Bits Bucket And Craigslist Finds For July 26, 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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Top headline in the Chicago Tribune today:
http://www.chicagotribune.com/news/nationworld/chi-0607260228jul26,1,4341437.story?coll=chi-newsnationworld-hed
finally some news out of chicago…
Also out from Chicago today from the Northern Trust Bank
…In the months ahead, Econ 101 predicts that the prices of existing dwellings will continue to soften. This will serve to reduce the excess supply as some not-so-serious sellers take their homes off the market and as those sellers who have to sell acquiesce to the reality of lower prices. The knock-on effects of all this will be subdued consumer discretionary spending as those “home ATMs” are not refilling as rapidly as before. Another factor that will curtail consumer discretionary spending is slower income growth in housing-related industries as employment and sales commissions moderate further. I said it last week and I will say it again - the residential real estate sector has entered a recession. Whether the economy as a whole enters a recession early next year depends on how severe the housing recession gets. Further Fed interest rate increases can only increase the depth of the current housing recession and geometrically increase the odds of an economy-wide recession.”
Paul L. Kasriel, Director of Economic Research
The Northern Trust Company
Economic Research Department
Positive Economic Commentary
“The economics of what is, rather than what you might like it to be.”
http://tinyurl.com/lawmw
The charts on this site of existing sfh or condos vs median price are very clear.
Naples-area single-family homes sold for a median price of $451,000 in June — down 8 percent from ….
http://tinyurl.com/jl6qd
“This is the day after New Year’s Eve. The party’s over, the confetti has come down,” Flood said. “We can’t sit here and expect the party to keep going. This is the letdown after the party but it won’t last very long.”
-
“At the start of the party, the punch is flowing and everything’s going well, but you know at midnight it’s all going to turn into pumpkins and mice. People think they’ll be able to get out just before midnight, but everyone else thinks that too. The problem is that, there are no clocks on the wall.” - Warren Buffett
“Orgies tend to be wildest toward the end. It’s like being Cinderella at the ball. You know that at midnight everything’s going to turn back to pumpkins & mice. But you look around and say, ‘one more dance,’ and so does everyone else. The party does get to be more fun — and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice.” - Warren Buffett
Yeah, Warren is just no fun at orgies. We don’t invite him anymore.
Pawn shops are beating expectations…
16:34 EZPW EZCORP beats by $0.04, beats on revs; issues upside Q4, raises Y06 EPS guidance (42.50 +0.39)
Simmsssays..10 Types of Men to Avoid
http://www.americaninventorspot.com/men_to_avoid
http://www.boston.com/business/globe/articles/2006/07/26/mass_home_condo_sales_tumble/
Mass. home, condo sales tumble
But June slowdown has little effect on prices as buyers become cautious
By Kimberly Blanton, Globe Staff | July 26, 2006
Home sales in Massachusetts tumbled 16.6 percent and condominium sales declined 14.3 percent in June, but the dramatic slowdown in sales had little impact on real estate prices.
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Boston.com
Sign up for: Globe Headlines e-mail | Breaking News Alerts The median price of a single-family home fell just 1 percent last month, to $370,000, as compared with June 2005, according to the monthly sales report by The Massachusetts Association of Realtors.
Similarly, the median condo price fell 1.1 percent in June, to $283,500, only the second time in the last four years that prices were lower than the same month a year earlier.
Higher mortgage interest rates and uncertainty about the real estate market caused buyers to be more cautious. As homes stay on the market longer, the supply of unsold homes is growing, putting pressure on prices.
“Prices are going to go down — there’s no question about that,” said Karl Case, a Wellesley College economics professor who specializes in the housing market. “The only question is how far and for how long,” he said. Continued strength in the economy in coming months will be key to preventing a sharp price declines, he said
Case was the bull to Schiller’s bear when they worked together in a RE consulting firm.
Did anyone else notice something funny about the NAR EHS regional breakup?
How did the NorthEast median manage to move up $19,000 from the (revised) May figure of $279K?
That appears in fact to be the sole reason the national median even rose 0.9%, as the West was flat and MidWest and South median prices both fell fractionally.
