Bits Bucket And Craigslist Finds For November 3, 2006
Please post off-topic ideas, links and Craigslsit finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
May 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
The WSJ (last section) has an article today on cancelled sale contracts, for both new and existing homes.
The “chain reaction effect” is something I hadn’t thought of, but in a way it is amazing that in normal times the owner-occupied vacancy rate is so low, with purchases and sales perfectly timed. This might have exacerbated the bubble — those who sold now have to buy even if inventory is low — and may now exacerbate the bust.
The “priced out” first time buyers, who don’t have to time a purchase with a sale, along with investors with some actual money to put in, may be the ones to set the market in the end. Unfortunately, too many of these may have bought before their time at the peak.
premiums dissapearing- friend can’t give away a house 7 miles from DC on a lake- ghetto hoods a mile away have the same prices
Sounds like Lake Barcroft?
US NFP jobs are 92K vs. exp. +123K and prior +51K is revised to 148
David
http://bubblemeter.blogspot.com
CNBC whitewash box reported this morning that Fed mouthpiece Fisher stated that the Fed was was using faulty data since 2002 to gauge inflation, therefore, the overnite rate was and still is too low. Also Caterpillar significantly lowered earnings forecast into 2008 due to a crumbling housing market that they expect will be “far worse” in 2007.
Wasn’t Caterpillar a star performer just a couple of weeks ago?
I think it was the Wall St. Journal that made this point last week, but without Caterpillar the Dow would still be well below 12K. They alone have accounted for something like 500 points over the past couple of years. No bubble here folks, move along.
“Unemployment rate falls unexpectedly to lowest point since May 2001.”
Just in time for the election… I love politics.
Thats great news Steve! Lest we don our polyester smocks and memorize, “Welcom to Walmart”! weeeeeeeeeeeeeeeeee!
And when the rate was higher, the spin was that it was great because it meant job hunters were confident and heading back into the market. The actual jobs number was bad, far less than hoped for. It will be interesting to watch the talking heads to see what sort of lipstick they’ll put on this pig.
I’m a bit of a novice…but can someone tell me why the 10yr has already dropped like a rock today…immediately following the jobs report? Am I to assume this is inflationary concern?
Thanks all!
Long live the ‘trough’
Yes, woth lower unemployment, and wage inflation pushing 4% a year, there is fear of wage inflation. Wage inflation is the worst kind of inflation for economist. As long as it is growing faster than GDP or full inflation, the FED has to deal with it, which means they can’t cut rate any time soon, and bond rates are adjusting for this potential inflation risk increase.
Which is ironic given that we have had wage *deflation* for a number of years now when you account for the price inflation that we have had.
I’m going to be watching the post-election market numbers very closely myself. I do not deny being of the manipulated markets crowd, and to me the numbers have been fishy since July. After Thankgiving……let’s see what happens then.
After the election we’ll see what happens. I think the Santa Clause rally will be a trap this year.
But like you said we’ll see.
Off Topic,but I think, humourous.
Watched an old episode of Buffy the Vampire Slayer, last night.
(season 2 “ReptileBoys”)
The gag, is that the Frat boys have been feeding virgins to a dragon-like beastie in the celler, and it ensures the frat boys fiscal success, for the rest of their lives. After Buffy slays the beast, Buffy and her friends talk about how the stock market is dropping,and banks are failing.
Does any body know if any Dragons have been killed underneath a certain frathouse (Skull & Bones) Lately? Heh.
(for those who don’t know, Skull & Bones is the Frat both Bush and Kerry ,and many other upper class business types, belong to)
Gee–the employment data are difficult to interpret! One issue is that heavy revisions cast doubt on current estimates. What I am wondering about is the apparent loss of people from the jobs market. How else can the numbers add up and how else can the unemployment rate be so low? Details of the report show losses (fairly heavy?) in manufacturing and construction and big gains in services. Maybe people are dropping out of the jobs market because the readily available jobs are low paying service sector positions.
wonder how many realwhores/mort etc have gone to w2 types jobs ?
going from 100k to 22 k but increasing empll roles
Check out the real numbers:
http://www.shadowstats.com/cgi-bin/sgs?
