“There Is Going To Be A Better Time To Buy’: California
The LA Times takes us back to California. “For the first time since the latest housing boom started six years ago, home price appreciation for each of the six Southern California counties has fallen to single-digit levels or worse, data released Tuesday showed.”
“‘People have become scared about home prices because they think prices are going to fall,’ said Michael Carney, an economist with the at Cal Poly Pomona. ‘They’re waiting and staying out of the market.’”
“Mira Loma resident Louis Martinez and his wife spend most weekends touring models at new-home communities in the Corona Valley. But the couple are in no hurry. ‘I feel more confident now than I was six months ago that prices will come down,’ he said.”
“In the early 1990s, the downturn had a clear-cut cause: widespread job losses that led to an economic recession. One thing common in both real estate cycles, said Edward Leamer, director of the UCLA Anderson Forecast, was ‘inappropriate appreciation.’”
From KGET in Bakersfield. “Many Kern County homeowners have been waiting for weeks without an offer on their property for sale. Escrow officer Yessina Castillo said appraisers are re-adjusting that formula on a daily basis because homes are now priced at about two-thirds of what they were a few months ago.”
“‘There’s a lot of new competition because we have a lot of new construction in Bakersfield so a lot of older homes are not selling like they used to before,’ she said.”
“Older homes with an asking price of $350,000 just couldn’t compete with new ones carrying the same price tag. ‘The older homes are tending to lower their prices 10 percent, 20 percent,’ Castillo said.”
“Several U.S. real estate markets including Fresno and Stockton in the Central Valley are facing a bust, says a company which buys and sells distressed properties. California saw a 196 percent increase in motivated sellers since August but unlike Florida and Arizona, the bust in California has been more widespread with a full seven counties seeing motivated sellers triple or more.”
“‘We’re seeing some trends that lead us to call certain markets literally a ‘bust’ market,’ says Duane LeGate. ‘The San Joaquin Valley area is a bubble spot. He says the current California market reminds him of the depressed home market of the mid 1990s.”
“‘You’ve got the makings here of the perfect storm,’ Mr. LeGate says. ‘I can see prices going down by a good 20 percent in the markets we’re calling ‘bust.’”
The Tracy Press. “Central Valley Association of Realtors director Karl Enzmann said the number of houses for sale in Tracy peaked eight weeks ago as interstate speculators dumped their homes on a market short of buyers.”
“Enzmann also said some sellers have pulled their homes off the market to wait until spring. ‘People that are looking to buy bigger homes are finding that they can’t sell their house,’ Lynda Mendoza from Countrywide Home Loans said she sold a lot more refinancing packages than mortgages recently.Mendoza said. ‘So they just take it off the market and go ahead and try to refinance.’”
“A report from a Bay Area mortgage insurance company says local homeowners should be very worried about a possible decline in prices. ‘No one should be surprised by the slowdown we’re seeing,’ Mark Milner, chief risk officer of PMI, said in a release. ‘Over the past five years, home prices appreciated much faster than incomes, and that can’t continue forever.’”
“The housing slump continues as Bay Area home sales last month dipped to the lowest level in nine years while appreciation was flat in the region, with prices falling in some counties, according to a report released today.”
“Bay Area home sales for August declined 24.9 percent from a year ago while the median price of $620,000 was just 0.2 percent higher, said DataQuick. From August 2005 to August 2006, the median home price dropped 6.7 percent in San Mateo County to $721,000 and dropped 1.5 percent in Alameda County to $577,000, while it was unchanged in Contra Costa County at $567,000.”
“The slowdown in homes sales began in spring 2005 as interest rates started to rise and inventory levels, the number of homes for sale, increased. ‘Several things are going on. Many homes are being offered for sale at unrealistically high prices as sellers try to game the peak of the market. Buyers appear to be taking a wait-and-see approach as sellers get real with their asking price. ‘The market seems to be going into a lull, until this all shakes out,’ said Marshall Prentice, DataQuick president.”
The Daily Breeze. “A total of 25,628 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month, according to DataQuick. That figure was down 25.3 percent from August 2005 and marked the lowest total for the month since 1997.”
“August was also the ninth-straight month that sales declined on a year-over-year basis. DataQuick previously said the median price for a home in San Diego County fell 2.7 percent in August and the county saw a 32 percent drop in sales compared with the same month last year. In Los Angeles County, sales dropped 21 percent.”
The Ventura County Star. “The end of the real estate market boom is forcing one of Ventura County’s largest employers to cut 5 percent to 10 percent of its work force over the next few months, a top executive told workers Tuesday.”
“Countrywide Financial Corp., the country’s largest mortgage lender with about 5,700 workers in Simi Valley, Thousand Oaks and Westlake Village, instituted a 60-day hiring freeze and plans to reduce staffing in several areas, Dave Sambol, president and chief operating officer, said.”
“‘Sales of single-family homes for the year through July were down 27 percent, condos are down 60,’ said economist Mark Schniepp in Goleta. ‘These are bloodbath levels of declines. There are direct casualties from this downturn.’”
The Santa Rosa Press Democrat. “Sonoma County home prices dropped for a second consecutive month in August as buyers sought bargains and sellers cut prices to make houses stand out in a crowded market. August’s median price was $577,250, a 6.7 percent drop from $619,000 a year ago when prices peaked.”
“‘The buyers are just waiting to see if sellers are adjusting their price downward, if they can get an even better deal on a house. Last year, they were paying asking price or more, and now they’re actually coming in at $5,000 to $10,000 less than what sellers originally had their prices at,’ said Bob Buhman, a broker in Santa Rosa.”
“‘This thing is much deeper and has happened much faster than people realize,’ said Marty McCormick, a Santa Rosa lender. ‘There’s going to be a better time to buy. But they’re going to be real tentative and driving hard bargains.’”
We are still adjusting the settings for the new server, so there may be downtimes. From the Daily Breeze:
‘The Hawthorne School District stands to lose millions in projected revenue this year because of declining enrollment, with high housing costs suspected as the main reason. The K-8 district’s loss of students seems to be part of a statewide trend.’
‘Hawthorne’s student rolls have been shrinking for the past three years, Rose said, adding, “it seems to be getting a little worse.’ The same is true in many districts throughout the state, from the small, upscale Santa Barbara system, to the giant, diverse Los Angeles Unified, which have also posted consecutive losses.’
Ben,
You might want to contact the company that hosts Realtor.com. I suspect that they will soon have lots of server space.:)
No way! Their databases are chock full of dead listings that just aren’t moving. And more coming in every day. More disk packs for Realtor.com, please!
Now as for the web traffic… yes, they must have plenty of *bandwidth* to spare, as nobody wastes time looking at those overpriced listings!!
Now you can sympathize with the heroin addict.
36 hours without Ben’s Blog……
As soon as my hand stops shaking I’m writing a check…..
Me too…it was just a ploy to put us into withdrawal, so’s we’d all pony up. I’m gonna heed the warning. Welcome back, everyone.
“it was just a ploy to put us into withdrawal”
No kidding. I found myself actually getting things done at work and having a life. Fortunately, I can put that all behind me since the blog is back…
I suspected sabotage by the Realtors…
Was it lost on anyboday, in the same page on the Sonoma press was an article about a RE agent arrested for stealing 10 bottles of pain killers from her open house client! She feels the pain! Ha…
http://www1.pressdemocrat.com/apps/pbcs.dll/article?AID=/20060920/NEWS/60920002/1033/NEWS01
My daughter’s elementary school enrollment is down 10% this year. The school secretary told me that the drop is districtwide in the Conejo Unified School District and the Las Virgenes district, both full of blue ribbon schools that used to draw LOTS of families. The average API score at my daughter’s school is 917.
This Daily Breeze article published Sept 17 discusses the net outflow of homeowners to other states: http://www.dailybreeze.com/news /articles/3937691.html?showAll=y&c=y
CA’s population is not shrinking ONLY because of international immigration, the largest component of that being poor people from Mexico and Central America with a high birthrate. 90% of the international immigrants RENT and much of this demographic (as much as I hate this sad reality) drives down property values and school test scores. CA is experiencing net homeowner losses that compare to the 1992-4 levels (after the aerospace industry crash), and this is BEFORE the big job declines that will unfold when So Cal’s mortgage industry collapses in 2007-08.
“(as much as I hate this sad reality) drives down property values”
Is this part of the stealth affordable housing program?
“CA’s population is not shrinking ONLY because of international immigration, the largest component of that being poor people from Mexico and Central America with a high birthrate. 90% of the international immigrants RENT and much of this demographic (as much as I hate this sad reality) drives down property values and school test scores’”
You are correct, Large numbers of Hispanic illegal immigrants flooding into SCal/LA usually results in deteriorating declining neighborhoods. Large numbers of rented out SFH’s in a given hood does not improve the hood. Right across the street from me there is a large bright rent sign on a duplex. LOng BeACH DOWNGRADED this area to R-2, resulting in a horrific scrambled mish-mash of duplexes, squeezed townhomes, apts , converted SFunits ,ect. One-third of all units in this hood are rented out, causing this area to go into noticeable decline.
