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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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Name:Ben Jones
Location:Northern Arizona, United States
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Topic-
How much time do you spend on this blog per day?
I mean the readers.
Check it when i wake up, while my kids eat lunch and after they go to bed….my husband believes i’m obsessed. i believe i’m just well informed.
Too long :D.
I think of you as our foreign correspondent!
Insomnia. Tabbed browser window with early morning markets. Durring tech support calls with clients. When my options broker calls (love that dec lumber). Durring tedious but important download, like the 040 release on Tuesday.
Way too much, during the workweek 1 hr roughly.
Days off, a couple of hrs.
I check in about once/hour M-F at work. Weekends are harder for me to get online because I have to chase after a toddler.
I spend way too much time. But I go slowly through the economic theory as I really want to internalize it, consider all the aspects, and use it in future decisions. For those that keep it to 60 - 90 min. are you only looking for specific posters, links, or are you speedreaders?
I probably visit this sight 3 to 4 times a day. I only read about half the posts though. I am mostly interested in real estate around Michigan which isn’t talked about much. We don’t have a market like CA but between job loss and people leaving the state we have a bubble just the same. I am curious how this will all play out. I want to leave MI but the wife won’t let me and she is trying to push me into buying a house on top of it!
Probably a half-hour or so in the AM, a brief scan at lunch, and another scan in the evening. The information and links provided here are far more timely and accurate than mainstream media.
More than I want my boss to know.
If I had a real job right now, a lot less. But I pretty much try to be in the office at least 5 hours a day….I am the owner after all. Being that RE is pretty much dead up here NNV, Ben’s blog is a great way to kill some time between what business I am conducting right now.
By the way, local brokerages are starting to drop off the tree like ripe apples. We lost 2 last week. More to come, I’m sure.
My kid is on the gymnastics team, the gym is too far from my house to go back home - I spend six hours there and read THB in between watching his round-off double back handsprings. It’s a perfect life!
Crispy, are you thinking of starting a 12-step group? Have you become powerless over blogging, making your life unmanageable?
I actually jokingly refer to this blog as my AA. (Not at all trying to mock AA - just saying it’s my own little support group…)
LOL. I think others are as hooked on this as me.
Hey, when no one around you will pay attention to common sense, and they look at you like an alien every time you try to throw a little enlightenment their way, you need somewhere to go to vent. This blog has been therapeutic from that standpoint. It’s nice to know you’re not going insane afterall.
Let’s see… Enough to know you’re a CPA currently residing in the Bakersfield area. You’re middle age male whom despises flashy/ cocky realtors. You hobbies are brow beating bulls on other blogs and providing us w/ anecdotal humor on this site.
That’ll answer your question.
LMAO!!!!
I flip back and forth during the trading day (very short attention span :)) and since when the trading day ends, my “work” day (charts & funnymental research) begins, then too. I generally work a 16 hour day.
1x/hr during the workday, rarely on weekends, and once or twice at night. Feels like the ‘virtual life’ or second life or whatever that world is..
I leave the page open from when I get to the office (8AM) until I leave (7PM).
Tell me you leave the office at some point. Even when I’m slammed, the max office time I can do consecutively is about 4 hours. If I do more than that I have cerebral meltdown (worse than heat stroke. start speaking Swahili) If there’s are park close by, at least go take a walk.
Office is at home and I have a home gym so it’s not as bad as it sounds.
I love workin’ at home. I stay in my underwear ’til noon.
Me too.
Same here. Page is open, read, work, refresh page, read, work…cycle continues. At home, several times in the evening and throughout the weekend.
Yeah….I’d say I’m hooked, um, well informed.
BayQT~
During the week, I really don’t “read this blog”–I just scan it, though I do visit as often as I can. On the weekends I try to read everything that each and every one of you writes, and I also follow all of the links. I spend *several* hours doing that, and I feel that it is time very well spent. I have learned something from everyone who posts here. Thank you all!
Let’s put it this way - if there’s a 12-Step program for Ben’s Blog - i should be in it.
Ditto. Hate to admit this, but I spend a at least three to six hours a day on this blog & related links, etc (mostly late at night — haven’t had much sleep in a long, long time). Agree with Upstater…you 1-hour types speed-reading or what?
Crispy, can I join you in the 12-step process?
way too much time. i often print it and take it with me.
I have a major time difference working in my favor. When business finishes up locally, THBB and the US markets are just heating up. I read everything and pay special attention to the comments from about a dozen bloggers.