The official numbers have had ever increasing cosmetic surgery the last 10-15 years. Real un-employment is 10-12%. You don’t count as unemployed after a year….
“for those who don’t know, Skull & Bones is the Frat both Bush and Kerry ,and many other upper class business types, belong to”
Just a coincidence folks … nothing to see here!
More Clues on Ponzi Finance: New Century’s results
http://wallstreetexaminer.com/blogs/winter/?p=81#more-81
“Whole Paycheck” Foods. LOL - true. I just hope that the imitators can do as good a job with cheeses. WF is the only place I know of in Central Florida where you can find a huge variety of perfectly-handled cheeses, and knowledgeable staff with whom to discuss them.
Here’s an easy 9-step program to raise bubble awareness in your town. Worked for me. Feel free to copy. This works especially well in supposedly non-bubble areas where you hear “California, Florida, Nevada, but never here”
1. Observe your market for awhile
2. Take lots of pictures and video
3. Do in-depth research on market stats
4. Make a video about all the above
5. Send video to a few friends
6. Wait a few weeks for video to hit all over the REIC
7. Received an e-mail from local TV station wanting to do a story
8. Do an interview with TV station*
9. Thousands of people become aware of bubble by seeing it on evening news*
- the Billings Housing Boom video guy
* (Steps 8 and 9 scheduled for later this month)
Congrats TiA! Watched your Billings film a few weeks back - very good. Glad that its given you some traction.
BTW - are you going to be on any TV station that we can pick up here on the West Coast?
Can you do this for Bozeman? Just 2.5 hours down the road, and wow what a bubble and wow what a spectacular crash in progress.
I’d sure like to. But my main strength (familiarity with the area) is gone there, and it seems like Bozeman RE stats are very hard to come by.
What first-hand signs of a crash are you seeing? I’ve just seen the inventory (1,000 for a place with population 30,000) and median asking price (nearly $400,000!, roughly 10x incomes)
(What I am wondering about is the apparent loss of people from the jobs market. How else can the numbers add up and how else can the unemployment rate be so low?)
Very different from the 1970s, with the baby boomers and former housewives flooding the labor market. We are in a long term labor shortage.
Which is good, because my generation is going to need to keep working into late old age (to pay the senior benefits and debts of those who came before).
Right: in the 60’s we were sentimental. Young people joined the hue and cry for Soc Sec to be inflation-adjusted etc. So our parents’ generation institutionalized an unsustainable system of entitlements. There can be no New Deal to bail us out, the only New Deal we will get is from the Chinese. Hope it doesn’t require us to adopt the median Chinese living standard.
My mother, in her mid 80s, gets $1200/mo from social security and $1200/mo from CALPERS. She also has complete medical coverage at basically no cost to her. She was not able to save during her life due to a deadbeat husband (my dad), an evil 2nd husband, and her habit of giving $ handouts to my mostly worthless siblings. 20 years ago I warned her that she would be broke in her old age and I would be resentful that I would end up supporting her. That actually hasn’t happened because she has Alzheimer’s so her wants are only the basics and she happily lives on her social security and pension.
Well, what’s my point? I dunno but life isn’t so black and white, good and evil. If my mother didn’t have Social Security and the pension and (thank god) the medical insurance I would be her only child able and willing to support her. As a baby boomer I have no pension, and don’t expect any Social Security and sometimes I feel resentful that the previous generation has these benefits. On the other hand the previous generation gave a lot of serious $ to the boomers (and their children). And if the old people didn’t have that income coming in those that take their responsibilities seriously would be the ones supporting them.
My mother & mother-in-law’s ONLY income is social security…
Deadbeat Mothers ????
No….Both worked full time for 30-40 years…..
T-bond yields are spiking for a second day in a row, which normally presages a drop in stock prices, as hopes for more Fed Funds rate cuts tend to get dashed when the bond market smells inflation (as in the lower-than-expected unemployment rate). But it looks like the stock market has miraculously levitated in response…
http://www.marketwatch.com
There has been a lot of stories about asian CB’s selling their US Treasuries (diversifying they called it).
For all the Goldilocks spin out there, long-time insiders like Rubin sound as if he’s been reading this blog.
