ah, that’s what the smell is. I was blaming it on my dogs.
An interesting day if you’ve been long shorts if you know what I mean.
Cisco just expanded here…..If I understand correctly they took another 1/2 mil square feet of space here recently….
Cisco beat numbers but they didn’t blow them out. You see, everyone thought Tech would continue to blow the doors off. Expect possibly another selloff tomorrow.
Dow Futures already say exactly that: -376
It was +122 until the Morgan Stanley news…..
Isn’t that the nature of a Ponzi economy driven by speculation/inflation? Not only do we need growth every quarter, but the rate of increase must increase each time as well - each day of “beat the numbers” must be better than the previous one to keep the game going.
–
Sorry, Chick, I was busying counting my gains for the day (enough for years’ expenses for a deflationist!).
I am loaded with naked calls and long puts on Crisco and Junior.
Tomorrow could turn out as good as today.
Jas
Hmmm…methinks not?
Dystopic horizons realtors…. the wave of the future!!!
http://www.dystopic-horizons-realty.com/
President “Bobby”: Mr. Gardner, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives?
[Long pause]
Chance the Gardener: As long as the roots are not severed, all is well. And all will be well in the garden.
http://www.youtube.com/watch?v=BCWpC1OT81g
Morgan Stanley Sees $3.7B Write Down From Subprime Exposures.
The hits keep coming.
http://www.marketwatch.com/news/story/morgan-stanley-sees-37b-write/story.aspx?guid=%7B56AAFAAA%2D31DE%2D463F%2DA8B5%2D5505D1B503FC%7D&dist=TQP_Mod_mktwN
That’s just a snowflake on their mountain.
Bulletin: Morgan Stanley writing down $3.7 billion due to subprime exposure, says could get worse”.
From marketwatch, email alert.
I like the “but could get worse” part. Enough snowflakes and you get yourself a nice avalanche.
It was our bad, we misplaced the decimal point and it’s really $37 Billion…
We’ve fired the accountant responsible for this error.
“No single raindrop feels responsible for the flood.”
Anyone getting that feeling?
Thank god I’m on high ground. Yes, this and other bearish blogs deserve credit.
Got popcorn?
Neil
Out of the yesterdays story, their ‘level 3′ holdings
( basically marked-to-model untestable crap) is about $77B, and their capital’s like $32B. Their writedown is less than 5% of just their L3 mess. Short-city.
Merrill just announced another 6.3 billion suprime exposure, to add to what they’ve already announced. Nice.
http://www.reuters.com/article/marketsNews/idUKN0744387420071108?rpc=44
At some point soon this will seem scary for even us. Right now its more funny.
Soon it will be an epic tale.
Here lies the story of the
Fall of the American Republic and Rise of the Empire.
Fall of the American Republic and Rise of the Empire.
Nah, that happened between the Mexico-Texas war, the acquisition of California from Mexico, the Civil War, and the acquisition of Hawaii.
Big countries are always empires…it’s just reality…no other choice…in all eras and all around the world…
How are we an empire?
Big V , 4 of my friends in Bay area would be attending the Nov 17 party.
Woo-hoo!
Level 3 assets=scary stuff even for HBBers. imagine the effect on the clueless?
Nov 15 is the date for Level 3 exposure.. FASB 159..
For me the scary point is reached, I find nothing amusing about trillions of dollars being lost in supposedly safe investments. Millions of people rely on dividends from the major bank stocks, many 401Ks are invested in financials, many individuals bought index funds and many are still buying.
As recent events now show, the financial house of cards is coming down. It is ugly. Imagine what Citigroup’s effect on the markets would have been if they had reported write downs of $18B at once! Instead the write downs across the financials are coming in dribs and drabs to insulate us from shock.
And my thoughts tonight, Goldman Sachs is incredibly vulnerable to massive write downs. However they will not take write downs until Bonus moneys are paid out. As Gomer Pyle said: “Surprise, Surprise.”
I predict (just instinct) that GS will wait until the very last moment.
Me thinks they are still wishing for the MLEC.
Leigh
McDonalds: Billions and Billions served
McFinance: Billions Lost Daily
Today THEY said on the money channel that the BONUSES would be reduced by 5 o 10 %.. and that wouldn’t be that much considering…for them..
Shoot. Wish I had had only 5-10% taken from my yearly paycheck instead of 35% + increasing insur costs.
Why didn’t someone tell me years ago ( to many yrs) to get into the money trading biz. or CEO ship..just to make money ruining things? I mean, some biz I have had did that already but no one got hurt but me..
SHEESH.
Same with all the rest of us in Middle America…
Of all the wraiths of past misdeeds that haunt Wall Street, Goldman Sachs is the Witch-King. No one can touch them, or so it seems. When they fall, much like the Lord of the Nazgul, it will be suddenly and in an unexpected way, IMHO.
As someone who has followed, and prepared for the collapse of the ponzi “federal reserve” scheme for more than twenty-five years, I’m afraid I must agree. This is going to be a long, rough road ahead even for the most seasoned.
I agree, after several differant opprotunities I put my accounting degree to work in the public transportation system here (bus company). Not glammorous, but I figure the worse things get the more people will use public transit and the more secure I will be.
Now is not the time to open a stupid boutique business like soooooooo many fools have done in the last few years. I need two more dumb correspondant courses and then the state test to get my RE brokers license and wait vulture like (with cash, income and good credit) to tear the flesh from the bones of the FBs. I should be able to pick up 3-5 cash flowing rentals per year as we bump along the bottom of this down turn. The big question is how severe credit will get?
