Housing Market ‘Chill’ Taking Toll
The St Petersburg Times reports on the consumer survey. “Floridians’ confidence in the economy plunged this month to its lowest level in 13 years, University of Florida economists said Tuesday. The chill in the housing market, higher interest rates and fuel prices appear to be taking their toll. National confidence numbers also fell in August, but not as much as they did in Florida.”
“The Florida Consumer Confidence Index fell 11 points to 76, while the national index went from 107 to 99.6.”
“Chris McCarty, director of survey research at the University of Florida thinks the changed outlook for housing is at least partly responsible. ‘Florida is in a position to really be affected by a decline in housing,’ McCarty said.”
“‘There are a lot of overvalued markets in Florida, and there are a lot of risky loans, some of which are going to readjust right about now,’ he said. ‘Also, a lot of employment increases over the last few years have been related to housing.’ When projects get canceled or put on hold, that has a direct impact on jobs and a secondary impact on sales of appliances and furniture, he said.”
“‘The feedback I get from people when they cancel their appointments at the last minute is that they’re broke,’ said (hairstylist) Valerie Bohr in Largo. ‘Just this week I had two people tell me they got electric bills over $400. People can’t afford to come in and get their hair done if they’re working to pay an electric bill like that.’”
“The Florida survey showed the biggest drop in confidence was among working-age people. They feel a pinch from rising interest rates on credit cards and home-equity loans. ‘We’ve got an adjustable-rate home-equity loan, and every time the prime rate goes up, our payment goes up,’ said Mike Della Penna, a flooring contractor in Land O’Lakes. He said he and his wife continue to pay more than required because they’ve set a target for paying off the debt.”
“‘But there may be a squeeze on some people whose incomes are marginal,’ he said.”
“Homeowners who have been using their home equity as a piggy bank find their borrowing power is no longer growing now that property appreciation has come to a standstill. ‘A lot of people unfortunately built that into their personal finances,’ said Stan Close, of Riverview, a banker. ‘That probably is a key contributor to people not feeling as good about their wealth.’”
From Reuters. “Costco Wholesale Corp on Wednesday warned of lower-than-expected quarterly profit because of disappointing gross margins. ‘This could be an early sign that the higher-income consumer is finally starting to feel a bit of a pinch,’ said Anthony Chukumba, an analyst with Morningstar.”
“Those higher-income shoppers have proved resilient in the face of steep energy prices over the past year, but as the housing market slows, Wall Street has been worried that upscale retailers would start to suffer.”
“‘The company could begin to suffer from a decline in higher-margin discretionary spending due to slowing economic growth and a deceleration in the housing market, causing a less favorable sales mix and pressuring margins,’ Lazard Capital Markets analyst Todd Slater wrote.”
From Bloomberg. “‘The tide is going out for all retailers at the moment,’ said Christian Holland, who helps manage about $1 billion in London. ‘Unless you’ve been on Mars, everyone’s aware that the housing market is rolling over, and that does have obvious implications on the consumer’s ability to prop up spending,’ Holland said.”
More evidence that the housing boom carried with it the seeds of it’s own destruction.
‘We’ve got an adjustable-rate home-equity loan, and every time the prime rate goes up, our payment goes up,’ said Mike Della Penna, a flooring contractor in Land O’Lakes.’
A construction guy with an ARM is a good example of the layered risks home prices are standing on.
maybe the wife is an RE or MORT agent
WEEEEEEEEE !!!!!!!!!!
07 is going to sck
“07 is going to sck”
is going to suck?
or
is going to be sick?
People in Michigan right now are already buying houses at 50 cents to 60 cents on the dollar from lenders (as short sales). If this thing seriously falls apart, it’s not going to suck, it’s going to be sick (using the slang from my days - check your urban dictionary). I could be buying at 30 to 40 cents on the dollar from lenders since they’ll be swimming in foreclosures that they just can’t handle.
Labor Day Massacre….the prices plummet come next Friday. Are there any qualified, motivated BUYERS after the school year begins? It will be like a 2 by 4 smack on top of the high priced listings, and the herd metality will rush towards the exits by competeing with lowered asking prices. This is the big bang we have been blogging about!!!
We’ve got an adjustable-rate home-equity loan, and every time the prime rate goes up, our payment goes up,’
Well…. ummm….yeah!
What exactly did he think was going to happen? Did he expect his payment to go down with each rate hike?
Did he expect the prime rate to stay the same for ever?
If the adjusting of the rate is such a big deal why didn’t he get a fixed second mortgage?
Ohhh…. that’s right. The boom in construction was expected to last forever so he counted on the income he was making when he bought the home to continue for the next 30.
See….. that’s where you always need a plan “b” or at least the ability to look a little further down the line.
Another probelm with borrowers exposed.
They KNEW that interest rates were at generational lows. Yet they borrowed right up to the max. They left no cushion. Did they think rates were going to go down from these lows? No. They just didn’t think.
The problems with this boom are too numerous to go into, but this is a prime one.
