Bits Bucket And Craigslist Finds For July 20, 2006
Please post off-topic ideas, links and Craigslist finds here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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My first anecdotal evidence of a rent slowdown, this is boulder, co
“Where have all the renters gone?” http://denver.craigslist.org/apa/183893574.html
The answer to his question is that they’ve moved to cheaper housing.
It’s the shower curtain, silly!
And just what do you have against 1970’s fish-themed vinyl?
They sell that shower curtain at Target.
Hey, that’s where I got the identical curtain!
Me too. My three year-old loves it.
Still, I would not consider it the highpoint of my interior decoration scheme.
No home, with a bathroom that hideous, is worth $1700 per month.
Nothing - IF I were vacationing at the beach and dropping acid.
Which is a different experience from dropping acid before skiing.
the curtain is cool but the green algae at bottom
$1700 for a townhouse in Boulder? As if, Flipper Boy. You can easily rent an immaculate 4-bd/4-ba/3 car garage executive house for that amount.
That was my first thought too! 1700 for that place? Those are CA prices. No wonder he can’t rent it.
It was a nice place, always rented, until I jacked up then rent from $1200 to $1700, is what he meant to say.
Meanwhile, from the LATimes:
Rent Increases in State Outpace Much of the West
“Rents in Los Angeles and Orange counties in the last two quarters rose at their fastest rate in five years, making them the costliest of any major market in the Western U.S., according to data to be released today.”
“Until recently, low mortgage rates and red-hot house price appreciation prompted many renters to become homeowners, keeping rents artificially low for the last few years.”
“The biggest rent hikes were in California, according to RealFacts, which surveyed apartment complexes of 100 units or more in 15 Western states. The largest second-quarter increases were in San Jose, where the average monthly rent rose 9.1% to $1,414 compared with the same period a year earlier.”
“Rising rents nationwide are a key factor behind higher consumer inflation, which increased in June for the sixth straight month. Rent-based housing costs account for almost 40% of the core consumer price index, a measure that excludes energy and food costs and that is closely watched by the Federal Reserve.”
“Developers here have opted to build market-rate condominium complexes rather than apartment buildings for a better return on investments. Then there are condo conversions. In the city of Los Angeles, for example, about 11,000 apartments have become condos since 2004.”
Bottom line don’t rent in multi-unit complexes!
Rent SFHs or small under 10 units complexes.
Less pricing power for landlords in those markets.
“Bottom line don’t rent in multi-unit complexes!
Rent SFHs or small under 10 units complexes.
Less pricing power for landlords in those markets.”
I may be nuts, but I like paying higher rents because they chase the riff raff out. I don’t like rap “music,” loud talking by college kids at 2:00 a.m., friends of neighbors honking their car horns to get their attention, and so forth. That’s all in the cheaper rent areas.
That is largely true, but in L.A. you can be living in a higher priced rental and be next door or down the block from a section 8 or rent controlled building that is loaded with those types as well as low income families. I see that all the time in West L.A. The townhouses across the street from me start at $650k and behind them is a low income rental building; the noise from the boom box radios must drive them nuts.
Social Engineering;…Cote’s favorite topic…..
Hey scdave, I just spent a week in Bishop/Mammoth fishing and golfing. I talked to a lady in Mammoth that is hoping/expecting a downturn there (maybe an earthquake will help). She owns a house in Reno (peak area sale at 880K, reduced to 780K) that’s been for sale for many months, even with big price reduction, and rents in Mammoth. She is getting very anxious. I sensed the fear is starting to set in, and told her to lop the price to 580K or she’d be sorry. She seemed to agree that might be what it would take to sell. She said she paid 475K in 2004. Greed is being overcome by fear.
If freedom of association was allowed in housing, you could have those benefits for free.
I am laughing uncontrollably at the woman who purchased for $475k in 2004 in Reno, and was thinking she was going to sell for $880k. I grew up there you stupid four letter word. The $475k home you purchased in 2004 is actually worth maybe $275k. You are delusional with greed. Yeah, keep it at $780k and ride it out beeeyatch, you have not a fricking clue.
And they can do nothing about it. If they try, they will surely get death threats or shot at.
im on rent control in sf valley my rent is 774 up from 760 last year.
With such dramatically-subsidized rents, what are your neighbors like, and why? I know it sounds like a college essay questions, but I taught for 14 years and am really curious!
Rents can rise in the short-term. You tell a month-to-monther their rent has gone up? They’ll pay it.
For about three to six months until they hear about better/cheaper digs elsewhere.
I have a rental question for any landlords (or anyone who knows) out there.
Is it required that a rental unit have a smoke detector installled as per California law?
Do renters insurance policies require one to issue a policy?
What would be the ramifications for the renter and the landlord if a fire burned a rental to the ground if the investigation reveal the lack of a smoke detector? Would it be cause for the insurance company to not honor a claim for either?
thanks.
Yes, smoke detectors are required, although the specifications were set by local law last time I checked.
The owner’s insurance covers the structure, and the renter’s insurance covers the contents.
An insurance company could try anything to avoid paying a claim, but it would be hard to prove that a smoke detector was defective after a structure fire. Smoke detectors are for the protection of the residents, not the contents or the structure.
A rental we considered had an addendum to the standard CAR lease agreement. It stated that we had to test the smoke detector every month.
From the Northern Virginia realtors’ site…
In Prince William County, 4812 single-family listings,
but only 602 contracts (of which we can expect some fraction
to fall through and not close) — and 1777 new listings.
With the market already north of eight months inventory,
additional inventory is being listed at three times the
rate of real sales at the very peak of the selling season.
The pace of sales is down about 40% year-over-year.
Judging from June reports for past years, the pace of “contracts”
slows slightly into July and August, then drops about 20% in
September and slows even more in later months, but the rate
of new listings doesn’t fall as much, so inventory normally
rises into the fall. Inventory may be at 12+ months by this fall.
Other NoVa counties are in similar straits.
What other industries can experience a 40% drop in revenue and call that a ’soft landing’?
Now here’s something that might bring down some overpriced houses around here. From the LATimes:
As Layoffs Sweep Movie Studios, Hollywood Fears for Its Future
“Walt Disney Co.’s move this week to lay off about 650 employees and revamp its Burbank studio to make fewer films only confirms what many in the entertainment industry have been stressing over for months: The movie business is shrinking.”
“Disney’s firings, which started at the top with the studio’s production chief, are the latest in an industrywide contraction that has cost more than 2,000 jobs worldwide. In Los Angeles, particularly, the economic effect is being widely felt.”
“The rollback in production will have consequences well beyond the major Hollywood studios, squeezing a range of service industries that cater to entertainment companies, experts say.”
“”The layoffs will ripple through the economy because the motion picture and TV production industry has a multiplier impact,” said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. Every new job in the entertainment sector produces two more jobs in the local economy, he said.”
Good find in the last bust Hollywood didn’t fare very well either.
Oh man, this will do a number on the LA housing market…
But only if TV and ad production drops. Right now, the increased ad spending is keeping bread on the table. Not the jobs the people *really* want… (its not “Hollywood”), but its keeping mortgages paid.
If we do hit any sort of recession, I expect the blip in ad spending to drop and TV production to “economize.”
