Bits Bucket And Craigslist Finds For October 3, 2006
Please post off-topic ideas, links and Craigslist finds here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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a good rant on wall street ethics.
http://www.oftwominds.com/blog.html
wall street ethics = oxymoronica
Some more good stuff to ponder for all you “Tin-Foil-Hatters” and anyone else that screams “This is complete bull sh-t!”
It’s a short read and but an excellant topic for us all to rant on…
http://financialsense.com/fsu/editorials/nystrom/2006/1002.html
“It’s a short read and but an excellant topic for us all to rant on…”
Read that, then watch “Grand Imperial Strategy” DVD on Chompsky’s lecture on mideast policy. That’ll really get you grinding your teeth.
DOC
ALL The Donald need in that picture were grey fenders on “Paulie Walnuts” do….. perfect!…..YOUR BROKE! GET OUTTA’ HERE!
a good story on how the costs for rents and owning have explodet during the runup with a very good graph from the nyt
Across Nation, Housing Costs Rise as Burden
http://immobilienblasen.blogspot.com/2006/10/across-nation-housing-costs-rise-as.html
The new census survey is hitting all the papers this morning. At least 5 separate artcles covering NJ housing costs this morning.
NJ Housing Cost - Highest in the Nation
Caveat Emptor!
jb (aka grim)
New Jersey Real Estate Report
While the typical New Jersey household earns 27 percent more than the national average, homeowners pay nearly 50 percent more to keep a roof over their heads, the new numbers show.
…
quite a disconnect….
Some news on my home town. From the International Herald Tribune:
Across the U.S., housing costs rise as burden
In Clifton, New Jersey, the percentage of mortgage holders spending at least 50 percent of their income on housing rose to 27 percent in 2005 from 12 percent in 2000, a 134 percent rise. In New Britain, Connecticut, the group paying at least 30 percent more than doubled, rising to 57 percent of people with mortgages, up from 27 percent.
Unbelievable that 27% of mortgage holders were paying housing costs higher than 50% gross income..
jb
New Jersey Real Estate Report
From the IHT:
http://www.iht.com/articles/2006/10/03/business/web.1003house.php
Among homeowners, there were big increases in the percentage of people spending at least 30 percent on housing in counties like Nassau, Dutchess, Orange and Putnam. The percentage of households spending at least 50 percent of income also rose in those counties.
In Clifton, New Jersey, the percentage of mortgage holders spending at least 50 percent of their income on housing rose to 27 percent in 2005 from 12 percent in 2000, a 134 percent rise. In New Britain, Connecticut, the group paying at least 30 percent more than doubled, rising to 57 percent of people with mortgages, up from 27 percent
jb
New Jersey Real Estate Report
also from the census survey
Hottest housing markets this decade
Hottest housing markets this decade
San Diego’s median value rose 128% from 2000 to 2005: Census survey (adjusted for inflation)
http://tinyurl.com/ql7g9
rent here is same as 2000
3 lights from Pentagon
My rent has’nt gone up since 1999. I can’t say I live three lights from the Pentagon though. Metro west boston.
That sounds a little too close.
sacalmtgguy is out with a new post about the false hopes on the real estate seminars
http://housingbubblecasualty.com/?p=45
Lots of Carleton Sheets seminar DVD sets for sale on eBay right now. I counted 124 last night, some selling for as little as $3.55. Another metric to follow!
You mean for $3.55 I can learn how to put nothing down and pay nothing a month, earn 10K a month and become a millionare in 1 year ??? Gosh, that beats Wal-Mart….
yes for $3.55 you can earn 10K a month from income generated when you buy $10,000,000 worth of propety.
firesale at pier one
PIER 1: SALE OF CREDIT CARD UNIT TO MEET YEAR’S CASH NEEDS
PIER 1 TO DISCONTINUE 10C A SHARE DIVIDEND
PIER 1 MOVE TO IMPROVE LIQUIDITY, FINANCIAL STABILITY
The board of Pier 1 Imports Inc. has decided to discontinue payment of quarterly dividends, the troubled home-furnishings retailer said. The move to discontinue the dividend, paid at a quarterly rate of 10 cents a share, “will improve the company’s near-term liquidity and is consistent with our efforts to provide financial stability as we execute Pier 1’s turnaround strategy,” said Marvin Girouard, chairman and chief executive. Even without discontinuing the dividend, Girouard said Pier 1’s management remains of the belief that its cash on hand, credit lines and proceeds from the sale of its credit-card business “will be sufficient to meet our expected cash requirements over the next fiscal year.” Over the weekend, Pier 1 announced that Girouard will retire on Feb. 28 and that an executive-search firm has been hired to help find a new CEO. Shares of Ft. Worth, Texas-based Pier 1 added 32 cents, or 4.3%, to end Monday’s trading at $7.74.
is it not amazing that after the biggest bullmarket in homefurnituring they have to sell assets one year after the peak to survive? amazing!
A rising tide doesn’t lift a boat that’s not just leaky but has a 3′ gash in the hull. Pier 1 has been sucking wind for several years now. When Bed Bath & Beyond starts selling off assets to survive you’ll know things are bad.
WHIRLPOOL TO LAY OFF 500 WORKERS AT EVANSVILLE, IND., PLANT
that should boost the local economy!
Haeir (?) or another Chinese appliance maker is ready to get them pennies on the dollar.
Thanks Walmart! You helped one more company from your “Associate” country, I mean Peoples Republic of China. (Stars over red banner….almost close as well huh?)
What part of “free” in “free trade” do you nationalists hate? Do you want Big Daddy Government to protect you?
I’m sure the FB’s feel just like you.
