Bits Bucket And Craigslist Finds For September 16, 2006
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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from comstockfunds
The Hard Landing For Housing is Already Here
32.6% of new mortgages and home equity loans in 2005 were interest only, up from 0.6% in 2000
• 43% of first-time home buyers in 2005 put no money down.
• 15.2% of 2005 home buyers owe at least 10% more than their home is worth.
• 10% of all home owners have no equity in their homes
• $2.7 trillion in loans will adjust to higher rates in 2006 and 2007.
• 70% of borrowers who took out pay-option ARMS in the past year have loan balances larger than their initial loan.
• Homeowners face higher payments as mortgages are reset. Generally, monthly payments rise between $200 and $500 depending on the size of the mortgage.
• According to Reality Trac, August foreclosures were up 23% over July and 53% over a year ago.
• The number of homes for sale is at record highs, and inventories are 59% higher than a year earlier.
• New home sales are down 22% and existing home sales down 11%.
• The NASB housing market index has recorded an all-time decline.
• The housing affordability index is at a 15-year low.
• The house price-to-income (rents) ratio is off the charts. According to HSBC, in 18 states accounting for over 40% of national home values, the price-to-income ratio is 3.6 standard deviations above the mean.
• The OFHEO index of house prices deflated by the consumption price deflator has soared to a record high of 350 from 250 in 2001. From 1976 to 1996 it never was above 220.
• According to the NAR the year-to year prices of existing homes are now flat. A short time ago they were rising at a yearly rate of 16%.
• Nationally, home prices have not declined on a year-to-year basis since 1933. Recently, however, prices have been dropping in the North East, West and Mid-West.
• Sales incentives are now estimated at 3% to 7% of selling prices.
http://www.comstockfunds.com/index.cfm?act=Newsletter.cfm&CFID=8162040&CFTOKEN=76697441&category=Market%20Commentary&newsletterid=1263&menugroup=Home
the 125% loan to value has arrived in the uk
plus a few catoons
http://immobilienblasen.blogspot.com/
Who kicks in the -25% “down payment”?
i would like to find out more about sellers’ concession. do i understand this right that it allows to legally inflate the prices up to 6% so that what’s recorded is higher than what was actually transacted? i smell another ‘ numbers’ massaging’ method to keep prices artificially high. or this is just my paranoia.
Actually, that was a method regularly employed when the market was going up. For those that don’t know how this works, here it is. You have a house that sells for 400K. The buyer/borrower has to purchase the home by obtaining 100% financing. But even with 100% financing, the buyer still has to come up with funds above and beyond to cover their portion of the closing costs, which can be as much as 6% (usually about 3%) of purchase price. Our buyer doesn’t even have the funds to cover this amount, which is around 12K. Enter a fancy little trick. The loan officer recommends to the realtor to have the seller bump the purchase to 412K and re-write the purchase contract to say that seller will cover ALL closing costs. The seller figures no sweat because he/she still nets the same amount, and the buyer has just backhandedly obtained 103% financing without the higher rate or having to qualify under the more stringent underwriting the 103 requires. The is easy to do in a market of yester-year, where, first of all, the appraiser would have no problem finding value for the extra 12K. Today, most appraisers arer doing everything they can to hit value on the purchase price. If they push it the 12K, it’ll more than likely get reviewed and slammed - there goes the deal. Second, since we’ve moved into a so called buyers market, most buyers agents are probably going to effectively negotiate that the seller pay all closing costs anyway, and be happy they didn’t ask for a 20K reduction as well.
So, while this was a popuar gig in the years past, it’ll be going into hibernation for the forseeable future.
No ,your never allowed to inflate a appraisal ,if a appraiser or mortgage brokers does this its against the rules . The fact that the real estate industry has been doing this is one of the questionable practices in recent years .In addition , any concessions are suppose to be reported to the appraiser/lender/underwriter . Failure to show the lender all terms of the sales contract can be a attempt to defraud a lender .
Let’s face it, if you have to hide something ,there is someone that get’s hurt .
For instance , when appraisers push appraisals up ,everyone pays higher property taxes and the lender gives a higher loan amount than is allowed under the allowable loan terms . The people that invested in those loans have greater risk on their investment than they see on paper ,and retirement funds could be funded at greater risk than expected .
Appraisers/realtors and lenders are under duty to prevent faulty sales contracts and appraisals but they have FAILED in their duty in recent years IMHO. They all know the rules but they didn’t care because of the money they were making . They can all go to jail if you ask me .
You notice I said “backhandedly obtained”. I didn’t say that it was right nor do I advocate this practice. Greater scrutiny on the lenders part to catch this kind of fraud would be welcome by this broker.
I know nnvmtgbrkr that you were just reporting on what has taken place and you don’t agree with it .
I saw this happen quite a few times (and up in your neck of the woods as well, wizard). Not uncommon at all as the old “co-operate to graduate” mentality kicks in by all the players getting paid from the deal going through.
My in-laws just pulled off something similiar on a home they sold/flipped in Corona, CA. But this one was a real doosey– They raised their selling price $200,000 per the buyers request so the buyer could complete their backyard since this was a brand new house. I told them they better be careful because the buyers could conceivable walk with the 200k if they managed to acquire a no down loan…
He said he could care less and as far as I know escrow closed last week.
Mildly iritating but what the hell am I to do??
You could report the fraud. Do you like your in-laws?
I like them enough to not turn them in… The system is really FUed if it relies on relatives to turn in relatives…
Alot of this will come out in the wash and people will be busted . Lets start with the realtor that set up the deal and the appraiser that pushed a appraisal that high ,than all other parties in on it .
