Adjusting Prices ‘The Moral Thing To Do’
The Arizona Republic reports that the big homebuilders are ‘regrouping.’ “A parade of builders has announced sales declines of as much as 40 percent in what one analyst called ‘confession season.’ It has been hard for some builders to face the new reality. Some analysts say builders got so accustomed to the good times that they forgot that real estate runs in cycles, and they still haven’t adjusted.”
“They’re sitting with bloated inventories of unsold spec homes, created when buyers canceled deals. There were 8,700 finished but unoccupied homes in the Valley at the end of March. That compares with 4,300 at the same time last year. ‘You see it in spades in Phoenix,’ said Stephen East, an analyst with Susquehanna Financial Group. ‘There’s a huge amount of inventory that has come on the market in the last six or nine months.’”
“Despite their homey marketing, housing is a commodity for many builders. The big national builders roll houses off their production lines like carmakers cranking out Chevys. They’re in trouble when the mass market can’t afford their product. Analysts say that is exactly the situation now.”
“‘These builders, where volume is the name of the game, they have to be really careful about where they price,’ East said. ‘And I think large public builders have to take some blame for the dramatic run-up in house prices.’”
“Builders are realizing that their customers can no longer afford the houses that were within financial reach before last year’s boom. ‘The builders open the doors, and there aren’t any qualified customers,’ RL Brown said. ‘They say, ‘My God, what happened?’ What happened is he moved his price beyond the customer.’”
“‘It’s the right decision,’ said Greg Williams, president of KB’s Phoenix division. ‘It’s the moral thing to do. If we think we’re overpriced, we have to adjust the price.’”
The Fresno Bee. “Sales of new homes in Fresno and Madera counties have fallen by more than 25%, and the number of canceled sales has skyrocketed this year as builders struggle to adjust to a slowing marketplace.”
“A record-setting 5,233 existing houses are for sale in Fresno and Clovis, up from 1,823 two years ago, according to the Fresno Association of Realtors. Meanwhile, sales of new single-family homes in Fresno County through May fell to 1,291 from 1,735 during the same period last year.”
“Add to that a 56% increase in the number of active subdivisions, and the fact that nearly 14% of all new-home deals fall through before completion (compared with about 1% last year) and you have a situation where builders are forced to retrench.”
“‘Builders will do what they can to keep their operations going,’ said Patrick Duffy, managing director of Hanley Wood.”
“‘Buyers recognize values are going down, and that causes them to cancel a sale. The general mood of the marketplace has turned into ‘Let’s wait and see what happens,’ said Mitch Covington, president of the Building Industry Association of the San Joaquin Valley. ‘The market was ripe for a correction,’ he said. ‘We knew it was going to come, but we still sell homes.’”
“One thing builders don’t want to do is drop prices, unless they have to. Developers know if they cut the price in the third phase of a subdivision, buyers of houses in the first two phases will squawk. However, that does not stop big publicly held builders with quotas to reach from offering one-day sales and other programs in an effort to slash excess inventory, Duffy said.”
“Dick Ellsworth, land specialist at Grubb & Ellis, said some larger builders are reducing their land holdings but are having trouble finding buyers for so-called ‘paper lots.’ One of those is Centex Homes, which spokeswoman Lissa Walker said was overloaded with property. ‘We have land positions through 2011 or 2012,’ she said.”
‘I think large public builders have to take some blame for the dramatic run-up in house prices.’
It’s nice to see this acknowledged in the press. Here are a couple of related links:
‘There are some positives in the midst of the current “correction” that has deflated sales at some builders by as much as 40 percent. It’s easier to buy a new home these days because the waiting lines are gone. Builders are offering incentives and making spot reductions on prices of selected models. The speculators who helped create the buying frenzy are starting to move on.’
‘After acknowledging that his prediction of prices stabilizing by mid-year was off, Brown now forecasts six more months of price volatility before the market settles. Brown said the trick for the housing industry would be to regain what made Pinal County so attractive just a few years ago. This means cheaper and bigger homes compared with Maricopa County.’
I honestly believe the “large public builders” are not to blame for this recent run up in prices. Not one bit. They are charging what the market is willing to pay. If morons (the young, the stupid, the greedy, the ones who do not do “due diligence”) are willing to camp out by the thousands to buy a couple of hundred homes, they deserve to have their heads handed to them. When you stand in line to buy anything you are getting screwed. Fact is, there was a “market shortage” for a few months in 2004-05, true the demand was false and a sham, but no one can deny there were more people biding the market up then the product to which to supply. Builders were lucky enough to be able to cash for awhile to attempt to fill that void. Many small builders were stupid enough to actually believe in the housing shortage, others, like the Toll Bros. were selling into the void by selling their stock. Shrewd.
And what of the posters here saying… “Sure am glad I cashed out my over priced McMansion for $870k that I paid $300k just 5 years ago”. Are they somehow less culpable??? Does morality really care if you have but one house to sell, or hundreds??? I think not.
It takes all types to make a market, historically money flows from weak hands to the strong hands for as long as time. This bubble and asset class is not one bit different. This bubble is “resolving itself” as all bubbles do, and cares not one bit whom it crushes on the way down. People just have a personal responsibility to arrange their own affairs in the best possible fashion so they are not standing on the train tracks. Because you know eventually the train is coming.\
Solvingadream
I agree, if people will pay the price, someone will always have the supply. This could be a new home, a new car, xbox, jeans, etc.
Funny thing, the diffrence between a car salesman and the marketing/ sale of new homes has become blured.
Both will try to obtain the highest possible price, and it takes a buyer to agree to this price for the transaction to occure.
Blaming young people for lack of RE savvy is like me blaming my grandmother for not configuring her wireless router correctly. You shouldn’t have to have a economics background to buy a house; and my grandmother shouldn’t have to understand TCP/IP to connect to the internet.
Many baby boomers that have bought 2+ homes in expectation for a GF have screwed the younger generation, making housing unaffordable. They’ve screwed the country up to; higher costs of living will push more jobs oversease were costs of living is cheaper.