Yes indeed, I agree with you. We bought in 2000 and refinanced in 2003 (due to replacement of a trailer with a MFD home) - both times, qualification was no problem at all. Our original loan was for $195, the new one for $295 (2,000 sf house added). But we could have qualified for a $500K mortgage. We looked at each other and shook our heads in disbelief. See, um, we’re buying a place to live, and the less we borrow, the sooner we owe nothing. Do people not get that any more? I’m 48, my wife 45. Are we that old-fashioned?
Trying to live within or below your own means is not old fashioned.
Interestingly, I got this in an email today. …
My friend in Hawaii has finally sold her house. She came down 7 times on the price and took over a year. Nice place but she says prices have plummeted!
Prices in hawaii have plummeted?
not yet.. been watching the market for the past few months. prices are going down SLOWLY in hawaii. (honolulu)
the median price for honolulu is UP still (July). but sales is starting to go down, about 18% down.
we have about 6100 properties listed on Oahu alone (not including all the other islands) about DOUBLE from last year (3000 LY)
she is lucky she sold her home, as the last newspaper showed 6 pages of open houses with over 750 open houses! (more than 10% of what’s listed!)
I was in Costco last night. It was absolutely dead. I had the whole store to myself.
Was in HD on Saturday and I was taken aback by how empty the place was. I NEVER saw it that quiet. I even remarked out loud once we got out in the parking lot and I realized I got a spot up front. This was 3PM on a Saturday no less.
Was in HD on Saturday and I was taken aback by how empty the place was. I NEVER saw it that quiet. I even remarked out loud once we got out in the parking lot and I realized I got a spot up front. This was 3PM on a Saturday no less.
Interesting, I was in the Costco in Bend, OR (bubble central) and it was dead too. Maybe it is because it’s the end of the month.
foz,
LOL! Bend really is ground zero for the bubble isn’t it? I will say since selling my Wil. Valley home in late 2003 I haven’t been in a HD or LOW since! Clean and sober. No more “adhesives” in my life! No sir.
If it’s that dead BEFORE Labor Day imagine after it starts raining? This may provide anecdotal evidence that either inventory will stabilize OR FB’s will just start dumping their now only marginally overpriced places on the market “as is” without that up grade fixture and fresh stain on their “expansive deck”! We’ll soon see.
(Of all the beneficiaries of the “boom” I think I’m enjoying seeing the big boxes take in the shorts the most). Am I wrong to feel this way?
This cancer has matastasized. Rainy days, sunny days, low inventory, high inventory, it won’t matter anymore. The boom was not based on fundamentals, adn neither will the bust. It’s spread beyond the fun housing appreciation and made the economy very, very sick.
Just as those on this blog have predicted for over 18 months, the fall out is going to be a killer. And the consensus opinions are falling into place, just as predicted.
Seem to be a lot of lucky people on Ben’s blog, we can’t find a time to go to Costco, Target or grocery shopping when the stores aren’t still packed, the freeway is packed. I can’t find any sign of a slow-down.
Same here, any chance you live in San Diego too?
Depends on the Costco. I’m here in Portland, OR. Business as usual at Costco. But… I go to one which is rarely crowded during the week. And it actually seems a bit MORE crowded. Maybe it’s back-to-school time.
Same here in Phoenix, at least on the weekends Costco is always packed.
Here in my part of CA school starts today, so we’ve been trying to get in a last bit of fun in the last week or so rather than shopping. Not saying the observation is misguided — just that the local observations will be more useful in a week or two once school is in full swing.
I hadn’t realized Costco was for the higher-income consumer. I thought they were all over at the Whole Foods.
Costco is for Joe Soccer Mom (thx to Russ Winter for that great demographic category definition…)
OH OOOO!
The economist watch Costco and Target for indicators of spending by the upper and middle class.
I can’t help but think of a post a few days ago.
- It was called ‘JINGLE MAIL’ … the house keys were ‘mailed’ back to the bank. Could it be a glimpse of Xmas to come?
SM Landlord -
I think we need your lyrical talents here!
I’ll start you off:
Jingle mail, jingle mail
Jingle all the way……
Into the burbs we go,
In a brand new Escalade,
We refied out our home,
Laughing all the way (ha ha ha!),
Banks and lenders ring,
No mortgage end in sight,
Oh what fun it is to ride in this Escalade tonight!
OH……
(chorus)
(still waiting for the master, Mr. Landlord… I don’t do this justice)
Went to Target last night in North Orange County, CA. Easy parking and checkout. Unusual.
Was at Costco today ghost town. Has been for the last 4 months. One more thing-Costco shopper in an upscale shopper? Wow. I thought we were the bulk store mid level schmucks that shop there.
A little less than 3months remaining until the start of the Christmas shopping season and reports like this are already rolling in. Imagine the fun we start having then. Retail meltdown du jour.