When the market slows the fraud that I discussed above come out . You would be surprised how many people end up calling the loan offices reporting this stuff ,even buyers/sellers that engaged in it because they found out later it was wrong . So go ahead you crooks ,I hope you sleep well at night ,fraud has a 10 year statute of limitations.
a must see!!!
http://www.youtube.com/watch?v=pLjo7-J1qho
thanks!! I can’t wait to show my husband that one.
Wow - someone took a lot of time on that one and is astute.
They bring up something that I wanted to be a THREAD:
COMMENTS OF WHAT HAPPENED PRE-DEPRESSION AND INDICATORS AND WHAT PEOPLE WERE BEING TOLD. INDICES AND EVERYTHING ELSE I.E. ELAPSED TIME OF THE PHASES OF WHAT HAPPENED.
Fellow HBB’ers: I think this deserves some of our time. This video definitely touches on it. I want some correlations because, quite frankly, it is obvious we learned no lessons and that history will repeat itself almost to a fault is not much of a doubt in my mind.
Any research on quotes, indices, anything from 1929ish should be posted here - even as OT on threads….
Much thanks
Ed
Ed, history is said to echo, rather than repeat. What the YouTube piece doesn’t get into is that, before the stock bubble of the late ’20’s, there was a spectacular real estate bubble, that crashed, of course. It, too, was fueled by no-questions-asked, easy bank lending.
So maybe it’s fair to say that right now is exactly the opposite of the ’20’s.
DC - if only that were true! The exct opposite would be that we are going to the moon! However, I am very interested to get your perspective (and others) on the catalysts of how you think this will play out.
Thanks
In the case of the 1929 crash, the problematic lending was margin trades. Banks lent money at 6% for margin trading so everyone could (and did) overextend themselves on stocks. Moreover, companies could (and did) buy stock in each other, and created companies just to sell stock (read IPO’s) and to hold stock in each other. This leveraging, combined with “easy” money for margin trades, drove the stock market to spectacular highs. Check the Yahoo charts to see what the 1926-29 stock market did.
Once the market received a shock, however, all of the leveraging began to unwind simultaneously. As the market dropped, margin calls were made to cover the losses. This forced the liquidation of other stock in that investor’s (or company’s) portfolio spot (then-market) rates. Investors realized that there was no reason to buy forced-sale stocks at the prevailing rates, however, so they lowballed them, thus causing those prices to drop as well. The market caught air and dropped like a stone. Once the leverages started to unwind, it became apparent that most of the companies were almost pure debt and leverage, and that very few were worth anything close to what they had actually been trading at. This caused fresh panic and liquidations, resulting in a dramatically rapid market decline that vaporized huge amounts of “wealth.”
Today’s situation is incredibly perilous. The derivatives markets wrangle more than eight times the entire world GDP. It’s all leveraged and optioned to the max. The housing market is saturated with bad debt and unsustainable loans, and homeowners who bought multiple properties to “flip” or for vacation homes, used credit lines, cash-back refi’s or whatever to take money out of their homes, are leveraged to the gills. Government debt and budget imbalances are rampant.
There is no way to correct any of this in any reasonable manner. We’re seeing the cracks in the dam before it gives way. What happens next?
Honestly, nobody can tell what will happen. There has never been a situation where the entire world has been so heavily leveraged and encumbered by debts. Two potential unwinding scenarios exist: 1) the dreaded “dominoe” effect takes place where one country or market crumbles, thus precipitating a crisis in others. This almost happened with the Mexican crisis and again with Brazil, the S&L crisis, and many other times. There is only so much grace which can be called upon to avoid catastrophy and it seems we’ve overextended that too. 2) Consumers might break and run, whether from a sudden panic or from observing their smarter and faster friends. When they go, the “professionals” must crumble with them.
Either way, a collapse of the scale I’m talking about would be catastrophic, not merely a hiccough in the market, but a full-on seizure. Given the course of human history, a problem of this scale would either result in the Balkinization of the world economy, and probably the larger nations as well, or in world war, or both.
The problem is this: nobody believes this is possible, therefore they do not temper their actions with an appropriate level of concern. By continuing to act intemperately, and ignoring the colossal risks of their behavior, the policy makers continue to make catastrophic outcomes more likely.
It’s true that our economy has a lot of safe guards not available in the 20’s, including FDIC. One similarity is very loose lending and a lot of leverage. It’s true that stock margin loans were much more leveraged then. Perhaps all of the money derivatives are today’s equivalent. Loss lending seems to be the big factor in common.
Bill said…
“It’s true that our economy has a lot of safe guards not available in the 20’s, including FDIC.”
And don’t forget another safeguard — the FSLIC. Oops — not so safe anymore…
http://en.wikipedia.org/wiki/Savings_and_Loan_crisis
Maybe we need a thread on government guarantees and systemic risk due to the resulting moral hazard problem.
“Maybe we need a thread on government guarantees and systemic risk due to the resulting moral hazard problem.”
Yes, absolutely! What I see is that we’re leading up to one gigantic loss when the U.S. Government defaults, vs. thousands of tiny losses as individuals or businesses default. I’ll take the latter - much less catastrophic and detremental to society. The former will only lead to socialism.
“Moral Hazard” is an important term. Don’t know why it’s called that, but it’s driving a lot of investments right now.
KIA,
Excellent post.
Thanks. I also wanted to mention two other aggravating factors from 1929 which are present today: 1) drought conditions and farm failures throughout the midwest; and 2) bank failures (wait and see this quarter’s numbers). For those who mentioned the FDIC: just where will the Federal Government get any real money to pay all of those obligations? Will China continue to fund a bankrupt debtor? I think not. Reinforce success, not failure. This is a principle which has been utterly lost on the US.