Nah… Each of us is responsible for his or her own financial literacy. The math for simple interest calculations is taught in fifth grade. Each of us is also responsible for containing his or her emotions (greed, envy) while making economic decisions.
But, we have the NEA and the CTA (California) dumbing down the kids. All they care about is gimmie gimmie gimmie. Bigger pensions, less work, higher salaries, more taxes on us to pay their sloth. Try your everyday teenager with some economic questions. They’ll say,’ Oh, I thought the government took care of everything’. Sports Fans, we need a big recession to sort things out.
What if BB let’s the dollar fall? That 500K condo might really be ‘worth’ 500K in weakened U.S. dollars a few years from now.
That’s not simple math on a calculator.
Pismobear,
All kids care about are bigger pensions, less work etc? What country are you living in?
Kids today expect nothing from the gov’t cause they know SS and Medicare won’t be there; they’re savings are being raided, and stolen from them right now.
They have to compete on a global scale, understand and work with complex technology and have a steadfast focus on the satifying the customer.
Not talking about the ‘kids’, I’m talking about the teachers.
Some perspective is in order here. Virtually noone is alive today who experienced the Roaring 20s and the economic crash that put FDR in office. Conversely, virtually all of our “wisest” elders, grandparents, etc., have only known an economy that was highly regulated. For better or for worse, the economy today is the least regulated than it’s been probably before FDR. Sh*t can happen. None of the old(er) folks can wrap their heads about that. You have to go back to the “Panic”s of the 19th Century for perspective.
You have no clue what you are talking about, pismo.
#1 Your kids are bad to begin with. 99% of Japanese kids study for the sake of studying. Spent 4 years over there figuring this out. Here, it’s more like 5% - Trust me, I teach here now. Kids are ignorant because American parents are lazy or indifferent.
#2 Most of the teachers in my area (I can only speak for the south bay of San Diego) despise the CTA for fighting the wrong battle. They battle for cash when they should be fighting to improve schools by dumping bad teachers. Most of my $90+ in monthly dues goes toward paycheck and benefit improvement - this is true. But know this: the unions DO NOT speak for the teachers. Cry foul on the “representatives,” if you wish; but, keep in mind that teachers do not spend time debating the pros and cons of the unions pushing a 5.24% raise to 5.27%. Nor do we waste time on the political crap involved. We are too busy cleaning up after the mess parents have made of their children.
#3 You think we care about cash? The greedy bastards who spend their lives trading gold, oil, options, whatever - these are the bad ones. Yes, I just outed 3/4ths of the people here. I could get 3X my salary with my computer and math skills - yet I teach. What, you gonna bag on firefighters and police now, too? So one bad cop does something bad. You see it on TV and, in your infinite wisdom, judge all cops based on the actions of 1/100th of one percent? Sounds like it.
You want to know why school districts have a tough time retaining teachers beyond their 3rd year? Look in the mirror. Quit blaming other people for your own shortcomings. I swear, seriously, I can’t imagine any group of professionals more likely than teachers to reflect on their own performance year in and year out - with the sole purpose of improving their skills for the betterment of society. New teachers come in with idealism and hope, and they leave in droves. Why might that be?
Sorry for the rant everyone. Just felt that someone was being spectacularly ignorant - and unfair.
Pismo, feel free to either clarify your distasteful bull or apologize. And I don’t mean to me.
P.S. - I agree about the need for recession to sort things out, though!
We Rent,
Agree 100% with what you are saying. I’m a former teacher, now day-trade (God, that sounds so bad!). Based on my returns for YTD 2006, I will make more than triple my former teaching salary (not including benefits). You’re right, this society does not reward productivity. It rewards gambling.
Also, agree with the kids entering the system being a mess. I can’t tell you how many(especially in low-income areas) come to school without even a basic understanding of letters, numbers, shapes or colors. Not kidding. What in the heck do people expect teachers to do with that? Not to mention the transient nature of today’s students. You can end up with a completely different class than what you started with in the beginning of the year (I taught in a very low-income area in LA).
My own kids will enter school knowing how to read at a second-grade level. The school, however, will be the beneficiary of my work. Parents like myself will only place their children in “safe” schools (read: schools where most students speak English well and come from homes with educated, fairly well-off parents). API scores are just a reflection of the neighborhood (educated, concerned parents who value their childrens’ education). Some of the best teachers I’ve known taught in some of the poorest, lowest-scoring schools. See, they actually HAVE to teach, instead of riding the coattails of the parents.
BTW, for anyone who thinks teachers have such an easy job with undeservedly high compensation, why aren’t **YOU** doing it????
Sorry for the rant!
Pismobear:
Your comment: “But, we have the NEA and the CTA (California) dumbing down the kids. All they care about is gimmie gimmie gimmie. Bigger pensions, less work, higher salaries, more taxes on us to pay their sloth.”
I don’t know from what planet you are from, but it must be one where people believe all what the papers (like our beloved LATimes) says. this is the official idea here in my planet too:
Teachers, who despite being nurses, social workers and psychologists 8 hours a day, with no chance to go to the bathroom for hours at a time (highest kidney problems in our profession) have to teach to read and write to a mass of kids who don’t know how to hold a pencil in second grade, come filthy to school,etc. Parents are unreachable because, of course, their phone is disconected. When you finally make some progress with ONE kid, he/she moves.
When you don’t make progress, after a year of struggle with the kid AND the parents (as in trying to make him/her understand why bringing back homework everyday might be important), the kid AUTOMATICALLY goes to the next grade level. It’s called “social promotion”. Have you ever heard about it? The thing is: You can’t have it both ways: have teachers filling in reports for child neglect while caring about scores AND having the kids go to the next grade level while blaming the teacher (who recommended retention) blamed for how little he or she knows. So that is how it works in the planet East LA, where I teach. I would love to be a teacher in yours, though, and have some of that sloth tax free that you mentioned.