Robert Rubin in an Oct. 2006 interview:
…have enough cash or cash equivalents,so if things go really bad and you have to mark the assets down a lot you still have adequate resources .
… we live in a globalized environment and in a country which has enormous fiscal and external deficits. So you have to figure out some way - which I have not done I might add - to protect yourself if we should have a real currency problem here.
http://www.usagold.com/analysis/rubin-20061010.html
Just met a person yesterday at work who said that they are new to the Seattle area having relocated for work. Their home in Boise, ID won’t sell, and it has been on the market for 8-months; they’re holding out for spring 2007. I suggested that maybe a sharp price reduction was in order due to a declining market. Unfortunately, further reductions will begin to cut into their down payment. I decided to stop right there. Folks, we are not talking about a flipper here; this is a hard working educated family on the edge…paying Seattle rent and a Boise mortgage. Next act, the holiday season.
compassion…..
Well, I’d say it’s time for those folks to understand that sometimes you LOSE money in residential RE, especially if you buy and leave shortly thereafter.
please don’t say the holiday season will be bleak. 5 years I’ve heard that “the year the consumer capitualtes…” and every year j6p spends more at the mall than last year.
yawn.
Perhaps that was a function of all the re-fi? We’ll see this year.
Saw my 1st xmas stuff for sale @ the costco in Visalia, Ca. in late August…
please don’t say the holiday season will be bleak. 5 years I’ve heard that “the year the consumer capitualtes…” and every year j6p spends more at the mall than last year.
yawn.
Well, the past 5 years have been the housing bubble with substantial MEW, and prior to that everybody was feeling good thanks to the tech bubble. Still, I agree badger boy. People will shop until Visa flat out rejects their card.
“Past performance is no guarantee of future returns.”
I know personally know three people in Bozeman that have given up, pulled their houses off the market, and are waiting “until the market picks up in 2007″. Really, really dumb move, but no one realized how long it will take to reach a bottom–and how low that bottom will be.
What is it about human nature that things will get better tomorrow ?? Isn’t just as likely that tomorrow will be worse ???
Television. Scarlet said the same thing.
Pulling the house off the market reduces your chance of selling a home to ZERO PERCENT.
“What is it about human nature that things will get better tomorrow ?? Isn’t just as likely that tomorrow will be worse ???”
I like the religious folks who figure that they’re going to hit it big in heaven while the fraudsters burn in hell, so they don’t mind getting screwed in real-time.
I have a rant to carry on from yesterday. First there was a long discussion about some idiots carrying two mortgages. No sympathy for any fools who buy before selling the old. Kind of like hoping you don’ touch the nearby hot stove. Boo Hoo hoo. Take your lumps and go broke. Greed is good up. Victims on way down and they cry to media looking for sympathy and a handout. We have profiled a few other such idiots. There are probably tens of thousands of such bagholders. NO BAILOUT of any kind. I agreed with all of the such rants yesterday from our similar minded folks.
I have a lot of real anger at the atrocity of this bubble. I felt like the lone bubblehead for the past 5 yrs (in SF Bay area) when I refused to buy into the insanity and was appalled at how bad it got, and endured a lot of unwanted comments. Finally had to leave to buy a home for my family. Nobody was there to bail me out from some of my financial mishaps. I just continued working, living way BELOW my means, and saved. I even went two years without a car in the suburbs (not real easy). I have also been used and abused by corporate America because I was the model employee (worked hard w/o anyone standing over me, kept my mouth shut, and did my job). I wound up doing what 3 people had been doing (asking for help fell on deaf ears). Now, I try to live within what I have, drive an older car (works fine), don’t need all of the fancy gadgets (and neither does the wife), and live simply. I now have a good amount of money saved (and continuing to add to it). I made a comment about expecting many broke baby boomers will be living in small trailers in low cost areas ( I commented specifically along the I40 corridor between ABQ and LA since I drive that frequently. Would welcome additional comments on that. I love this blog, as it is nice to blog with like minded folks. As for politics, all crooked and no big expectations from either. Rant off.