Neil
TV Production has already economized. Reality TV has put a bunch of writers out of work, because the producers have re-classified the writers of these shows as “production assistants” or something.
And these cutbacks in movie production have been coming for some time. Warner’s had layoffs about six months ago. The big studios are now creatures of Wall Street and as such are acting predictably. They haven’t been able to cut back on the big-name “stars” compensation, but I gotta believe they are working on it. One obvious way to cut the big stars’ take is to make fewer big movies, which seem to be what DIS has in mind.
As usual, the little guys will get hammered first and hardest as the industry cuts back. But a few big fish seem to be getting a reality check this time around as well.
I saw an article just in the past week outlining the pay cuts studios are getting out of top stars. That’s on top of the lower movie count.
One casualty of the home equity ATM shutdown will be visits to the movie theater in spite of exorbitant ticket prices. Hollywood Videos will gain, and theaters (and studios which supply them) will lose, as consumers question the wisdom of paying more to take their family to the theater than it would have cost to purchase the DVD.
GS:
Does this mean that you are predicting increased sales of flat-panel TVs? I never thought I would see you type that
No — everyone who could already used home equity ATM cash to buy one of those.
Netflix, cable companies, and Apple’s upcoming movie store.
Some of us will go. Of course, I’ll be damned if I’m willing to drop almost a tenner/ticket to watch the crappy films out lately. Here in Irvine there’s the $1 theater. Current releases, and not a bad environment. Still gotta sneak in your own popcorn, though.
The popcorn is easy, getting the microwave in to pop it is the tough part.
asu -
Lately?
Hollywood has made a lot of crappy films for a lot longer than that - try a couple decades at least.
Don’t forget the other winner: Video Games! Not much more than the cost of visiting the theatre, but a good game can last for a long time.
Of course, I’m biased. And the new consoles are expesnive as hell.
It’s no longer a renter’s market
BY GITA SITARAMIAH
Pioneer Press (St. Paul, MN)
Apartment hunting? Don’t expect as many deals as last year and be prepared for higher rent on that one- or two-bedroom now that the housing boom is over and apartments are back in demand.
So far, rents have gone up $12 from last year, to an average of $860. But they will continue rising. “We expect that to start happening in the months ahead, particularly in the urban markets and the close-in suburban communities,” Wittenberg said.
The highest vacancy rate in recent years was 7.6 percent in 2003, a sharp contrast from when the rate was as low as 1.5 percent six years ago.
“A year ago or two years ago no one wanted to go to the cocktail party and say I rent,” said Stuart Simek, owner of Meridian Management of St. Paul. “It was almost like you had to own something to feel good about yourself.”
But the 154 units his company owns in St. Paul are all rented for the first time since 2001 and he expects to raise rents 3 percent this year. “It seems that the tide has finally turned for the moment,” Simek said.
The vacancy rate is lowest, at 3.9 percent, for units between $800 and $900 a month.
The highest vacancy rate of 8.8 percent is for those over $1,500, a segment where demand was flat from last year. Demand for apartments $500 and under also experienced no change.
Full article at
http://www.twincities.com/mld/pioneerpress/business/15060580.htm
Wait a minute:
So far, rents have gone up $12 from last year, to an average of $860.
That’s… a 1.4% increase? Oh yeah, that really hurts… I better run out and buy a house, instead of wasting my money on my landlord’s rapacious rent increases…
OHMIGOD WHAT AM I GONNA DO!!!! I HAVE TO RUSH OUT NOW AND BUY A HOUSE!!! I HAVE TO PAY $144 MORE A YEAR TO THOSE BASTARD LANDLORDS!!! LEMME GO GET A MORTGAGE AND PAY $12,000 TO THE BANKERS AND INSURERS AND GOVERNMENTS INSTEAD!!! Sorry, angry as I’m loosing the battle trying to convince my future parents in law NOT to buy a condo right now… and the fiancee is cutting me off from discussing it further with them… :/
Kiss your future wife’s inheritance goodbye…
Hey, don’t rub it in.
Here’s only trying to help.
Why do these friggin loons think that because a couple of apartment complexes try to raise rent, it isn’t a “renter’s market” anymore? Who rents apartments anyway? It’s a beautiful renter’s market for houses, townhouses, condos, etc. Gimme a break, here.
Wow, txchick, you can be brutally insulting. I’m currently in a complex (albeit a small one) because the rent’s much cheaper than the privately owned homes/townhomes/condos around here (like 33% lower) and if I move to one of the supposed “beautiful renter’s market”-type homes (which, btw, I disagree that it’s a beautiful market) I will not be able to keep saving $$ towards an eventual downpayment.
Sorry, didn’t mean to insult you. I assume you’re in one of the big East Coast cities. However, once you leave there, you can pick and choose from hundreds of places.
Brutal insults are sometimes what is called for and quite humorous in my book.
Txchick57 rules. Do not discourage her from posting. Maybe she’ll post a photo of her hot self.
Even in the land of 10,000 lakes, home buyers have been suckered into paying premiums for homes abutting storm ponds:
Land of vanishing sky-blue waters
Homeowners say that the ponds they paid a premium to live near were dug to hold storm water.
Kevin Giles, Star Tribune
Sok and several of her neighbors on Omega Drive say they paid a premium of $8,000 or more for lots on what they thought was a natural pond. When it ran dry this year, they discovered it was nothing more than an excavation to collect storm-water runoff from yards and streets.
“Why would neighbors pay a premium for a storm drain?” asked Jason Williamson, 33, one of several residents worried that what they call “Wyndam Swamp” will drop their homes’ value. “If I’d known it was bone dry, I wouldn’t have bought here.”
Keith Cherryholmes is a senior engineer specialist in the storm-water management unit at the Minnesota Pollution Control Agency. He said artificial ponds and lakes supplied mainly by storm runoff can contain harmful levels of bacteria or collect oil and gasoline, hydrocarbons, insecticides, pesticides, herbicides, and heavy metals from brake linings.
“They shouldn’t be fished in, they shouldn’t be waded in, but left alone,” Cherryholmes said.
Andrew Chase, the developer who built the houses in Wyndam Ponds, said he can’t understand why residents would think the pond was supposed to be an amenity. Chase said that homeowners paid premiums for lots with open space behind their houses or lots that allowed them to have a walk-out basement. He said buyers didn’t pay premiums for pond lots.
The homeowners disagree, and several of them complained to the state attorney general’s office.
In Apple Valley, billboards near the Cobblestone Lake development promise “lake living,” but city officials point out that the lake is actually a regional storm-water pond, excavated and graded to collect runoff.
“Developers like to sell their storm-water pond as a lake,” said Jeff Kehrer, Apple Valley’s natural resources coordinator. “We all have stereotypes about a lake, and it’s supposed to be nice and clear and sandy and you can swim in it. We hate to see them called lakes because of the concept in people’s heads.”
Molly Shodeen, a hydrologist at the Minnesota Department of Natural Resources, said she wonders if homeowners near artificial ponds are aware that accumulating chemicals can turn storm-water ponds to “a green, gooey mess,” or that ponds can run dry in times of extended dry periods.
