“This Isn’t A Crisis, But It Is A Downturn”
The Herald Tribune reports from Florida. “When a developer recently submitted plans for 8,100 more homes in the Manatee County mega-project Lakewood Ranch, it left some people scratching their heads. Why would developers forge ahead with plans for thousands of homes there, and at other area projects like Palmer Ranch in Sarasota and Babcock Ranch in Charlotte County, with a housing slump officially under way?”
“To developers and builders who make millions by speculating on land years in advance, now is a great time to keep charging ahead with big projects. Most won’t build out for years, or decades, so short-term housing slowdowns are not a reason to panic.”
“The only thing that could dramatically sting the long-range speculators would be a drastic drop in the arrival of new residents to buy those homes. Almost everyone in the housing business seems convinced that everything will be just fine. They believe that people will just keep coming to Southwest Florida.”
“‘That’s what we’re putting our faith in,’ said Tom McTigue, Bruce Williams Homes’ VP. ‘It’s a little bit of luck, a little bit of faith and a little bit of market research.’”
“The problem right now in the Sarasota area is the roughly four-month surplus of new single-family homes, according to Metrostudy. The imbalance came from an artificial demand, said Tony Polito, director of Metrostudy’s Tampa/Sarasota market. ‘We just saw a huge amount of speculative buying,’ he said.”
“Everyone in the business feels the pain. Bruce Williams Homes had to lay off 15 construction workers this year because of the slowdown. Builder and developer Pat Neal is discounting homes up to 8 percent.”
“‘I expect that to continue,’ Neal said. ‘I think the builders who are focused will work with buyers. This isn’t a crisis, but it is a downturn that will last a year or a little longer.’”
The Naples News. “With three children to support, for Rudy Bustillo and his wife it came down to a choice between having a home or luxuries like eating out and going to the movies.”
“They chose to have a home. Now they have a $2,100 mortgage to pay from their combined gross monthly income of $4,800, about $4,200 during the slow summer months. Bustillo leaves his home in Lehigh Acres at 5:10 a.m. and drives 50 minutes one-way and works a second job when he can.”
“‘We can’t pay our bills with just one job - mortgage, car payments, insurance, utilities…,’ Bustillo said. ‘It is hard but we wanted a chance to own our own home. We didn’t want to rent anymore.’”
“With home prices cooling and sales stagnating, builders will start to realize that they can make more money by selling 10 houses for $250,000 than building homes for $500,000 that don’t sell, said Bill Price, COO for McGarvey Development in Lee County.”
“As for why builders haven’t responded to the need before, Price said, ‘in their defense, the real crisis and an awareness of the crisis has only really developed in the last couple years.’”
The News Observer from North Carolina. “In recent months, builders and brokers have found that the region’s reliance on transplants for home sales means that the area is not shielded from the nationwide housing slump.”
“‘Raleigh-Durham is one of those [regions] that draws many new residents from other states for jobs and baby boomers who are retiring,’ said Lawrence Yun, an economist for the National Association of Realtors. ‘They are coming from places where they are having housing market problems,’ Yun said.”
“In Northern Virginia, California and Florida, speculators drove prices sky-high and are now trying to dump their properties. That’s causing a housing glut that’s keeping homes on the market, Yun said.”
“Locally, sales to people moving to the area are estimated to account for between 20 percent and 50 percent of home sales, according to builders and realty companies. Often, companies that are transferring workers to the area buy homes the owners can’t sell.”
“About 46,000 people work in the housing market, building, selling and supplying materials, in Wake County alone, according to the home builders association. So far, nobody is laying off employees or slowing building, but that’s a possibility.”
“What most people don’t want to do is lower their asking price. Daniel Wall, a builder in Fuquay-Varina, has tried to sell a $349,000 custom home in the Broadmoor subdivision in Johnston County since June. Two potential buyers who wanted to escape Florida’s hurricane season were interested but both backed out when they couldn’t sell their homes.”
“Even though monthly payments on the construction loan are $2,500, he’s reluctant to reduce the price because it’s already $8,000 below market value, he said.”
“Mark Kistler, who moved from Gainesville, Fla., to Raleigh for a job at N.C. State University, understands that attitude. He’s been renting an apartment for $1,500 a month since July because he can’t sell his Florida house, which has been on the market for 17 weeks.”