M
This bubble is “resolving itself” as all bubbles do, and cares not one bit whom it crushes on the way down.
Darwinism at work!
‘I think large public builders have to take some blame for the dramatic run-up in house prices.’
I disagree, at least with the “blame” part. Shareholders (and yes, HB CEOs are the biggest shareholders) have the right to expect HB’s to price as aggressively as they can. Fortunately aggressive pricing works in both directions. As HBs fall over themselves slashing prices on the way down this should cut the comps faster than waiting months or years for the Walter Mitty home resellers to snap back to reality.
Sorry if this is a bit o/t but while we’re on the subject of morals:
http://bigpicture.typepad.com/comments/2006/07/post911_option_.html
That is so sad. I don’t recall a time that I’ve seen so many “me me me me” people. If we need a recession for people to come “down to earth” so be it. I dislike greed and screw anyone else buy me attitude.
Time will tell.
buy = but… sorry
These are the sorts of stories which evoke thoughts and feelings in me which are in direct conflict with my usual manner of tolerance, acceptance, and good will. That these despicable pukes, drunken with rapacity, only think about themselves amidst a sea of shattered lives, is unforgivable. They pose, in my opinion, more of a threat to this nation, and it’s security, than any number of terrorists the world, as a whole, can produce. It is further my sentiment that they have passed the point of no return and offer little if anything to society period. They are a cancer and it would be fitting should they experience that. Only when faced with their own mortality might they embark on a journey of introspection. They will get theirs…
Unbelievable.
Oh no, I know one of those people in the graph - it is not R. Channing, but R. Channing Wheeler, recent former CEO of the Uniprise division and resident (still, I think) of Westport, CT.
BAD BAD MAN!
Chan - how could you be so slimy? 96000 options?
Ugh….
It is everyone trying to get a piece of the pie before it is totally gone. Whether it is private business or politicians. Politicians want to stay in office. They can do that by placating to folks for votes. Gas too high? Not a problem. A couple of weeks ago, they pass legislation to subsidize oil companies (of all things) by 16 billion. Ever wonder how the hell gas at the pump can be cheaper today with oil prices at an all time record than it was a couple of months ago when oil was @ $72 and gasoline was @ $2.20 in the commodity markets(now at about $77 and $2.30). You know that is what the idiots in Congress think is the solution. Make it less expensive, and the problem will go away. They were talking about giving $100 rebates for gas, and people realized that was idiotic. Well, Congress knows what’s best. We’ll just do it in a different way with a more hidden subsidy. Brilliant. We’re getting exactly what we asked for. The old saying of being “careful what you wish for, you just might get it” is too true.
Bakersfield numbers for June are out. We finally beat the double digit increase. We are up 8.2% YOY. Home Inventory is up 350% YOY. I think we will see YOY declines by August 2006!
Where did you find this info?
I live in Kern County and watching Bakersfield over the last year, I think it will get hit harder than most areas. Too many new homes…NO new jobs.
Crispy, I disagree in part. $ 80 oil will help (Kern heavy crude probably @ $65) put a floor under jobs and wages. What say you. I can’t argue with the basic supply demand curve and increasing interest rates for dampening sales and prices. Have I contadicted myself? Not quite.
Pismo bear-
I am in Cambria this week. There are a $hit load of homes for sale here! WOW! I rent here every summer and I am shocked at the # of for sales and open houses. On Bakersfield - 30% DOWN guaranteed!
Numbers from Gary Crabtree’s report. Affiliated Appraisers.
The builders are capitulating, and have begun to slash prices. The existing homeowners are going to have a more difficult time coming to terms with reality and are going to ride the market down by not cutting their prices sufficiently.
Did any one watch Bush News, er.. Fox News this morning? They were pimping HB stocks as great buys. This is like the 10th time in the last year they have pushed these falling knives.
A developer is also advertising multi-million dollar Las Vegas condos during the O’Reily Factor, stating that they’re selling fast. If they were selling, why would it be necessary to advertise them on a national program?
Dittoheads as RE bagholders, I like it.
I guess you expect maybe the developer’s gonna pay millions to say something like, “Hey dudes, these multi-million dollar condos been sittin’ for six months now and we’re getting desperate for a sale. We’ll take almost any offer with legs. Don’t think you’re getting a good deal though because the price is liable to be even lower than your lowball two years out.”
I SAW THAT! I was sitting there, minding my own business, eating my oatmeal…then, I watch those tanning bed talking heads say “BUY HB STOCKS…YOU’LL BE GLAD YOU DID!!!”
THAT’S the true immorality….
at least they admitted they’d been in them for a bit and lost money.
I used to watch the FNC Saturday morning shows just for fun. I picked a random show once, watched their picks of stocks to buy, and waited. Mostly losers! All emotion and no reason. Stocks of the week! Ha! And HB stocks! good grief! That’s like buying HB stocks in 1990! Can’t they say T-Bills for once?
I have to admit, a few years back I couldn’t stand CNN. Listening to the inflection, choice of words, etc, I felt like they weren’t reporting the news. It was all a hidden editorial ON the news. I started watching FOX because I thought it was “fair and balanced”. Well, I can’t take watching it for a second, especially the financial shows on FOX. They’ll label two guests as a bear and a bull, but they are both saying the same thing, and it is nearly always buy, buy, buy. It literally makes me want to strangle these “panel of experts”. WTFO? They couldn’t run a team made of 2 people (with one of the team as themselves) with their leadership skills. Why the hell do I give a damn about their personal opinions?
I saw that and the family jumped as I exclaimed “WHAT?” at the stooge on the TV spouting that line. I think the bag holders are going to cut across political ideology, Bushies, Rushies, Hillarites, KOSmos, everyone.
What I find amazing is that the in-flight magazine for American Airlines used to be about 30% Florida condo ads. Last one I saw there were hardly any.