Actually this is more of a business model problem - these types of businesses have a natural life-cycle. This one starts off with someone (usually a world traveler) finding a niche in having cheap, ethnic-style furniture manufactured in cheap labor countries. Logistics (including shipping and customs) are difficult and gross margins of 10 X are not uncommon. Eventually as the business matures people who have worked at Pier 1 or others begin to copy the business model and undercut prices or find more interesting products. The business becomes increasingly stale while competition is increasing, but the model is too entrenched to easily overhaul.
“China’s TV makers have risen to dominate the world market. They now produce nearly half the 160 million TV sets produced globally each year.
By the end of 2005, Chinese companies had produced 590 million color TVs and exported 172 million, the Ministry of Information Industry said. …
…Many other domestic companies have worked out ways to deal with trade barriers - for example, exporting spares instead of complete TV sets, or collaborating with overseas companies to produce Chinese brands,” said Yu Zhipu, secretary general of the home appliance branch of China Chamber of Commerce for Import and Export of Machinery Electronics Products….
China enjoys the advantage of low labor costs — which in the manufacturing sector in general are three times lower than in Mexico and Hungary and twenty times lower than Japan and the United States….
TCL’s four leading R&D centers have been heavily involved in setting digital TV standards in the United States, Europe and China. “TCL will in this way reinforce its status in the world’s top three TV markets,” said Chen Xin, president of Guangdong Polytechnic University.
The company’s R&D spending totaled 1.65 billion yuan (206 million U.S. dollars) last year.”
http://tinyurl.com/zeflb
October 3
Chinadaily
IMHO if this is a new business model then the world is in a far worse mess than I think. I believe this to be an example of worker exploitation. We will be paying for the technological edge we gave China for the next 30 years. Next thing we will export to China will be wing technology - sorry Boeing employees they can do it cheaper.
Girlfriend and I went into pier one in that just opened in Lodi, Calif. It was dead quiet.
DOC
Banc of America Securities downgraded three homebuilders, cutting D.R. Horton to neutral from buy, and cutting Pulte Homes to sell from neutral. D.R. Horton has little upside after a recent run, WCI’s core Florida markets are seeing a continuing deterioration in demand and Pulte Homes’s markets of Phoenix and Las Vegas are among the most challenged, the broker said
should be enough to boost the stocks further….
Did you see the Barron’s piece yesterday? I need feedback. Here is the link: http://tinyurl.com/g682f
yes and it is amazing that they were one of the best performers yesterday.
wall street alive and kicking.
Maven,
There a was discussion about this in yesterday’s posts. Check the discussion bucket. (I think)
One of the best articles I have read this year….The implosion of the off the books debt and guarantee’s could take our economy on a terrible spiral down…I kind of wish I had not read this….scary…
Enron all over again.
How do you know the homebuilder stock prices will not stay on a permanently low plateau?
I get what you are driving at GS; however, the task of *managing* the JV’s value during an extended land price downturn becomes exhausting, unwieldly and fraught with risks.
So far, so good…
CREDIT SUISSE UPS M.D.C. PRICE TARGET TO $52 FROM $46
M.D.C. HOLDINGS UPPED TO OUTPERFORM: CREDIT SUISSE
STANDARD PACIFIC UPPED TO OUTPERFORM: CREDIT SUISSE
D.R. HORTON CUT TO NEUTRAL AT CREDIT SUISSE
More faux-economist, Realty Clown “whistling past the graveyard” media tripe in Boston — today’s Herald reports that economists are optimistic that 40 cents off a gallon of gas is going to save the housing market:
http://business.bostonherald.com/businessNews/view.bg?articleid=160485
I don’t know about you guys but every time I save $60 a month I get the urge to run out and buy a $500,000 asset! Just last week I saved $1.25 on a pizza and then ran to the local car dealer to buy a new BMW.
Excellant sarcasm and a point well made!
There’s truth to this….because of our negative savings rate, it’s safe to say that most Americans believe cost is measured in “howmuchamonth”.
I coudln’t tell you what the credit limit is on the two credit cards our family has. They’re paid in full every month….but I meet a lot of people who think that getting a new 10K credit Limit credit card is equivalent to getting a $10,000 pile of cash!
For them another $60/month may mean another credit card they can have!
didn’t help WMT
that was weird
That extra $12 bucks a month (in my case) must stretch a lot farther than I think it does.
I have about 28,000 miles on my 10-year-old economy car. It goes back and forth to the airport about 2-3 times a month. When I’m not on the road, I work from home. I may fill the tank once a month–and that’s when it’s showing 1/3 full.
But a month ago it seems everyone (including myself) was convinced that gas was the final nail in the coffin.
I hate seeing this zombie corpse get anymore breathing room!
maybe i have found the guys who are responsible for the often wrong and revised statistics……
http://immobilienblasen.blogspot.com/2006/10/statz-rappers-explains-some-us_02.html
Great video, jmf!
posted yesterday from gekko
make sure you read this
IF YOU’RE wondering why I’m sweating so much, the answer is simple: I’m waiting for The End. It’s been a long time coming, there’s no doubt about it. But I still feel unprepared. During my 31 years, I’ve lived through a few traumatic events: the dot-com crash, September 11, anthrax, the Iraq war, Simon Cowell’s America’s Got Talent.
Just a few months ago, “open houses” in LA were like orgies
These days the ahi tuna canapés are gone, the brokers look ill and the only buyers are professional vultures, offering 30 per cent below listing. As for the sellers, they can be found upstairs in bed, hyperventilating.
read the whole thing / thanks to gekko !
http://www.timesonline.co.uk/article/0,,6-2385537,00.html
http://www.npr.org/templates/story/story.php?storyId=4823346
Great article, Gekko & GMF. Chris Ayers is extremely funny — I just read his book about being a craven coward who because he was too chicken to say “no” to his boss, found himself as an embedded correspondent in Iraq. He’ll be a great observer of the housing meltdown.
