Bits Bucket And Craigslist Finds For October 8, 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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Agents are going to be thinned out by the coming RE maket crash (duh?).. The only reason I am posting it; about 1/2 the way down, they talk about a RE agent who is trying to sell her own 800K home because they can’t make the payments.
Sounds like what we all have thought for a long time is probably true, RE agents believed their own hype, and bought it just like all the rest of the lemmings.
http://www.palmbeachpost.com/business/content/business/epaper/2006/10/08/m1a_SCARED_AGENTS_1008.html
I’ll try to keep my utter contempt for women like the ones in that story to myself, but it’s hard.
The machine has already chewed them up and will spit them out shortly.
I have no pity for that woman who left her 100k plus salaried job to sell real estate. What a dope. 3 months after starting a career as a RE agent and she is forced to put her house up for sale due to ZERO commissions. Her family was probably strapped for cash before her “career” change. What’s her next move? Financial advisor?
Bird dogging is the next in thing . Quit your job and look for the hot deals.
How incompetent must she be when she leaves her six figure job in the family business, struggles, gets 2 minimum wage receptionist jobs, and the family doesn’t let her come back to work? Daddy must have wised up. A further example of how nepotism could have destroyed a company.
What I actually find most telling, is that she is now working two full-time receptionist jobs.
First, how can someone work two full time jobs that require attendance during normal business hours, which a receptionist position almost certainly does? Sounds awfully fishy to me.
Second, if she was making $100K plus before she quit, and now can only find receptionist positions, then she is now either 1) seriously underemployed, or 2) never really was qualified for the $100K marketing position in the first place and therefore was really an incompetent just sucking off the proverbial teat of the credit boom that made it easy to sell anything because fools and their money are so easily parted.
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Dena’s still in business…for now.
http://www.denawebster.net/
The situation is creating sleepless nights for investors, such as Dena Webster of Wellington, who hasn’t been able to sell any of the 14 houses that she purchased at the peak of the boom. Eleven are in Olympia, a Wellington development where houses routinely carry price tags of more than a million dollars, but where rents are in the $1,800 to $3,000 range.
“I’m upside-down on every one of them,” Webster said of her properties.
To help make her monthly mortgage payments, which total $50,000, Webster has renters in four of her houses and is advertising for tenants for two more. Still, she’s taking large losses every month.
“I’m not sleeping,” she sighed.
http://www.palmbeachpost.com/goodlife/content/home_garden/epaper/2006/05/28/a1k_renters_0528.html
http://www.ftc.gov/os/comments/FACTA-implementscorestudy/514719-00007.htm
Pretty good article, although it would be better if they at least put quotes around “investors”. No actual investor would buy 14 houses during a mania!
I know the answer, but who actually loans that much money to somebody like her? I guess I go to the wrong place. Every time I’ve ever applied for a loan they asked me a few questions and insisted on correct answers.
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“I also am a mortgage broker, owning Home Mortgage Corporation of America, LLC. This gives me an advantage over the average real estate agent. I am able to prequalify Buyers for Sellers and assist Buyers in obtaining financing for a new home. Home Mortgage Corporation specializes in creative financing solutions for all types of buyers.” - Dena
http://www.denawebster.net/About_Me/page_1563048.html
Oh. She qualified herself. That clears it up.
Most Americans are confused about investment versus speculation. This applies even more to the stocks.
Only a few are prudent speculators, most are pure gamblers but are not willing to admit.
Gambling is deeply rooted in human psyche.
Jas Jain
“Gambling is deeply rooted in human psyche.”
And it is almost impossible to resist when it seems normal because “everyone is doing it.”
I personally know several realtors and RE investors who each owned 10 to 50 homes in SoCa last year( OC and Santa Barbara).
sorry, investors should be quoted.
What a great article - Here in Austin, there are tons of speculators running into the real estate market. They buy a houses with the intent to rent them out for two years and then sell making a nice $50k.
However, the market is quickly becomming saturated with “for rent” signs everywhere. Its not uncommon for these rentals to sit empty for three months.
Sounds like 1984-85 in Austin all over again….!
14 houses with a total mortgage bill of $50,000 a month means she needs on average to rent them each out at $3,500 a month just to break even. I wonder how many people in Wellington can afford a $3,500 rental and who don’t already either own or rent somewhere else?