“Kistler is asking $319,900 for the Gainesville home, which he bought for $285,000 a year earlier. Kistler knows he bought near the housing market’s peak, but he doesn’t want to reduce the price, because brokers advised that it’s still below market value, Kistler said.”
“‘The market is soft, and they aren’t selling properties like they used to, but the broker still feels we’re priced competitively,’ Kistler said. ‘Did I pay too much? Should I reduce the price? Those are the things going through my head. I could drop the price significantly and get a buyer, but I don’t want to take a loss.’”
“‘All the Realtors tell me it’s still a sought-after market, not flat like on the coast. I don’t know the answer. I wish I knew so I could sell my house,’ he said. Until it does, he won’t be eating out, making any big purchases or taking a vacation.”
‘A lot of people confuse investors with speculators, said Ava Van de Water, vice president of the Palm Beach Board of Realtors. ‘Investors are still strong, but speculators have fizzled out,’ she said. Those who bought just to flip, ‘looking for a million-dollar profit with a coat of paint,’ are gone from the market, Van de Water said. ‘But we still have investors doing good things and very happy. There are no fire sales (in Palm Beach)’
‘Joel Naroff, chief economist for Commerce Bank sounded a cautionary note. ‘Some special factors are involved there; it’s a different market,’ he said. ‘Construction has not been as totally out of control as in other parts of southeast Florida. That doesn’t mean it will escape unharmed. Because you can afford it doesn’t mean you’ll be willing to pay a high price.’
No fire sale just 30,000 + homes on the market. All of Palm Beach county sold 500 homes last month!
“‘A lot of people confuse investors with speculators, said Ava Van de Water, vice president of the Palm Beach Board of Realtors.”
I have been saying this for years. It applies to stock market as well as housing market.
Let me try: How many know the meaning of the term invetment and if you do would you care to share?
Jas Jain
Investing: Instead of spending what I have now, I defer using to a later date. I do this by different means. One example would be giving it to a bank. I get interest, and someone else is able to use my money hopefully in productive means. If they aren’t (just using it to consume), then the risk is that I may not get it back. I unknowningly didn’t invest in what I thought I did. I gave it to someone to consume instead of creating something which would improve their earning potential. What happens if the banks use fractional reserve lending and loan out money to non-productive means like housing? Well, me and a lot of others may not get any back after they go bust.
Speculating: Putting my money somewhere in the hopes of timing the fluctuation in price to make a profit.
The ramifications of thinking you’re investing when you’re speculating are about to be witnessed.
“Investing” in the stock market? Does the company you bought shares from get to use your money after the IPO? Is the market based more on speculation, or investing, and what was the original intent when began by the Jones and Dow guys?
“Investing: Instead of spending what I have now, I defer using to a later date.”
Thanks. What you have said above is savings, pure and simple. Of course, protecting one’s savings is not always an easy task, especially, to protect its purchasing power.
You do have some grasp of the issue, but have given no satisfactory definition, or true meaning, of the term investing. I can assure you that very few “educated” people do know it. So, you have nothing to be ashamed of. I myself learned from the genuine Maestro, Joseph Schumpeter, by reading him like some read The Bible and Koran. We Americans are so unfortunate these days to have Maestros like Greenspan. Power hungry men like Greenspan are extremely dangerous. And Bernanke could prove to be worse.
Jas Jain
Jas Jain,
That was my definition. Ideas/concepts have been around since the beginning of man. How could they not have been? The terms and means used in finance, war, love, etc are studied endlessly, and new terms are used to help better understand them…if that is possible.
That said, what do you define as investing and speculating? I understand that you learned from Mr Schumpeter, and he learned from someone else. So perhaps you are using what they came to grips with in terms of understanding investing and speculating. Nonetheless, I would like to hear how you define the terms, and I mean that in all sincerity.
“The terms and means used in finance, war, love, etc are studied endlessly, and new terms are used to help better understand them…if that is possible.”
I don’t buy this. Terms have precise meaning; otherwise, they are misused all the time to manipulate people by distorting the true meaning. 1984.
The Maestro defines investment as something from which one derives income over a period of time. Sometimes, it may not be immediate but there must be good likelihood of income within a reasonable period, e.g., after some improvement.
In relation to stocks, I would consider a stock an investment if the income, i.e., dividends, is more than 5% annually, in today’s environment, and some expectations of growth in dividends. Any purchase that is based on future increase in the price is a speculation, be it land, or be it a stock.