These so-called “safe-guards” are part of the problem. If people didn’t “feel” safe from FDIC, there is no way they would have given their money to a bank to loan to every breathing person possible. Government intervention has great intentions, but in the end it is just central planning.
Any good idea begins as just that, and if it gets to the point where people don’t understand the logic behind why it was put in place, then in the end it won’t be providing its original function.
http://www.gold-eagle.com/editorials_01/seymour062001.html
1929-1933 Chart of Pompous Prognosticators.
“Wall Street people learn nothing and forget everything.” - Benjamin Graham (1894-1976)
And it does not take them very long to forget — less than five years, judging from the short time that has elapsed since the tech stock bust.
I think that we will find they remember 5 years ago. When the stock market starts falling seriously again, which I think will begin within a week or two at the most, people will try to get out much sooner than they did in 2000-2002; they will be saying “I’m not getting caught again”. In other words, the drop will be more severe this time.
Good post Kia as always .As I see it people who can are just going to have to hold their leveraged assets (housing ),long term to avoid loss .In 1929 everyone began to sell at once ,driving the stocks lower ,until they became worthless . Sounds familiar when you have everybody and their brother trying to sell housing now with a limited amount of buyers .
People must act in their own best interest ,if they need to sell they must sell ,otherwise your looking at a long term holding position IMHO.
Ed/MBA - I meant “exactly the opposite” in terms of which bubble came first
I think the real answer to your question is that nobody knows how this plays out. People have studied bubbles and their aftermaths pretty much to death - there are common, identifiable features that give us some clues as to what is going on and how it will end (badly), but there are a lot of unknowns. The “catalyst,” or The Pin, is nearly impossible for anyone to see.
Warren Buffet likes to remind us that it is out there, lurking.
“As I see it people who can are just going to have to hold their leveraged assets (housing ),long term to avoid loss.”
A really long time; It took housing 30 years to get back to its peak 1928 level and 20 years to get above the 1930 level.
“When the stock market starts falling seriously again, which I think will begin within a week or two at the most,,,,”
Kim,
What do you think of the conjecture that the stock market will remain propped up until after the mid-term elections? It struck me as puzzling that it did so well these past two weeks after glum news from homebuilders and Ford, although I cannot say that this disconnect between changes in fundamentals and asset price movements is anything new.
I think part of it was the big drop in oil…. what else could it have been?!
“What do you think of the conjecture that the stock market will remain propped up until after the mid-term elections?”
I’m not Kim, but I say “Yes”.
And for a while after that (1/2 year to a year) as well.
I tend to think that it will be a big drop in consumer consumption that will start bringing the economies (plural) down. I’m thinking that you will see ambiguos signs of this during the Christmas ‘06 shopping season, and non-ambiguous signs during Christmas ‘07.
By then I will probably be 100% divested from equities, and into God knows what (are we in for inflation, deflation, or none of the above?)
Ok,
Here is what I’ve found:
Orlando has 21000 properties on market. They claim that this is a 10 month supply at 2,077 properties / month.
Here is what I say:
Rate / month 1 year earlier: 3134 / mo
Rate / month at present: 2077 / mo
Rate of change over the year: (3134 / mo - 2077 / mo)/12 mo = 88 properties / mo^2. (^2 read squared)
approximate new rate = current rate - rate change * 12 months
So,
1020 /mo = 2077 /mo - 88 /mo^2 * 12 mo.
Is 21,000 a 10 month supply? Simply speaking at current rates: yes. However, we are in a decelerating market. This should be taken into account when this statement is tendered.
What it probably is is 21,000 / 1020 approx equal 21 mo. This is a rough calculation that is assuredly a simple extrapolation. I make it to show that the 10-month supply statement is too optimistic and misleading.
I am not employed as a real estate or economics anything. I am but a simple physicist. I am probably not correct in these numbers, but the scary thing is I am most assuredly not wrong.
If economists are not loosing sleep over the housing issue they should be. There is a huge credit problem that has been commented on for about 10 years now. The housing problem could cause this to develop into a full blown collapse. I don’t think we can inflate it away, either.
But what do I know.
Roidy
“I am but a simple physicist. I am probably not correct in these numbers, but the scary thing is I am most assuredly not wrong.”
IMHO you are probably on the high side. The probable error is straight line imputation of rate of change as a opposed to an accelerating rate of change. From 3134 to 2077 over 12 months changes the volatility. A loss of 88 units per month has a larger effect on 2077 than on 3134. The Rate of Change/volatility (Delta) increases as a result of reduced transactions. The effect will result in outliers, scattered prices all over the board for similar units. Each declining prices will further erode transactions and over the next few years volume will drop a further 50% or more.
I am not a physicist, but have spent 35 years dealing with volatility in markets.
Unfortunately, reators and their associated economists don’t seem to know anything more sophisticated that linear extrapolation of current values.
I feel smarter just reading your guy’s words.
Most realtors don’t understand the words “linear extrapolation”, let alone the concept.
Great. Now you’re using technical terms that will make me break out stats textbooks. I could tell the non-astronautical engineer how to get a payload into orbit using terms and principles they would understand, or I could use terms and principles that only myself and other astronautical engineers would understand. I guess it depends on what your underlying aspirations are.
Kind of like Greenspan talking to the American masses. It would have been nice if he’d have remembered that not everyone has a Phd in economics, but perhaps Phds in other fields. That might have prevented the predicament we’re in now.
Oh well. I’m off to look up the “probable error is straight line imputation of rate of change”.
It’s not that hard. What the physicist is saying is that the current number of months supply of homes for sale is a very flawed measure. Consider two universes:
(a) we are in a static sales environment where the number of homes sold is the same every month. Because the total population is buying the exact same number of houses every month, it is easy to figure out how many months it would take to burn through current supply. Just take the total supply and divide by the monthly rate of sales.