Fox news = tabloid for the masses
I was listening to NPR this morning and some government spokesman from Fannie Mae was saying that the time to buy housing was now and to strain your budget to get a house. Alas
They’re pimping on Fox b/c the housing bubble and the Bush bubble are closely related. Bush prodded Greenspan to drop the rates to historic lows as part of the “War on Terror.” Cheap money, escalating home prices, and incessant flag-waving yielded Bush a second term. Now the smoke is clearing and we are in economic and military ruin. The only people who have yet to recognize the housing bust are the ones who have yet to recognize the Bush bust. (Seriously, the votes for “worst Administration in history,” from even conservatives now, are coming in at an astounding clip. And he hasn’t even reached the mid-point of his second term.) Yeah, Fox would be a good place to advertise HB stocks…
Get ready! If the Dems get in again you can look for Higher personal taxes, No death tax relief, and they’ll pay off the illegals with Amnesty. If you have a job you’ll be screwed again. Both parties are whores. The only group with balls are the Minutemen.
Agree with your last three sentences 100%. However, can’t say I completely agree with what precedes it. The only people who got income higher taxes under Clinton were primarily rich people. Mine certainly didn’t go up. And which Americans have personally benefitted most from the Bush taxcuts (while incomes for all others are stagnant & falling)? The modestly rich and (especially) the extremely rich.
The so-called “death tax” is really just clever spin for “inheritance tax”, which again disproportionately used to hit the rich until Bush repealed it. I have *no problem* with people who get rich through hard work, brilliant ideas, pulling themselves up by their bootstraps, etc. –especially if they do it while treating customers & employees ethically. In a supposed “meritocracy”, though I see no good reason why mostly parasitic offspring “deserve” all the spoils they did nothing themselves to create. Why should the Waltons (or Kennedys –see I’m being “fair & balanced”
) get to skate on their unearned fortunes why I have to sweat it out with the rest of the proles?
I say “soak the greedy bastards”.
People should be able to give their money to who they want, period. Government has no right to take your money twice and to try to curtail you giving away your own money. You better believe I would want to give my money to my children before the government that will spend on wasteful things and projects I do not agree with.
People like you want to control others. It’s much like communism. You don’t want to allow others to be free and spend their money as they see fit.
it amazes me the outstanding quality of the economic discussion on this blog, coupled with the atrocious political remarks: Libs/Dems suck; Righties/GOP blow. If people this bright can’t decouple from their tribal loyalties, what hope is there for the rest of the country?
chilidoggg,
First, let me say, I LOVE chilidogs - especially with cheese. Ooohhh, baby.
That being said, not everyone here is as bright as they think they are. Actually, none of us likely are as bright as we think we are! I suppose I mean to say that they’re not as bright as YOU give them credit for being. Knowledgeable, sure - I won’t deny THAT.
If you think the government spends money like a drunken sailor and wastes tons of money on all kinds of crap and corruption you & I have no say in, you’ll get zero argument from me. That’s not the issue here. Point is, why do the super-rich always manage get a free pass, while the rest of us get tapped? Taxes are a fact of life and probably always will be –as long as governments exist anyway. Either everyone should have to pay their share, or NONE of us should have to.
I see no good reason why the entitled brats of the uber-wealthy get a “free pass” on their inheritance lotto-winnings, while all the typical income sources that regular people have (wages, cap gains, interest, etc.) get taxed up the wazoo. And btw, we all get “double-taxed” –remember that the next time you have to pay sales tax, using money that was already payroll-taxed. Inheritance tax has to be the most pain-free form of taxation ever invented –basically free, unearned money. Why is inheritance “special”, but all of my income (mostly used for things my family actually needs as opposed to luxuries) is “fair game” for govt. confiscation?
Seems to me if little Bill Gates Jr. can’t “cut it” in life with a mere 70% of his dad’s mega-$Billions (or whatever the take was after the old inheritance tax), then too friggin’ bad. He still gets to keep the vast majority of money he didn’t have to earn himself. Do we really need to rig the tax code to favor creating a permanent caste of landed nobility in America? Sounds more like Europe. If you’re born rich, don’t you already have enough of an advantage over everyone else, without also getting preferential treatment from the I.R.S.?
Come to think of it, just to be fair to working class/middle class kids, why not exempt inheritance tax at –say $1 million– and tax anything above that. That should exempt about 98% of the populace. And if you are super-rich and want to give the rest of your fortune to charity (like Gates or Buffet), we can fully exempt that too.
Is that fair/flexible enough or still too “Communistic” for you, comrade?
fyi: My last comment was meant for Soliel.
HARM,
Once that post-tax money is mine, I should be able to do whatever I want with it. My money is my kids’ money. It is **my family’s** money.
That being said, I do agree that assets should not be “stepped up” for cap gains purposes, and do not believe things like Prop 13 should be inherited.
I am totally in agreement with a progressive income tax, but after that money is taxed once, it should be left alone, IMHO.
It was Bradshaw shooting his mouth off that HOV and some of the other homebuilders were great buys because they are cheap. He’s an idiot. He also admitted that he bought weeks ago and had lost a lot of money. I would guess he’s hoping for a bounce to cut his losses. These guys are disgusting. In fairness, the bulk of the FoxNews gang including Leah Goldman (who I can’t stand at all) said the home market is dead. They said, “don’t buy”.
“‘It’s the right decision,’ said Greg Williams, president of KB’s Phoenix division. ‘It’s the moral thing to do. If we think we’re overpriced, we have to adjust the price.’”
Hmm, I guess last year it was the moral thing to stick it to all the buyers with high prices.
I Guess it’s a morality issue for GM and Ford also, Oh Sorry ! we realized we’ve been raping you fools with high SUV prices for years. Our Bad !
wow , what a dip sht
got his email?
Morals..what does that have to do with greed. Is this HB still making money at these prices
Here’s one from a KB development in Surprise. Also done by KB and other builders in other areas.
4 bedrooms, 2 baths, 1981 square feet…includes window treatments and various upgrades.