Full article at
http://www.startribune.com/462/story/563038.html
A random pick through Craigslist Metro-DC, and here’s a typical FB, in all probability:
http://washingtondc.craigslist.org/doc/apa/182270700.html
I’ll remove all his lovely asterisks, but this desperate guy has been hitting Craigslist several times daily, trying to rent this place. This is just one of the various headers he uses:
$2486 / 5br - New 5Br LUX SFH for condo price, Just See It!
For a condo price?!?! In New Market? That’s way the heck up in Fredneck, er, I mean, Frederick County, where you can get a huge three-level townhouse for about $1500! Maybe he’s comparing his price for New Market with a condo price in the city (DC) two hours commute away.
Brand NEW (2006) 4-5BR 3.5BA 2 Car Garage SFH
Uh oh, brand new, is it? Oh, I feel your pain! (NOT!)
***Best commute (using lots of alternative RDs that are not available in many other locations you can avoid Rt 270 w all its trafic, however it’s only 5 miles away from 270) to anywhere: Frederick, Gaithersburg, Germantown, Mt Airy, CLARKSBURG, Urbana, DAMASCUS, Rockville, Washington DC and even to Baltimore!
Oh the lies! Yeah, you can avoid the truly miserable traffic on I-270… by heading through the other truly miserable traffic on MD 355 or other smaller, windier, congested routes! And you’re “only 5 miles away” from I-270? Lies again, at least if it’s “Close to the LAKE!!!” as he says. If so, then you’re 5 miles away from any highway at all. Five miles from a grocery store, five miles from a gas station… But my guess is that you are not actually close to the lake at all. What a liar.
But he saves the best for later:
36 MILES to WASHINGTON, DC (without any traffic!!!)
Bwaaahahahahaha!!! He’s gotta be kidding! Maaaaybe 36 miles as the crow flies. Check GoogleMaps/MapQuest: It’s 43 to 50 miles depending on how many country road shortcuts you take, and a friend of mine from that area says it’s about a two hour drive into the District at normal times.
But when, pray tell, is there “not any traffic”? Not when the sun is up. Or close to being up. Or just gone down. Maybe if you leave at 4 AM. Last time I was in Frederick County at 5:15 AM, traffic was STOPPED there on the highway leading into DC, no accident, just congestion.
With any luck, his prospective renters are not so stupid, and they’ll try that drive (or just look at a map) to see where this Flipperville house sits. And if they work in Frederick County, it’s pretty unlikely they’ll even be able to afford this place.
Yet there’s even more to pick at:
-HOA fees are the best!
Eh? Does a renter normally pay HOA fees? Ouch! Flipper boy, does that means you want $2486 *plus* HOA fees out of your renter? Bwahahahahaha! I’m usually not so spiteful, but I hope you lose you a$$ on this one!
This is typical of the genre. First they have to swallow the painful reality that they can’t sell for a profit. Once that goes down, then they try to cover all their monthly nut on someone else’s nickel. Nice try but it won’t fly.
There is CONSTANT traffic in Frederick. I fled uppper MoCo just pre-bubble for western FredCo. I’m on 1+ acre surrounded by farmland in preserve, and back to South Mtn parkland. I don’t regret the move, MoCo’s quality of life is spiraling down, but I work late and don’t face the most hellish of truly hellish traffic. I leave work in Rockville (much closer than D.C.) at 10 p.m. and face thick traffic on I-270 all the way to Frederick. Rt. 340 is getting worse. I drive 45 minutes. Many northern Loudoun Co commuters travel this route to get to rt.15. The roads are crammed with WV, PA and VA drivers as well as MoCo refugees; all must take 270 south for decent-paying jobs.
I can’t help feeling sorry for the stupid people who got burned. I have no mercy for developers, flippers and the rest…
tx- I can just imagine their surprise. first they can’t sell for big profit. then they say to themselves they’re in for the long haul and will try to rent the place out. imagine the shock when you can’t rent the place out after 6 months and realize you can’t cover monthly expenses. trying to rent the place out is what will burn most of these flippers. they’ve wasted 6 months trying to rent the place, are still behind, and now the market has changed even more in the 6 months.
disaster.
Daddy… please make that sucking sound go away.
In Boise, people are now flocking to less expensive rental homes as an alternative to buying:
“The Boise-area vacancy rate for single-family housing rentals fell dramatically in the second quarter, according to a survey of local property management companies.”
“Industry members said consumers are being driven into the rental market by rising interest rates, skyrocketing housing prices and annual increases in property taxes.”
http://www.idahostatesman.com/apps/pbcs.dll/article?AID=/20060720/NEWS02/607200345
I thought that everyone Boise wanted to live in high rise condos?
I am amazed about the volume and quality of housing bubble coverage.
It seems like someone threw a light switch in late June and it is a media dogpile on the housing bubble.
Right and think about how miserable it is making life for the FBs and their ilk. If it were not for this nonstop media coverage, they could probably still sell some of these places.
Nova:
This was my favorite part:
“36 MILES to WASHINGTON, DC (without any traffic!!!) ”
What a maroon. Its the same distance regardless of how long it takes to get there. And I have never, ever, ever not been stuck in a traffic jam in that area of MD, and I’ve lived around DC my whole life. That’s a two hour commute to town.
Yeah, that MD traffic is the pits. Even on Sundays! OK, maybe not on Sunday morning. Then again, the Va suburbs are hardly better.
I guess if you can somehow get a decent job in Frederick, traffic would be no problem from this overpriced rental, but pay scales there aren’t high enough to pay the rent this flipper demands. And if you *were* smart enough to get such a job, you’re surely too smart to pay that much rent in the middle of nowhere!
(Oops, middle of nowhere, did I say? No offense to anyone in New Market, which is a pretty little town, but “little” is the key word. For most things besides groceries at Food Lion, you’ll be driving nearly a half-hour round trip.)
Just to get back to basics here. This is cabela’s Log Trout Cabin, 600 sqft, for 31k.
Then the S hits the fan, We might see quite a quite a few of these beauties going up in the OC and Manhattan. From FBs to ALs (Abe Lincolns).
http://www.cabelas.com/cabelas/en/templates/pod/horizontal-pod.jsp?rid=&indexId=cat600471&navAction=push&navCount=1&cmCat=null&parentType=index&parentId=cat600471&id=0022784
The new Craftsman! I’ll gladly pay 10x median income for one next bubble! The appreciation is in the bag.
JA,
We vacationed in waaay northern Minnesota a few winters ago with some college friends. One ran a family farm and he had a cabin that looked *just like that* for ice fishing. When the ice started to melt in the spring they would tow it off the ice. Very cool. In fact, downright cold.
The good life!
Search for House to Rent in San Diego Finally Comes to an End
This is my debrief on the agony of searching for a decent house to rent in
San Diego while waiting for this bubble to give out. I’m posting it here
because I’ve had numerous requests for status on this from the
participants here.
A couple of months ago on this blog, there was a lot of speculation on
what bubble deflation would do to rents. This post provides anecdotal
evidence along these lines.
First, we personally evaluated over 16 different properties (3-4 BDR
detached SFH) covering Carmel Valley, Carmel Mountain, Rancho PQ, Sorrento
Valley, Mira Mesa, and Chula vista. The property owners spanned the range
from the hysterical to the smug. It was clear that many of these property
owners had purchased more than one home and were trying to rent out the
surplus. For one property in Chula Vista, the rent started at $2600/mo and
then dropped to $1800/mo after sitting on the market for three months.