Jas Jain
Joseph Schumpeter was probly the best economist of the 20th century. Maynard Keynes once stated that Schumpeter was the only economist he respected. By the way Schumpeter is quoted as saying that you can not understand economics unless you study Kondratieff.
Jas Jain,
I would agree with that definition of investing. However, I don’t think it is much different from what I said. To get that steady stream, you have to turn over some money to do that. Hopefully, you’ll be able to get that principal back at some time in the future if it was a sound “investment”, or continue to reap the steady stream.
On semantics, I disagree. Let’s take the military. We’ve adopted ten principles of war. They were taken/adopted from Clausewitz, who studied Sun Tzu. We’ve recently used the term “Shock and Awe”, which is essentially a term for mass of firepower, one of our ten principles of war.
I agree that knowing what a term means is critical. Knowing where it came from and the history behind it is also important. It allows you to know if term fits the principle, or if it is just a way to con the unsuspecting.
“Joseph Schumpeter was probly the best economist of the 20th century. Maynard Keynes once stated that Schumpeter was the only economist he respected. By the way Schumpeter is quoted as saying that you can not understand economics unless you study Kondratieff.”
Patriotic Bear,
We are fortunate that circumstances made Schumpeter to come to our country.
I am a student of the economic Longwave and have studied Kodratieff as much as I had access to his published work in English. My conclusion of the Greater Depression to begin within this decade is a result of my understanding of the current Longwave and how it has unfolded thus far.
A fellow bear,
Jas Jain
Investor = Realtor/Investor who is selling his/her house and advises clients not to lower the price as IT IS BELOW MARKET while slashing price on his/her POS
Specuvestor= One listens to this Realtor and do not lower the price
LOL!
People are such dunces. Maybe is is not yet a crisis, per se, but it will be soon. They do not seem to see beyond the noses on their faces. It is scary! How can people live without thinking or planning for future events…. How can they be so short-sighted?
“‘The market is soft, and they aren’t selling properties like they used to, but the broker still feels we’re priced competitively,’ Kistler said. ‘Did I pay too much? Should I reduce the price? Those are the things going through my head. I could drop the price significantly and get a buyer, but I don’t want to take a loss.’”
This is the thing that sends me up the wall. They can take a small loss now or a much bigger one later. Who told these people that when you indulge in speculation there is no chance of loss? If that were true, everyone would be a zillionaire.
Speculation aside, who told these people that you could buy a house, sell it within a year, and at the very least not have to eat your closing costs and moving expenses?
I disagree with your interpretation - this guy is not a speculator, he got a new job. Not everyone trying to sell their home is a speculator. Also, this story tells me that the Raleigh area is actually doing much better than the other areas.
No, he speculated. Obviously in academics/teaching - going from Gainesville (UF) to NC State. Bought a house in Gainesville for $300k (!) Had to know the market had just run up dramatically. Had to know he might want a different job. May NOT have known he was speculating - but he was.
Good point. And we are all speculators too. We are all betting on current (downward) momentum to continue … which is exactly the same bet the FBs were making on 2004 upward momentum. But, we are not becoming nominal debtors in making our bet. I say “nominal” because, as many of you have pointed out, the price of this mess will surely be inflicted on all of us by taxation, inflation, and/or currency devaluation.
Raleigh is probably doing the best along with Austin right now…Austin is getting more speculation and more likely to crash and burn, however. Raleigh will cycle through but be a more mild swing than most places.
Another self-serving agent trying to maximize commission and taking advantage of a lazy seller.
If the realtor was truly self-serving, he would tell the seller to drop the price by $50,000. At 1.5% (the realtor’s cut), It would only make a difference of $750 in the realtor’s commision.
You’re missing the bigger picture, comps! $750 * number of agent’s sales = self-serving agent.
“As for why builders haven’t responded to the need before, Price said, ‘in their defense, the real crisis and an awareness of the crisis has only really developed in the last couple years.’”
Yep, let’s give the builders a few more years to wake up.
- Almost everyone in the housing business seems convinced that everything will be just fine.
- They believe that people will just keep coming
- ‘It’s a little bit of luck,
- a little bit of faith and
- a little bit of market research.’”
A LITTLE BIT MARKET RESEARCH! Wtf! This sounds like a hell of a business plan. I am going to rush to the Small Business Administration ASAP…now I have the missing part of the equation!