I would say that I spend about two hours a day however if GS puts in a link or commentary from his graduate school economics course then I can easily find myself doing homework for a couple extra hours.
hello from germany,
90 minutes per average on this blog. but at leat extra 90 minutes on mish, russ, charles hugh smith, barry´s, tim´s etc
i have a good artikel from doug kass “when the wall come tumbling down” with a very good observation from his neighbourhood.
http://immobilienblasen.blogspot.com/2006/08/when-wall-come-tumbling-down.html#links
http://immobilienblasen.blogspot.com/
Foreclosure: what is going to happen, and what are the rules, if the scale of foreclosures is far greater than in the past.
On a recent thread, someone noted that in foreclosure auctions banks are bidding the mortgage amount. I wonder if those are the banks holding the “20″ in an 80/20 who would be wiped out if a house sold for 80 percent of its purchase price. As long as they can get the value of the mortgage, it is in the interest of the holder of the conforming loan — the 80 — to sell at market, before the price goes down further. So the “20s” bid the value of the “80″ mortgage and begin making payments, to keep from being wiped out.
I looked into how long a bank can legally hold a piece of real estate. The answer is for five years, with an extension permitted for three years after application (a close relative is very knowledgable about bank regulations). A bank holding the real estate and renting out the property is in the same situation as a FB renting out the property with a negative carry, except the carrying cost is the bank’s cost of capital plus property management rather than the FBs mortgage rate plus personal work.
Banks would usually rather just sell the property, because in foreclosure they have to write off the entire loan, booking a “recovery” on sale, I’m told. That’s a bigger hit to profit and loss up front. And, the ongoing deterioration of a rental property with an absentee owner makes the eventual sale worse. I could see property management being a big growth industry, and a big local issue in communities where bank-owned rentals are mixed with owner-occupied homes.
BUT if you are the holder of the 20, you’d we wiped out anyway if the market locks up. And if the “80s” start taking a hit, there may be political pressure on Fan and Fred to not dump units on a locked-down market. Renting the units out for years stretches out the loss in a cash sense. And these banks or other mortgage holders may not have the cash to survive taking the whole hit up front, especially at a sales price that reflects a lock-down in the mortgage market.
One political outcome could be legislation to allow the banks to hold the property for longer, under a rent-with-option-to-re-buy scheme, to stretch out the problem and avoid forced sales. They may also be allowed to defer writing off the loan, just writing off the negative carry each year. These measures would hide most of the financial damage by deferring it.
This would also defer the recovery, and keep prices artificially high for the young (ie. a suckers market) into the future. That sort of papering over is what made the S&L disaster ultimately so bad in the U.S. — and the aftermath of the bubble economy vastly worse in Japan.
But I wouldn’t put it past this administration. If the damage is wide-scale enough, the alternatives could be better in the long run economically but worse in the short run politically. Ie. an immediate loss for holders of MBSs, including pension funds and insurance companies, partially backstopped by the government with an increase in debt, a further decline in the dollar, etc.
Some of the banks are bidding in the full amount. Today, I’m calling two more sales in Fairfax County. For one, the lender (second trust) is opening bidding at $1,000.00, and isn’t going any higher. Original principal of the loan (January 31, 2006) was $132,000.00. First trust is $528,000.00.
This lender either intends to take a bath on this property or to hand it off to someone and let that person deal with the first. This is a big step toward price adjustments and is becoming common. Not a good sign.
It’s a GREAT sign, to some.
are you in fx county ?
even in the 90’s foreclosures were in dale city and scuzzy areas mostly
The properties are in Annandale and Burke. Yes, there are a lot of local foreclosures. One of my colleagues has thirty-five (35) scheduled in Prince William on a single day later this month. I don’t know whether that will be bargain city or whether a bank executive or two might jump that day.
Update: no buyers for these properties. Back to lenders, lenders took a bath.
“But I wouldn’t put it past this administration.”
My prediction: GOP takes a hosing in ‘08 (dems probably close the gap or reverse ‘06), democrats come in with a welfare save-the-dipsticks platform, jack up taxes, and try to keep the boat afloat - though I think they’d (or the repubs) would fail.
We need to all vote Libertarian. Enough with the government intervention already.
This would be a great place to start that movement.
I already do.
Libertarians are big fans of open, uncontrolled borders. You’all just come on in! No thanks….
I would love to reply to this but I know my reply would send this post into OT territory. Maybe in the Off Topic thread?
There won’t be a government bailout, even if the most fiscally liberal Democrats take power. The fiscally conservative, socially-liberal Democrats that represent most of the country will remove Bush’s tax cut, and cut spending in an attempt to balance the budget again, not to try to prop up any monetary bubble.
Bj’s aside, Clinton’s team was the most fiscally conservative administration in recent memory. Those of us in the Democratic party realize that was the highwater mark of the party, so there’s a big effort to return to that.
I suspect that most holders of seconds couldn’t affort to outbid the firsts. At least not with the number of these comming down the pike. I’m betting they’re pretty overlevraget themselves.