That damn article rubbed me the wrong way.
The only consolation to us homeowners is this: America’s tax system favours mortgage-holders, and Southern California’s last bubble took six awful years of 5 per cent price declines to burst fully. That’s a long time to live in a rented home, especially a town as obsessed with status as LA. I hope the Bubble Sitters loathe every second of it.
Wow, how bitter!
you may hope, but we know that if you are one of the those who purchased at the top you are likely going to have to work on average an extra 10-15 yrs to fund your retirement. At least you’ll be able to soak your 85yr old feet in your own bath tub while saying “only 3 more years,only 3 more years.”
you are likely going to have to work on average an extra 10-15 yrs to fund your retirement.
At least they won’t retire and help collapse Social Security / Medicaid / Medicare / The USA.
ROTFL….
What? A bitter HOMEOWNER….hmmm, now I KNOW the market is tanking. Think about this Melissa, I paid $146,000 state & fed tax on $460,000 in income for 2005 (31% effective). I need a BIGGER home for my finance and our combined families (older children, coming home on holidays). I looked at many properties over the last 9 months in this market. I actually made one offer for $820,000 (Sacramento area). I FINALLY DECIDED TO RENT! During the next two years, my landlord will carry $3300/month negative (I pay $2,000, he pays $5,300). Even on an AFTER TAX basis, I will still save over $20,000/year versus buying. I have a one-year lease and a one year extension at $2100/mon. Selling prices are tanking. After 24 months, I will have saved $40,000 in CASH FLOW (after tax) and be able to buy the $800,000 home for 30% less, or $560,000. Total savings over 24 months: $280,000.
The only regret I have is that I own FOUR other smaller homes which I have not sold, and they are losing value too. However, I am keeping those for cash flow income, as they all have low debt and substantial equity paydown each month.
It is a weird market and owning a home may be rewarding in some ways, but buying a new home today does NOT MAKE ECONOMIC SENSE.
Impact of high housing prices on people and the economy is the headline on NYTimes.com right now. Has anyone seen the paper itself? This must be the front page story?
The burden of housing costs in nearly every part of the country grew sharply from 2000 to 2005, according to new Census Bureau data being made public today. The numbers vividly illustrate the impact, often distributed unevenly, of the crushing combination of escalating real estate prices and largely stagnant incomes.
http://www.nytimes.com/2006/10/03/nyregion/03census.html?hp&ex=1159934400&en=aee99cfd4b1ef740&ei=5094&partner=homepage
The ramifications of which will be the crushing of discretionary income sections of the economy like tourism.
The only ones I’m seein’ trundling around the New England countryside are aging members of the Greatest Generation crew taking on one last tour before being committed to assisted living centers.
States that think tourism can supplant mfg. are in for a rude shock.
Yup HD;….And this group in particular are as tight as it gets when it comes to spending…..
was busy today and one piece that quite shocked me.
addicted to debt
http://immobilienblasen.blogspot.com/2006/10/addicted-to-debt-uk-auf-den-spuren-der.html
it is a 360 % statistic on the uk consumer(debt, savingsrate, creditcards, first time buyer, net worth, real estate ….)
i think if anyone comes close to the us consumer it is for sure the uk consumer.
The median UK house price is higher than the median US house price.
And the median UK house is a LOT older and smaller.
I don’t agree.
That’s a great article with alot of good stats, but 2 stood out for me. First time buyers average income multiple is 3.24x and the savings rate is rapidly improving, now at 6%.
I should think that this looks pretty healthy compared to the US?
This builder is f**ked and doesn’t know or would admit to it.
This is hilarious.
A $1 price reduction followed by a price increase and another $1 price reduction.
7-20-2006 $938,000
8-1-2006 $937,999
9-26-2006 $949,999
10-3-2006 $949,998
http://realtor.com/FindHome/HomeListing.asp?snum=12&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=900000&mxprice=1000000&js=off&pgnum=2&fid=so&stype=&mnsqft=&mls=xmls&areaid=25649&poe=realtor&ct=Newton&st=MA&sbint=&vtsort=&sorttype=&typ=1&typ=2&typ=4&x=98&y=8&sid=075C3E5F42F0C&snumxlid=1064878567&lnksrc=00002
The original house was a ranch style house. The builder claimed in the listing that a year ago, this house would have sold for over 1M. I say NO WAY! For those of you who are familiar with the Newton area, this neighborhood borders West Roxbury and most of the original house were modest ranches built post WWII for returning GI’s. In the last few years, builders have gobbled up these ranches and replaced them with ugly McMansions. Still a lot of small post WWII ranches remains. Any sane person would not be paying close to 1M for a house in this neighborhood.
good luck with this tactic……
That’s right keep the buyers confused and jumpy. Great tactic!
Buyers? What Buyers? We don’t have those here in NoVA anymore.
It is astounding how aesthetically ugly a lot of these McMansions are.
It’s a reflection of who has gotten into the building business meaning some out of work GM line worker with a certificate of compentency from a local votech trade school.
People who buy this ugly garbage obviously have more credit than taste.
Yup;…Make it big but keep it dimensional thereby eliminating a lot of waste and maximizing labor efficiency particularly, if you can build it repetitively….What you end up with is a Kennel Box on steroids…..
Don’t get me started on the *cough* architectural value of McMansions. The freebie “New Homes” mags are full of those horrible things. I’ve actually started to feel a wave of relief when I see an ad for a well-kept manufactured double wide. And Craftsman and Tudor are housie heaven.
There’s also a chance they’ll fall out of popularity. Generation iPod (what I call kids today) may not want to buy them–they may prefer urban living, etc.