(2) in reality the rate of sales is dynamic. So the physicist was looking the monthly sales rate from a point in time prior to this month’s, and he simply supposed that next month’s rate would decline by the average monthly decline between the two points in time he chose. This is the “straight line imputation” because it is the average rate of change.
The second poster who critiqued the straight line imputation suggested that in reality the rate of change is not constant. Home sales actually are getting worse, so current supply as it is calculated is fundamentally biased low in a deteriorating market.
B
I apologize if it seems I critiqued the admiral calculations performed by ACH. I did not mean to offend, because I agree with him/her. I merely meant to point out that it is far worse than it appears. As my grandkids say “me bad”.
The replies have been well-crafted and informative. I have learned and become more that I was. This is good.
Could I please have some comment on the credit mountain that we currently are sitting on? What are its implications.
Roid
Don’t miss these to great posts…as good as any news article / column ever posted
http://thehousingbubbleblog.com/?p=1455#comments
Comment by oliverks
2006-09-15 17:00:25
Comment by GetStucco
2006-09-15 20:35:25
OT - WSJ today, page 1 Money:
New Home Buying Tricks:
……
There is also a renewed interest in so called buyback programs: The builder or a broker agrees to buy your current home, for a PRESET price, if it turns out you can’t sell it.
….
People - yet another reason to dump Toll, Pulte and Lennar….
Good grief, Charlie Brown.
Watched Cramer last night. He says… buy, buy, buy. Any of the homebuilders. Dumb ass.
Crammer!!!!!!!!!!
RealMoney Radio Recap: Keeping House
By TheStreet.com Staff
9/15/2006 2:51 PM EDT
Click here for more stories by TheStreet.com Staff
1. Monday’s Analysts’ Upgrades and Downgrades
2. Cramer Video: Step Aside
3. Cramer Video: Enough Lies About BMY
4. The Five Dumbest Things on Wall Street This Week
5. Tuesday’s Analysts’ Upgrades and Downgrades
Tech, financial and drug stocks have been good bets, Jim Cramer told “RealMoney” radio show listeners Friday; and now he says you can add homebuilders.
This is a group that everyone hates, but Cramer says the big slide in commodities prices is going to give the sector a lift. “This stuff is coming down faster than they can cut the prices of the houses they sell,” Cramer said. This means extra money for these companies, even if housing slows.
http://www.thestreet.com/_tscnav/funds/realmoneyradiowrap/10309296.html
Maybe Cramer knows something about why homebuilder share prices always go up which we do not? But that would be different this time — as I recall, he encouraged many fools to buy tech stocks just before their prices sunk to the bottom of the sea.
An alternate theory: Is it possible the HBs somehow compensate Cramer for drumming up sales?
I have been a stock market investor for over 20 years. (I have had my share of dogs but on a lifetime basis I have made a whole lot more than what I have lost.)
As a stock market investor I am always exploring what others have to say about stocks. For a while I was tuned in to the Cramer show as a curiosity more so than anything else. He has not said anything to cause me to change what I do in the stock market. I have continued to invest the way I normally do. I am not advocating a “Cramer contrarian” view, but I will say that what I have done recently that has been contrary to his advice has been profitable for me.
Feel free to draw your own conclusions about the Cramer show.
Buyback at a preset price if you “can’t sell it”?
What are the terms for that? Like the timeframe, etc. Do you get 3 months of no sale? 2 years? before builder will buy back?
I assume there’s some kind of limit to how much you can “try” to sell it for before it is deemed that the home was impossible to sell?
What are the whacky terms for this whacky idea?
This is new to me:
A Short Course in College Finance
“FOR many parents of college-bound children, the runaway growth in housing values over the last decade has prompted an anxiety-inducing question: Can colleges require parents to use their home equity to pay for school?
“The answer is yes, at least for some colleges. But in instances when it does happen, colleges will expect parents to extract at most 6 percent annually, according to financial aid counselors and college finance specialists. Whether parents should take that route, though, and how they should manage their mortgage and college planning overall, depends on a number of factors, these specialists said.”
QUESTION FOR FLORIDIANS
Has anyone seen sharp increases in electirc bills? I’ve been hearing some places have had as much as 40% increases. Not sure if there is any truth in it or just rumors. If it is true, there’s more fuel added to the fire!
Yes, I have seen a huge jump, but it was about 8 months ago, not recently.
My bill has jumped up about 60% since last year, and I have no idea why. Now, before everyone jumps on me; I will admit I have been lax reading the bill; and the number is small anyway (I live in a small condo downtown in West Palm) so I just have not investigated it as I should have.
Obviously, in FL, electric is always higher in the summer months, but should start to drop now for the next 4-5 months or so (no heat, less AC).
But, to answer your question, no I don’t think its a rumor, I have definately seen a big jump over the past year. If I have some time I will try to find some old bills and see what changed.
Public Service Commission allowed rate increases for FUEL SURCHARGES about 8 months ago.
You should have seen an increase starting a while back.
You probably didn’t really notice till this HOT summer.
We’re in a smaller home, but the rates don’t seem that much different from last year. Of course, we’ve been moving and not paying much attention. I don’t save old statements. I’ll need to go back through the checks. I’m hearing reports of people paying $400+ when they only paid $150 same time last year. Just wondered if it were true! I know even without looking, that our electric didn’t go up that much!
I am in a smaller home in CT and our per/kwh rate DID increase, but it looks like CONSUMPTION increased too. The problem is, my electricity usage is the same as last year. Net effect: doubling of my bill.
They no longer come out and perform energy audits. Something is going on - maybe a conspiracy!!!!
Here in SoCal our electric company (SC Edison) is actually delaying a rate increase for a few months, the rates have already skyrocketed, I had a $580.00 bill in July. Edison realizes they can only screw people slowly.