Just one more compliment Ben. It was very noticeable that you make quite an effort pulling in stories from all over the country that your fellow blogees don’t have access to unless we come to this sight. Seeing this lastest bubble played out in all the various localities really reinforces the period we’ve been through and are still going through — it really does seem “different this time. The information you present and the ease with which can access it provides a true bird’d eye view of it all. Tremendous work!
Ben, There better not be…We had rioting in the streets the last two days…Of course it was just me…
Gary (15%, it’s in the bag) Watts must be getting nervous about his prediction for OC! Didn’t he also say that it was “impossible for RE prices to go down”?
Too bad for Gary Watts because prices on the OC already fell by $7K in 1 month alone! He is already wrong, heh heh. Theres some news about it at http://www.realestatedecline.com
This is getting good. Prices are falling year over year all over California now. Theres a bunch of articles about it at http://www.realestatedecline.com
It is time for PMI to bump up some of its predicted probabilities of price declines to 100% certainty.
http://cbs2.com/topstories/local_story_263200232.html
“The end of the real estate market boom is forcing one of Ventura County’s largest employers to cut 5 percent to 10 percent of its work force over the next few months, a top executive told workers Tuesday.”
“Countrywide Financial Corp., the country’s largest mortgage lender with about 5,700 workers in Simi Valley, Thousand Oaks and Westlake Village, instituted a 60-day hiring freeze and plans to reduce staffing in several areas, Dave Sambol, president and chief operating officer, said.”
Only cutting 5 to 10% of its workforce? The must be cutting elsewhere. Current mortgage volumes do not support the current workforce. Or will they do a series of “papercut layoffs” where they trim 5 to 10% every 3 months?
It doesn’t suprise me that schools are losing kids… sad, but this state has become too expensive to raise a family.
My prediction? More layoffs to be anounced shortly. September is going to be the last “strong selling month” for a long time. The true bear market in homes starts soon.
Neil
Wow!…and just think, probably not one politician in Sacramento has thought for one moment about the massive loss of property tax revenue and what they are going to do to satisfy their spending binge?
“what they are going to do to satisfy their spending binge”
Borrow.
No, you can’t know how, who or why, but I have firsthand knowledge that the fallout of the housing bubble bursting is discussed at high levels in Sacramento.
Some folks at lower levels believe that the sales tax revenue will save them. (”Did you realize how much more revenue we’re making off gas prices being high?”) Uh oh, prices just dropped.
They will still need a lot of hands to process all of the refi’s that should be coming up as the great ARMs reset period of 2007 sets in. As we all know, there is an estimated $1.5 trillion in ARMs adjusting next year due to the poularity of those loans in 2003 and the three year adjustment period coming up on the first wave of those ARMs. The real question is why haven’t those borrowers moved to lock in at the current rates instead of waiting for the surpise adjustment later? The level of refi activity has been up, but not dramatically so, begging the question, how many ostriches have their head in the sand?
uhhhh, they can’t. you can’t take a borrower out of an 80/20 (or a maxed option arm) into a fixed program unless they’ve had appreciation. max 95% ltv on conforming with mortgage insurance (what’s that?). besides, that would be a full-doc loan (what’s that?) that would require superior credit (what’s that?) and a job (huh?). to make matters worse, most of your subprime borrowers have degraded over the past 18 months, not improved and credit standards have tightened. a society of “unrefinancables”. i heard some background noise on cnbc that many of the major lenders were considering modifications to stave off the wave of foreclosures, figures.
Heard from an inside source today that CountryWide has sent out an unsolicited pamphlet to all of their clients who have ARMs. Kind of a “we should have told you that you were screwed when you got the loan but now, since we know it’s coming, here are the ways you will lose it all”. 90% of the cases coming into my office are giving back AT LEAST 1 property. In San Diego, This Will Be Huge!!!!
boulderbo,
What kind of “modifications” are they talking about? Haven’t they already pushed this to the breaking point over and over again?
Tired of watching the paint dry. Let’s see some tightening already! Thank you for all your input!
‘a society of “unrefinancables”’
boulderbo –
Are “unrefinancables” the new “untouchables?”
The big reason is the FAT pre-pay penalties that accompany MANY of those loans. Most don’t want to pay, or have the equity to pay 6 months interest which is a common pre-pay penalty.
8-10 grand in pre-pay penalty, in addition to the costs of refinancing can easily total 12-20k depending on the loan. If you did 100% financing the first go around, you probably don’t have that money, and/or you couldn’t afford the new ‘locked-in’ loan rates/terms.
SoCalMtgGuy
http://www.housingbubblecasualty.com
I can confirm this for a fact, there are hardly any families with children left here in Southern California. Even in the (relatively) less expensive San Fernando Valley, most homeonwers in my area were elderly, or childless professionals. Here in Santa Monica, the number of couples with designer toy dogs outnumbers those with children by about 10 to 1. And the ones that do have kids, wait till their like 45 and have ONE. I was at a tour of a preschool today, and the average age of the other mothers was, like, dead. There are some advantages, though. My kids’ private school was able to purchase a gorgeous campus in Culver City from the school district there, because there was not enough enrollment to maintain the site as a public school.
A gal friend of mine had her son at age 41. My ex-girlfriend had a girl at 41 and a boy (now one years old) at 44. Two of my sisters are in their late 40s - early 50s and have no children. I have no children (that I know of!). Call it the birth dearth. And now who will give us oldster’s social security? Will my contemporaries demand to rob gen-y and gen-z to pay for our stupidity in buying overinflated houses instead of saving in 401ks and IRAs?
i was getting a weird error from the “Word Press Forum” all day today. Is there a way to move all the content to a dedicated server and not to get too dependend on google?
If you get onto the blog but are having trouble navigating with your refresh button or are getting Error messages try going to the browser bar and changing the p=xxxx number to a number, say, one higher
The error you saw was the same one I saw while Ben was changing platforms.
(From Inside Bay Area article above: “We can say, with some certainty, price appreciation is zero and may even be slightly retracting. The market is flat and the bubble has popped,” said Chris Thornberg, an economist with Bay Area-based Beacon Economics.)
So this is where Chris Thornberg wound up after leaving UCLA’s Anderson School — something called Beacon Economics, apparently in the Bay Area. Good news for Bay Area people, to have a wise bear like Thornberg bearing down on this bloated market with his no-nonsense research and catchy media-friendly comments. It’s about time. (It’ll be interesting to see if the shilly SF Chronicle RE section EVER quotes him, now that he’s a local and all…)
And thank heavens your blog is back up, Ben. I didn’t realize how addicted I was till I was cut off cold turkey…
I hear you all… I was manically checking every FIVE minutes to see if the site was up. Even checked Google to see what was up and GOT AN ANSWER! Clearly I’m not the ONLY addicted one out there…Anyways..
Chris Thornberg. This guy was Mr. POSITIVE two years ago about CA RE. Could hardly shut him up. Ol’ Alan Gin at USD sounded postively downbeat next to Chris. Now he’s back in BA. (Can’t say I blame him…we came back too after seven years.) Yeah it will be interesting to see if the SF Comicle ever quotes the guy now that he’s seen the ‘light’.
Just back from another Bay Area RE search. Seems there are a lot of tax liens these days here on the San Mateo coast and the Bay Area in general. The golf course out here sure has it’s share. WOW. Guess that bill of 4K, 8k, 10K throws ya for loop when it comes. Gee it sounded like such a good idea not have an impound account. Forget trying to actually save for it. I guess they thought they could just re-fi every six month to pay it. Sort of like they were doing in So Cal last year.
I was frantically checking as well - kind of sad.
Comment by waiting_in_la
I was frantically checking as well - kind of sad.
I was getting the rickets myself!
Just found this through a quick google, but it is precisely 2 years ago (9/20/04)
http://money.cnn.com/magazines/fortune/fortune_archive/2004/09/20/381175/index.htm
“The market isn’t acting rationally,” says Christopher Thornberg, an economist at UCLA. “It’s now an emotion-driven market where people are buying on the expectation of future appreciation.”
Not forecasting doom and gloom, but what do you want in such a small quote. Definitely indicating that housing was in a speculative bubble.
On another note, that article was pretty bearish about 2 years ago. Someone please reassure me that the current market sentiment is correct this time. I remember thinking around 2003/early 2004 that there was no way prices could continue higher and … here we are.
“Not forecasting doom and gloom, but what do you want in such a small quote. Definitely indicating that housing was in a speculative bubble.”
For those who read between the lines, saying the market is driven by speculators is tantamount to gloom and doom.
People have become scared about home prices because they think prices are going to fall,’ said Michael Carney, an economist with the at Cal Poly Pomona. ‘They’re waiting and staying out of the market.
Is this dude a ‘colleague’ of those foolish professors that published the article a few months back that prices would keep going up? Would love to hear those colleague talks.