If that’s so, then there will be a lot of houses coming down 15 years from now….
I live nearby this property. This is a joke. Its easily 40% over priced and the only attraction to owning it over other properties would be using the Newton school system.
The area involved has had a number of tear downs…..and I’d bet there are 15-20 similar properties in the area…have been for months.
Anyone want to hazard a guess at a what a “reasonable” price per sq. ft. would be for a home in their market? Extra credit for giving a target date as well.
In 92130, I am targeting $250/sq.ft. by Nov-07. Current price is $300-$350 for new construction and $350-$450 resale (FB!)
At $250/sq.ft. I’m a buyer (long term, traditional financing.)
If La Jolla drops to $250/sq ft by next year I’m moving to La Jolla! As much of a bear as I am I still don’t see it happening. Hope you’re right (I think?).
Wait a minute, 92130 isn’t La Jolla, is it?
Nope. Carmel Valley. I need more space. La Jolla is closer to $800/sq.ft. these days.
The Times article could have been written in the late 1980s (perhaps they just reprinted it).
As prices rise, buyers fearing getting priced out forever, and speculators, hoping to cash in, stretch and sacrifice more and more, becoming worse and worse off. With the financial “innovations” of this boom, they have not only sacrificed their present, but also their future and their children’s future — all in order to pay sellers more, and provide more commissions to brokers.
This seems to continue until people realize that the American Dream has become a nightmare, and give up their hope of living where and how they would choose. In the late 1980s, we assumed that we would leave the New York area when we had kids. Others did leave. (Now there are fewer places to move to, but there is renting!)
Years later, we purchased a home at a reasonable price. Others will have that opportunity soon. Prices can’t get that far out of whack with incomes forever.
As in the 1980s, people who sacrificed to buy at the top have had the entire course of their one and only lives altered for the worse, in order to enrich those cashing in. They’ll work and save and be farther behind, having wanted nothing more than to live in a home that people like themselves have typically lived in for decades. It’s sad. But it was impossible to tell them not to buy. They didn’t listen.
Well said, here are a number of articles from the Times during the 80s boom and subsequent collapse:
http://www.youdovoodoo.com/80sbubble.htm
Or at least until they smarten up and walk away. Three years of credit-rebuilding later and they will be ready for another shot at home-buying. This is just exactly what any smart business would do.
More people will walk this time. In the 1980’s, those 20% down payments made people stick with their homes. I cannot imagine someone looking at payments over $2,000 a month more than they can afford sticking with their home once they realize they’re over a few years income under water.
Neil
I’m not so sure about buying again in 3 years. If I understand the new BK laws will hit anyone with income above the U.S. median income (very low) with wage garnishment until the bad debt is repaid or for life.
It’s true that under the new BK laws, most filers will have to file chapter 13 and make payments with creditors (basically, if you are over the median and you have more than $100 of disposable income per month you will file ch. 13 NOT ch.7)
But you don’t have to declare BK to proceed with foreclosure. You can continue your payments to other creditors and just send the keys back to the bank. Maybe someone better informed can tell me what recourse the bank has at that point.
It’s sad. But it was impossible to tell them not to buy. They didn’t listen.
Right, but this statement makes it crystal clear that it’s nobody’s fault but their own.
some bubble news from the island of Corse (France): nationalistic groups are threatening to take all homes of foreigners on the island (without financial compensation) when they gain political control after the elections. Before that there will be some ‘warnings’ (local expression for bomb attacts). Bidding up of home prices by foreigners has made housing on the island unaffordable for local young people and this is destroying the social structure. More than half of the homes on Corse are ‘vacation’ (investor) properties, mostly owned by foreigners from the French mainland, Italy, some from Holland or Germany.
The issue is controversial, because obviously some people from the island have made lots of money by selling their home to foreigners, and they say that the rising prices are good for the local economy (readers from the US will recognize this argument!). Part of the foreign speculators are former Corse inhabitants that moved to the mainland (made a lot of money …) and purchased a second home on the island.
But maybe it’s a good suggestion for all the other people in new EU member states that are suffering from the equity locusts from Old Europe. If they get this new idea, the EU housing bubble would be over very soon.
Wow! Luckily for Hawaii their bubble has popped!
you got a link to this - went to Corsica for a holiday last year. Great place
no sorry, just noticed the story in my local Dutch newspaper. But I guess you can google the story with the appropriate keywords, it’s probably coming from one of the big international news agencies.
So..can we take over all the speculator homes purchased here in Florida from the English, Irish, Scottish, and Germans? They are just sitting empty you know. As far as the affordability issue here, well you know about that too.
If the threats are carried out, the EU idea itself, and not just the EU housing bubble will be over very soon.
yeah, sometimes you get the impression that the EU is most of all some kind of neo-colonialism, with the housing bubble being one of the prime wealth transfer mechanisms
Freddie Mac first-half profit around $2.7 billion
FRE buyer of residential mortgages and mortgage-related securities, said it’s estimating first-half net income was $2.7 billion, as it benefited significantly from mark-to-market gains recorded for its guarantee asset and derivatives, as interest rates increased during the first half of the year. Given the reversal of interest rates of around a half percentage point since June 30, management expects to report a significant reversal of these mark-to-market gains in the company’s third quarter results. Through August 2006, its credit guarantee portfolio rose 11% to approximately $1.4 trillion. It added it’s continuing on a plan to strengthen its controls and systems. (Corrects credit guarantee portfolio levels to fix error in company’s original statement.)
First time I have seen this in the real estate section of the english language Moscow Times:
“Golden opportunity to become a MULTI-MILLIONAIRE
if you buy suitable property in NEW DUBAI. Don’t miss this golden opportunity…prices are cheap now, payment and credit terms, blah, blah, blah.”