I’m on a payment plan which spreads the payments equally over the course of the year. My payment plan has not been altered although I did get a credit National Grid had to pay its customers for not living up to its service obligations.
Today’s Washington Post has 4 sections of real estate advertising, 57 pages total. That’s not including apartments or other non-real-estate classifieds.
I’m not sure what the normal size of those sections are (just moved into the area), but that seems awfully high to me, especially for a Saturday - I think Sunday’s are normally larger, though need to check tomorrow.
Saturdays are the big realestate advertising days. Need to get folks off the couch and out looking at homes over the weekend. Sundays reserved for shopping and other things.
I just want to say if prices are going down it’s against the rules/laws /guidelines to inflate the appraisal to cover the concessions and kickbacks . Everyone in the business knows this so don’t let them BS you .
Coming soon to a market near you:
*Last half of October stock market crash due to poor earnings for Q3 and advance GDP number for Q3 which reflects recession
*Fed cuts rates at December meeting
*Foreign investors back away from US Treasuries prompting a rise in interest rates and gold and a fall in the dollar
*YOY declines in median home prices accelerate with overall economy decline
“*Last half of October stock market crash due to poor earnings for Q3 and advance GDP number for Q3 which reflects recession”
Postponed to mid-November to pave the way for Republican encumbants’ mid-term election campaigns.
“Postponed to mid-November to pave the way”
And for a while after that as well. Remember, you were expecting the HB stocks to act ’sanely’ as well. I think that it will all come to pass, but a bit after it ’sanely’ should.
Well, in fairness to my expectations, HB stocks are off by 50% or more off the August 2005 peak, and though they bounce up and down quite a bit and the trend rate of decline has flattened, its direction is nonetheless unambiguously down.
found a realtor showing signs of fustration on the write up of a listing, blaming the return of a home back on the market solely on the “flaky ways of the buyer,” probably more likely the buyer wised up to the stupidity of buying at the present time at the present price and went thru every excuses in the book to back out of the ecrow and did.
Blame it on the Buyer
-
Wow - anybody else catch “Cavuto on Business” on FNC this Sat morning? Infamous NYC RE Broker, Barbara Corcoran admited prices have “fallen alot” and may fall further - and also said we haven’t even seen the full real numbers yet because they are 3 months behind. I CLEARLY can recall watching this beeyatch a year ago on the same show say something like “home prices one year from now will be higher than they are today.” Nobody called her out on it of course.
Was that long hair guy on the show? They were both cheerleaders last year.
No, that hippie realtor Tom Adkins wasn’t on the show.
But Interesting to note - That hippie is actually married to the one host, Brenda Buttner.
http://www.newshounds.us/2006/01/28/ever_wonder_why_tom_adkins_deserves_to_be_on_bulls_and_bears.php
I used to watch the “cost of freedom” - but I tired of the rah rah. I might have to start watching again.
Barbara Corcoran=the person who said the market would pick up after the Super Bowl, you could bank on it.
yes, and then when questioned wasn’t sure exactly when the Super Bowl was to take place. I was as shocked as Gekko watching the show this morning. She has definitely done a 180 and gone from “buy now or be priced out forever” to “sellers have to get real and drop their prices, no matter what we said 12 months ago”.
Yep. I think the spokescritters for the Realtors ™ are starting to realise that the volume of transactions contributes more to total commissions than the price at which each transaction is conducted.
Here’s a genuine conflict of interest for seller’s agents; they are supposed to represent the seller (and so get the maximum price obtainable), but hteir own interests are best served by getting a fast sale at an inferior price.
Well, we all know how corporate management has resolved a similar issue regarding their own remuneration.
Blue Eye condos cater to Christians
Jim Bakker will be among development’s residents.
Kathryn Buckstaff
News-Leader (Springfield, MO)
9/14/06
————-
Blue Eye — Compared with similar attractions aimed at the Christian market, Branson developer Jerry Crawford said Morningside has an ace in the hole. Crawford’s trump card for the new planned development is Jim Bakker, whom Crawford brought to Branson four years ago and supported as he regained a position in TV evangelism. “He’s the anchor tenant,” Crawford said.
The first phase of the 560-acre development to open in January features 115 whole-ownership condominiums, a three-story domed atrium with projections of moving clouds and a studio for “The New Jim Bakker Show.”
City officials in Blue Eye, which has a population of 130, are so excited by the prospect of new residents and tourists that they voted last year to annex the project planned for 1,700 homes.
“I think it’ll be an asset to the community,” said Donna Lawhon, who owns the Dairy Land diner. “I think it will increase people’s property values.”
Bakker predicts Morningside will become a destination. “When we first came here, a lot of people came here for Branson and then found us, but now we have a lot of people coming just to see our show,” Bakker said.
Blue Eye Mayor Jerry Kerns said as Morningside develops, residents could vote to impose the town’s first sales tax. “We would love to have our own law enforcement,” Kerns said. Kerns said he expects no negative effects from the development and that Crawford has proven to be a “straight-shooter. Everything he said he’d do, he’s doing.”
Morningside condos will range from $79,900 to $185,000. They also plan a fitness center, pool and tennis courts as well as RV campsites, hiking trails and a 50-foot waterfall at the entrance. There won’t be a litmus test for buyers, but the development will attract like-minded buyers, Crawford predicted.
Christian competition
It was nearly 20 years ago when Bakker was ousted by the board of the ministry he founded in 1978. PTL later entered bankruptcy, and other ministry officials were subsequently convicted of mail fraud related to vacation time-shares. Bakker served five years in prison.