Didn’t we read about a survey where something like 60% of people in condos and apartments in Florida are considering leaving due to Hurricanes and high costs of housing? Moreover, schools in FL are suddently seeing declining enrollments are years of fast growth. Things may be changing.
Don’t forget to show the SBA this Powerpoint slide:
1. Build lots of new homes in an overbuilt area
2. ???
3. PROFITS!!!
Sound alot like South Park’s “Underwear Gnome” strategy:
Gnome 1: Collecting underpants is just phase one. Phase one: collect underpants
Kyle: So what’s phase two?
[Silence]
Gnome 1: Hey, what’s phase two?!
Gnome 2: Phase one: we collect underpants.
Gnome 1: Ya, ya, ya. But what about phase two?
[Silence]
Gnome 2: Well, phase three is profit. Get it?
Motley Fool even wrote about this investment strategy.
http://tinyurl.com/8jn7
Actually, “Underpant Gnomes”.
Any one here from TOaks. here is comparable from Domania.com
latest Sale
1 1287 Ramona Dr Sep 06 $357,000 3/2 1234 3049 1978 $256,475
2 1171 Ramona Dr Aug 06 $469,500 3/2 1234 3049 1978 $275,022
3 1318 Ramona Dr Aug 06 $459,000 3/2 1234 3049 1978 $306,516
Does this count for a crash? Appears that was a foreclosure sale, I dont have full access to it. Has seen one listing on this street in the free site.
Not an arms length transaction. Probably an estate transfer. Those prices look exactly like Prop 13 step up basises.
I find it interesting how many of these articles are starting to take the slant that the slowdown is nearing its end and all is well. Sure it is! Let add another 20,000 spec houses to the 30,000 that is setting on the market, then we will have 50,000 spec houses ready for the mass of new home buyers in ‘07?!
RR, They will keep the spin going until the bitter end. remeber 6 months ago they said the spring selling season should pick up…then before school,now by next year…I can’t predict the future anymore than they can ,but all metrics point to a serious slowdown ,and don’t think has even picked up speed yet.
… but just wait until the Superbowl, Spring, Easter, (more?) then things will really start selling again!
Yeah, it’s starting to sound like the prediction for things getting better in Iraq.
well, who doesn’t need a McMansion w/granite et al. to hold their big screen TV for the big game. I don’t know about you, but nothing makes me want to buy a large house more than the superbowl….
The Japanese argued that prices would come back for over a decade. It wasn’t until the media, the officials, and everyone else through in the towel that the bottom was reached. At that point the tide shifted.
Expect 5-10 years of denial, maybe even more.
It won’t be 5-10 years….by 2010, real estate will be considered a terrible investment by most, except for long time holders (more than 10 years of the same property).
“Kistler is asking $319,900 for the Gainesville home, which he bought for $285,000 a year earlier. Kistler knows he bought near the housing market’s peak, but he doesn’t want to reduce the price, because brokers advised that it’s still below market value, Kistler said.”
Boy, I’d like to know how his broker defines market value. If his home is below market value it should sell. Since it isn’t selling doesn’t that say it is above market value.
Market value should be the price that a home will sell for in a reasonable amount of time given you have a willling seller and a willing buyer.
If he needs to sell now price it to sell. It’s just that simple. Chances are that he will buy into falling market in his new location, so he shouldn’t be any better or worse off than he is now. And he then go and have a meal out..
its gainesville. really is there anything up there worth 200,000?
if he breaks even, he needs to kiss the ground and say thank you!
Ridiculous bubble drove prices up in the most unusual places.
17 weeks on the market is too long, unless he has an unusual property that requires time to match it to a particular type of buyer.
Also, this guy has a serious problem. Buyers are looking for deals. His home sold for 40K less last year and the they probably know the Seller has taken a job in another state.
Dude, you’re a landlord.
17 weeks on the market is too long, unless he has an unusual property that requires time to match it to a particular type of buyer.
Also, this guy has a serious problem. Buyers are looking for deals. His home sold for 40K less last year and they probably know the Seller has taken a job in another state.
Dude, you’re a landlord.