I guess they are scratching for buyers for those over the top projects in the UAE.
megalomaniac is the only word that describes what is going on in dibai.
http://immobilienblasen.blogspot.com/2006/09/dubai.html
Has anyone figured out who is going to buy all these condos and homes since it is obviously not going to be the tens of thousands of $4 a day laborers that Dubai imported to build these places. Or are speculators simply going to trade them back and forth until they are all billionares.
Dubai is the Florida of the Middle East.
:-)!
Hey Texas Chick, I’m with you, nothing ever stays the same. Where is the Ben we all know and love.
MORE DISCOUNTS COMING:
RYLAND HOMES has a billboard in Tampa advertising 40% discounts.
This sign directed you to http://www.rylandhomes.com.
Sure enough, in the right hand column there is an offer for 40% discounts for a limited time in limited communities.
I’m flabbergasted! I heard that Florida was working off an entirely new economic model, with land scarcity driving prices up eternally.
Then I remembered an older model: “There is no new thing under the sun”.
Sorry for the bad link.
You need to get rid of the period at the end of .com.
try http://www.rylandhomes.com
That should work. Then use the map to locate florida. I clicked on the Tampa area and the right hand side-bar comes up with the discount banner, while the center of page has “communities” for sale.
My bad.
I read the details. The offer is for 40% off mortgage payments for 1st year, plus forty percent off closing costs, etc.
They are apparently NOT discounting the home prices.
Sorry for not checking the details. Another Bait and Switch game.
40% off the first year is just the same. You just flip it in a year and pocket a 100K, simple!
Americans paying more of incomes for homes in nearly every state
(http://tinyurl.com/kzgj6)
Among the other findings released Tuesday:
–New Jersey had the highest monthly housing costs for homeowners, at $1,938.
–West Virginia had the least expensive monthly costs for homeowners, at $797.
–Hawaii had the highest monthly costs for renters, at $995.
–North Dakota had the lowest monthly costs for renters, at $479.
–Mississippi had the least expensive median home value, at $82,700.
–Among America’s 15 largest cities, San Francisco had the most expensive homes, with a median value of $726,700. Detroit had the least expensive, at $88,300.
–San Diego had the biggest increase in median home values from 2000 to 2005, going from $249,000 to $567,000.
sorry, first link can’t just be clicked on. here it is again.
http://tinyurl.com/kzgj6
I am following up a post from yesterday on the IPO of SAIC.
Carlsbad wrote: This is what I heard about SAIC. They spend a lot of their money buying back stock from their employees. Since they have grown so much over the years, they are almost to the point where they can’t afford to buy-back stock from departing employees.
From the first paragraphs of the S-1:
We anticipate that the initial public offering price will be between $13 and $15 per share. A special dividend of between $1.6 billion and $2.4 billion will be declared prior to this offering by our principal operating
subsidiary and, following completion of this offering, paid to its stockholders of record, including our directors and officers. We will not pay this special dividend on shares sold in this offering.
Offering $13 x 75M Shares, or about $1B from the IPO.
They will pay out $2B to the shareholders before the IPO.
They are not hurting for cash.
No exec owns more than 5% of the stock, so their cash-out is not going to be google-like.
It looks to me that somebody thinks this is the top for the Gov’t service companies, and decided to sell to the public.
jp:
Yes SAIC is flush w/cash which makes their stock price all the more puzzling. This stock price essentially puts SAIC at the bottom of the Gov’t services companies stock price wise.
Some believe SAIC will be swallowed up by Lockheed or one of the other bigger defense companies. Who knows.
Yes SAIC is flush w/cash which makes their stock price all the more puzzling.
Not really, it looks like they’re pricing it at 2x sales. For a slow-growth company, this smells right. The buying funds will get a bump in the first year, they’ll dump and everyone with the gold will be happy.
Except maybe the public that holds past the first year or two.
If you missed this in yesterday’s WSJ, there was some salient investment advice for AARP real estate investers on p. R5
—————————————————————————————–
Property Play
Yes, real estate can still help your nest egg — but the game is getting a lot tougher
(The article goes on to report several cautionary tales from the ground level illustrating the perils of real estate investing at the cyclical turning point.)
Several posters here commented on the bizarre recovery of the headline US stock indexes on no knews circa 2pm yesterday. Does this recurrent pattern suggest the Greenspan put has outlived his tenure at the Fed, or something else?
And by the way, I am seeing lots of red on this page today…
http://www.marketwatch.com/tools/marketsummary/default.asp
Down almost 2% in Moscow. Go baby go!
http://www.rts.ru
P’cola — It’s different over there on the Moscow stock market. Less gov’t intervention…
I have been reading this blog religiously for about 6 months, and I have gleaned an enormous amount of information about not only the housing bubble, but also the economy in general. I recently ran into an interesting situation, while not directly related to the housing bubble has shown me first-hand the alarming rate at which corruption and unethical business practices are occurring in corporate America today.
I have been familiar with the term “universal default” as it applies to credit cards for some time now. For those not familiar with the term, “universal default” is a clause that allows credit card companies to raise you interest rates to astronomical levels should one violate the terms of the account agreement; these violations can include having a late payment (even a single day late), exceeding the max credit limit, etc. It gets better, not only will the account with the late payment default to the higher rate (30%+) , but in many cases, credit cards from other venders will increase al well.
After being with Capital One for nearly 10 years and having a flawless payment history, Capital One decided to leverage the universal default clause against me. This decision was made because my July payment was 5 days late (a single late payment no other factors). I will not make excuses as to why the payment was late, but I will say that I paid the balance in full last night. Fortunately, I had enough funds in my brokerage account to pay off this credit card several times over, why I was investing these funds instead of paying off this credit card is another matter. However, by paying off this card, I just received a 33% return on my investment—I would never see that in today’s market!