A nice read on the dire situation in Michigan these days. Probably what the future holds for many in Florida that need to make a living.
http://www.freep.com/apps/pbcs.dll/article?AID=2006608300319
“Almost 72,000 people are unemployed in Detroit — about 21% of its workforce.”
This quote from the article, wow, I didn’t think it was that high.
These are depression like numbers.
And we are at the peak of the current economic cycle…
Please correct me if I’m wrong, but isn’t 25% unemployment one threshold for a depression? Yes, I realize Detroit is, so far, the hardest hit city/region. But as “the_economist” noted, we’re still rolling off the peak of the economic cycle… Yikes!
Will be saying Detroit is undergoing a local depression soon?!?
2007 is going to be painfull (as many of us have noted).
And Ford, Delphi, and GM are not done laying off yet.
Escape from New York? A sad but appropriate analogy.
Neil
Thank you for that link. Very somber article.
Detroit area is as good bet for the first “Escape from New York”- type scenario.
Michigan never really recovered from the last recession. I am sitting here at my desk with very little work (we supply to GM) and expecting to get laid off. My wife doesn’t want to leave the state because of family but we are not gonna have much choice very soon.
My sympathies to you. I wish you the best of luck. I bought a Toyota, but it was made in California (near my home town - I have friends at NUMMI) - and later a Honda, made in Lima, Ohio. In the meantime, the Big 3 keep sending jobs to Canada and Mexico.
My last truck was a Toyota, loved it (purchased brand new, had zero problems). My current truck is a GM, hate it (purchased brand new and extensive problems). My next truck will be another Toyota.
We own a Lexus SC-300 (’93) and a Toyota RAV4 (’97) because they are economical, reliable, and affordable.
No need or plans to replace them for at least 5 years. No faith in American cars, no matter where they are built.
Just a reminder that the economic cycles (and housing cycles) in the MidWest are not always in syc with the coasts.
Ouch!
“We can’t meet the demand for services,” Taylor said Tuesday. “The middle class is being squeezed. ”
In my darker ‘tin-foil hat moments’ I see there’s a pattern of squeezing the middle class from every side. Maybe it’s designed to be that way, and maybe it’s an unintended consequence of big money greed. Usually when the middle class is squeezed or displaced, uprisings happen.
Let’s see what the November elections have to say about this.
For those who are interested in watching the stock market manipulation through the day. Seems the constant bad news about the housing market requires extra effort by the Plunge Protection Team to keep prices up. The homebuilder stocks opened this morning and plummeted until 10:00 am sharp. The PPT went to work and not only stopped the plummeting but pushed the prices up sharply. This is a major issue that gets no publicity in the main stream media but practically every day we see evidence of their manipulation of the housing stocks. For today’s manipulation, look at the charts here. There are a long list of HBs and a few subprime lenders and precious metals stocks here. Notice the precision of the timing on the HBs and the dramatic reversal of all of the at exactly the same time. Then look at the non-HBs and see that the pattern is different there.
Here is the site: http://tinyurl.com/ovpm8
Dawnal — I agree that if for no other reason than that this has happened many times, as you’ve documented here, it is very odd that no MSM have asked whether this is purely coincidence and if not, as I agree is the case, why not?
Could you stop with this tinfoil hattery? I can almost guarantee you that there was some kind of data release today at 10am. If that data release told us something about housing, then it is logical for all of the home builders to move at once.
And furthermore, why on earth would any ‘PPT’ care about one particular sector of stocks? When the PPT was around in the 1990s, the idea was to save the *banking system* from a liquidity crisis. No one cares about one particular sector - it’s the system they want to protect.
Your ‘PPT’ posts are simply annoying and add absolutely no value to this forum.
Well, Dawnal repeatedly has provided documentation of this happening at predictable hours, so we know for certain that a boost is occurring and that it must be for a specific reason. You on the other hand could be correct, that it is due to some sort of report coming out then, but if you don’t present any evidence here to support that, it’s an ineffective counter, IMO.
If it were really happening in a predictable manner at at a predicatable time, then hedge funds would be making money hand over fist by leaning against this.
For example, if a plunge of n% triggers a PPT buying action at a particular time, all you’d have to do if wait for the trigger, and buy first and then sell to the PPT. Instant money.
The powers-that-be are too overconfident in the economy and see no need to do anything remotely like the PPT. If they did see so great a risk as to need a PPT, why wouldn’t they have also acted to cool the bubble rather than letting it inflate into something harder to protect against.
So I don’t mean to be rude about it… but to me this is Tin Foil Hattery.
And in addition, a large amount of money is directed by a relatively small number of fund managers, who with the aid of automated trading systems, who tend to make similar decisions given similar data. Conformity is not necessarily conspiracy.
The best part is that most of the programs require human intervention for bail-out or disaster situations. Otherwise they might sell out huge chunks of the market with very little notice.
Your ‘PPT’ posts are simply annoying and add absolutely no value to this forum.
I agree, it is an outrage and a perpetration!