Price Increased: 01/27/06 — $348,500 to $349,000
Price Reduced: 02/02/06 — $349,000 to $326,000
Price Reduced: 02/19/06 — $326,000 to $299,900
Price Reduced: 03/16/06 — $299,900 to $275,000
Price Reduced: 03/30/06 — $275,000 to $262,900
Price Reduced: 07/02/06 — $262,900 to $224,900
(bill5129, July 13, 2006 10:00AM)
That’s actually starting to look like a pretty good deal.
IF you have a need to live in or near Surprise.
He’s merely claiming a moral imperative to screw the comps for suckers who already bought into previous phases of KB’s developments, even though they’ll howl like monkeys when confronted with looming financial ruin.
howl like monkeys? I hope that’s all they do. I can imagine some FB’s who have lost $125K in 6 months doing a lot worse, unfortunately. Anybody for hose and tailpipe party?
Yeah, it’s not a moral decision when you HAVE to do it, because no one is buying! It would have been the moral thing to do on the way up.
The inventory numbers on ZipRealty have begun to increase so rapidly it really appears that a selling panic has begun… or a listing panic in any case since the market is being sucked dry of liquidity.
I noticed this too - i looked thursday night and it was at 889K - today its 894K - up 5K in two days - where it was doing 5K a week in the past
Alternatively sales are really tanking.
“Builders are realizing that their customers can no longer afford the houses that were within financial reach before last year’s boom.”
They couldn’t afford them last year either, it’s just that sentiment has changed. Affordability has been gone for years now.
“They couldn’t afford them last year either, it’s just that sentiment has changed.”
Yes, and the meaning of “afford” itself is changing. Last year “afford” meant being able to scrounge up financing under any terms while commuting two hours per day and working two jobs to make ends meet. Now “afford” means maintaining a sane lifestyle with a reasonable fixed monthly payment. Folks understand that appreciation won’t bail them out anymore.
(That is so sad. I don’t recall a time that I’ve seen so many “me me me me” people. )
There have always been. It’s just that between 1930 and 1980 they were less likely to get away with it. And before 1930 you didn’t have the internet, so they didn’t get outed as rapidly, though there was plenty of journalism and literature from that era that would make you think “same as it ever was.”
O.T., but I see our Ben is posting over at the S.D.C.I.A. (San Diego Creative Investors Assn) board.
Careful Ben, or you’ll wind up owning a couple of negative cash-flow POS’s in Boise!
This comes up from time to time. First, there are a lot of people with the same name, but I don’t have time to post on any blogs other than my own. If you ever see someone claiming to be me at another blog, it is a fake.
OC Register has had a Ben Jones impersonator with links to this blog here.
I pointed it out, the original post stayed but no more have been posted.
Kinda reminds me of some of the trolls. The guy that started the Housing Bubble Blog 3 comes to mind.
does toll meet every monday to LOWER prices yet ?
fck em
Bank of Japan raises rates: Bank of Japan raises rates
“The days of interest-free money in Japan are over.
Defying warnings from some politicians and economists, Japan’s central bank Friday raised a key short-term interest rate for the first time in six years, to 0.25% from virtually zero. The historic policy shift reflects Japan’s emergence from a long slump in which extraordinarily low rates were used to prop up a stagnant economy and troubled banking system.
The expected move by the Bank of Japan holds implications not only for the world’s second-largest economy but also for global markets.
The immediate effect is likely to be small — affecting primarily speculative investors such as hedge funds that enjoyed access to cheap loans. But rising interest rates could spur Japanese banks to change their investment practices, including cutting back on purchases of U.S. Treasury bonds, thus influencing America’s interest rates as well, said Hiromichi Shirakawa, a former staffer at the Bank of Japan and now chief economist at Credit Suisse Securities in Tokyo.”
At 0.25, the interest rates there in Japan are still a bargain. Lots of big money players there can still do well by borrowing tons of yen and buying tons of US Treasuries. Borrow $10,000,000 (US Dollars equivalent) of yen at 0.25 interest, and buy $10,000,000 of US short term securities at 5%. That would amount to $475,000 profit.
Retail Sales, Confidence Pressured by Energy Prices
It’s all just a matter of time…
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/07/14/cnusa14.xml&menuId=242&sSheet=/money/2006/07/14/ixcity.html
$1 Billion LA Housing Bond
Yes, that’s with a “B.”
“The Los Angeles City Council is poised to place a $1 billion affordable-housing bond measure on the November ballot, but officials indicated Wednesday that they may move more slowly on a $1.5 billion plan to repair the city’s streets.
The council voted unanimously to instruct the city attorney to prepare bond language that, if approved by voters, could help finance about 1,000 new units of affordable housing per year for the next decade.
The bond money would go to a range of projects aimed at homeless people, low- and middle-income renters, and first-time home buyers.
“Angelenos are feeling the impact of the soaring housing prices in Los Angeles,” said Councilman Ed Reyes, adding that more than 85 percent of city residents cannot afford a house at the current median price of $570,000. “The housing bond addresses this crisis and provides the city’s essential work force with the safe and affordable housing they need to live and work in their communities.”
The bond measure drew support at Wednesday’s council meeting from business groups and advocates for the poor and homeless.
“The bond is about the production of housing,” said Holly Schroeder, executive officer of the Building Industry Association-Greater Los Angeles/Ventura Chapter. “We have an imbalance of supply and demand and this goes a long way to help that.”
The bond measure would cost city property owners an average of $14.66 annually on each $100,000 of assessed property value for 20 years.
Councilman Bill Rosendahl said he strongly supports the bond measure, but warned that it will take a vigorous campaign to persuade two-thirds of the electorate to support it — the minimum required for such a measure to pass.
Mercedes Marquez, general manager of the city Housing Department, noted that while 38 percent of Angelenos are homeowners, only 12 percent could afford to buy their house at its current value. Such figures should help convince property owners that the affordable housing crisis concerns everybody, she said.”