If the FC is an 80/20 with MI, the MI company will have the option of paying off the 80% and then acquiring the property and selling it off to recover whatever they can of the amount paid on the private mortgage insurance. Same with FHA loans that have MIP. On VA’s the feds “guarantee” 25% of the loan, so the lender only needs to sell for 75% of the loan, then the VA takes over the house and recovers whatever they can of the 25% they guaranteed. In all of these cases, the note holder orders an apparaisal and at least one BPO to try to get a fair market value of the property. Banks almost never hold property for long term (at least in the states where I have worked (FLA and PA)). Some states have a redmeption period after the courthouse sale, at least one state has it for one year. The borrower can pay off the judgement and acquire the house back. The point is, it’s not as simple as the above would make it seem.
The whole point of an 80/20 is to avoid MI. I doubt there are more than a handful of “80/20 with MI” loans out there. For VA, it is usually the case that VA simply pays the lender the 25% guarantee (actually up to 50% for small balance loans) and lets the lender dispose of the property (a no-bid, in VA parlance). Banks (or Fannie or Freddie) rarely hold on to property for long, but the sam can’t be said for FHA or VA.
IF the govt. wanted to do some sort of foreclosure bailout, I think the obvious precedent is RTC, where a short-lived govt. entity took over the troubled mortgages and worked them out (in the process pretty much creating the Commercial MBS market. I actually doubt that there will be such a bailout, but if there were I’d bet that’s the form it takes.
Time for a new blog: “Another F’d Lender”
Larry,
Your research into this matter is much appreciated. It’s certainly what I’ve been worried about — extending the pain for a torturously long time, forcing responsible people to either commit to buying using toxic loans (the only way to afford at these prices) or making them rent for 10+ years (which really isn’t the end of the world).
Many of us are relying on the FBs not getting bailed out (by loan workouts or 10+ years of I/O pmts on a FRM, or a crazy “tax credit” for homeowners which would subsidize their mortgage payments). Lots of ways to prolong the pain. Hope people don’t get too discouraged and buy anyway. It will still be far more advantageous to rent, IMO, but they will make the decision more difficult.
Let’s hope they decide to have a quick and effective correction so we can all get on with life.
I recently exchanged emails with a VP at the FED (from the recent Time article). All he kept parroting was “soft landing”. Do these guys truly believe this or are they just towing the company line?
company line, do you really want to see mass panic?
I don’t.
I prefer a reasonably orderly (on a macro basis) reversion to the mean.
I prefer a ripped off bandaid. Bring it back down to reality and go from there. It didn’t inflate in a pleasant, orderly manner.
Is the MSM simply behind the curve, or are they being overtaken by events unravelling faster than one could reasonably expect?
I was staggered to see this view of the US housing market expressed by a normally market-savvy columnist in this article in a quality Australian national newspaper this week.
http://www.theaustralian.news.com.au/story/0,20867,20072730-25658,00.html
Then I thought for a bit, and realised it’s only the fact that I lurk on this blog (among others) that allowed me to instantly see how irrelevant those year-to-June-2005 numbers are.
I’ve got a feeling a lot of people are really going to be taken by surprise.
I want, and believe we’ll get, mass panic, deflation, mass unemployment and widespread ethnic violence.
I’m partial to hot showers and regular meals in the comfort of my secure home, so I’m not too keen on the kind of chaos you’re espousing. Do you really understand what you’re claiming you want?
I do want some deflation, but just to correct the imbalances, and because I think deflation will ultimately lead to a sounder economy than the alternative, which is escalating inflation. But how can anyone want mass panic, unemployment and ethnic violence?
Kim, I do not believe that the youth on this blog have ever seen mass panic, unemployment or serious ethnic violence. Just look at what happened in France (a small country providing services from cradle to grave) last year and remember the authorities considered it good if only 370 cars were burned a night.
Some people, myself included, consider that a sign that we need to get our ethnic violence done and over with now. Rip it off like a bandaid.
Just like Iraq…and Israel/Lebanon
I have worked with military veterans for over 30 years (as a psychologist) and I will tell you what they tell me. There are no good wars and damn few neceassary wars (many of which lately are ethnicity based). Talk to the warriors, before you wish for that type of violence.
“But how can anyone want mass panic, unemployment and ethnic violence?”
Indeed! As a child, my family and I were caught in a race riot in Plainfield, NJ. (For those of you who don’t know, Plainfield is about 20 miles from Newark–”riot central” in the 60s.) It was absolutely terrifying. To this day I don’t know how my dad managed to keep his cool and get us out of there before the rioting mob broke into our car. Heaven knows that they tried hard enough.
No one who has ever witnessed that type of violence would wish for it to occur again!