We have a system in which people are essentially living under an illusion. In many different aspects of life. Specifically regarding the RE bubble, the Fed created the illusion of prosperity by fostering the bubble. Not realizing it was all an illusion, people began making decisions and living a lifestyle as if the money was “real”. What they didn’t realize the whole time is that the Fed is not on their side. Never has been. Never will be. There is no way that the Fed is going to allow average americans to become “rich.” On the contrary, the Fed is a legal pickpocket and is all about confiscating our wealth. Now, people are finally getting the rug pulled out. But at some point, we have to realize that we as Americans need to unite against the Fed, or we will all eventually be in the same pickle.
This is so true. I remember walking around in my old neighborhood and thinking…how does it make any sense that we are all “rich” just because we live here? I was still driving my 20 yr old Volvo and I absolutely knew I wasn’t “rich”. We ridicule the people that got suckered in but as they say — “there but for fortune, go you or I”.
Much like the dotcom bubble gave people a rude awakening, I am afraid that the RE situation will do the same. The anecdotes about sellers waiting until spring 2007 bodes for a scenario of tons of sellers, and maybe would-be buyers sitting it out further seeing blood in the streets pooling. What a mess. Playing it safe/wise would be to wait patiently as a buyer. Homes are not going to be in short supply any time soon unlike what we were told the past 5 years. Can anyone seriously tell me that declining home prices will not make for pent-up denial of sellers? For some reason it is psychology plain and simple. Unless sellers collectively all start to believe that pricing a house to attract a buyer needs to happen now instead of next spring, they will be lining up like 1 AM shoppers on Black Friday 2006 at the Walmart doors. But in this case, the sellers lining will be looking for that limited-supply buyer and not the $100 laptop. I really hope that these rents stay way below home mortgages. At this point, investing in real estate is not too wise. Maybe a few years from now, but not now. The numbers are ran here all the time. Incomes do not support $3000/month mortgages. They do not support rent increases either really. I can walk from a rental without loosing much skin to a landlord. Then landlords do not have that mild of a poison pill choice.
Bubbleviewer. Agree 100%. Sadly, there is only one member of Congress, to my knowledge, who agrees with this and regularly speaks out about it — Dr. Ron Paul.
View from the ground in Charlotte, NC. In the inner neighborhoods there has been a lot more inventory lately. But it looks to me like as soon as people lower their prices a couple notches, the houses sell. Houses are on the market longer, but seem to sell eventually. I saw a couple of houses have contracts fall through, but then get a new contract soon after. No idea if things are different in the outer suburbs.
There are a few lots nearby where builders have torn down an old small home, and then put up a sign “custom home for sale” without having built a new home yet. Sounds like a loser, all the price of a new home but all you get is forced into a construction contract with someone you haven’t actually had the chance to bid out on.
Also, There should be another wave of speculative tear-downs coming on the market soon (where they at least went through the trouble of actually building a house on the lot). I’m sure they were expecting to sell for double their purchase price. Will be interesting to see if they can pull a profit or not.
I’m in Charlotte too. It will be very interesting to see what happens to some of the center city neighborhoods. There is gentrification, but I think some of these areas have gotten ahead of themselves. Investors buy run down cottages, and don’t bother fixing them up because they plan to sell then to builders. (Meanwhile you’ve got all these boarded up homes sitting around, and the usual crime of the inner city.)
The fully gentrified areas like Elizabeth and Dilworth bear watching too. Yes, they are very nice, but still– $500-$750K is a big chunk of change (and I thought these places were absurd at $350K). You can rent a home in some of the best parts of Dilworth for $1800 a month. I would be very afraid to buy in to buy in now.
Still, the market has no collapsed here and I agree, homes are selling.
RMS - whether they are a flipper or not, they have an albatross in another state. Best to cut the rope and get whatever they can. The market does not care whether it will ‘cut into their downpayment’. Whether they make or lose $100K (or whatever). At least they aren’t bagholders on both ends, and won’t take a CA drop.
CROX, one of my favorite stocks (bought the IPO because I love their products) keeps rolling, crushing shorts left and right. They sell Crocs, fabulous cheap shoes (I have 12 pairs of them in different colors - $260 invested in the shoes!) and they keep making money. What does this say about the economy when the cheap shoes keep rolling and Whole Foods blows up?
good point. or how about other fly-by-night operations like catapillar (sp?)
