Bits Bucket And Craigslist Finds For October 13, 2006
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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usa reloaded 2004/2005 Fort Langley BC Pre-sale Hysteria
this video is from september 2006 in canada. i say just two words
“tent+camping” sounds familiar……
http://immobilienblasen.blogspot.com/
As part of the international section on Ben’s blog I would like to report the Russian market is up 1.57% as of 17:05 today fueled by optimism generated by New York’s impressive close yesterday.
http://www.rts.ru
and to add another tidbit from Europe: the euro is going further down the drain today; the banksters from the ECB are having a jolly good time lately.
Over this past week, in two different speaches, I heard Bush say that he’s just recently cut the deficit in half. Did anyone else catch this or know what numbers have been manipulated for him to make that claim?
Read angrybear.blogspot.com. He is “stealing” from the social security trust fund to get these numbers to work out.
They are not only stealing from the Social Security Trust Fund but also from Federal employees retirement funds. It is already underfunded, and they’ve had to raise the debt ceiling in order make investments for the G Fund so the government would not exceed the present Federal debt limit.
http://angrybear.blogspot.com/2006/02/snow-withholds-checks-to-retirement.html
The government workers (ha) deserve to have it raided.They don’t work anyway, except military. Give me more NOW ; I’ll be room temperature by 2020 when the ‘trust fund’ is empty. Screw the rest of you boomers, xers and yers.
Isn’t that what Republicans used to accuse Democrats of doing? I wish that real Republicans would form a “fiscal responsibility party”.
“I wish that real Republicans would form a “fiscal responsibility party””
Ahahahahahahahahahaha! They’re all dead (in both parties).
I like the name too… it would be pretty hard to remove “fiscal responsibility” from their platform.
Of course they could still screw it up by either not following through after they get elected or redefining what “fiscal responsibility” means. I guess “republican” probably meant something rather specific at some point.
And this is why politics is depressing.
Yes and Liberal used to describe someone who believed in freedom from the government. Now it means inclination to take your money(taxes) with the threat of the IRS and Federal Prison to back it up.
So I’ll throw away my vote this year by voting for neither of our two options. NeoCons or Socialism, pick your poison.
Both parties are like boobs on a nun…useless.
that’s why others, including myself, are starting to look more at alternative parties.
http://www.reformparty.org/
I agree with you guys. The choices that the two main parties provide are usually some variation on the theme of bad. I usually vote for a libertarian or other “small government” candidate when I can.
I don’t expect they’ll ever win, but maybe one day at least they’ll be allowed to debate the other candidates on TV.
> maybe one day at least they’ll be allowed to debate the other candidates on TV
They are allowed now, only the two candidates from the two dominant parties might not show up, if they have to share the attention.
I consider the dominance of two parties independent of programs and candidates but simply a function of the election system. If you change it, into any type of run-off system, small party candidates have more chances - enough reasons for the current parties not to do it.
Libertarians have won local offices in the past. Don’t discount the 3rd largest party in the USA. I ran on the Libertarian ticket in Ohio in 2000. Interesting experience…
I didn’t think things were so bad when Clinton was humedoring Monica and Mark Foley was humedoring little boys.
It was better than Reagan with the Democratic Congress.
It was better than Carter with the Democratic Congress.
It was better than Little Boots with the GOP Congress.
Let’s make a deal: you vote for the pinko leftist President, and I’ll vote for the closeted homosexual right wing Congressmen. Things will be better.
Just like Clinton.
Just like every president since Johnson…There has not been a real surplus in 40 years. The biggest con this side of the inflation and unemployment reports.
Walker - Thanks, it’s worse than I thought.
Sadly, it is not just GW fudging the deficit numbers. Just look at the actual National Debt numbers over the past 10-15 years at the following link:
http://www.publicdebt.treas.gov/opd/opdhisto4.htm
Remember when we were told that there were “budget surpluses” in the late 1990’s and early 2000’s? If so, why did the National Debt INCREASE each and every year throughout these times of surpluses? What a joke…
From 1996 to 2000, it increased the equivalent of one year’s increase in the each of the last 5 years. In other words, if GWB had stayed on the same budget track, the national debt would only be up 1/5th of what it is now (2000 to 2005). Instead, GWB racked up 5X what Clinton ran up in a total of 4 years.
W doesn’t know himself half the time what he is saying when sputtering such simple sentences as “I have to go to the bathroom”. Why would anyone waste their time analyzing his pronouncements on a subject as slippery and elusive as budget deficit reduction.
Found it. Here is the appropriate commentary.
Who knows. He’s the master of spin this close to an election. What amazes me is how people forget about how much he’s increased the debt and deficit and how big the dificit really still is. Did anybody catch the WSJ opinion page story yesterday about the $2T unfunded obligations of state and local governments for retirement and health plans? GASB accounting regulations will require these to be accounted for and reported as obligations next year. It seems your local government is now going to have to tell you about this deep dark secret, on top of all the other empty promises they’ve made to you. I work for a local government and this is just one of the new accounting rules. Government now has to look at all of it’s infrastructure like streets and water/sewer lines as depreciating assets and must show the level of improvement, or lack of improvement, to those systems. It’s going to show how much our national infrastructure is deteriorating due to lack of investment. As with retirement and health care, our national infrastructure is also an “empty promise”.
Why? It is not like the federal government plays by these rules. If they did, everyone would understand that this “halving the deficit” comes from the surplus intended to pre-fund social secuirty.
