Bits Bucket And Craigslist Finds For September 7, 2006
Please post off-topic ideas, links and Craigslist finds here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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details to the earning from hov
cash von 202 mio$ auf 37 mio$ und das trotz einer anleihe von 250 mio$ im juni!!!!!!
despite a new infusion of cash (250 mio$ note offering)
Total Notes Payable at end of Q2 $2,099,622,000
Total Notes Payable at end of Q3 $2,353,497,000
rest here
http://immobilienblasen.blogspot.com/2006/09/detail-zum-ergebnis-von-hovnanian-hov.html
“Housing demand in our major markets during the second quarter continued to outstrip supply, producing the highest number of net new orders for any single quarterly period in our Company’s history… we are comfortable raising our earnings guidance for 2005 to $9.00 per diluted share.” - B. Karatz, June 16, 2005
“Net orders continued to show strength within our operating regions, providing important evidence of the fundamental health of our business…. a favorable outlook for our markets going forward have led us to increase our 2005 earnings guidance to $9.30 per diluted share.” - B. Karatz, Sep. 22, 2005
the rest of the statements
http://immobilienblasen.blogspot.com/2006/09/kbh-homes-kbh-warning.html
sorry wanted to post the whole thing
“Housing demand in our major markets during the second quarter continued to outstrip supply, producing the highest number of net new orders for any single quarterly period in our Company’s history… we are comfortable raising our earnings guidance for 2005 to $9.00 per diluted share.” - B. Karatz, June 16, 2005
“Net orders continued to show strength within our operating regions, providing important evidence of the fundamental health of our business…. a favorable outlook for our markets going forward have led us to increase our 2005 earnings guidance to $9.30 per diluted share.” - B. Karatz, Sep. 22, 2005
“While year-over-year net order comparisons posted double-digit increases in each quarter of the year, our net order growth moderated in the fourth quarter… [however] the strengths within our business, economic factors, including positive job growth and demographic trends in the markets we serve, support our favorable outlook and earnings projection of $11.25 per share for 2006.” - B. Karatz, Dec. 15, 2005
“There are signs of cooling in the hottest markets on both coasts and a shift in investor activity from buying to selling, resulting in less demand and increased supply in certain markets… [but] we feel confident in maintaining our earnings estimate of $11.25 per diluted share for 2006.” - B. Karatz, Feb. 28, 2006
“The country’s current-year home sales will likely fall well short of the record rates we have seen in the recent past as the market works through inventory build-ups, including a spike in investor/speculator resale inventory, higher interest rates and higher cancellation rates… we believe it is prudent to revise our 2006 earnings forecast downward to $10.00 per diluted share.” - B. Karatz, June 16, 2006
“Our earnings expectations for the third quarter and full year reflect an increasingly challenging housing market, where the supply of new and resale home inventories has built up in recent months in markets that have experienced rapid price appreciation or substantial investor activity, or both, in the past few years,” said Bruce Karatz, Chairman and CEO. september 7, 2006
to be continued………
and on top of that he is the guy with the option probe
KB Home reviewing stock option grants to CEO:KBH43.19, +0.17, +0.4%) is reviewing the stock option grants given to CEO Bruce Karatz, The Wall Street Journal reported Wednesday, citing a company spokeswoman. Outside counsel is helping the home builder with the probe, the spokeswoman told the newspaper. Karatz has received nearly $100 million from cashing out many unusually timed options, the report said, citing regulatory filings it’s reviewed.
http://www.immobilienblasen.blogspot.com/
For GS……..you had these builders figured right……..I don’t think they’ll be around come the next boom. Kaboooooooom!!!!!
I could have predicted the builder’s crash in my sleep (maybe I did?).
Maybe his December statement will be him jumping out of a window.
i think that you could find comparable statement from most of the builders.
management from wci is leading the pack
in summer of 2005 all of the insiders were selling like mad and the made massive buybacks until the last 2 months.
look at the cashposition of most of them. after the biggest boom ever there is almost nothing!
For all of the homebuilders I have looked at the inventory on the balance sheet is huge and debt is increasing with cash decreasing. So there will be lots of empty houses going to auction in a couple of years. Does anybody want to guess which will be the first publicly traded homebuilder to declare BK?
CHCI builds in my area and is one of the top candidates on my list. Anybody else have suggestions?
anybody remember the “burnrate” ranking back in the dot.com days?
mybe we will see simular things for the hb
Cool! So should we expect to see KBH’s share price rally? Because homebuilders’ share prices always go up, at least over the long run.
lol good one.
I keep hoping that someday homebuilders will actually move the right direction on bad news, but not yet today…
What’s up with BZH? My puts are suddenly moving into the money…
the warning was was beazer not kbh.
my mistake
the ceo quotes are from kbh
mixed it up. sorry
sorry.
bzh and kbh warned both.
that has made me confused. so many warnings…..
2006–Beazer Homes USA, Inc. (NYSE: BZH - News; http://www.beazer.com) today announced that it is revising its outlook for fiscal 2006 diluted earnings per share to be in a range of $8.00 - $8.50, compared to its previous outlook of $9.25 - $9.75. The Company expects to close fewer homes in the fourth fiscal quarter than previously forecasted, as net sales through the two months ended August 31 were 49% below prior year levels and cancellations of existing contracts rose to 50% from 26% in the same period in the previous year. As compared to prior years, a higher percentage of home closings are being deferred or cancelled, immediately prior to closing in many cases, due to worsening buyer sentiment and the inability of buyers to sell their existing homes. This revised outlook also contemplates potential charges to exit non-strategic land positions currently under review
orders down 49%!!!! canrate 50%!!!!!! close to the rekors of wci
Glad to have about 50 each of KHB 45 puts, BZH 40 puts and LEN 45 puts and CTX 50 puts, all bought at the money. The home builder stocks stabilized in August but are now on a new leg down. Right now that are just near the July and early August lows. The “value” buyers who have been buying these stocks are now getting stung. Two weeks ago, Barrons recommended buying home builders and lenders–looks now like the worst possible timing. I think that home builders might again be a good investment by early 2008.
