Bits Bucket And Craigslist Finds For October 26, 2006
Please post off topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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WSJ:
Home Prices Keep Sliding; Buyers Sit Tight; August and September Declines Were Largest in at Least 38 Years; Yanking a Listing in Naples, Fla.
THE AIR CONTINUES to seep out of the U.S. housing market, according to the latest data, and some economists are warning that prices will keep declining through much of 2007.
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thanks for posting.
We’re beyond anecdotal evidence that this run up in housing was without fundamentals. Hard data reveals the ugly truth, yet, yesterday afternoon, Neil Cavuto (Fox News) ran a propaganda skit essentially screaming to the world that “prices are holding and in fact continue to go up”. The guest was some RE nutjob who looked like she stepped out of a Times Square porn shop.
This is the 3rd time in as many months that Fox News headlined that “housing is a great investment that only goes up in price”.
Unbelievable.
Why unbeliveable? It’s a propaganda news channel. They lie most of the time mixing in some truth so that many won’t be able to tell lies from truth. It is a well tried method that produces wanted results.
Cavuto had a reasonable commentary on business at one time in his life. Lately it seems like he’s been bought off like the rest of the freaks from Fox. I’m beginning to believe Fox is completely devoid of any truth, honesty, decency or morality. Nevertheless, Cavuto’s credibility is slipping fast.
Captain Credit,
I didn’t watch the Neil Cavuto “propaganda” piece, but I’d be interested in a transcript to provide proof that he’s lying and merely doing the will of his masters.
I don’t care for your opinion on Fox News. Whom would you rather have me watch, Dan Rather? Walter Cronkite was not biased?
Give me a break already!!
I’m certain transcripts can be had of all three rah rah sessions. Additionally, I’m sure those that hold Fox News in such high esteem as you can be counted on one hand if the responses here are any indication.
I don’t hold Fox News in high esteem. I don’t even watch it. I am, however, a student of media bias, and I sympathize with the likes of Rose Wilder Lane who was blacklisted as a writer for not joining her fellow communists in the 30’s in the print media.
And you’re saying I’m wrong because I’m in a minority here? LOL. Take a poll. But what a waste of board space.
So you’re another ideologue. Just as I thought. Nevertheless, there is no need to take a poll. Scroll up student.
Captain Credit believes that since most people don’t reply to his twaddle that he is proved right. Unfortunately this encourages others to think that his viewpoint represents the blog. It’s the fact that he constantly belittles, insults, and ridiculously underestimates the strength and opposition to his extreme opinions that makes it necessary to respond, in order to keep him and his ilk from thinking they run the show.
Thanks Paul.
Read his post twice, please, Cap’n Crunch.
I vote that the Captain is a nutjob, and Tortious gets a close second.
Whats wrong Paul… You can’t refute the message so you attack the messenger??
Ad hominem attacks are the trademark of the GOP and their supporters and pundits. After most that they have proffered over the years has been proven fantasy, they have nothing left to throw at the reasonable people but their hate and ignorance.
Tortious…. Little paul is the same one who said that NYC rents would drop if rent control were pulled. I told him he was crazy as I live on the upper east and studio’s go for 2000/month. His response? “Captain - You exaggerate horribly, you are insulting, and you don’t know crap about how the world works.” The JMunnie sets the record straight with the fact that studios are actually in the 2400/month range. Paulie is still trying to wrap his mind around that one.
Tortious posts”Ad hominem attacks are the trademark of the GOP and their supporters and pundits. After most that they have proffered over the years has been proven fantasy, they have nothing left to throw at the reasonable people but their hate and ignorance. ”
Very well said!!! I thought of Ann Colter as I read you post. Another Fox shill.
I agree with the Captain. I have watched Neil Covoto for many years since he was on NBR with Paul Kangus. I have had the feeling Neil has been nippin’ at the kool-aid over the last year or so.
Neil is a smarter and I would say a better man than most he works with. When he was on the beat years ago he would have been howlin’ to the heaven’s about this realtor/lender mess!
I guess it is something about sitting behind that big desk. He should get out more often.
Just to be fair, MSNBC is not far behind. This is the headline at this moment on the website
Is housing out of the woods?
A growing chorus of experts says the worst may be over for home sales
I agree. And it’s not a matter of bias, it’s a matter of flat-out lying.
Yeah right, and CNN is right on all the time. Come on Tort, open your eyes.
In all fairness to NYC, I believe Times Square has been cleaned up for some years now, and has been returned to its former glory as a very dynamic part of the city and a magnet for tourists. But I understand your frustration with the “RE nutjob.” (LOL.) Also, Tortious, I am not at all surprised that Fox news - “a propaganda news channel” - is resorting to this kind of crap. Fox news has lost it’s credibility with me for some time now.
Correct on Times Square. Guiliani did a great job of turning around mid-town.