And this probably does not count taxes and maintenance.
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http://www.denawebster.net/
http://www.palmbeachpost.com/goodlife/content/home_garden/epaper/2006/05/28/a1k_renters_0528.html
http://www.ftc.gov/os/comments/FACTA-implementscorestudy/514719-00007.htm
I hear you TXChick. I just don’t understand how they can call themselves professionals; when anybody who has read a full day of posts on this blog has FAR more idea of what the market it doing/heading then they do.
What is the purpose of a RE agent anyway? Just to tell both sides what they want to hear to get the deal done?
Anyway, there is justice in the world; that’s for sure. She is going to lose it all; she better drop the price on that 800K home to 600K and just get out now. Assuming she has any equity in it..
I love this comment on that article (replying to a previous poster)
amstel, you are a pathetic doomdayer that is adding fuel to the fire and mis-representing facts. You clearly must be short on RE and have something to gain. Your negativity belongs somewhere other than America. You better get outta Florida before your sky falls…
BEN;…..Can you please give Fred Hopper my email address….Thanks….
scdave….
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In case you missed it -
“Martha Stewart doesn’t live here, but you might think she does!”
http://philadelphia.craigslist.org/rfs/217451947.html
I think Martha Stewart would hang herself if she had to live there.
OMG. That is just too funny!
Martha would think her probation had been revoked and she was back in the clink.
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I love the big air hockey table crammed in between the cheap gaudy furniture and other crap jammed in the basement.
They could make more money if they advertised it as a bad taste musuem and charged admission.
It’s crammed full of little garage sale, dust collecting, do dads. Very nice.
The kitchen is ultra modern, complete with breakfast bar, oak cabinetry, dishwasher, and disposal.
What, no granite countertops? No stainless steel appliances? No t.v. built into the fridge? Not exactly ultra modern.
For those who think this is cheap, you’d have to consider the area of Filthadelphia that this is in. (And for anyone who considers calling me on the Filthadelphia thing - keep in mind, I’ve lived just outside the city all by 7 years of my life. Meaning I’m not trashing someone else’s town - just my own!)
err…all but 7 years…
Notice that the ad states only one bathroom (in a central location - the hallway). Those basement air hockey players must be doing a lot of trudging up and down the stairs.
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I’m a big fan of a clean, minimalist decor. It’s very calming to me.
http://www.accomodationsrome.com/imgimmobili/2548/01.jpg
Clutter, knicknacks, and crap makes me uneasy.
LESS IS MORE. THROW IT OUT.
That looks kinda like my house. Except without the sofa and coffee table.
I like that too. Most people’s houses make me cringe. And it has nothing to do with how much they cost.
Oooooh! a disposal!
Ultra modern kitchen - circa 1981.
They need to rent a storage space for all that crap, or better yet, salvation army.
In my new hometown here in the midwest, just about EVERY house interior looks like that. Except what’s missing in that photo is the pool room with the dead animals on the walls and floor.
O.M.G - yet another Teal Carpet…..
The place is cluttered, IMHO. It reminds me of my last visit to get a haircut where I had to wait about ten minutes. Picked up a magazine: “Lucky — The Magazine about Shopping.” No snippets of news, politics, Iraq, nothing but vanity^2, i.e., me first! Talk about promoting a shallow existence of meaningless consumption.
Are there bars on the window or something?
Here’s a winner from MSN/Verizon’s homepage astrology column:
“Cancer
“June 21 - July 21
“Some rather disturbing news about trends in the world economy could have you and everyone around you worrying about your financial futures. Have faith, dear Cancer. What you’re hearing is probably total misinformation, and the future is probably going to shape up far differently than the picture you draw from the news. In fact, you might find that your own personal finances take a definite turn for the better.”
Hum. Do you think the “astrologer” may be a desperate condo flipper trying to convince potential buyers the bubble hasn’t burst?
Sure hope that has its usual disclaimer somewhere hidden on the page, because that sounds like financial advice to me.
“By our reckoning, commodities’ prices are now about 60 per cent above what could be explained by fundamental supply and demand,” the Merrill report said.
Its research suggests that September’s drop in commodity prices might “only be the beginning” of a long-term drop in prices.