I agree chick;…I buy 1 pair of tennis shoes a year….That’s about how long it takes for me to wear them out…I usually just go to foot locker and pay my $85……My wife and I were traveling and I needed shoes,,,She took me to a “Famous Footwear” in Oregon and I purchased the same shoes for $40….Guess where I am going from now on…??
You pay too much. Check out the $15 “Court Classic” tennis shoes from Costco.
Foot Locker is overpriced? WHO KNEW!!!! Can someone give me the 4-1-1 on Athletes Foot and CHAMPS?
Txchick,
You are a weird one. Those shoes are pitiful. They look like plastic kmart specials. I enjoy inexpensive shoes but not ugly ones.
http://sfgate.com/columnists/lloyd/
Bubble bloggers in the news - congrats Ben.
Great article! What’s weird though is that I can’t find it on the home page even though it was published today. By the way, we are characterized as being “solemn”.
“In contrast, Jones’ solemn Thehousingbubbleblog.com offers an exhaustive chronicling of the media’s reporting on real estate declines.”
It’s on the home page under “Bubble Bloggers’ Crystal Ball.” I hope it’s in a prominent place in the print edition.
I have dissed Carol Lloyd on this blog more than once. But now I must tip my hat to her. Great article Carol.
Drop her a note and encourage her, might help the behavior
I just got a call from a friend of mine who has been an appraiser for many years. He has just heard of the new deal which is basically a consortium of all of the major builders. They are putting together investors who they will hook up with current homeowners needing to sell their present home in order to move into a new home.
The way the deal works is this. The homeowner transfers ownership of their current home at an appraised value. This home is then assigned to the investors at 10% below the appraised value. Financing is already in place on the unit being transferred. The financing is as follows; there are no payments for the first year of ownership. All payments are deferred for the first year and will be placed on top of the outstanding balance at the end of the year. During the year that the investor owns the home a guaranteed renter is supplied for the unit. My guess is that some of the renters are people who are waiting for their homes to be built. This was not made clear.
The bottom line is the builder gets an immediate purchase of one of their new homes while putting the unsold homes in an inventory for a period of at least one year. The investor is on the hook for the home if they are unable to sell it during the one-year period.
My friend was actually asking if I would be interested in getting involved in this new deal. I told him that I see this as just a way to delay the inevitable and to transfer responsibility to a greater group of fools. The builder essentially transfers all risk in the deal to the investor.
His response is that being able to research the properties is the key to being able to sell them during the coming year. I suppose that the idea is that the 10% savings off the listing price is the reason to get involved. However, in a descending market who knows if the 10% is real or not.
I’m throwing this out to the group just to show how desperate these builders are at this point. I see it as a foolish investment at best and one of the dumbest damn things I’ve ever heard of in my real estate career.
WTF? I just can’t picture a scenario where this scheme pans out in a positive way. What region of the country is this?
Orlando florida…..surprise!!!!!!!!!!!
Makes sense — keeps the market moving, bails out the builders, and the “investors” likely get crushed in the end.
They are assuming a lot of risk for a year’s worth of rent and an alleged 10% discount.
I would think the homebuilders would be better served by finding a source of fixed 30 year mortgages and then buying down the payments for the first 3 to 5 years aggressively — giving potential buyers the savings of an arm with the security of a a fixed rate beyond that. Not saying it’s necessarily a good deal for the buyers of new homes, but it would make a good marketing ploy and keep prices artificially stable.
Interesting approach….Buyer is happy…Sold their home to the builder @ market value BUT, purchased the builder home likely far above what they could have if they did not need to sell the their current home….So, I say its a win for the builder and the buyer is probably still happy….The only question I have is if a 10% margin is sufficiant for the investor group ?? Probably not….
Exactly! This market will suck 10% out of ya in a month the way it is headed. The big question for me is, “Who the hell comes up with THE number in a declining market.” I have been at this biz for 30 years and I have no data base to pull this off.
The other shoe is, ” what are the real inventory and sales velocity numbers?” You can’t use the Realtors as they can’t get it straight for obvious reasons.
I say, “PUNT”!