BTW: I have a 740 FICO score, and this card was my only dept other than my automobile. I was nowhere near the max limit on this card, but my balance had increased somewhat over the past months.
Cut it up and throw it in the trash. We have been using credit cards and paying them off each month because of convenience. But I notice this kind of crap and am rethinking even having CC’s in my wallet. I hate having corporate idiots in my wallet who think they own me. F*ck them.
I haven’t used a credit card in years. I have a debit card w/a Mastercard logo on it tied to my checking account. Works just as well with no BS.
I prefer to get the 2% rewards, and for items/fraud I wish to dispute to be paid with their money rather than mine.
I also like being given tens of thousands of dollars at 0% interest to invest at 5%+.
I do admit the card issuers are getting sneakier everyday, but there is money to be made off their schemes if you are careful enough.
I love having corporate idiots in my wallet who think they own me… when I own them instead.
Audet, how are you going to feel when you have to get your National ID card in May 2008? Nothing like having those government idiots in your wallet who KNOW they own you…
Capitol One made a mistake, they thought you were a typical credit card holder with so much debt that they had you trapped into their forever in debt plan. They sprung the trap but missed you since you had enough assets to walk away. Unfortunately for many credit card holders they don’t have any assets and get stuck with the bill.
Mine got raised to 28.9% when I forgot about paying it for a month. Usually I pay it off in full every month. I pay my rent two months at a time, and utility bills whenever I get motivated to “do the bills”.
FWIW, I just use one CC to get frequent flyer miles on purchases. For instance, I just paid my car insurance bill with the CC and the cable TV bill, and …
The games that CC companies play is a PIA and debt is slavery.
Here’s an article today from the San Diego Union-Tribune about the increasing homeownership rates among Latinos in San Diego, and showcases a young couple who “bought” a townhouse last year (sigh) in San Marcos (sigh again). Here’s some interesting quotes:
“I do think that there has been a concerted effort by the industry to accommodate Latino home buyers with bilingual marketing efforts and loan products that are more relative to Latino buyers, and there has been an increase in Latino professionals in the housing industry.”
“The real estate industry, along with nonprofits and government entities, have beefed up efforts to make homeownership more accessible for low-and middle-income households. Lenders have eased guidelines for qualifying for a loan, especially for Latinos. And a panoply of financing programs have sprouted in recent years, from no-down to interest-only loans, that have helped transform more renters into first-time buyers.”
Yes, and they’ve just helped that poor couple to future financial ruin too. f**king morons.
Remember, if they DON’T give them a no-doc suicide loan they are being RACIST.
And if they don’t later give them a bailout from bankruptcy, they are being RACIST again.
Unless the Latinos are beneficiaries of the minority bailout package that will result when it becomes common knowledge that blacks and Latinos were disproportionately targeted by toxic lending.
“Immigrants, who have been arriving in strong numbers for many years, are buying in to the American Dream”
David Lereah
October 28,2005
http://tinyurl.com/kopqg
“We had record immigration in the 1970s, 1980s and the 1990s. Immigrants don’t buy a house as soon as they come to this country. It takes them a while to acclimate. So the immigrants of the ‘70s and ‘80s started buying homes in the ‘90s, which also helped fuel our real estate expansion. The immigrants in the late ‘80s and ‘90s are buying homes in this decade – at a record-setting pace for immigrants.”
David Lereah, 2005
http://tinyurl.com/gjz8z
Immigration is vital to Lereah’s constituency, otherwise he would not promote immigration so frequently. It does not matter to David Lereah and those in the REIC whether or not the immigrants have entered the country illegally, except to the extent that the REIC benefits by exploiting cheap construction and landscaping labor, and he and his fellow parasites are eagerly anticipating the future purchasing power and demand from immigrants.
San Marcos is in the San Diego area. Hah!!!
All of a sudden that amazing thread on Ocrenter’s blog makes sense.
http://www.bubbletracking.blogspot.com/2006/09/home-sweet-home.html (hope I typed that right, this terminal doesn’t cut and paste)
That’s brutal - $2300+/mo. for a 2/2 townhouse in San Marcos. I guess it has something to do with the panoply of products more relative to Latinos. Oh, well, they look like a nice couple.
By the way, I was reminded of something by the fact that the couple in the story had been living in an apartment in Tijuana while waiting to buy in San Marcos:
If you go down to Old Town San Diego, on San Diego Avenue in front of one of the bars (can’t remember the name), there’s an old guy who used to always be playing blues, the “Chicago Blues,” as he told me. I got to talking to him one evening, told me he worked a regular Wednesday-Sunday schedule, five nights a week, sitting on the ledge outside the bar with his dobro-style blues guitar. Said it was a pretty good living. I asked him where he lived. Said he lived in a really-nice gated community. . . in Tijuana.
It seems quite common, here in SD, for people to live in Tijuana and work in the US. I’ve known at least three families who’ve done that at some point. Not a bad idea, IMHO.
“And a panoply of financing programs have sprouted in recent years, from no-down to interest-only loans, that have helped transform more renters into first-time buyers.”
Don’t forget NO DOC loans since I am sure that a significant number of these new “homeowners” really like the idea of not having to provide documentation. I wonder however if the people who get stuck with the bonds for these loans will also appreciate when they find out that they loaned hundreds of thousands of dollars to someone who might not even be giving their right name.
And so , the lawsuits begin. I don’t know who is more frightening in this case , the plaintiff or the defendent. One scary read:
http://www.lewrockwell.com/french/french50.html
Good one Huck….
Hair dresser and painter with eight houses purchased in two months. What is it with hair dressers and real estate? Ha! Ha! Ha! Ha! Ha!