This article is the best news I have read all year. GO CALIFORNIA, we’re #1 in dropping!!!!! I am sure a few recent buyers here are ^&$%&&## in their pants for future increases and inability to refinance. How is Arnold going to rescue folks, or is he getting the heave-ho here in NOV?
I think they were at Pomona College or one of the other Claremont Colleges.
i am too addicted to this blog also.
I imagine someone’s linked this already, but here goes:
http://www.theonion.com/content/node/52979
Hah! Thanks for posting that.
That was awesome, the onion needs to do a bigger piece…
They’ve had other, minor ‘fake’ listings.
Ben, Glad to see you back up and running..
Sometimes when I’m out there in the ocean, a couple of dozen feet from the ocean buoy signalling the Huntington Beach reef dropoff point, I see waves converge from three sides.
This combined wave kind of comes at you like a horseshoe, laying down, with you in the middle, out at the open end.
The people on this blog, including Ben, saw this formation coming a long, long time ago.
Like intelligent people, we swam FOR the wave, not AWAY from the wave.
As this mountainous wave rises up before us, and we prepare to surf it, or where I come from- Michigan- you might call it ’sledding’…
…Nevertheless…
…As this mountainous creature begins to rise, create wind, sound, fury, and motion…
…Let us all remember this:
If you came here to this blog, you took action.
If you buried your head in the sand, or swam the other way…you freaked.
I REFUSE TO BAIL OUT ANY INDIVIDUAL WHO WAS INVOLVED IN THIS PONZI SCHEME OF GARGANTUAN PROPORTIONS.
MY TAX DOLLARS WILL NOT BE USED IN ANY WAY SHAPE OR FORM TO BAIL THESE PEOPLE OUT.
We saw the wave, we swam to the wave, and we TOOK the wave.
If you were too lazy, stupid, or arrogant to listen to our advice…
…YOU’RE GOING TO DROWN.
I always liked your posts Action Heaven in ‘07. I agree with you 100% and like the surfing analogy as I used to surf. With ‘07 approaching do you think you’ll change the last part of your name to ‘08?
Good question.
Maybe I’ll put it up for a vote.
It might be more fun if you guys picked my new name.
Keep it as is…it rhymes. (Heaven in seven)
How about ‘Auction Devine in 09′?
“Auction Fate in 08″?
Wouldn’t be too quick to change that name. A heck of a lot’s happened in the past few months and there are 15 more months to go before ‘07 is over.
Remember, it was just one short year ago that, heck, even 6 months ago, if you mentioned you thought RE was going to crash, people looked at you like you were completely stupid or nuts.
Now, if you say the same thing, 1/2 of them say”I know”.
A couple more months of this and EVERYONE will “know”. What do you think sales will look like then?!
Good point.
Or, I could try…
‘Perp Walks Await in 08′.
Kinda like that one, too. It also rhymes.
“I REFUSE TO BAIL OUT ANY INDIVIDUAL WHO WAS INVOLVED IN THIS PONZI SCHEME OF GARGANTUAN PROPORTIONS.”
Who the hell are you? Our benevolent govt. will bailout many, especially, Bankrupters who are the number one cause of the bubble and the lending abuses. Bankrupters have far more control of our govt. than “American People” do.
“MY TAX DOLLARS WILL NOT BE USED IN ANY WAY SHAPE OR FORM TO BAIL THESE PEOPLE OUT.”
As long a you pay taxes your tax dollars will be used. What are you going to do, a tax revolt??
It is the Corrupt System (Controlled by Crooks), Stupid!
Jas Jain
Jas you’re right, it’s sick but you’re right. I’m just worried that this thing could be so big that it will have dire consequences for us all. There is simply no risk of punishment for stupid money decisions in this country - the middle class always bails everyone out. If this goes to far our money will essentially be worthless. Why should anyone work a real job, when you can get a 500K loan and buy a house while working at McDonalds or even being UNEMPLOYED. It’s madness… there HAS to be a consequence to all this insanity.
Ain’t nobody gonna use my tax dollars for no bailout no how.
I got a big, big mouth.
If they even ATTEMPT that crap…
…well…
…they’ll hear me yellin’ all the way to Washington DC.
… and they will laugh all the way to the bank!
AH07, Appreciate the sentiment but Jain is correct….We will get F%#@’d no doubt about it…Death,and taxes..
Congress rolled ,and gave the credit co’s there new BK law …at such an opportune time. Not only that slipped in that little zinger where if late on any UN-related bill they all get to jack up your rate to the fullest ! What country are we in ? Truly twisted point in history we have allowed to transpire…
Since we are in a new phase, I can’t release my weaponry just yet. Nor can I provide details, or a blueprint.
But I will tell you this…
Any politician, be they local or national, who attempts to bail ANYONE out of the mess they willingly stepped into WILL HAVE TO WEIGH HIS OR HER RE-ELECTION ON IT.
Asking the American people who have saved, been prudent, and operated by reason to bail out those who have been outside their own minds will be a very, very tough fight, indeed.
I see it coming, and I’m on it.
Can’t share my tactics, though.
I can give you a hint, though.
Think about Stormin’ Norman’s utterly mindblowing plan during Desert Storm.
He got them to put all those Iraqi troops on the southern border. He took out their communications. He carpet bombed inside, so they couldn’t see back in.
AND THEN, HE DROVE OUR TROOPS NORTHEAST, DROPPED THEM DOWN INSIDE TO THE SOUTH…
…And they believed they were surrounded…
…As only a handful of American troops guarded the northern border.
I see where they’re going to attempt to go with this.
Let them go.
Right into a trap of their own making.
Stay tuned.
auction heaven in 07,
You must be a powerful man with powerful friends. Good luck to you.
Or, I could be a powerless man with powerless friends…
…and a really, really big mouth.
Too much power means far less time in the ocean.
How fun would it be to be powerful, and miss all those amazing waves because of travel?
Power is overrated.
Happiness, even on a smaller scale, makes for a wealthier man, with a happier marriage, with better children.
Throughout all of this ‘treat a house like a stock’ insanity…
…some of us may have lost sight of that.
It all comes back around.
Just keep your eye on the release, not the uniform, and make sure your shoulders are level.
You’ll hit the ball every time.
Money talks, bulls!t surfs.
Asking the American people who have saved, been prudent, and operated by reason to bail out those who have been outside their own minds will be a very, very tough fight, indeed.
I agree with your sentiment, but it’s a LOSING BATTLE.
Why? Because responsible, prudent savers are in the MINORITY here. We have a “HOWMUCHAMONTH” culture now. They’re in the minority. We will end up bailing them out.
why wait
http://www.lp.org
There was a time, about 230 years ago or so, when people had enough courage, self-confidence, and conviction to overthrow an oppressive regime. Wasn’t one of the rants “taxation without representation?” Buy gold, hide it, and forget about it.
My guess is the FED is backed up to FANNIE’s back door right now swapping treasuries for bad paper. Couldn’t prove it, of course.
I agree the Fed will probably bail out banks but not FBs. If you’ve been through the energy crisis in California, and hurricane Katrina aftermath, and probably half a dozen other things, you’ll know our current government doesn’t give a rats ass about its citizenry.
Abso-friggin-lutely. I don’t know what people think the “government” will do to “bail out” FBs — hand out cash cards to help cover their mortgages? “Forgive” their debts? And if so, at what point? Foreclosures have already doubled in CA. Do they start handing out money from street-corners when foreclosures are up 500%? 1000%? The financial institutions will be saved, and we’ll all have to indirectly pay up for that, which will suck. But I just don’t see how the truly F’ed of FBs will be bailed out.
Well, you could as I plan sometime in the future stop paying federal income tax which is an illegal tax, unratified by the states, in the first place. This tax goes to nothing else than the pockets of bankers who finance such schemes. Alternatives to continuing to pay the oligarches thier tribute: expatration, fighting it in court and possibly winning, living under the radar, jail time. I hear ya brother, if it comes to bailing these worthless f@cks out and/or when the national ID card(mark of the beast) comes into play I may just have to head to Argentina.
Stick around, it’s when the party begins.
Is your kool-aid red or purple?
Not to get too personal, but how much RE can you afford to buy once the market really tanks??
I will buy one house, in Huntington Beach, near the ocean I reside in almost every day, so I can have children with my wonderful, beautiful, intelligent wife.
After that, I’ll stop saving the world and devote more time to learning to speak dolphin and porpoise, and maybe, since they seem to enjoy swimming around me so much, pilot whale.
Man, them fish are warm.
Every time they go by me I feel like 20 kids peed in the pool.
One house by the beach. That’s reasonable. I hope you get your wish. I’m raising my kids here in Venice, and although it’s not as safe or wholesome as your area, it’s really good for the kids to have that environment, for biking, roller skating, or just playing in the sand. Good luck!
Venice is wonderful.
You’re blessed.
Good luck to you, too!
I am from Michigan as well.
‘02 graduate of University of Michigan Engineering School
Start writing (a real, PAPER letter) your representives and tell them you don’t want to bail out spec-u-vestors, or stupid people with toxic mortgages.