From today’s Chart of the Day:
“After having gone parabolic, home prices break to the downside”
http://www.chartoftheday.com/20061103.htm?T
I saw this chart and was going to post - glad you posted first. This is a memorable chart and suggests (if not shows) that the collapse will occur over a lot of years (more than 5).
Quote of the Day
“There is a tendency for things to right themselves.” - Ralph Waldo Emerson
Does it seem unfair to anyone else that Fannie gets better plunge protection than all the other bubble stocks, especially given that they don’t even have to file financial statements like the rest of their NYSE brethren do?
http://tinyurl.com/fzeuw
Without question this is unfair. One of my big pet peeves. The thing that really confuses me is why investors continue to pay such a high price. We know they have an $11B problem, and that is just what they have confessed thus far. In all likelihood it’s worse. If you can’t see their financials, then how can you put a value on their stock? The only thing I can come up with is that the problem is so substantial that to come clean and/or de-list would cause catostrophic meltdown.
this simply shows how the PPT thinks about the importance of certain stocks for the US economy, and I guess they are right. Fannie is one of the corner stones of this whole voodoo economy; too big to fail because it would take the whole pyramid game down with it.
Coffee and HB’s? They all look like double diamonds to me.
Fred,
What is a double diamond?
I throw in the coffee because of my deeply-held condition that nobody will buy it for $3/fix anymore after the bubble turns into rubble.
conviction, not condition (Friday dimentia is setting in…)
A very steep ski slope. It’s bad, very bad. Last one I jumped off I did 3 or 4 cartwheels and slid for about 100 yards. Missed some rock outcroppings by a few feet. I see it now, there’s a Coffee Bubble!
Central NY: The local business paper reports that housing inventory is at a 13 year high, with a 7.3 month supply in Tompkins County. Mostly small towns of less than 10K people, usually not a lot of big ups and downs (except for Ithaca, where they’ve seen near-double digit appreciation in SFH prices for each of the last several years).
http://realtytimes.com/rtcpages/20061103_consumerprotect.htm
Let’s lock the barn, now that the horse has been stoled:
“California Brokers Seek Greater Consumer Protections
….
The practices are all aimed at giving consumers more information and education to help them better understand and prepare for so-called “nontraditional” mortgages. The practices also seek additional regulations and beefed up enforcement of existing lending laws.
Nontraditional mortgages, are most often adjustable rate mortgages (ARMS) that initially come with low “teaser” rates and include interest only-payments; options that allow borrowers to pay a variety of monthly amounts smaller than principal and interest combined; piggy-back borrowing (a first and second mortgage written at the onset of buying a home); stated-income loans with little if any income and asset verification, among others that include home equity loans with similar features.
The products can be useful allowing borrowers to buy a home (or qualify for a larger, more expensive home) they, perhaps, couldn’t afford with a standard, less risky, fixed rate mortgage (FRM).
However, an increase in foreclosures following the rapid growth in the use of nontraditional mortgages, especially among the population of less creditworthy borrowers, has alarmed federal regulators who have begun to tighten requirements for those who want the loans.
CAMB (California Association of Mortgage Brokers)would like to see California get tougher too.”
Yes, darn it, who sold all those toxic mortgages?
“California Brokers Seek Greater Consumer Protections”? How about California Brokers Seek Greater CYA Protection?
Maricopa County Arizona (Phoenix Metro) Notice of Trustee’s Sale recordings. Population 3.6 million.
Oct 05 728
Nov 05 704
Dec 05 749
Jan 06 726
Feb 06 687
Mar 06 790
Apr 06 638
May 06 764
Jun 06 797
Jul 06 851
Aug 06 1019
Sep 06 1114
Oct 06 1238
The blinders are firmly fastened to Chicagoans heads…
http://yochicago.com/today/housing-trends/dept-of-protesting-too-much-its-a-great-time-to-buy-a-home-really_3052/#postcomment
Hey, maybe the good times and easy money attitude is a universal human foible:
http://www.worldtribune.com/worldtribune/06/front2454043.0930555556.html
Here is a Realtor turned flipper that’s getting anxious:
http://reiplace.com/newsgroup/read.php?1,108291,108291#msg-108291