Am I the only one who thinks Mark’s comment was sarcasm?…
do you work for the gov ? how else will you eat
Did you see how airline passengers calmly sat through heightened security and stayed committed to their flights after the terrorism plot was revealed yesterday? I think that’s the same attitude that will keep us calm in an economic downturn.
Initially I’m proud of that response. But I have a nagging doubt it’s that feeling we all have that nothing that bad ever happens to us. I fear that maybe its based more on emotional denial than steely determination. Any thoughts?
Someone’s been reading their Fight Club…
Move to Iraq, and you can get all of the above by tomorrow…
(I want, and believe we’ll get, mass panic, deflation, mass unemployment and widespread ethnic violence.)
Naah, it won’t be THAT bad. First of all, with the baby boomers retiring we have a long term labor SHORTAGE. That’s why unemployment remained so low, relative to the 1970s and 1980s, in the recent recession. So you won’t have masses of people trust into desperate circumstances.
You will have a reduction in the standard of living, as people cannot buy as much as before. People will have to live below their means. After a period of anger and depression, people will begin to rationalize their diminished (but pretty rich by global and historical standards) circumstances. There is a lot we can do without.
I live very frugally, but most around me do not. I don’t see how people will be able to change their mindset and start “doing without” — as in doing without the plama t.v.s, and the latest, greatest video gaming systems, and ipods, and fancy cell phones, and expensive cars, and expensive sneakers, and deluxe appliances, and swimming pools, and so on and so on…
I honestly don’t see it happening.
It will happen when they are forced by the economy to do without those things.
Short of prying the endless supply of free credit cards out of their greedy hands, I’m not sure how they’ll be forced to stop. I know of people right now who in no way should be spending money the way they do. And I’m talking about people who don’t own a house and, thus, don’t even have any equity to foolishly tap into. I cannot see them changing their careless ways. And I can’t envision an economy that will “force” them to do this when it’s simply too easy to keep piling up the debt and then walking away from it if need be. This is what they do. And then some moron qualifies them for a mortgage. Insane.
Case in point.
My SIL and her husband ran up credit purchases for a $3,000 Bose home theater system, HD plasma screen TV, PlayStation, XBox, washer and dryer, then declared BK (about a year ago). All debts absovled and nobody bothered to come by and pick up all the treasure they had accumulated. They have two young kids and neither one seems to be able to hold down a job longer than six months at a time. They think what they did is funny and can’t wait to do it again. And the guy has been on public disability multiple times (learned how to work the system from his dead-beat parents).
I used to believe in our country’s social welfare system, but after being around my wife’s family for a decade, I now believe in forced sterilization and letting people starve to death because they are too stupid, dishonorable, and lazy to take care of themselves.
Who is John Gault?
Rancho cal, please run for congress… I’ll be your campaign manager!!!
We’ll run on the platform to Spay and neuter ALL entitlement recipients….you want your welfare check? bring proof…like your testicles in a jar of vinegar before we issue.
I’ll run on the “No Child if Your in a Bind” platform.
I-pods, for starters.
Please tell your kids to leave them at home. They do not help their education. Also, you are a MORON if you give your kids a cell phone. You have no idea what they do with them all day at school. (Maybe one that only calls 3-4 of your preset numbers is okay)
Let me add to this. The poorest of the poor here at least have something to eat and drink. Even if you are a hobo, you have options, that as a hobo are not appealing, (you have to keep clean, stop drinking, no drugs, etc) but you have somewhere to go.
Most of the world south of the border, except for Australia and NZ are poor. How poor? Think about living in a 6 X 8 cardboard built, tin roofed hovel with your family of 5, gas stove kitchen on the side of the dirt floor, and a shared outhouse for the block on the side of a hill. Your daily caloric intake is around 2000 calories, enought to keep you in a daze, consisting mostly of sugared water, and some rice and beans.
Now think that around 70% of the population (specially in rural areas) lives like that. We are the lucky ones, who can at least eat. We in fact eat so much, that we have an obesity problem!
“First of all, with the baby boomers retiring we have a long term labor SHORTAGE.”
The shortage will be white collar/high tech jobs while the baby boomer retirees move into the blue collar service jobs (sales, restauraunts etc.) because they don’t have enough saved. What we may end up with is not ethnic violence but rather the fallout from a new “Generation Gap”
And the white collar/high tech jobs that they retire from will be farmed out to India.
I think that India is at the saturation point. Pretty soon those with understandable english and basic skills will have jobs, and all that is left are those who have no clue, and cannot be understood. India is a poor country with a very small percentage of the population that is educated. Most of these educated people are either here, or already working in outsourced white collar jobs.