Vancouver — would appreciate your comments on this New York Post article, that quotes an interview of Ben Bernanke by our Congressman Ron Paul of Texas in July. The “Working Group on Financial Markets” is the PPT. Mr. Bernanke did not answer the questions well; Ron Paul is well-informed, well-spoken and very mistrustful of government.
http://tinyurl.com/q5ase
Vancouver does not dispute the existence of the PPT…nor do I. What I (and him I think?) dispute is everytime a stock does not move in the direction the tinfol hat crowd thinks it should they say AHA!! I can’t be wrong…must be PPTintervention
PS- MANY (not myself) feel that the HBs are oversold and are buying their stocks.
Again, PPT springs to life when there is a crisis….9/11..FNM….this past May?…etc.
Thanks for the rational thoughts here.
And Vancouver is right - think about it: why right now do you really think the PPT gives a rats ass about the HB’s over any other sector in particular?
I think you mean mistrustful of the entrenched bureaucracy.
Senator Paul is the Government.
By the way, I like the commentaries………..give me moment while I adjust my tin-foil hat.
I meant Congressman Ron Paul.
My mistake…………………….
Thanks for the update. The market was always a crap shoot. Its not an investment tool, and CNBC is just another “tout” service with high priced goof balls hawking the gullible public. This real estate stock manipulation is the worst I have ever seen. If this is going on with traded stocks, can you imagine what is happening in the back rooms of the mutual fund companies?
The scary part is how blatant they are about it day in and day out. How can the MSM not comment on this? Did you see how they capped the precious metals when gold opened up $8? Crazy stuff!
The thing I forgot to mention is that what you aren’t looking at (technical analysis indicators) is just as if not more important than what you are looking at (price) when trying to determine why an investment vehicle behaved as it did at that point in time. Example… why did certain home builders stock price drop from opening and then do a quick reversal, only to slide down again?
My guess a combination of support at said reversal price, oversold indicators, candlestick patterns, etc. combined with some manipulation by the MM’s. If you don’t have the TA charts/candlestick patterns/indicators in front of you and tuned in to the correct time frame, then you have no idea what/why the stock is moving… not that TA is 100% correct (or that there aren’t macro events impacting the stock price), just that it can predict behavior, especially when other market participants use the same data/indicators.
Sorry for the long, involved, boring posts…
What you call market manipulation is just how the market works… i.e. for every sale you see as the price goes down, there is someone else buying that share. As often as not, it is the MM’s(market makers).
They make money by being on the right side of the transaction and lose it by being on the wrong side (they are participating to make money BTW). When you see movements like you highlighted, the mm’s are trying to make up for their losses. While it is market manipulation, the benefit is added liquidity… and really this only kills the short-term/swing traders who have electronic stops/buys set (which the MM’s can see and manipulate to grab profit)…
Last post on this I promise… in case any don’t know what I am referring to as far as Market Makers: A market maker is a person or a firm which quotes a buy and sell price in a financial instrument or commodity hoping to make a profit on the turn or the bid/offer spread. (Wikipedia def)
http://en.wikipedia.org/wiki/Market_maker
hb’s are traded on the nyse where there is one market maker per stock — the specialist. there are multiple market makers for otc stocks. having been a former equity trader at a major wall street firm, i never saw the scenario you described.
There is no PPT. There are only self-interested people who act as a cartel or bloc from time to time. The dynamic being referred to is a false bottom wherein bulls jump in at what they consider to be bottom, or a good buy, and hope that others jump on the bandwagon. This has been a successful tactic for nearly a decade now. They will continue to make attempts like this, and to sustain losses as the market drops, until they finally capitulate, panic and rush for the exits.
Yes there is, and Ron Paul’s on to them!
COME CLEAN, BEN!
I’d say it’s more likely it’s a result of all the ETFs and program trading. Most trading now is done by computers using ETFs. Hence single stocks don’t matter anymore, just sectors and funds.
The ETF’s and program trading you refer to are the tools, not the casue… that would be like saying “the grass on my lawn grows/doesn’t grow because I use a fertilizer spreader instead of doing it by hand”. The reality is it grows/doesn’t grow because of how much water/sunlight it gets, how much fertilizer I provide, whether macro events like insects or dog urine are present.
Program trading causes a decrease in the time to execute trading strategies and a decrease in mistakes caused by human error during execution. These things increase efficiency, which can have an impact on profit, but only if the trading strategies are sound…
What evidence do you have that the Plunge Protection Team has anything to do with this activity (or indeed, actually engages in stock market transactions at all, as opposed to having the power to stop trading or give advice)?
Yet the lenders still try to offer ARMs and other toxic loans. Case in point: I got another one of those “Lower Your Monthly House Payment!” offers in yesterday’s mail.
Yes, it did offer to cut my monthly mortgage payment way down there, but a reading of the fine print revealed that the offer was indeed too good to be true.
That dubious offer died a quick death in my trashcan.
We got one of those too! And I went into BofA to completely pay off spouse’s cc and they had a large poster advertising helocs!