I don’t see rates skyrocketing (the fed allready threw the dollar under the bus) but those doing the lending will become very concerned with being paid back, no more glass fogging loans.
Life at the end of Empire …
http://www.whatawaytogomovie.com/
–
I am short naked calls on MS (WWDAT, MS Jan-10 $100 Calls). See my comment under bits for truck load of puts.
Every dog has his day and today was my lucky day.
Jas
Yeah…WWDAT…WHAT!
J/K Jas…put it out there
Leigh
All the big banks are selling new paper right now that lets them spread the losses across multiple quarters. All these numbers are fractions of the real number. Merrill lost closer to $20B — but they put the losses into slow motion (y’know, Enron-style).
“Winckel said builders slashed prices quickly and aggressively with the aim of pushing the market to a bottom that would draw buyers back. ‘They wanted to create a bottom of the market. But it hasn’t happened yet,’
- Heehee. One day the Inland Empire will find the bottom. Of course that bottom will be the undisputed leader in foreclosures. The illegals are quickly going underwater out there - no consturction jobs = no bueno
The IE will be the bottom of the RE collapse, worldwide! No doubt. When homes are still going for a cool mil in Fontucky, you know you have problems. Except for maybe a few small areas, nothing, AND I MEAN NOTHING, should be going for more than 150K, 99% tops, in the IE. I don’t need to list any of the reasons. We have belabored the reasons why before. Suffice to say, the IE will be GROUND ZERO when it all pans out. People will be lucky to get 150K on homes bought 10 years ago at that same rate. And yes, I know all about inflation. Heck, it won’t do any good adjusting. Prospective buyers still won’t have any down, won’t want the commute, won’t want the furnace blast Santa Ana’s, etc. Couple that with the melting dollar, no way, Jose!
I still remember driving from San Diego to Anaheim along the I-15 a year ago in a car with no A/C. The hot wave around Riverside right after the 215 split….I thought for a minute I was gonna pass out and die…
- no consturction jobs = no bueno
Yea, but they know how to salvage all of the plumbing. (we need a “duck” emoticon)
Got popcorn?
Neil
OT, but I thought you folks might enjoy this email that I sent to Kim Blanton Blanton as the Boston Globe today.
Hi Kim,
Given that you never told me to not write you, I will assume that you won’t mind receiving this email.
You might rember part of my response to your question of “Who am I?”, included a reference from me regarding the impact of the sub-prime/ARM situation on the economy and how people just aren’t getting the message.
Well, here it is about a month later and things have and still are worsening in the credit markets. The Fed, from their Ivory Tower, has cut rates at the last two meetings. This didn’t save the mortgage markets and it had a disastrous effect on the US dollar. The “super fund SIV” that the major investment banks are trying to string together, just isn’t happening fast enough, and probably won’t happen at all. Basically, the jig is up, the word is out, they’ve finally found us…the credit markets aren’t interested in buying the debt of the over-leveraged Joe Sixpack borrower via SIVs, CDOs, etc. The Pigmen of Wall Street are already begging for another rate cut. If the get it, the already ailing dollar will be DOA.
The folks over at Countrywide are complaining that the government hasn’t stepped in to bailout the lenders, borrowers, real estate salespeople, mortgage brokers, appraisers and other dolts, who created this bubble (yes, it’s a bubble, there is no denying it) in the first place. Turns out Countrywide is trying soemthing on their own, which is basically re-writing the mortgages with better terms. Care to guess where the funding is coming from? I bet it isn’t from the executives’ pockets.
Even Alan Greenspan is on board now. Too bad he told everyone to take advantage of the low interest rate ARMs a few years back. (Hey Al, how is the book selling these days?)
The National Association of Realtors and Massachusetts Association of Realtors included in their market forecast for Massachusetts a statement that home prices here could go up by 10.8% in 2008. I’d like to know how they can see past the continued falling prices here (and they are falling, despite any data that might claim other-wise) and into next year and get their forecast to a precision of one decimal place. MEANWHILE, the President of the National Association of Realtors can’t get his own house sold, because he hasn’t figured out that, “It’s the price, stupid.”. I’d be willing to bet that the average dues paying member of the National Association of Realtors doesn’t live in a million dollar plus home (in Virginia, no less) and I bet they are afraid to ask why, for fear of being black-balled.
Where to from here? Just watch and see.
Pen
A nice letter.
Thank you for posting.
I just watched Jim Cramer end his career on television.
That was disturbing on sooooo many levels.
Wow.
do tell, I don’t follow the guy, I get most of my info about him right here. What’d he do now?
Dude, where have you been?
I’ve been working on a project and haven’t been keeping up.
No, no….not you my friend. I’m talking about AH in ‘07. It seems like I haven’t seen a post from him in ages. He’s an oldtimer on this blog.
LOL, I thought you were dissing me for not knowing about Cramer’s latest tantrum.
No diss for the palmetto.
At work all day, damn it! Somebody ’splain this to me! HBBers NEED to know.
Must be nothing, I just googled and didn’t see anything except the usual.
Is there a link, yet?
(Speaking of wow, haven’t seen you post in a while…)
Probably not compared to Bud Dwyer ending his political career on the news a few years back.
What did Cramer do?
Was it this verbal vomit?
http://www.cnbc.com/id/15840232?video=591207257&play=1
Ask yourself: Where is Amurrrika?
I still think this guy has a cocaine slur.
I saw that also. Very disturbing.