There are still homes on craigslist in our spreadsheet that remain on the
market for months after being discounted a paltry $50 or so. In general,
the property owners were not a happy bunch. They were clearly somewhere in
the anger phase.
It’s important to emphasize that finding a decent situation is much harder
than just finding a house. Finding a good house with an insane flat broke
landlord who is on the verge of foreclosure is obviously not a good
situation. There’re a lot of SFHs for rent and more and more of them
appear to be coming available in some of the more desirable locations such
as Delmar and Carmel Valley. They seem to be at the beginning of this
phase while Chula Vista is clearly somewhere in the middle of this as
there are many essentially new SFHs popping up every day in Chula Vista at
lower rents.
Smug landlords happily rent to multiple families for the same residence.
It’s extremely hard for small family, even with an income in the top 3%
for San Diego, to compete with four income earners under one roof. Given
four income earners, it’s easy to charge $3000/mo for 2600 ft.².
I found dealing with property management companies stupefying. They are a
3-way screw. It was the exceptional company that actually returned a phone
call. Almost all did not want to entertain any lease changes much less
accommodate your schedule for a walk-through. These companies are screwing
the landlords just as much as they are screwing the possible tenants.
Dealing with them does not give you a lot of confidence that they will
actually show up to fix something.
In the end, we finally settled on a two-year-old home in Chula Vista. The
commute is not so good, at least until they finish the South Bay
Expressway sometime next year. The landlord was willing to accommodate
certain lease changes to defend us against foreclosure problems and other
miscellaneous hassles. Could we have found a better place at a lower
price? Probably. But after three months of this, we were already worn out.
It’s not so easy to play this game with little kids at home and frequent
business travel.
I hope you all found this interesting. I’m glad it’s over. We now has a
relatively safe place to sit as we watch this bubble collapse.
LA TIMES
Rent Increases in State Outpace Much of the West
Cost of leasing
Average rents and occupancy rates for rental units in the second quarter of 2006, by county and overall in Southern California
Area: Los Angeles
Average rent: $1,559
% change from year ago: +7.0%
Occupancy rate: 95.7%
Change from year ago: +0.2
—
Area: Orange
Average rent: $1,458
% change from year ago: +6.3%
Occupancy rate: 96.1%
Change from year ago: +0.9
—
Area: Ventura
Average rent: $1,416
% change from year ago: +7.3%
Occupancy rate: 96.3%
Change from year ago: +1.3
—
Area: San Diego
Average rent: $1,276
% change from year ago: +3.1%
Occupancy rate: 95.0%
Change from year ago: +0.6
—
Area: San Bernardino
Average rent: $1,119
% change from year ago: +5.9%
Occupancy rate: 95.0%
Change from year ago: -0.4
—
Area: Riverside
Average rent: $1,099
% change from year ago: +5.6%
Occupancy rate: 94.7%
Change from year ago: +1.3
—
Area: Southern California
Average rent: $1,319
% change from year ago: +4.9%
Occupancy rate: 95.4%
Change from year ago: +0.5
—
Source: RealFacts
http://tinyurl.com/hup8l
Thank you for posting on your experience. It can be very difficult trying to find a rental when you have small children. Also, it’s worrisome to think you might have to move at any given time. What sort of lease changes did you enact which would protect you in the event of a foreclosure? How long is your lease? Did you try to get a longer lease (multi-year) or anything other than the standard?
I agree that mgmt companies can be problematic. Best to find a home with a local landlord (preferably one who has owned the rental for a long, long time, IMHO).
Best of luck to you and your family!
Thanks for your kind comments. We got a 3 yr lease w/ privisos that protect the lender deleted (subordination clauses, etc) and the return of deposit to us if property transfers ownership during lease. It was more about deleting than adding. Rookie landlord, though.
3 yr lease…Good for you!
Wish we had one of those.
I feel obliged to share my rental story. Sorry it’s really long…
I’ve been in my current condo for 7 years now. It’s a nice 2BR 2BA condo on the edge of Mira Mesa and Scripps Ranch. It’s not bad…almost 1100 sq ft and has a 2 car garage.
I’ve made every effort to take good care of the place as if it was my own, doing little home improvements where I could. I generally didn’t bug the property management company with things. However, when I did, it was a real pain in the butt because they were soooo slow to get anything done. It took me 8 months to get them to replace my furnace, which was causing me health problems. There was a leak in the ceiling and all in all it took almost a year and a half to fix it, including having a hole in the ceiling for a couple months.
BUT, I let it slide because I had a real low rent, which hadn’t increased the entire time I was living there. It was probably a good $300/mo lower than it should have been.
Well, my wife has lived with me for the past few years and has always complained about no A/C (it gets REALLY hot in the condo) and wanting a somewhat nicer and newer place. But, we’ve always fallen back on the low rent as a good reason to not move.
Then came along this recent heat wave. My wife is currently pregnant and stays home quite a bit. It’s truly unbearable for her and is potentially hazardous as she can’t get her exercise done (too hot) which is very important for the health of the pregnancy. We called and told the property management company that we wanted A/C and asked them to check with the owner about putting it in. We said we’d be willing to split the cost of the A/C. My wife got so desperate she even said we’d pay for it completely if need be, but then we’d like a stipulation that they didn’t raise the rent if we signed a two-year contract, given we’re putting in about $5,000 into their condo. Well, the property manager took her sweet time getting to the owner while my wife is sweating in our condo. Finally, after three weeks and numerous calls, they finally got back to us telling us that the owner doesn’t really want A/C, but understands the situation. He said he’d let us install it if:
1. He could choose the unit, since he didn’t want something cheap
2. We’d have an attorney (paid for by us) draft up a document saying we’d be liable for any damages caused by the A/C, such as a leak
3. He’d still raise the rent $100 the first year and another $100 the next year. He said he was upset that his wife has been handling the condo and hadn’t raised the rent.
Well, of course my wife and I told them to take a flying leap. We proceeded to start looking for a rental. Besides the A/C, we wanted another room anyways for a nursery since I didn’t want to give up my office.
We looked in Scripps Ranch, Sabre Springs, Rancho Penasquitos, Poway, Carmel Mountain and Rancho Bernardo. We were shocked at how much more rentals were. 3BR condos/townhouses were going for around $1800-$2000 and houses were starting at $2100 or more. And what you were getting for that…it was sad. These places were disasters, yet they said “Beautiful Landscaping” or “Immaculate condition”. Whatever! These people are delusional. We looked at 2 new townhomes in the same complex. One had like 10 people living in it and had been completely trashed in just one year. Another one had been for sale for several months, as I had remembered walking through it back in March. It was pretty then. However, when I looked at it now, it had college students renting it (for what I’d guess was just 3 months) and it was already looking bad. PLUS, it was still listed for sale!