Funny you should mention completely paying off a credit card. Last week, I did just that at my credit union. While I was standing in the teller line, I noticed that they had a table set up to promote first-time homebuyer mortgages and HELOCs.
No, they weren’t serving Kool-Aid, but they were offering free servings of Eegee’s, which is a popular frozen treat here in Tucson.
Needless to say, I wasn’t interested.
Not only do I still get mortgage spam, I still see *lots* of web banner ads that tout “Get $xxx,xxx mortgage for only $625 a month*.” The value of $xxx,xxx is abnormally large, of course.
there is a radio ad currently running in L.A. promoting a $300,000 loan for $63 per month.
I’m telling you people - this is a financial bubble, of quite unchartered proportions.
You had to not have heard that correctly $63.00 for $300k?. How does that work?. Post the number if you hear that again. I’ll call just to get the scoop.
they don’t specify for how many months the payment is $63 but I’ve heard the ad several times and it’s definitely $63 dollars (I couldn’t believe it the first time I heard it either).
“[b]Costco[/b] Wholesale Corp on Wednesday warned of lower-than-expected quarterly profit because of disappointing gross margins. ‘This could be an early sign that the [b]higher-income[/b] consumer is finally starting to feel a bit of a pinch’”
Something does not compute.
Agree. In my community, Costco is where low-income people shop. High-end shops at Whole Foods.
That’s nonsense. We have an income of over 300K and we shop at both of them. Whole Foods is a ripoff on a lot of things.
My nearest Costco sells Breitling Watches, 4 carat diamond rings, $100 steaks, and devotes at least 1/5th of it’s floorspace to expensive televisions and consumer electronics.
grim
Agreed Grim.
The two near me carry similar items and not just a few of them. They carry more LCDs and plasma screen televisions than most of the electronics stores nearby. One had a $17,000 watch for sale when I was last there.
Costco used to be a warehouse store, with actual bulk pricing on most items and nothing too fancy. Not anymore, thanks to MEW.
Whole Foods is where people like to be seen shopping while Costco is where they do their shopping… Put another way in Whole Foods you will potentially see more people pretending to be high-end. At least in Silicon Valley appearances are deceptive. That guy in a t-shirt and torn jeans could be a billionaire
Costco is the one of the largest wine resellers in the country and it is not the cheap supermarket wines that they have !
my costco memebership is being cancelled in a few months
if you shop at whole foods and buy only the meat/fish on sale you will pay costco prices. if you go all out you will spend your Whole Paycheck. Wife and I now alternate between Trader Joe’s and Whole Foods. TJ for packaged stuff and mostly fish. Whole Foods anytime they have something good on sale. The killer at Whole Foods is pre-packaged stuff we always ended up buying. And we spend less money than when we went to Costco.
Whole Foods buys from the same suppliers where the really high end restaraunts that cater to people like Larry King get their food from. One time I ate at a 5 star steakhouse next table over from Larry King and the CNN crew and their meat was the same brand as you find at Whole Foods. On sale it’s the same price as Costco.
I buy gigantic bags of edamame at Costco (organic) for the cost of two small ones at WF. It’s the sushi at WF that gets me every time, dammit
I have some right now.
Last 3 years i noticed costco raised the prices on food and kept the stuff you buy once in a while the same.
until the start selling meat with no hormones, no antibiotics and naturally raised on a vegetarian diet like their New Zealand lamb, I’m not going back.
@dba,
What’s wrong with hormones in your meat? Personally, I like the fact I don’t have to shave as often –saves time & money on razors. Though I’ll admit the wife is none too pleased with the extra-large “rack” I’ve been growing, and those hot flashes are killing me.
In my community (silicon valley), lots of wealthy people shop at Costco! How do you think they got to be wealthy? The poor folks take every new credit card they get (which Costco doesn’t take, except for Amex), and spend it to the limit on crap they don’t need. (That’s why they’re POOR!)
I think they are saying the higher income consumers tend to buy stuff that gives them higher margin (over pay for crap).
I think they are saying the higher income consumers tend to buy stuff that gives them higher margin (over pay for crap). Which is different than “higher income consumers tend to shop at Costco”.
I respect Jim Senegal for running his business for long term growth and not quarter-to-quarter as the markets want him to do (and the way Walmart and Target operate). Little wonder why Costco has among the highest customer satisfaction rates in the retail world…..
that’s just an excuse for running a bad business. Wal Mart and Target have long term growth plans. Wal Mart just announced a green initiative to cut carbon use by 20% over 5 years.
Costco’s model is to sell extremely limited selection to pay for their employees’ health and benefits. The reason is that a huge selection like you find in Wal Mart and other stores costs a lot of money to manage.