Several weeks ago, “someone” bought at least 10,000 Pulte 30 Sept calls and 10,000 DR Horton 22.5 Sept calls. Actually, the open call interest at these strikes is now extremely high, over 20,000. It now looks like the several millions $$ spent on these bulish calls on home builders will expire worthless next week. Taking the Sept puts at the same strikes would have been great trades. Of course, selling the calls was also a winner. However, I don’t like to bet on short term (several weeks) positions.
the barronscoverstory is just a few days old.
http://immobilienblasen.blogspot.com/2006/08/barrons-bullish-on-homebuilder-mal.html
“Several weeks ago, “someone” bought at least 10,000 Pulte 30 Sept calls and 10,000 DR Horton 22.5 Sept calls. Actually, the open call interest at these strikes is now extremely high, over 20,000. It now looks like the several millions $$ spent on these bulish calls on home builders will expire worthless next week.”
Many professional traders buy the “calls” and then short the stock. The reason is that the purchase of the “puts” is above theoretical value and the calls are below theoretical value. This then gives the trader the ability to invest the proceeds from the “short sale” in US T-Bills as well as benefit from the move down. This can only happen when there is a lot of buying of “puts”. If the trader wishes to complete the trade they will then sell “puts” locking in their profit. This is called a “reversal” = you are reversing a “call” to a “put”.
I bought 100 puts of KBH back when it was 58 at a strike of 55. $$$$$$$ for me!
Follow the money: first these pirates priced compensatory stock option strikes arbitrarily by back-dating to the market’s lows, then they financed corporate treasury-stock buy-backs with 0% borrowing from the BOJ, then they exercised their options, and lastly they sold their personal stock while f#@king current shareholders in the wallet. Sweeeeet!
If BK of KB spent ten years in prison, he’d still “earn” over $1,100 per hour, 24/7/365 in the pokey ($100 million’s a lot of loot or looting). Let’s see the SEC fine them enough to make the shareholder, pensions and trusts whole. Yeah, right. Who wants to wager they won’t do much time at all?
After Quattrone beat the rap, I am not betting on the SEC or the law doing much of anything about any level of corporate theivery, no matter how egregious.
rippleeffekt from the us bubble in europe/uk
http://immobilienblasen.blogspot.com/2006/09/tomkins-rippleeffekt-us-to-europe.html
I figured all the shitty fiberglass bathtubs were made in China by now.
My co-workers were putting some shelves up at work yesterday. I picked up a brand new hammer they purchased at HD. It had a sticker on it that said… “Proudly made in Taiwan”. We can’t even make hammers in the US anymore?
I’d rather have a hammer made proudly, than one made in shame!
clouseau
Try shopping at Sears & Orchard Supply Hardware. Last time I looked all the tools with the Craftsman label (come with lifetime warranty) were made in the USA.
I talked with my commercial landlord a few years ago in SoCal. He said he could buy hammers for 8 cents in China, sell them wholesale for 70 cents, and they showed up at HD for nine bucks.
Even he was amazed that the Chinese factories could make a profit for the eight cents for production.
up to now business seems to be booming like never before in the Netherlands - that is, if you believe the official numbers (close to election time here, just like in the US). No ripple effect at all, except large waves of easy money arriving in certain sectors of the economy.
Our evening news briefly mentioned that the IMF warned about too optimistic expectations for the world economy, but conveniently left out the threat of the bursting US housing bubble (of course, don’t scare the Dutch sheeple; ‘there is NO housing bubble in Holland’).
Banks are complaining that the mortgage market is getting very competitive lately and they are not making as much money as they used to (well, maybe they should raise mortgage rates a little then?). And big corporations are getting a bit worried about increasing labor cost, also similar to the US.
nhz,
I was just in Holland and noticed the enormous amount of vacant commercial space. What is going on with that? It was amazing to see all these big brand new buildings just sitting empty.
On the news they were suggesting to start turning it into residential?
situation with commercial space seems to be much better this year than the last 5 years or so
In my region, vacancy rates of 30-40% have been normal for years and at the moment they are probably around 25-30%. Some analists predict it will take at least 5 years to get the oversupply down to acceptable levels (mostly by demolishing older properties).
Prices are at idiot levels, but the RE brokers don’t want to negotiate lower rents or sales prices for these properties. I think that’s mostly because they see it as an investment that can only go up in value, just like the average public here still sees their second home as a sure investment (irrespective of income). Most of these properties are financed at extremely low rates by a bank or pension fund; the ‘value’ of the properties is usually based on the asking price or rent, even if the building is totally empty. Go figure … So as long as they keep the asking price/rent high, there is no problem with the bank loans. And the banks, they simply don’t want to know I guess.
Some politicians are lobbying for huge subsidies to convert these commercial buildings into residential properties. And by the time that conversion is finished, they can probably lobby again for subsidies to convert them back to commercial space
Don’t they have to pay property tax?
a very good piece on the madness with hedgefonds and private equity
http://www.washingtonpost.com/wp-dyn/content/article/2006/09/05/AR2006090501181.html?nav=rss_business/personalfinance
jmf-Many thanks for posting that article. Very readable and concise.
i like the quote:
Now, if this sounds to you like a giant, circular Ponzi scheme, it’s only because it is
jmf-Yup! Great quote.