The median moves up when buyers at the low end of the buying range fall away, even as those at the high end cut their asking price. Just one example. It’s the most deceptive statistic out there.
I thought that seemed really odd too, especially when the local markets in the NE seem to be reporting lower medians. The median is a terrible measure, but I can’t understand how it got skewed enough for a huge rise. And, you’re right, that’s the only thing that saved the national y/y stats.
It all depends. Even if the “builders” discount, they still report the undiscounted price as their sale price and probably take a taxbreak for the difference.
perhaps you’re seeing the “ability” of the “builders” to sell by discounting while the “mom and pop” sellers, of course, can only make money on a single house and must, therefore, hang on for a “living wage” price.
sadly, as I go about looking for a home, I realize that a lot of the existing homes aren’t worth their premium because they have old windows, are uninsulated, etc… As I’ve contemplated the offer on a house I want, it’s fairly low but why pay a premium for a mediocre house? in one instance, I need to refinish the floors, put in modern windows, etc…
this discontinuity, between price and value, might lead to saner house prices that factor in the need of buyers to make updates. in the bubble market, the buyer has money for the house but not it’s upkeep and update! that might mean a bleak future when the seller wants to sell!
Are the simply amazing GM 2Q numbers going to affect the housing market around Detroit?
how about unbelievable instead
Saved by their sales of SUV’s! Maybe the this isn’t a housing bubble.
“Henderson said that per-vehicle revenue increased in North America even though volume was flat. That increase was driven by a greater share of high-margin sport-utility vehicles in the product mix, he said.
“The Yukon, Yukon Denali, Escalade, Tahoe, Suburban, Avalanche — we love them,” Henderson said. “So do customers, that’s even more important.”"
A must read article from Mish.
http://safehaven.com/article-5605.htm
Thanks BDad;…..Mish is one of the best….
Story on Washington Post online titled:
“After 5 Years of Growth, Home Prices Drop”
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/25/AR2006072501513.html
You beat me to it, supernova– here’s a tinyurl for it:
http://tinyurl.com/kprve
Just as we think the bubble is bursting, we get reports of bubble growing in some pretty random places such as Teton Valley in Eastern Idaho: http://www.idahostatesman.com/apps/pbcs.dll/article?AID=/20060725/NEWS02/607250357/1029/NEWS02
“When Quentin Bell, a real estate agent from Boise, visited the Teton Valley, he saw its rugged peaks, open lots and, most important, the potential to get rich. Within months, he moved.”
“Boise was really solid, everybody knows how fast it’s growing, but I got in on the tail end of its boom,” he told the Post Register newspaper in Idaho Falls. “I wanted to get in on the ground level at something with real opportunities.”
Will they not quit until the bubble has touched all of America?
The Teton Valley in Idaho, if I’m not mistaken, is the “spillover” region west of Jackson Hole, Wyoming.
Because Jackson has become so expensive, this place has been booming for probably a decade now (equity nomads from the world over)… and because the billionaires are pushing the millionaires out of Jackson, the Idaho side may not slow down as much as other areas when all is said and done.
But who really knows?
SF;…yeah, this has been happening for some time…I suspect that it is boomers or pre-boomers looking for there place they can pay off, bank the remainder of the cash and live out their days…I just wonder, when the health problems arrive, needing more intensive health management (for what ever ailment) are these remote area’s going to continue to be attractive ??? And, as they get older, will they return nearer the urban centers for quicker and better health care ???
In my neighborhood, their have been a half dozen new residents recently…My hood runs 1-1.3 mil….EVERY new resident is in their mid 60’s to mid 70’s….All have moved in from surrounding area’s that were more rural…Reason; all wanted to be closer to services, doctors and hospital…..
Sorry about the ramble…
> because the billionaires are pushing the millionaires out of Jackson, the Idaho side may not slow down as much as other areas when all is said and done.
If I were a millionaire, I might want buy there a summer home, too. The Tetons are great.
from the nytimes:
http://tinyurl.com/eqfdh
Sales Slow for Homes New and Old
By JEREMY W. PETERS
Published: July 26, 2006
Selling a new home is getting harder and harder: just ask the builders who are being forced these days to entice potential buyers with expensive inducements like free swimming pools and fancy kitchen cabinets.