Again, it is a matter of scale. This story is being repeated thousands of times around the country. If there’s four million dollars at stake in each of these cases, multiply that by just 1,000 and you see four billion in losses. If it’s ten thousand, forty billion. If just one hundred thousand people (out of our 300 million) got in over their heads like this, then four hundred billion dollars might be unrecoverable. It could be worse. Much worse.
Great one…they should all be held responsible and rot.
Am I the only one who thinks a hairdresser and a self-employed painter might not even be making $60K a year?
Report from fly-over country, Springfield, MO
We are in the SW of MO. Columbia, MO featured in yesterday’s posts is in the middle of the state.
Our local newspaper has had only two region-specific real estate stories in the last year (that I can remember).
Homeownership eludes many
Conference attendees find that for many, prices too high, wages too low.
Didi Tang
News-Leader
$59,800
median value of Springfield houses in 1989
$79,800
median value of houses in Springfield in 1999
$122,000
median value of Springfield houses in 2006
—
“In 1989, the median household income was $24,204, and the median value of homes was $59,800, according to the U.S. Census Bureau.
Ten years later, the median household income increased by 22 percent to $29,563, while the median home value went up by 33 percent to $79,800.
Between 2003 and 2005, when the median price of Springfield homes saw a double-digit increase, personal income in Springfield grew by 5.9 percent.”
For the whole story go here.
What’s scariest is that , never mind house prices since they aren’t included in CPI , the household income in the area came nowhere near keeping up with inflation in the time period if I calculated correctly. 17 years later and people are generally worse off then they were in 1989 , and are infinitely further away from being able to afford a home. Never mind the true cost of health care as opposed to the quality-adjusted costs spit out by the government.
If house prices start to crash , and continue to come down for years , will they put it back into CPI calculations to make it look like inflation is under control?
interesting news tidbit from RE mob paradise the Netherlands: a major newspaper reports that over the last one and a half years 68 people were arrested because of their involvement in fraudulous activity with mortgages and real estate. Many of those arrested are professionals from the RE and banking/mortgage industry. This seems quite a change, because there have been many signs of RE/mortgage fraud in the Netherlands over the last ten years and up to now no one has been arrested or convicted.
It’s a bit difficult to translate the details in english, but it’s mostly about whitewashing criminal money with real estate, and getting mortgages on names of people and companies that are not credit worthy. It could be related to the investigation of frequent drive-by shootings of RE tycoons in Amsterdam over the last years. Maybe there are arrests now because the people who made a profit seem to be mostly underworld types, and not the usual white collar criminals? Let’s hope all those other criminals in the Dutch RE industry get at least a bit nervous from these arrests, that might be a good pin to prick the bubble over here.
The St. Louis Post-Dispatch finally has a lead story on the fall in house prices here. Sales in many neighborhoods have been in decline for some time, but I think this is the first time it’s made the front page:
Cooling St. Louis market
Anybody know what a Cape Horn Fishing boat is and what it’s worth?
Nice place but I’m sure ridiculously overpriced
http://dallas.craigslist.org/rfs/215444038.html
Bought in June of 2005 for $285,000 per property records. Way overpriced for a house on 0.12 acres of property not located directly on the water. Every house in Pensacola is located about ten to fifteen minutes from the beach, the country club, downtown and the yacht club. Nothing special about this house.
http://tinyurl.com/j8nja
http://tinyurl.com/zanhb
This may be a double posting. Apologies.
The house was bought in June of 2005 for $285,000 and is located directly across from the Pensacola Bay on the periphery of the Pensacola Country Club (PCC) area. I guess it goes without saying it is way overpriced and every house in Pensacola is located within ten to fifteen minutes of the beach, PCC, downtown, a marina, etc. Public school district in this area is terrible and all the people I know in the area send their children to private schools. Most likely the house was destroyed by hurricane Ivan and required substantial rebuilding. Living on the bay is not really considered that prestigious in P’cola better to be on bayou Texar, Star Lake, or the north side of Gulf Breeze proper in my opinion (protected water).
http://tinyurl.com/j8nja
http://tinyurl.com/zanhb
Cape Horn is a brand.
http://capehornboats.com/index.htm
http://www.naplesnews.com/news/2006/oct/01/prices_stabilize_market_falters/?housing
this is a continuation of yesterday’s discussion about Ben Stein and his bullish predictions about the real estate market almost till the end.
Say it ain’t so Ben!! You didn’t buy another property right at the peak again, did you Ben!? Certainly you learned your lesson from the early 90s, right Ben? You wouldn’t get suckered in to buying some overpriced POS in the middle of nowhere, would you Ben?
Property Address: XXX XXXX LN, RANCHO MIRAGE, CA 92270-3038
**************************** SALES INFORMATION *****************************
Sale Date: 1/6/2005
Recorded Date: 2/28/2005
Sale Price: $ 1,460,000 (Full Amount Computed From Transfer Tax)
A sign of things to come?
So there I was this morning….ready for my cuppa joe to get the heart beating again. Quick stop at the 7-11 here in Irvine, The OC. Pull into the parking lot, and wha?
Yup, at 7:45 on a Tuesday morning, hanging out in the lot, is a guy with one of those multicolor clown wigs (purple/orange/etc fro). And swinging around one of those nursing home walkers like it was a dance partner…..
And a sign that says “OPEN HOUSE BY OWNER…call xxx-xxxx for info).
Wish I was making this up.
I have a vewwwy vewwwy bad feewing.
ROFLMAO!!!
Unlike the country at large, San Diego’s financial hole is turning out to be deeper than first thought. Not sure of housing market implications…
http://www.signonsandiego.com/news/metro/pension/20061003-9999-1m3finance.html
Is the stock market’s wild ride getting paid for by gold investors?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=GC06Z&sid=999169&freq=9&time=1dy&siteid=mktw
Don’t forget the greasy stuff! Down almost 4% today.