Nice to see the city of L.A. has completed its turn away from a bout of fiscal responsibility under Riordan. Spend money on more housing but not spend it on roads? Portland, Oregon, are you listening to this? Robert Cote is more versed in this than I am, so I’ll hope that he chimes in. What was that stat? L.A. has the fewest highway lane-miles per capita? By 15% over the next closest city?
LA is spending all its infrastructure $ on rail. While it might be convenient to do so, it amounts to a large subsidy for rail riders at the expense of the taxpayer. Mayor Villarigosa’s plan for the “subway to the sea” under Wilshire Blvd. will cost tens of billions (ironically, that’s the one plan that is the most easily justifiable, much more so at least than the light rail he proposes). LA needs to build toll roads, it’s the only thing that works.
MONORAIL!
Ray Bradbury (Martian Chronicles, Fahrenheit 451, etc) wrote a series of articles about how a monorail system in LA would be the best idea for mass transit in the city. As I recall, his proposal was for it to sit a couple of stories above the median of a majority of the major cross streets (think Santa Monica, Sepulveda, Normandie, etc) and you could build something like 25 miles of monorail for the cost of 1 mile of subway. Make the monorails electric and there would be little to no noise pollution and no smog increase.
As far as I recall, the automobile lobby spent all kinds of money trying to discredit Ray. Sad, really, because the monorail system really sounds like it would work.
You recall incorrectly. The “auto lobby” spent nothing although Wendell Cox did reply with a cogent rebuttal.
Monorails are elevated subways; “ELs” and cost quite a bit more than Bradbury imagines even if the city could survive the congestion caused by construction or the congestion caused by misallocating funding or the congestion caused TOD projects or the congestion caused by misallocating TOD subsidies.
“no smog increase.”
Electric cars, busses, and, yes, monorails do increase pollution. The electricity is generated at a COAL plant. Adding any steps to the process simply increases inefficiency.
This is why hybrids are much more ecologically sound than electric. The recouping of energy that otherwise would have left the system as braking friction decreases inefficiency.
Burning gas or burning coal. Either way you create pollutants - but transmitting energy to homes, only then to reconvert to torque, is terribly wasteful. Might as well burn the coal in the car.
“This is why hybrids are much more ecologically sound than electric.”
Guh. Don’t get me wrong, I drive a hybrid as well, but you are wrong. The efficiency of a gasoline engine is about 29%, and that includes the gas engine in your hybrid. The efficiency of a purely electric engine is closer to 80%. Even considering the minimal waste of transmission, all-electric is far better for the environment than hybrid. Plus, the regenerative braking that works for a hybrid can also work for all-electric.
But the efficiency of a coal-fired generating plant producing the electricity will range from 34% to 48% (latest technology), and there will be losses in transmission, so the overall efficiency with an 80%-efficient electric motor will be less than 40%. A good turbo-diesel engine will be about 40% efficient. Six years ago I did a substantial amount of driving in Europe in Renault minvans with turbodiesel engines. Plenty of space for passengers and luggage (about 80% the size of a US-market minivan), and quite happy at a hundred mph on an autobahn.
MB,
Don’t get ME wrong - I don’t drive a hybrid!
Plus, what would you have us all do, change to electric? We’d need to build a plethora of new coal-burning power plants to deal with that kind of demand. You’d just be polluting somewhere else. Plus, I don’t think they’re making any more coal.
I do agree with the point that we will not be able to rely on oil for energy indefinitely; and, as such is the case, other sources/methods will need to be refined for efficiency. It’ll happen, don’t worry. However, I fear the idea of an electric-driven motor is not as cracked up as people would believe it to be.
Turbo-diesels might be the way to go. I heard that most of Europe is now driving Diesels. If they ever come out with a diesel-powered mini-pickup i might trade in my 4-cylinder 25 mpg toyota pickup for one.
I disagree upon the necsssity for more coal burning plants for electrical power generation. Natural gas-fired plants are relatively clean-burning, and we can always increase % of power generated from Nuclear Energy, which is clean,safe, and renewable(problem of disposal of radioactive wastes an issue here)
We are also currently using oil to power 25% of all US power generation , which is inexcusable. We should be going to all natural gas, hydroelectric and nuclear, which would considerably reduce greenhouse emission problems. Most of the Modern industrialized nations around the world are switching to Nuclear as their primary source of electric power generation.
Monorails sound like fun. Definitely cheaper than subways. For that reason alone, the current L.A. government would be against it.
Monorails are probably the worst possible option.
I hear those things are awfully loud…
It glides as softly as a cloud.
Is there a chance the track could bend?
Not on your life, my Hindu friend.
I do a lot of driving(comes with the job) and i have to praise south Orange countys Fwy and road system, which was well-planned to accomodate future urban growth. Even without their toll roads S OC’s road arteries are less congested, relatively speaking, than LA’s. There are occasional jams along the 5 and the 405 during peak morning commutes thru costa mesa/tustin areas but they are relatively minor compared to the horrendous jams encountered in LA county’s admittedly older fwy/road networks.
If you use OC’s additional overlay of toll roads the drive thru S OC would be even faster. I have not used the fasttrac device at all as OC’s regular road/fwy system quite adequate.
LA (LAMTA) spends either 77% or 87% of all transportation funding subsidizing the 2.3% of all personal transportation taken by transit. LA has built almost exactly half the number of freeways planned and has half the freeway cenerline miles per capita of the average metro area. Because of the extraordinarily high density of the urban area LA is saddled with the most VMT per sq mi of any US urban area. (LA City is worse but the correct cachement for traffic and congestion is the Urban Area or Metropolitan Area.)
Don’t even get me started on the evils of affordable housing. Here’s a typical rant too long for this forum:
http://exurbannation.blogspot.com/2006/03/more-on-affordable.html
Jeez, Robert, I agree with most of your arguments against TOD, NURB, etc., but is there ANY form of mass transit you like (or at least tolerate) ?