At the same time, the torrid pace in the existing-home market is slackening, as prices are leveling off and properties are staying on the market a lot longer than they used to.
Adding it all together, a variety of experts now say, the housing industry appears to be moving from a boom to something that is starting to look a lot like a bust.
“Housing has had a great five-year run,” said Edward Yardeni, chief investment strategist for Oak Associates, a money management firm in Akron, Ohio, and a longtime bull on the economy. While he still does not expect a housing downturn to damage the overall economy severely, he predicts that the housing industry itself is entering a longer decline.
“Instead of being a seller’s market,” he said, “it became a buyer’s market. And once the psychology changes, it could take a while to reverse. Buyers recognize there’s no need to rush out to buy a home.”
The latest housing data, released yesterday by the National Association of Realtors, made clear that a significant slowdown is under way. It showed that the sales pace for existing homes fell for a third straight month in June — the ninth monthly decline since hitting a record last June.
On a seasonally adjusted annual basis, the rate of existing-home sales dropped to 6.6 million, down from 6.7 million in May and well below the record 7.3 million pace reported last June. The number of existing homes still on the market, meanwhile, grew to a record of 3.725 million units, representing a 6.8-month supply at the June selling pace, up from 6.4 months in May.
The shift of the upper hand from seller to buyer is showing up in home prices. Last month, the national median price rose to $231,000, less than 1 percent higher than in June 2005. That was the smallest year-over-year increase in more than 11 years.
Builders are losing their grasp on the new-home market, which is why so many of them have responded by being more aggressive in their use of promotions to sell homes. A check by the National Association of Home Builders of 369 builders across the country found that 75 percent are currently including add-ons like pools or garages at no additional cost when they sell a home. That compares with 50 percent a year ago.
A handful of builders reported offering free vacations. None did last July.
Builders are also helping buyers finance their homes. The survey found that 33 percent of builders are currently absorbing financing points on mortgages, which allows homeowners to pay lower monthly rates. Only 18 percent reported doing so a year ago.
When people were lining up to buy, “the only thing they had to complain about last year was getting enough material, labor and land,” said Michael Carliner, an economist with the home builders association. But now, he added, “things are slowing down.”
The home builders association reported last week that builder confidence had fallen to its lowest level in 14 years.
Mike Wainwright, a realtor with Coldwell Banker Residential Brokerage in Mesa, Ariz., says that each time he walks into the sales office of a new housing development, the incentives seem to change.
“It varies from week to week,” he said. “Sometimes it’ll be a pool or $25,000 or even more than $50,000.” He said he has seen cars, kitchen cabinets and flooring thrown in free. Regionally, the slowdown in sales of existing homes last month was most pronounced in the South. The Northeast also fell, while sales in the Midwest and the West held steady compared with May.
One consequence of the slowing housing market, economists and real estate experts said, is a strengthening of the rental property market. With interest rates rising, buying a home is becoming less affordable to more and more Americans. That gives landlords improved pricing power that home sellers now lack.
“A lot of the people that wanted to make a jump to their own home are waiting,” Mark Obrinsky, chief economist for the National Multi Housing Council, a trade group for the apartment rental business. “This year is going to be a much better year than we’ve seen for quite a few years.”
The housing council is predicting the biggest net increase in apartment rentals this year since 2000, Mr. Obrinsky said.
With a growing number of potential buyers moving into rental units or holding onto the homes they own, builders across the country are canceling or delaying housing developments. From Las Vegas to Dallas to Washington, some developers now report abandoning condo projects because sales are not meeting expectations.
Earlier this month, D. R. Horton, the nation’s largest home builder, said it would build fewer homes this year than it initially predicted. It also sharply cut its earnings guidance for the year by 30 percent, citing growing inventories of unsold homes and the increased use of incentives as part of the reason.
And Kenneth Simonson, chief economist with the Associated General Contractors of America, said he thought more projects would be canceled as demand falls.
“Certainly more projects will be scrubbed,” he said. “The risk is too great that they’re going to wind up paying more for the project and collecting less.”