Well done, don’t you think? Hammer gold and oil for breakfast, push the dow to record high for lunch, and rocky mountain bear oysters for dinner!
of course, someone has to pay to get Bush and his cronies reelected!
Looks like Moody’s has a new report on housing: “Housing at the Tipping Point”
http://www.economy.com/home/products/housing/default.asp?src=hattp_economy
Anyone have a subscription?
Subscription is $3,500 !!!!
I was thinking it would be $10 and I’d spring for it…..but at that price, no thanks….LOL
I’d pay the fee and get a report that says “Housing market is weak”…..
Yikes!
Indeed - I love all the BS about how the Dow’s record high is a sign of “a bullish future” or some other nonsense. The fundamentals are not there at all, and it is clearly a case of something ranging from plain stupidity, greed, another bubble, and/or market manipulation. It does seem rather conveniant that the Dow hits record highs and oil is dropping before an election…
The full report will be released Wednesday but Yahoo has the story:
http://news.yahoo.com/s/ap/20061003/ap_on_bi_ge/troubled_housing
For me, this is the interesting part:
I think that prediction will bite Moody’s in the butt pretty fast. In my neighborhood(historically very desirable, good schools), houses keep going from “sold” to back on sale, and the truly funny part is that a few of those asking are apparently chasing Zillow.com down, dollar for dollar. I.e. Zillow says the value went from $319K to $312K this week, so they reprice at $312K.
From the article: “The second biggest decline is projected to occur in the Fort Myers, Fla., area, a fall of 18.6 percent from the peak in the final three months of last year to a low-point for prices that is projected to occur in the second quarter of 2007.”
They’re projecting that the second biggest decline will be only 18.6%??? That sure doesn’t sound like much of a drop. The houses in my neighborhood have more than tripled in the 12 years I’ve been here. I’d think the drop here would be 30% at the very least. However, I thought things were way too high 4 years ago, so what do I know?
this is one of the real questions; I cannot imagine any orderly decline after these extreme price runups except maybe by hyperinflation (which the FED is feverishly working on).
I’m in the Netherlands where individual home prices have surged around 1000% over the last 15 years, without any significant correction. And the major banks are projecting prices to double in the next 5-10 years. All that with declining personal real income …
WCI Just lowered…..
News & Analysis: Real Estate
WCI Communities Warns
WCI third-quarter earnings will be “significantly below” what the company initially forecast, sending shares lower in the after-hours session.
WCI shares sunk 5.3%, or 90 cents, to $16.26 in recent extended trading.
WCI NEWS JUST OUT:
Homebuilder WCI Communities Inc. (WCI.N: Quote, Profile, Research) warned on Tuesday that its third-quarter earnings would fall “significantly” short of estimates as it writes off some costs and orders for new homes fall some 80 percent.
WCI said the write-off of about $13 million of costs associated with land options which were terminated will trim about 18 cents a share from its quarterly profit.
The company, which said it still expects to report a profit, previously forecast earnings of 52 cents a share for the quarter. Wall Street analysts, on average, expected the company to earn 54 cents a share.
“With the current slowdown in demand, we believe we own sufficient land to support our operations through the foreseeable future. We have concluded that it is more prudent at this juncture to apply our cash flow from operations primarily toward debt reduction and stock repurchases.” Jerry Starkey, WCI’s chief executive, said in a statement.
“We have concluded that it is more prudent at this juncture to apply our cash flow from operations primarily toward debt reduction and stock repurchases.” Jerry Starkey, WCI’s chief executive
Translation: “We’ve still got a boatload cash with dismal investment options, so we’re going to try to prop up our stock price and hopefully it will be enough to keep those pesky directors from canning my worthless ass for a few more months so that I can maximize my golden parachute.”
I came accross some money which I intend to invest in real estate in the LA area. I am interested in foreclosures, can anyone help or guide me as to which service is the best if available. I dont trust these slimy RE agents and Mortgage brokers which are all around these days telling me that they can help me.
Any help will greatly be appreciated.
nick,
I’m assuming it’s rather obvious that the folks on this blog would NOT recommend buying anything right now. There are many fools out there just salivating over a 10% drop, so they can “pick up foreclosures”.
This will likely be a multi-year process, and the foreclosures worth buying will not be readily available until late 2008 and beyond, IMHO.
There’s plenty of time for you to find out where auctions are held. Attend them as often as you can, and learn from the pros (and the not-so-pros). Also, you can get to know the people in the REO departments at your local banks. Go in there and chat them up right now. See what’s going on and build a relationship with them. Check out different neighborhoods and walk around them, talking to residents from different parts of the city. Find out what kind of changes have occurred over the years (gentrifying or decaying?). Get to know the areas where you might eventually want to invest.
You might also want to interview different Realtors (yes, some are very useful) and RE attorneys. I would highly recommend reviewing different laws WRT foreclosures (esp. title and lien issues).
Good luck!
Doubt anyone will see this but…
Forbes has an online article titled “What will your house be worth in 2016″:
http://money.aol.com/forbes/realestate/2016
For LA, a 23% increase in 10 years…not great, but at least the dip is very shallow, look at the graph:
http://tinyurl.com/ozwmf
Looks like we need not worry, we’ve hit a permanently high plateau in Los Angeles, eh?
And places like Seattle? Well, we all know that “real estate only goes up”, and “everyone wants to live there”:
http://tinyurl.com/rwped
And San Diego? Narry a dip:
http://tinyurl.com/lzpgv
Well, we can all stop worrying, and get back to spending. Where’s my credit card…