We found a promising place in Scripps Ranch. We called for an appt and the lady took longer than expected to get back. When she finally got back, we went by to take a look (without her). We loved it and my wife wanted to sign a lease immediately. The owner had said to call her back after we looked. We did and she didn’t pick up her phone. We called numerous times…nobody. I called her again the next day at work and she said she forgot her phone at work. I told her it was nice, but we were wondering if they were going to do touch-up, as there were several holes in the wall and scuffed paint. She said, “I don’t think so”. I told her that she really should go by and take a look. She said she’d call me back and she didn’t. This back and forth went on for several days until she finally called me and said that she spoke to her husband and he had already rented it days before to somebody else. Then why the hell did you waste my time lady!
My wife and I were truly frustrated until we stumbled upon a new 1800 sq ft. condo in Carmel Valley that seemed underpriced. I looked up the place and found out the guy had put a huge downpayment on the place, so his mortgage was pretty low. There was no contact number on the ad, but an address. So, we drove by and knocked on the door. The nice tenants got a hold of the owner and let them know we were interested. We met and found out the guy had originally bought it to live in, but it took longer than expected to get built and so he bought a second place in the meantime and ended up renting it out. It’s truly in immaculate condition and absolutely beautiful. Plus, it was a steal at what they were asking. Suffice to say my wife and I asked how soon we could sign.
I fell lucky that we found a nice place for a good price with an owner who isn’t going to be foreclosed on.
Good job. Yes, the lack of A/C is a bit much this year (we live in Carlsbad). Congrats on the pregnancy!
I think these stories show how much tighter the rental market has gotten in SD. In 2004, when we were looking, there were few good tenants, and lots of desperate landlords. I believe that has changed since then. We, on Ben’s blog, aren’t the only bubble-sitters. The owners of three different houses around our rental sold to rent in the past couple of years. I don’t know how prevalent this is, but it could be the thing that slows the downturn.
Curious. How much is the rent you ended up with in Chula Vista?
Could any of the technical analysts in the audience please offer comment on the hangman’s pattern seen in BZH’s stock chart for this week?
http://tinyurl.com/ln2rs
Is another execution in progress?
http://tinyurl.com/okocl
For those who doubt that the Plunge Protection Team rigs the stock market, take a look at these statistics:
Here is a breakdown of the times that the S&P has entered the last hour of trading down -15 points or more since 1999.
1999 30 11.90%
2000 38 15.08%
2001 38 15.08%
2002 32 12.70%
2003 14 5.56%
2004 1 0.40%
2005 1 0.40%
2006 1 1.59%
155 Total
No one talked about the PPT until the last couple of years. Now professional traders take it as a given.
Tinfoil hat conspiracy theory (Thought I would steal thejdog’s thunder this time
)
I’ve never doubted the existence of the PPT. I know it to be true.
But it is just laughable how people take things to the extreme, usuallly something they cannot explain or do not understand. No wonder conspiracy theorist get such a bad rap.
I am usually joking when I say the PPT did this or that. There is generally no way to verify what causes the stock market to exhibit bizarre behavior, especially when so many traders are using rocket science strategies to milk all they can out of the predictable components of price movement and volatility.
But I find it laughable when people immediately label anyone who mentions the PPT a “tinfoil hat conspiracy theorist,” particularly given the documentary evidence that by executive order, the government formed a Working Group on Financial Assets in 1988 which elevated US asset price stability to the level of a national security concern. Obviously, persistent efforts to prop up asset prices will eventually lead to a conundrumish situation where assets are fundamentally overvalued and returns are low.
Good post. This blog needs emoticons to aide in deciphering what is sarcasm and what is not.
The relationship past and present between big WS firms and the CIA is well documented. The way people seem to move back and forth between the two is scary.
Now look who needs to put on a tinfoil hat
Dawnal,
As we have both often noted, there are significant qualitative changes in the behavior of the stock market, both in terms of excessive correlation across disparate asset classes and in end-of-day upswings in prices (2pm or so) on absolutely no news to change the fundamental picture. But I am not 100% sure this implies government (PPT) intervention. How do you know it is not due to price manipulation by one or more big hedge funds? I am reminded of the Hunt brothers unsuccessful attempt to corner the silver market in the early 1980s, and of the LTCM bailout in order to prevent a global economic meltdown in 1998. In this New Era, it seems that individual private actors may wield an excessive degree of market influence.
GS
GS
There has been Hedge Fund participation this week. The volatility of the market has increased and hedge funds are generally sellers of volatility buying less volatile items. Hedge funds have also been large buyers of gold “call options” December 2006 expiration strike price $1000.
‘Hedge funds have also been large buyers of gold “call options” December 2006 expiration strike price $1000.’
Whoa! That bet will make’em or break’em…
I know of no hedge fund that would purchase such a ridiculously out of the money option? You could probably get a strike much closer to the market at virtually the same price (getting progressively more out of the money has diminishing returns). Sounds like someone trying to spread rumors to manipulate the market. Heck, its such an illiquid option too probably out that far with such a far strike, it would be more effective to use a futures position, etc…
http://www.gata.org/node/4264
For you hedge funds buying gold options
I just had an encounter with a seller that just makes me shake my head in amazement. We found a place that we like and made an offer. Yes, yes, I know it is a horrible time to buy right now, but we are putting 45% down and are getting a 30 year fixed for the rest. We can easily afford the payment and would stay there for the long term. I’m not buying an investment, but a long term place to raise my family.
A 3br, 2ba SFH in orange county. On the market for 90 days. Originally listed for $840k, multiple reductions to it’s current listing of $749k. Currently vacant, the owners have already bought and moved to their new place. Now in my opinion, this place isn’t worth a dime over $500k. It needs a lot of work - it was not maintained well, but it is in a good location. Incidentally, the owners bought it for $450k in 2003.
I offered $725k. Boom, they hit the jackpot with me. They could have taken the offer and ran with a nice profit, but what did they do? They countered for $727! They are trying to nickel and dime me, and it leaves a sour taste in my mouth. It was a shock to my system, but for the better. I’m walking away from this counter offer and am waiting for something better.
Unfortunately for me, my wife IS the wife in the “Suzanne researched this” commercial and… well… you can imagine my hell right now.
Counter with $720k and tell them that it will go down each time they try and play silly b*ggers.
I’ve used this tactic and it often shocks them into sense.
Alternatively, wait six months and buy it for $650k.
Regards,
Loafer
You beat me to it! If you want it quickly, I’d would have said to lower your price by something more substantial tho. 705K, along with a note saying that you’ve been reading how fast prices are dropping in the area.
If they have a friggin brain, they’ll jump on the offer.
And of course, wait til winter and you’ll have it for 650K.
“Counter with $720k and tell them that it will go down each time they try and play silly b*ggers.”
Unfortunately, there place on the counter-offer form for comments.
OC will be down to Fall 2004 prices within 3 months. That makes the place “worth” approx. $620K…assuming they bought it in spring 03 and a 25% annual appreciation rate. Try to hold out.
So he should offer about $620k. Incidentally, if the place is only worth $500k, why not offer that?
Serious lowball offers, and a shock to the system is what is required for some of these sellers.
He will seriously regret rejecting the 725 offer soon.
Bad move offering $225k more than you think the house is really worth. What were you thinking? Slap, slap! Even upper $600k’s is pushing it if you think it’s not worth over $500k. Really. But you escaped.
