Bits Bucket And Craigslist Finds For August 15, 2006
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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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hidden in the home depot report
Total sales in the Retail segment grew 5.1 percent to $22.6 billion, reflecting new stores and comparable store sales of -0.2 percent.
http://www.immobilienblasen.blogspot.com/
Good catch. We’ll see how Lowes and other building material stores and distributors do over the next few months as housing [flipping, remodelling, etc.] slows down….
see how we all do- who’s immune ?
They’ve been cannibalizing store sales as a strategy for several years (even when times were good). Almost every retailer knows to a few bucks how much business opening a new store will pull from other stores vs how much will come from new customers–that’s why they ask for your area code or zip code when you buy.
I really wonder what is going to happen when those who are not “at or over 55,” and screwing those who come after, get old. The idea some people had that stocks would pay for it all, and then the house would pay for it all, is obviously wrong. And most Americans (unlike the savers who post here) keep upsizing the lifestyle needed to make them happy.
I was preparing to write a post at http://www.r8ny.com, a politics/public policy blog, about how my generation and those after were screwed by the Social Security deal of 1983. Our payroll taxes have been higher and our retirement age was deferred, allegedly to “save social security,” but the money was spent rather than saved, offsetting lower income taxes and higher spending on health care.
Then I found something startling. Payroll taxes as a share of GDP were no higher in 2004 than in 1980, despite a huge increase in the rate! What a shock!
It must be because so much more of the money is going to those earning more than the Social Security limit, and so much more of national income is going to investment returns (and so much more of that is going overseas). If the wages of those earning less than the social security cutoff are falling behind inflation, and the promises to retirees rise with inflation, you can see how the former would fall behind the latter even without the tsunami of baby boom retirement.
What a mess. All this on top of the housing bubble, which allowed the old to sell to the young at inflated prices.
BTW, it was Maestro Greenspan who led the commission that put through the 1983 social security deal too. I believe he has concluded it was a bad deal, though he hasn’t come out and said so. But at least he worked until 75, like we’ll have to.
” If the wages of those earning less than the social security cutoff are falling behind inflation, and the promises to retirees rise with inflation, you can see how the former would fall behind the latter even without the tsunami of baby boom retirement.”
Actually social security benefits are indexed to wages not to inflation. One of Bush’s proposed cures was to index social security to CPI instead of wages, as over history wages have tended to advance a bit faster than inflation. This would have the effect of leaving social security at a 2005 living standard forever regardless of future productivity enhancements.
The Social Security problem is exaggerated by most in the press. Medicare and our health care system is a much bigger problem with costs spiraling out of control. We currently spend 15% of GDP on healthcare in the US (significantly more than any other country) and cover a smaller percentage of our population than any other industrialized country.
The big travesty of Social Security is that it is a pyramid scheme that the first people didn’t pay into. So we have $1 trillion NPV of payments that went to the first generation that we have to make up for. So how do we pay for this trillion dollar gift to our greatgrandparents, well we pass the buck along until finally the demographics won’t let it be passed any further. Then we use our regressive social security taxes that screw the middle class. We would be much better off to transfer a trillion dollars from the general US funds to the social security trust fund to allow corporations, capital gains, dividends, and high income earners to pay their fair share of the that most generous $1 tril gift.
You can find a lot of good information about both The housing bubble and the Social Security/ Medicare funding issues at http://www.cepr.net/
hillary and BIG GOV will get us PHREE health care soon
Ummm…. Bush isn’t exactly a fiscal conservative
one way to go http://lp.org
or join in the trough
one way to go http://lp.org
Or opt out and become a non voter.
That’s my choice. Haven’t voted in years. Could care less.
If you don’t vote you should at least hand in a blank ballot.
As a registered, activist Libertarian, I vote for every politician who is totally dedicated to minimum size and intrusion of government (Ron Paul). I harangue against all the others whenever I can. Ain’t much, but it is better than voting for a politician who “seems” to be the lesser of the evils — time and time and time again, that is proven to be a bad call, after the fact.
Unelect ‘Em All! We cannot be worse off, IMO. At least a new one has to waste some time in office before he can figure out how to screw me.
Interesting thing about SS. When you reach 65 you can now get a job and make all the income you want without loosing any SS monies, that’s what the gov says. But that’s a sweet deal for the gov because you are going to be paying SS tax on the monies earned. Net result is that you can increase your income anytime you want but that you locked in you SS pension (ahem, misnomer here) from future attacks by Congress.
“which allowed the old to sell to the young at inflated prices.”
Is that what is happening here? Both my parents and my in-laws bought their houses many many years ago, they paid them off and are planning to live in them until they die. I think the increase in prices is caused by flippers and “investers” of all ages, not just older people.
“which allowed the old to sell to the young at inflated prices.”
——————–
Additionally, NOBODY has to buy. There is no need to fund somebody’s retirement. Nobody puts a gun to anyone’s head. If a critical mass of buyers held off buying when prices were too high (and property taxes as well), prices would come down to reasonable levels. It’s more the buyers’ fault than the sellers’, IMHO. Of course, people are going to try to sell at market prices. It’s the buyers who determine what market prices are.
By the way … count on the interim solution to the Social Security pension problem being what is called “means-testing.” Since I don’t believe in government-sponsored social security or welfare at all, I can be objective about this part, since it deals with “Whom among the screwed are going to be screwed most?” Means-testing will look at assets and income and exclude from, or greatly reduce, pensions for those individuals who have what the current powers consider to be “enough.” This will happen very late in the game and will become part of the new paradigm. All you ever need to know about government you can understand if you just learn, thoroughly, the card game called, “Three Card Monte.”
Young people do not have to pay for the retirement benefits of the old. You do not owe old people anything. Social Security is not an insurance fund. It is revocable by an act of Congress. IMO, the young people should and will revolt and get rid of the liabilities which they have been saddled with. Wake up, young workers! And I’ll be happy to be in there fighting - and I’m 54.
Interesting that in the AARP magazine my wife and I recieve, there are often 10 to 15% discount coupons. Discriminatory or smart marketing? We don’t use them because we still have to save for our meager retirement. Got in the job market too late to get pensions, just like all of the generations who follow us.
We totally agree that there should be no cap to deductions on SS. Should be 7.75% for the employer and 7.75% for the employee, with NO CAP.
Might keep it viable? -
Definitely should not be a cap, IMHO.
MLS # 70415339 List Price: $646,800
822 Walnut Street
Newton, MA 02459
Looks like we are back to pre-2004 prices in Newton, MA.
The homeowner paid $646,800 for this house in April 2004.
Her dream of 20% annual appreciation has vanished.
Here is the complete price history. At this rate, we can expect to see $100 price reduction soon.
8-6-2005 779,000
11-19-2005 740,000
12-8-2005 735,000
1-14-2006 725,000
2-1-2006 710,000
4-25-2006 691,000
5-6-2006 685,000
5-26-2006 669,000
6-12-2006 662,000
6-30-2006 655,000
7-21-2006 652,000
8-9-2006 648,000
8-15-2006 646,800
Bid 299.
“Bid 299.”