The other issue is that Americans are not patient with accents, and nuances. They will hang up, and will call the company complaining if they are not understood. You can tell when you call India Tech support because nothing gets done, you barely understand the person answering and you are transfered multiple times to the wrong destinations.
big hat, no cattle. the thing is that this economy depends on the rest of the world and not the other way around. fast forward to a protectionist economy with no outsourcing of any sort and the hispanics kicked out, your 3$ drill bits at walmart will cost you 10$, and houses will cost you 3 million dollars, are you willing to pay that? essentially money is a unit for services rendered and in a freemarket setup, not everyone can get rich, its a triangle, you will still be having what you have or even lesser and will not become rich or have an easier life either way.
We depend on the world for cheap imports, but those are only temporary. It is the same concept as the equity locusts. We have an income delta that makes our manufactured goods expensive for us and the rest of the world, but when we outsource we cheapen it for a while.
That while depends on the time it takes the outsourced country to catch up in wages, or use up the available resources (human or Natural) and then those resources will get more expensive. We might get away with outsourcing tech support to Botswanna, for real cheap, but what quality would you get?
We have been dropping quality for cheapness for quite some time. Durable goods are less durable, and items like clothes, or shoes that are made in 3rd world countries no longer have the longevity that they once had.
Granted I would much rather have an automobile built in the last 10 years than its equivalent build in the ’60s or ’70’s when we first went that route. Those years had a dismal quality for manufactured goods, as the companies faced international competition with lower wages for the first time. Now Honda, Nissan and Toyota all manufacture here because it is cheaper, and closer to their markets.
As far as the world not needing the US, I guarantee that if the US has a mild cough, India and China will have Avian flu. Trust me when I tell you that the US will be able to live without the cheap crap imported from China, and the dismal tech support from India easier than china and India not having the US as its major market.
Once US consumers get tight, they stop spending on that 3 dollar drill bit, and will not care that it rises to 10, because they still will not buy it. Same for houses. In a free market environment, you and I would not even be having this conversation, as the underlying economic basics would have corrected the imbalances sooner.
…Glad someone else noticed the quality issue. I’m old. I remember clearly when Nikes were nicely finished - albeit more expensive…when books were nicely trimmed…(for the same price)…., etc. I wouldn’t trade my Corolla for any American-made car…and I do appreciate cheaper/more powerful electronics. BUT…we will definitely see the result of our pack rat/infinitesimal attention span/celebrity saturated thinking…. We reap etc.
“And the white collar/high tech jobs that they retire from will be farmed out to India.”
Good point, Eastcoaster. I’m wondering what the ROI will be on $120,000 undergraduate degrees. I’ve read here and there some recent grads are already planning some overseas career stints. I believe their plan is that those jobs will be short term. Guess we’ll see.
I don’t think India is working out quite as expected where High tech jobs are concerned. Ohter phone services maybe, but they will not replace IT guys for long.
Wasn’t there an article some time back that stated that Dell had dropped from the best customer service record to one where major corporations threatened to cut off any further purchases unless they could speak to Americans here in the US? Main complaint was that nothing got resolved?
Yes, and Dell responded by bringing tech support for important customers back to the USA. Consumers should respond by not buying Dell.
Too late for me. My Dell is almost 2 years old. Had the “pleasure” of trying to work out an issue with a tech recently. It was painful. Never resolved the issue. I’ve been working around it.
It would seem that many of them won’t be able to afford to retire, so I don’t think that this labor shortage will come to pass.
Here’s the smooth way down from the addiction to overconsumption:
(Not saying that this is what’ll happen in every case, just showing possibilities. The overconsumption habit didn’t happen overnight and it doesn’t have to end overnight with a “bang” either).
1) People start ditching the stuff they know they do not need (and has actually been waying them down anyway)- all the crap in the garage, storage shelters, etc.
2) They start making more conscious decisions before they buy: Am I really going to use/wear this thing or will this be yet another candidate for the garage, back of the closet, etc in a few short months?
3) Start noticing how much $ they spend on eating/drinking out and realizing it REALLY adds up. Begin cutbacks there.
4) Now they’re feeling pretty good about themselves because they can see that, even with all the cutbacks, their quality of life has not really suffered, maybe it’s even improved! Less unused crap around weighing you down.
5) Now comes the hard part. As economics become worse, they have to start doing without things they thought they couldn’t live without: cable TV, extra cell phones, the TV in every room, etc. The tech perks will be the hardest to let go of but by now they’ve been in “save” mode for so many months that “sacrifice” is becoming more habitual than it ever has been in recent memory. So sacrifices, while still difficult, are easier to make.
Plus, by then it’ll be abundantly clear that they have no choice so MUST ditch some of the perks, one by one.
5) Each ditch gets easier to make and they start figuring out how to replace the lost toys with things that have actual meaning. ie. more time with friends/neighbors/family now that everyone’s not stuck in their own private little world watching TV/computer/talking on cell, etc.