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1.commodities tank
2. land prices plunge
3. builders buy cheaper lands and w/ lesser material costs, the new homes are sold cheap..much cheaper. New home volume remain at ~ 1 mil/yr as new household formation remains robust.
4. existing homeowners (stock 6 times more than new homes,typ) are forced to revise prices downward..Big time.
—- we can see the new home bargains today are forcing the exisiting homw owners to slash..
I question that. Check out this:
http://www.kitco.com/ind/Willie/oct052006.html
“Central banks worldwide have grown the money supply in reckless fashion in the last year. The pace ranges from a seemingly modest 8.5% in European Union, a modest 7.5% in Australia, and roughly 9% in the United States. Check this! Money supply growth is up to 18.4% in China, 19.1% in India, and a whopping 23.2% in South Africa. While not “Weimar-like” numbers, for the modern era, these are staggering numbers. The next phase will be marred by the futility of more rapid money supply growth to kickstart economies, in conjunction with flat economic growth outside Asia. The more rapid money growth will render US energy costs as painfully high again, since the USDollar’s crippled status will be recognized, acknowledged, debated, and confirmed. Without fanfare, Russia has increased its money supply by almost 45%, not so much inflationary as capitalization of energy deposits.”
Commodities have to increase in price to catch up to too much currency in circulation. Just because house prices are going down does not mean we are in a deflationary era. The RE craze was a bubble and overshot because of 1) speculation, 2) the capital gains tax break on primary residence, 3) the interest rate cuts to 40 year lows, 4) ignorant boomers who thought they could get a GF to finance their retirement.
Commodities are scarce. Once oil is extracted and used, it’s gone. I am cheering on the oil stock sell off. Pengrowth yields 14.90% right now. I buy more as the gas prices head south. This steep cut in gas prices smells very political to me, and I’m certainly no Democrat or “Green.”
commodities are simplying correcting. do you guys really think a 6 year bull market is all that will follow a 20 year bear market?
‘“By our reckoning, commodities’ prices are now about 60 per cent above what could be explained by fundamental supply and demand,” the Merrill report said.’
Don’t they know it is a new era, where hedge funds with leverage have accelerated money velocity to a permanently high plateau?
An actual SALE Fresh from the Las Vegas MLS in the very desirable Henderson area. From $558,000 to $449,000 in 6 months. Thats a $109,000 reduction from a motivated seller. Listen up, you economist dudes, this is a whole lot bigger loss than most of you project from your crystal ball. Like I said before, the internet is going to make this crash quicker and more painful than ever, and when this sale becomes a comp, CRASH, BOOM, BAH!
10xx CALICO RIDGE DR 89011 $ 449,900 10/03/06
10xx CALICO RIDGE DR 89011 $ 449,900 10/03/06
My aunt has been trying to sell her age-restricted condo in Henderson for over a year. She finally locked the doors and moved to Colorado.
But we know someone who sold their age-restricted single-family condo in St. Pete in less than a week. They know they are VERY lucky.
But was the 558K price in a range that it would have sold at within the last couple of years, or was it just wishfull thinking?
Exactly my question, and Zillow doesn’t support Safari!
I stopped using Safari after trying out Firefox. Give it a test-drive.
The real “Internet Bubble” IS the information bubble that led to the Twin Bubbles, first in stocks and now in housing. People feel that they have “knowledge,”‘ when in fact what they have is information, supplied mostly by self-serving propagandists.
Jas
“People feel that they have “knowledge,”‘ when in fact what they have is information, supplied mostly by self-serving propagandists.”
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like kitco.com and other repetitive gold bug sites that will be glad to take your order
They’ve been repetitively documenting the bubble economy, currency destruction, government run amok and the commodities boom. Luckily you know better. House that condo flip going?
There were 6 price reductions in 6 months. Can’t seem to get the comment transferred
10xx CALICO RIDGE DR 89015 $ 558,000 04/03/06
Make sure you have no html-unfriendly characters like & or < or > (I am using escape character to type those 3).
Oops, I meant > (>
Found this gem: can anyone check his math for me?