That’s a bit rash — you must know the area well.
wow, I thought 2003 pricing would take till 2007
I know that area, very nice part of kerredyland
The hilarious thing is it probably would’ve sold in 24 hours if he had priced it at $700k last summer. But nooooo, he will accept nothing but absolute top dollar. Okay maybe a little less, or a little less, okay just a bit less… Next thing he’ll probably put in a new pool and deck, stainless steel appliances and raise the price $100k to see if that works. People like this can rot in their overpriced houses.
Then offer two first class tickets to whogivesashitland - and it STILL won’t sell.
Air, or rail?
Newton is a beautiful community with excellent schools, and very good public transportation for a suburb of Boston. I grew up there and it’s a nice city. It’s usually in the top 5 for school districts in Massachusetts. My parents paid about $30K for their house.
I don’t know how families afford to live there today. There are some real mansions in Newton along Chestnut Hill Avenue and there are very nice old houses in various parts of the city. So there is real and old wealth.
Not surprised to see that it’s a bubble place now.
I imagine that a lot of older folks have been taxed out of the area.
“Not surprised to see that it’s a bubble place now.”
The whole world is a bubble place now.
Newton is just part of the tremendous income stratification in the Boston area. There used to be at least somewhat of a mix of working class, middle class, professional class and wealthy in most communities. As a result of more factors than it is worth going over in a blog comment towns have become more homogenous, with disctinctly middle class towns, wealthy towns, and a few super-wealthy towns.
The different types of towns entered, and will leave bubble phases at different times. The wealthier towns bubble up sooner (>1,000,000 market flattened out in 2004), and started deflating over a year ago. Lower-middle class towns are just now showing the weaknesses.
“I don’t know how families afford to live there today. “
1. Both the husband and wife work.
2. Financing their 1950’s small colonial or ranch with a
suicide loan.
That’s something that seems to be less commented on, here. I’m reading a lot about the old screwing the young, retiring on a home sale that will be lifelong indebtebtedness for the GF - but it’s even more ironic. The fiscally healthy older folks are screwing the marginal seniors. (Except in California, where they get to screw the next generation twice, with Prop 13.)
Does anybody here under 50 think they are ever going to see a Social Security check?
I own an HP-67 which still works. This programmable scientific calculator still works and I keep it in my desk. The only other places that I’ve seen these is in museaums (the calculator is 30 years old). Someday, we’ll get to see Social Security checks in museums and be amazed that governments had enough money to actually pay them.
Sure, we’ll get a social security check — and we’ll be able to take it to the bank, cash it, and use the entire amount to buy a can of soda.
I am shocked at people’s lack of faith in the longetivity of the Social Security system!
i expect to get one 30 years from now. the only question is how much. my estimate is about half of the *value* promised today. one calculation i saw indicated that by just halving the promise amount (or value), SS should work fine with future generation not being burdened worse than us.
Personally, I am kind’a expecting a bill! Wonder if my attorney would let me sue the gov for fraud? Hell, they will have taken a ton of my money by that time?
I just have to talk about this one. My mom (a baby boomer) has spent her whole life squandering away every penney she’s ever earned on credit-card purchases for garden ornaments or whatever. Even owns a timeshare that she never uses and highly OVERPAID for. I’ve tried to give her advice on how to sell it or rent it out or whatever, but whenever I talk about anything fiscally responsible, she gets all mad because she thinks I’m trying to tell her that she can’t have “whatever she wants”.
Now, her home is worth about $600,000 more than what she paid for it, she stands to inherit enough social security money to keep her in heating and food until she dies, and her irresponsible spending habits will be my burden to bear.
It’s not that I want my mom to be poor or anything, but I am resentful that baby boomers (unlike most parents) actually believe that their own children should be expected to slave away for a pittance in order to keep their parents living lavishly.
Old people should be shown compassion, but the expectations are getting to be a litte unrealistic.
Big V — since you are, we presume, an honorable person, and since honoprable persons do not profit from those they denigrate, you are not counting on receiving any particular share of your mother’s $600,000 equity upon her passing, right?
I re-read Big V’s post and he didn’t denigrate his Mom - but he should have. And if even if he did and also did stand to gain something from her if he outlives her, it wouldn’t make him dishonorable. Enough of this required deference to the older generations, already.
When I was single, I rented in Newton for a bit. It was a great experience with lots of nice memories. I would have loved to settle there. Unfortunately I was in good company with that opinion.
OK, sorta-rant time for me. I see and hear a lot of discussion about “good” school districts. This, of course, refers to the government schools, because private schools can exist and be accessed pretty much anywhere. Why is it, the, that people (usually “liberals” in the current big-government sense) give a damn about the school districts when they all send their kids to private schools? I know, and am related to, people in hot-damn neighborhoods and McMansions who act like it matters, yet they and whomever buys their house after them will not send their kids to “those” schools. With bussing a part of most equations, what is with this? Sorta-rant off.
Another great example of stair stepping the market down. As mentioned if it was priced right in the first place we wouldn’t be talking about it. I would like to see an example of the opposite, stairstepping the market up with all the multiple bids that happened a year ago on properties. Either of these examples are completely irrational. “What a long strange trip it’s been”&
The homeowner paid $646,800 for this house in April 2004.
[...]
8-6-2005 779,000
[...]
8-15-2006 646,800
My theory is that people’s worst fear isn’t their house value dropping — it’s feeling stupid. And there is a definite price where they start feeling stupid, and that is the price they paid (or refi-ed or HELOC-ed at). Yes it hurts to lose equity, but what really REALLY hurts is the feeling that you screwed up.
Figure out the average price drop required for the average homeowner to be underwater, and you’ll have the point at which things will really start getting ugly. If I had to guess I’d say about a 25% drop in nationwide median. And from there it goes on to be at least a 50% drop, unless there’s massive bailing out by the feds, which will tank the dollar. So 50% drop in real terms, that’s my prediction and I’m sticking to it. Bottom hit 15 years from now, but bulk of drop within 5 years.
People will actually walk into foreclosure rather than feel stupid. There is a friend-of-a-friend doing this in San Diego. They could continue on their fixup plan, price aggressively, and get out. Instead they’ve given up and are headed towards BK.
That just hurts my head. They feel stupid selling at a loss, but not going BK? HuH?
This is just the asking price? The home hasn’t been sold yet has it?
Yes. Prices shown are the asking.
Time to call it by its real name: “Wishing Price”
LOL — coined, herein.
Where is Suzzzzzzann ?
i have been watching that house in newton for nearly a year as well i believe it is right across from a cemetary my husband and i wonder if that is somehow a deathkiss for the house Golf54 - any other thoughts about what you are seeing in newton? we are planning to buy there in a year i have seen huge declines in asking prices since i began monitoring the market about a year ago..
Linda,
Yes, you’re right. That house is on a busy road and right across the street from the cemetery.
A contractor slapped a lien on the property because the owner hasn’t pay for major repairs to the roof and attic.
I sold my house in Newton in late 2003 and is currently renting. I have been monitoring the Newton’s market closely since. I expect 1999 prices (40 to 50% off current levels) by late 2007/early 2008. Should have some real bargains by that time.
There is a lot of wealth in Newton as someone mentioned earlier but most of it is perceived wealth. Yeah, there is a Range Rover and Lexus in the driveway but I would not consider financing a modest house with a 1 mil mortgage wealthy. These folks are
no more than two missed paychecks away from financial ruins.