Cramer had photos of that super model and Cuomo (sp?) mounted up in gold frames. He blamed the model for the decline of the USD and raged against Cuomo for investigating WM while waving a giant Bowie knife around. I think he stuck the pictures a couple times.
I would love to see video of Cramer exiting the NBC studios with one of those “clear out your desk” file boxes in his arms.
I’d rather see him in a straight jacket. Keep ranting, chief.
“I would love to see video of Cramer exiting the NBC studios with one of those “clear out your desk” file boxes in his arms.”………dragging the last 4 feet of a Joshua Tree that just wouldn’t quite fit.
Holy sh!t , sorry I missed that.
I clicked the link and saw a video where he referred to a model and to Cuomo, but I didn’t see any photos or a knife. Is there another link I can go to?
Gawd, he is annoying, though.
Check the “Seeing Red” video on cnbc
Oh man! He’s a friggin’ RETARD! He’s blaming everyone but people responsible. The lenders and the mania driven buyers. Without the retarded leveraging and poor debt lending standards, there would have been no sell off today.
Erin had that “Where is the pepper spray when I need it?” look on her face…
The writers’ strike is showing on SO many levels already…
Borre Winckel ? What name is that? LOL !!
and what’s a “Bea Bea”?
OT, and by Ben’s leave —
In Santa Barbara County, the number of recorded Notices of Default for Q3 of 2007 was 598, outdoing 2006’s Q3 by more than 200%. Among those 598 ne’er-do-wells, as discussed this week at the Santa Barbara Housing Bubble Blog, is the Gloved One itself, who’s in arrears (that’s one word) to the tune of $23 million and change on a Neverland-secured note — regarding which one might query: Who’s been advising Jacko as to his real-property secured transactions all these years, M.C. Hammer? Should you happen to pay us a visit at the abbey this week, be sure to consult current footnote 2 for some unpleasantness concerning the KoP’s Neverland property-tax pickle.
Can’t touch this,
Saint Barbara
SB, this is the California thread, so you aren’t off topic. I can’t say the same for some of the preceeding though.
Thornberg thinks things will bottom in 09. Not likely. The ARM chart says no. Further it will take time for REO to get in to the system and poeple will be holding on to see if things recover quickly. They will keep streaming in for years. Probably 5 years.
Then we will have to deal with the ever increasing mass of retirements.
No, this will go on even longer. Prices might bottom in 09 but it could be a long flat period before they recover.
Since he wasn’t quoted directly, I have some doubt that is what he actually said. Previously, Thornberg has said we will reach the bottom in ‘09 AT THE EARLIEST.
Agreed. Thornberg was so right so early that I won’t likely question his motives. At the worse, he may be a little nervous at being SO right so long that like a mad stock-picker he wants to save the fortune he’s earned.
exactly. It seems like most economists and ’specialists’ tend to forget about the whole gift that keeps on giving- all those ARMs that will be resetting for the next 2-3 years with great regularity.
increasing mass of retirements ??
I keep thinking about this also….Its got to have some impact one way or the other…..Then, extend out 15 years, what the hell are we going to do with 78 mil boomers in thier 70’s & 80’s ??
Soylent Green.
Hey! I resemble that!!!
Youth in Asia?
I remember reading a short Asimov story about that many moons ago.
Plumpynut = Soylent Brown?
As the state budget dries up in CA, expect some early retirement offers before you see layoffs. So many people are just a few years of service away that ER offers will be snapped up. These retirees are also planning on selling and outmigrating in droves so this will just further depress the market in Sacramento. Little to they realize that that they’ll be selling into a crushing standing inventory.
Don’t have to worry… I’ll be in my 90s
Groundhog beat me to it. I was busy looking around for an actual transcript of the Urban Land Institute event, because I bet Thornberg said it would be 2009 BEFORE the housing market would recover…and of course, that simply means that the housing market would not recover any sooner than that.
I can’t imagine Thornberg predicting that the housing market WOULD recover in 2009. I’m sure he didn’t. Especially since he seems to have said worse yearS (plural) lie ahead for housing.
2009 is the fools bottom; and many will be fooled. The sub-prime resets end after the first half of 2008. Probably beginning in Quarter 4 of 2008 foreclosures and new home loan delinquencies will decline. Those who ignore the Credit Suisse reset chart will call the bottom and be able to support their claim with data. Then the Alt-A and prime resets begin and don’t end until the end of 2011. Expect the bottom in 2012.
N.B. If the Fed screws up and the dollar really goes to hell, say half of what it is now, then inflation would raise all boats, including housing. In such case the nominal bottom would be earlier.
A fool’s bottom is soon parted by a Joshua tree!
IMHO, we won’t be seeing this madness again until we’re all in the retirement home, posting on the Nursing Home Bubble Blog.
How are prices going to go back up? With higher wages - nope, we don’t have those - we’re lucky if we have real jobs! What about “demand” - oh, yeah, “demand” doesn’t let one pay the monthly note and as the Baby Boomers retire/downsize/face foreclosure, demand will be falling. Maybe toxic loans will return? Nah, not likely.
Real estate has a LONG downward march ahead of it, IMHO.
“The company will take orders on the 240 high-rise units there, but won’t offer discounts to encourage sales, he said.”
When I see comments like this I keep realizing how long we have to wait until they get it. The game is over and they still think they are playing.
I
That is one big bluff they are calling.
Lennar seems delusional at this point. They just gave back deposits on their Park West project, and are slowing or halting construction on the projects around Angel Stadium because they want to get the prices that they projected. Good luck with that strategy, Lennar. They’ll be holding that property until they file BK if they try to wait out the market.