So good move blowing off the seller when he tried to squeeze you for $2k more. What on earth is *he* thinking??? Any seller who is that scroungy is one who you better watch like a hawk when it comes time to move in. He’s probably the type who will not only take every chandelier in the house wiht him, but even dig up his flowers and shrubs and take them. Seriously.
agreed - you offered just 3% under their asking price - you should at least aim for 10%+! they almost made a GF out of you, though, IMO. good for you walking away. even if you’re staying for a long time, it’s a home, etc…$725 is a lot of money for a house that needs a lot of work, no less.
Offer him your wife instead.
LOL!!! Exactly!
Try not to let emotions get screwed up in the process, ok they were jerks trying to squeeze another 2k out of you, but if you thought this was the house and 2k changed your mind? I speak from experience I almost walked away from selling my house for some non-issue. On the other hand I would not buy right now in this market.
We did think that this was the house. Truthfully though, there are tons like it for sale around here, and houses are still selling somewhat. When I made the offer, which I thought was more than generous, I told them that this was the best that I would do (it really was, it was literally the limit of what we could confortably afford). They apparently didn’t believe me.
Now we are back to waiting, and looking.
Tell the realtors to pay the difference if they want the deal , if you really want the house , however waiting to buy will pay off.
I actually did that on the house I’m sitting in right now. Never been seen before or since in the London market - serious hardball.
Mind you, I was a muppet, because it was a fantastic price at the time, and I let emotion take over, all because of £750.
Still, turned out alright in the end.
Regards,
Loafer
Next time offer them the price they bought it for plus 2.5% compound interest per year as appreciation.
Using my handy calculator…thats about $485K plus or minus some change.
If you think 2.5% is too small then plug in another number. Even at 5% pa the number still comes in at around $521K.
I think sellers should get a reasonable return for their property, even in this market environment, but expecting to make 250K after 3 years of owning is just greed. The 2K nickel-and-diming just goes to show that they’re using needs-based pricing.
Be interesting to see how long the house is on the market for, and how much it eventually goes for…
It sounds like the sellers are Asians….really good people but perhaps the greediest on the face of the Earth?
I’m always amazed at the number of racists on this blog…
Every human being is born a racist…some of us just keep it under control better than others.
Exactly. Nature has found that quick snap judgments are more effective than testing everything. An example might be distinctive colors on dangerous insects. Being dangerous alone isn’t enough; predators have to be able to spot it and recognize it.
In addition, humans, as a social animal, must have a mechanism for favoring the home team, or else they would be overrun by other groups. Even ants know how to recognize an ant from another colony.
No each of us is born a human. The racism is learned. Tots don’t give two craps what another tot looks like if they have fun with them.
No each of us is born a human. The racism is learned. Tots don’t give two craps what another tot looks like if they have fun with them.
Absolutely incorrect. Studies show that yes, toddlers do have racial preferences. Toddlers even have beauty preferences… they like to look at faces that adults would also find attractive.
Now, that doesn’t mean they can’t have fun and enjoy other races/ugly people… but we are all born and think like monkeys.
Invest accordingly.
Americans seem to lack the ability to distinguish between generalizations and stereotypes. Some generalizations are warranted, stereotyping condemns or exalts all of the given class without evidence.
In my years in education. I have had students from 67 different countries. Blew out my stereotypes and reinforced some generalizations. Even married one of them “foreigners!” Best move of my life!
I agree that racism is a learned behavior. I never felt it from any of my students over the 14 years I tried to show the good and accepting side of the US. I was apologetic at times for some of our more selfish and phobic policies, and I was always greeted with sighs and smiles when the foreign student realized that not all US citizens reflect the elected government’s values.
but what if a “racist” comment is for the most part true? Is it still racist? I don’t know anything about Asians being greedy but he did say they were “perhaps the greediest” and perhaps they are, or perhaps they aren’t. I just think some people are quick to say Racist or Sexist when ever a generalization comment is made.
http://tinyurl.com/lcskk
Read that, and then try to justify racism and other forms of prejudice…
BTW: “a generalization comment” that is generalized to a whole race of people, is, um, racism.
Disagree strongly. After working face-to-face with international clients for 14 years, you get a feel. 70% of people from Country X will ask for a discount, 40% from Country X2. No money complaints from Country X3 about money, but they want an ample supply of food. You get the idea. Their unique value structures made them that more interesting. Ya Gotta Love The Differences or Get The Hell Out of any International Business!
“70% of people from Country X will ask for a discount, 40% from Country X2. No money complaints from Country X3 about money, but they want an ample supply of food.”
Bzzzt! Wrong answer. That is culture, not race. Try again.
…or Californians, or perhaps that percentage of the population who is greedy white trash, or rednecks, or perhaps those hot diggidy dong ayrabs, or perhaps those stupid greedy Brits, or perhaps…
Need I go on - I think you’ll find every race has greed, indeed many would say none more so than Americans in the broadest sense.
After all, isn’t greed why this blog and this bubble exists?
Regards,
Loafer
You’ve established a new “asking” price. Excellent work. Before this you were working with only opinions. You now have a fact. The place is worth no more than $727k. Time to adjust your eyeballs. The sellers think the place is worth $727k. The sellers also thought the same place was worth $450k in 2003. They think prices can change $10k in a month. The realtor knows this now too. Time to let someone else catch this knife. This one sale to someone else for $727k will suddenly make a dozen other homes more affordable to you.
I’m telling you , if I was one of the realtors on this deal , I would of immediately said “You got yourself a deal ” ,and I would of filled in the 2 thousand myself or split it with the other agent . Are those agents nuts ? There are alot of stupid realtors out there in la la land .
Go find another house down the road ,maybe a foreclosure .
(after all you said the house wasn’t in good shape ).
Yea, I gotta agree with you there Wiz.
As long as you will not bother if price fell 30 to 40% over next 3-4 years, the only thing a buyer can do is to pay as low as presently possible.
450K to 725k is a LOT of easy money for the sellers….did they do any upgrades?
I think the seller is thinking they are being Giving away asking $850k- selling $725K=$75K. So they are trying to “recover” as much as they can. IMHO.
Oops!
I mean I think the seller is thinking they are giving away asking $850k- selling $725K=$75K. So they are trying to “recover” as much as they can. IMHO.
If you were willing to buy it for 725 then pay the 727.
You’ll regret not buying the house for that 2k. In 10 years it won’t mean a thing.
In 10 years, it will be worth $250k. I don’t think a quick rebound is in the cards. Deflation will be brutal, and will trap many in suckers’ rallies.
Look Mark, I’m all for a recuction in prices, but to think that it will be worth 250k in 10 years is very wishful thinking. It’s just not realistic.
You must be pricing in 15% unemployment and a massive depression. I just don’t see it in the cards.
downward_spiral,
You’re gonna have to work harder at switching your wife from this potential FB track…seriously. I don’t care what her body clock is telling her, she has to get up to date on what’s going on out here or there will be hell to pay on the other end. I sincerely hope she is not one of the folks who say later, “but why did you listen to me?”. You will feel a powerful urge to smack her, but PLEASE don’t.
Continue educating yourself. You’ve got a great support group here.
Leave printed articles or copies of this blog around. Hopefully, something will catch her eye…everyone has a curious spot…she’ll read it eventually.