Houses that I have seen sold have been reduced down to around 1 mil from 1.25m to 1.3m. Substantial reductions but still overpriced at 1 mil. At least we are moving in the right direction. Still a lot of denial but I feel panic will set in soon because some of these houses have been on the market forever.
Golf54
thanks so much for the info i actually know a young family in newton who i suspect is in the pickle that you describe
they have good cash flow but have enormous debt to top it all off, they moved to newton for the schools, only to decide their school was overcrowded and now both kids will go to private school
im hoping that not everyone in newton is like this we were actually looking for awhile in wellesley but we were scared off by folks telling us how snobby it is is newton like this too? we can only afford newton because we are very very thrifty and i fear that my young child will grow up surrounded by massive, in-your-face wealth
any thoughts? thanks again!
Linda,
I agree about the schools in Newton. They are over crowded and overrated.
But my family and I like Newton because it’s so convenient to everything. It’s very hard to give that up. Newton can be snobby but definitely not as snobby as Wellesley because Newton is more diverse – both culturally and economically.
Real Estate Economist Leaves UCLA Forecast
Christopher Thornberg was one of the first to say that the housing market was peaking last year.
By Roger Vincent
Times Staff Writer
August 15, 2006
Bearish real estate economist Christopher Thornberg, who says the Southern California housing market is a bubble beginning to pop, has left UCLA Anderson Forecast to strike out on his own.
Thornberg, 38, will continue to teach economics at UCLA but will no longer be part of the quarterly Anderson Forecast on the economies of California and the nation.
“I wanted to start my own business and do things I wasn’t able to do before,” said Thornberg.
His new consulting firm, Los Angeles-based Beacon Economics, will prepare forecasts for regions he thinks are underserved, perhaps including San Diego, the Inland Empire, the Bay Area and Sacramento, Thornberg said. His partner at Beacon is San Francisco economist Jon D. Haveman of the Public Policy Institute of California.
Anderson Forecast Director Edward Leamer did not respond to requests for comment Monday.
Real estate forecasting “is becoming a surprisingly competitive field,” said economist Jack Kyser of the Los Angeles County Economic Development Corp., which does consulting work for developers. Other competitors include Cal State Long Beach, CB Richard Ellis and the Milken Institute.
Thornberg was one of the first economists to declare that the housing market was peaking. He did so in September, when the median home price in Los Angeles County was $494,000, and he said that there were “signs that the housing party is ending.” Since then, the county’s median price rose another 5%, hitting a record $520,000 last month. But year-over-year sales plunged 25%, the eighth consecutive monthly decline.
Other market observers now agree that the market is cooling but are uncertain about whether it will result in a “soft landing” that won’t disrupt the economy. Thornberg said his expectations are growing more gloomy.
“My guess is we’re going to have a hard landing,” he said. “It’s ugly out there.”
There has been large-scale overbuilding of homes and condominiums nationwide, he said. “And here in Southern California we have had this massive price appreciation that is just not justifiable by any kind of standards of reasonable economics,” he said.
Although home prices in most Southern California markets are still higher than they were a year ago, “there has been no appreciation for four or five months,” Thornberg said.
With interest rates rising in recent months and sales declining, “the bubble is popping, just like a bubble is supposed to,” he said.
In a soft landing, prices would level out and economic growth would be flat or slow while adjusting to the loss of jobs and spending in the construction, real estate and mortgage industries.
A hard landing could come if housing prices begin to fall, Thornberg said, in large part because that would scare consumers accustomed to watching their net worth rise on paper. Their spending pullback and a corresponding drop in construction could push the economy into recession.
USC forecaster Dolores Conway remains more optimistic even though the inventory of unsold houses is growing and sellers are making price concessions to close deals.
“There is still a strong demand for housing, especially in Southern California,” said Conway, director of the school’s Casden Real Estate Economics Forecasting Project. “Everything we see is consistent with a soft landing.”
Thornberg, whose departure was first reported on the website LA Observed, insists that the real estate market is dangerously puffed up.
“Look at what your house was valued at three years ago and what it is now. Is it really worth 70% more? The answer is no,” he said. “There is no way you can justify the math.”
he’s keeping that gov teacher job- striking out on his own my A_S
At least he seems qualified to teach economics to our impressionable young minds. Maybe he’ll save a few of them from doing something stupid during the next bubble.
flatff –
Maybe you ought to consider getting one of those gov teacher jobs. They are pretty easy to get, and require little by way of qualifications.
I’m not sure that the masses will understand your sarcasm from your understated prose.
Amen, GS! It’s funny how all these people are willing to put down the teaching profession, claiming that it’s too much money, too easy, etc. But if it’s so much easy money, why aren’t **they** doing it? Something doesn’t compute.
I’d guess most of these people wouldn’t last one month in a decent school, much less a Title I school. Total ignorance…
Uhhh… do you guys really want a nation without public education?
Higher education is one of the last great American exports.
I, for one, and perhaps alone here, want any education that is funded by taxpayers to be regulated entirely by local government, county-level preferably and state-level at the highest. I believe that the Carter-created Department of Education should be totally abolished, without a trace, and that the “No Child Left Behind” pap is an abomination that has resulted in even less than squat, witness the school district that cancelled a spelling bee because some dumb-ass kid might not make the cut and thereby risk disqualification for the federal $.
If State “A” has a hot-damn public education program and State “B” does not, then let the people choose where they want to live and have their children educated. As I posted above, the people who tell you what is best for you will have their own children in private schools because — well, you wouldn’t understand, but they know what’s best for you.
“My guess is we’re going to have a hard landing,” he said. “It’s ugly out there.”
Ahhh, so now that he’s leaving the Anderson Forecast he can begin telling the truth?
‘Thornberg said his expectations are growing more gloomy.
“My guess is we’re going to have a hard landing,” he said. “It’s ugly out there.”’
DId he have to leave for speaking too plainly?
I’d guess so. He’d been pretty forthright about the bubble until the last report– then apparently got reigned in.
Oh really? These are some comments of his made at various times this year:
“Given the current momentum in the general economy, the forecast for real estate is general cooling. Appreciation will slow to a mere 6% (nominal) by the end of this year and will be flat in 2007.”
“Prices people pay today will be about the same in 2011, maybe 2012,” Christopher Thornberg told an audience of about 130 people at the University of California San Diego Economics Roundtable held at the campus faculty club.
Thornberg said the housing boom has been propping up the state’s economy but its cooling is not triggering a recession. Even if construction jobs were to drop by 20 percent, he said, they represent 5 percent of the state’s employment base, and other sectors were generating jobs.
He said 2006 “is looking fine. But ‘07 is still a bit of a mystery.”
Thornberg’s comments yesterday were more optimistic than those he made last fall, when he worried that lost housing-related jobs statewide would not be replaced in other fields, perhaps leading to a recession.”
None of that sounds like hard landing talk to me.
Agreed. He originally spoke out hard against the bubble, but recent comments have been much softer. When the soft comments came out a few months ago, I was left wondering as were some on this blog.
I have to agree w/you … part of his (unstated) motivation for leaving was that he was being reigned in and, by leaving, can now speak his mind freely.
For the record, my last statement is based on my educated opinion.
Good Calculated Risk post here: http://calculatedrisk.blogspot.com/
He also thinks Thornberg was being reigned in and got fed up with it.