I think most of this stuff is fairly easy to let go of as long as the way there is fairly gradual.
If they had to dump everything and cease all shopping overnight, yeah there’d probably be rioting in the streets.
But out of all the “soft landing” scenarios, I think the one that could actually happen is breaking the American consumer off their overconsumption habit, softly.
…OR they could buy a house a the top of the market and have 75% of their check go to principal, interest, taxes and insurance. I have seen evidence of this in some of the pictures of houses on realtor.com. The living room is furnished with one recliner and a TV on an ironing board in front of it and that is it! Absolutely no excess. They stay real skinny too, solves the obesity problem.
Greater SD ziprealty inventory = 23,333
Number listed w/ price reduced = 9234
Percent listed w/ price reduced = 40%
The pace of inventory increases has slowed recently, but the percent listed w/ price reduced has grown fairly steadily (was 30% earlier this year). Is there a tipping point where price reductions will flush out those with negative appreciation burning a gaping hole in their household balance sheets? If so, it would be marked by a flood of REO / short sale inventory hitting the market, and an increased pace of price reductions…
Will the Fed eventually regret being kinder and gentler than under Volcker?
http://tinyurl.com/htpo4
Maybe things will be OK. Real estate will stabilize and household debts will be manageable with falling rates, oil and energy costs will decrease, savings will increase as will employment and wages, and peace will break out in the middle east. Inflation will roll along at 8-10%, but nobody will notice for another 5 or 10 years. Got patience?
IMHO the fed should have raised rates by 0.500% in August and the Fed Fund rate should be 6.000% by year end. The Fed is currently reporting inflation of 4.3%, if inflation were calculated today in the same method as in the Papa Bush’s tenure it is currently running in excess of 7.2%. If inflation is calculated by disallowing hedonic inflation it is currently running ~10%. These inflation rates will continue to accelerate as companies and individuals are intuitively aware “borrow today payback with cheaper dollars tomorrow”.
Link to above source
John Williams Shadow Government Statistics
http://tinyurl.com/mg6z5
hello from germany,
has anybody noticed that the retails sales werde only hot because of a downrevision in the past month? as ausual. a revision just in time to make the actual numbers good
Excluding both autos and gas, sales were up 0.7%, also the best since January
The figures were higher than expected on Wall Street, where economists surveyed by MarketWatch were reckoning on a gain of 0.8% for retail sales and a 0.5% increase in sales excluding autos.
The better-than-expected results were offset to some extent by the 0.3% downward revision in June’s sales to a 0.4% decline. Sales excluding autos were also revised lower in June to a 0.1% gain.
http://www.immobilienblasen.blogspot.com/
just about every state has a sales tax holiday now = big back to school sales
several EU countries have posted excellent retail sales numbers lately; not sure how much of that is due to massaging the numbers though …
I have been collecting houses for rent numbers off of craiglist for a while. I just do a search for 3BR and see how many it returns. There has been a pretty steady increase in the numbers but they seem to be accelerating for the last few weeks. Are others seeing this and does anyone know if this is a normal seasonal variation.
Craiglist house rentals.
3BR TOT
Date Phoenix Orlando Raleigh
25/03 2571 610 724
26/03 2557 614 724
27/03 2493 604 715
28/03 2515 599 699
29/03 2574 618 705
30/03 2583 630 726
31/03 2613 641 734
01/04 2529 631 719
02/04 2494 637 711
01/05 2572 766 908
09/06 3014 961 903
01/07 3296 1055 979
01/08 3930 1255 1138
02/08 4034 1306 1165
03/08 4096 1347 1170
07/08 4166 1374 1186
08/08 4114 1386 1161
09/08 4242 1419 1193
10/08 4323 1432 1204
11/08 4438 1461 1214
Ohh baby! Any flipper out there thinking that they are going to alleviate some pain by renting is going to find out they have some issues! hehehehehe
How about a topic of how the the boom causing people to be unneccesarily wasteful? I mention this because I have started noticing that many of the homes in my neighborhood that have been suddenly slapped together to sell have large dumpsters out front full of what appears to be the entire contents of the house itself. Let me explain. I started selling things on Craigslist for extra spending/grocery money simply because I kept walking past dumpsters full og things like new bicycles, lawn mowers, TV’s, stereos, couches, lamps, chairs, antiques, etc. These people don’t care. They want to sell, and sell now, and as a result are severely wasteful. I’m sure there are tons of other stories like this one.
Tell them about freecycle.org!!!