However, I agree with the blogger who said that if you don’t have a problem with an eventual 30% drop in value of whatever you buy, then do what you have to do. Otherwise, keep looking and don’t let the sellers or your wife convince you to do something against your better judgment. I suspect your wife is also feeling the pressure from friends, family, the rest of the sheople, who are buying or have bought, and she feels left out. Whatever it is, I hope she snaps out of it for both your sakes.
BayQT~
I think you should buy some pants instead. Sounds like someone else has been wearing them in your house.
Good for you…that would piss me off as well. Plus someone who nickels and dimes like that would NOT have done preventative maintenance, would probably sneak off with the chandeliers and toilets before closing, etc…
From the Personal Journal section of today’s WSJ:
For-Sale Signs Multiply Across U.S.
Our Quarterly Analysis of 26 Housing Markets Shows Supplies Rising in Many Areas as Prices Slip
By James R. Hagerty
—————————-
The housing market continues to weaken in much of the country as inventories of unsold homes rise and many sellers cut their asking prices, a quarterly survey by The Wall Street Journal shows. There is no sign of a broad collapse of housing prices about a year after the once-hot coastal markets entered a long-anticipated cooling phase. But the general level of prices is edging down in some areas and leveling off in others, while the supply of homes for sale keeps rising.
Undsoweiter…
As the saying goes, “Doctor, heal thyself.”
————————————————————————————————-
S.D. real estate concerns Fannie Mae
‘No question’ about slowing, says official
By Emmet Pierce
UNION-TRIBUNE STAFF WRITER
July 20, 2006
Widely seen as a forerunner in national real estate trends, San Diego County is being viewed “with some trepidation” by lending giant Fannie Mae as its housing market cools.
“San Diego is one of the areas of the country that has had incredible . . . price gains,” Fannie Mae Chief Economist David Berson said yesterday during an economic and mortgage market report. “There is no question that the San Diego housing market has slowed.
“Inventories have surged in San Diego and the surrounding areas,” he continued. “Home price gains . . . are certainly down from their peak and perhaps will fall.”
http://www.signonsandiego.com/news/business/20060720-9999-1b20berson.html
While Fannie Mae officials worry about risks posed by San Diego, Treasury Dept officials worry about the risks posed by Fannie Mae’s and Freddie Mac’s bloated portfolios…
http://tinyurl.com/pqqz6
“The biggest rent hikes were in California, according to RealFacts”
I’m getting PO’d with this scare tactics crap. My daughter rents in LA. Last street of BHills area. It’s in a 4-plex and rents aren’t going up. Elderly couple who own the units know the benefit of having quality long term renters.
There aren’t too many of us small-time operators left. Most of the remaining apartment complexes are owned by BigCorps and operated by management companies. The big guys only care about getting rents up at all costs, in order to show rising profitability and resale value.
Me, I’d rather have stable, high quality tenants rather than pushing the envelope and accepting high turnover. But since rents have been artificially low for so long in my market, I will certainly adjust to market price when it makes sense to do so.
It’s not a “scare tactic” it’s true. Now, there are some areas that are experiencing stagnating rents or possibly even decreasing, but on the whole rents are rising in CA (and probably the whole nation?)
Rents in Manhattan Beach, one of the most expensive places to buy in the city, are stable and haven’t increased in the past two years. It’s a scare tactic.
Rents in south Carlsbad (San Diego) are up. No doubt about it.
I think rents in certain areas are up because there are fewer buyers today than in the recent past.
What used to be a certain percentage of first-time buyers are staying as renters for now…
This is happening in SF, as rents have increased and vacancies have decreased measurably over the last six months or so for the first time in about five years.
Oh. Rents are stable in MB. It must be a scare tactic then.
Rents are decreasing in Davis (college community outside of Sacramento). Only the big complexs are raising rents and even then not by much and they are offering incentives with effictively wipe out the gains.
I know. I rent in Davis too (as of June) after selling two homes in SAC.
Actually, I replied to soon…you said they are decreasing?? Pass that shit over my way..I got OUTBID on TWO SEPERATE rental houses last month…Davis is perhaps the hottest rental market in the state..
I think their could be “rent compression”.
Rentals under $1000 could rise because lower rents will be more desirable. Rentals over $3000 will die on the vine.
This would satisfy the overall rent received dropping while some rents did indeed rise. I don’t think any rise would be permanent though.
I get an automatic email when houses the fit my criteria come on the market or change status. In the Winter and Spring, it would vary in how many new listings I’d get, with it picking up slowly until about Summer. Now I get almost no new listings, but I get a ton of “price changed” emails, mostly from houses that were previously too high to be in my range and now are. At the same time, I get very, very few new listings now. Does anybody have a theory of why people would no longer be listing new houses in my range? I can think of why I’m getting lots of prices changes from higher priced houses, but I can’t think of why the new house listings would dry up. Thanks.
I’m still seeing new listings coming on as though prices were on the same upward trajectory. Literally, they take 2004/2005 prices and add 10%+. It will take awhile before sellers know to put their homes on the market for LESS than past comps. Right now, we are in the denial stage. Big time.
I love to hear real flopper stories. The more the better. The bigger the haircut the better. Floppers losing mulitple properties, wonderful. Publish them all.
flopper pr0n
Go to OC Renter’s Bubble Market inventory tracking.
His/Her city focus series is just what you want.
need 2 leave -
You should check to the excellent Sacto area bubble blogs.
They have a series of listings (many, many) called something like “Flipper’s in Trouble”. They define a flipper by how long it’s been owned (usually less than 2 years) and they show the price reductions the properties have undergone and by how much. Some have reduced prices significantly and more than a dozen times.
Entertaining.
Arrrgh. Now Bernanke is fluffing the soft landing fantasy:
Fed Chief Says Housing Market Is Headed for a Safe Landing
http://biz.yahoo.com/ap/060720/bernanke.html?.v=7
Any landing you can walk away from is a good landing?
Just leave the keys on the kitchen table, ya know?
Well, in a way he is right. As a whole we are seeing a soft landing…
It’s the areas that have tripled in recent years that are getting killed.
I applaud BB so far, and take this as a sign of more rate hikes.
Wednesday, July 19
Realtor.com: Bend has more listings than Ashland, Astoria, Corvallis, Eugene, Hood River and Pendleton put together
http://bendoregonbubble.blogspot.com/
From Realtor.com - number of properties listed:
Ashland (pop. 20,000) - 316
Astoria (pop. 10,000) - 182
Corvallis (pop. 50,000) - 246
Eugene (pop. 140,000) - 780
Hood River (pop. 6,000) - 149
Pendleton (pop. 17,000) - 129
Total population - 243,000
Total listings on Realtor.com - 1,802
Listings per capita - 1 for every 134 people
Bend:
Population - 75,000
Listings on Realtor.com - 1,885
Listings per capita - 1 for every 39 people
Let’s dwell on that “1 for every 39 people” for a moment. That’s a piece of real estate for sale per block, give or take. It’s close enough to say that on average, there’s a property for sale on every block in the city, according to Realtor.com. And that doesn’t count the “for sale by owner” properties.
Bend is filled with Californicating equity locusts and a few specuvestors.
Your post confirms it.
Of all those towns Hood River is probably my choice.