I wonder if these are the projects that Lennar is “mothballing”.
“halting construction on the projects around Angel Stadium because they want to get the prices that they projected”
ThAT A-town project back in 2006-early 07 was just a large barely graded field stretching a half mile along south side of katella ave west of state college blvd. The developers, maybe it was lennar, had just competed the Stadium Lofts on the north side of Katella at corner of State college. That entire area is adjacent to and even built over a former dismal industrial zone. And i mean dismal. The entire Platinum Triangle is one of the most ill-conceived massive boondoogles in LA/OC. The entire area is almost a blighted industrial zone-the city of Anaheim/Lennar showed no foresight and no vision as to the requirements of an attractive urban mixed use area. They just decide to raze and clear the mile square area -urban clearance- and thought they would plunk down a massive urban development in an area which should have better been left as fallow agricultural land.
There is no market for these lofts/ condos /hi-end apts except for lower working class and/or immigrant first time buying hispanic families which cannot afford to pay the $400-500,000 which lennar would have been asking. Instead these units, at least the few put up so far, will become massive low -income apt projects , which is the market in this somewhat butt-end area west of Anahein stadium .
“Lennar slows down 2 O.C. projects
The company has halted sales at Irvine’s Central Park West and postponed construction of A-Town”
If my memory serves me, back in 2006-early 2007, that central park west which is right off the 405 on Jamboree where it intersects with Michelson, is an ambitious huge mixed used development maybe taking up a quarter square mile. As i recall back then they were putting up the commercial/shopping structures first . The entire project was barely above grading stage but progressing rapidly early 2007 but now with the slowdown they are pulling back/downsizing the project, halting sales of condos but proceeding with pre-selling the hi-rise units still under contruction. Market there is for white collar professionals/office workers/executives. There has been an OC mini-boom in multihousing /mixed use all up and down jamboree off the 405. Would have been a rich hi-end condo market as that area packed with office hi-rises but with a lot of mortgage operations shuttering down in the area the housing market has fizzled.
As for the anaheim A-town and othr projects which are collectively called the platinum triangle , that is less promising as the market there would be mostly entry -level Hiospanic Buyers. The entire PT development is a overconceived boondoogle-the area around Anahein Stadium is rather dismal, and all in all the entire PT is pretty much housing hell. In case you google on a map and notice that area where the 5, 22 and 57 fwys all intersect, and where 4 cities meet(Anahein, Orange, Santa Ana, GG) : that entire area is a traffic ensnarled mess and offices/hi-rises scattered about haphazardly, and any condo projects in this area will be badly sited as the entire area is a traffic madhouse and some areas/streets rather sleazy with cheap shopping malls and even storefront strip joints.
Bad ambience in that entire area in and outside the Platinum.
They will end up offering “incentives” or, alternately, simply lower the asking price (or have an auction). I think they just want to get rid of the word “discount”.
Lettin’ the cat out of the bag, Burns?
nudge nudge wink wink
So it was really ALL about granite countertops, wasn’t it?
“‘It is more about price and monthly payments than about granite countertops now,’ said John Burns, president of Irvine-based John Burns Real Estate Consulting.”
Corbert Report…
“‘I’m going to negotiate big time, or I’m not going to do it,’ Corbet said.”
“‘It’s been my experience, a good deterrent is hitting someone in their wallet,’ Councilman John Harris said.”
The good Councilman apparently has never heard the adage “You can’t squeeze blood from a turnip”. Hey azzhat Harris, the reason they are not in the house is because they don’t have any money!
But the banks that now own the property do. This will make the banks holding REO there want to dump those properties even faster.
Either that, or they’ll just hire someone to mow the lawn. Or call the city council’s bluff and hire an attorney to challenge the law.
“The vacant home ordinances give Manteca the ability to dole out civil penalties of $1,000 per violation per day, or up to $100,000 per structure per year. Manteca also now has authority to abate a home by keeping it properly boarded or maintained at the property owners expense.”
The Texas S&L debacle culminated in leveling houses to reduce the squatters, drug use etc. The problem in Manteca, where do you stop leveling?
$1,000 a day, thatsa lotta lard…
“‘It is more about price and monthly payments than about granite countertops now,’ said John Burns, president of Irvine-based John Burns Real Estate Consulting.”
We stopped making sense a long time ago…
Watch out
You might not get what you’re after
Cool countertops
Granted, but not taken for granite
I’m an ordinary countertop guy
Burnsing down the house
Hold tight wait till the housing party’s over
Hold tight were in for nasty bubble weather
There has got to be a way
Burnsing down the house?
http://www.youtube.com/watch?v=Ozc70JPGRMQ
Who else wants to come to the Bay Area HBB party in Redwood city?
Saturday, November 17th, 6 PM
Chevy’s
2907 El Camino Real
Table will be reserved under the name of “Ben Jones”
Biv V ,
4 of my friends in Bay area would attend the Nov 17 HBB party. Count 4 of them in.Confirmed.
“‘Very few (builders) are making money on any of the homes and a lot are taking losses,’ Winckel said.”
So at the grossly inflated prices we were seeing before, their profit margins were relatively small? That doesn’t seem plausible.
The builders are losing money because their costs were (1) $300K for the lot (land), (2) 40K for improvements to the lot, (3) 50K for the building permit. Construction has not even started yet and the builders have already dug a $390K hole.
The cost that the developers paid for the land will force them to stay in the game of building houses. What a freeking mess.