“Reigned in”- a polite way to say he’s been lying to keep his job?
Knew it all the time. Thornberg was a housing bear being forced to dance in a tutu as the music played. Problem with that is sometimes the trainer gets mauled. Will be interested in seeing what the new firm “discovers” for San Diego. Hmmmm, could it be that it’s not different this time and that not everyone wants to live here?
reined in not reigned in!
like a horse not a king.
How many clients are going to hire this guy for “guessing”. The UCLA and USC real estate schools are useless in helping anybody understand the economics of real estate. They missed the market on the way up, and they are way behind Ben’s Blog on the way down. And the government pays these clowns to do projections based on guesses.
They don’t deserve the attention this blog is giving them
“They missed the market on the way up, and they are way behind Ben’s Blog on the way down.”
What better way to acknowledge that Ben, his blog and blogging in general is the way of the future? Sometimes, when I read Ben’s blogs, I feel like I’ve picked up a bottle with a genie in it.
Actually Thornberg was early on (perhaps to early and it came back to bite him) saying that so. cal. was in a bubble. Many of us who followed his lectures were surprised when more recently he softened his stance implying that prices would stay flat long term. (Although some of us, especially me, felt that was not the true message being given - just depended which part of the lecture you focused on.)
Academia can be harsh when one goes around biting the hand that feeds it. Tenure be damned - if you don’t toe certain lines but instead go against majority opinion you will be punished. I suspect the new firm will be very successful and I wish Thornberg all the best as I have agreed with everything of his I have read/listened to.
I attended USC and there were some very knowledgeable R.E. professors there. Many of them have done well in R.E. investing. But I guess when the school gets funds from R.E. industry, they have been bought and paid for, so they will say anything to keep the donations coming in…
I am disgusted that someone from my alma mater ‘SC is so far up the *ss of the R.E. industry that she is actually “optimistic” with the housing market…
CNN Video: Condos Come with Extras
http://www.cnn.com/video/partners/clickability/index.html?url=/video/business/2006/08/14/preheim.co.buy.my.condo.kusa
This news video is about a couple whose condo has been on the market for over a year with no offers. They are offering a pair of round-trip airline tickets to the buyer of their condo. They might also throw in a $1,000 bottle of wine.
They also interview a realtor who says his clients are using all sorts of unique and creative gimmicks to draw attention to their properties. He has seen offers of a Vespa scooter, a month of massages, and a personal chef.
Why don’t these people just lower the price?!?!?! This stuff drives me crazy. Nobody wants your stupid $1,000 bottle of wine. If I want a Vespa scooter I’ll go buy one myself. The realtors need to stop their sellers from using these gimmicks and start lowering the price - that will get the attention of buyers like nothing else.
Lowering the price can’t be done, house prices never go down. Regardless if their value is not going up.
I still haven’t understood the gimmicky incentives… ok, from a fradulent transaction point of view, if I were a flipper, I might need my fix of cash back or no-HOA and taxes for a year… but anything else makes no sense from an actual buyer - as stated above, if I don’t overpay, I can just buy my own - the odds someone actually wants a Vespa Scooter or a $1000 bottle of wine must be tres slim… I can just barely appreciate $30 ones
Maybe they should instead give out 100 bottles of $10 wine… during the open house, only rule is you gotta drink them there…. 3 bottle minimum…. then sign some papers…
Yeah!
I think someone can make a case for price-fixing fraud when “gifts” are given for the purchase of a house. Obviously, if the house sold for less money, then neighboring houses would be “worth” less money, because of the way valuations are established via “comps.”
Developers sometimes do this to avoid being sued. If you just bought a $550K KB sh*tbox, and “phase 2″ of your gated CC&R/HOA-hell homes sell for $500K, you’re going to SUE! (It’s happened to developers already.)
This video is very telling.
The condo sellers didn’t explicit say why they “wanted out”, but
I think its safe to assume the sellers discovered that their carry
costs (PITI, Homeowners, etc) are too high.
Yet we see $1000 wine bottle, big screen TV, gold bathroom
fixtures.
Explains a lot about some peoples priorities.
At least give ‘em something good. Have seen a Jaguar and a BMW offered in Phoenix. Get with the program, people. Make it worth my while to over pay for your POS house.
Or Barbara Corcoran(real estate guru) recently on ABC, to paraphrase, “It is a mistake to reduce the price…have the smell of freshly baked cookies wafting through the air when the buyers come to look.”
Quote from Jim Cramer re option arms:
“Homeowners who chose these mortgages have been very shrewd,…
That’s why I do the opposite of what he does.
He has a speech impediment and pronounces “sc” like “sh”, even when he’s writing.
EXCal I jsut now got it. The truth is always very funny.
I wonder if he has one.
I read that. He’s a moron. But some of us make very good money fading him.
He is a moron. The only metals stock that is down in my portfolio is one I took from him off the tube. Fool me once….
RE: Baby Boomers:
It is annoying that we do not address the social security issue now, rather letting the boomers off the hook during their peak earning years only to have the rest of us pick up the bill (higher tax rates) for the term while they are in retirement. They have not saved jack, and the are expecting to live off of their Social security and home equity….another debt to be passed down. What an irresponsible generation!
Gimme a break. Every generation that followed WWII has behaved unfrugally.
The only way out of the SS/Medicare mess is going to be by taking the bull by it’s fiscal horns. Finger pointing and name-calling politicians are just going to cause a distraction from getting the thing solved.
godot;….What an irresponsible generation! You talking about me ?? Got my first payroll job when I was 9…You were probably still peeing your pants @ 9…Got my social security card when I was 15…That was 40 years ago Pal….
I’m sure the baby boomers have a few responsible souls in the lot. However as people look back at the baby boomers all they see are a bunch of dirty hippies burning their draft cards, mainstreaming drug addiction, and getting a divorce socially acceptable. Other than that Baby Boomers are great.
Oh I got my social security card a few months after I was born and what child labor laws was your employer breaking when hje hired you at nine. I had a paper route at 11.
Godot is right. Each dirty hippie will get $1.00 for every .30 contributed. Each generation after the dirty hippies will get $1.00 for every $3.00 contributed.
i had 2 paper routes at 10 so there
At 11, i launched a successful hostile takeover on the paper route on the other side of SR 413. i enjoyed monopoly pricing power - delivering the fresh, dry papers to the good tippers, and the torn crap to the cheap bastards. i hoarded the cash, and raided the existing pension fund that I acquired as part of the acquisition (eat your heart out Grekko).
I was just ready to take the paper route public when the “oil crisis” and stagflation of the 70s took its toll on public offerings. Strategy aborted. In my testimony in front of the House Ways and Means committee, i took the fifth when asked why i took the coupons out and sold them at 50 cents on the dollar to the dotes at the bust stop. My contract with the Bulletin was terminated shortly thereafter, and in an unbelievable turn of fate, the Phila. Bulletin collapsed - mainly due to my hardships as a delivery boy.
I briefly entertained (at the age of 12) buying the entire newspaper operation, but was told by my dad that delivering left-wing commie propoganda was no way to make an honest living. I went on to become a banker.
dd
dd
Funny stuff, that has to be the funniest thing I have read since posting here
DD — great stuff — funny.
David;….labor laws was your employer breaking when hje hired you at nine.