If more people had access to the hidden deep dark government secrets they might care a little bit more. Perhaps then government would have to play by the rules.
I heard an NPR op-ed (on last night’s Marketwatch) which quoted budget expert Laurence J. Kotikoff’s estimate (actually Gokhale and Smetters’) that the US is $65.9 trillion in the hole (over 5 years-worth of GDP)== BK by standard business accounting measures. But the govt does not use these.
Somebody is going to end up holding the bag; let’s hope it is neither you nor I…
http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf
“Marketplace” not “Marketwatch”…
If no one’s posted this yet, there’s a series of videos on youtube called Real Financial Heroes. The link for the 3rd one is
http://www.youtube.com/watch?v=TxylHPnoloI
They’re parodies of the Budweiser commercials. All 3 are funny, but the 3rd one is right on target for this blog.
Good stuff!
Was out last night and had two conversations re: housing.
1) 60-year-old man and his wife own their home free and clear. Lived there since 1976. The neighborhood is starting to turn into a rental community. Specifically a mostly Russian rental community (I don’t understand why there’s such an influx of Russians in this area recently). Anyway, some negative things have been happening around the neighborhood and this older couple thinks they want to get out of the area. My advice to this man was to price his home right (since at any price level, he’s making nothing but profit) in order to make it move in this market. I then suggested renting until the market settles down. He likes the idea, doubt he can sell the wife on it. She’ll want to buy something else. He said he thinks he’ll wait until the market picks up again in January.
2) A 24-year-old girl and her fiance are near settlement on a new home they’re having built. It’s a 4BR home costing over $400,000. She said she’s a “little nervous” about it. She owns a townhouse currently - bought it 2 years ago - price was 7 times her salary. She said she’s unhappy because when they decided to buy the new home 6 months ago, her townhouse was “worth” a lot more than it is now and they were really counting on getting that amount for it towards the new home. But she’s not worried - she’ll just wait until January because the market will get better by then.
So I was left with a few questions…first of all, where’s the memo stating that the market is going to improve come January? I missed that one. Second, how or why does a 24-year-old couple afford or even deserve to afford a $400K+ home as their “starter”? She’s a nice girl so I hope it works out for her (she actually said she was considering calling the deal off - I told her, very nicely, that that’s not a bad idea). But seriously, what the heck?
So, just a few more examples of what the average Joes/Janes out there are doing/thinking regarding the real estate market.
The memo was sent…it was from Leareah
More on Leareah-
Nothing that anybody here didn’t already know.
http://www.thedailyreckoning.com/Featured/Danarticle92906.html
My “starter home” had wheels.
Mine was quite a bit above average…but then again, I was *37* at the time we bought our “starter”.
“where’s the memo stating that the market is going to improve come January? I” It’s called the Super Bowl pop! That’s what my realtor told me, and she knows everything.
She is wrong - the Super Bowl pop is the surge in sales of big screen TVs. Of course no money down - no payments for fives years.
eastcoaster:
The Russian immigrants came to NPhila area because there’s a tradition of a lot of Russian/Polish/other E. European communities from Pennypacker Circle all the way up through tpke. area. I went to the Polish festival in Doylestown at the Shrine of Our Lady of Czestochowa last month, and it was like bright blonde Russian day. I had to wear shades. : )
At TJMaxx in Bucks (went on Sat. for the first time, in maybe years), few “natives” were there. The following is VERY close to what I observed. I actually heard one American say, “I got my statement yesterday, but I’m taking back the boots, so I can buy this coat, I think.” Another said, “How you buyin’ that! Nuthin left on your card!!.” These women were saying these things right in front of strangers. Like debt is pride.
Actually buying were the well-dressed Russians, shopping in groups, and flush with cash.
You nailed the area! From the Northeast up thru Southampton, Huntingdon Valley, and into Bucks. I take my son to a local park (H. Valley areaa) where, as an English speaking person, I’m in the minority. I’m all for a melting pot, but it’s getting downright creepy around here.
I’m from S. Jersey, but I work with a lot of these Russians (I believe they’re mostly Russian Jews). I started wondering where they were all coming from and why did they park themselves here in Philly. Apparently they’re fond of Poconos vacation homes too. Just 5 years ago you could pick up one of those things for like $60k.
This area, including the Poconos, has what feels like mild weather to some immigrants. My daughter had a 4-yr. old recent Russian immigrant in her daycare last year, and I swear, she ran around in a light jacket, sweating, when we bundled up the kids like it was 20 below zero.
You went to PSU, right? Or was that somebody from Plymouth Mtg.? Anyway, I finished early, so I could go to Germany and study for a year, and then my Sr. year was free, so I took intensive Russian all year out of curiousity. It was a lucky choice. Let me tell you, is it ever interesting to listen what to these folks say. (plus NONE of them ever assumes I can understand them, especially if I smile stupidly as I’m standing there.) I wish I felt like starting a small business around here catering to new immigrants.
Yup - PSU! (Went back for the Northwestern game 2 weeks ago!) I should have you meet me in the park some afternoon. I’d LOVE to hear what’s being said…
I’ve been meaning to take my 5-yr. old to that big park in Newtown with the 3 story playhouse building. I need to find out when they close it for the season.
Might be a little ‘creepy’ now, but in 15-25 years, all of the immigrants kids will be living there speaking fluent English.