Who cares what he wants to sell it for? It will sell for what it will sell for, no matter what his broker said. Obviously, the house will be on the market (fruitlessly) and either he will pull it off and live in it or lower the price and try again. Its like somebody telling you “I’m going to jump off this building and not get hurt because, frankly, I disagree that gravity is 32 ft/sec2. I think gravity is 4 ft/sec2, and I blame the media for talking up the rate of gravity”. The guy jumps and breaks his legs.
If your house is not selling, than you did not price it right. Everybody has been screaming for a while now, if you want to sell your house, you must price it right. What is it about this concept that people do not understand?
I realize that the dumbing down of society is in full swing, but come on people, this is not rocket science. I here so many people saying, “I don’t know why my house isn’t selling”. YOUR HOUSE IS NOT SELLING BECAUSE YOU DID NOT PRICE IT RIGHT. PRICE YOUR HOUSE RIGHT IF YOU WANT IT TO SELL. How come everyone keeps pricing their houses wrong?
“‘That’s what we’re putting our faith in,’ said Tom McTigue, Bruce Williams Homes’ VP. ‘It’s a little bit of luck, a little bit of faith and a little bit of market research.’”
Take that comment and compare to:
“‘We can’t pay our bills with just one job - mortgage, car payments, insurance, utilities…,’ Bustillo said. ‘It is hard but we wanted a chance to own our own home. We didn’t want to rent anymore.’”
A wing and a prayer, that’s how they all figure things will work out.
Really, some of the crap I hear and read add up to some dysfunctional thinking. One household crisis and Mr. Bustillo’s house of cards will come tumbling down. Same with these optimistic builders.
“I don’t know the answer. I wish I knew so I could sell my house”
Can someone here help this poor man find the answer? Anyone??
Maybe he could “Google” it to see what’s out there on the internet? I do that sometimes.
Let’s see, I type in “home not selling, reasons?”
WOW! There’s alot of articles suggesting the #1 reason is my price might be too high for the market. But I know that’s not the case since my agent said it’s below market value…so I guess I’ll have to keep wondering what the answer is. Oh poor me, I just wish I knew WHY? It’s like the friggin’ riddle of the Sphinx I tell you.
LOL. This guy is obviously clueless like all too many RE ‘investors’ who won windfall profits in a boom market and concluded that they’re business geniuses, but they’re too dense to understand why the money tree isn’t throwing off thousand dollar bills any more. He’s going to bleed all the way down.
…he doesn’t want to reduce the price, because brokers advised that it’s still below market value, Kistler said.
Market value is what people will pay for it, as he’ll eventually learn.
No, I think he wants to keep throwing money at a mortgauge. Then he will show his true finacial ability.
‘It’s a little bit of luck, a little bit of faith and a little bit of market research.’
2 parts wishful thinking, 1 part market research…these are the makings of a viable business? I wonder what his business plan looks like…
Makes me wonder who is financing said business plan.
I am sure his bank funding the const loans would love to hear this.
‘It’s a little bit of luck, a little bit of faith and a little bit of market research.’
I hear that’s how Warren Buffett did it too.
“I wonder what his business plan looks like…”
Build house, sell house, make money, repeat.
Buy real estate
Pray it goes up in price
If it goes down have “Daddy” bail me out
Oh, wait, that was Donald Trump’s business plan. The key is the billionaire daddy.
This down turn is the death of the McMansion. I don’t understand who is going to rent let alone buy these massive, 5 brd 4 bth homes from DINKs. Rich families with 5 kids? That’s an oxymoron.
There is still demand for affordable housing which means building less expensive, smaller homes with useful interiors that are efficient to heat and cool. Homes built for living not investing. We need another craftsman movement.
A Craftsman movement would be great but not possible in today’s political environment. Planners will not allow 1100 sf homes on 1/4 acre and back alley services. Planners will not allow wide boulevards and muncipality mantained tree belts. Planners will not allow neighborhoods or communities to develop over time organically and naturally without their guiding hand. Nice but not possible unless we first kill modern planning.
You’re right. Those old lot sizes are impossible.
I was thinking about homes designed for efficient use, not built for square footage. Craftsman design emphasized utility. The McMansion craze emphasized size.
I agree and would like to see more smaller, well built homes. BUT you are dealing with customers with a Rolex taste and a Walmart budget.
In building, most things being equal, increasing size does not increase some costs. cost to build 3 bedrooms either 8′x8′ or 15′x20′…. you will still only have one door into it, one closet door, and one window per room. small or large home, has the same water, waste and utility connections.