Fox News is not the only network making such claims. CNN has Glenn Beck reporting that the economy is healthier than it’s ever been and any report to the contrary is just liberal election posturing.
Course Glenn does not have a history of platform zombiism. I think he simply suffers from not looking beyond his own circle of friends.
Beck says he thinks the economy is better than ever, but he also admits we have a problem with debt, deficits and spending. The “good” economy is an illusion.
Ok. I watched the Neil Cavuto video. http://www.foxnews.com/yourworld/
Under today’s features: time to buy?
He politely called her biased and proceeded to ask a lot of good questions. I didn’t hear or see him screaming to go run out and buy.
She’s the top agent in the nation, hence the reason for the interview. He clarified that she would have an opinion on the sales side.
And yeah, the agent’s blouse was a little low.
Yes,
She actually said that California and Florida have overbuilding and prices will likely still go down.
Of course, “New Yor is different”. Not surprisingly, it’s her back yard. Which just reinforces what we already know… nobody thinks their area is not “special” and won’t fall. The true test will be, what will they say when prices do fall? Maybe they’ll just pull a “in the bag” moment and blame the media?
“..some economists are warning that prices will keep declining through much of 2007.”
I guess they didn’t consult with David Lereah.
What about the “Post Super Bowl Bounce?”
‘“Housing is still contracting,” says Gregory Miller, chief economist at SunTrust Banks Inc. in Atlanta. “We haven’t yet found the bottom.” Mr. Miller doesn’t expect house prices to resume their usual rising trend until 2008.’
Pick a bottom — any bottom! 2008 is one year later than Lereah and Duncan predict, but would still make this the shortest bust ever after the most protracted boom.
This mysterious price reversal and concomitant resumption of price escalation is a real expectation by FB’s, homedebtors and speculators. I was speaking with a close friend who believes he’s sitting on a million dollar lottery ticket and he asked me, “will this thing (downward price action) be over with by Thanksgiving or Christmas?” I just shrugged my shoulders and moved on. Nevertheless, all this “we’ve hit bottom” talk by the media just makes me wonder what in hell they’re all talking about.
I suspect that many in the REIC think the housing market is quite similar to the stock market, in the sense that if enough media outlets say the bottom has been reached, then fools will rush in to buy and buoy the prices. But most fools who buy stock actually use their own bank to do so. It gets tricky when everyone who could fog a mirror has already bought a home and cashout-financed themselves down to an equity position which will go empty the moment prices stop rising.
Some other reasons the real estate market is harder to “talk into” finding a bottom:
1) The inventory train wreck is palpable, as anyone who looks around can see all the for sale signs and the new home developments desperately seeking buyers with their massive incentives. Anyone with their eyes open can see lots of evidence that there are more homes than there are buyers, and hence that there is pressure for further price reductions.
2) Foreclosure rates are already climbing even before we have seen the effect of huge numbers of ARM resets.
3) The labor market is still OK, but the REIC will clearly have to let go of some of the 36% of all new private sector jobs created in the real estate sector since 2001, and ripple effects will ding retail and financial sector employment.
4) Many would-be buyers are just finding out for the first time this morning that the real estate “experts” lied when they said real estate always goes up, and they will become more precautious about the risk of catching falling knives.
5) It has always taken at least four years for a real estate bust to find a bottom in the past. Is it different this time?
You know, from the perspective of the REIC, I think there is a combination of hope and prayer that denial and talking enough people into taking their homes off the market while waiting out the “short, shallow decline” might forestall disaster or reduce its ultimate magnitude by allowing more of the people that are in trouble and vulnerable to resets next year to refi if comps don’t fall that far and that fast. In that sense, we’re kind of in a race between the resets and the level of interest rates on the one hand, and the speed of the price decline on the other. But if downside momentum really gets going in the short term, then Katie bar the door.
They may think they can stretch the decline out over a longer time period with less of a nominal decline, but a real (adjusted for inflation) decline nonetheless as things go a little more sideways for a long time than straight down.
In that regard it’ll be interesting to see who’s right on interest rates over the next year or so. Bill Gross predicting a 4 to 4.25% FF rate end 2007 or those predicting stronger growth and inflation. The thing about Gross’s prediction is that it would probably require substantial weakness in prices in the shorter-term so the lower rates would be of no help to those upside down when trying to refi.
I’m not betting their game of chicken will work, but it may mean a long, drawn out, death-of-a-thousand-cuts decline as we gradually decline the slope of hope. But then again maybe it’s just peeing in the wind and things will really fall out of bed in the near term.