CIRCA 1959 ….No labor laws in place Pal…It was fend for yourself if you wanted spending money for bubble gum cards or what ever…I am quite sure much different than what you experienced at the same age evident by your little childish rant….
So no child labor laws in 1959. Are you sure you were not working in China. Yesterday was the 70th anniversary of Social Security, so you and your child slave labor employer were both commiting payroll fraud because you did not even have a social security number until age 15. You must have been an undocumeted and working in the fields. Honest Work, I won’t hold it against you.
So there were no child labor laws in 1959. Are you sure about that.
Yesterday was the 70th anniversary of social security so that means you and your chid slave labor employer were both committing payroll fraud, because you did not have a social security number until age 15. No wonder the dang thing is under funded. You should cut a check to the social security trust fund today. Al Gore can put in his lock box.
We all heard you the first time.
This boomer had 3 summer jobs to pay for my college tuition. Not too many do that anymore. (Mommie and Daddie added nothing and called me a snob to boot!) I bought my first car without help….bought my own school clothes at 15 as soon as I started working. Did my own laundry at 15 too. I held a job at college and still made Presidents list. I got those grades on my own…no papers purchased on the internet or edited by mommie and daddy! Moved out and paid rent IMMEDIATELY after graduating…didn’t hang at home for 3-5 years w/o rent.
As for making fun of the hippies (born too late for that myself) I suppose you’re in denial on the body piercing and tatoo thing. Wait till your generation starts getting flamed for that.
As for boomers making money off their long held homes, I find it difficult to believe that any of the younger crowd would do it any differently if given the same options. Most people’s attitudes are simply a function of their environment. Nothing new under the sun.
When ever I hear people whining I always wonder what options they have that they’re not even considering while all their energy goes into blaming others.
Upstater;
Good response. No tatoos or piercings here; and I’m solidly an X-er. Periodically there are those that break the mold of a Generation’s stereotypes
“Whining leads to self-loathing. Self-loathing leads to apathy. Apathy leads to laziness.”
John Doe, 2006
If you’re 55, that means you were born in 1951. You were 9 in 1960. In that year, it was already illegal to have a 9-year-old on the payroll. Was your “job” as a farm helper for your parents? Sorry, but helping to dig up potatoes in the family garden isn’t really a job. It’s a chore.
I had my first job at 15. Legal age. Parents never paid for scit (see “Cramer” joke, above). They kept the money while I labored for college, car, and apartment. But they’re still in debt and live like kings, while I’m debt-free and live like a blue-collar worker.
Like I said above, it’s not that I want them to suffer. I think they should live comfortable lives, but their expectations are ridiculous.
My SS card at 14. Fuller Brush.
update on home depot
they expect flat to negative same store sales for the secound half and they will start again wtih monthly sales figures. the have suspendet this in the last few month
http://www.immobilienblasen.blogspot.com/
(It is annoying that we do not address the social security issue now, rather letting the boomers off the hook during their peak earning years only to have the rest of us pick up the bill (higher tax rates) for the term while they are in retirement.)
Agreed.
The second half of the baby boom — those who came of age in the 1970s, who no one thinks about, are on the wrong end of the deal too. The “silent generation” of the 1950s and the 1960s generation got the best deal.
Lately, I’ve begun to worry that my kids will end up with an even worse deal than I have. They’ll be at the back end of the baby boom echo. There educational situation has already been worse than that of those who came before.
Getting back on topic, with this problem on the horizon, how can people be extracting home equity through HELOCs and spending it? I can only think that people have concluded we’re all screwed anyway, and those who save will be taxed to provide something to those who spend, so they might as well party now. Except that most people are not that sophisticated.
I think that we’ll either end up with a Democratic “screw the savers” solution — means testing Social Security to reward those who spent when young and will then be poor — or a Republican “screw the female workers scenario,” in which one one worker in a two worker family collects.
I’m one of the last of the BB generation, my hubby is too. We will have paid the most you can pay to social security when we retire (we max out every year) but we don’t expect to ever see a penny of benefits. We have always been screwed coming behind such a large generation who always got there before us and drove up the prices of everthing without our ever really being able to keep up. It’s not anybodies fault. Just bad luck to have been born when we were.
Larry L - where’d that “screw the female worker” idea come from? I don’t think the Repubs have ever floated such.
I’d think enforcement would be a bear. Couples would divorce and shack up, just as they do now to preserve assets when one faces overwhelming medical bills. Biggest winners? Gay couples (outside Massachusetts, anyways). That’ll show those god-defying, uh, ooops!
Most women workers actually get less in social security than do women who are married and have never worked.
> women who are married and have never worked
Never worked outside home, but some raised children and that is work, too. Who would otherwise pay for you when you are old and needy?
Thank you, Peter!
Oh brother! I quite my job in 1996 to stay home and take care of the kids, I am a homeschooling mom. I am one of those moms that doesn’t work. I think you know what I meant when I said work and don’t work. I meant work outside the home.
Take all of that, now add in Peak Oil === bear market for 40 years.
Foreigners Sold Stocks in June
By Tony Crescenzi
RealMoney.com Contributor
8/15/2006 9:47 AM EDT
URL: http://www.thestreet.com/p/rmoney/tcrescenziblog/10303732.html
Foreign investors bought $75.1 billion of U.S. securities in June, $10.1 billion more than expected. Here are a few highlights:
Japan continued to be a net seller of Treasuries in June, selling $2.6 billion worth. Japan has been a net seller since August 2004, reducing its holdings to $635 billion from the August 2004 peak of $699 billion. Japan continues to diversify its assets after a massive buildup of Treasuries from 2002 to 2004. During that period, Japan’s holdings of Treasuries more than doubled from $300 billion to the $699 billion peak.
Foreign investors on the whole bought $27 billion of U.S. Treasuries, the most since last November. The purchases occurred when rates hit their high for the year, suggesting that foreign investors might be willing buyers on weakness, providing a safety net for the bond market. Foreign investors still own about half of Treasuries, so such signals are important.
Foreign investors were net sellers of U.S. corporate equities for the first time since September 2004.
Net purchases of corporate bonds were again robust, at $38.7 billion. Hearty purchases such as these have been common for about two years, indicating confidence abroad in the cash flow outlook for U.S.
Foreign investors on the whole bought $27 billion of U.S. Treasuries
Thanks for the info, tx.
Does anyone have a link for a graph: net foreign treasury purchases vs. time?
TxChick — it’s late — no comprendo — title is, “Foreigners Sold Stocks in June” (clearly this implies “net”);
but lead-in is “Foreign investors bought $75.1 billion of U.S. securities in June, $10.1 billion more than expected.”
??? Which is true, or am I missing something obvious or otherwise?
Today’s WSJ has an article which illustrates another way the conundrum has led to lapses of good judgment in risk assessments. The article offers a truly astonishing answer to the question, “What is the average time from when an option ARM loan is made until it goes into foreclosure?”
————————————————————————————————–
From p. A2 of today’s WSJ:
Option ARMs Remain Popular In Spite of Risks
by Ruth Simon
Despite concerns from regulators, lenders continued to issue large numbers of so-called option ARMs during the first five months of the year, new data show.