The ethnic group with the highest percentage of net-worth millionaires in the U.S. is Russian.
underground economy is cash flow positive
also, a lot of these folks know how to game the “system”
(disclaimer): these russian immigrants are legal
Dear eastcoaster,
I”m sorry I forgot to send you the memo. Here it is:
http://biz.yahoo.com/weekend/weakhome_1.html
Be sure to look through the predictions of the various declines and when the bottom will occur. As you will see the bottom is occuring at present in several areas.
As usual, buy now or be priced out forever.
jp
PS. That link (+ the chart they reference) is a wonderful summary of what the MSM believes counts as a decline. lmao.
The kicker is that, even though San Diego is predicted to decline 8.5% from its peak by 2008, the DataQuick numbers show that San Diego has ALREADY declined 8.8% from its peak.
Who are these guys, anyway?
I thought the 2006 spring summer selling season was supposed to save the market. That is what many Realtors said!
they’ve readjusted their “forecast” - now it will be the Spring 2007 season. So come April of next year, we might as well all tattoo NOW IS THE BEST TIME TO BUY on our foreheads, because that’s all we’ll be hearing from that crowd.
although in another thread the turnaround is supposed to happen in January 2007. Isn’t that when the ARMs reset?
Or do the ARMs reset after the Super Bowl bounce? Or will the market rebound happen after the second New Moon rises in the city of the winning Super Bowl team…
(… scratching head)
Agreed. My landlord pulled his house off the market with the same hopes (better market next year). When the “better market next year” doesn’t happen. We may see some real panic set in by late summer/fall.
‘07 and ‘08 are setting up to be very crucial times.
About the “Why January?” thing:
Friends in Seattle wanted to put their home on the market a few weeks back. Their realtor told them to wait until January because “Interest rates will be cut in January”.
Yes, she actually said that, as though she was an authority and KNEW FOR SURE.
Maybe it’s the latest schpiele from the NAR? Tell your sellers to wait til January to keep inventory from it’s disastrous upward climb? Who knows.
I told my friends that it seemed strange that their realtor would know about what will happen with US interest rates in January when economists world over are arguing back and forth about it, ie. no one knows.
But, according to them, she’s a “good” realtor. Guess the really good ones have the inside info. on this sort of thing. Who Knew?!!
We really give these realtors too little credit here. They know a LOT and have tons of valuable info that NOBODY ELSE HAS!!! Apparently they are not only brilliant economic minds , but clairvoyant also.
Shame on us for thinking they’re just lowly salespeople.
For a bit of ultra conspiracy thinking: One stupid Seattle realtor that I know personally just dumped all of her properties on the market a few weeks ago. Perhaps there’s a tacit agreement amongst the realtors to keep as much inventory off right now so they can unload their own?
I know that in Seattle at least, they have worked in tandem in the past to screw ohers to get their own properties sold.
http://seattlerei.blogspot.com/
Very amusing seeing someone so smug and confident start to panick after just 1 week of no traffic at two of his flips. I wonder if he’s still going through with the houses in that red hot market of Buffalo. Unfortunately he disabled comments.
The most telling thing about this guy’s blog. Is that he has been able to get 10 + houses in America, but due to Swiss like diligence of Mexican lenders can’t get financing to build on his lot in Mexico.
“…the DTI ratios required were well outside the envelope of my profile.”
Translation: I have no money, and people that do have money are not stupid enough to give me any for this disaster.
“Ultimately, my wife and I came to the realistic conclusion that the capital locked up in that land can be used better elsewhere.”
Translation: My wife is not going along with my clueless plans anymore, and we have to sell this property to get cash to pay our bills.
‘Envelope’, ‘capital’, ? All the pseudo-financial jargon is not going to change the fact that you are one notch away from Casey Stein. Not sure if you are a notch higher or a notch lower.
He is burning over$7k per month. They are hoping some “investments” in Oklahoma City, and Buffalo will “cash flow” to help this situation. I wonder how they like that two feet of snow already? Looks like it is going to be a long cold winter.
He turned off comments on REI site about 2 weeks ago. Pretty obvious what that says…
People in WA. have no clue about rough winters. They think that just because it’s colder here than CA. that they’re “roughing it and hardy”.
This guy is going to be shocked senseless over what it takes to get a building through a Buffalo winter.
I will give him credit for one thing: His rehabs come out looking really fantastic. If he priced these houses properly, they really should sell.
They should sell “eventually,” I might add. I don’t know if it is him or his wife (or maybe his contractor) but one of them has very good taste.
I agree with you Claudia.
When I saw the quality of the work I almost felt sorry for him.
He should have done a little more research before jumping in with both feet.
He has comments open on this site:
http://bubbleator.blogspot.com/
Talk about a carpet bagger! Some guy from Seattle buying up properties in (of all places) Buffalo? BUFFALO??? I am thinking he might be from New York State for that city to even cross his radar screen.
Did any of his friends tell him that there are many reasons why real estate is cheaper in Buffalo than Seattle?
Yes, as someone else stated, very smug. I am going to bookmark his blog to keep track of things. He has not updated in a week. I hope he looses his shirt. Does he realize he is basically trying to make it certain that his kids when they grow up can’t afford to live anywhere, or would he say that his kids will be “different” and very successful and will be able to afford anything.
My favorite part was when he sent his wife to Buffalo! He said his wife wanted to go, but I doubt that. Of course if he needed to scout out Vegas, Miami, the Virgin Islands, he would have gone. But nope. Buffalo. Send the little woman!
People are running like ninnies to anyplace that sounds cheap. My realtor in Austin a coupla years ago was mentioning that all his investor clients were running to Oklahoma City to snap up rental properties there since Texas was getting to pricey.