I tend to agree with that assessment. Watching the spin process, and realizing that most of the talking heads are not that stupid, you realize that the objective is to stretch out the game so that the “stupid middle” continue to buy and sell enough as the market deflates that realtors don’t have to experience a “cold turkey” year (historically, starving realtors have been at the vanguard of most revolutions:). People like those on this blog will/may have the patience to sit for four or five years while the air comes out of the ball. During that time, CAR and NAR will be sending multiple conflicting messages out, as there is no upside to them in having everyone understand that housing is 25% to 50% overpriced by historic norms. It would just lead to a collapse of the system where everything ground to a halt until the number of foreclosures became to high that the price plummeted in short order (could that happen in 2007?). So we get the spin and they just continue to blow enough smoke that idiots keep buying and selling on whatever emotional charge is driving them at that point.
It is a bit depressing for someone like me who would like to buy, but knows too much (thanks Ben). I’ll just be sitting with my popcorn watching the fun until the median has dropped 25% from peak. I’ll buy then knowing it could go even lower.
“will this thing (downward price action) be over with by Thanksgiving or Christmas?”
Tell them “Yes, and David Lereah will hold a press conference to celebrate with a ‘Mission Accomplished’ banner flying behind him”
We heard the same BS about the stock market. These people are clueless. As if an historic bubble which encompassed many standard deviations above the norm would normalize itself that quickly. Maybe it would if it had been a true supply and demand situation rather than a speculation and greed driven frenzy replete with enormous fraud. This will all take a long time to unwind. Even if things “bottom” price wise in the next few years on an average, to predict that prices will again rise vertically is just irresponsible or silly, take your choice.
Agreed, txchick.
Very astute assessment.
“rise vertically is just irresponsible or silly, take your choice”
Irresponsible?? How about fruadulent? Propaganda? Untruthful? Deceitful? Misinformation? BS?
These con men are watching their income existence dropping and they arte scarred. One more shoe drops, and it’s taking a header out of the 40th floor.
People I work with who, last year, were saying nothing but, “Prices will NEVER go down - they’ll keep going up - this is AWEsome!” are now saying, “Prices are dropping - everyone knows that. They’ve come down about 2.5%. 2007 will be the best time to buy!” To which I reply, “Hmmm…up 100%, down 2.5%, that’s the definition of a bargain?”
Anyway, point being that if these clowns are touting 2007 and a “correction” of a mere -2.5% as the best time to buy, we’re a LONG way off.
obviously, if there are enough of these clowns -2.5% or -5% could be at least a temporary bottom. It worked like that in Europe a few years ago …
“Leslie Appleton-Young, the California Realtors’ chief economist, says she doesn’t expect the current downturn to be as severe as the one in the 1990s because she thinks the job market will be healthier this time.”
Didn’t anyone tell Leslie yet that 36% of US private payroll growth from fall 2001 - fall 2005 was in RE, and it is even worse in California? Or does she think that real estate employment has hit a permanently high plateau?
http://calculatedrisk.blogspot.com/2005/11/housing-and-employment.html
GS posts “Leslie Appleton-Young, the California Realtors’ chief economist, says she doesn’t expect the current downturn to be as severe as the one in the 1990s because she thinks the job market will be healthier this time.”
Nice happy talk. She should have added intrest rates are lower too!
Too bad she did not address the fact most people are broke. Most people who own property are in fact “property poor” and are going to be unable to withstand the one trillion in ARM debt due to re-set in the next 12 months. Let alone the trillions to come.
Funny how otherwise smart, well educated people, like Leslie cannot form any logic. Are they really so vainglorious, to think that by sheer force of will they can turn the tide of fact?
Her and David L. belong in the bunker, like past fools.
“Her and David L. belong…”
Careful — the grammar police read here.
“In Massachusetts, the median price for single-family homes in September was down 8.3% from a year before, according to Warren Group Inc., a publisher and data collector in Boston.”
Northeaster –
Are you sticking with your conjecture that Mass prices will soon flatten?
that’s 15%+
ask a res of MA trying to sell
I’m so glad to see that people here are calling out the conspiracy theory loons and sticking to the topic of the real estate bubble.
Amen ElPasoGuy…. The problem with calling out the conspiracy nutjobs is that they pop back up using alternate names.
I welcome them back as long as they stay on topic.
Bright new idea from the Netherlands to save the housing bubble (RE bulls, pay attention!):
A Swiss company, Swiss Capital & Guarantee, is offering an innovative insurance product for Dutch homeowners that guarantees the buyers that after 10 years, their home will have at least 55% higher value. After those ten years, the owner can sell back the home for purchase price + 55% to the company, or sell to someone else if they think they can get a better price. The insurance also protects the homeowner from other risks that might lead to worries about the ability to pay for the home (like being unable to work and rising government taxes on the home). So: you can own a home and get paid 5% yearly for that (much better than the +/- 2% you can get on a Dutch savings account!).
The biggest association of homeowners is not happy with the product: they think it is a rip-off because history of the past 10 years shows that in 10 years time, a home will appreciate far more than +55%. So, they strongly advise their members against using this insurance. Some other consumer organisations have suggested that maybe in 10 years the Swiss company might get into trouble but nobody really understands the details.