…
Many borrowers have been attracted to these loans because of their low introductory rates, which have run as little as 1%. But borrowers who elect to make the minimum payment can be hit with a rising loan balance. They can also face “payment shock” down the road, when their monthly pament resets. Roughly 75% of borrowers with option ARMs are currently electing to make the minimum payment, according to UBS AG.
Option ARMs accounted for 12.3% of mortgage originations through May, up from 8.4% in all of 2005, according to a new study by LoanPerformance, a unit of First American Corp. The study looked at loans sold to investors that buy mortgage-backed securities. (The data exclude loans sold to Fannie Mae and Freddie Mac…).
The loans’ popularity comes as rising interest rates are making them less attractive.
…
“It’s hard to know why anybody would want [an option ARM] in the current rate environment,” says Keith Gumbinger, a mortgage analyst with HSH Associates. Yet borrowers seeking to lower their monthly payments have few other choices. Given the narrow difference between short- and long-term interest rates, Mr. Gumbinger says, “there are very few products that … provide payment relief.”
There already are signs that some borrowers who took out option ARMs are running into trouble. Foreclosure rates fro option ARMs “are rising fast,” although they are coming off very low levels, according to a report issued last month by Credit Suisse Group. Option ARMs are going into foreclosure an average of 10 months after the loan is made, earlier than for other types of loans, and that is “a cause of concern,” the report said.
10 months??!!
Loan-to-own lending on a massive scale, I guess.
We must have a whole slew of smartass MBAs behind such a gargantuan screw-up.
I have never worked with a smart MBA.
Ass, however…
Somebody please send this to that MSNBC idiot Jim Cramer.
Why would an entertainer like Cramer care about this?
This was sent in by another blogger:
Panic Over Option ARMS Is Just Noise
By Jim CramerRealMoney.com Columnist8/15/2006 9:10
Everyone who uses a Option ARM is an idiot and will lose his house when rates go higher. There. There’s a constant theme in the drumbeat of the press that the housing market is the Achilles heel of the economy.
What a joke. OK, so 12% of borrowers have taken out these unique loans that allow you to call your own shots, up from 8% a year ago. You get to have a teaser low rate that is much below what you would have without it. (in den hotspot sind zum teil 70% der kredite arms und negarm)
The implication of the media is that people are buying these homes to flip them, and when the value doesn’t go higher they will freak out and become casualties of the new higher rates and will have to default on their houses, leading to a continued glut of homes. (passiert gerade)
Sorry, that’s just stupid. I am sure some of the borrowers are speculative, but you know what? Funny thing. The borrowers are not morons. They can read the papers, too. They recognize that homes aren’t selling. (zu spät. in 2005 sind 40% an investoren gegangen. das jetzt keiner mehr spekuliert ist klar.das war aber auch nach dem nasdagbust der fall. toller typ…….)
I would bet that most of these borrowers are simply younger people with new jobs who are correctly taking advantage of a low rate. People who have taken this rate have been very right. The long end hasn’t gone up. It seems like it won’t go up now. So while they build up some savings with the low rate, they get stronger down the road and then can take the higher rate.
The media call it dangerous. I call it prudence. !
Is the $US a better bet these days in times of geopolitical unrest than the traditional safe haven currency?
http://tinyurl.com/hwsz4
The answer lies with a point I made yesterday about how the conundrum is driving yield chasers to gamble on unsustainable spreads. The low yield on Swiss francs represents an implicit safe-haven insurance premium, but the bulls on Marketwatch.com probably are not familiar with this concept.
‘BBH’s Chandler, agreed, saying that the low interest rates in Switzerland have prompted many speculators to use the franc as an alternative to the yen as a funding currency in carry trades–in which investors make profits by borrowing low-yielders and reinvesting in higher-yielding currencies and assets.
With the Swiss franc currently offering only 1.5%, while currencies such as the pound and the Australian dollar offer much higher yields, “the Swiss franc becomes a currency more likely sold against the higher-rate currencies just to earn the interest rate differential,” Ward said.’
Hi GS,
“The breakdown of the strong relationship between the Swissie and gold also contributed to the currency’s recent weakness, said Schlossberg. At one time, the franc was 40% backed by gold, but the Swiss government sold the nation’s hefty gold reserve in 2005 and returned the funds to the country’s cantons, he said. ”
Looks to me to be just another Fiat currency tied to the Euro. Which means it has only 15% gold reserves to cover its Euro holdings - a long way from 40% coverage.
By request, here are a few bumper stickers to put on your car and make fun of Escalades in traffic. Remind them that they’ve been homepwned!!!!
You’ve been homepwned n00b!!!
ur homepwned lol n00b!!!
Looks like I get a buck a sticker, so I can contribute to Ben’s blog fund. It would be great if bubble stickers catch on.. I’d love to see the looks on “investor” faces if they saw one at every stoplight. I would have put Ben’s blog address on it, but I didn’t since they’re not “official” or authorized.
Anyway, enjoy. Under $5 shipped, plus tax in KY and CA.
Fully understandble to those who speak AOL gibberish and are under 13
L33T!
..and the “leetness” of the leet language itself has become a point of ridicule and humor (as have specuvestors), thus the bumper stickers. It’s a joke, enjoy it! suxx0r!!!11
Apparently, for the first time in my adult life, I am now functionally illiterate.
I had to do this myself:
go to Urban Dictionary,
Look up “pwned”
and then “n00b”.
Haha
Sounds like a lot of effort just to learn a language that will only last for about another 6 months. Won’t somebody just pony up and give the answer?
Sorry, my correction to the first message didn’t make it through. Here are teh correct addresses:
you’ve been homepwned n00b!!!
ur homepwned lol n00b!!!
Man! I can’t get a comment through to correct the bad addresses. Let me try again. Sorry if this is a duplicate:
you’ve been homepwned n00b!!!
ur homepwned lol n00b!!!
If there’s anything worse than an NAR truthmaker, it’s some hustler showing up in here trying to make a fast buck off a lame bumper-sticker. Beat it, loser.
Not a bad conclusion; However, consider:
a) I’m a 12-month lurker and have a few posts recently
b) In yesterday’s bit bucket thread, I made an offhand comment about “homepwned” bumper stickers (homepwned was coined by someone else way back, I believe) and someone said to make one up and they’d buy it
c) If by some miracle 25 people buy bumper stickers, I get a $25 check and intend to chip in to Ben’s blog fund. If less than 25, I get jack squat and it was just a fun late night project. Relax, I didn’t mean to cause controversy.
Maybe some late-night comments are better to just chuckle at and leave alone.
But please, please, take back that comment about me being worse than Watts!
What the hell does that mean?
On this point, alone, I think Big V and I agree — if a bumper sticker is truly meant to generate revenue for Ben, it should be understandable by the people who are most likely to contribute.
While “Ben Jones for President” is lame, it sends a message that is instantly recognizable to anyone who has read this blog more than once or twice.
“Know your market” is never bad advice.
While “Ben Jones for President” is lame…
——————-
Now I’m really offended, Chip. That was my **lame** idea.
Obviously kidding, Chip. I admit to being entirely un-”urban” and very solidly lame.
when people look back they are going to see 3 things.
1. why didn’t someone see homes being so unaffordable as being a problem?
2. how did companies lower lending standards so much and who was the fool that took out those loans?
3. how did people actually think homes only went up and if you don’t buy now you’ll be priced out forever?