Not sure if I’ve got the timing right, but at one point he had a troll on his blog advertising Buffalo RE. I’m pretty sure he bought the Buffalo properties a couple weeks after that.
And yes, it is sad because he does a nice renovation job.
He just got into the market 10-5 years too late.
Perhaps he can take what he’s learned and get back in in 20 years at the next bottom and upswing.
And therein lies this whole sickly farce……….a traveling circus of Equity Vagabonds in search of greener pastures.
I can’t recall how many times I have heard the reason someone was buying was that the area was “undervalued”.
Then you have the Real Estate snake oil salesmen shilling out the lastest market data of the next hot market.
You have seen the enemy….the wandering hordes of greedy flipper bandits.
WSJ:
“Politics & Economics: Real-Estate Services Face FTC Complaint On Web-Listing Policy”
“WASHINGTON — The Federal Trade Commission accused two operators of multiple-listing services in the Detroit area of restraining competition by discriminating against a type of service often offered by discount real-estate brokers.
“The agency’s complaint will be subject to an eventual ruling by an administrative-law judge.
“The FTC also announced that it has reached consent agreements with multiple-listing services operating in parts of Colorado, New Hampshire, New Jersey, Virginia, and Wisconsin, avoiding further legal action with them. Those companies have discontinued the practices being challenged by the agency, which in July reached a similar agreement with an MLS operator in Austin, Texas.
“The policies in question block certain listings of homes for sale from being displayed on Realtor.com and other Web sites often used by consumers to search for homes. These listings, known as exclusive agency, often are used by discount brokers charging flat fees rather than a percentage of the sales price.
“The FTC maintains that restrictions on such listings deprive consumers of the right to save money by using limited-service brokers. Some MLS operators have argued that they have the right to establish rules deemed to be in the interest of the brokers that set up and own the MLS. Multiple-listing services, which are databases of information on homes for sale, generally are owned by local brokers belonging to the National Association of Realtors, or NAR, the dominant trade group.
“The two Michigan MLS operators charged by the FTC are Realcomp II Ltd. and MIRealSource Inc. Karen Kage, chief executive officer of Realcomp, denied that the firm’s policy is an illegal restraint on competition. “Our obligation is to protect the interests of our Realtor members,” she said. MIRealSource CEO Virginia Bratt declined to comment pending a review of the complaint.
“The NAR said it doesn’t agree with the FTC actions but is seeking to cooperate with the agency in an effort to resolve the issue.”
Centex reported that its earnings for the quarter will be barely half of the consensus estimates. In a normal market, this would cause the stock to plunge at least 10%, but so far it’s holding up much better than that. It’s crazy, because CTX is now likely selling at at least 20X next year’s earnings, which is unheard of for a builder.
The news on CTX isn’t so rosy. Stock off at 10:00am. Wonder how it will close?
+++
” When the company reported first-quarter results in July, it had forecast net income of $1.40 a share for the second quarter. Analysts polled by Thomson First Call see quarterly profit of $1.32 a share, on average.
“The housing market continues to adjust rapidly and Centex is executing its balanced approach to effectively manage these transitions,” said Chief Executive Tim Eller in a statement. “Cancellation rates that were well outside of historical levels diminished our earnings visibility this quarter.”
The company said it’s seeing record levels of cancellations, due largely to the inability of buyers to sell their existing homes, and that it continues to focus on generating cash flow and strengthening its balance sheet.
“Centex said it expects to write off between $85 million and $95 million this quarter for land options it’s walking away from. It also anticipates land-valuation adjustments of about $40 million to $45 million.
The company is slated to report second-quarter financial results on Oct. 24. “
The amazing HB levitation act is soon to come to an end. I give them another month maximum before they make their next big leg down.
Think the election has anything to do with it?
Although I would expect the administration to use all levers possible, I don’t buy all the election conspiracy and PPT talk in regards to financial market movement. Too expensive with a low probability of achieving the desired outcome over a long period of time in a liquid market.
Centex had a brand new sales office open in Sacramento for some condo complex, but it closed within a week. Say they will reopen when the condos are closer to being finished. I would have stopped by, but they were only serving chocolate chip cookies, I like peanut butter chocolate chip cookies, why could they not have served peanut butter cookies those GREEDY BASTARDS.
and juice!!
Check this out…
http://www.irvinehousingblog.com/2006/10/10/bad-investment-fraud-or-what/
Mortgage fraud is alive and well in Southern California.
HEY EVERYONE, TAKE THE TIME TO READ THIS…it is a great piece! (nice post MC). Now to figure out how to get some prosecution going on all these fraudsters.
Yeah, standard fraud pattern of family flips for higher values. They pocket the payoff money and when the price gets high enough that nobody will give them any more loans, they let it get foreclosed. Often, they take the renter’s deposit and rents as well when they leave. I’ve seen it so many times now, it’s old hat, but every time I wonder “how many of these multi-million dollar hits can the banks take?” Obviously they can take more than a few. But how many?
That is insane. It looks like the banks may be in on it. And why not, since they don’t hold the loans anyway.
Thanks for posting this. I noticed an uptick in our traffic and this explains it
Lainvestorgirl was on the blog last night wanted know how many people on the Ben’s Blog are buyers? Asked her if she was doing market research and that she should come back in the morning.
Wanna’ be buyer, here. Not sure if/when I will ever be a true one…
I rent and would like to buy…..but not in this market. Maybe in a year or two when the sh*t hits the fan.