During the dot-com-crash, my representative Anna Eshoo wanted to give TAX RELIEF to dot-com gamblers who lost and had big tax bills. It made my blood boil. Fortunately, her proposal went nowhere.
And if the Dems take control of the House in November, Anna Eshoo will likely be Speaker of the House. A bail-out of the FB’s is in the bag.
I like your spirit, but you have about as much influence over what those in DC spend your future tax $$$ on as you do over what they spent previous tax $$$ on - NONE. They will spend at will on whatever comes along and no one can stop them, not even the courts.
I REFUSE TO BAIL OUT ANY INDIVIDUAL WHO WAS INVOLVED IN THIS PONZI SCHEME OF GARGANTUAN PROPORTIONS.
MY TAX DOLLARS WILL NOT BE USED IN ANY WAY SHAPE OR FORM TO BAIL THESE PEOPLE OUT.
100% with that.
Underground economy here WE Come!
The underground Econmony already exists In city of LA: my guess is 25-30% of all transactions are underground black market. Biggest underground transactions are used auto parts and repairs : auto junkyards are great places to avoid sales tax. MOn and pop businesses in Scentral probably report less than 50% of all sales on their books. If you want to avoid intrusive Gov’t probing into your business set up a shop in LA: the Gov’t will not send out investigators out into the slums, and police/city code enforcement is a joke.
AUCTION HEAVEN
Amen to your statement.
Thank you.
There are a lot more of “them” than there are of us. What does that say about how a potential bailout will affect politicians’ re-election prospects?!
If a politician endorses saving an immoral, corrupt system with an immoral bailout, it just might say plenty.
Including jail time, complete with high profile ‘perp walks’.
Prices appreciating by single digits.
Doesn’t look like a bubble popping to me, since prices are still going up.
Price is NOT going up I think. It is just that compared to last year price at this month, (sept. for example) price is still up. ( That too it is the MEDIAN price. )
Meanwhile for the last 6-9 month price have been FALLING.
And again, it is the Median price, for any house which I think anyone has been trying to sell, for the last one year or six month, the Asking price has been surely coming down and down.
And in many area same model house is selling lower than last years price.
This is one spin for which most people fall!
IMHO.
They only seem to be going up because you are stoned, Pontiff.
‘Doesn’t look like a bubble popping to me, since prices are still going up. ‘
You are stoned. Prices in most CA markets are falling .5% or more per month. See http://www.housingtracker.net/ for data.
“In the early 1990s, the downturn had a clear-cut cause: widespread job losses that led to an economic recession. One thing common in both real estate cycles, said Edward Leamer, director of the UCLA Anderson Forecast, was ‘inappropriate appreciation.’”
Is Leamer suggesting that this time is different? If so, why did he leave that out of his statement? Maybe because he believes otherwise. The NAHB Homebuilder’s sentiment index has not been as low as its current level the past two months since July 1990 — at the onset of a recession — and it has fallen four times as fast from the peak this time (remember last October?). The change in automobile sales, inverted bond market yield curve and Index of Leading Economic Indicators are also flashing red. Add to that the housing-slowdown-related layoffs in construction, mortgage finance and real estate sales, a consumption slowdown with the end of home equity cashout ATM financing, slumping commodities prices and large planned job cuts at the (formerly) Big 3 automakers, and you have many signs that a recession may be on the way, or could already be in progress.
I think the recession started about 3 quarters ago.
YUP-The inventory of used Harley-Davidson motorcycles on eBayMotors has doubled in 2 weeks.
“‘People have become scared about home prices because they think prices are going to fall,’ said Michael Carney, an economist with the at Cal Poly Pomona. ‘They’re waiting and staying out of the market.’”
“Mira Loma resident Louis Martinez and his wife spend most weekends touring models at new-home communities in the Corona Valley. But the couple are in no hurry. ‘I feel more confident now than I was six months ago that prices will come down,’ he said.”
Oh, and I forgot to mention deflationary psychology, which will only get worse if there is an actual recession, as then would-be prospective buyers will add fear of job loss to their existing fear of catching a falling knife.
Not only fear of job loss, but fear of relocation!
We cannot pay wages that support buying a home at these prices, thus employees are insisting we relocate them. How long until the company starts to sell bubble market land?
Prices are so out of whack that they’ll still be too high even after they’ve fallen 25%.
Neil
Well, Neil, now that you mention it, there is not only the fear of relocation, but the ongoing reality thereof. Like in the early 1990s, when many clever Californians cashed out near the top and moved inland to big houses in cheaper locales like St. Louis, Kansas City, Denver, and Salt Lake City, this time is no different. That is why, from here to the end of price deflation, the drop in prices will probably be steeper in CA and East Coast bubble zones than in flyover land, although the automotive recession creates a wild card, as there are more auto plants in the heartland than the coasts these days. (Californians don’t much care for air pollution, so they import their cars from other places where pollution is more readily tolerated.)
I see california is sueing the automakers for greenhouse gas emmissions from the cars they sell. This is the biggest bullsh@t lawsuit i have ever heard of, simply ridiculous crap.
Ewee, I don’t think anyone who sells their house in Cali and moves to St. Louie is “clever.” Dat’s “desperate.”
I moved from Bay area to Saint Louis, but I never bought in CA.
Its coming GS… Its coming… Only question is how deep?
Job loss in the early 90’s meant less money less credit:
full employment or very low unemployment the past 4 years has been characterized by slow or no wage growth. So actually what we are experiencing is very similiar to the 90’s. RE goes up in price faster then income=crash.
If there is going to be a better time to buy in CA, all of the speculator markets driven by CA money will get slammed as well. Arizona, Oregon, Florida, Nevada, Idaho, etc.
I still have people telling me that we (greater Seattle area) will not see RE price drops here because of all the people who are selling their homes in California in order to move here.
I live in the Seattle area. My next door neighbor wanted to move up to a bigger house. He put his 4 bdr/3 bath house FSBO on the market two months ago for $575K. No action at all. He got a RE agent and cut the price to $550K, still nothing. The Seattle area is slowing down like everywhere else.
“because of all the people who are selling their homes in California” - that’s where those people telling you about Seattle RE are wrong. Californians are NOT selling their homes. Months and months of inventory and no intelligent person would buy at the still way overinflated prices the sellers are stubbornly demanding.
I can see the ad now:
Standing offer to all realtors….Bubble Bloggers will immediately absorb all excess bandwidth. Please network 10 or 12 at a time to accomodate our needs.
ROFLAMO
I sold my condo in November 2006 (San Diego, CA), and currently am a bubble sitter. I am renting back. My money is in a CD. I was so surprised today to see on the MLS an exact condo like mine for 100K less. I sold for 385K (I paid 90K in 1998) and never refinanced. So, I did good. The condo was just listed today. It is in foreclosure, but 100K less than what they are currently selling is unbelievable. There is a lot for sale around here but nothing under 300K. Maybe it is a mistake. I spoke to my realtor about a week ago, (He sold my condo), and just to get an idea of what he would say to me I said “I have been looking on the MLS but if I make an offer on a house, I am really going to low ball.” His response to me was to go ahead and do that. I wouldn’t loose anything. It’s just paper. He never said that to me 9 months ago. He would say. Go ahead and offer less but the seller will probably not respond to the offer. It’s just funny to hear how things have changed in a couple of months. Thanks!
“I sold my condo in November 2006…”
That’s a neat trick.
Aw man! I am still writing ‘06 on my checks. DOH!
I sold my condo in November 2006 (San Diego, CA), and currently am a bubble sitter. I am renting back. My money is in a CD. I was so surprised today to see on the MLS an exact condo like mine for 100K less. I sold for 385K (I paid 90K in 1998) and never refinanced. So, I did good. The condo was just listed today. It is in foreclosure, but 100K less than what they are currently selling is unbelievable. There is a lot for sale around here but nothing under 300K. Maybe it is a mistake. I spoke to my realtor about a week ago, (He sold my condo), and just to get an idea of what he would say to me I said “I have been looking on the MLS but if I make an offer on a house, I am really going to low ball.” His response to me was to go ahead and do that. I wouldn’t loose anything. It’s just paper. He never said that to me 9 months ago. He would say. Go ahead and offer less but the seller will probably not respond to the offer. It’s just funny to hear how things have changed in a couple of months. Thanks!
OT I know, but I just can’t come to grips with what is happening in the stock market. It rises on bad news, it rises on good news……..maybe it has reached that permanently high plateau I hear spoken about. Any ideas?
Yea — think of the last time (1929?) a brilliant economist (Irving Fisher) declared the stock market had reached a permanently high plateau, then overlay the aspersions Alan Greenspan cast on the bubble markets during his valedictory year at the Fed:
“History has not dealt kindly with the aftermath of protracted periods of low risk premiums,” Greenspan said. “Such an increase in market value is too often viewed by market participants as structural and permanent.”
luvs-footie
I trade the stockmarket everyday and have done so for many years. Repeat after me: M-A-N-I-P-U-L-A-T-I-O-N. Look no further and take that as gospel from someone (me) who used to sit at his computer looking confused at the market movements, and now now falls about laughing at just how blatant the Wall Street Financial Gangsters (known in the trade as Da Boyz) are at cooking the market. It’s simple to get away with it if you have powerful connections (like Paulson) and you have the SEC turning a blind eye to the corruption. BTW, if you invest - don’t watch CNBC’s MarketWatch or listen to Cramer or Kudlow.