I thought I remembered seeing somewhere that the Goonie house in Astoria was renovated and sold….
IMHO do not expect a pause in interest rate increases.
From Bloomberg
… A 21 percent increase in the price of oil this year has boosted companies’ costs, increasing concern at the European Central Bank that they may feed through to consumer prices and lead workers to demand higher wages. The bank has signaled it may raise rates as soon as next month to combat inflation.
“Firms are now finding it easier to pass on the increases in their input costs,” said Ken Wattret, chief euro-zone market economist at BNP Paribas in London. “The implications for ECB policy are pretty obvious. It has to raise rates.”
Higher oil costs and an expansion in the global economy are adding to inflationary pressure in other countries as well. U.S. producer prices and the U.K. inflation rate for June both jumped more than economists expected, reports showed yesterday. …”
http://tinyurl.com/jf4o7
From Daily FX
Bernanke Burns Dollar
“…Ben Bernanke delivered his semi-annual testimony on the economy and monetary policy. He was ripped apart by members of Senate that blatantly criticized his performance and his lapses in judgment thus far as well as questioned whether he was ready to take on this much responsibility. Too bad Ben could not blame it on the curse of the new Fed Chairman. On a more serious note, in a bid to rebuild his credibility, Bernanke stuck to the less hawkish tone that we saw back in late June. He traded growth for inflation by confirming that a slowdown in consumer spending and the housing market are already underway. Even though inflationary pressures are rising and remain a main concern for the Fed, Bernanke feels that the effects of past interest rates hikes are still in the pipeline and as such, do not necessitate an overly aggressive stance. A pause in rates is near and Bernanke’s latest comments certainly hint that it may come sooner rather than later, but before getting too excited, he stopped short of slamming the door on another rate hike. Instead, he repeated that any further moves would be data dependent. There is a risk of overshooting interest rates, but there is also a cost for allowing inflation to get out of hand. Expectations for an August rate hike have been pared back significantly and if this later on proves to truly be the end of Fed rate hikes, then it could also be the beginning of a long term dollar downtrend…
…In the meantime, what the Fed will do next is still a guessing game. Bernanke’s comments were slightly less hawkish, but inflation reports continue to remain strong. Headline consumer prices accelerated by 0.2 percent, which was right in line with expectations, but core rates came out stronger than expected, rising by 0.3 percent in the month of June. This brought the annualized pace of core rate growth from 2.4 percent to 2.6 percent. Before Bernanke spoke, the combination of a strong PPI report yesterday and a strong CPI report today actually sent the dollar soaring as the probability of a rate hike in August JUMPED TO 80 PERCENT…” (my emphasis)
http://tinyurl.com/kufgk
…”The EUR/USD continued to hold the 1.2600 level in quiet Asian and European sessions absent of any new developments, as the currency markets continued to digest Fed Chairman Bernanke’s remarks from yesterday’s testimony in front of US Congress. With Bernanke presenting a neutral rather than hawkish view, the market has started to pare down expectations about any future Fed rate hikes beyond the expected bump of 25bp to 5.5% at the August FOMC meeting. The key take away from yesterday is that the Federal Reserve appears to be nearing the end of the interest rate hike cycle started in 2004. This slow change in policy comes despite the relatively “hot” results from inflationary gauges such as yesterday’s core CPI report which showed prices rising 2.6% on a year over year basis. The Fed is clearly beginning to worry about the slowdown in US economic demand as evidenced by latest economic data points such as the tepid results of the most recent Retail Sales report and the significant backup in the housing market where inventories have reached record levels of more than 3 million units. Furthermore with US mid-term elections scheduled for November, the Fed is very likely to stand aside during the last six weeks of the political season leaving it only with one additional opportunity beyond August to raise rates further. In short, with US economic growth slowing as the spread in interest rate differentials flattens and perhaps even begins to contract…”
http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Euro_Holds_Gains_As_Market_1153391338983.html
When to do we start the pool for when we reach 1 million listings?
ZipRealty has 896,748 active homes Nationwide
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
I say Aug 18 ….
and how many states does ziprealty include? if you estimate the total US homes for sale, what is it - like 3 mil?
Even though this has been gaining more National news, with Bernanke today I thought it was a Yellow to flasing yellow signal…Zip is up 440 since the last time I posted…
10 year down to 5.03 mortgage rates to follow.
Can anyone comment on what it means that the Fed funds rate is actually .22 % HIGHER than the 10-year yield? Wouldn’t that kind of imply that the Fed has completely lost control? Am I totally off here? Also, 30-year mortgage rates seem to have decoupled from the 10-year treasury, as it continues to rise as the 10-year yield falls. ???
Good question. Try posting tomorrow on most recent thread at about noon, IMO. The early threads tend to get “old” by 10:00 am (Pacific time).
Here is some fun
http://tinyurl.com/zr44g
D.R. Horton Doesn’t See Housing Rebound For 3-4 Quarters
By Janet Morrissey Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- D.R. Horton Inc. (DHI) Chief Executive Don Tomnitz predicts the housing sector will continue to struggle with high inventories and incentives for another three to four quarters before the market returns to more normal levels.
During a conference call Thursday, Tomnitz said his company is cutting back on land purchases, housing starts and the number of speculative homes it builds in an effort to bring its production more in line with the depressed demand. Currently, he said speculative homes, which refers to homes that have been built without a confirmed buyer, represent about 40% of the company’s 40,000 unit inventory. He said he expects to reduce this to between 30% and 35% of inventory by the end of its fiscal year, which wraps up Sept. 30.
I live in Lake Mary, Florida. Received a letter in my door today offering for my rent to stay the same when my lease is up in September. Just six months ago they were jacking up everyones rent up 30 to 40%. It’s happening, it’s really happening.
Here’s a look at a disgusting boomer trend: sleep with your contractor!
For crying out loud, this article talks about the sex appeal of butt crack carpenters with walkie-talkies. When will this garbage end? I hope they all drop granite countertops on their fat feet.
http://www.nytimes.com/2006/07/20/garden/20romance.html
Affairs. Is that the new payment arrangements? LOL
Hope this gets noticed here:
OC Weekly is keeping at it with their barbs at OC’s housing bubble.
See this quote:
Monday, July 17
I’m not sure why Money magazine keeps doing these “Best Places” deals—except that people like me keep mentioning them. They’ve just published one about the cities with the highest median incomes and there is an Orange County city in the top 10, but it’s not the one you think. Newport Beach? Nope. Laguna Beach? Uh-uh. According to Money, the OC city with the highest median income is Yorba Linda, Land of Gracious Living, where the median income is 100 grand. There’s a tendency not to think of Yorba Linda when one thinks of wealthy Orange County, what with there being nothing but horses and women thrusting their pelvises at Sub-Zero refrigerators. Trust me, Yorba Linda does have its affluent/outdoor seating side. Money has another list that ticks off the most expensive median house prices, and Newport Beach ranks first in the nation at $1.3 million. In a nod to God’s wicked sense of humor, though, only seven of the nation’s 25 highest-income cities are in California, but the state boasts 24 of the 25 highest-priced cities in which to buy a home. Hilarious.
Link:
http://www.ocweekly.com/columns/diary-of-a-mad-county/diary-of-mad-county/25521/