I’m not a buyer. But I registered for Zip realty and browsed three metro areas and now 3 RE agents are calling me or e-mailing me every so often. I’m courteous to them. I don’t mind calls because I shut off my cell phone before sleeping. Until I detect lies in other people I treat them as equals.
I want to buy also. At today’s prices, can’t afford. Cheaper for me to rent and save my money.
Not a buyer - already own. Just find the blog interesting - a lot of noise at times but some excellent comments and insights too.
Not a buyer here, either. I’ve wanted to, since 2001, with money to burn and thinking rental properties were a good way to go. Ha! Certainly not at these prices. Even though I still have the habit of scanning the weekend RE ads, I don’t seriously think I’ll find any rental properties worth investing in. Rents are too low, and there’s too much competition from owners/landlords who don’t care if they lose money for years. (Something about big negative cash flow for years makes me think “poor investment choice”.)
Want to buy - but waiting for now. Miami is uber-bubbly. Though I don’t believe in a big nationwide correction (fed will print enough money to prevent that), Miami may go down quite a bit.
So, I”m renting till mid-2007, and tracking a lot of places on zip.
Renting. I won’t consider buying until the numbers work out to being close to what I pay in rent and exotic financing has been flushed out of the market for quite awhile.
Definitely a future buyer! Like many/most on this blog I’ll wait and rent until prices come down to a point they make sense. That could be anywhere from 2-10 years. Unlike Austin Powers at the blackjack table, I don’t like to live dangerously also. It’s not my bag baby.
Also (I suspect) like most on this blog I make it a point to never pay “full retail price” for any purchase. Big business is in a position to squeeze the consumer so I do my small part to squeeze back by not participating in the consumer society mentality. Renting is actually very relaxing right now.
Hopeful buyer. I’m projecting things in the OC will be ripe for me around 3rd or 4th quarter of 2008. Maybe early 2009. I’ll be ready.
Currently renting, been waiting to buy even tho I have more than enough $ as I don’t want to be upside down like some of my Los Angeles friends in the 90’s.
Planning to buy in 2008-2009. Where we buy will depend on the market. If prices in the Bay Area are not down at least 25% at that time, we will be relocating to the Midwest. We have our down payment saved - now we are just waiting.
Mortgage-free owner here. I got hooked on the bubble when developers started offering me 50 times the amount I paid for agriculturally zoned, swampy, Florida pasturelands. Now I am just waiting a few years to buy back some of my old property at my original price.
that’s what I’m talking about…!
I would like to buy, but I don’t want to do so until incomes support home prices and buyers can afford to purchase using non-I/O mortgages with a reasonable percentage down. I think that the latter is important to ensure the stability of the neighborhood in which I’d purchase.
Also renting and saving to buy. I found this blog in June ‘05 when I was researching the market because a realtor associate of mine was trying to get me into a starter. It was a 278K, 660 square foot condo conversion in the Warner Center area.
You guys saved my life. Now I am saving and waiting patiently.
Buyer here waiting. Looking forward to owning but not enough to be stabbed with a falling knife.
I’m not a buyer, as I already own. I just find this whole mess interesting. I come here mainly for the economy talk. I also enjoy hearing stories about people ruining their financial situation through some combination of stupidity and greed. It reminds me of the when the tech stock bubble popped.
I couldn’t understand how people got rich investing in companies that didn’t have business plans, products, or profits of any kind. I figured that either I was too stupid to figure it out or everyone else had gone insane. When all those people finally lost their investments I was re-assured that yes, the world does indeed make sense. At least in the long run.
We are saving tons and tons of money right now and intend to buy when the market hits bottom.
The return on our SAVINGS ACCOUNT alone is way higher than house-price appreciation right now, and rent is less than 1/2 of the interest we would being paying if we bought the house we live in, so why buy?
If the market doesn’t come down enough to justify buying vs. renting (we have to at least break even after 30 years), then we will rent until we have enough cash to buy something outright.
I own a weekend place in Austin and co-own a condo with a friend in Vancouver BC. Renting in Seattle (primary residence) after selling my house in September 2005. Not considering buying again until I hear a lot more hissing sounds out of the Seattle bubble.
Also want to buy again.
And want to wait til the lending practises tighten to find out exactly what these properties are worth.
I’ve got a feeling they’re worth a LOT less than currently advertised! 100K price drops notwithstanding.
I have never owned RE, prolly never will.
The Rise and Fall of a POS…in the “Bubble”
2000 - 150K POS in da hood
2001 - 175K “with potential”
2002 - 200K “in up and coming neighborhood”
2003 - 225K “cute”
2004 - 250K “hot investment”
2005 - 275K “wow…won’t last”
2006 - 300K sold to clueless flipper
2007 - 250K “seller motivated”
2008 - 200K “bank repo…make offer”
2009 - 150K POS in da hood
LMAO!!!!!!!!
LOL. This is my pick of the day .
Very funny!
2009 - 150K POS in da hood w/ 6 other houses on da block for sale!
2010 , abandoned, stripped of anything worth more than $1, and inhabited by ten or twelve former-realtor squatters .
2004 young professional buys “hot investment’, because they belive hype that if they do not buy now they will never be able to buy, young professional ignored warning signs that a homeless guy pushing a shopping cart makes repeat trips to and from in front of the house that is being purchased. 2009 young professional comes to the realization that they are in “mortgage prison in the hood” and their is no escape. 2010 Young professional gets a divorce, family breaks up , and they lose house. 2010 shopping cart guy puts 50% down on POS in da hood from his cost effective savings plan of rent free living in the river bottom while collecting disability checks. The circle of life in da hood home is complete.