“M-A-N-I-P-U-L-A-T-I-O-N”
Which brings up my favorite questions in finance, and my hunches about the answers:
1) Is perpetual manipulation possible? (No.)
2) Does manipulation foster a healthy macroeconomy? (No — in fact, it leads to massive imbalances in the Main Street economy if it is continued sufficiently long; just witness the short succession of the tech stock bubble followed by the housing bubble for evidence. But for the short term, it does help the rich get much, much richer.)
3) Does manipulation result in smoother business cycles? (Yes, until you have the mother-of-all-disasters when the whole Old River Structure collapses and the Mississippi changes course.
Read “Atchafalaya” by McPhee if this metaphor is too obscure for you.
http://en.wikipedia.org/wiki/Atchafalaya_River )
Go to the cupboard, get some tin foil, make yourself a cute little bonnet, and join the rest of us.
We are all tinfoil hat owners now.
I find that plastic wrap works just as well…
Yeah, chewing tinfoil just makes my teeth ache.
BTW, adding an little tube on top of said Tinfoil Hat allows you to put a few flowers in there. Helps you stand out in a crowd of other Tinfoil Hat wearers…
..OK, dinnertime… I’m getting hypo and slightly hysterical
http://www.stopabductions.com/
Since you are on the subject, here is the latest ditty from the folks who raised the BS Flag when Rubin implemented Clinton’s strong dollar policy and have been crying foul ever since (GATA). http://www.gata.org
sorry for the long post but it is from a pay site.
This stuff on the incestuous relationship between the Counterparty Risk Management Group and Goldman Sachs is fascinating and extremely telling. A book could be written on this subject. Getting right to a key point: you have a group of insiders working the markets over in concert, in violation of what our financial market system is supposed to be all about. What is the point of having anti-trust laws in the US when this rogue operation is allowed to operate like they do? Collectively those “in the know” are making hundreds of billions of dollars and allowed to operate without any oversight. They have a license to steal from the general public … all under the guise they are assisting the public.
Let me take the other side of the trade, saying their activities are keeping the markets from hurting the public. Fine. Then let everyone know that we have a “Fascist” (a much used term these days) government … that our markets are not freely traded … and let everyone compete on a level playing field as to how our financial system in the US REALLY works these days.
What does Fascism mean? For one thing, since it is what they are mostly about these days, the establishment loves to use that word, along with the word conspiracy, to antagonize and influence the public against anyone who points our their real modus operandi.
“Fascism is a radical, political, ideology that combines elements of Corporatism, Authoritarianism, Nationalism, Militarism, anti-Anarchism, anti-Communism, and anti-Liberalism.”
Here is yet another definition, furnished by Sarge:
“Any movement, ideology, or attitude that favors dictatorial government, centralized control of private enterprise, repression of all opposition, and extreme nationalism.”
Sound like the Bush Administration to you? (When it comes to the gold rig, the Democrats were just as egregious).
OK, some of our fellow Republican Café members won’t like the analogy of their political leaders as operating Fascists. Go a step further then and review the 14 Defining Characteristics of Fascism by Dr. Lawrence Britt, which can be found here:
http://www.omnicenter.org/warpeacecollection/facism.htm#14fascism
Here is number nine:
9. Corporate Power is Protected - The industrial and business aristocracy of a fascist nation often are the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite.
That is exactly what the Counterparty Risk Management Group is all about, especially when you realize they work closely with the Fed and Exchange Stabilization Fund.
That is bad enough; however, when you read the other 13 it is no stretch to equate MOST of them with what we have going on in America today. The only difference in a number of those 13 as far as the Bush Administration is concerned is nuance and degree.
Now to some specifics how veteran gold investors and the general public have been ripped off over the years and what the GATA camp has been fighting against and taking on.
Back in 2001 Reg Howe sued The Gold Cartel. Reg versus the defendants in that law suit:
Reginald H. Howe, ) Plaintiff, ) ) v.
) )Bank for International Settlements, ) Alan Greenspan, ) William J. McDonough, ) J.P. Morgan & Co. Inc., ) Chase Manhattan Corp., ) Citigroup, Inc., ) Goldman Sachs Group, Inc., ) Deutsche Bank AG and ) Lawrence H. Summers, ) Secretary of the Treasury, ) Defendants.
Now let us go to the full list of members of the Counterparty Risk Management Group, and their working groups:
Toward Greater Financial Stability: A Private Sector Perspective
July 27, 2005 vii
EXHIBIT I
Counterparty Risk Management Policy Group II
E. Gerald Corrigan, Chairman
Managing Director
Office of the Chairman
Goldman, Sachs & Co.
Don M. Wilson III, Vice Chairman
Chief Risk Officer
JPMorgan Chase & Co.
David C. Bushnell, Vice Chairman
Senior Risk Officer
Citigroup Inc.
Policy Group Members
Michael J. Alix
Senior Managing Director
Head of Global Credit Risk Management
Bear, Stearns & Co., Inc.
John G. Macfarlane III
Chief Operating Officer
Tudor Investment Corporation
Dr. Hugo Bänziger
Chief Risk Officer (Credit & Operational Risk)
Deutsche Bank
W. Allen Reed
President & Chief Executive Officer
General Motors Asset Management
Craig W. Broderick
Managing Director
Chief Credit Officer
Head of Credit, Market & Operational Risk
Goldman, Sachs & Co.
Edward J. Rosen, Esq.
Partner
Cleary Gottlieb Steen & Hamilton LLP
Scott C. Evans
Executive Vice President
Chief Investment Officer
TIAA-CREF
Thomas A. Russo
Vice Chairman and Chief Legal Officer
Lehman Brothers
Douglas J. Flint
Group Finance Director
HSBC Holdings plc
David H. Sidwell
Executive Vice President and CFO
Morgan Stanley
Christopher B. Hayward
Managing Director
Head of Holding Company Supervision
Chief Operating Officer - Corporate Risk Management
Merrill Lynch & Co., Inc.
Associate Member
Adam Gilbert
Managing Director
JPMorgan Chase & Co.
Secretariat
Pawel Adrjan
Associate
Goldman, Sachs & Co.
Pierre-Hugues Verdier, Esq.
Associate
Cleary Gottlieb Steen & Hamilton LLP
__________________________________________
The members of CRMPG II wish to thank Manar Zaher of Goldman Sachs for her efforts in support of this project. In addition, we would like to thank Goldman Sachs,
-END-
In many cases these are the same people GATA has gone after for nearly 8 years. Note the chairmanship people and the leaders of this group: Goldman, Morgan and Citi … all defendants in Reg Howe’s lawsuit. What foreign bank is part of the group: Deutsche Bank, ANOTHER defendant in Reg Howe’s lawsuit.
Can the picture be any clearer, especially with what else GATA has brought to the table for so many years?
Specifically, the following is just one example how these “Fascists” are ripping you off. It has to do with how this group employs a few privileged hedge funds to assist their operations. One of them is actually part of the group: Tudor Investment Corporation, an enormous hedge fund founded by one of the great commodity traders of all time, Paul Tudor Jones, who began his career trading cotton futures. How would you like to run a hedge fund and be in “the deal,” getting the skinny on what is good for the American public. Do you think you could make a few bucks? Any question how Goldman Sachs makes billions every quarter, much of it from their trading operations?
OK, to a specific. The Tudor Jones people are close to the Moore Capital people, founded by another super trader, Zach Bacon. Moore Capital has been cited often in this column. An example:
September 24 (2001) - Gold $326.10 up $3.40 - Silver $4.64 up 1 cent
GOLD SURGES!
Massive fund buying surprised The Gold Cartel early on and took gold up nicely, as it reached $328.20 at one point. Moore Capital was also a featured buyer. In years past Moore was known to be the largest hedge fund gold carry trade short.
***
Moore Capital and others in on the gold rig, made fortunes with this carry trade, as they could borrow money practically interest free and invest it much higher paying credit instruments, or could use the money to fund their own operations.
Back to the culprits again, especially Citi, GS and the US Government (the term Fascism is not an over the top description at all). Look at what Frankfurter Allegeine Zeitung (the WSJ of Germany) reported years ago:
November 2 (2000) - Spot Gold $264.40 up 70 cents - Spot Silver $4.69 down 6 cents
Now, the big picture overview for Goldman Sach’s gold trading over the past years:
First, the comment by former Goldman Sachs CEO and former US Treasury Secretary, Robert Rubin as brought to our attention by newsletter writer Jay Taylor:
“Last May I interviewed Congressman Ron Paul, M.D. and member of the House Banking Committee for my newsletter, J Taylor’s Gold & Technology Stocks. In a letter to Congressman Paul, Bob Rubin said the following.