The Heritage resort has recently been restored, Bakker said. “It’s just wonderful to see it being restored,” Bakker said, “but Morningside — the thing that’s unique is the Crawfords are building it, so I haven’t had to raise the money.”
But Morningside will be competing with the South Carolina attraction that also has a themed Main Street with shops and meeting space. Also, the Rev. Jerry Falwell is planning a resort with time-shares, skiing and golf near the campus of his Liberty University in Lynchburg, Va.
Crawford’s dream
Crawford said he’s wanted to build Morningside for 21 years since he and his wife, Dee, first visited Bakker’s Heritage USA. The couple was on the brink of divorce, but the marriage workshop they attended and their encounter with Bakker turned their lives around in every way, the Crawfords say.
“We want to offer people the same opportunities we had,” Crawford said. “When I came to Branson, I was going to do that, but the 12.5 acres I had on (Shepherd of the Hills Expressway) wasn’t enough, so I just dropped the idea. Then I met Brother Bakker a few years ago, so that’s how it all started again.”
Bakker’s dream
Bakker dreamed of finding a place he could again teach the gospel, he said. Crawford called in 2002 and offered the Bakkers — who were then doing charity work in Florida — a rent-free restaurant remodeled into a studio. The Bakkers arrived in Branson in three weeks. The Crawfords even provided the Bakkers and their five adopted children a home until they got on their feet.
Bakker’s TV ministry is now on networks in more than 40 cities, broadcast around the world on the Total Christian Television network and recently began showing on DirectTV. Donations received by Bakker’s ministry go to purchase air time, Bakker said. He’s not getting rich, he said.
“We’ll have Bible study every day, and we have other teachers lined up to come, and we’ll have camp-meetings at night where there will be speakers and music,” Bakker said.
He, like the Crawfords, plans to live in Morningside.
“This is my last move, as far as I’m concerned,” Bakker said.
http://www.weht.net/pics/j-hahn.jpg
A byline on p. C1 of today’s WSJ reads, “Stocks Rise Despite Auto Makers’ Distress.” I wonder whether a slightly different wording might be more appropriate, say “Stocks Rise in Response to Auto Makers’ Distress,” as we consistently see the same sort of contrarian bounces in homebuilder stocks on the days of bad news releases. As shown in a NY Times article a poster linked in yesterday, YOY drops in new car sales like we are currently seeing have perfectly predicted every recession since the early 1970s, and so far as I know, stock prices normally drop steeply during a recession. What gives?
The auto stocks were way down on Friday, a generally up day with optimism over interest rates. The builders were up as much as 5% at 11:00 but fell to 1-2% by the close.
Cramers followers are stupid money. Next week we will get the reports of sharp declines nationally in building permits and home starts. However, as long as most people think that we are not heading for a recession, the market can go up. The recession talk is going to get a lot stronger in the weeks ahead. Maybe it will help cause that 10% correction that we have not seem for an unusually long time.
I learned in my college Economics class, that car sales are typically a 6 month leading indicator.
Why Bernanke is called “Helicopter Ben”?
I do not get it.
That was because of something he said, not something he did.
The real helicopter is “Helicopter Al.”
I thought it was a reference to him dumping our fiat currency out of a helicopter if necessary to increase liquidity.
“As God is my witness, I thought dollars could fly!”
Jon
TV reporter beaten, but not broken
By Alex Roth
UNION-TRIBUNE STAFF WRITER
September 16, 2006
NANCEE E. LEWIS / Union-Tribune
TV reporter John Mattes still showed the signs of his on-camera beating. A widely viewed video of the attack has made him an accidental celebrity.
San Diego TV reporter John Mattes was hard at work this week, calling sources and chasing stories, even while convalescing from the bloody on-camera beating that turned him into an accidental celebrity.
His body still aches pretty much everywhere. He has scratches on his face, human bite marks on his hands and arms, several cracked ribs and whiplashlike symptoms in his back. His gouged left eye socket remains tender and swollen.
“They had to remove particles of things that didn’t come from me,” he said Thursday night, sitting in his cubicle at the Fox 6 News studio in Kearny Mesa. “Human hairs. Not mine. You don’t want to think about that.”
His sudden fame has left him a bit mentally drained. In the past 10 days he has been interviewed by everyone from Larry King to a Costa Rican radio talk-show host. He turned down an offer to appear on David Letterman.
He’s also received several hundred e-mails from people around the world who have seen the video of him being pummeled by a husband-and-wife couple upset about his investigative reporting. The footage is wildly popular on the Internet. On some Web sites, Mattes’s beat-down is offered up as a kind of cyberspace sight gag.
“This video has it all!” one Web site declares. “Bloody reporter, bleeped profanity, cops with guns drawn, you name it! I thought I had seen the exciting part until about halfway through . . . then it gets AT LEAST eight times more exciting!”
http://www.signonsandiego.com/news/metro/20060916-9999-7m16celeb.html
Sanders working on housing issues
Mayor recruits building leaders
By Lori Weisberg
UNION-TRIBUNE STAFF WRITER
September 16, 2006
San Diego Mayor Jerry Sanders is enlisting the help of building industry leaders and housing advocates to devise a way to finance and construct housing more affordably citywide.
He made known his plans during a news conference yesterday that was organized by the Building Industry Association to highlight what it says is a new cooperative spirit at City Hall when it comes to housing issues.
The city of San Diego and local home builders recently settled a long-standing lawsuit in which the industry challenged the legality of the city’s three-year-old inclusionary housing law. The ordinance mandates the inclusion of affordable units in new housing projects, or, alternatively, a fee levied on new development.
http://www.signonsandiego.com/news/metro/20060916-9999-7m16afford.html
I don’t believe Mayor Sanders actually has to do anything at all to get more affordable housing in San Diego. The market will do it for him over the next couple of years.