That ought to bring garcap and hedgefundanalyst out of the closet today. Of course they’ll deny everything.
Has anyone else read “The End of Shareholder Value” by Allan A. Kennedy? Originally published in May 2000 and roundly ignored, but there is a discussion at Amazon attached to the paperback re-release.
Kennedy was ahead of his time with this IMHO, as I see signs that we are heading into another destructive LBO fiasco that will make the late 1980s look like a child’s birthday party. Private R&D is going to have be done in secret “skunk works” again (or not at all) if this continues.
I’m in a stock now where I am convinced that is going to happen. I have accumulated a pretty good sized position and await my chance to file suit
Do you plan to sue them for destroying the company with a botched LBO, or for running a secret R&D program?
Or both
Great stuff here! The hedges are the latter-day reincarnation of the stock syndicates in the 1920s. And their destiny will eventually prove similar.
“This new arrangement raises serious questions about the efficiency of our vaunted capital markets.”
Efficient markets? Bwahahahahahahaha!!!
An interesting view posted at indexcalls.com:
Man…have we ever had a situation where so many people were upside down at the peak of the business cycle?
No.
*
It’s the debt, stupid … This is not your papa’s business (credit) cycle. I think those boldly predicting where and when this business cycle bottoms are in for a bit of a shock - something on the order of 100,000 volts.
We are strictly a cash-flow economy with negative savings. Any minor hiccup in the cash flow and the smoldering gas soaked house of cards will burst into a fan forced bonfire. And the hiccup in this case will be housing. The hiccups will prove to be incurable - the patient will have to die to stop them. No rate cut on the planet can save it.
And for those who have been glowingly reporting the health of major corporations as measured by their cash - they better scrutinize the balance sheets a little more closely. Many if not most have borrowed money to do share buybacks and other company wasting financial manuevers. Yeah they have some cash, but they never stopped piling on the debt either.
RE Jas Jain and the housing overbuild numbers. That report in itself is seriously bad, bad, bad. However it doesn’t fully capture the problem. IMO you have to count empty apartments, condos, mobile homes, etc. Heck we even need to consider the number of RVs that can serve as full time housing. You have to consider each viable housing space as an alternative to “owning” a single family dwelling to really see the extent of the over-build.
I believe we will see in this country millions of homes abandoned and unoccupied for years if not decades. It happened in the 1930s. Many of those abandoned homes sat empty into the 1950s, by which time there was little left to salvage. Considering the way today’s homes are built with all sorts of pressed cardboard faux moldings and other items, I don’t think they can sit empty for 10 years without suffering major degradation.
here a the graphs from jas jain.
very impressive
http://www.financialsense.com/fsu/editorials/jain/2006/0906.html
Add to that the 15 million or so “guest workers” who will be returning to their fatherlands now that the boom has turned to bust. That makes for a lot of empty housing units.
I think a lot of these “guests” will be hanging around long after the big boom. Many have reproduced and have US born children that are eligible for aid.
not only that. their country will probably in a worse shape.
and by the way stop propagating that aid hocking immigrant. they’re are no worse aid-needing americans than the poor caucasian americans today. would you rather have these americans (born and raised here) grow up destitute in need of help all their life or productive citizens of this country?
Nice attempt at english. Back to raking leaves for you!
Interesting. Now I have to wonder about a friend of mine who transferred permanently here to DC, and he’s decided to just keep his 3,000+ sqft house in Atlanta. Not rent it, since he says renters are bothersome and taxes get complicated. No he says he will just “keep” it!
Well, let’s say that was sour grapes about the renters. He found that he can’t charge enough rent to even make his mortgage principal and interest, much less taxes and insurance and maintenance! So he gave up.
He figures he’ll be retired from this new job in 15 years, and in the meantime he’ll just leave the house empty till then! What kind of foolishness is this? Sure, he’ll go back to visit two or three times a year, but financially it sounds crazy — even though one lady at work only encouraged him when she heard his plan by saying “Good idea! That house will be worth a million dollars by then!” Huh????
So 15 years of renting money from the mortgage copany, and 15 years of utilities just to keep the place dehumidified, yet just one unattended leak in that roof, and his place will turn into a festering lump of molding sheetrock and fiberboard. I wish him luck.
He sounds like someone who refuses to admit he can ever be wrong about something. We’ll see how long he can “hold” the house if he loses his job, someone in the family has a catastrophic illness, a divorce happens or something. Then he’ll sell a lot lower than he could now.
NoVa Sideliner. Could it be that he’s afraid that his new job won’t pan out and he has a place to land?
I also have a DC friend who bought in Atlanta and maintains an apartment here in DC, where his job is. All was fine until he realized that he can no longer afford to fly back and forth as cheaply as he did last year, and his Atlanta ARM is about to reset in early 2007. He can’t rent the house because his new wife lives there full time. His DC rent is rising in December, too.
I wonder how this will all play out. It doesn’t look good.
He would be better off finding a little old retired couple with impeccable references and letting them live there for free, obliged only to keep the place clean and functioning and to report any problems.
We have a family in our neighborhood that transferred from Europe to work here. After a few years they were transferred back. But they kept the house and now that they’ve retired they spend the winters here and then go back to Europe for 6 months for the summers (Mobile winters are beautiful, summers can be brutal). They have been doing this for the last 6-8 years.