“We have long recognised that helping prevent extreme market fluctuations from generating self-fulfilling losses of confidence that could unnecessarily destabilise the real economy is an appropriate objective of government policy. We also recognise that government action is often required to create the conditions for markets to work at their best.”
Then, we have Fed Chairman Alan Greenspan’s infamous quote before the US Congress:
“Central banks stand ready to lease gold in increasing quantities should the price rise.”
Follow that up with the Frankfurter Algemeine Zeitung story expose of the Citibank/hedge fund/Robert Rubin capping of the Euro at 90 after the recent coordinated G-7 central intervention to try and halt its slide:
FRANKFURT (Dow Jones)–The European Central Bank’s intention to intervene in the foreign exchange market, together with the U.S. Federal Reserve, the Bank of Japan and other central banks of the Group of Seven leading industrial countries, was known several hours ahead of the operation, market participants in Frankfurt said, German daily Frankfurter Allgemeine Zeitung reported Thursday.
According to the paper, a leak in one of the central banks outside the euro zone prompted Citibank, a unit of Citigroup Inc. (C), on behalf of a U.S. hedge fund, to start buying euros early Friday. The euro rose to slightly above $0.86 in early European trade Friday.
Citibank’s subsequent sale of euros was preventing the euro from rising more than slightly above $0.90 during the intervention that started around 1100 GMT, Frankfurt banking sources said, according to the paper. The euro subsequently rose to $0.9040 before falling back to the mid-$0.88s.
Banking sources attributed the leak to a possible connection between the hedge fund, Citibank and the Fed, FAZ said. Robert Rubin, former U.S. Treasury Secretary, is currently Citigroup’s co-chairman……. End.
Moore Capital in New York has since been identified by Café sources as the hedge fund that not only was “fed” the information ahead of time, but was instrumental in capping the Euro at 90. Over the past years Midas has reported Moore Capital to be carrying the largest hedge fund “gold carry” trade positions of all.
It would appear that Rubin initiated the same fraudulent type trading activity in the Euro, via government “Fed” information spread to a bullion bank and their clients, as he has done in the gold market since late 1994.
-END-
There it is … all laid out for you and anyone else who wants the truth and what a good portion of the US financial markets are all about.
Fascism, alive and well in the US, a stretch? Don’t think so.
I’m sure Hillary will put everything to right. She’s not an insider or anything.
If you are an Elliott Wave Theorist (or Principle now), you know that external events do not really influence the market. That is why constantly the news and market action do not match up. Just think about it. What made October 19, 1987 any different than October 18, 1987?
October 18, 1987 was a Sunday. That’s what made it different.
I remember well, I married Saturday the 17th.
Oh yeah — Oct 19, 1987 was Black *Monday*
It wasn’t…at least for me!
The DJIA was 20% lower? After only one day? What am I missing here?
1. Fed in holding pattern. 2. Oil dropping. 3. Some good earnings reports from tech companies (when you can sell stuff and not raise wages for 4 years, you can make profits). 4. Denial about the magnitude of the housing crash. 1,2, and 4 are very temporary and likely to change by the end of the year. 3 will change pretty soon after the others do. I’m tightening up my stop losses twice weekly now!
Last night on CNBC/Kudlow, the CEO of Toll Brothers was quoted as saying he sees light at the end of the housing tunnel (as in better housing market in 07). This kind of blew my mind as he has been pretty straight as far as saying how bad things have been in his industry.
The market is moving up on the good news of lower inflation (CPI), lower energy prices, stable interest rates (and potentially lower rates next year), and generally decent profits for corporate america.
What does all this mean? I’m not sure… what scares me more than a housing/economic crash would be a soft landing and then a return to the insanity of easy money and high appreciation as the Fed lowers rates again. Look at Europe as an example of the continuing disconnect in housing. Does anyone else have concerns that ‘07 may not be as bad as we expect (and most of us hope)?
A big reason the stock market has been moving up is that 10 year treasury yields are moving down. The stock market loves falling rates. The question is whether the falling rates are indicating a slowing economy or recession, which the stock market would not like.
the CEO of Toll Brothers was quoted as saying he sees light at the end of the housing tunnel (as in better housing market in 07)
No, no, no… you merely misinterpreted what he meant. That “light at the end of the housing tunnel” is a train coming!
Robert Toll (Toll Bros) with Larry Kudlow on CNBC spinning about how “brave” the 100 buyers that took advantage of give away extras and special finanancing over the weekend. And of course you will report on the 50% cancellation in 10 days, right Bob and Larry… Larry Kudlow is another economist who just doesn’t understand integrity or ethics. I swear, every PHD economist should be up in arms over these talking clowns claiming educational creditionals from top business schools, and selling their souls to the highest bidder. These guys make used car salesman look ethical.
‘… opining about how “brave” the 100 buyers that took advantage of give away extras and special finanancing over the weekend.’
I have always maintained that there is a fine line between bravery and stupidity.
On Wall Street traders have a saying: Don’t Be a Hero. Meaning don’t step in front of a trend trying to guess the exact bottom/top.
Did Kudlow think to ask Toll why, in the summer of 05 while he was pumping housing, “which only goes up” he himself was dumping more than a hundred million dollars of his own stock? Let me guess, the thought never crossed Kudlow’s cranium. In fairness, I don’t think you can describe the empty space between Kudlow’s ears as a brain.
These interviews are scripted prior to the actual event, i.e., the “approved-questions” are reviewed by the lawyers.
If you have “executive privilege” like Ronald Reagan did, the lawyers on both sides decide which questions will be suitable for the courtroom, and the answers are scripted.
Why the peons bother listening is another topic.
spike66 In fairness, I don’t think you can describe the empty space between Kudlow’s ears as a brain.
He is a recovering CokeHead along with other Dope and Drink. This is a well reported fact. Spike you in fact might have it right.
As HBB was down, went through the withdrawl pain like most of you did and also had time to reflect!
Now that the bubble has officially popped, surprisingly I am no longer looking forward to getting into a house.
A falling market will force that anyway.
My rent2home ID need to go.
How about my new id, 1NBR(1 no brainer renter)
Any feedback please!
I like the rent2home name, keep it. Someday owning a house will be a good thing again.
Guess it depends on your age.
rent2home,
Agree with the sentiment. There’s an auction in our area (San Diego) coming up. The reserve bid is about 44% below its selling price in spring 2005. I pondered putting in a low bid, but worried that they might actually accept it. I don’t think prices will necessarily go below this, but just don’t want to buy a house right now (before the recession — don’t want to be tied down). Also thought that following this bubble would be much less exciting if I already bought a house, and that thought depressed me.
I was never really chomping at the bit to buy again (sold spring 2004), as I’m patient and think this will take years. But it’s interesting how the psychology has changed.
DON’T buy now , keep your gains.
What ever be your offer, any successful bidder IS buying at TODAY’s market price.
PRICE at which it sells will reflect today’s market, that is the key.
( the buyers sentiment has not changed as much…..many would compare with yesterdays price and think ooh what a deal!)
It is a worthwhile bet that one year from now market price for THAT house will be LOWER.
- rent2home
Anecdotal market update (central California coast):
Last year, I tended to shy away from discussing a possible RE bubble, because the conversation always turned to laughter.
Now, I *never* bring up RE; however, about 50% of the extended conversations I have turn to real estate, and how my renting now “may have been a good move”. What a difference 12 months makes.
i live in pismo beach,i enjoy your comments about the central coast,isnt it wonderful to see this build-up of inventory,prices are still way to high,but there has been some movement.the bubble has definitely popped in the north county.the beaches are still way too high though
In places like Salinas, prices are way above local wages and there is ample land for expansion. I see problems there but I don’t think the coast cities, pacific grove, monterey, and etc are as much at risk. There is a national if not international demand for those properties. People may not be able to afford their properties and have to sell but there are going to be buyers that will step in as prices drop and prop the market.
“There is a national if not international demand for those properties.”
Does anyone know how much (if at all) prices in The ‘Bu (Malibu, CA) dropped in the late 80s/early 90s? To me, *that* would be a good barometer for an area with ‘national if not international demand’.
I can’t say how much they dropped, percentage-wise, but looked at a property on the west (south) side of PCH during the last downturn. I’d say it was about an acre (w/”estate” type gate) with three buildings. One building had four one-bedroom apartments, another had a studio and a two-bedroom unit, and the third was a 3/2 SFH. It’s hard to describe, but the lot was beautiful with large trees. The 4-unit building was designed to look like a castle. Older buildings with a lot of charm. Price? one million dollars.
That was just one of many distressed properties we saw. Prices tend to go down across the board. The timing and percentage vary, but if prices were driven up by the lax lending standards, they will be taken down by the tightening standards (if that ever happens).
The Pismo Beach market will drop 10-20% for the crap houses with bad financing. However the majority of the homes are owned by 65+ age plus people with no mtg and Prop 13 protection and will weather any crash. Meaning the owners are not forced to sell and are not flippers.