Reply to: hous-217620481@craigslist.org
Date: 2006-10-08, 9:34AM EDT
You can OWN a beautiful 2 bedroom 1 bath condo with a 1 car garage and your own workshop/storage space for $1,500/ month everything included- 100% Financed! This means that you could move in to your own condo with no money out of your pocket. This remarkable condo is close to everything: 95, trains, buses, shopping and More…
Everyone is nervous when they are thinking about buying their first condo or home. This is a great opportunity to stop throwing money out the window in rent every month. If you are paying roughly $900/month rent….in say 4 years you will have given away $43,200 never to be seen again. If you purchase this beautiful condo: on average you will receive a 6% increase in value on your property every year. In that same 4 year period you will have gained on average $46,720.00 That is yours!!
Call Today to find out more
Additional information can be seen at: http://www.riliving.com/PropSearch/cndformdetails.asp?MLSid=652436&indiv=1
-Sean : (401) 575-3218
Sure, it’s fine if you actually see a 6% average annual increase when you sell it after 4 years. Is he willing to guarantee that in writing? I doubt it. Also, if it were that great an “investment”, why would he sell it?
the best part is fully financed (exotic 80/20 2/28 I gather) it costs you 1500 a month to live there, but you’d be “throwing away 900″
P.S. this condo is in the ghetto and might fetch around 500 in rent, a little more if you’d do section 8.
Chris Thornberg (formerly of UCLA Anderson Forecast, you might have seen his awesome video on the California housing bubble) spoke at a Real Estate in the Northern Rockies conference on Friday.
New West summary
I wasn’t able to make it, but he sounds surprisingly soft in the write-up.
Thornberg showed statistics on housing trends which indicate a continuing boom in Colorado and Idaho, but with Idaho’s growth more sustainable, and Colorado’s in danger of bust. Montana and Wyoming are on good trends paths, but not as strong as Idaho.
Did he miss the massive speculation in Idaho? I’m curious about what he finds “sustainable” there.
Maybe he is factoring in the equity locusts and priced out out-migration for ID, MT, etc.
OK. But what about when it’s 2010, California is semi-affordable again, and the out-migrants decide that -10 degree winters aren’t really that much fun. And that they like having an actual job market. Think there’ll be much incentive to stay? I tend to think that Californians would also get bored in any “city” under 300,000, but maybe they could change easier than I think.
Here’s something I wonder about… People on this blog like to say that housing prices will revert to 1998 (or so) levels, adjusted for inflation.
But the supply / demand relationship has been fundamentally altered in the boom years since then. This housing bubble has resulted in the largest OVERSUPPLY of housing in history. After the market bottoms out over the next few years and the dust settles will the real price of housing be at all-time lows? I think so.
Depends on location, closeness to employment, schools, is the neighborhood in decline or coming back, ongoing new development, etc…
I do not think good neighborhoods, close to significant employment and cultural/entertainment will go to new lows. OTOH, homes built 30 miles from anything more signficant than WalMart and Applebees and McD’s may well hit new lows / sf.
I’m guessing you will be able to move into a house for free in some of the far exurbs of Phoenix. Of course, you won’t have a deed or lease so it might be hard to get the utilities turned on.
Actually, the bank will probably give you the deed in return for you maintaining the property and paying the taxes.
Here’s a good one:
http://portland.craigslist.org/mlt/rfs/215568744.html
I’d guess it’s really worth maybe $100K, what a POS.
Read an article this weekend that Alan Greenspan,speaking at a conference in Calgary, believes that a weekly rise in mortgage applications could signal the “worst may well be over” for the US housing industry. If the Greenspan indicator is still working, we be very close to a huge pickup in downside momentum. As a unofficial Greenspan biographer, I would like to take the opportunity to recall history as I saw it unfold.
1. Greenspan is on record as saying that deregulation was working and the banking industry was extremely healthy, this was within a year before the S & L Crisis.
2. He made a famous utterance referring to “irrational exuberance” in the late 90’s, but later vacillated, and changed his mantra to one of “productivity miracles and new paradigns”. This was 3 or 4 months before the huge break in tech.
3. And perhaps most perplexing of all ,is the giving of his “blessing” on adjustable rate mortgages back in 04. This questionable piece of advice contributed to millions of Americans missing the opportunity to finance their home at long term rates at 40 year lows. The Fed then proceeds to hike rates 17 straight times thereafter. Even if some of these ARMS are tied to the Libor, not short term US rates, the advice was in my opinion, shockingly abbhorent.
And so it is, with the aforementioned track record, that the opinion of Mr. Greenspan must not be taken seriously. Indeed, if anything, one should expect the opposite to occur.