Or about “It’s Deductible” and how fast the charitable giving deductions can add up. How hard is it to call Goodwill instead of a dumpster company?
http://worldnetdaily.com/news/article.asp?ARTICLE_ID=51445
Here’s some real tin foil hat stuff! August 22nd is being watched as a date Iran might start the apocalypse. Guess housing wouldn’t really matter if these predicions came true.
An 3x day for one (1) hour total. Also I copy and paste a lot of the stuff on a Palm Coast / Flagler County FL chat site. I am looking to buy there so I am making ‘friends’ with some of the homeowners who need to be ‘educated’. They don’t like what they hear. Reality Bites
gordo
1)In light of how the mass media has handled this whole RE debacle how many of you watch the news or read a newspaper confident that the information you are being provided with is anything more than anecdotal?
2) Which news programs do you watch and which newspapers do you read/trust?
I have been thinking the same thing lately. If they are so far off on RE, and the economy, how good is the rest of the news? My favorites are National Public radio, The Economist, and Financial times of London, and Grant’s interest rate observer. I also keep up on a bunch of doom and gloom web sites such as this one just to keep myself convinced that I am not crazy, since everybody else seems so sure that everything is going to be ok. I have been convinced RE/ the world economy is on the verge of collapse since December of 2004 and I find it very tiring. I am not a pessimistic person by nature and it seems like a lot of effort for me to maintain such a dark outlook.
It always seems things can’t continue… but stopping isn’t an option either.
” If they are so far off on RE, and the economy, how good is the rest of the news?”
That’s exactly what I mean. Fortunately for me I can see what’s going on in the housing market because I’m in the industry. What I have come to realize is that almost every interview I watch or read involves some “expert” who is doiong nothing but paint the picture that serves his/her own cuse. No tough questions from the interviewer…. they let the expert spout the crap and then the interview is over. I often find myself wishing the interview format was more like how it is handled in England where the interviewer is lless likely to let you off with a spin bite. I love how they nail the interviewee down to qualify/quantify what they pass off as expert analysis. They couldn’t care less if it pisses the interviewee off.
Only the Fox News channel ever seems to pummel the interviewee but their agenda is so biased it renders the whole process useless to someone seeking a devil’s advocate position.
As I try to increase my knowledge of the stockmarket I find myself watching Bloomberg Television only to realize there’s just as much spin and obfuscation happeining right there: pundits painting a rosy picture no matter how bad the numbers look.
The MSM is way to soft in America. The only place where people have the balls to challenge conventional wisdom seems to be in blogs such as these.
One can only hope the media takes note of the blogs’ popularity and injects some truly thought provoking questioning in their coverage at some point.
How delicious the blog world exists….. in light of commercial/editorial control of the MSM… Critical thinking is rather helpful….but the best part is the effect blogs are having on the media…. A door closes…another opens. Frustrating to try to glean usable data from the MSM. Easier to recognize it for the echo chamber it is, and be grateful for experts like many of those found here.
” If they are so far off on RE, and the economy, how good is the rest of the news?”
That’s exactly what I mean. Fortunately for me I can see what’s going on in the housing market because I’m in the industry. What I have come to realize is that almost every interview I watch or read involves some “expert” who is doing nothing but paint the picture that serves his/her own cause. No tough questions from the interviewer…. they let the expert spout the crap and then the interview is over. I often find myself wishing the interview format was more like how it is handled in England where the interviewer is much less likely to let you off with nothing more than a spin bite. I love how they nail the interviewee down to qualify/quantify what they pass off as expert analysis. They couldn’t care less if it pisses the interviewee off.
Only the Fox News channel ever seems to pummel the interviewee but their agenda is so biased it renders the whole process useless to someone seeking a devil’s advocate position.
As I try to increase my knowledge of the stock market I find myself watching Bloomberg Television only to realize there’s just as much spin and obfuscation happeining right there: pundits painting a rosy picture no matter how bad the numbers look.
The MSM is way to soft in America. The only place where people have the balls to challenge conventional wisdom seems to be in blogs such as these.
One can only hope the media takes note of the blogs’ popularity and injects some truly thought provoking questioning in their coverage at some point.
I have very little time to watch TV, mostly because I read blogs. IMHO, blogs are the best source of information…you could spend a lifetime just learning about everything.
The MSM news is so obviously full of BS, it’s actually painful to watch. That being said, I watch CNBC and Bloomberg just to be up on what’s going on for the day. I take what the “experts” say with a grain of salt. Occasionally, I watch Fox News and CNN (LOVE Lou Dobbs!).
Here’s to blogs like Ben’s, keeping the populace educated when the schools and MSM aren’t willing to do it!!!
The endangered bed-and-breakfast is another bubble casualty. Get it here if you have online WSJ access:
http://online.wsj.com/public/page/leisure_weekend.html?mod=1_0051
“The Endangered B&B
In a side effect of the real-estate boom, scores of bed and breakfasts are closing as buyers make them private residences.”