They pay the people next door to keep an eye on the place, mow the grass, trim hedges, clean the pool. I’m thinking its a good deal for them, maybe this guy in Atlanta has the same idea. But to just let the place sit, unoccupied for many years in inviting disaster.
dawnal …good post .The abandoned and vacant houses is the part of the housing bubble that really gets me sad /pissed . What a waste .This Nation turned into a bunch of gamblers .
Of course we’re a nation of gamblers. We don’t produce anything except “financial instruments”…AKA hot air. From Beanie Babies to houses to “Weather futures,” there’s little else to do to produce income other than gamble. Probably why there are casions on every street corner and Vegas is doin a bang up business. At least until all the suckers are bled dry.
There are developments full of of empty houses in Lake County FL. They’re all owned, I checked the county records, by non-local (many from Europe and South America) specu-vestors. Sometimes they show up in listings, sometimes they just sit empty. At best 50% of the houses have tennants.
Even though these houses are at least 5 years old, driving around the neighboorhood looks like a ghost town.
Eventually–and in not too much time–it’ll be an actual slum as houses get abandoned, etc.
“There are developments full of of empty houses in Lake County FL. They’re all owned, I checked the county records, by non-local (many from Europe and South America) specu-vestors.”
I highly encourage people who are having a hard time finding affordable housing to become squatters in these sorts of properties, especially the ones owned by specuvestors from abroad. With a little luck, they could become legal owners should the purchasers actually abandon them.
I don’t think many of them can sit occupied for ten years without major degradation. They’re being called “Old Navy” houses for a reason - only good for one season.
“RE Jas Jain and the housing overbuild numbers. That report in itself is seriously bad, bad, bad. However it doesn’t fully capture the problem. IMO you have to count empty apartments, condos, mobile homes, etc. Heck we even need to consider the number of RVs that can serve as full time housing. You have to consider each viable housing space as an alternative to “owning” a single family dwelling to really see the extent of the over-build.”
I agree. The data are very conservative estimate of the Over Supply problem.
Thanks.
Jas Jain
Re: Jas Jain’s “Moms and dads, get ready to have the junior and the miss move back in.”
I think Dawnal has a good point, that total number of units that can be used for shelter probably is waaay undercounted when potentially-empty housing numbers are discussed. People who in recent times would have sneered at the thought of living in a mobile home might well find, after leaving the closing table, that they have absolutely no other choice. Shelter works, even when pride doesn’t.
“We are strictly a cash-flow economy with negative savings. Any minor hiccup in the cash flow and the smoldering gas soaked house of cards will burst into a fan forced bonfire.”
Right, except there is a minority of very strong hands waiting in the wings who will buy much of America when the cash-flow-negative sheeple have to declare BK in droves…
“IMO you have to count empty apartments, condos, mobile homes, etc.”
You might also want to add in homes under current construction, homes owned by soon-to-be-bankrupt flippers, investors, and broken-ARMed owners.
Has anyone heard of this before?
Friend of mine is preparing to move to Charleston, SC for a new job. He has been down for a few weekends to buy a house (he rents now). He gets set up to buy a house with a realtor and selects one. He goes to the insurance company to set up that part of it and they say he cannot buy cause they do not deal with new customers in the middle of hurricane season. So he has to wait til January to buy before the insurance company will talk to him.
That would pretty much tell me all I need to know about buying in Hurricane Alley.
That’s pretty short term thinking on the part of the insurance company. Don’t they realize hurricane season comes once per year?
Sounds like a big lie, er, I mean excuse. Insurance company probably faces bureacucratic regulatory environment in state approving rate increases and for some reason can’t raise rates significantly until 2007. Thus, management says don’t take on any new policies under the old rate structure - make up a hurricane excuse.
Makes total sense to me.
When there are active hurricanes / tropical storms in the Atlantic Basin and / or Carribbean the insurance companies down here in Florida WILL NOT write binders for Homeowners or Renters insurance.
That has been the practice in the insurance industry for years.
Yep. In my humble experience they will write a policy that excludes certain perils for a set amount of time, i.e., no hurricane damage claims will be paid for the first 90 days the policy is in force.
Just turning someone away is BS. I’d go to another company.
That’s true - but they don’t “not write” for the whole season - just before/during an active storm.
The entire industry is a scam - Ins. industry made 40 billion dollars last year - I deal with them all the time as a paralegal - they exist to make profits for shareholders & execs, not to put you in “good hands” and pay claims.
From what i’m reading in the Fla. papers - there is a huge voter push to get some changes made like not allowing companies to pick and choose what kinds of policies they write in the state - meaning if they want to rake it in writing old ladies auto policy, they have to write homeowner as well. Makes some sense.
So far, no wind damage of any significance this year in Fla. - if there turns out to be few/no wind claims this year, does anyone think there will be a rollback? HA!
No kidding. They’re a business, not a charity.
Of course there is a “huge voter push”. There are regular voter pushes to vote themselves bread and circuses, and to beggar their neighbors. Nothing new there.
Of course not, they have to make up for all the money they “lost” the past 2 years. Actually there is no way any of those companies should have shown a loss with the reinsurance and other tricks of the trade.
DSmith
I know they aren’t charity - & know about the Bread & Circuses - point is that they advertise themselves as “being there for you” when the chips are down, and they generally are not. Their “business” is to insure people, but they don’t. In nearly every case I have ever handled (except for clients who have been involved with the industry) when the client tried to settle by themselves with the Ins. Co. - the Ins. Co. tried to screw them or wouldn’t settle at all.
And every time anything bad happens and they have to eat into their enormous profits and actually pay significant claims, they go running to the Gov’t crying for help. Meanwhile, as a whole, they have made bagfuls through every crisis, including 9/11 and Katrina - so screw them.