“that the opinion of Mr. Greenspan must not be taken seriously”
That is if you can actually figure out what Greenspan is saying since he often speaks in a way that can mean multiple things to multiple people depending on what they want to hear. He reminds me of palm readers who will say just enough to sound good but not enough to actually be definite and therefor proven wrong.
‘Read an article this weekend that Alan Greenspan,speaking at a conference in Calgary, believes that a weekly rise in mortgage applications could signal the “worst may well be over” for the US housing industry.’
So is the REIC paying his speaking fees these days?
Seen today in the LA Times online:
—
Known By Millions
Owned By You
Condo Hotel Suites
From the 400s
—
… Ugh, is all I have to say.
Hard Rock Hotel
San Diego
Known by millions
Bagholder is you
Condo Hotel boxes
With a rail line and convention center view.
Hard Rock Hotel
San Diego
Soon to be renamed Hard Knocks Hotel…
I have followed this blog for a couple of months. I totally agree it’s bad time to buy a house. But both my wife and I got a 20% + raise in September which brought our family income to $180K/year. That means we have to take a 33% federal tax rate. Someone suggested me we should buy a house right now. If we pay $80K mortgage per year(we have enough savings for our daily life), we will have a 20% federal tax rate after deduction. We will save about $20K in tax. The tax deduction and our current rent combined will be more than the mortgae and the possible housing falling. I have no idea about such tax and mortgage stuff. I don’t if that guy is correct. I know there are many experts here. Could someone give me some ideas? We are living in East Bay CA.
Thanks a lot!
Do NOT make such a major financial decision unless you thoroughly understand all the ramifications of the choice you make.
If you don’t think you’ll be able to self-educate enough, then try finding a fee-based financial planner or an accountant — someone who does not have any ties to the real estate industry and has no vested interest in the outcome of your decision — and get him/her to help you crunch all the numbers.
Why buy when only a 3% drop would wipe out your tax savings? IMHO, coastal CA will suffer drops of at least 50-75%.
I do not think anywhere will fall 75%.
Why all this advice to pay a financial advisor and accountant? Just find a friend who’s knowledgeable and trustworthy, and ask for INFORMATION (not ADVICE) Then find a second friend and repeat the process. Then ask Ben Jones.
Buy if you need a place to live, and plan on being in the house for at least 4-5 years. It takes that long to just to recoup the non-recurring expenses - assuming the house goes up in value, hardly a certain thing these days. Financial and Investing considerations should always be a secondary consideration for your primary residence.
Of course, this is a terrible time to buy with the housing market teetering on the edge of a collapse. You certainly would risk losing your 20% (or whatever) downpayment, if you had to sell within a couple of years.
You need professional advice before making such a major decision, especially since you don’t seem to understand the financial ramifications.
“Buy if you need a place to live, and plan on being in the house for at least 4-5 years.”
Moteplug –
You didn’t learn to spew this BS in Realtor (TM) school by any chance? Because I am guessing homes in many parts of the country will be on 50% off sale by 4-5 years out. So how is it that it makes sense to buy now, if you could save yourself five years of pre-tax earnings by waiting?
Additionally, nobody knows when/if they might HAVE to sell (job loss, divorce, health issues, etc.). It took over 10 years to break even during the last RE cycle — and that peak did not have the credit/financing issues we have this time around.
Best to buy when your risk of making money is greater than the risk of losing money. It doesn’t matter if it’s an “investment” or your primary home. Primary homes have to be paid for in DOLLARS. Nobody is giving it to you for free.
You’d be wise to talk to at least one financial advisor AND an accountant. Watch out for those who are “pro-housing” under any circumstances. Just listen to them and ask LOTS of questions about different scenarios (percentage down, opportunity costs, worst-case scenarios, AMT tax issues, etc.).
Good luck!
Contrary to the opinion offered in this self-contradicting article, it is no buyer’s market, but a falling market. All you can do in a falling market, if you have to buy, is to catch the knife which will fall by the smallest amount.
“Some tips for sellers in a buyer’s market
Price realistically, offer incentives, fix up the property
By Holden Lewis
BANKRATE.COM
October 8, 2006
House prices are falling in much of the country, and more than 4 million dwellings are on the market. That’s bad news for sellers, because buyers feel free to make lowball offers and then just wait.