Here’s an interesting tactic for renter’s.
http://longisland.craigslist.org/rfs/471467699.html
Assuming this couple is for real, it’s shows a very interesting point:
If you don’t burden yourself with a lot of possessions (i.e., “crap”) and chose to rent, you can actually have some creative ways to make the most of renting. Being able to move quickly is sometimes an advantage. Why do you need a house full of stuff?
These people may have a great time living in spotless homes that are on the market for the next few years at below market rate. And saving a bundle of cash in the process.
“Why do you need a house full of stuff?”
You mean, like, furniture, cooking utensils, and dishes? They probably don’t have any because they’ve been foreclosed on themselves, sold all their stuff, and are now homeless.
There are actually companies out here in So Cal that seek renters for vacant homes on the market. The renters get to live in nice houses for well below market rent, but they have to have nice furniture, keep the place very clean, allow it to be shown to prospective purchases, and vacate on fairly short notice once the home sells. It’s not for me, but it seems like a good deal for someone who has some (but not too much) nice furniture (don’t want to have too much stuff to keep moving), normally keeps their place very clean, and doesn’t mind moving a lot.
Yeah, they have the same thing in Dallas. We had to do it when we were selling our house down there due to a job relocation. This service can be a real scam and the people don’t necessarily take good care of the house. We ended up renting the house to the people who “house-sat” it and they eventually helped me to fix it up an sell it. I lost my A@@ on this house!! This is why we rent!!!!
Being Ben Bernanke… (triple-bbb rated goodness)
“The film is about a man named Craig Schwartz (Cusack), an unsuccessful puppeteer.”
http://en.wikipedia.org/wiki/Being_John_Malkovich
Yen to Dollar at 112.4
Didn’t people say that 112 was the point at which the Yen carry trade would unwind?
The currency index is the EUROYEN.
That index is 165.21
a 3month chart of EuroYen vs S&P500
http://tinyurl.com/2lvgnp
To break down, the EuroYen has to drop to 149 and change.
Hoz, while there’s great correlation (>90%?) between EURJPY and the S&P, it appears that the S&P 500 leads the EUR/JPY. Not by much… but then again you only need a few hours in the world of electronic trading.
Why then is the Euro/Yen index the major one with respect to the US markets?
Charles Hugh Smith at oftwominds.com has written several times on his blog that 115 is the critical level.
Mr. Charles Smith is wrong.
The US dollar has been meaningless for the last 2 years with regard to the carry trade.
If you wish to see unraveling of the trade, then the EuroYen has to break below 149. No reasonable investor is using the carry trade to buy dollars.
If anything, the dollar has now become attractive to borrow and then convert to other currencies. The Sharps figure is 20. Once it gets to 25, I will do it.
If you want to see devaluation in the dollar, wait ’til it is on the other side of the carry trade.
Hoz,
Thanks for your response…I learn something on this blog everyday thanks to people like you, TxChick and Professor Bear.
“The vacant home ordinances give Manteca the ability to dole out civil penalties of $1,000 per violation per day, or up to $100,000 per structure per year. Manteca also now has authority to abate a home by keeping it properly boarded or maintained at the property owners expense.”
“‘It’s been my experience, a good deterrent is hitting someone in their wallet,’ Councilman John Harris said.”
Every prospective, eventual buyer, every renter, and every stable “didn’t suck out the fake equity” homeowner should get behind this kind of big government meddling. (Yes, the kind many of us would normally deplore.) I don’t see ANY other way that the system will be pressured to find a solution to banks/mortgage servicers being unwilling or unable (hands legally tied) to concede reality before a property becomes dilapidated or worse. This chokes off the potential rental supply for cautious bubble sitters, while dragging down neighborhoods and home values faster than any unfavorable comp could. (Hey, the realtors can spin it as proof that it actually *is* a good time to buy, as the note holders are being “forced” to sell for well under “market value”.)
What’s critical is that the bagholders on these properties see their interest in it slipping away by every tick of the clock, not at some indeterminate future point or with the denial line that “It’s only paper losses if I hold until the market corrects.” Then you can bet that the financial markets will be screaming to congress to expedite legislation that will cut through the normal glacial speed of post foreclosure machinations.
Forgive the soapbox, but I really, REALLY hate to see the waste of a home rotting away. I don’t own a home, and it’s no skin off my nose if the neighborhood goes to hell. I’ll move. But it’s tandamount to plowing down fields of perfectly good produce, while right down the road, people go hungry.
If you can’t afford to take care of it, it should go straight into the conservatorship of someone who will - then fine, let the bagholders slug it out for a share of what is left on the court’s schedule. (It will all likely go to the lawyers, anyway.) You aren’t just destroying your house or the property towards whose owner(s) (shareholders?) you have a fiduciary duty. You’re passively destroying a neighborhood, on the slim-to-none chance of recouping the investment.
I agree, though I’ve come to wonder if destroying the “excess inventory” isn’t part of the long range plan to get housing back up to unaffordable levels where it “belongs.” Can’t have people spending less than 50% to 60% of their paychecks on housing, can we? Debt = wealth, remember?
No surprise, but i just killed a half-hour flipping between the network evening news shows to see how they handled the Wall Street/dollar/economic news. Answer: they didn’t. They covered obesity, Iraq, Pakistan and Prez candidates. Losses on the market, devaluing dollar, a mention of China? Nada.
Woh. The dollar lost 2% against the Yen today.
2%! Today!
Multi-decade high in USD for the Australian dollar and Icelandic krona today. My other fave the Brazilian Real is not quite so hot, but BRL bonds yield 10%, so they’re great so long as BRL doesn’t actually LOSE vs USD.