They are a business, not a charity. Since when did you have a god given right to assign the risk of loss to someone else? Aside from that, I’m willing to bet that every single one of those insurance companies would be happy to write a policy for everyone in the state. They just realize that most people wouldn’t be willing to pay the rate the company wants to assume the risk for the property owners so instead just decline to insure. (Either that or state regulations won’t allow them to charge the risk premium they require to assume the risk.)
Here is an idea, if no one wants to assume your risk for a price and you don’t want to bear the risk, move.
Buddhaman, there’s a reason that Warren Buffet always liked the insurers and reinsurers, even the ones who write catastrophic coverage.
Interesting problem explored at http://forum.freeadvice.com/showthread.php?t=333679
If you scroll down, you can see the advice he got.
I have two investment properties I bought 100% financing owner occupied that are both now about 6 weeks from foreclosure auction. I’m about 5 months over due and my credit is now badly damaged. I never refi’d the properties, but I’m probably 100 grand upside down in each one, plus the cost of taxes, liens, etc, which brings the total I’m upside down to about 250k between the two properties (some of the conditions of the properties were not disclosed to me when I purchased- a situation which I have a pending lawsuit over). Anyways that all aside, I’m just wondering if I would be better off giving up and letting the properties go to auction. My realtor has not been able to get any negotiation on a short sale from any of the lenders (2 on each property), and I have another professional trying to get the lenders to negotiate, but already doesn’t think we’ll get anywhere. Are there any advantages to foreclosure? Will I see a 10-99 either way?
I think the best advice he got was “See an attorney. You are in a bad place.”
I can understand why the bank won’t short sale this guy .He doesn’t give enough details to know if he has a case or not regarding the lack of disclosure from the prior owner ,but stating that he was going to owner-occupy when he didn’t is going to come back to haunt him .
I just wonder how many foreclosures out there are similar to this guys story .
What struck me was the “two investment properties I bought 100% financing owner occupied”. Interesting to see that several of the posters also jumped on that and basically said, “So you committed fraud to get the loans? Good luck staying out of jail.”
Do you really believe they will do jail time? I’m wondering if they will really get in any kind of trouble (besides financial).
Some will, if not many. Leviathan always makes an example of at least a few. Look at how close to toast those Duke students were, except that the blogs saved them — and the prosecutor apparently pays no price at all for the false accusation. Salem witch trials, 2006.
Not to be read that I have any sympathy at all for those who fraudulently overstated their income — just assuring that someone out there will hang a few of them.
The U.S. Senate has the housing bubble on its schedule in Open Committee.
Wednesday, Sep. 13, 2006
10 a.m.
Banking, Housing, and Urban Affairs
Housing and Transportation Subcommittee
Economic Policy Subcommittee
To hold joint hearings to examine the housing bubble and its implications for the economy.
SD-538
The witnesses will be announced at a later date.
David (bubble meter) -
This is on the schedule. Google: SD-538
$499999 HURRY BUY MY HOUSE! I NEED A GREATER FOOL!
Yes, I need to offload this albatros POS I paid $545000 for! I owe 590k on it because I took out a HELOC to buy a Harley and go on vacation! Now I need someone even stupider than me to buy it so I don’t have to give it back to the bank! I know there are THOUSANDS of others listed here JUST LIKE MINE but this one is mine and at least I am honest! I don’t know how to setup up grow lights to grow pot and I don’t have an “in” with a corrupt mortgage broker (no shortage of those these days here in SAC eh??)so I cant go the drug dealer route like many of you. Anyway please help I have 2 car payments (the H2 was a very bad idea…) and I am gonna miss my mortgage payment this month so I’ll be in in pre-foreclosure soon. PLease help, I’m SURE you can get an OPTION ARM and afford this POS!
http://sacramento.craigslist.org/rfs/203558960.html
That is hilarious!!
I thought this was a joke until I followed the link - unbelievable!
I’m amazed at the three-month treasuries right now. Yield is under 5%. Why can’t the Fed get them to target? He’d probably have to kill the stock market to do so.
Treasuries are implying a recession.
The steepening yield curve is reflecting a slow loss of confidence in US debt. The dollar should begin to weaken more consistently. Rates will be more “in line” with the Fed Funds rate within the next couple of months without any Fed action.
well, the dollar SURGED today relative to the euro …
Everyone should check out yesterdays bits bucket for the video of an RE scamster attacking an investigative journalist in La Jolla, CA.
Probably much more of that coming down the line.
I am amazed at how stupid the RE scammer was to assault somebody with a TV camera rolling.
I think they were both higher than a kite on meth. They sure beat the hell out of the reporter. He was back to work the next day with a few scratches and teeth marks. Luckily he still has those ears!
These attackers might be from the middle east. Which country i am not sure but I heard on fox that the Male might be from Ahganistan. I have had dealings with Middle Easterners and let me just state that they are highly temperamental and quick tempered, especially the ones who run Business operations. Just hearing the attacking lady on the news video her accent does have a middle eastern tinge.
Nightly Business Report on valuation of the homebuilders’ stocks (with Hilary Kramer, Personal Finance Editor at Aol.com):
http://www.pbs.org/nbr/site/onair/transcripts/060906b/
KANGAS: Let`s cut right to the chase. We`re seeing a lot of weakness in the latest housing data. Is that weakness fully reflected in the share price of the home builders?
KRAMER: Not yet. There`s still down side left in the home builders, which is something we saw today with them of them down 4 and 5 percent.
KANGAS: So we`re in a major correction in that whole industry?