UK prices up in july ? = wierd
Off topic :
I have been following this blog since 2004. There has been a noticable change in tone, possibly coincident with the market. Ben, care to comment?
I see the same economic insight, repeated quite consistently. However, it is the attitude of the response that has changed. It used to be random posters would reply with, “gee, I hope your right. I am 3X years old and have a family and I can’t imagine renting my whole life, etc. etc.” I don’t see that so much anymore, we seem to be much more confident on our outlook.
It’s as if the beginning shift in the market has assured us that our prophecy will come true. At what point does our agreement that we are headed downwards signal a state of the market? Does anyone else recognize the tone change that has occured on this blog, or am I out in left field somewhere?
Well, there’s certainly more smugness and schadenfreude in the comments these days, is that what you mean?
I really hadn’t noticed any schadenfreude, and think that making fun of the poor, duped victims of the housing bubble is distasteful, personally.
LMAO, Sammy!
Haven’t been around long enough to notice a tone change but I have been thinking that now that things are going as predicted we better start looking for signs that we may be wrong instead of patting ourselves on the back.
Nah. I love being right, and some daily smugness and back-patting is just the ticket….
Yes!
Most definitely a change in tone since the beginning. No doubt about it.
Agree with Waaahooo. We need to keep our confidence in check (and I have a very difficult time doing this). We might be wrong. NOT wrong about there being a credit/housing bubble, but that some entity might prove us wrong (hyperinflation/currency debasement, etc.). We have to be vigillant, and not get too confident until the predicted bottom has been reached.
no.
‘I have been following this blog since 2004.’
That would be pretty incredible since I didn’t even tell anyone about this blog until early 2005.
Waiting — if you followed this blog since 2004, you must have been among the very first to do so. I began following it in March of 2005 and it was very young then.
Yes, the tone has changed, from tentative to “it’s here, it’s now,” but I don’t think that should be a bit surprising. Collectively, led by Ben, we were right all along and now our focus narrows to specifics, as is the natural course of analysis and debate.
To my knowledge, there is only one difference between this blog and other housing-bubble blogs and all the MSM articles written to date:
Ben Jones created it, moderated it, kept the trolls out of it and made it what it is today. All at a cost, by my estimation, of his entire personal life for the past year and a half. His regulars have hoped that he’s been compensated reasonably by donations along the way.
I believe Ben has earned a place in online history that even he may not yet fully comprehend. In earlier times, the statues usually were erected after the hero croaked, but Ben’s time in the sun will be while he’s still around, and not too long in coming. He was right, and he was firstest with the mostest.
Builder has started to reduce price in Orange County. Here is from William Lyon Homes ….
“The price for this month’s featured home at Garland Park at Woodbury has been reduced to $573,990 for August. Now it comes with all the upgrades below for less. Now that’s added value!”
This subdivision is in Irvine … and was one of the “hottest” RE markets in the nation.
Was attacked again today for trying to help a co-worker save money. This co-worker has been house shopping for about a year and half or so. She’s made 2 offers on homes - first deal fell thru due to high radon levels, second deal fell thru due to a “bad feeling” she was having dealing with the FSBO process. On the second deal, she told me she had really lowballed her offer. I come to find out they owners were asking somewhere around $325K and she offered around $322 or something like that. She considered that lowballing.
So today she announces she’s making another offer on a FSBO home. The woman who owns the home is 75 years old and has just bought another house. She’s had NO offers on her current home. It’s listed at $337K. My co-worker is “REALLY going to lowball” (her words) this time at $320K. I suggested she start at $280K and work up from there if need be.
The entire lunchroom table just blasted me saying things like, “that area is WORTH it!” or “she doesn’t want to insult the seller!” I’m like, “I don’t think offering between 80-85% of asking price is exactly insulting. I think it’s a fair starting point for negotiating. Worst case is the seller can say no and counter or she (co-worker) can make another offer.” Someone at the table said, “Well if she offends the sellers that much, they might not accept another offer from her!” I’m like, “Are you kidding me? She’s not offering 50%. The woman has already bought another house and no one’s made an offer on her current one. Why is everyone so concerned about hurting feelings?!”
And, as always, I had to just drop the subject.
If anyone is wondering why prices/comps are staying high . . it’s because of people like this. And this is why I continue to wonder how things will ever change. I’m beginning to think that the only people who are staying out of the market are the ones who blog on this site.
Your co-workers are idiots. When the bubble has clearly popped for even the most brain-dead, then they’ll tell you all about it, having forgotten that you ever said anything before.
I have already had that happen. I have been “warned” by people I had warned years ago. Granted, I thought the bubble would burst in late 2003 so I don’t blame them at all.
eastcoaster:
I have had a few personal experiences similar to yours to
the extent one such event resulted in a permanently
damaged friendship.
It is group think and mob psychology at its worst.
In our culture, the social pressure to conform is enormous.
The way I now handle such situations is to say ” I have a really
strong opinion of why you shouldn’t (fill in the blank) but noone
listens to me anyway so I am going to keep my mouth shut.”
What I have discovered is that more often that not a member
of the group will approach you privately. In public, they are
too scared to voice a dissenting opinion.
Social pressure whould make a great “Dr. Phil” show, I think.
Octal — yours is a very smart approach to the matter, IMO.
Giving any advice is a lose-lose proposition. Wait till the house loses 20% in value, and she is mad at you for letting her buy the place. Trust me, she will never remember any suggestion you made today, because she is all pumped up from her fellow coworkers. I don’t even tell anybody what i think of real estate anymore, and I have 30 years of success.
Why do people fear an agressive lowball?
There are no other buyers out there right now. Is it some sort of decency or politeness thing that’s holding peole back? I’ve seen it happen twice.
Despite being advised by muliple people to go with 25% below asking, friends have offered 10% below asking and the offer is accepted right away. It’s sad.
First Rule: If your first offer is accepted, you offered to much!
You have to pay for the mortgage out of you future earnings for christ sake. Only a fool dosen’t try to get the best deal possible.
“Insulting the owner” is a BS ploy by agents to get a higher offer and increase the likelyhood of a quick sale.
why give advice - “friends” and co-workers are the best source of REO’s (you find out first and you can buy from their bank directly). You also know how much they make, how deep into debt they are, and how much you can lowball the offer… Who needs Foreclosure.com?
Homebuilder confidence “plunges” in August
http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=mktw&guid=%7BC63296BD%2D60D8%2D44B9%2DAFEC%2DE60DE1D70D47%7D&
Barbara Corcoran offers six tips in “How to Sell Your Home in 5 Days”, and ABC’s Good Morning America prints it without questioning.
Step 1 is outright fraud:
1) Remove your listing for five days.
Touch up your ad. When your property is listed again, it will appear new to the market.
Step 3 is highly wishful thinking:
3) Offer a “One Day Only” sale.
Of course, this assumes that there are bidders. The days of bidding wars are over.
That whole article is garbage. I would be real surprised if that lady even owns a productive real estate company. Some of her advice was just downright horrible for todays market. Especially that sealed bid crap. Her whole article was based on the fact that properties are moving like they were last year. Properties are not moving like that anymore. Different strategies need to be applied. In this market it’s going to take more than 8 showing because buyers have too many choices. 15 would probably be a bare minium.