Mr. Yardeni of Oak Associates added: “Home builders will tell you it feels like a recession.”
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For those interested, Intermountain MLS (serving the Boise area) has improved their statistics page with more useful data:
http://www.intermountainmls.com/displaycommon.cfm?an=1&subarticlenbr=24
From:
http://news.mainetoday.com/apwire/D8J3MEL80-206.shtml
“Proponents are weighing a referendum campaign to promote a plan to let home sellers bypass real estate agents and place their properties online in a statewide multiple listing service…
Linda Gifford, the legal counsel for the Maine Association of Realtors, said Realtors already face competition from newspapers, online listings and other real estate agents.
“The system we have is working just fine,” Gifford said.
“The system we have is working just fine,” Gifford said.
For you guys, not for us. 6% comish is a rip-off.
Well, yesterday in the middle, more or less, of the week the Everett Herald (45 minutes north of Seattle) had a large front page article on how housing is booming around here and prices are really going up, and how even though other parts of the country are experiencing a slowdown around here the market may go flat but there won’t be any serious drop in prices. I take this as a sign that our bubble is topping this summer and we can expect to see inventory start to rise this fall in the greater Seattle area as the first step in the end of the bubble.
I’m in South Snohomish County and totally agree with your observation. Prices have doubled in three years. Personally, I think they will fall back to 2001-2002 levels before all is said and done.
Here’s a listing in my neighborhood. It was originally asked for $399K, then dropped to $389K within a week. Guess what? it was dropped to $367K per the leaflet in the box as of yesterday but the web still showing $389K. It was priced way too high to start off.
http://www2.helpusell.com/Southsound/Listings/ListingResults.aspx?QF1=City&QV1=Bellevue&QC1=0&QA1=0&QI1=0
Inventories in the Puget Sound region are already rising. I believe I read that our inventories are up 20% from last year. I started tracking Tacoma inventory in February this year and here’s what I’ve got (these numbers include condos):
2/13/06 - Tacoma 1185
3/19/06 - Tacoma 1202
4/19//06 - Tacoma 1224
5/18/06 - Tacoma 1346
6/20/06 - Tacoma 1427
7/20/06 - Tacoma 1528
7/26/06 - Tacoma 1562
Tacoma has many condo projects in the works which are either in the process of coming online or will within the next year or so.
The only numbers I’ve heard about local prices indicate they’re still going up, but it’s been awhile. As you can see from the local inventory, pressure is steadily building. Living in the land of volcanoes, I’d have to say that mountain’s gonna blow.
Mortgage Applications at New Low
By Tony Crescenzi
RealMoney.com Contributor
7/26/2006 8:55 AM EDT
URL: http://www.thestreet.com/p/rmoney/tcrescenziblog/10299445.html
The Mortgage Bankers Association, or MBA, released its weekly mortgage applications index this morning on home purchases and refinancing. The index for home purchases, which is very strongly correlated with the major housing-related data, fell from 398.50 the previous week to 389.0. That’s its lowest level since the week ended Nov. 7, 2003. The index had been moving mostly sideways for about five months, after having fallen about 15% from its peak.
The latest decline suggests conditions might be weakening again after a period of steadying. However, seasonal-adjustment factors might have played a role in the latest decline, given that figures for the comparable period a year ago were at record highs, which should impart a downward bias to the current figures.
The MBA’s mortgage applications index began to slip toward the end of last year, with the decline accelerating in February. Since then, mortgage applications have run about 15% below the one-year average, a depth of decline not seen since the data series began in 1990.
While a sharp decline, it has not worsened much, suggesting that new- and existing-home sales have stabilized at around 15% below the peak, a level that is still significantly above those seen during the 1990s. The stabilization is apparent in the fact that the four-week moving average reached its low point four months ago and has not gotten worse, even with the new figures.
The weekly data on mortgage applications have proven their worth as a forecasting tool in recent months, with the data giving an early lead on the recent decline in new- and existing-home sales and the plunge in the Housing Market Index released by the National Association of Home Builders in early June. The applications data, released every Wednesday morning by the Mortgage Bankers Association, have been a reliable tool for over a decade.