Some costs are static wither 1000 or 2000 sq ft home.
But your electricity costs are more. Try heating and cooling all that massive space.
My father was an architect, builder and develpoer who would always design some pretty spectacular homes. He would start with a premise on efficiency, or design style and create unique homes with built ins and other convienince features. I would ask him why he never built these homes. He would say the public does not want to pay for design, they want a big ugly vanilla box to put all their crap in so that is what I give them. I agree smaller can be better. Large moldings and architectual details are worth more then 25% more square feet. Quality over cost over quatitity is my motto.
I agree with your Dad, in that those things do make a smaller home way better for use. The Location, location, location mantra has changed in our area to square footage, square footage….
What would happen on the items you outlined, is the customer would always have the plan to “Add” these things later. Never happens though.
This down turn is the death of the McMansion. I don’t understand who is going to rent let alone buy these massive, 5 brd 4 bth homes from DINKs.
The carrying cost for these McM are huge. Once they are completed, you have power and water to pay, along with basic landscaping and lawn upkeep. Someone has to pay the taxes, right, and there is the carrying costs of the expenses of building, the sunk costs, as it were.
I figure this whole mess will end badly.
And to add, most of the people that buy these things don’t either have the focus or think the mundane chores or owning a home like that are beneath them to do.
Pay a heath club tab to work out? heaven forbid to work around the home.
It will end badly very soon - energy prices will clobbber owners and there are too few buyers who need and can afford the space and cost.
Also, many of them are plain ugly.
How true! Natural Gas heating and electric generation will become a problem cost wise over the next few years…unless we open up the coast and off limit interior lands.
Kinda a touch choice in Fla…do I want to view Nat Gas wells offshore and afford to A/C my house…or no Nat Gas wells and no A/C?!?
Mcmansions will be split up into flats, just like inner city Victorians from the previous “Greedy, I mean Gilded Age”
If we open up the border…e.g., the North American Union, then there will be a use for these McMansion homes…multi-family!
People think these nice pretty new neighborhoods won’t evolve into something much different thay what they are today. If you can find someone old enough to remember the Bronx in the 1920s, ask them about did they think the Bronx would turn out the way it did by the 1970s? Maybe too late for this type of discussion, but one can learn alot from the old timers.
From Hampton’s Cottages and Gardens - sounds like the Hampton’s are immune to problems. Ha!
Stock market guru Jim Cramer, of TV’s Mad Money fame, has turned bullish on several well-known housing stocks. The maverick investor, who claims to have made his fortune by being counterintuitive, believes the stocks of major home builders have bottomed. He also notes that interest rates have peaked.
With reams of negative press bemoaning the so-called “housing glut,” many home sellers have been lowering their asking prices. Could Cramer be right? It may be too soon to say the market has bottomed—but if his call is correct, now might be an ideal time for buyers to purchase a home in the Hamptons. After all, home prices in the Hamptons rarely decline more than five or six percent. Ever since the end of World War II, there have been few investments better than Hamptons real estate.
http://www.hcandg.com/oct06/deeds.html
The maverick investor, who claims to have made his fortune by being counterintuitive
I know some people who’ve done pretty darn well “being counterintuitive” to that clown; i.e., fading his every move.
Cramer made his fortune by being obnoxious — kinda like Donald Trump. I guess realt-whores and stock touts have a lot in common.
“Once again, I reiterate that the bear phase is over. This rally looks like the real deal. It has the financials and the techs and the drugs all up. Maybe we bounce down a little off NDX 3000, but then we just reload and go through.”
Sorry to be so unabashedly bullish. But nobody else I know is, so it seems fine with me.
- James J. Cramer January 11, 2000
Any questions?
Joe Momma-Lots of guys in the mid to late 90’s made a huge amount of money. They still think they are a smarter than everyone else. In reality, they were in the right place at the right time and were able to capitilize on a mania.
You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.
OK. Here goes. Write them down — no handouts here!: 724 Solutions (SVNX:Nasdaq - news), Ariba (ARBA:Nasdaq - news), Digital Island (ISLD:Nasdaq - news), Exodus (EXDS:Nasdaq - news), InfoSpace.com (INSP:Nasdaq - news), Inktomi (INKT:Nasdaq - news), Mercury Interactive (MERQ:Nasdaq - news), Sonera (SNRA:Nasdaq - news), VeriSign (VRSN:Nasdaq - news) and Veritas Software (VRTS:Nasdaq - news).