KRAMER: That`s right. Even though they`re trading at book value and many see that as cheap, there could be up to 20 or 25 percent down side left.
KANGAS: You expect to see a lot of delinquencies or foreclosures as these new mortgages, these boutique mortgages have new reset values?
KRAMER: Absolutely, especially these option ARMS which is basically negative amortization and then of course, more than 50 percent of mortgages were some kind of ARM or adjustable rate mortgage in the last year and a half.
KANGAS: The interest-only mortgage. That`s bound to lead to trouble sooner or later and probably sooner.
KRAMER: Absolutely.
It’s nice to hear frank talk every once in a while, isn’t it?
Kramer is a jackass.
I am no genius stockpicker but his comments change with the direction the wind is blowing.
Are we talking about the same Kramer here?
no - Kramer on Nightly business report is a woman
SunsetBeachGuy did not read John’s first line. It’s Hillary Kramer. I like her. She’s not a jackass. The other one is, and I think that’s who SunsetBeachGuy is referring to.
Oops, My bad!
Yeah, Mad Money Kramer was smacking the Bull button on the HB’s all the way down.
You are thinking of Jim Cramer from CNBC’s Mad Money. We are speaking of Hilary Kramer of AOL.com. She is a finance editor. However, this doesn’t damage the credibility or thruthiness of your statement.
He’s mentioned unfavorably in the comments section of the classic investing book “Intelligent Investor” by Benjamin Graham. That’s got to be embarrassing
Money talks and bullshit walks. I don’t know what Kramer’s portfolio is like, but if he is making good money, why should we dog him? Take his show for what it is; tv entertainment. It’s a modern Jerry Springer show with stocks instead of trailer trash.
Just look at the direction CNBC has taken since 2001; more sensationalist than factual. I’ll never forget sitting in the CNBC store at an airport in Nov 2005 listening to some expert analyst refute that there is no housing bubble because prices will continue to rise forever.
Money talks and bulls**t walks. I don’t know what Kramer’s portfolio is like, but if he is making good money, why should we dog him? Take his show for what it is; tv entertainment. It’s a modern Jerry Springer show with stocks instead of trailer trash.
Just look at the direction CNBC has taken since 2001; more sensationalist than factual. I’ll never forget sitting in the CNBC store at an airport in Nov 2005 listening to some expert analyst refute that there is no housing bubble because prices will continue to rise forever.
Unfortunately, the rest of her comments are drivel. She likes HOV because it has “overcorrected” more than other builders.
BTW, if you look at the 5-year charts for the big builders, they all look like Shiller’s housing-price graph, except the stock prices fall off the cliff in 2006.
I’ve been away for a couple of days, and I’m catching up with the threads. (Shame Ben put one up about Oz in that period.)
Anyway, there was a thread on the 5th about Arizona, and it talked about bbiiiiiigggg developments between Lake Mead and Kingman. As I read through, one thing struck me.
If these developments are even partially aimed at LV commuters (despite being up to 100 miles away), how the HECK are all those commuters going to get to work? When I was in that area on holidays in 2001, it seemed to me there was ONE road from Kingman to LV, which ran over the Hoover dam single lane with 90 degree bends and tourist car parking at both ends.
It also occurs to me that it might not be a trivial exercise to increase capacity on that puppy. Let’s see now; we need to start with a new bridge over the Grand Canyon …
That was 5 years back, so if I’m talking BS feel free to correct me, but I envisage the commute bottleneck from hell.
I should have read the whole thread first, it appears there is indeed a new bridge etc. being built (hat tip to azSun).
Well i see clouds but no storm yet here in Tucson except the rainy kind.
New 3300SF McMansion 2 blocks away from El Con just sold, was listed at $769K, in mid-town Tucson!
Damn, those Californicators must have $$ to burn!
Still kicking myself for not buying when I had the chance in ‘04, will prices here ever go down or is Arizona different this time?
Nope. not different.
Wait, you’ll see.
Everybody said the same thing about San Diego last year. Now the wailing is just begun. same for Las Vegas, and Phoenix. Tucson took off after all of the above. It will start to fall similarly.
Tucson is about 1-2 yrs behind, since it was a second wave sort of place.
Most people have never heard of Tucson. then the investors jumped in. Then people started with the “well yeah, everybody wants to live here” stuff.
Believe me, Tucson is nice I’m sure, but everybody doesn’t want to live there. You’ll see the effect of the lack of speculators starting in a few months I’m sure.
(no crystal ball, but it’s happening in all the echo bubble areas the same way).
Besides, don’t beat yourself up about it, you can’t change the past!
clouseau
Realtors expect home prices to fall
WASHINGTON (MarketWatch) - U.S. home prices will probably fall temporarily as the housing market corrects, the National Association of Realtors said Thursday.
Prices should bounce higher in a few months, said David Lereah, chief economist for the real estate group “as the market works through a build in housing inventory.”
Median existing-home sales prices should rise about 2.8% this year and 2.2% next year, the realtors said in their monthly economic outlook. Median new-home prices are expected to rise 0.2% in 2006 and 2.4% in 2007.
“This year sales are slowing, homes are plentiful and sellers are negotiating,” Lereah said. “Under these conditions, we’ll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory.”
Lereah said home prices typically appreciate at the rate of inflation, plus one or two percentage points. Buyers who plan to stay in their homes should see those gains, but “people who purchased last year with the intent of flipping are likely to get burned,” he said.