Whole Foods and Starbuck’s also have similar models in that they are supposed to be socially responsible. But in those cases you get a much better product, wide selection and a much better shopping experience. Most of Costco’s food is junk quality. It got so bad my wife refused to eat a lot of it because it was so bland and no matter how I tried to cook it, nothing made it better.
if costco had such a good growth model, you would see it in their earnings. How do you always plan for long term growth and never deliver? Research shows that the best stock market performers are the ones with the best earnings over a long period of time. Whole Foods and Starbucks are it in the socially responsible yuppie market. Costco is not.
I thought the collective behavior at Food Lion was bad until I went into a Whole Foods. First I had to double check to make sure that I hadn’t somehow overlooked a “ladies-only” sign, but then when I got to the produce and the nuts and the like I’ve never seen so many people grazing - one well-dressed lady was leading her pre-teen daughter around and letting her treat the place like a buffet. I finally called her out on it - I just can’t stand that behavior! Gag me with a spoon! Shopping sucks!
You don’t understand Costco’s demographic or business model. Go for the 2gal cooking oil, stay for the 60″ plasma, end up buying 2 DVDs, gin, bagels, solar walk lights and an SUV to take it home.
I spend a fortune at Costco. More than any other store.
Me too…raising the bunch of rug rats I had, I bought lots of bulk filler food….with all them mostly out of the house now, I still buy lots, but spend more time and money in wine section (nice port!).
And gas…the gas prices, at least here, are great.
Catherine
You are a gourmet cook and a wine drinker? You must go to the Scottsdale cullinary festival next year. It is to die for. $35 dollars to get in and then it’s all the wine and food you want. I bring my designated driver with me. A nice port is always good too.
I am still planning on a bubble party in Phoenix in October.
See? Txc is smart and wealthy and she shops with Mr. Price. I’m “close to reasonably comfortable” and have an Executive membership. I don’t go for the “road show” furniture or home furnishings and one needs to be choosy about the meat/fish but everything else is bulk consumable inexpensive top shelf quality including gas 10-15 cents cheaper per gallon.
I still don’t get the hype about Costco. Same junk as Sam’s Club with some high profile big ticket items for show. Not worth the gas to drive there.
Kinda a culture. The workers are not sullen. There is no waste obvious. Priorities seem in place. Sam’s Choice labelled items are surely the lowest cost no matter what else. The Kirkland stuff is best value for the money. I can’t speak to the drive as my Costco is 3.8 miles/3 stoplights away. No questions asked returns make a difference as well.
You all remember the Price Club? That was my favorite. So sorry that was bought out (by Costco).
People cancelling their hair cut appointments because they can’t swing the electric bill> Nice . Tells you just how precarious the situation is. With $40 in a checking account and $9000 credit card debt , they no doubt have a new sports car parked outside their new condo though.
Note to self : buy more stock in Proctor and Gamble as longer hair requires more shampoo , or , as water bills grow along with the hair , and in lieu of bathing altogether , people turn to deodorant as an alternative.
P&G is a recession stock, along with beer, cigarettes, all that low rent stuff.
You want some shorts, look at stuff like Nordstroms, Tiffany’s, Saks, etc. I don’t know how the charts look but I’d hit rallies on them for sure.
check this out…
http://news.yahoo.com/s/nm/20060830/bs_nm/leisure_starbucks_preview_dc
LOL, forget about shampoo, try deodorant, that way you save on the water bill too.
This could be a wonderful sign of the upside-down financially strapped homeowner.
Visit open houses right at the closing when the owners are returning. When they all step out of the car and have matching mullet haircuts eerily shaped like the bowl you noticed in their garage, they are a candidate for a lowball offer …….
amen to that. i see no slowdown when i go to whole foods and have my jaw drop at the prices- as well as the female shoppers .
around my parts though, costco, sams, bj’s, mostly small business owners there and maybe some illegals.
bj’s has a ‘free monthly pass’ this month too (see fatwallet.com), maybe business is slow?
‘And I went into BofA to completely pay off spouse’s cc and they had a large poster advertising helocs!’
Bank America stock price is still near it’s all time high. They are exposed to everything talked about here on a daily basis. Plunge protection team is working overtime on this company with $450B of enterprise value..
Someone on this blog recently suggested buying BAC puts. Given their acquisition of MBNA, and as you suggest, the high price, that sounds pretty good. Only question is the timing?
According to this article, “The Florida Consumer Confidence Index fell 11 points to 76, while the national index went from 107 to 99.6.”
That’s what happens when home prices increase to unaffordable levels, so you finance said home with an adjustable rate mortgage, max out your credit cards to buy groceries and gas, take out an equity line of credit to buy a new SUV, your property tax, HOA dues, and homeowner’s insurance bill double, your wages stay constant, and you’re still waiting for the contractor to come fix the hole in your roof from hurricane Wilma. Paradise my a$$.
I gleaned the listings and for rents on five of the big new condo projects in downtown Ft. Lauderdale.
http://www.johnsabia.com/New-Construction-Downtown.php
Rents on $500k places run about 2,000 a month, so about a 3-3.5% cap rate, gushing blood numbers. Of course the 79 units for rent (empty) that follow have a 0% cap rate. The five projects have 1385 units, and 175 (12.63%) are for sale. 18.34% are either for sale or for rent.