We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over — and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don’t even have earnings per share, so we won’t have to be constrained by that methodology for quarters to come.
James Cramer
2/29/00
“724 Solutions (SVNX:Nasdaq - news), Ariba (ARBA:Nasdaq - news), Digital Island (ISLD:Nasdaq - news), Exodus (EXDS:Nasdaq - news), InfoSpace.com (INSP:Nasdaq - news), Inktomi (INKT:Nasdaq - news), Mercury Interactive (MERQ:Nasdaq - news), Sonera (SNRA:Nasdaq - news), VeriSign (VRSN:Nasdaq - news) and Veritas Software (VRTS:Nasdaq - news).”
Exodus and Digital Island merged; Exodus filed for bankruptcy in September 2001. Ariba cut 1/3 its workforce in 2001 and changed its business model; it’s still around. VeriSign paid $1 billion for Network Solutions and then sold it for $100 million a couple years later; they are doing well today. InfoSpace is still around; they recently laid off 40% of their staff. Veritas is still around, though now as part of Symantec. Inktomi was acquired by Yahoo; they’re now struggling to come out with their new search engine capabilities to compete with Google. Mercury Interactive has done well and was just acquired by HP. Sonera almost went bankrupt and was bailed out by the Finnish government in 2001; it merged with Telia. 724 Solutions was taken private by Austin Ventures after major layoffs.
In my industry, at least, the stock run-up from January 2000 to around November of that year was when the humungous increases took place. So Cramer called that one correctly. I was able to exercise and sell my stock options in September 2000, and my company’s peak was reached a couple of months later.
““As for why builders haven’t responded to the need before, Price said, ‘in their defense, the real crisis and an awareness of the crisis has only really developed in the last couple years.’””
How is missing the customer business demand badly a ‘defense?’ Shouldn’t it be, speaking as a shareholder, a condemnation?
As for why Ms RealAtor plowed her Rover into the bus stop, in her defense she was only putting her make-up on.
Check out what Florida is saying, or should I say moving. look at Ga. Nc. Sc. and Tenn.
http://www.city-data.com/forum/florida/
ZILLOW cilpped 20k off my house - it’s off over 50k ,but zillow’s getting there
Lawrence Yun is trying to back pedal.
http://nvar.com/newsdetail.lasso?articleno=nvarn100608
Quote from Lawrence Yun just one year ago:
“The chance of a housing price decline in the DC area is close to zero, in my view. I anticipate that prices in DC will outpace the national average price growth. DC prices will rise at close to a 7 to 10 % rate of appreciation. That’s not the 20 to 25% rate we’ve seen in the past, but it’s still very respectful.”
Northern Virginia certainly has gotten more activity and seen larger price increases in the past because it has dominated job creation in the DC market. That trend will continue.
This was the explanation just last year from L.Y. There was no mention of speculators last year.
Man this guy is lower than dirt.
L. Yun is the “economist” who was interviewed by a local yocal last year and proclaimed that Seattle RE would appreciate by another 30-40%.
In the interview, which was run over and over on local cable TV as though it was an infomercial, he bemoaned the fact that he “didn’t have enough money to get on board the continuing Seattle RE boom”.
He’s as scummy as Lereah anyday.
“That’s not the 20 to 25% rate we’ve seen in the past, but it’s still very respectful.”
And thank you for being so respectable to me, kind sir!
“‘All the Realtors tell me it’s still a sought-after market, not flat like on the coast. I don’t know the answer. I wish I knew so I could sell my house,’ he said. Until it does, he won’t be eating out, making any big purchases or taking a vacation.”
It looks to me another dominoe just fell over, we have a long way to go until the giant FB mouse trap is sprung for complete FB devistation.
Kistler knows he bought near the housing market’s peak, but he doesn’t want to reduce the price, because brokers advised that it’s still below market value, Kistler said.”
Thanks Mr. Kistler for chasing the market down and playing your part in the Housing Bubble dominoe game. With you help and millions like you we will have utter FB devistation in short couple of years. Thanks for coming out and supporting our national housing bubble.
If you want to further contribute please take on a second mortgage why you are trying to sell your house, I hear it is all the rage.
He’s probably using an equity line to pay his rent.
Cannibal.