On another note: while homeprices in the US are declining, Dutch RE agents say that bidding wars are starting again in the Netherlands especially for ‘affordable’ homes price at 200-250K euro (that is about 8x median income, for the type of home that 15 years ago probably nobody would be wanting to own). Latest sales data shows appreciation at 5-7% yoy and climbing; consumer and producer confidence in the Netherlands are now at or near a 30-year high. Of course, no one talks about the US housing market here.
What sort of premiums are we looking at here?
There has to be a catch. At Euro mortgage rates you should be able to talk a lender into a 150% LTV option-ARM given you’ve got a guaranteed 155% payout, and it wouldn’t reach the trigger point in 10 years, so you could finance 100% and pay nothing and walk away with a profit.
“is offering an innovative insurance product for Dutch homeowners that guarantees the buyers that after 10 years, their home will have at least 55% higher value.”
How about instead I just give them the money, they buy a house and they guarantee me a 55% return in 10 years. I don’t keep track of bonds, is that a good deal or not? If its not, I think I will pass on the deal, if it is then I might take them up on it.
Don’t know about euros, but 55% as a 10-year compounded return can certainly be beaten with Australian govt bonds or NZ govt bonds. Aus pay 5.3%/yr, compounds to something like 66% return. NZ pay 6%/year, compounds to something like 77% return. (sorry, no calculator, maybe errors) For the stout of heart, there’s Brazil paying 12%/yr, but more risk of degrading currency and history of past defaults.
yes, but there is the currency risk … I already have a deposit account for NZ$ but am waiting for the right moment to transfer euros to Kiwi dollars. After several years of climbing versus the euro, the NZ$ declined this year from 0.61 to 0.47 euro (23% decline) and then quickly recovered to 0.53 euro. If the expectations of the National Bank of NZ come true, the Kiwi dollar could easily decline to below 0.4 euro in the next 1-2 years. Not pretty, because even with 4-5% higher rates on deposits (or 3-4% higher on bonds) it could take years to compensate for the currency loss …
so I’m holding my breath and waiting for a good moment to jump in (during graceful touchdown of the Kiwi$ bungee jump?).
What kind of counter-party risk are we talking about here?
My guess is the company would take in premiums, pay out wages and bonuses, and then in 10 years if price decline, would declare bankruptcy and be unable to pay the claims.
Unless this company is going to set aside 70% of the current value of the homes as a reserve (in case house prices are in fact 15% lower in 10 years) it is a ponzi scheme.
That was my thought — pay your premiums for ten years, then learn that the company has no fund balance to pay claims when house prices are actually lower.
yes, I think it is a ponzi-scheme. This company has probably understood very well how the housing market works and decided they could make money exploiting it. The same thing has been done here previously with ‘free’ kitchens, cars etc. and after the 5-10 years the company that is going to buy back the purchased item for purchase price or even more is ’suddenly’ out of business. Of course with homes it works better, because nobody here believes that homeprices can decline after 15 years of stellar gains. After all, if the Dutch government provides free put options for home prices, why should a commercial company not be able to do even better and guarantee positive gains?
P.S.: the company says on their website that they have re-assurance for the risk of lower housing prices (so payout after 10 years is guaranteed), but I don’t think any reliable counterparty can be found to take that risk after a +/- 1000% runup in prices …
Lol. Exactly. Who is reinsuring the reinsurer?
“My guess is the company would take in premiums, pay out wages and bonuses, and then in 10 years if price decline, would declare bankruptcy and be unable to pay the claims.”
Exactly! This is a sham.
You would NEVER see a sold insurance company (e.g. Berkshire Hathaway) underwrite something like ths. And if they did, even Berkshire would not be able to deal with the loss in a downturn.
It would be less expensive to underwrite the social security system!
but just suppose that the same insurance would be offered not by a private company, but by a semi-government agency a la Fannie & Freddie?
In Netherlands we already have special programs for ’starters’ that sound very similar to this (if the housing market tanks you cannot loose a dime; if it surges you can keep 50% of the gains). Currently it is limited to people below 35 years, certain areas of the country and houses under 250K or so - but I’m pretty sure they are going to expand the program after the elections, because 90% of politians (from left to right) is in favour of even more subsidies for the housing sector. Re-assurance in this case is easy, it is provided by Tricky Trichet and his gang from the ECB.
I concur, nhz, the only possible ultimate reinsurer of such a scheme would be the unwitting taxpayer, which is another type of scam besides the Ponzi scheme version.
http://www.palmbeachpost.com/business/content/business/epaper/2006/10/26/s1a_SWCHOMES_1026.html
“Even the most steadfast residential real estate bull is going to have a hard time denying the bear is in the house with Wednesday’s sales report from the Florida Association of Realtors.”