It’s a buyer’s market, but don’t despair.
You can increase your chances of selling your house in a reasonable time by following a few good guidelines.
First, play the cards you’re dealt. A successful home sale begins before the house is listed, when you decide not to expect to make a killing.
an agent with Corcoran Group on Long Island, N.Y. “Not what you wish you could get, not what the neighbor got two years ago, but at the price you should get now. That’s the reality.”
http://www.signonsandiego.com/uniontrib/20061008/news_1h08sellers.html
Take two:
“All you can do in a falling market, if you have to sell, is have the best possible product out there at the price it should be,” says Diane Saatchi, an agent with Corcoran Group on Long Island, N.Y. “Not what you wish you could get, not what the neighbor got two years ago, but at the price you should get now. That’s the reality.”
Pessimists: Housing market is crashing, but too slowly for numb-skulled optimists to notice. (If this is not the case, then how come all the bull shills feel constantly compelled to offer reassurances the market is not crashing?)
——————————————————————————-
Optimists: Housing market is slowing, but not crashing
By Michael E. Kanell
COX NEWS SERVICE
October 8, 2006
ATLANTA – If you are a mortgage lender, you are almost by definition an optimist.
And in the optimists’ view, the housing market is slowing – not crashing – as it decelerates to a saner, less frantic normality.
“We feel like things are stabilized,” said Charles Richardson, senior vice president of Market Street Mortgage, a Florida firm.
http://www.signonsandiego.com/uniontrib/20061008/news_1h08mortgage.html
The good news: You can get a Seattle condo for the reasonable-sounding price of $150K.
The bad news: It is only 2 truck widths across, with 296 square feet of living space, which would be $500/sq ft before factoring in the present value of the increasing annuity known as HOA dues. (Don’t miss the “weecondo” imbedded in the link. Someone at the SD-UT has a sense of humor!)
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Seattle’s tiniest condos measure 2 truck widths
By Aubrey Cohen
SEATTLE POST-INTELLIGENCER
October 8, 2006
SEATTLE – Park two of GMC’s biggest Sierra pickups next to each other. That’s a lot of truck, but a small condominium – at least by Seattle standards.
But a developer is betting Seattle urbanites are primed to carve out their own two-truck chunks of Belltown. The condos, set to break ground this month, promise “New York-style living,” with units as small as 296 square feet that start at $149,950.
http://www.signonsandiego.com/uniontrib/20061008/news_1h08weecondo.html
Crazy loans are OK according to regulators, as long as lenders exercise appropriate caution…
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NATION’S HOUSING
KENNETH HARNEY
Regulators OK innovative mortgages, but caution lenders
October 8, 2006
WASHINGTON – You may have seen reports about tough new federal rules aimed at curbing the availability of popular payment-option and interest-only mortgages, both of which feature low monthly payments in the early years, followed by big payment jumps later on.
Those cutbacks, in turn, could make it more difficult for many buyers in high-cost markets to stretch their budgets to afford the houses they want.
That’s all true – to a point. The “guidance” jointly released Sept. 29 by the Federal Reserve, the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration did not ban or attack payment-option and interest-only loans per se.
http://www.signonsandiego.com/uniontrib/20061008/news_1h08harney.html
GS,
I don’t like the title, but if you read the article, they seem to say that borrowers have to qualify for the loans (on highest rates for their mortgage) and that they need to be aware of the risks.
From what I’ve seen, it does look like there is some tightening going on. I intend to call around to different lenders this week to find out more about the tightening. Will post on any findings.
Final reduction.. $60k UNDER appraisal
http://washingtondc.craigslist.org/mld/rfs/217567454.html
I love the fake fireplace.
Note that they don’t show the kitchen at all. It’s probably a dump.
The Zurich Cantonal Bank is offering a new loan product that includes a put option linked to Zurich’s house-price index, which costs 0.5% per year. The result is that if your home value drops, so does the size of your loan.
More at The Economist.
That is interesting. Is that only for Switzerland, though? What happens to the loan amount if prices go up?
Since it’s an option, if the prices go up you are only out the 0.5% per year which covers the cost of the put option. Looks like it’s currently only for Switzerland, but it wouldn’t be surprising to see a comparable offering appear elsewhere.