I love mass transit. Mass transit makes a lot of sense. Mass transport even more so. It is public transit that I’ve pretty much given up upon and then only in US type situations. For a counterinstance, as near as I can decode the transit math Sweden public transit seems not only energy efficient and timely but beneficial to the urban landscape and environment.
I love airplanes private and mass transport. I love shipping both private and mass transport excepting ferry services that are just waterborne public transit. public and private transport via pipelines are also wonderful. Coal slurry, NatGas, water; doesn’t matter to me, all generaly good ideas. I don’t even mind public transit. I object to running an operation so sloppy that even bribes are not enough to change behavior, we have to resort to punishing alternative behavior as well.
Reproduced for extended discussion at: http://exurbannation.blogspot.com/2006/07/privatemasspublic-transporttransit.html#comments
Got it. Efficiently run mass transit = good; horribly inefficient public transit, requiring coercion & subsidies and soaking up resources better spent elsewhere = bad. Agreed.
Just deport the illegals. Stick the mayor and Cardinal in jail for helping felons and you’ll have plenty of affordable housing.
LA County assessments rise 11% over the past year
Over 12% in Hermosa Beach. I’m sure the municipalities are planning wisely for the future /sarcasm
“Hermosa Beach led South Bay cities with a 12.3 percent spike last year in the value of its assessed property, outpacing the record-setting countywide average growth rate of 11 percent.
Properties across Los Angeles County ballooned in value to a total of $950 billion, up from $856 billion the previous year, according to the annual property tax roll released Tuesday by Assessor Rick Auerbach.
The 11 percent bump from 2005 to 2006 outpaced the 9.6 percent increase from 2004-2005, a rise the assessor attributed to a strong market for home sales and reassessments required by Proposition 13.
The robust numbers put the county on track to break the trillion-dollar mark next year, despite evidence of a flattening in the real estate market.
“I was surprised that we had a larger increase this year than we did last year,” Auerbach said. “The reason for that is really because of the mix of the properties that are selling.”
The valuation increases are due in large measure to lucrative sales of single-family homes, driven by factors such as low interest rates on loans and the short supply of low- and medium-priced houses, Auerbach said.
The average market value for a single-family home in Los Angeles County in 2005 was $560,400, up from $477,100 the year before and $276,400 in 2000.
In addition to Hermosa Beach, the other South Bay cities with the largest increases in assessed property values included Lawndale at 11.6 percent, Hawthorne at 11.2 percent and Redondo Beach at 11 percent.
That fits a trend in recent years in which the steepest rises are seen in both beach communities and their inland neighbors, where land traditionally had been more affordable.
“You still have large increases in those areas,” Auerbach said. “As prices go up, the areas that are not as high priced are going to do better when things start to moderate and when the market levels off — and that’s what we’re seeing.”
South Bay home prices continue to rise for the simple reason that people want to live near the beach and there is a limited supply of housing there, said Steve Goddard, a broker and manager with Re/Max Beach Cities Realty in Manhattan Beach. [What he's saying is that the South Bay is different and...wait for it...we're running out of land.]”
“”The city of Hawthorne, for example, they’ve exploded with commercial development, and Lawndale is following along those same lines,” said Goddard, who serves on the county assessor’s citizens advisory committee.
The South Bay also includes the two cities with the slowest growth in assessed values. Carson is at the bottom of the countywide list with a 2.8 percent increase, and El Segundo, which was lowest the past two years, was next to last this time with 3.7 percent growth.”
“The steepest increases in assessed value were in the Antelope Valley communities of Lancaster and Palmdale, clocking in at 29.2 percent and 21.1 percent, respectively. They are among the fastest growing cities in the nation.
While the South Bay did not crack the top 10, the nearby cities of Signal Hill and Inglewood had among the largest growth in values, with 15.2 percent and 13.4 percent, respectively. Hermosa Beach was the only local city to appear in the top 20, tying for 15th place with its 12.3 percent increase.
The area was better represented on the roster of highest overall property values. While behemoth population centers Los Angeles and Long Beach topped the list, Torrance came in third with total assessed property valued at $20.7 billion, and Carson came in 10th at $12 billion.”
I don’t know who’s buying in Lawndale. You’d have to pay me to live there.
Yes…same here. What’s interesting is that the less educated/ignorant folks are still buying. They are the ones that will feel the most pain as this thing plows deeper into the ground. I’ll be looking for some great rental property in Lawndale in about a year…when their teaser rates adjust.
Come on, surely you’ve seen the ads in the Beach Reporter about how you can get “minutes from Manhattan” properties in Lawndale and Hawthorne.
I agree. Lawndale, Hawthorne, even Torrance are dreadful.
I love to read about those assessed value increases! Those buyers of million dollar beach homes will pay about $10,000 annual property taxes to support socialist engineering causes of liberal LA schools, and so forth. Fast forward to 5 years from now when those homes are valued at $500,000. The $10,000 would be locked in annual robbery taxes while the buyers of those homes in 2011 will pay $5,000 a year. I’m a tax-resident of California and work/live in Arizona. I try my best to pay as little taxes to the socialists in California as I can. They ruined the state with their liberal experiments.
The problem is that, just as with the .com bubble, the governments are counting on the easy money to last forever. When the bubble bursts, hello tax raises.
Sigh. I’d like to move to Arizona, Nevada, or Texas but I’d have to take the bar again.
AZ is a two day bar. 12 essays, 30 min each on day one. Day two is the MBE. What I like about doing all twelve essays is that there is no guessing about what topics will be covered - it’s all of them. And with only 30 minutes there isn’t a whole lot of detail you can go into. But with CA you have six essays from twelve topics. There’s an element of randomness to the CA Bar because you can either get most of the topics your strong on or get all the topics you’re weak on. Plus the one hour length means you have to write in more depth. I rather do the 12 x 30 minutes each.
The Texas bar is easy and it is a better legal market than California — billing rates are only slightly lower but the cost of living and taxes are MUCH lower.
Texas is a better legal market than California? LOL, have you ever practiced in California? If you went to a reasonable law school and passed the Cal bar, you’d have to be monkey to not be able to get a job there.