–
“About 46,000 people work in the housing market, building, selling and supplying materials, in Wake County alone, according to the home builders association. So far, nobody is laying off employees or slowing building, but that’s a possibility.”
With a population of 750,000? And how about the secondary employment? At least another 46,000 service jobs. That means 25% of the total employment is directly and indirectly related to housing. If the housing activity falls only by 50% we are talking about depression level employment. It could fall by 80%, you know. Overbuilding now means underbuilding later.
Booms are great but Busts are even worse.
Jas Jain
I was looking through Craigslist today and found this plea for help. Not sure what to think of it. It’s just another fallout of the bubble and stupid greed. It’s unfortunate that the innocent are always caught in the middle.
http://orlando.craigslist.org/rfs/220905292.html
Probably not a good idea to have three kids when they have no SAVINGS, no friends who will help, and no family who will take them in.
Allowing it to go from bad to worse - they then post their kid’s picture on the internet as a pathetic charity case.
They should squat until the new owner has them evicted - which could take some time - and save like mad while doing so. If that means the mother has to walk the streets to get the money, she does it.
In the meantime, the worthless human beings passing as parents should take keep the true innocents, their children, off the internet and quit using them.
Agreed. That family’s best move is to take advantage of a protracted eviction process. I have idea what tennant laws are in Florida, but in California they’d be able to milk at least a few months out of it. Ultimately they’ll get kicked out on the curb, but they can at least buy themselves some time.
At the very least, but threatening to be a huge pain in the ass they might get their new landlord to offer a larger buyout to get rid of them.
If they have no savings and have only been paying $750/month a month in rent, then my guess is that they really can’t afford more than $600/month. Or one of them needs to start working at least another 20hrs/week.
And agreed: keep the pictures of their kids off the internet. And at least one of them needs to get themselves sterilized so they don’t pop out anymore babies that they can’t afford.
if you have 3 kids and cant afford $600 a month rent you have some other really serious problems.
There was a lady in Richmond last summer who stood on the street corner with a sign about they were evicted and the kids were with mom— blah blah blah. Thig is the corner she stood on was just down the street from the “free clinic”. I think she was making money for the loose ends, I don’t think she was a druggie but who knows. She needs to get an attorney and sick them on the land lord!
FYI… some useful info I could add. Reading here gets addictive, at times with you finical folks feel a little like the rube in class.
I am from Detroit, working in San Jose CA, some info from Detroit.
1. friend of mine works for a company that makes sewer pipe, those big cast concrete things. they usually take in about 1 million per month…. last months order were $300. [no typo]
2. mid size builder [six subs in area] been in biz at least 25 years, going BK… But FBI is after them too cause before they went BK, took a few large cash deposit [400k] on homes with the lure of total price was “discounted”.
3. My attorney has told me of other builders coming in with big problems.
Like I have said before, our area had never had the bubble in prices, in fact our area had been hit with price declines starting 2 years ago.
Question, anyone know of a finance/ tax person to talk to in this CA area… with primary home in Michigan and working out of state, have been getting conflicting info regarding deductions .
Thank you
“Question, anyone know of a finance/ tax person to talk to in this CA area… with primary home in Michigan and working out of state, have been getting conflicting info regarding deductions.”
Builderboy,
Yes, I know someone real nice, but don’t know of her availability. Please send me an e-mail: Jas_Jain at hotmail.
Good luck.
Jas Jain
Thank you, to add, I enjoy your comments here on this blog also.
some times the “old boys” network is better than just cold calling someone.
This guy who’s “trying to sell” his house in Gainesville is a sad case.
He’s asking all the right questions but unfortunately is depending on his realtor for the answers instead of trusting his own intuition.
A true “I chased the market down and my realtor made me do it” type. Too sad.
Inveastor: Bought Halliburton stock when Bush was elected, stock price has since increased 800%
Speculator: Bought a McMansion in Modesto 9 months ago, still doesn’t know he’s upside down
HAL - trading in the teens in late ‘00, bottomed around 5 (on Bush’s watch), currently at 28.71. Has returned approx. 10%, compounded annually, since election.
Got ax?
“this isn’t a crisis, but it is a downturn”
It’s a “downturn” when your neighbor goes broke, It’s a “crisis” when you do.
after 4 months on the market “he’s reluctant to reduce the price because it’s already $8,000 below market value.”
if it hasn’t sold in 4 months, its not $8,000 below market.