Wonder what his lucrative new real estate career entails — maybe twirling a sign?
————————————————————————————————–
Aztec Warrior chucking it all, including spear
September 16, 2006
San Diego State’s warrior mascot is hanging up his headdress.
There are some things Carlos Gutierrez, aka the Aztec Warrior, won’t miss. Having a bare torso and wearing a loincloth wasn’t his idea of fun when temperatures dipped into the low 30s at a Wyoming game.
He also performed in winds so strong at a game in Las Vegas that three feathers snapped in his headdress as soon as he exited the car.
After 16 years of masquerading as the university mascot, ***Gutierrez is now turning his attention to his more lucrative real estate career***. He won’t miss the bad weather, but he will miss his alter ego, which he says will always remain part of him.
http://www.signonsandiego.com/uniontrib/20060916/news_7m16bell.html
Too funny.
I work in engineering. I know of four co-workers recently laid off that are now getting into the realty business. Most of them solicited their ex co-workers on the way out and/or afterwards.
I’m thinking that and the mascot thing are about the equivalent of shoe-shine-boys investing in stocks.
Check out the chart on this link. The NAHB index which has fallen dramatically overlayed with S&P500 index set back 12 months. Draw your own conclusion. The next 12 month should be very interesting.
http://www.safehaven.com/article-5896.htm
The part of that article pertaining to Seattle is a joke. While there are some decent employers up here, not everyone works at Microsoft and makes huge money. They cite Starbucks as if baristas are rolling in the dough buying 500k homes. The guy talks about how there is this mass influx of young professionals moving to Seattle because it is so great, affordable, blah, blah, blah. What any average wage earner finds when relocating here is a nothing short of a rude awakening given how sickeningly expensive it has become. This place is going to crash and burn.
Ad in San Diego Union Tribune Change of Address supplement this morning:
Verano La Jolla “Bottom Line Prices” with this amazing statement:
“ACT NOW! THIS VALUE WON’T LAST”
“ACT NOW! THIS VALUE WON’T LAST”
How true — this value is definitely going lower.
he he
The brainy ones driving up house prices?
September 16, 2006
Memo from a financial simpleton (aka Logan Jenkins):
If the real-estate market made sense, it would work like this:
You’d put money down, take out a mortgage and buy a house for X number of dollars.
Over the long haul, its value would steadily increase depending on variables such as interest rates and sweat equity.
On a psycho-financial level, the homeowner would enjoy control over his/her shelter as well as tax benefits and the pleasant daydream of one day burning loan documents.
In a word, home ownership would be predictable and accessible, a sort of economic democracy.
The reality, at least in these parts, is quite different. Real estate can seem as predictable as a runaway roller coaster.
During periods of bubbly exuberance, prices can shoot up 20 percent or more a year. It’s like every homeowner is a lottery winner, drunk on dumb luck. Gimmicky instruments such as interest-only loans allow speculators to feed in a frenzy. Houses get flipped as fast as In-N-Out burgers during lunch hour.
http://www.signonsandiego.com/uniontrib/20060916/news_1mi16jenkins.html
May as well finish redelivering Jenkins’ bad news:
“Then, just like that, the mood changes from bubbly to flat. The flippers worry they’ll get caught upside down, owing more than their houses are worth. Buyers stand back, worried they’ll plunge in as the market heads south.
That appears to be about where we are now. In a leery standoff between buyers and sellers.
Countywide, the volume of August sales was the lowest in nine years. In North County, the median price for a house declined from last year at this time, a cloudy bellwether.
The wary word one hears whispered is “reset,” as in the resetting of payments for variable or interest-only mortgages. In a down market, those who bought homes to make a quick killing may find themselves unable to make ballooning payments, spawning foreclosures and more downward pressure on prices.
Call me callous, but I don’t mind seeing the speculators go down in flames. If you treat houses like chips in a casino, and not a long-term investment, then you should be prepared to lose.
Still, beneath the bubble talk, there ought to be some basic economic foundation to inspire faith in the region’s property values over the long term.
Evidently, there is, but it takes a lot of brains.”
New math:
SD County added a net 600 jobs last month. Last time I checked, 12 mo/yr X 600/mo = 7,200 / year. But Alan Gin says that “by the beginning of 2007, hiring in San Diego could slow to an annualized pace of 15,000 per year.” What gives?
The sidebar is also puzzling — shows the following decomposition (presumably of last month’s changes):
Retail +700 jobs
Construction +1400 jobs
Finance -200 jobs
Telecom - 500 jobs
But the article states “local construction companies shed 500 jobs.” All told, I am confused, as the numbers they throw around in this article do not add up. But if the biggest recent growth areas were in construction and retail, then I would guess Gin’s projections are way high.
————————————————————————————————–
Local hiring fairly flat
Despite a net gain of just 600 jobs in San Diego County last month, year-to-year growth robust between August 2005 and August 2006
By Dean Calbreath
STAFF WRITER
September 16, 2006
The decline in real estate sales continued to put a damper on San Diego County’s job growth last month, as local construction companies shed 500 jobs, according to data released yesterday by the state Employment Development Department.
After taking into account a seasonal increase in tourism jobs and a decline in education work, hiring in the county was basically flat in August. The addition of 1,100 professional and business services jobs – mostly held by temporary workers – was largely offset by the slowdown in construction work.
Despite the sluggish monthly growth, however, the county still showed strong year-to-year growth, with the creation of 18,300 payroll jobs between August 2005 and August 2006.
“That’s pretty solid growth, particularly with the pullback in construction,” said Alan Gin, an economist with the University of San Diego. “What that means is that other parts of the economy are stepping in to pick up the slack.”