Las Olas Grand: 211 units, 15 for sale, 4 for rent
Wintergarden: 315 units, 35 for sale, 20 for rent
Las Olas River House: 287 units, 42 for sale, 13 for rent
Nu River Landings: 409 units, 70 for sale, 30 for rent
350 Las Olas Place: 165 units, 13 for sale, 12 for rent.
I drove over to Ron Jon’s yesterday, to see what was going on at the beach. Passed a riverfront condo building that has been completed for a good year or so. >95% of the shutters were down, at about 4PM. Weather was clear. No one puts storm shutters down on a unit they are living in, a full day before the storm. Seems, then, that there are hardly any owner-occupied units in the building. Even allowing for a chunk owned by absent snowbirds — where the shutters would be down every day this time of year, there must be a pretty scary percentage of units owned by speculators. One unit in that complex, directly on the river, sold for $80K less than the seller had paid the developer for it a year earlier — assuming the tax records weren’t manipulated.
You know that’s a good point . Who is going to put the storm shutters up for the out of state FB’s/locust in Florida etc. ? Do these owners have more potential for damage because they can’t respond . I would imagine that boarding up windows really do help in a hurricane . I’m just wondering about those ghost town glass window condos all along the coast .Anybody know what they usually do with those when a hurricane is coming ?
“Anybody know what they usually do with those when a hurricane is coming ?”
Yes — Most absent-owners’ first choice is to ask a year-round neighbor/occupant to close the shutters. Fallback is that almost all condo associations require a door key be kept in the office safe (it may well be a law in most places, relative to firefighter access); the building manager or board members go around and close the shutters.
Most of the newer places have electric shutters, which are super-easy to close. Manual vertical ones are easy to close and hard to open, but the exigency is getting them closed. The pain-in-the-tail ones are the accordian shutters that close horizontally, particularly on oceanfront units becvause of the corrosive salt air. After a few years, if they are not lubricated regularly, they can be very difficult to close and near-impossible to lock/latch.
Thanks for the information Chip .
Home Loan Demand Hits 3-yr Low:
http://tinyurl.com/hlnxe
Note that the purchase index is down 20% yoy.
Speaking of the stock market, another WSJ article today (C1) says that this might be the high point for corporate profitability, and the deflation of the housing bubble is the reason.
If the proletariat is unable to go deeper and deeper into debt, as Marx pointed out, the bourgeosie will either have to pay them more or sell them less. Neither is good for profits, now at the highest level relative to national income in decades.
On C2, the WSJ says the S&P 500 is at 17 times last year’s earnings but only 15 times next year’s earnings. I don’t believe the 15.
“Speaking of the stock market, another WSJ article today (C1) says that this might be the high point for corporate profitability, and the deflation of the housing bubble is the reason.”
No doubt. All that housing bubble dough is now sitting in Corporate checking accounts (or bloated inventory). So, what happens now?
“On C2, the WSJ says the S&P 500 is at 17 times last year’s earnings but only 15 times next year’s earnings. I don’t believe the 15.”
Neither do I. Probably closer to 20.
Corporate EPS at the top of the channel. Nowhere to go but down. How long does the Street think the streak can go on?
So I guess I can add flobee to my list of crash investments (along with coffee maker manufacturers)?
Snigger. Good one. What were those stacking plastic towers for dehydrating your own food? Maybe a pocket fisherman to toss over the side of the bridge for a quick snack? Who makes a plasma television that plugs into your cigarette lighter?
Hard to use the flobee if you don’t pay the electricity bill. Is there just a pure play on scissors?
Tapped out FBs that can’t pay electric bills to operate the flobee are perfect customers for: http://www.econvergence.net/electro.htm
Pinocchio Theory and Jenna Jameson Every Night:
http://www.xanga.com/home.aspx?user=russwinter&nextdate=8%2f30%2f2006+23%3a59%3a59.999
On topic / must read op-ed in today’s WSJ by Case and Shiller
————————————————————————
Full House
(an excerpt is given here)
While our surveys indicate that relatively few expect prices to actually fall, buyers do not want to pay prices that are asignificantly higher than a year ago…
We now have a futures market based on home prices… Since the margin requirement (on a futures contract) is only about 2.5%, an investor who is sure that prices cannot fall by next May has, on that assumption, a sure return of at least 200% from buying a futures contract, and even more if prices rise at all.
—————————————————————————–
Translation: Lots of dopes still believe real estate always goes up, but the smart money is sure that it will fall by next May. And the really smart folks who read here learned yesterday that, according to a Bank of America survey, prices have already been falling for eleven months straight. LOL!
I can give you a good example of prices falling. It’s the house behind mine, in fact.
Last summer, the owner kicked the not-so-wonderful tenants out (hooray!) so that the house could be listed for sale. Mind you, this place is on a tiny flag lot with no street frontage. And it hasn’t been that well kept up over the years. (Show me a rental that has been.)