After reading that and watching that CNN clip about the condo sellers I’m beginning to wonder if the press does any due dilligence when they start interviewing Realtors. I mean do they even bother to ask if that person has sold anything in the last 6 mo’s or what their volume numbers are for the year. It seems like they just pull up a van pull out a camera and interview the first person sitting at a desk, incredible…
How about these suggestions (listed under her #4):
“Prepay house taxes for two years
Prepay the mortgage for two years (not just the home warranty)
Offer to pay for closing costs
Offer broker commission bonus”
—————————
Prepay the mortgage for two years????? Why not just lower the price? That’s what you’re doing anyway.
MIS, Barbara Corcoran is one of the BIGGEST brokers in NY.
http://www.corcoran.com/
**Very** successful woman.
“Barbara Corcoran is one of the BIGGEST brokers in NY”
I really find that hard to believe after reading that article. But I’ll take your word for it. It must be really different up there.
Corcoran is actually one of the most successful brokers in NYC. They got me top dollar in the last days of the up market here - but I paid full 6% commission to get it. I’m happy with that deal, however they have taken a new turn recently to slick “lifestyle” ads that crack me up - they have pictures of “Hot” looking people that they want you to believe will be your new neighbors if you pay millions for a NYC condo or co-op. Hilarious. If sheople buy into that crap then they deserve to be shorn.
Broke-back yield curve:
http://www.bloomberg.com/markets/rates/index.html
What’s up? The market smells recession over the next five years and inflation over the next 30.
Check out the drop off in the UK yield curve:
http://www.bloomberg.com/markets/rates/uk.html
As a priced out renter in Northern CA, I was wondering if there are any sites on the internet that discuss the pros and cons of living in certain communities around the country. It would be really great to get first hand knowledge from current or former residents of specific communities as I search for a place to escape to.
It is easy to get basic demographic data, housing prices, rents for most areas - but what about the intangibles?
Any ideas?
I think the problem with the intangibles is we are all comfortable with different things. What’s acceptable and even enjoyable for some may not be for others. So unless it’s a friend I know I share similar attitudes with I take most opinions with a grain of salt.
Upstater is right — what are your “intangibles?” Mine might be being able to shoot squirrels in my back yard without Leviathan or neighbors getting me into trouble.
(Disclaimer: I have a soon-to-be-published cookbook in the works — “San Francisco Squirrel — How Many Ways Can I Love Thee?”
Upstater is right — what are your “intangibles?” Mine might be being able to shoot squirrels in my back yard without Leviathan or neighbors getting me into trouble.
(Disclaimer: I have a soon-to-be-published cookbook in the works — “San Francisco Squirrel — How Many Ways Can I Love Thee?”]
We are having a soft landing here in Bend, OR (the fifth most overpriced area in the country). Unfortunately the runway is only 500ft long.
(Larry L - where’d that “screw the female worker” idea come from? I don’t think the Repubs have ever floated such.)
No, they haven’t thought of it yet. They will when the music stops.
(I’d think enforcement would be a bear. Couples would divorce and shack up, just as they do now to preserve assets when one faces overwhelming medical bills.)
Hey, I didnt’ say these were good ideas (needless to say I don’t like the Democratic “screw the savers” solution which they haven’t though of either, but will). They are terrible ideas. But if things go on as they are, they will be the least damaging political solutions.
Enter 1982 in the first box END YEAR in the second box and press Submit:
http://www.sddt.com/Finance/EconomicIndicators.cfm
I think I can spot a trend here….
Yeah, it’s been batted around that the California real estate market cycles in a 10-year trend. Sometimes I wonder why all of us spend so much time on this blog reiterating what’s already widely known, but I guess it just helps to see the same conclusion represented by different forms of data.
Your chart was a good one. Maybe it will actually help to convince one of your friends not to lose all their money in OB real estate ;>|
You weren’t that far off, Kipper. Anyone who bought in 2004 or later will not be making the profit they hoped for, and some may end up losing $$ when compared to the alternative of having waited things out. Those who purchased neg-AM loans in 2004, and want to sell now at the top, have probably spent more money in interest than they will make on the sale, even after subtracting the $$ they would have paid in rent.
Next time you want to save your coworkers some money, fight the urge and come blog here. That’s what I’ve been doing all day. Works for me, and I save my own money instead of theirs!
I gave up trying to give advice to people at the end of 2003, when the market should have really stalled (as based on the normal R.E. life cycle, but was kept articificially alive with “exotic” financing). Now I am just watching idiots that made fun of me and my wife for driving a used car (not a new Escalade, etc) and for not buying a new home and “just renting”. They said ” dont tell us how to invest - you have no money”, even though I currently make more than just about all of them. I know of three families right now trying to give back multiple properties and who had their cars repo’d. But they were the “smart ones”.
I think what threw me off was the massive use of inerest only loans. I overestimated the ability of the average person to see how dangerous those loans are. Had they not been available to Joe sixpack - I do think the end of 2003 would have been the end.
The link shows the volume of Trustee Deeds (issued?) annually from 1982 to the present. As I understand the Trust Deeds are used in foreclosure and therefore are indicative of foreclosure activity. A big “woodie” has popped up over the last six months.
Apologies if this is a double post.
This is suppose to fall in the Comment above by OB_Tom time stamped 2006-08-15 12:29:44.
The trustee deeds are supposed to be the best measure of how bad RE looks. It’s the end of the road for FB’s. Not all foreclosures end in trustee deeds.
It’s intereesting how steep the rise is this time (”it’s different this time”).
This is suppose to fall in the Comment above by OB_Tom time stamped 2006-08-15 12:29:44.
News talk 550 kfyi in phoenix is going to do a 1 hour housing rant at 6pm az time
umm…they said they were
Does this really work? Or is it just online gambling in disguise?
https://www.lowermybills.com/
“The state has shut two licensed mortgage brokers in Lawrence and fined one of them $200,000 after regulators documented several cases of brokers inflating the incomes of borrowers on mortgage applications, sometimes doubling or tripling the sums, to help home buyers qualify for loans.”
http://www.boston.com/business/globe/articles/2006/08/16/state_closes_2_mortgage_firms_in_lawrence/
I grew up at 822 Walnut Street and lived there for over 20 years. What I want to say about this particular property is that it does not define the prices in Newton.
My parents sold the house in 2000 (after owning it for over 30 years) for $368,000 because it needed a lot of work (a new roof, a new garage door, new windows, new siding, the floors needed to be redone, and the layout of the house needed to be redone as it was an old layout).
Because the house is situated on an old burial ground (from Newton Cemetery) and in the early 1800’s, the bodies at the time, were moved to the new cemetery across the street so that houses could be built on that side of the road on Walnut Street.
I did not have a great childhood there and neither did my siblings. Since we sold it in 2000 there have been 3 or 4 owners (in 14 years) and the house is not lived in for longer than a few years.
You have to understand that living across from a cemetery can be a deterrent and make house costs low in the area (albeit the most beautiful cemetery I have ever seen, but still a cemetery with a lot of Civil War Veterans that have been killed brutally by war). If you look at other areas surrounding that particular area of Newton you will see prices well into the millions. It is the area of Newton that the house is located, which makes it undesirable. People don’t want to live directly across the entrance to a cemetery.