Maybe GWB will run for mayor of LA. Would that make you happy?
Look, Republican, Democrat, it doesn’t matter who runs what. They all suck! All the politicians right now are equally worthless.
Bill, your theory breaks down when as soon as prices start dropping, the homes will get revalued lower. Villaraigosa will never, never let people overpay when it results in overall consumer confidence in the city drop. If people aren’t happy, Villaraigosa isn’t happy.
The 115 degree heat must be cooking your brain.
Hello! When the ‘comps’ show a decline in value. You apply to the Adjustment(Assessment Appeals) Board and they LOWER your assessed value.If they don’t, you can sue in Superior Court. Got my property taxes reduced in the early 90’s by this method. Generally the Assessor will do it in house. They don’t want to spend time and money from their budget on reducing your taxes. The average person, however, may have difficulty in getting up to date comps.
Back in the early 90’s we here in VenCo had to add a second assessment appeals board to handle the overload. People flooded the county with lowered valuations. If they don’t get a hearing their valuation stands, even $100.
Robert,
Curious about your take on “recapturing”.
The way the law was written in entirely unambigious terms there is no bottom to reappraisals but valuation increases are limited to 2% of the previous year. The recapture attempts were and are illegal but the nice people with the guns say otherwise.
ahem. Republicans have held the Governor’s office in California for 19 years out of the last 24. Also, the single biggest thing to affect California in the last 30 years was (and is) Proposition 13. Let’s not forget term limits. Hardly leftist experiments.
Something tells me you don’t live in Kalifornia, at least the Kalifornia the rest of us know.
Agreed. I’m a native Californian. The legislature of California writes the spending bills and raises the taxes. The legislature has been Democrat-controlled for decades and has successfully passed socialist bills such as taxpayer-financed day care, and taxing millionaire residents 1 or 2% to pay for mental health (when the problem is the liberals are the ones who have no mental health). Also the mental disease called Liberalism has affected the California Republicans for 3 or more decades. There has been very very few capitalist (low tax/no tax and low spending) Republicans in California since I could remember, and I’m 47. I’m an official California resident (by tax law and rental address) after 9 years of being an Arizonan, although I am working and living mostly in Arizona.
I’m sure the municipalities are planning wisely for the future
hahahahahahahahahahahahaha!
remmeber the bubble myth- the homebuilders has consolidated/regionalized and they’d learned from the last bust so they wouldn’t make the same mistakes again? yeah, I remember that too.
No, they are going to make entirely different mistakes this time.
Things they learned; land options instead of purchases, don’t hold inventory at any price.
New mistakes; stock buybacks, product mix too high end, vertical integration.
Same mistakes; shoddy workmanship liability, mandatory executive ethicsectomies.
they are still overbuilding.
I’m not ready to call this one yet. I agree they are overbuilding for the market trend but that is because they learned something last time about “riding out” a slowdown. The building you see is frontloading to get any units in process completed. One to not give people reasons to back out of signed contracts and two so they can fire lots of people and subs. They’ve already culled middle management who aren’t needed with no projects in process. Next comes the subs as their stages are finished. Concrete and lumber futures are already down because those are things that get finished first. Finally the finish workers and landscapers and sales force. You call it overbuilding, I call it frontloading.
Ben:
THis from the OC Register:
PRINT ARTICLE E-MAIL ARTICLE CHANGE TYPE SIZE
Saturday, July 15, 2006
Ameriquest eliminates more jobs
No exact number given
http://www.ocregister.com/ocregister/money/homepage/article_1212168.php
It’s easier to buy a new home these days because the waiting lines are gone.
Bubblefucius say:
Avoid a waiting line with throng
Just as much where man is gone.
As of this morning, San Diego inventory is at 23,042 (per ZipRealty).
“Some analysts and home shoppers say first-time buyers can’t afford the typical new home in metropolitan Phoenix. But there are agents and builders who insist that Valley housing has been underpriced and that the market finally adjusted. The conclusion of agents and builders? Houses are a good deal now. Buy one.”
NO!
Looks like the real market in Fresno is starting to show it’s self now that the speculators have left. Hard times ahead for many.
“it’s self”
i usually can’t stand the grammar police who pop in and slam people, but this is priceless.
when i was in school we had to complete these grammar exercises where we had to circle the right usage of a word in a sentence, e.g. taught/learned. i never understood how someone can learn someone else a lesson. who the f*ck could get that wrong? that’s just one example that i can recall right now. but the point of this is, i never, NEVER, recall being tested on the usage of lose versus loose. and they are consistently misused on this blog. perplexing. is it a cultural thing? are there a lot of esl posters here? oh well time to go to bed and dream about uppercase letters…
It’s the “moral” thing to do? (KB on lowering prices.) Whom are you kidding??!! Don’t talk about things you know nothing about!!
Raise prices by 300%, hit a slump, then act charitable. How psychotic!
we have a builder talking about morality, stick a fork in it.
“Despite their homey marketing, housing is a commodity for many builders. The big national builders roll houses off their production lines like carmakers cranking out Chevys. They’re in trouble when the mass market can’t afford their product. Analysts say that is exactly the situation now.”
The massive new tract home developments i see all over the San Bernardino/riverside region (SCal) do have an assembly line look about them. They are all exactly the same: standard two story, spanish tile roof, brown-toned wood and stucco exteriors,ect. This is certainly true for the massive housing complex built by Pardee Homes out in Beaumont. I think they refer to these as cookie-cutter suburban tracts.
Don’t get me wrong, I drive a hybrid as well, but you are wrong. The efficiency of a gasoline engine is about 29%, and that includes the gas engine in your hybrid. The efficiency of a purely electric engine is closer to 80%. Even considering the minimal waste of transmission, all-electric is far better for the environment than hybrid.
You are swallowing the ecowacko party platform hook, line and sinker.
“This isn’t right. This isn’t even wrong.” - Pauli