“The market is not in balance, and as long as that is the case, you will continue to see reductions in price,” said Homekeys.net President Manuel Iraola. “Have we reached the bottom? Probably not, but we are getting closer. And most importantly, the descent has been relatively soft.”
Of course you’re getting closer, Aristotle. If you intend to walk from LA to NYC, your first step puts you closer, but you still got a loooooooooong way to go.
I love realtor logic. He claims prices are still falling, yet they’ve come to a soft landing. Well, if that ain’t the plumber’s buttcrack, I don’t know what is. Listen very closely Mr. Real-uh-tor man, prices can’t fall and stay the same simultaneously.
I can’t believe how these guys say these things with a straight face. The sales numbers indicate a catastrophic trend yet they call it a soft landing. The SEC really should regulate these clowns.
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“There’s going to be blood in the water. A big pileup.”
“Where there’s blood, there’s opportunity.”
http://money.cnn.com/2006/10/24/magazines/business2/newrules_redbrick.biz2/index.htm?postversion=2006102606
See Model #5 -
http://www.files.bz/files/11251/RealEstateValuationMethods.xls
“The next couple of years will be ugly,” he says, optimistically.
I just love that quote.
fugly?
A major tract housing developer in Jacksonville of “affordable housing” in the 150K-600K range - Providence Homes - has lowered prices by about 15% and begun aggressively advertising on TV. He’s marketing this as “bottom line pricing.”
http://www.providencehomesinc.com/bottomline2.htm
In response to DR Horton perhaps…
Moreover, how do you know they are actually lowering the prices on these inventory homes? It’s attention grabbing buy very difficult for me to discern the deal. They need to show me the money. Horton has been playing pricing games for several weeks; I suspect Providence is too.
Maybe the 15% figure isn’t quite right, and I agree there are lots of games going on, but there is no question that they are cutting prices. Their marketing strategy is identical to car dealers with way too much inventory. They recognize that prices have to come down to move product - there is no other way.
Some housing survey data from USAToday.com
According to the first article which focuses on the national market, “…about half of American homeowners who thought of selling their homes in the past year have delayed putting their homes on the market, according to a USA TODAY/Gallup poll conducted this month….And roughly one-third of those who had considered selling have abandoned the idea.” This survey provides some additional context for the NAR data published yesterday. Here is the national article link: http://tinyurl.com/yfhqy4
And the Florida article which focuses on the contentious insurance issue, “…according to a Mason-Dixon Poll:
•42% of voters say their premiums have increased by more than $1,000 since 2005.
•Nearly *one in five* Florida voters have considered leaving the state because of the cost of insurance.
•Eight out of 10 voters said insurance premiums are very important or somewhat important in the upcoming election.
Additional context for what is motivating 1 in 5 Floridians to leave the state. Here is the Florida article link: http://tinyurl.com/ydnk34
Phoenix:
http://www.azcentral.com/business/articles/1026biz-pulte1026.html
“We’re bumping along the bottom,” he said. “The builders are kicking it in the tail, marketing their inventory. When you cut a $195,000 house down to $118,500, that attracts buyers. That will move the inventory out, and the permits will come up as builders need to start producing again.”
Tortious, if these numbers are for real (no spin), then it is time to start thinking in terms of dividend cuts from some of these homebuilders stocks.
Knowing RL Brown, I wonder why he would make such a comment or why the article doesn’t reference a builder or subdivision. It sounds like a “teaser” ad for homebuilders, i.e. if price drops like this are to be expected, it’s time to buy a new home. I can guarantee that home builders are not offering discounts of over 30% across the board, yet.
Friend who I had tried to share HB info with who had jumped out of their housing stocks jumped back in recently. They couldn’t stand to watch all the increases they were missing out on.
Wife said they were making good money and could get out as soon as things started receeding. They were planning for HBs to be their kids college fund.
Do you agree its that easy to get out before losing anything? Is that just one more reason why stock prices keeps going up?
“Cancellations hit an all-time high of 37 percent.”
It ain’t SOLD until the deed is recorded with a new owner. Anyone telling me they just sold their house, especially auctions, is open to my next question “Has the new deed been recorded”
“It’s aint over, till it’s over” Yogi Berra
Great link tortious. Thanks.
I disagree that this is a teaser ad. If it is, then it’s a great example of cutting off your nose to spite your face. I don’t think it is. I think the reality can no longer be hidden so they are making sad attempts to work with it.
“the highest bid for a three-bedroom lakefront house was $440,000, including commissions and auction fees. The house had sold in July 2005 for $690,000.”
36 percent drop within little over one year. I think we are pretty much experiencing the worst case scenario, prices are dropping way too fast in order to have even somekind of controlled hard landing. Tsunami of distressed sales are just around the corner.
If it hasn’t been posted already here (I’ve been offline for 2 days), NAR’s October 2005 national median went up to 229K from September 2005’s 225K.