Is it as simple as comparing that 10% to a Treasury at say 4% or are there other considerations to be aware of? And by considerations I mean those other than the stability of government.
Here’s all I can think of:
country rating of minimum approx
govt debt investment yield (7-10 yrs)
—————————————————————
Australia AAA a few thou 6%
Iceland AAA a few thou 9%
Brazil BB $140K (US) 10%
————————————————————-
I’ll try that again:
country……rating of…..minimum….approx
……………govt debt…investment..yield (7-10 yrs)
———————————————————
Australia…..AAA……….a few thou…6%
Iceland…….AAA……….a few thou…9%
Brazil………BB………..$140K(US)….10%
——————————————————
Thanks. I don’t know if I’m ready to go as long term as that, but I’m considering currency CDs from Everbank.
wow, 140K min on Real?
“builders are now routinely forfeiting profit by cutting prices,”
Exactly how can you “forfeit” something you never had?
20% off the wishing price is not forfeiting the profit, just some of it
How Federal Regulators, Lenders, and Wall Street Created America’s Housing Crisis …………….
http://www.moneyandmarkets.com/Issues/SpecialReports.aspx?NewsletterEntryId=1158
Naturally I oppose the recommended fix of Federal licensing and testing requirements for mortgage lenders. If they engage in outright fraud, they should be in jail. If they don’t, what’s the problem? Like any other so-called professionals, the mortgage loon officers would probably like nothing better than some B.S. licensing requirement that puts REAL lenders (me) out of business.
“It was the last day of the sale offering up to $200,000 in reductions off the original sales prices, but the couple said they were in no hurry to buy.”
This makes no sense, and the buyers know it. If a few houses sell at $200K less, then no appraiser will appraise similar homes for any more than that (esp. in this climate where they may actually be held accountable for their actions)
So there are two scenarios:
1. No houses sell at the sale price. Then the builders may drop the prices lower. (What else can they do?) So buyers should wait
2. Houses sell at the sale price. Now they’ve established a new price ceiling. So buyers should wait.
A “Special Sale” is a dumb idea for houses. Just tell people to make offers, and take the best bona-fide offer you get in, say, a two week period.
Your two choices assume all buyers are rational and base price on reality. too many buyers base price on ‘what they think it will be worth in 2 years’. That has been proven again and again by actual transactions in the past 5 years.
More on Cuomo/WAMU/FNM:
“the bank said its bad loans could remain a problem into 2008.”
“The most sobering thought about the credit crunch so far is that it’s happened without anything approaching a recession. Difficulties in the financial system could slow the economy and that in turn that would create new losses at the banks.”
http://tinyurl.com/2ka8f2
My perch on here has allowed me to see far further than I could have ever imagined…
Thanks to you all.
I liken myself somewhat to a later day Pliny the Elder, who watched Pompeii and Herculaneum breathe their last, from the effects of Vesuvius…
http://en.wikipedia.org/wiki/Pliny_the_Elder
It’s only now getting to the stage where things that will blow your mind, happen on a daily basis, and all the world’s a stage for this housing bubble…
Standing Section-8 Count
“Haddad said the company also is considering the conversion of A-Town Stadium condos into apartments, or it could sell the project to an apartment developer.”
Rentals postings in Craiglist for the SF Peninsula are now accepting Section 8s.
Real estate bubble closing in on local housing market.
“Housing bubble aka “the blob” closing in on Vernon County”
http://www.vernonbroadcaster.com/articles/2007/11/07/opinion/01storyop.txt
Forgive me if this is a repost. It is just too good to miss. Articles today in CNN/Money/Fortune if you missed it.
http://money.cnn.com/2007/11/06/real_estate/home_prices.fortune/index.htm
Be sure to click the related links.
Moody’s wrote down 16 SIVs. This thing is about to BLOW!
“‘We are hoping it all comes together,’ she said.”
Hoping for widespread financial collapse may not be such a good thing.
According to Kudlow this evening the dollar is just a little weak, inflation is tame, growth is strong, it’s time to buy stocks, high oil and gold prices are fine and just signs of global prosperity. Kudlow said that abolishing the corporate and capital gains taxes are what the US needs to move ahead financially (I guess income taxes from the middle class would pay for all government obligations?) One of his guest’s basically said that people should just quit whining about high petro prices and enjoy their $25 DVD players. All is well in Kudlowland where the sun always shines. I would bet that there are a few in HBB that would tend to disagree with the bright picture painted by Krudlow. I don’t know which one is more difficult to watch, him or Cramer. They both live in a world that barely skims reality. Enough of my rant.
You mean like a bizarro world?
OT: How can I check S&P + NAZ futures after hours?
http://www.cme.com
another.
http://www2.barchart.com/mktcom.asp/cmepag.htm
Any thoughts on tomorrow’s markets? I keep wondering if this is the first crack in the major dislocation I keep expecting, or just more day-to-day volatility (e.g. another bounce-back tomorrow). Can’t decide whether to cover my shorts (GREAT DAY!) or hold…
Nobody ever went broke taking a profit…
Judging the open interest on the dec dow and s&p, longs were pulling the plug. I doubt there will be a bounce tomorrow.
Nov. 7 (Bloomberg) — Federal Reserve officials underscored their reluctance to lower interest rates further, while suggesting record oil prices and the weaker dollar aren’t enough of an inflation threat to require higher rates.