1. this is a follow up to the San Diego U-T article posted yesterday. Read more about the house Realtor Faye Hines was talking about. For those of you that don’t remember, she’s the one that was wondering how come no one on earth is buying when everybody should.
2. this one is purely for laughs. owners/sellers are clearly caught in the headlights and don’t know what to do. they already have plans for the profit they’ll generate from the sale and they are sticking to it. So they oscillate from $685,000 to $684,000 to $684,999 to $684,995 and back to $685,000. these guys have done so for the last 7.5 months.
Now this is lots better than Hollywood enterteinment! ROFLMAO!
Here’s the latest for Southern California
Updated SoCal Real Estate Charts
Sacramento is now have seminars on how it is better to buy than rent. Check this out.
Saturday, October 14, 2006:
Michael Stitt of Valley Sierra Mortgage Planners, a division of SAC 1st Mortgage, will present a free workshop, “Why It Still Makes Sense to Buy versus Rent,” from 10 a.m. to noon at Roseville Maidu Public Library, Rocky Ridge Drive in Roseville. Information on the local and national real estate market and the history of property appreciation and interest rates will be provided. For more information, call (916) 367-7100.
Any roving citizen-reporters in Roseville?
Lies, Lies, and more lies.
I know that there are plenty of single family residences purchased in Sacramento for investment purposes that are now rented by MULTIPLE FAMLIES. We have plenty of housing up here, we just cram two or three families into one $800,000 McMansion and everything seems to even out. So for the 18,0000 homes for sale in the Sacramento area we can cram at least two families in each, which gives enough housing for around 60,000 people, not counting all the rentals. We will be able to accomodate any population growth for all the people moving to Sacramento to work in our great service industry nicely. And people say we have a housing shortage Geez, what we got is a spare bedroom surplus.
George Chamberlin on daily TV and radio makes this lying statement on a daily basis here in San Diego. He says it like an undisputed fact. Everyone know it’s better to buy than rent because of the loan interest tax deductions, blah blah.
Of course he’s no dummy (can do the math) and doesn’t really believe it himself, but repeatedly slips in the propaganda, almost subliminally. Why? Come to find out, he/daughter/son all bought in 2005 according to his own on-air admission. Think this may have something to do with it.
Oh, he also informs us sales price is unimportant so long as you plan to live in the house. Huh? Then there’s the running theme about the SD U-T conspiracy to crash the housing market in order to pump the stock market. No kidding, he actually repeats this stuff several times a week.
George Chamberlin (Chamberlame)
George lives in a mobile home park somewhere near San Marcos, he is great comedy.
According to George, he bought a home in Vista ‘05. Out of the trailer park, I guess. His “daughter Sarah and son Tom” also took the plunge. I’m thinkin’ he pumps housing to minimize losses his family took based on his [Chamber]lame advice. Stubborn ole dude. I tune in to see at what point he will actually capitulate.
The poor sucker who put nothing down to buy at the peak is now 30% underwater, and, like any rational economic animal, is thinking of creative ways to get out of paying that extra 30%. Or he’s cutting expenses so as to be able to keep paying on his now-wildly-inflated mortgage. Either way, it’s bad for the local economy and augurs for more auctions, more instant haircuts, and a real estate bottom that’s a lot further out than BusinessWeek and JP Morgan seem to think.
http://www.resourceinvestor.com/pebble.asp?relid=24704
“and augurs for more auctions”
This one’s just for you augur-inn. They’re demanding action!
oops, they’re actually demanding “auctions” not action. Either way they say it’s a job for you. Comments?
Topic idea: What is the real drop in prices?
Citing median numbers doesn’t tell us how much prices are dropping, as we may end up comparing apples to oranges as the type of houses sold a year ago can be quite different from today. One should be able to compare really similar houses y2y and how their prices are developing.
So, someone should find as many houses as possible in a bubble area, that have been sold one year ago, and then have re-sold just now. Then compare the price differences of these houses, and calculate the average drop. Sum it up with the 1 year inflation number. Publish the real drop. Then do the same for new construction, but remember to subtract builder incentives. Add the inflation. Publish the real drop.
this is purely California-based, but is what you’re asking for:
http://bubbletracking.blogspot.com/
Sounds like you are describing the S&P/CS housing indices. It is based on pairs of sales-prices for the same properties. Therefore, it does not count any new-home sales (no prior to compare with), nor does it count any condos. But for the ten major-markets that they track, it is far more useful than the median-price numbers.
The one downside of these indices is that it takes more time to gather the data and compute, and they are normally released 2 months after-the-fact. In other words, the data that will come out on the last Tuesday of October is really for the sales recorded in August.
More info at: http://tinyurl.com/glpgj
What about interest rates? Anyone else notice the ongoing shellacking in the bond market? I’ve been posting on my blog for a while that I believed bonds were wildly overbought … and I pointed out that speculative long positions in 10-year Treasury Note futures were the highest in history (for large specs). In fact, the net long position was more than TWICE the previous record. That’s the kind of stuff that sets the stage for a nasty reversal. And now, you’re seeing the fallout — ANOTHER day of pain in the bond market (long bonds UP 11/32 in price this morning … down 9/32 right now).