This was due to a move from 187K to 199K in the Southern region median, which IMHO was almost certainly hurricane-related. That won’t happen this year.
So I expect the 2.2% “largest [YOY] price drops in at least 38 years” to stand as a record for precisely one month.
I love the “prediction” that prices “may” fall 10% from their peak in No. Va. Anyone who knows the market knows that prices have already fallen more than that much.
Today’s Washington Post has an article titled, “A Record Drop In Home Prices”:
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/25/AR2006102500484.html
It’s interesting how the media spin is gradually shifting. There has always been a huge supply of industry shills who are eager to offer sunny, bullish quotes, and there have always been other “experts” (in my opinion, the honest, reality-observing kind) who will offer the opposite view. For a long time after the downturn began, news organs insisted on giving the former group very generous airtime and print, while giving the latter type a small cameo at best. Now the media has been burned a few too many times, as the bullish sources have been proven wrong again and again, and so they’re trying to position the “pessimists” of yesterday into today’s “voice of reason.” They still offer quotes from the shills, but now such commentators are deliberately undermined by giving the “voices of reason” the last word. Of course, a truly “objective” reporter would by now completely ignore these idiots who pull ridiculous predictions out of their asses: “we’ve hit bottom, and it’s only up from here!” Or at least follow them up with something devastating like, “of course, this commentator ignores the fact that all previous real estate downturns in American history have taken at least 3 years to hit bottom, and usually more, so by any historical measure this crash is just getting warmed up.”
The lesson is that the media will always serve the economic interests of its advertisers and corporate masters, even if they harm the interests of their readers in doing so. It’s only when they risk squandering all credibility that they throw a bone to readers, and then only when it’s too little, too late.
Here, here.
Notice the Post article is in the business section? House prices have officially fallen, YOY, for the first time since statistics have been kept. And they stuff this into the business section. What a great public service.
At least at the end they quote a University of Maryland economist who blames “Realtor happy-talk” for prolonging the process - and goes on to say significant price adjustments are still necessary to bring the market back into balance.
well put.
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Seems CONTRADICTARY:
Top 10 Cities: Best places to buy now: ATLANTA
Top 10 foreclosure markets: ATLANTA
http://money.cnn.com/popups/2006/biz2/newrules_bestinvest/index.html
http://money.cnn.com/popups/2006/biz2/newrules_foreclosure/index.html
Thoughts?
You’d be a fool to buy in Atlanta unless you plan to stay there for a very long time and are prepared to possibly lose money on the resale. Atlanta is the Deep South version of Dallas.
Ha ha! Good analogy. And I wish I’d noticed that Atlanta was in the top 10 foreclosure list when yesterday a friend of mine (who is sitting on an empty house in Atlanta!) showed me the “Best Investment” list!
He was, I guess, justifying paying his mortgage, taxes, and maintenance on that empty alligator there — empty for a year now, and he’s looking at keeping it for another 10 “because I think it’s a good retirement investment”. :-O
Bloomberg noted today that Atlanta has a large and growing downtown office vacancy rate.
Gekko;….Cool post…Thanks…
Panama City;….Saturday morning I watch FOX (The only time that I do) because there is a couple of hours of investment analysis (Forbes on Fox etc.)….Anywho, on one of the programs is a actor turned investor Wayne Rogers…He is also a residential developer with projects in several states one of which is in the panhandle of Florida….He has discussed Panama City in the past and has suggested that it is a possible opportunity…I just thought it was interesting that this post showed Panama City as #1…
Agree with Gekko that this is in fact contradictory, but we always see some idiots who think that whatever is going down the worst must be the best buy. Basically the same argument now being used by (some) non-realtors who tell their friends this is a good time to buy real estate.
Here is an update on the Chicago market. Sales are way down:
http://www.chicagotribune.com/business/chi-0610260153oct26,0,1634672.story?coll=chi-business-hed
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Anybody still shorting the S&P 500?
I hope not.
Why? Has it reached a permanently higher rate of appreciation?
“Why? Has it reached a permanently higher rate of appreciation?”
Fred says yes…. lmao..
It looks to my eye like it is going to peter out before it ever gets back to its 20th century high, but I am admittedly a bear.
http://tinyurl.com/ymkouv
We’ll see if this dude clams up after the election. After about a 10% correction or so, he’ll claim to have sold at the highs.
Permabulls are typicially empty pockets with a ideological agenda. The few that are left are way out on the fringe of society….. right where they belong.
Bull market geniuses. A lot of us got caught leaning the wrong way looking for that October cycle low and then a rally from there but with options as cheap as they are, hedging was not a problem.
I think it would be hilarious if that post about the S&P was entered just as the indices pivoted down into a multiweek/month correction. I think I’m going to capture it just in case . . .