Based on his monthly index of leading economic indicators, Gin predicted last week that by the beginning of 2007, hiring in San Diego could slow to an annualized pace of 15,000 per year. He said it’s too soon to tell whether he’ll have to revise that prediction.
http://www.signonsandiego.com/uniontrib/20060916/news_1b16jobs.html
Alan Gin is a total idiot. I doubt if he knows how many fingers and toes he has. Math challenged, logic challenged, or maybe ethically challenged. All these bobble head economists that spew lies can burn in hell.
this is just a short bit of quotes I’ve saved. some don’t have links to the articles.
“‘The buyers are definitely out there,’ said Miguel Soler, a real estate agent in Valencia. ‘It’s not a bad market, just overpriced homes,’ he said. ‘The bottom line is, selling houses is very competitive on price. People don’t care about cookies, donuts or flowers, they just want the best value and they are doing comparison shopping.’”
http://www.the-signal.com/?module=displaystory&story_id=32837&format=html
Some experts say that downward trend may spread across the state, but other Realtors say as many areas continue to grow prices will continue to rise.
“Because prices are going to keep going up, I don’t know if you know what sheetrock is going for right now but it’s $4 a sheet more than it was last year,” Craft added.
That’s why prices will likely continue to rise even as sales are expected to steadily slow down.
http://rdu.news14.com/content/your_news/raleigh/?AC=&ArID=90678&SecID=17
“This year sales are slowing, homes are plentiful and sellers are negotiating. Under these conditions, we’ll probably see prices dip temporarily below year-ago levels as the market works through a buildup in housing inventory.”
Lereah called it a normal pattern during a market correction and said price should return to positive territory within a few months.
http://www.eastvalleytribune.com/index.php?sty=73710
It’s going to be short-lived, though. If there’s any national downturn, it will probably last a quarter.’
http://www.chicagotribune.com/business/chi-0609100082sep10,1,5965765.story?coll=chi-business-hed
“A U.S. housing sector downturn may last for years because of excess supply and faltering consumer confidence stemming from worry over U.S. foreign policy and federal government competence, the head of nation’s largest builder of luxury homes said.”
“Robert Toll, CEO of Toll Brothers said the current slump in prices and sales volumes was more severe than the ’soft landing’ for housing predicted by some analysts. He said the market recalls the recession of the late 1980s when prices took more than three years to recover. ‘This isn’t a soft landing, it’s harder than a soft landing,’ Toll told Reuters.”
“The current downturn is mostly the result of a ’severe overhang’ in supply that Toll estimated at 15 percent to 20 percent more than the market can easily absorb. That was driven by ‘tremendous speculation’ by home buyers who never intended to occupy seeking a quick profit from a rising market, and by builders who constructed homes before securing buyers, he said.”
http://today.reuters.com/news/articlebusiness.aspx?type=realEstateRestaurantsHotels&storyID=nN06245309&from=business
(9-7-06)David Lereah, NAR’s chief economist, said the most obvious effect in the near term will be with home prices. “A year ago we had record home sales and tight supply with buyers bidding over the asking price,” he said. “This year sales are slowing, homes are plentiful and sellers are negotiating. 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.”
“This is a normal pattern during a market correction, but home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms,” Lereah said. “Keep in mind that over time, home prices rise at the rate of inflation plus one-to-two percentage points – buyers in most of the country who plan to stay in their home for a normal period of homeownership can pretty well bank on those historic averages, but people who purchased last year with the intent of flipping are likely to get burned.”
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/SeptemberForecast07?OpenDocument
Milano said that translated into bad news for sellers. “It’s a buyer’s market now,” she said. “That’s if you can afford it.”
The National Association of Home Builders found that those who buy new homes spend an extra $6,000 in the first year on alterations, furnishings, appliances and the like.
http://www.baltimoresun.com/business/bal-te.bz.jobs01sep01,0,2179927.story?coll=bal-home-headlines
“It’s very important that the Fed understand the fragile state of the housing market,’’ Lereah said. “It’s very important that the Fed maintain the status quo, keep rates where they are.’’
http://www.bloomberg.com/apps/news?pid=20601087&sid=ay_RofPm.SV4&refer=home
Vander said double-digit home-appreciation rates have pushed median prices in Ada and Canyon counties up 30 percent and 35 percent, respectively, in the last year. At those prices, investors cannot get the rents they need to pay their mortgages, she said.
“The investment doesn’t pencil out for a $200,000 home, even with 20 percent down. It won’t cash flow,” she said.
http://idahostatesman.com/apps/pbcs.dll/article?AID=/20060824/NEWS0203/608240360
In his 40 years as a home builder, Mr. Toll says, he has never seen a slump unfold like the current one. “I’ve never seen a downturn in housing without a downturn in employment or… some macroeconomic nasty condition that took housing down along with other elements of the economy,” he says. “This time, you’ve got low unemployment, you’ve got job creation, you’ve got a stable stock market and relatively low interest rates.”
http://online.wsj.com/article_email/SB115630090176442994-lMyQjAxMDE2NTI2MzMyMDMwWj.html
“Although places such as New York City and Boston look overheated by many measures, the Philadelphia region’s housing-price run-up hasn’t been nearly as fast and furious. ‘Things can slow down, but there is no bubble in suburban real estate,’ said Jeffrey Orleans, CEO of Orleans Homebuilders Inc. in Bensalem. ‘I’d bet my life on it.’”
http://www.philly.com/mld/inquirer/classifieds/real_estate/12376832.htm
“A shortage of land in the suburbs reduces the potential for a boom-and-bust cycle in this region, he said.’
one of my favorites.
“Some things are best left in the rear-view mirror. Like adolescence, high school, living at home, renting and roomates. Sooner or later you’ve got to put them behind you.”
http://www.thegrantdc.com/