Classic condo conversion
http://westpalmbeach.craigslist.org/rfs/182284083.html
They’ll be renting this babies by the end of the year! Archstone will probably by entire property.
Story at Bakersfield.com including 2nd qtr #’s.
How is Bakersfield doing these days?
112 degrees. IT SUCKS!! Housing is, however, running at a chilly 32 degrees.
Sales down 35% yoy, inventory up 350% yoy!
Has anyone see the new C21 television ad?
I usually don’t watch too much TV that is non-Tivo-ed, but I saw it last night at least twice while watching the Red Sox - A’s game on Bay Area FSN (regional sports network).
Perhaps it’s not new. In any case, it looks like the same kind of production values as the “Suzanne researched this” ad. It’s called “Asking Price” and is complete with a nervous husband (”we have to get our price on this one”), a bleating, whiny wife (”I want that house!”) and an all-knowing co-worker of Suzanne’s (realtor - “it will all work out”).
The husband says something to the realtor like “Can you make that thing buzz [her phone, they're waiting for an offer]; you’ve done everything else for us.”
Realtor replies with something like “it will all work out” and just like magic, her cell buzzes “with an offer.”
The “tone” I took away from it is that seller’s are nervous (wives are desperate in the move up market) but that realtors will make it happen for them.
“So stop being so nervous!”
time to show the wifey this blog- tell her she can cover the loss !
Wifey will be out on the street corner trying to earn enough cash to forestall foreclosure.
This is why I’m a Giants fan :p
when do we start to see stocks in the lending and financial sector start to decline like the homebuilders?
Builder stocks have taken a beating, but they still have a ways to go until reversion to trend or lower. The final capitulation phase is still out there somewhere in the future, IMO.
I know the E is shrinking, but the low P/E has mean wondering if the P will go up a bit.
Any one have any favorite mortage lenders to short?
$8500 a month. For a freaking apartment. Well, this one has a sense of humor at least.
http://dallas.craigslist.org/apa/186495355.html
C’mon it’s got a “Faux Fireplace Master Suite With Faux Fireplace”,
that should be worth a lot. And even though you might not see Elvis there, but I’m sure Liberace’s ghost is on his way after reading the description.
Did you see the San Diego UT story this morning about the office rental market? “Market might be slowing or it’s seasonal, brokers say”
http://www.signonsandiego.com/uniontrib/20060726/news_1b26office.html
Commercial real estate was the only thing still going up ….until now. I guess it’s heading for a soft landing.
“In addition, GreenPoint Mortgage vacated 110,000 square feet on Willow Creek Road along the I-15 corridor. And Capital One is leaving several floors in the First National Bank tower downtown.”
Must be a seasonal thing. Mortgage companies always downsize in summer, rigth?
I saw this website on the way home from work last night. It was posted on one of those little roadside signs:
http://www.dumpingcondos.com/
I wish I owned that domain name…
An official website of
William the Liquidator
dumponcondos.com is available. Go for it!
Not available, but worth a look and a laugh nonetheless:
http://www.condovultures.com/
From yesterday’s posts:
‘The California realtors have their June numbers out. “California home sales plunged 26.3 percent in June compared to last year while the median price of an existing home increased 6.2 percent, an industry trade association reported today.”’
Could this be the great news which explains why the builder stocks are hanging in there? It always amazes me how these dogs can shrug off a steady barrage of bad news. All I have to say is that eventually, fundamentals will catch up with them, and that will be the point when their prices have reverted to historic trend or lower (still another 50% drop left before then…).
Seen last night on San Diego KPBS’s Full Focus show: A close-up look at the human directional industry…
———————————————————————————-
Sign spinners: Marketing help or community hurt?
FULL FOCUS | KPBS SAN DIEGO (2006-07-25) Developers are enlisting sign spinners to jump start a sluggish condo market and entice potential buyers. Builders say it works, but some cities say the animated signs point to nothing but trouble. Full Focus student correspondent Madelyn Warner has more.