The fundamental catalyst? Retail sales and import price data that was NOT as bond friendly as it appeared at first glance. You can read more at http://interestrateroundup.blogspot.com/ if you’re interested.
Please keep in mind none of this is investment advice, just my personal observations!
We spoke to one of our friends last night who bought a new home from DR Horton 7 months ago without selling their current home. At this point they don’t even want the new home (the workmanship is so shoddy that they may walk away). They had negotiated with the builder directly without a realtor. They were recently approach by a realtor to encourage them to break out of the contract and to allow her to negotiate with a new builder for another home. During the conversation she told them that the new builder is offering a $24k cash incentive to all realtors who bring buyers and that she would split the difference with them. This is in addition to the realtors fees.
Wow!!! How low will this go???
Now why would a buyer do business with a builder and realtor on a kickback like that when the buyer can go directly to the builder and get 50K off if the builder is that hard up for a sale . Questionable practice to be giving cash kickbacks to realtors to than give to a buyer . Same as inflating the appraisal to give money back . I hope they all get busted .
In fact , I think the secondary market should just stop buying fradulent loans . Go on strike on buying loans knowing that the market is corrupt and the appraisals are false because of kickbacks and incentives . The escrow companies should go on notice that any escrow company engaging in side agreements in real estate deals are subject to personal liability .All real estate offices should get notices that undisclosed kickbacks will result in actions taken .
Keep in mind that people talk about the kickbacks they get .
The industry should be cleaning up their act rather than thinking of ways to beat the system ,(while showing T.V.commercials that you should trust your realtor . Brokers cya by sending out memos to your outlaw agents telling them what is allowed and what isn’t allowed .
It seems like the bubble collapse is now entering the “blame phase”. More and more news on fraud, etc. This happening so quickly cannot be good.
Let the secondary market buy the loans. Either as MBS (mortgage backed securities) or just the Credit Default Swaps (CDS). The hedge funds and institutional investors will take the hit. The banks will be fine and the gubmint’ will not have to bail anyone out.
Works for me. Now if I could only short those CDSs….,
> the secondary market should just stop buying fradulent loans
What is the incentive for Fannie Mae and Freddie Mac to stop buying loans. They were set on one direction by congress, and they will stay on it to the bitter end - bitter for us, I fear.
The Sacbee had this gem:
In an interview this week, Wells Fargo Bank Chairman and Chief Executive Officer Richard Kovacevich said he believes real estate prices statewide will stabilize by next spring.
Buyers “may be under water 10 percent for a while, but you can ride it through,” he said. “We have low unemployment, very low interest rates and expectations of a continued good economy, all conditions for a very healthy housing market.”
New home sales lowest in eight years
Another one of those “bottom-callers “.
Typical. There will be non-stop bottom-callers for the next 5~10 years.
“Buyers “may be under water 10 percent for a while, but you can ride it through,” he said. “We have low unemployment, very low interest rates and expectations of a continued good economy, all conditions for a very healthy housing market.”
Talk about dreaming. Where do these guys come up with this crap? Yeah, sure Dick. Buyers are waiting by the tens of thousands to start gobbling up $500k homes for $450k because they are such a great deal, and so affordable given their salaries. Wake up a$$hole.
Here in the Bay Area about a year ago, I distinctly remember everyone in the REIC saying that Spring ‘06 would usher in a brisk rising price market (hah!). I guess if they keep saying it every single fall eventually it will come true…
This CEO is a product of the entitlement phenomenon. His executive compensation is in the millions and millions of dollars a year. He looks at half million dollar homes as a commodity that he personally can purchase several a month if he wanted to, he is making so much money. He simply is incapable of understanding that half million dollar homes are not affordable to most of his employees at his bank since they earn less than $50k/year. This is how a man who should know better (the CEO of a major American bank) could make such an absurd statement like this.
This story is interesting although I can’t figure out what exactly it indicates for the housing market.
=================================
Can’t Blame Yahoo’s Problems on Real Estate Ad Market
Mike Simonsen submits: Yahoo (YHOO) is getting crushed lately. The stock is off over 40% from its 52-week high. Analysts have been tripping over themselves to downgrade the stock as the company makes known the softness in financial and auto advertising sales. The latest stated culprit? The bursting real estate bubble.
RBC Capital Markets analyst Jordan Rohan (the guy most notable lately for declaring MySpace worth $15billion to News Corp) said recently, “As housing softens, fewer consumers are in the market for a mortgage, reducing valuable mortgage clicks.” The implication is for online real estate ad spending in general.
….skip….
Borrell is actually projecting overall (online and offline) real estate marketing spending to decrease between now and 2010 as the bubble deflates, so the online percentage gain is even greater.
Beyond paid search ads, the Trulias, Homethinkings, BuyerHunts, Craigslists are providing new channels to reach home buying consumers. Agent websites, blogging, market research and other online tools add to the total spend. These channels, because of their efficiency gains, actually grow the real estate marketing pie, rather than simply transfer from offline to online spend.
In spite of declining real estate activity (maybe because of it), online real estate spending will continue to go through the roof.
go the the article for the rest of the story
From today’s WSJ (p C2):
Financial Flashback
The WSJ, October 13, 2000
‘The bear that has mauled technology stocks has begun to sink its claws into the rest of the market. A toxic mixture of political tension in the Middle East and the eroding profit picture at home sent the Dow into a 3.6% tailspin, down 379.21 to 10034.58.’