Yeah but 65+ plus people have a tendency to, uh, die. And who’s going to buy the property then at an unaffordable price?
The Central Coast market fell pretty hard in the 90’s crash, so the question to ask is, if it’s going to be different this time, what makes it so?
all those californians who paid 600k for ahouse while earning 60k a year are dust,once there toxic loans,teaser rate reset.there is no way they can pay the mtge,they wont be able to refiance to favorable terms….its going to be fun to watch,better than any sunday football game….
…or even a Monday night pounding of the Raiders…
Comment by soldinstudiocity
“all those californians who paid 600k for ahouse while earning 60k a year are dust,”
You Nailed it! Thoese people + or - 20% in income and house price WERE the So Cal Market. Blue sky and BMW’s ….Typical LA all show and No GO. It was dicussed in a thread back, ‘who would suffer the most, during a down turn?’
This crowd is #1 on my Hit List…. The Roaches and lowlifes cant jump out a basment window…..The truly rich could give a hoot!…. But thier 60k a year salarymen will be dropping like flies.
“A report from a Bay Area mortgage insurance company says local homeowners should be very worried about a possible decline in prices. ‘No one should be surprised by the slowdown we’re seeing,’ Mark Milner, chief risk officer of PMI, said in a release. ‘Over the past five years, home prices appreciated much faster than incomes, and that can’t continue forever.’”
Yea, right, especially those who live in places where DataQuick has already documented that prices have dropped. Step right up and catch your falling knives!
BTW, Milner’s “forecast” is of the sucky kind that is made after the predicted results are already historically verified in the data. By contrast, Marko van Akkeren (PMI economist) went out on a limb over a year ago and got it right. Kudos to Marko, and a back door raspberry to Milner.
I don’t know what a “back door raspberry” is, but it sounds intriguing.
Sounds bad / smells bad…
No worries. Things will pick up after the Super Bowl.
Super Bowl LX!
prices already have fallen!
economist my a-s
The very worst thing about this is that all of the money being lost was invested in something (houses, condos) that produced nothing. There was no investment in science, engineering, new products, new technolgies,etc. Just in houses. Oh, I know the reason: “We invested in that stuff during the tech boom and look were it got us.” The investments were being blindly made in anything internet: pets, toys, etc. It’s the same mentality, really. No wonder manufacturing went away here in the US.
Roidy
Actually, you can thank the Clean Air Act, child labor law, and other Green & liberal legislation for the end of US manufacturing. The 1960s represented the apotheosis of dirty US industry; since then we have steadily outsourced our nasty air and water pollution, not to mention utilization of child labor, to places like China, which seem happy enough (for now) to accept a few pieces of green paper in exchange for the manufactured goods they send us, subject to the added environmental costs of child exploitation and toxic emissions. But watch out — what goes around comes around.
Except in the end China is holding alot of worthless green paper AND
they have all the modern factories.
“… AND they have all the modern factories.”
Plus an army of engineers and managers with the finest US education that money can buy. This is where “what goes around comes around.”
“Actually, you can thank the Clean Air Act, child labor law, and other Green & liberal legislation for the end of US manufacturing.”
Stupidest comment of the day award.
Do you care to elaborate? Otherwise, we will think you are stupid, because your comment contained no content other than name calling.
Getstucco,
I’m not defending baseless name-calling here, but I experienced a “huh?” moment when I read that too. You do have a point when it comes to poorly thought-out “green” knee-jerk NIMBY legislation; however, I seriously doubt that a century+ of Progressive/anti-trust/child labor reforms (largely started under T., Roosevelt, a Republican President, btw) really has anything to do with the offshoring of the U.S. manufacturing base to cheaper 3rd world labor markets.
Offshoring is simply wage arbitrage in action (capital seeking lower production & labor costs). The U.S. is following much the same pattern that most other post-industrial nations have already followed, The U.K. went through this process about a century before we did. The fact that the U.S. became a manufacturing giant simultaneously as Britain went into steep decline is no accident. Back then, we were basically “Britain’s China/Japan”. Once wages/technology/living standards here rose up to (and surpassed) European levels, the cheap-labor gauntlet was passed to asia. And so goes the world…
There’s little evidence to suggest that the fact we don’t allow 11-year-olds to be chained to their workbenches for 18 hours a day (as they do in Pakistan, etc.) is a major contributing factor in this decline. In any case, would you prefer to live in a country where this was allowed?
“Stupidest comment of the day award.”
Nope. Getstucco is right. I would like to add this, being interested in energy: Hanoi Jane and the tree huggers railing against nuclear energy (China Syndrome). No new refineries built in 25 years. Shutting down offshore oil exploration off of California due to environmentalists. The left has done a very good job at destroying wealth and potential wealth in America.
Has poorly concived (and often misguided) NIMBYism masquerading-as-environmentalism inhibited technological progress, job growth and development in the U.S.?: Clearly, yes.
However, I would caution against painting with too broad a brush on this. Not every “green” anti-pollution law or anti-child labor law has had a detrimental effect on the economy & society at large. Consider the “Tragedy of the commons” for the laundry list of externalities that completely unfettered free-marketeerism can lead to.
Socialism and or left-wing nanny-state fascism is not an ideal, but neither is completely unregulated “robber baron” capitalism. Consider how differently the current housing bubble might have turned out if lenders had been required to verify borrowers’ credit-worthiness, incomes & ability-to-pay? Or if they had been required to book (or guarantee) the loans they issued, vs. selling the risk upstream to some MBS pension fund holder?
Not all forms of regulation are evil or counter-productive to society at large. Nor does Libertarianism = favoring pure anarchy.
“Stupidest comment of the day award.”
Nope. Getstucco is right. I would like to add this, being interested in energy: Hanoi Jane and the tree huggers railing against nuclear energy (China Syndrome). No new refineries built in 25 years. Shutting down offshore oil exploration off of California due to environmentalists. The left has done a very good job at destroying wealth and potential wealth in America. ”
This is for Bill in Phoenix regarding offshore oil exploration. The continental shelves and slopes constitute about 10 % of the total earth surface. Have noticed that many off the newest large oil fields have been discovered in offshore continental slope areas(Gulf-of Mexico, Indonesia, North Sea,Prudhoe bay,ect). As these shelves are areas of deposition of continental sediments, they would likely contain enormous oil and gas reservoirs. Problem is that getting and extracting these deposits is prohibitedly expensive but doable with our moderm drilling technology.
Expect that we will discover more enormous offshore continental shelf oil reservoirs in the future, which may extend the future peak oil date.
By the Way, having off shore oil platforms actually would create new underwater ecological niches for all kinds of undersea life, sort of like artifical reefs or sunken ships. The record of oil spills is actually very few(Natural disasters like Mt St Helens or hurricanes cause more frequent ecological damage)Nuclear reactors have an even greater record of safety, and are far more preferable than greenhouse-polluting coal-burning power plants .
If you drive out to parts of the IE/riverside county it seems as if thats all that is being built. Homes, Home tracts, homes for sale signs everwhere but nothing else is being built: no factories, no commercial parks, ect. The HB’s out in the boonies just threw up all those SFH tracts without adding the necessary commercial, industrial, and transportation infrastructures to provide local jobs, services,parks,other amenities which provide for a well-rounded community.
From the dailybulletin article: ” DataQuick’s Prentice says there’s no reason to panic. There’s an awful lot of moaning going on right now,” he said. “Potential buyers and sellers need to be careful what they believe and exercise common sense in their decision making.”
This fool seems to fancy himself the Kofi Annan of the housing market. As if it were his role to bring buyers and sellers together in some sensible middle ground. Buyers, if they use “common sense”, will be just as sharky on the way down as Sellers were on the way up. The best advice is from Jimmy Conway in Goodfellas: “Don’t buy anything. Nothing big.”
DataQuick’s Prentice says there’s no reason to panic.
————–
Whenever somebody says this, it’s time to panic.
Hmm, what happends after the midterm election? Are we in for a very nasty surprise?
Roidy
Too bad the market is crashing right before most boomers could cash out and save their blown up retirement plans. Now they have loads of debt, depreciating real estate, and zero savings.
Retirement will be spent buying dinner on the old folks aisle. You know, where they sell the Alpo.
Naw — it will be spent cleaning up spills in the pet food aisle at Big Box Mart.
http://www.jibjab.com
Yes home prices fall right before the boomers could sell and retire on all the equity. Typical pyramid pattern.
Again, goes to show how lazy MSM is at reporting housing news. Bakersfield’s KGET interviewed an escrow officer about the sudden housing slump. The last phrase from the officer, “This is normal. The market is just taking a break.” Yeah, a 5 to 10 year break.
Good CA news link found on Piggington.com
http://cbs2.com/video/?id=25369@kcbs.dayport.com
Good TV news story for OC LA area. Nothing new for us, but shows the MSM is finally on the story.
No bubble here in Tucson, AZ!
Prices in ‘04 were $100-125sf, now they are up to $175-225 and they keep going up, and people are still buying like we’re living in a Gold Rush here, not sure what’s up w that but is it ever going to crash?