Sixteen year-old Matthew Doolan turns on his ipod, tunes out the traffic and twirls his vinyl-padded sign, showing off his moves for hours at a time here in San Diego on the corner of Florida and University to advertise new condos down the road. He is a sign spinner, one of San Diego County’s growing band of street side workers employed to grab the attention of the public, and, in this case, sell units.
Doolan: “What we do is we actually go out there and get people’s attention by a point, a smile, or a wave, doing anything to be enthusiastic or goofy.”
http://www.publicbroadcasting.net/kpbs/news.newsmain?action=article&ARTICLE_ID=946265
I think local municipalities should make it legal to target sign-spinners with paintball guns. You would have to buy a hunting license, of course.
reminds me of the saying ” Beware of strong drink, it may cause you to shoot at tax collectors - and miss.” LOL
Gloria Penner (Full Focus - KPBS San Diego) also interviewed Will Carless on the show last night. They were discussing the collapse of the downtown San Diego condo market, and Will did a great job telling the story. The interview is mysteriously missing from the KPBS Full Focus web site, but you can read the Voice of San Diego’s excellent reporting on the rapidly evolving San Diego real estate market situation here (scroll down to “Housing”), including several articles by Will:
http://www.voiceofsandiego.org/
P.S. Will, in case you read here, I have already suggested this moniker, but will do so again: “Conversion-Reversions”
The Will Carless interview is there - it follows the segment about sign spinners and the condo market in general. Just click on Sign Spinners and watch awhile (or ff.)
http://www.kpbs.org/fullfocus/index_072506.php
Thx!
This is definitely must-see-TV for bubble watchers. The sign twirling pyrotechnics are over the top!
http://www.kpbs.org/airchecks/fullfocus-tue.asx
I think there was once an informal poll on this blog. The winner was “repartments”
Heard a great advert on the radio this morning on the way to work. They actually said something to the effect of: “Stop trying to protect that equity that is already gone! Call us for a bankruptcy consolidation loan!”
It was these guys:
http://outofbk.com/
Bankruptcy-related services will flourish in the next five-ten years. Do any of you bankruptcy bulls who read here have any stock recommendations for bears who secretly desire to purchase stock?
Yes, and they have a great array of free calculators you can use!
I have a question concerning about who will end up holding all the non-servicing mortgages of insanely priced homes. The lender normally has sold the mortgages to an investor. I have heard that some investors can go back to the lenders and force them to repurchase the mortgage if there are difficulties like non-payments or foreclosure. Is this true? How often will this happen?
http://sittingprettyfinancially.blogspot.com/2006/07/palm-springs.html
Remember Nina Smith of “Sitting Pretty” fame and her flipper (er, invester) friends and their Palm Springs “investment property”? Looks like any profit they made (not including the costs of their labor) was pretty razor-thin. Can anyone verify the price she claims to have sold it for?
She says she’s still getting daily e-mails from “crazies” — that would be us — asking how the flip turned out.
“By day, Nina sells software, but her real estate investments have grown to become a significant part of her financial plan and also a great passion. She has owned and lived in four homes from varied eras (three of which she upgraded and sold for tidy profits, one she occupies now). She also owns three investment properties and recently sold a fixer in Palm Springs.”
All I can say is: Nina, don’t quit your day job.
I will do some research and get back to ya….
Got some info but I need some confirmation….Middle name ??? Address of the Palm Springs property ???
No idea.
Even using her figures from her website: ” (principal and interest) If you factor in these then you can call it a “break-even” venture. But we used the house & pool on the weekends so we maximized our dollars and enjoyed the time in Palm Springs.” Plus your own labor and time sponged.
It wasn’t even a “break even venture.” I did some basic math. 2500 up front from each person. 700 per month carrying cost from each person for 11 months. Total spent from each person; $10,200. Total return per person; $8,000.
That looks like a loss to me. If that were one person, it would have cost him/her almost 9K for 11 months of “work.”
I posted my math as a comment on her page. We’ll see if she accepts it.
High energy price inflation + slowing growth = stagflation is BACK…
http://tinyurl.com/ze5e2
Yep and real inflation just crossed 10% per annum.