Fed Governor Kevin Warsh said new information would need to “materially” alter the Fed’s expectations to prompt a shift in its rate stance. Dennis Lockhart, head of the Atlanta Fed bank, said an “orderly” depreciation of the dollar is “manageable.” Richmond Fed President Jeffrey Lacker endorsed last week’s rate cut while warning that he’s concerned about inflation
———————————————————————–
looks like the dollar is going down , now if you work for dollars don’t you feel poorer? I expect the stock market to have two parts, the financial half which is going down and the get out of dollar half that should do well. Thats my view long term at least.
Is November the new October?
I can only hope…
It would take some really great news to prevent tomorrow from becoming a bloodbath. Could Black Friday be far off ?
It’s still early but things are settin’ up for red:
Hang Seng down 3.4% (1000 pts.)
Nikkei down 2.5% (400pts)
Dow Futures at -360
Nasty at -26
S&P at -7
Have you lost all faith? Buy the dip! The stock market always goes up!!
Jim Cramer, is that you?!
in the absence of anything of major importance, i have to agree.. buy the dip.
so, my prediction is Dow up at least 250 points by noon.. moving sideways towards the close.. then a small drop of less than 100pts.
Could be right joey.
The Dow future right now is showing a -80.
Now down to -76.
How much longer, before liquidity becomes more of an issue, than the falling price of a given stock?
It’s now 4th Down, time to punt.
Here’s what George Soros says…
“Global financial meltdown ‘not far-fetched”
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10474773
CNBC running an awesome story about miami condos….
Builders selling to speculators… pretending they didn’t know they were speculators.
Speculators trading condos between each other to get comps to sell their other properties to other investors speculators.
$200K condos soon selling for $1 million+.
$150 a sqft, $300 a sqft, $600 a sqft, $650 a sqft at the peek.
More than 20 new buildings comleted in the last 3 years, with…
hold on….
…37 more currently under construction.
Now prices have fallen 50% in the last 4 months. Condo auction last week had units with last-sold values of over $400K going in the $180K-200K range.
People can’t rent the places for even half the monthly carrying costs (at low teaser rates).
Some buildings that were 100% sold 2 years ago have over half the units that have never been lived in.
If it weren’t for the much larger house disaster, the condo disaster would be enough to put us into recession. Will be “interesting” when the commercial property market implodes on top of the credit card implosion, on top of the hosing implosion, on top of the condo implosion, on top of the….
Ring around the roses, pocket full of posies, ashes, ashes, all fall down….
On a special on Business Nation ,they were discussing the whole downtown condo scam of flipping condos in Florida . The cat is really out of the bag .
One of the guys they interviewed was a investor who bought 25 units in one project ,while the builder of the project was trying to say they would discourage investors and only sell one unit . There is no reason why a builder would not know someone is buying 25 units. One guy they interviewed admitted that the builders were building for speculators ,(something that I have said all along and the reason for the overbuilding .)
Now, I would like to know who is going to be blamed for builders being in bed with lenders on allowing this sort fraudulent lending in these projects . One guy mentioned speculators going under different names and that means to me they got straw buyers . This scheme all stinks and it explains why so many people are walking .The program also showed a investor that lived in the property that didn’t qualify that was holding on but he admitted that he bought the condo to flip it in 1 to 11/2 years
For people who have never been in the lending business ,a investor loan is considered a higher risk loan and lenders usually require a bigger down payment and a higher rate and points ,unless some sort of fraud is involved in the application process . One guy on the program said that many of these condo project had 80 to 90% speculators/flippers .
as far as speculation, builders themselves are among the worst offenders… it’s practicaly in the job description.. there’s no way in hell would they be “fooled” by some amateur using strawmen as buyers.
..and they’re in bed not only with lenders but with politicians.
it’s annoying to know people pull political strings to get favorable treatment and collude behind the backs of tax payers for the sake of unneeded “growth”… but this time it will all come out in the wash. A freakin mountain of money went into the toilet, to the point of sparking a recession.
Heads will roll.
keep in mind people when the financial community has writedowns, the AAA mbs according to the ABX index is down 10-20%(haven’t checked it when I wrote this). what do you think Level 3 assets should be marked down to? what is a SIV worth?
“ResMae Mortgage Corp., a Brea-based subprime lender, stopped funding new loans on Tuesday, citing ‘unprecedented’ market conditions, according to an e-mail sent to mortgage brokers and its Web site. The company, which emerged from bankruptcy in June, said the move is temporary.”
What move? The move out of bankruptcy I assume?
“‘Worse years in housing are not behind us, but in front of us,’ said Christopher Thornberg, president of Beacon Economics. He predicted it would be 2009 till the tide turns on the housing market.”
Did he predict what factors would turn the tide in 2009? Because by my 5th grade arithmetic, the reset tsunami detailed in Ivy Zelman’s famous chart lasts five years, starting in January 2007, which would end by January 2012 (2007 + 5 = 2012). Or does Thornberg have some fancy economist math that explains why prime and Alt-A resets will not matter?
PB, see above where several of us question the quotation. It doesn’t even make any sense: “worse years” (plural) lie ahead of us, suggesting that 2009 will be worse than 2008. I blame the “till” on the reporter. Thornberg probably said it would be 2009 before the housing market could possibly stabilize. Not an unreasonable assertion. Wish I could find the actual transcript.
his Coachella Valley presentation .. 24 pages of charts and stuff are first link on this page.. ..does someone usually make a transcript of the meetings?
page 22 outlines his thoughts as far as dates on the recovery..
http://www.beaconecon.com/products/Presentations/
So Merrill Lynch really blows through $10 Billion today, after hours…
ho hum
Stop it, all this containment is killing me!