Me thinks not w the Fed pausing again today.
‘No bubble here in Tucson, AZ!’
Inventory in Tuscon up 144% YoY and prices have started to fall in recent months in Tuscon, pretty much the same story all over the west: http://www.benengebreth.org/housingtracker/location/Arizona/Tucson/
No way. Prices weren’t 100 bucks a square foot in 2004 - that’s 2001 pricing. By 2004 I think pricing was at least 150/sqft.
Tucson definitely had a mania last summer. My wife and I looked around and there was literally nothing to buy. Everywhere we went, including WAYYY outside of town they were telling us “we’ll call you if we get something available”. I decided no way was I going to get a good deal in that kind of overheated market.
We bought a place on the westside for 100/sq foot in 2001 (202k) and sold it this summer for 192/sqft (385k). Zillow had it peaking late last year at 405k and now shows it at 340k. Zillow consistently runs 10-15% too low for that side of town, but that suggests 370k. Our place was immaculate and had a terrific view of the Catalinas but I still felt fortunate getting that price because things were already slowing down this summer. Within the next year or so I wouldn’t be suprised to see prices fall to around 150-175 sq foot. We have some friends who have a run-of-the-mill little house in Continental Ranch that has been sitting for like 6 months and is showing no activity - they may wind up selling close to 100/sqft because they are in a sea of identical places. Extraordinary properties may be getting 200/sqft but I don’t think those prices will last the year - Tucson’s prices are way out of whack with the local economy even if they are propped up by retirees and snowbirds.
In our case we cashed out and moved to OKC for a new job. Feels nice to be sitting on the 200k cash we received at closing. OKC is still very inexpensive but it seems to have a sort of bubble all its own. Pretty much 100% of the nice land remaining in town is held by developers who are throwing up $600,000+ McMansions on one acre lots. SCADS of them - many more than the local OKC economy can support. It’s pissing me off because the nice lots with views, trees, etc are all requiring 3,000 sqft minimums and other nonsense, so you can’t just buy a nice lot and build a quality smaller place.
Instead they are throwing up huge mansions (4000-6000 square feet) and I have a sneaking suspicion that a lot of them are being supported by toxic loans. They may be subsisting off people like us moving in from the coast and enjoying $100-125/sqft prices, but I think anyone buying one of them right now is going to have um “difficulties” reselling due to oversupply. My realtor says when one of those goes on the market “you show it to the five people in town that can afford it and are looking, then wait for the next CEO to move to town”. The 75th percentile asking price for the metro area is 229k, so I think these giant places will produce a giant sucking sound in a few years. All it will take is interest rates moving up a point or two or a recession hammering the town.
I talked to a Denverite the other day and he described a similar phenomenon happening out there. People are coming in from CA and having cash to build big ol’ places but are then finding they have this same problem - you basically need to sell to another incoming Coaster and when those people stop migrating the sellers are hosed.
Finally a question for the board - in a neighborhood of 400k houses rents are around 2200-2500/month. This doesn’t seem too out of whack to me, but what do you guys think? All the evidence I can find suggests that OKC isn’t terribly overheated but I still think there will be some declines here over the next year or so. I see little evidence that this area will be hammered by double-digit declines in pricing unless interest rates shoot up or recession slams the town hard. Rising oil prices are good for this town so if anything it might have decent future ahead of it.
We sure do miss the mountains though, and breakfast at Tohono Chul, and Carne Seca at El Charro, and…
Keep the spin coming, midi-flipper…
A little cash coming your way Ben. Hope it helps. The wife almost lost it! Without this blog I would be talking to her more.
I realize it’s early, but does anyone have any predictions on what year this will bottom out?
A first bottom in 2009-2012, with a slight uptick after that. Then, the real tanking comes in 2015-2020.
when prices = 100/110 x rent
same as ever before
So a house that rents for 1300 in Ventura should sell for 130K? I don’t think things are going to get that bad?
lainvestorgirl,
Actuall the 100x (or 120x) monthly rent has been a long-standing rule-of-thumb for RE investors/landlords for a very long time. Even better, is to use “cap rates”/NAV calculations, as they are more precise. It just goes to show you how far out of whack prices are right now vs. supporting rents & incomes that a long-standing traditional benchmark “sounds wrong” to you.
Come to think of it, where the heck are you going to find a whole house in a non-gang neighborhood to rent for $1300/month? In my area (Pasadena), anything decent rents for $2500-3500/month. Multiply that by 100/120 and it doesn’t sound so crazy after all.
Any house that rents for $1300 in coastal CA is probably an old ghetto dump and deserves to be less than $130K…
I think we will see a bottom earlier. I know the Japanese have taken much longer, but they are very different from us; they have the 60 year loans, but I don’t think they have the option ARMS, etc., that we have, and I think there is more stigma against bankruptcy or having a house repossesed than here. Also, keep in mind that in the Great Depression the bottom only took 3 years. However, I don’t think there was as much of a housing bubble during that time, most of the speculation had taken place only in Florida, and it was over before the stock market crashed.
I vote for 2-4 years from now to see a bottom.
2-4 years would be lightening fast, in housing terms. It took approx. 6-7 years to go from price peak-to-trough during the last downturn in CA, and I wouldn’t expect it will take any less this time.
I’m not being bullish when I say “real estate is sticky on the way down”. Just pointing out that RE transactions take MUCH longer than other assets (stocks, bonds, commodities, futures, etc.) –months in the best of circumstances. If a foreclosure and/or legal action due to fraud is involved, months can easily drag on into years, especially if the FBs try to fight it or file BK.
Believe me when I say I want this mess to unwind as fast as possible (so I can become a homeowner in a sanely priced market). However, I have my doubts about the crash/correction duration being “different” this time.
HARM posts “2-4 years would be lightening fast, in housing terms. It took approx. 6-7 years to go from price peak-to-trough during the last downturn in CA, and I wouldn’t expect it will take any less this time. ”
Another Bang on comment! Having been thru this the Greater So Cal area it near impossiable to expaine this to someone who has not been thru it.
The main problem is young Realtors in thier 30’s during the last bust they were in jr high school and it was Pops’ tough luck. A few years a good job, the salad days then Kaboom!
All of a sudden you are not as smart, as you once thought!
The “kids” don’t kow jack!
See my most recent post. I’m in agreement on this prospect. It will be 2011 before we see anything sane in pricing.
Not sure if I’ll still be here then.
“‘People have become scared about home prices because they think prices are going to fall,’ said Michael Carney, an economist with the at Cal Poly Pomona. ‘They’re waiting and staying out of the market.’”
First, the market has been bought forward several years. Meaning buyers jumped in early out of fear the would be priced out during the run up. Second, the pool of potential buyers on the sidelines most likely includes many who, by choice, are priced out at these price levels. I say by choice because they refuse to use exotic or toxic loans, are fiscally conservative and thus would adhere to the mortgage loan = gross income X 3 and are waiting for price drops that bring housing prices back to within their rational reach.
IMHO, the percentage of potential buyers who are will try to catch the falling knife is much smaller than some may think. It is they who will make up any dead cat bounce if there is one.
Well said.
here here! I am also a fiscal conservative (very much so) and am shocked that so many of my fellow Americans would use risky loans and inflate their incomes to get into a house. I have situated my investments since 2001 to avoid state taxes (savings bonds, Treasuries, municipal bonds and avoid short term capital gains on stock sales) as well as avoid federal taxes (municipal bonds). With the inevitable tax increases in 2011 to pay for FBs, medicare, the prescription drug benefit, and social security bailout (and war against terror), we are on the road to serfdom and this part of the road coming up is downhill, so we will tread further in shorter time to serfdom.
I am reading Hayek’s book now. I think a good topic for discussion would be how do we position our selves to minimize supporting any gov bailout of those foolish enough to ignore economic realities and too lazy to do their due diligence with regard to loans. Bailouts erase any economic lesson opportunities and negate the efforts of those who use their brain when making economic decisions. Let’s use our brains to avoid paying for such a blatent misuse of our money.
‘IMHO, the percentage of potential buyers who are will try to catch the falling knife is much smaller than some may think. It is they who will make up any dead cat bounce if there is one. ‘
I agree with your opinion. Anybody prone to “jump in” and with any stable income at all has already been sucked into the finance machine in the past few years.
You have too much faith in our fellow Americans…They are mental marbles…In 7 years, when it is time to go all in, the herd will be yelling…”Realestate never goes up. It only depreciates”.
Here we are “The lone ranger” rides again………his new name is Dr Don.
http://biz.yahoo.com/brn/060920/19744.html
“A report from a Bay Area mortgage insurance company says local homeowners should be very worried about a possible decline in prices
Huh? I’m a Bay Area home owner! And I’m not worried about a decline in prices. Maybe my R-E taxes will stop going up.
Only Sally Spec-U-Vestor and Arnie I.O. ARM need to worry. People living in their homes with fixed-rate mortgages thay can afford doen’t even have to think about house prices.