Rate Hikes on the Horizon
25 basis points appear to be in the cards on August 3rd
From France to Germany to Portugal…
ECB_DdV Dominique de Villepin, French Prime Minister
“Economic growth is firmly in place in France. We have relaunched public investment and made the lives of businesses easier.” – July 20, 2006
ECB_JA Joaquin Almunia, EU Commissioner for Economic and Monetary Affairs
“After four years in breaching the stability and growth pact, Germany is finally on track to correct its excessive budget deficit.” – July 19, 2006
ECB_VC Vitor Constancio, ECB Board Member
Said that borrowing costs in the region are still low and the “European economy is growing more than some time ago.” – July 17, 2006
With all of the upside risks, it seems the ECB has little choice…
ECB_NG Nicholas Garganas, ECB Board Member
“It is absolutely essential to act without delay, if the data warrant … [growth] has been quite buoyant. Everything goes pretty much as we had expected, and I expect real GDP around potential for the remainder of the year and perhaps a little above potential with the output gap narrowing somewhat.” – July 21, 2006
“I would say the recent jump in oil prices, and the geo-political situation have worsened. We have seen, of course, rapid money and credit growth, the highest for a number of years, so I would have thought these are the main risks that have increased recently.” – July 21, 2006
ECB_LBS Lorenzo Bini Smaghi, ECB Executive Board Member
“The case for a policy adjustment becomes more and more relevant as it is increasingly risky to assume that market forces alone can foster the necessary adjustment without a significant cost to the world economy.” – July 19, 2006
Oil: Dangerous Times
Rising oil prices inflict pain not only on the US, but also globally, and the situation appears to be getting worse…
Fed_BB Ben Bernanke, Federal Reserve Chairman
“The increase in energy prices is clearly making the economy worse off both in terms of real activity and in terms of inflation. There is no question about it.” – July 21, 2006
Oil_Richard Lugar Richard Lugar, Chairman of the US Senate Foreign Relations Committee
“Venezuela’s leverage over global oil prices and its direct supply lines and refining capacity in the US give Venezuela undue ability to impact US security and our economy.” – July 21, 2006
Oil_Ali Naimi Ali Naimi, Saudi Arabia’s Oil Minister
“The Organization of Petroleum Exporting Countries wanted to avoid raising prices in a way that might affect the global economy. OPEC is concerned about the stability in the international market.” – July 24, 2006
Oil_Christian Noyer Christian Noyer, Governor at the Bank of France
“The increase in the price of oil is bad for the world economy.” – July 24, 2006
Oil_Jim Rogers Jim Rogers, Co-founder of George Soros’s Quantum hedge fund
“Unless somebody discovers something very quickly and very accessibly, we’re all going to be dumbfounded at how high the price of oil will go, including me,” and goes on to say oil prices will reach $100 a barrel, possibly this year. – July 24, 2006
PBoC: Coming From All Sides
The Central Bank is being encouraged to increase flexibility by just about everyone.