It may take quite a while to blow through several hundred billion dollars if the guts keep spilling out in $3 bn to $10 bn chunks.
2 comments:
a) expect the Fed to lower interest rates again. Watch them lower it by a full 0.50%. This should happen around Thanks giving. Don’t home sales typically dry up around the holidays anyway? It won’t make any difference. Japan lowered its rate to 0 %, and it didn’t make any difference. The Fed just doesn’t get it: this is not an interest rate issue. It’s not about money it never was. It’s about truck (or actually: lack of trust) none of the banks trust each other so there’s no lending going on.
b) The BANKS will be the biggest loser in this upcoming Massacre. Watch every move they make, because they are the Harbinger. I’m absolutely convinced they are Broke. I mean DEAD broke they don’t have any equity left on their books they are just praying that the general public won’t figure it out. The above poster is absolutely correct: they are parceling out the Poison piece-meal. $10 billion this month, $14 billion next month. They’re letting the Titanic sink, stateroom by stateroom.
c) By January it will blow, is my prediction. They’ll have the MSM Hologram Media blabberfest keep things extended for a while. But they can’t hold out forever.
On book, the banks are NOT flat broke. However, they’ve loaned lots of money to people that are flat broke. When they can’t get paid back for their loans, they WILL be flat broke.
They question is, what does the govt. do then? Another rescue fund where the govt buys up the crap loans for a significant protion of face value, then packaeges and sells them off for pennies on the dollar, adding the difference to the national debt, never to be paid back?
“They question is, what does the govt. do then?”
Run the printing press, then drop money from helicopters?
Won’t work - we won’t have wage inflation, most Americans are basically tapped out, and all the jobs are leaving the nation, putting downward pressure on wages. Heli-Ben has no way to get the money to the Average Joe.
“I am from the government; I am here to help you” LOL
So what do you do with your money? Do you pull all of it out of the banks and literally stuff it under your mattress? I’m getting closer and closer to that every day. My grandparents went through the Depression. They never trusted the government or banks after that. My grandfather was one of those that believed Roosevelt and the PTB allowed Japan to bomb Pearl Harbor. My grandfather believed if we hadn’t entered into WW2, the US would still be in a depression.
We were well on our way out of the Depression before Pearl Harbor. Just selling ships, guns, bombs, etc to the brits was enough to pull us out.
That isn’t to say that we didn’t know the Japs were going to attack Pearl Harbor. We were certainly reading at least parts of their code just a few months for the battle or Coral Sea and Midway. It was awefully darned convenient that all 3 carriers were at sea.
If/when the U.S. crashes, paper cash won’t be any safer than electronic “money” in the bank.
Gold may be good. Maybe not.
“So what do you do with your money?”
It may be high time to invest in a wheelbarrow…
http://www.mises.org/images3/wheelbarrow.gif
LOL Professor.
Just don’t leave the wheelbarrow full of dollars alone and unattended…someone just might steal the wheelbarrow, leaving you with stacks of dollars and no way to transport them…
well, if you do decide to panic, go to the Bellagio in vegas.. buy $25,000 chips… beats sleeping on bricks.
buy gold, store it at home
The bank deserves all the sh** they are having now.
I remembered that I got a notice from the bank when they found out that I “didn’t” pay the fire insurance (It was delayed processing by the insurance company) blah blah blah, gave me all sorts of warning with my house’s LTV like only 10%
Now, tell me Mr. banker. How come you allow 0 down payment and negative amortization and all these BS with home mortgage? You deserve to be screwed big time….
I’m interested in this super-SUV thing everyone is talking about. What’s it called, MLEC or something? Does it look anything like this?
http://tinyurl.com/ypwk56
Japan Now Owns The USA.
You know at some point it may be wise to just buy a small house for cash. Yes the house will fall in value, but if banks go bust what happens to your cash. Even if they don’t go bust dollar is collapsing. I bought a hybrid, invest in anything that will save you money down the road because anything you buy down the road is going to cost a lot more.
or a small motel..
i once stayed at the nicest little place while driving through Palm Springs.. the room reminded my of my grandmother’s bedroom.. hand crocheted doilies under the table lamps.. i think the lady was the owner, and charged me like 19 bucks for the night.. me in my beat-up Chevelle.. must have thought it was all i could afford, or liked my face, or something.
This was back in the 60’s, right?
“Renee Katayama said they are expecting the Federal Reserve will take further steps that could lead to lower mortgage rates, and that an explosion in foreclosures next year could cause home prices to ‘tank’ even more.”
I’m confused by this statement. Just a year ago, housing bulls were telling me that the Fed slashing rates was sure to prop up the market “no matter what”. How can there be this “explosion in foreclosures” if money becomes cheap to borrow again? Every FB can just refi and trees keep on growing to the sky, right?
I don’t think they mean it sequentially, although it is written that way. What I think they’re saying is:
“they are expecting the Federal Reserve will take further steps that could lead to lower mortgage rates, and that an explosion in foreclosures next year could cause home prices to ‘tank’ even more if they don’t.”
That does make a lot more sense, thank you.
the other shoe: credit card debt. Folks used cards and expected the House ATM to pay for it, or used the cards as the alternate House ATM when the equity disappeared. WFB, BoA, Citi, Wachovia…….expect bad news coming in the next few weeks as folks stop paying on their plastic. Then watch the Christmas retail season tank, just about the time gas hits $4/gal. It’s going to be a cold, interesting winter.