Back to the future (at some unspecified date over the next twelve months):
‘The bear that has mauled housing sector stocks has begun to sink its claws into the rest of the market. A toxic mixture of political tension in the Middle East and the eroding profit picture at home sent the Dow into a ?.?% tailspin, down ???.?? to 10???.??.’
From the L.A. Times favorite RE (shill) reporter, Annette Haddad, another in her series of “this isn’t a bubble” stories:Would-Be Home Sellers Settle In Rather Than Cut Prices Further
A Southland pullout eases the supply glut, relieving pressure on remaining sellers.
http://tinyurl.com/y49a35
Actually, the second page of that story isn’t all that bad (esp. for Haddad). Points out that inventory next year will only be higher because of mortgage distress (ARMs resetting, teaser rates expiring, etc.). The upshot seemed to be: This year many would-be sellers aren’t anxious, but next year they will be.
True, but you had to wade through the entire story towards the end before she gave that perspective from a local non-RE professional. I come from a journalism background and the whole story construction, including headlines and front page position makes their point clear. Haddad has never written an unbiased story on RE, at least that I’ve seen, and I read the Times daily. They do have other, more objective writers, though; too bad she is the one getting the front page space.
The LA Times is a Real Estate Cheerleading piece of Parrot Cage Carpet.
What about the St. Joe Company in Port St. Joe Florida? Those guys used to make paper. They had about a million acres of land. Then they decided that making paper wasn’t sexy enough. I could have been due to the advent of the paperless office. Anyway, they decided to build houses in one of the most remote and hurricane prone areas of Florida - right in the armpit. So, they seem to be going broke. Maybe it’s not too late to make paper again.
Roidy
You went to PSU, right? Or was that somebody from Plymouth Mtg.? Anyway, I finished early, so I could go to Germany and study for a year, and then my Sr. year was free, so I took intensive Russian all year out of curiousity. It was a lucky choice. Let me tell you, is it ever interesting to listen what to these folks say. (plus NONE of them ever assumes I can understand them, especially if I smile stupidly as I’m standing there.) I wish I felt like starting a small business around here catering to new immigrants.
What are they saying?
they’re saying:
“look at stupid amerikans…they pay income tax…!!!”
Argggh.. I typed out stuff twice and got that error message “fill in name; email.” I think my auto delete cookies went off.
Saturday I heard normal stuff; some seemed to be on their best behavior, over-polite and posing. Two 20-ish girls with boyfriends, like a social event or on a date. One said shopping around here is crappy. One commented that she should take a 10 but has to buy size 8 and the jeans are too short because of this fat-american sizing (like we don’t know that goes on). They discussed parties and visiting that was planned. The men helped them and complimented them on clothing they tried. The women modelled. “I drink up the trying-on through my skin.” {or something..my Russian skills are really rusty after 20 years.} “Black is good.” “Tighter looks better with that coat” (of course…men). Leather is making me look dated (or maybe “makes me stand out”).
Baseball is not a sport. They are watching the hockey game at the arena.
Two older women there talking like buffets. We’re going to the buffet on both Saturday and then even Sunday with two different couples.
So, that day was the normal stuff.
The government justs keeps “printing money” 24/7. No real limits. Money for over-funded projects, no problem. Money for wars, no problem. Money for retirements, especially for government employees, no problem. Government spends the money and knows it can “print” to cover its bases. So what’s the problem? Any stupid fool know this. What the dollar is worth 10 years from now? Now that might require thinking but few will as the future is for tomorrow. Let’s think about it then. Don’t confuse me. Can always pay the debts by just replacing new loans for old ones. What’s the problem?
If people can’t afford the payment on the “new loans”, replacing the “old loans”…… mmmmm there might be “a problem”. Does that confuse you?
May as well exchange some of your fiat currency for the real stuff - silver, gold, and platinum bullion. Buy it, save it, hide it. $570 gold at today’s price is $190 gold in 1980 prices. And I laugh when pundits say gold is in a bubble, especially only 6 years in what is usually a 20 year commodity boom. Precious metals are not an investment. Consider them a currency. Too many dollars, yen, huan, rubles, francs, and so on being printed, lots of excess over GDP means precious metals have to fill the void and increase in price in the long run.
Friday Fairfax Foreclosure report: bad. The trickle of foreclosures has risen to a steady stream, and looks like it will surge to a full-on flood. Think “O Brother Where Art Thou” for the flooding of the valley.
I’m still seeing very little action in the “midrange” properties of say $350-600,000.00. There are just no bidders at these sales. Many of these properties turn out to have been bid up enormously by unqualified people. Today’s sale in Leesburg, VA was for a property in the $450k range. In pre-sale investigations, I learned that the buyer was of foreign extraction, had a prior BK in California and used someone else’s SSN to get this loan. Interestingly, the person’s SSN which was used was another bankrupt individual. To nobody’s surprise, this property went back to the lender because it’s hideously overvalued.
Lenders are continuing to take a bath on these properties. Losses are mounting. Moreover, I’ve probably got a dozen properties on the block in the next two weeks and another fifteen to twenty in the works for the period after that. I’m just a small office. I know that the big guns have hundreds of foreclosures thundering through their process.
I don’t think any of this will be properly reflected on the lenders’ 3q results, although some have delayed their reporting. It will take 4q results for people to realize the magnitude of what is happening.
Casey’s buying another property! Read some of the comments, they’re hilarious.
http://iamfacingforeclosure.com/
I could’nt resist- had to post my comments on his blog. he needs more than another flipping deal to get him and his wife out of this mess.