Good for remodelers. They can turn the B&Bs into homes now, then come back in a few years and turn them back into “R&Bs” (room and boarding houses).
Suggest readers scanning this thread make sure to look at Larry Littlefield’s comments (timestamp 2006-08-11 04:17:47) on the options financial institutions might have in a “foreclosure glut”. Some good insights from a guy who has clearly talked to people who are looking ahead from an REO standpoint, and what it might mean in terms of forecasting a timeline for getting to a RE “bottom”, and how the a “disorderly exit” from RE might play out for banks in the meantime.
I wish this blog had a FAQ for compiling the real exceptional stuff that’s being posted here - it’s terrific that readership/comment volume is what it is, but I feel like I’m missing valuable info when I don’t have time to read or even scan every day.
‘Bubble sitting: The pros and cons
Waiting for home prices to drop before buying a home is tempting, but making the right call isn’t simple.
By Les Christie, CNNMoney.com staff writer
August 11 2006: 10:13 AM EDT
NEW YORK CNNMoney.com — Convinced home prices will fall? So are a lot of other Americans.
Some - known as bubble sitters - are acting on their conviction. They’re cashing out by selling their homes and renting, figuring they’ll return to the market after prices have fallen.
Bubble sitters also include those people who have never owned a home and are waiting to take the plunge, along with folks who are relocating and holding on to their cash until the market in their new hometown softens.
Many experts have labeled the majority of U.S. housing markets either overvalued or severely overvalued, but is it wise to count on prices falling?
Roulette or sound reasoning?
Bubble sitting has contributed to softening in housing markets, especially in new homes. Builders have reported slowing sales and they’re offering numerous incentives, rebates and discounts in order to move inventory. Just this week, builder Toll Brothers announced they expected sales to decline substantially for the year.
“With many potential buyers on the sidelines right now, we believe there is growing pent-up demand that will come into the market once buyer sentiment improves,” said CEO Robert Toll.
He does not, however, think bubble sitting works. “It’s very hard to pick a bottom,” he said.’
I am convinced prices *are* falling in San Diego, because even Realtor (TM) - friendly DataQuick is admitting it. And I guess Robert Toll believes tops are much easier to pick then bottoms, as he cashed out a fortune in stock shares just before Toll’s stock price started tanking in August 2005.
http://money.cnn.com/2006/08/11/real_estate/bubble_sitting/index.htm?cnn=yes
‘He’s playing a bit of roulette,” says Jim Gillespie, CEO of Coldwell Banker, who doesn’t think even that scenario justifies bubble sitting. “Look at the history of prices in this country. [Postwar prices] have never gone down.”‘
There is a first time for everything, and I believe this will be the first time postwar prices go down.
‘While that may be true on a national level, it’s also true that home prices in individual markets have fallen during periods after 1945.’
It’s also true that home prices in San Diego have fallen during the period since this time last year.
“My advice is don’t do it,” Gillespie said. “If the Feds stop raising rates, mortgages will start to go down and prices will recover.””
If the Feds stop raising rates, the bond market could anticipate a lack of resolve to fight inflation, resulting in runaway long-term interest rates and a need for Bernanke or his successor to crash the economy into a wall in order to prevent a total meltdown. It happened in 1980-1982, but I realize this time is different…
P.S. To the dumsh!ts at CNN.Money, it is the Fed (not the Feds)
“But if you already own a house you like and there’s no other reason for moving, stay put,” he says.
What your time horizon is: The value of bubble sitting also depends on how long you intend to live in a house. If you’re planning to be there for five years or more, it make sense to buy as soon as possible. Time smoothes out any price bumps - over long periods prices nearly always go up - and the tax advantages may help make it cheaper to buy than rent.”
Real estate always goes up in the long run, blah, blah, blah…
But so do stocks, right? What happened, then, from 1929 through 1945? Lots of folks learned what Keynes meant when he said, “In the long run, we are all dead,” as the protracted market downturn outlasted their staying power.
Something similar happened in the Japanese real estate market between 1990 and 2006 — a sixteen year period of bubble unraveling. So the question is not whether housing prices go up *eventually*, but soon enough for it to make sense for an owner (especially a new buyer) to endure a protracted period of falling prices. Dean Baker does not think so — he rents — but he is a pro; the rest of you sheep out there had better get with the program and buy now or get priced out forever!
“…in the long run we are all dead….a sixteen year period of unraveling..”
Quite literally!
16 years and the last of the baby boomers are retired or “dead”. The ones who rented and SAVED the extra median $800.00 a month(difference between median rent and mortgage) will retire o.k. The ones whose houses finally get up to the price that they paid will be wishing they had not thrown that money away.