The group is forecasting existing home sales to fall 7.6% in 2006 and a further 1.7% next year. New homes sales are expected to fall 16.1% in 2006 and 7.1% in 2007. Housing starts are projected to fall 9.6% this year and 9.8% next. The forecasts are slightly below the group’s projections from a month ago.
median 2007 up 2,4%.
oh boy…. he will never change.
“…homes are plentiful…”
How quickly things change, eh Liareah? We’ll see how long it takes for Liareah to dramatically revise his prediction on the magnitude of median price drops.
“Median existing-home sales prices should rise about 2.8% this year”
But… but… didn’t he predict a few months ago that prices would still rise 8% this year, then 5%, then…
“Lereah said home prices typically appreciate at the rate of inflation, plus one or two percentage points. ”
What, has he started reading here and decided to tell the truth about what a normal gain should be? So taking 4% inflation into account, that 2.8% “gain” is really a 1.2% decline, no? At least, no?
Where does he get his ‘appreciate at the rate of inflation, plus 1 or 2 %?’
Isn’t the rate of inflation (even if negative) just whatever the difference in price is from one year to the next? If so, how could it be 1 or 2 % more than itself?
What’s really amazing is that Marketwatch.com has that headline “Realtors expect home prices to fall” is BIG red letters at the top of there homepage (or did this morning).
OT from previous discussions — here is a meme which popped into mind to haunt me at 3:30am last night…
Isn’t it quite a bit more expensive to maintain vertical real estate than the horizontal kind? There is a fixed energy requirement to keep its climate controlled, the need to maintain the vertical structure so it does not crash to the ground, the need to insure against a potentially catastrophic natural or manmade disaster impact, etc.
So how do these costs get shared with owners of condos in luxury towers?
And how about commercial office space in our nation’s burgeoning supply of skyscrapers (this is an important question for investors in commercial RE)?
Do all these vertical structures pencil out over the long run? What does the vertical structure capital base portend for future US economic prosperity?
Well you can’t let them go to seed; maintenance has to be done regularly that’s why you HOA dues with condos. Otherwise the lifespan is about the same.
They are cheaper to heat and cool for the individual units because you have fewer outside walls; ceiling, floor and inside walls are shared, so it acts like super-insulation. My Seattle apartment is dirt cheap to heat, $20/month max because only two sides are outside walls.
As for insurance: a newer highrise will be built for the local risks and will hold up better than most SFHs. Insurance for the structure is paid thru the HOA dues, but you still need personal insurance on top of that - recommend buying it from same company that insures condo building, less headaches when things go wrong.
Thanks for the insightful post. I will sleep better tonight
News item on finance.yahoo.com
Shares of KB Home (KBH) fell sharply after the nation’s fifth largest homebuilder cut its earnings forecast because of the rapidly deteriorating housing market. The news came as luxury homebuilder Hovnavian Enterprises said its orders had fallen by 26 percent and its quarterly net income had dropped by 36 percent. “Expect more pre-announcements, more lowering of guidance, more missing estimates, orders coming in below expectations, yada yada,” said JMP Securities analyst Alex Barron. “It’s just starting.” (Reuters)
It’s just starting…
HOV up today. I guess it’s different!
http://tinyurl.com/nd7zu
The future - RE deals gone bad. caution this is graphic
Jolly good show!
That’ll be the next FOX sweeps week show. “When Real Estate Goes Bad!”
I suggest “Fulminating Fraudulent Flippers”
Annette Haddad has another piece in the LATimes business section today.
Glum Outlook Is Offered by Home Builders
“Three of the nation’s biggest home builders issued downbeat news about the housing market Wednesday, warning that buyers’ increasing wariness could affect their businesses more severely than previously thought.”
Not news to anyone on this blog, but a couple of choice quotes that I haven’t seen before. Like this:
“Toll argued that demand for housing and consumer confidence had been hurt by concerns about terrorism, the Iraq war and the U.S. government response to Hurricane Katrina.”
‘”It appeared that we were no better prepared for floods than Bangladesh and now that’s been exacerbated by continuing bad news out of Iraq,” Toll said. “It gets into the psyche of the American consumer.”‘
That is f’n hilarious - it is always anything else except the enormous inventory and outrageous pricing structure/lax lending policies that caused builders to create that inventory. Toll has actually given the straight story a few times since he sold his shares high but I guess pressure is on him to blame other forces.
More detail at the WSJ
American Housing Horror Show: Twice As Many Units Built Than the Demand!
http://www.financialsense.com/fsu/editorials/jain/2006/0906.html
Is your data source the recent census release?
OT, to TXChick,
I know you’re an experienced trader, I have a question - are there trading firms that offer “fake” trading for training purposes? I would like to try trading, but have to try it out first safely.
This isn’t TXChick, but there are a few out there in the marketplace. http://www.cybertrader.com has a good one.
Did you guys see this?
http://www.fox6.com/news/local/story.aspx?content_id=67522AFC-D21F-4497-8BFE-2A7F82DC0094
A FOX News SanDiego reporter got beat up by a couple he was investigating. They were running a RE scam.
He’s going to jail and his wife will be working at taco bell.
Good to see crooks from 3rd world contries get busted here when trying to pull their 3rd world cons and rip offs in America.
heyyyy. keep you bias to yourself. the guy was born and raised in your beloved country u s of a.
Wife may go to jail, too, if we are lucky, for threatening to get out the gun…
Ken-Someone is in need of some serious anger management.
Hey, we finally got some RE “news” in Montana. They reported on the HPI numbers. Realtors expressed relentless optimism, of course, but they went outside the REIC and got these interesting quotes:
Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana, said the data suggest “a softening of the housing market in Montana and its three (largest) urban areas.”