To be fair, both permabulls and permabears have empty pockets over the long haul. Unfortunately, our system favors the permabulls because there are more ways for them to “privatize the gains and socialize the losses.” Look at someone like Donald Trump.
I still have December shorts on the Russian market which are doing terrible. Plan to move out to March contracts after the November election results.
You just don’t know when to stop, do you. You sound like the person who demanded that the squirrels be fed.
Hey TX - there’s a great quote in Ken Gailbraith’s history of 1929:
“Genius is rising prices.”
“Anybody still shorting the S&P 500?…I hope not.”
Nouriel Roubini of rgemonitor.com argues the stock market is rallying in anticipation of a FRB cut; however, as we get closer to the rate cut, broad economic data will show we are rapidly approaching a recession and the market’s will adjust accordingly. Consequently, bonds or short S&P might be a good bet soon.
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Sorry, kids. I’m neither a stock day-trader nor a house flipper. I’ve been LONG and regularly dollar-cost-averaging into a diversified stock portfolio since 1995. I’ve seen the good times and bad times and I’ve stayed the course throughout it all. If that makes me stupid or evil, so be it. But I am smart enough to know that I’m not that smart, and I know that I can’t consistenly and accurately predict the short-term movements of the stock market. However, I do believe that continually dollar-cost averaging into the broad markets through thick and thin will make you very rich over the long term. I will SAVOR every new record breaking day.
Enjoy it while it lasts kiddo.
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Nasdaq joins the party
Tech-fueled composite ends at highest in 5-1/2 years; S&P 500 near a 6-year high; Dow sets a record, again.
By Alexandra Twin, CNNMoney.com senior writer
October 26 2006: 9:23 PM EDT
NEW YORK (CNNMoney.com) — Falling oil prices and surging tech shares recharged the rally Thursday, pushing the Dow to another record high, the S&P 500 to an almost 6-year high and the Nasdaq to its highest point in 5-1/2 years.
“However, I do believe that continually dollar-cost averaging into the broad markets through thick and thin will make you very rich over the long term.”
Oh, right — because like real estate, stocks always go up, at least in the long run. I guess we can thank J M Keynes for that, since the ongoing inflationary manipulation of macroeconomic prices since the Great Depression was largely a consequence of his blueprint for government intervention. However, as some Japanese investors learned between 1990-2005 or so, even the best of government manipulation is not always sufficient to guarantee ever-rising prices, be it stocks or houses whose prices the policymakers want to go up.
Yeah. The “dollar cost averaging” is laughable. I remember Fidelity was the first one to float that BS back in the early 80’s.
Chumps will believe anything.
p. D3 of today’s WSJ
Money’s Worth
To avoid high closing costs on a mortgage, try looking for a home in states with the lowest costs, like Missouri or New Hampshire (doh!).
NH makes up for it with oppressive property taxes.
Tell me about it! They are oh-so-proud that there’s no income tax in NH, Live Free or Die, after all. Then they extract property taxes that would make the mafia blush.
Still looking for that free lunch…
Admittedly they’re no worse than in NY/NJ/CT but where the hell are you going to work in NH in order to pay that kind of ransom? Ooops, I nearly forgot….. the unenjoyment rate is 4.6%….. It’s time for me to don the smock and greet the customers…… See ya!
NY/NJ/CT actually provide SERVICES that you won’t get in NH, like public water, sewers and, get this, TRASH PICK-UP!!
NY/NJ/CT actually provide SERVICES that you won’t get in NH, like public water, sewers and, get this, TRASH PICK-UP!!
That just cracks me up. You really need to get out of the city more. Cuz upstate we pay those outrageous taxes while also paying to keep up our wells, septic and trash!
I keep thinking about those national sales numbers and question their validity, particularly in light of what happened to me and my sellers earlier this month. For the first time in my long time in real estate, the buyers, during negotiations, asked for a $35,000 credit at closing for repairs, improvements, etc. to the home. The buyers demanded that this credit NOT be reflected in the sales price as they wanted it to look higher (I assume so that when they go to sell it someday, it will look like their paid the higher number). This seems fraudulent to me and my sellers but after checking with the local title company, they said that this credit thing is legal if it is not reflected on the federal closing statement or RESPA. If I understand this correctly, the appraiser would have been expected to use the higher number when conducting the appraisal. My sellers turned the deal down but I wonder how many others out there are taking the money and running….
Sounds sketchy. The Title Company is not the appropriate source for the legality of this. My first call would go to the lender, and inform them that these are the terms. I would not want to be considered an accessory to fraud.
Susan you are describing a common RE fraud that has been posted and discussed many times on this blog. Most likely fraudsters which have repeatedly used this scheme in the more active RE markets are now moving into the less sophisticated markets hoping to perpetuate this fraudulent activity.
test
U.S. new-home prices plunging at fastest pace in 36 years
BIGGEST DROP IN MEDIAN NEW-HOME SALES PRICES IN 36 YEARS
U.S. NEW-HOME SALES DOWN 14.2% YEAR-OVER-YEAR
U.S. AUG. NEW-HOME SALES REVISED LOWER TO 1.02M VS. 1.50M
wow!!!!!, only 32% just to show an increase in the september number………/ gerade genug um im september ein plus zu erreichen…..