Well, last July, the house was listed at a price that was well above what I paid for this place. Which is is in much better condition, thanks to the attention paid to it by previous owners.
Any-hoo, House Behind Me sat there. As the owners ran the air conditioning full blast, in case a prospective buyer showed up. And they let the AC go flat-out until mid-September. Then, for some reason (let me guess - high electric bills?) the AC was shut off.
Well, despite their high hopes, the buyers just didn’t materialize. A neighbor and I went to one of the open houses, and let me tell ya, that real estate agent seemed like she was starved for companionship. She talked our ears off!
Well, it got worse. Last September, they pulled it off the market for a quickie interior and exterior paint job. (And the exterior painters missed several spots, which I can see quite clearly from my side of the property line.)
The house was also staged inside, and you’re gonna love this part, put back in the market in October as a New Listing! (Yeah, right.)
Several price cuts and five months later, the place was finally sold.
And there you have it. An example of the real estate bubble from Tucson, Arizona, in one of those neighborhoods that the RE people say is “conveniently located near the University of Arizona and Downtown Tucson.”
http://news.yahoo.com/s/nm/20060830/bs_nm/economy_bernanke_dc_1
“WASHINGTON (Reuters) - Rising incomes should support the U.S. economy even as the housing market slows and consumers lose the boost they were getting from home equity,
Federal Reserve Chairman Ben Bernanke said in a letter released on Wednesday.”
What is this man smoking? Rising income? What country is he talking about???
I would say that the first and best places to look for decreases in consumer spending are ‘toy’ stores (Best Buy, Circuit City, Guitar Center), higher-end suburban chain restaurants, and upscale clothing retailers. It may be that sales at Costco and Whole Foods will go down, but at least they are selling the basic stuff of life, rather than entirely amenities.
Anecdotally, I can say with some confidence that the Guitar Center nearest me has been a lot less crowded on recent Saturdays and more and more items are being marked down significantly. One always has to be careful about reading things into this, especially given the time of year. But I have browsed at this same Guitar Center store in No. Va. since it opened during the late ’90s, and I have never seen it as slow as it has been recently, nor the same kind of discounts. It’s actually kind of nice for me, since you don’t have as many 13-year olds plugging in guitars and played really out of tune and really loud.
Check travel agencies for declines. Also things like ski resorts (being that we’re starting to move into the fall and winter) for slow business. Harley Davidson dealerships, these should decline significantly.
Carnival Cruise Lines several months ago warned about slowed bookings for their prime season, and blamed it on an increasing fear of hurricanes. It was to laugh!
Agreed.
- There is a Whole foods here in Redondo Beach and I once read in the Beach Reporter that the store should be called
“WHOLE PAYCHECK”.
For years I shopped at a specialty meat store in central Florida. I was always amazed at how many people shopping there were pretty obviously of modest means — driving beaters. And it wasn’t a standalone store, so they weren’t there for a two-fer.
Electorate is highly pissed if you belive the polls. Looks like the incumbents should be packing their bags soon. I am not sure the new crowd will be any better.
I have to wonder if they are going to start impeachment hearings the first or second day after taking their oaths of office. I am sure that will fix all of the ecconomic problems we are facing.
sorry for this test. my posts haven’t been posting.
I’ve heard the same ad. They don’t specify the length of the teaser payment, but it is based on paying 0.25% interest. That’s right, only 1/4 point of interest. $300,000/12 = $25,000 x .0025 = $62.50/month. They also don’t seem to mention what the actual interest rate is. Regardless, this kind of loan product serves no useful purpose and should not be offered.
Sorry, this was supposed to be in reply to the exchange above between mrincomestream and dwr about the ad for the $300,000 loan for $63.00 month.
Man, I hope not!! Hubby and I did the same thing - we are only 28, and 30, but we COULD have qualified for 300K!!! I’m a computer analyst, he’s a chef - we REALLY don’t make nearly enough to cover that - I mean - The hell!!??? And this was even with the understanding that at our age - I MIGHT stop working for a while to actually RAISE a kid or two.
If you’re oldfashioned, we are old fashioned right along with you!
“They feel a pinch from rising interest rates on credit cards and home-equity loans.”
Classic misdiagnosis, delivered by a news media deeply complicit in the problem.
Rising rates aren’t to blame. The pinched are feeling the effects of abusing credit cards and buying houses they can’t afford.
south florida is in deep trouble. miramar, pembroke pines, hollywood and sunrise have big buildup right now. but the cream of the crop is fort lauderdale beach. crane world and fort lauderdale beach is crap. a1a is right on the beach, so all you hear is cars, and suck up fumes. it is totally unsafe and the only real night life has been closed (other condo project). any real hurricane will send water all through the lobbies and a few floors up. talk about price correction in lauderdale. we havent began to talk about the new condo skyline along las olas. in a few years, the deals will be nice!
AZslim, what part of Tucson are you in? I’m near Bdwy/Alvernon.