He also said it shows that Montana housing prices are following national trends, debunking the conventional wisdom that “hordes of immigrants” are driving up housing prices here.
Rising home prices in recent years had more to do with national factors, such as low interest rates and a rush of real estate investment, Polzin said.
At least somebody is thinking critically.
Home prices rising, but slower than a year ago
This just in from Tucson: Our city council drinks the condo Kool-Aid…
http://www.azstarnet.com/dailystar/metro/145561
Liareah is predicting a price bounce in a few months. This time is different than every other time, when prices kept going down for over four years…
——————————————————————————-
ECONOMIC REPORT
Realtors expect home prices to fall
By Rex Nutting, MarketWatch
Last Update: 11:27 AM ET Sep 7, 2006
WASHINGTON (MarketWatch) - U.S. home prices will probably fall temporarily as the housing market corrects, the National Association of Realtors said Thursday.
Prices should bounce higher in a few months, said David Lereah, chief economist for the real estate group “as the market works through a build in housing inventory.”
http://tinyurl.com/fhzw9
if rates keep declining like they have been in the last months, I would expect at least some kind of serious bounce or echo bubble; the question is of course how far the bounce will go and if it will last. There will probably be many bounces on the way to the bottom.
With the size of the inventory?……….I just don’t see that. You may see a leveling off from time to time during the down hill run, but I just don’t see a bounce……question…….where will the large number of buyers come from to cause a bounce?
nhz lives in the Netherlands, where despite the fact that they *are* making more land, they nonetheless have far less buildable area than the desert southwest of the USA…
Central Banks Worried About the Pigs at the Trough?
http://www.xanga.com/home.aspx?user=russwinter&nextdate=9%2f7%2f2006+23%3a59%3a59.999
“As I’ve blogged before, if China gets serious about accounting for pollution costs, expect higher prices for American consumers.”
Russ — this is an important link in the symbiosis. Our enviros have demonized dirty industry, but we all love our cheap manufactures, which are made at the expensive of China’s dirty air and sweatshop labor. What our enviros don’t know won’t hurt them…
“expense of” … (sorry, my editor is not around tonight)
San Diego reporter attacted on TV while investigating real estate fraud:
http://www.ktvb.com/sharedcontent/VideoPlayer/showVideo.php?vidId=86121
Oddly enough, Toll is half right. The nature of a speculative bubble is that it feeds upon itself, and basically, if the psychology had stayed in place that 15% yearly gains could go on even further, they might have happened, at least for a while longer - but they knew full well they cant continue forever. There is a theoretical upper limit to this, and that is because of the nature of the ponzi scheme financing that sustains it. The reason the bubble was really let loose in the past few years was because we went progressively from 20% down, fixed, 30 years, to adjustable 10% 30 yrs, to nothing down arm, to interest only, to neg am, to 40 year term, etc. It got even more creative, and people started taking out equity from one house to buy another.
I realized the party was over when I asked myself, “how much more creative can the financing become?” And that was in 2004! But alas, I was wrong - well not wrong, but early. I told my clients this was a bubble, but noone bought it, and where like, “I told you so” when prices ran up for another year and a half.
Well, here we are…we used up every last speck of creativity to keep the bubble inflating. So now what? You really think that cutting interest rates at this point can make any difference when all other levers of credit are to full open? Hell no. I dont care if they cut rates to 0%, you cant loosen credit any longer on the other terms. So, the problem is, for a rising stock of homes, at rising prices, to keep turning it over at even higher prices you need greater and greater sums of money (debt). Typical ponzi.
So, back to my point, Toll is right that investor psychology ends this, because as more people realize this, demand falls, and as price growth slows even from 15% to 10%, it all starts to move in the other direction. But regardless, without loosening lending further (since population growth, rents and income growth - the FUNDAMENTALS - are rising at a SLOWER rate than prior to year 2000) it would have had to have happen sometime anyway.
What really irks me though, is that Toll kept talking it up when they had clearly already seen that the end was nigh, and started insider selling a year ago. Made a killing…pump and dump.
Honestly, Id like to see every one of them go to jail. Absolute criminals.
I have to assume this is a spoof…but who knows.
http://austin.craigslist.org/cas/204213129.html
It sure disappeared fast enough!
Grim has this quote from the WSJ on his blog today:
“Twenty-five of the 48 economists who answered the survey’s question about housing predicted no change or a decline in a closely watched gauge of nationwide home prices during 2007. The average prediction for next year was for an increase of 0.43%, lifted by five economists who forecast gains of 5% or more.”
I don’t remember the term, but isn’t there something in statistics or forecasting where you are better off eliminating the highest and the lowest estimates and average the rest? You bet your bippie the five who forecast 5% or more skewed the results — clearly the average would have been negative without them, and I bet they would have been negative still if you threw out the equivalent low portion of the curve.
Just drive down the Gulf Beaches in Pinellas County (St. Pete/Clearwater) Florida. Two observations:
1. The Bilmar Condotel with a “NEW PHASE” sticker smacked over the old, higher price. New phase indeed.
2. A “Luxury Condo” development putting sheets of fake plastic tiles on the roof instead of real tiles. Ah yes, it really is a mirage. It has been all along.
Alert!! St. Joe Raises the White Flag
St. Joe says that they are going to get out of the home building business:
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060907:MTFH89492_2006-09-07_21-32-54_WEN5132&type=comktNews&rpc=44
I note that the Dept of Labor beige book for July mentions that Dallas had one of the most acute ‘labor shortages’…..yet another piece of info that argues against a ’strong job market’ being a preventative to a bubble pop or increased foreclosures.