From MPC Members…
PBoC_YY Yu Yongding, PBoC MPC member
“China should implement measures to address its surging current and capital account surpluses.” – July 24, 2006
To Academics…
PBoC_XB Xia Bin, Director of the Development Research Center of the Chinese State Council
“I think exchange rate flexibility should be increased, and widening the trading band should be the first consideration.” – July 21, 2006
PBoC_XF Xie Fuzhan, Deputy Director of the Development Research Center of the Chinese State Council
“I think the yuan trading band should be expanded at an appropriate level in a bid to increase the exchange rate’s flexibility.” – July 24, 2006
PBoC_logo Liu Lida, Director of Monetary Policy Research for the PBoC
“The central bank will wait and see whether the signs of a slowing trend evident in the June economic indicators continues or not. If not, the central bank will take stronger measures.” – July 24, 2006
There’s Even Foreign Persuasion…
PBoC_Timothy Adams Timothy Adams, US Treasury Undersecretary for International Affairs
“If we’re going to give China or any other country…greater weight in the IMF, then they need to take their responsibilities in that institution seriously, and they need to play by the rules as they’re laid out.” – July 24, 2006
“Membership has its rewards; it also has its responsibilities…The Chinese have been very good about not asking for a quota increase for the very reason that they know we’ll ask for more movement on the currency.” – July 24, 2006
BOJ: The First Step
Following the Bank’s decision to end ZIRP, the hawks and doves became more clearly defined…
The Hawks
BoJ_TF Toshihiko Fukui, Governor at the Bank of Japan
“Today, we took the first but important step in the process of normalizing interest rate levels, which will also be good for the Japanese economy.” – July 14, 2006
BoJ_KY Kaoru Yosano, Japanese Economic and Fiscal Policy Minister
“Ending zero rates is the first step towards normalizing the financial system, with lenders to gain interest for their money and borrowers to pay a cost for it.” – July 18, 2006
The Doves
BoJ_HT Heizo Takenaka, Japanese Internal Affairs Minister
“The BOJ must explain its monetary policies, and it must take responsibility for the results,” – July 16, 2006
BoJ_TM Toshiro Muto, Deputy Governor at the Bank of Japan
“The market’s focus now seems to be the timing of the next rate hike, but I can only say that we will conduct monetary policy by carefully examining economic and price moves.” July 21, 2006
“The Bank of Japan will take its time with future increases in interest rates, and current accommodative credit conditions are likely to stay for now.” – July 21, 2006
http://tinyurl.com/s6wmt
And if the foreign central banks are worried about inflation, oil and world economies to raise rates, then the US will follow.
From today’s NYC RE craigslist listings:
“$775000 - I Have To SELL!!! I Am Desperate.. High Ceilings.. Great Unit!”
“MOTIVATED SELLERS!”
“**$50K PRICE DROP** ”
“$499000 - Deal Fell Apart-Bring Offers-Very Negotiable”
“$399000 - *REDUCED PRICE* 1-BR”
“MUST SELL !!!”
There seems to be good price movement below 96th Street. From a realtor friend, deals are being done at 10-20% below asking price.
I am seeing more ads with the phrase: “price improvement.”
All in all a good sign of things to come.
casa grande, az….dr horton homes slashed prices at ghost ranch.
http://www.drhorton.com/corp/GetCommunity.do?dv=E8&pr=41736
they were asking 60k more for these models just last month …how do I know? I still have the brochures
WARNING: Remove liquids from keyboard prior to opening.
Nominee for Craigslist candidate of the day:
“Buildable land in Arizona, $22k”.
http://seattle.craigslist.org/est/rfs/186651907.html
OH come on — that’s nice property, it’s even got a yucca plant.
A friend of mine bought 5 acres in the flood plain that looks just like this, built a nice house smack dab in the middle of the wash - the house is built up 4 feet-, and sold it for a nice profit 4 months ago. I pity the new owners. I really thought my friend was the bigger fool.
I love the shade of the greasewood plant in the background when its 120F. But remember, it’s a dry heat. hehehehehehehe
http://tinyurl.com/q9n8j
This is my first Tiny, let me know if it works.
Helen
Wish I had time to read every post, so I’d know if these were posted already, but just in case, 3 great ones from CNN/MONEY.
http://money.cnn.com/2006/07/25/real_estate/housing_market_values/index.htm
http://money.cnn.com/2006/07/26/real_estate/Florida_fading_markets/index.htm
http://money.cnn.com/2006/07/26/real_estate/hearing_on_real_estate_competition/index.htm
I have long wondered about the effect of improvements to existing inventory on median prices and acceleration of the run-up in prices.
Whether dual-pane windows, insulation, landscaping, hardwood floors, solar, pool, additions, granite (?) or marble, remodel, or whatever, certainly money invested correctly to improve a dwelling should surely result in a higher selling price vs. unimproved property in the same area.
It seems to me to be irrelevant whether the funding was from savings (hah!) or HELOC, or Flipper Heaven.
The housing stock has been improved by what percentage? Five to 10% or more?
In my neighborhood, many of the houses on the market have undergone great improvements. Thus, they are worth more, and the median rises. How widespread, or does it vary greatly by location? I think not so widespread and varies by location, but still a contributing factor in the overall picture.
Please help me think this one through. I think it is a contributing, though not major, factor.