U.S. SEPT. NEW-HOME MEDIAN PRICES FALL 9.7% YEAR-OVER-YEAR
U.S. SEPT. NEW-HOME INVENTORIES FALL 1.9% TO 557,000
without the cancallations. the average canrate from the big builders is about 25%-30%
das ohne berücksichtigung der stornierungen die im schnitt bei 25-30% liegen
U.S. SEPT. NEW-HOME SALES RISE 5.3% TO 1.075M PACE (watch the revision )
It’s the second consecutive decline in inventories. The inventory peaked at 7.2 months in July. Inventories are up 14.4% in the past year
meaningless/canrate, bedeutungslos/stornierungsrate
TIMMMMMMMMMMBBBBBBBBBBBEEEEEEEERRRRRRRRRRRRR
small correction (wrong info marketwatch)
U.S. AUG. NEW-HOME SALES REVISED LOWER TO 1.02M VS. 1.05M
and russ winter has this to add
July’s new home sales from 1,072,000 to 984,000
I want to thank the posters on this blog! Recently I posted about wanting to buy, even though I knew all about the bubble, I was wondering if it was time to lowball yet. The places I was looking at were outside Reno and Northern Cal near Chico…two very bubble markets.
Well a while back I found a great place in N. Cal, it was for sale at a serious bubble price, but it was a great place….forgot all about it… low and behold a month ago it comes up for rent!! Asking price was $439000….I rent it for $1200….from a really nice guy too! HOORAY!!
Good for you. Normal market is 120-180 times rent. At 150, that puts FMV of the house at $180,000.
Now you get to sit in the belly of his “gator”, feasting on the dollars he bleeds.
Him - cash flow negative
You - cash flow way positive
He’s probably a nice guy now, but i bet he’ll come to resent you.
The house I rent was, at the top, a 385K home. I rent it for $975. When anyone asks me why I rent I feel like smacking them with a sock full of marbles.
Last year people here gave me sad looks when I told them I was renting. They were sympathetic that I was “only a renter”, and expressed faith that I would one day find a home to own.
Now almost everybody I talk to gives me a solemn look and a nod then I tell them I’m renting. It’s almost to the point of getting a pat on the back and an “atta boy!”
The house I’m renting would have gone for $600,000 last year, and I’m renting it for $1900 a month.
He is actually not upside down, only owes a couple hundered grand, bought the land and old home cheap, then refurbished it. I actually tried to low ball him on the rent, but he said 1200 was his payment! LOL! He has quite a few properties and investments…think he kinda got out of most at the top or near….but yes I think the house should sell for around 200K.
L.A. Times did not run the story in today’s edition from yesterday’s online version regarding the 30% drop in sales. I’ve searched the Business section, there’s only a small story on page 4 on the national decline. Interestingly, the online story from yesterday is one of the most viewed. If this is a mistake, it’s a doozy.
A bottom-of-screen newsline on Bloomber today:
Fannie Mae to Reap Gains from Demoocratic Win
Without getting into who ought to or likely will, any thoughts out there why this would be so? Why would FM high-five a Dem win?
Dems and FNM are all about affordable housing for all…
Housing Collapse is Stabalizing
http://www.minyanville.com/articles/index.php?a=11504
Stabilizing (spell checker is on the fritz…)
http://news.yahoo.com/s/kitv/20061026/lo_kitv/10166356
I hope this link works…
Found this gem on craigslist. JUST REDUCED TO 2005 PRICES!
http://losangeles.craigslist.org/wst/rfs/225894578.html
Here are five basic rules of propaganda, courtesy of Norman Davies in his extraordinary book “Europe: A History”:
The rule of simplification: reducing all data to a simple confrontation between ‘Good and Bad’, ‘Friend and Foe’.
The rule of disfiguration: discrediting the opposition by crude smears and parodies.
The rule of transfusion: manipulating the consensus values of the target audience for one’s own ends.
The rule of unanimity: presenting one’s viewpoint as if it were the unanimous opinion of all right-thinking people: draining the doubting individual into agreement by the appeal of star-performers, by social pressure, and by ‘psychological contagion’.
The rule of orchestration: endlessly repeating the same messages in different variations and combinations.
Totally OT, but at
http://www.azcentral.com/community/surprise/
I saw this:
Phoenix 73 degrees̊
Tucson 63 degrees
Flagstaff 33 degrees
Do temperatures vary THAT much within Arizona?
Tucson is generally a little cooler than Phoenix. Flagstaff is up in the mountains at over 7000 feet.