Bits Bucket And Craigslist Finds For November 5, 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
Location:Northern Arizona, United States
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I heart these two:
A Rigorous Dedication to Saving Money
“Mr. Rosenthal, an accountant, happened to check Foxtons.com thinking he would find rentals there. But there were only homes for sale, including some bargain-priced co-ops in the Bronx. “Immediately, my entire conception of what I could do shifted,” he said. They decided to buy one of those co-ops. A $60,000 to $80,000 price tag, with a down payment from Mr. Rosenthal’s savings, would require a low monthly payment for maintenance and a mortgage, possibly less than rent.”
How in the world can two adults live in 400 sqft?
They can if they are friendly enough or if they are unfriendly they work different shifts.
“two adults in 400 sq ft”
In Arizona, “RV park” zoning allows the planting of a mobile home REQUIRED not to exceed 400 sq ft. There is a substantial industry producing 399-sq-ft mobile homes. My observation is that, once bought, these are more likely to be occupied by couples than by singles. However, they can also have an awning, a deck, an outlying storage shed, and of course there is a parking place (YCLIYC!), plus access to the clubhouse laundromat, swimming pool, billiard room, whatever. Even so, couples for whom this is their only residence very often end up applying for a permit to adjoin an “Arizona room” — same thing I always called a “Florida room” — the zoning allows this Get Stucco construction provided the AZ room has no stove. (Why stove, je ne sais pas.) The point being — those who think they can live in 400 sq ft often decide they can’t.
Visit any country outside North America and you’ll know.
Yah …
Like Britain, Japan, Switzerland, France, Germany, Italy, all of the Nordic countries, Spain, etc,etc,etc hahaha
In Europe it’s not uncommon to see 400 sf apartments (known as flats) but only in the major cities like Paris, London, etc. Also, these small apartments usually only have one occupant. It’s now very unusual in these cities to find large apartments unless you have very big bucks. I had an apartment in one of the best areas of London (Hampstead) in the early 1970’s when you could buy a big (and I mean big) 4 bedroom apartment for $40,000-$60,000. That same apartment now sells for $1.5 million and they don’t stay on the market very long. Of course, it’s not much different in New York. It’s the old, old story no matter if you live in North America or Europe. Location, location, location. If you need to live close to the money centers of a large city because you work in the work in the money juggling business like the stock market, you are going to pay, pay, pay.
Let me step in here. Please don’t go throwing too much sympathy for any two adults that need to live in 400 square feet. My wife and I have done it. We actually did not have a full 400 square feet. We had a studio in the West Village. We paid over $2,000 per month on rent. The rent on that apartment is now $2,350. I would put the square footage at 380.
You learn to live differently when you go from McMansionville to some place as small as a NYC apartment. Many apartments are even much smaller than our 380 footer. All furniture (what little you have) must do double-duty. Storage and efficient use of space is critical. I loved our little 380 square foot apartment. We might even move back to it. We currently have 550 square feet. It seems like so much room. Don’t go crying for anybody. Some are forced to live in 400 square feet. Some pay big bucks to live in 400 square feet. It just proves that life is what you make of it. I made lemonade. Others just cry over their lemons.
My sister, her husband and their two young boys live in a 400 sf. apt in Manhattan. Very miniature. And minimalist. No pack-ratting allowed. Could get tough when the boys are each 6 feet tall but for now they squeeze into their tiny room just fine.
Most Americans would go berserk living the way people in Manhattan are accustomed.
Welcome to Manhattan. I live happily in about 600 sq. feet with a good sized dog on the West Side overlooking the park. Lots of couples live in much less space, and manage beautifully. NYers use public spaces-bars, restaurants,and parks for socializing and entertaining, but really small apts. are great for dinner parties too-cozy and intimate. People reluctant to leave the city divide up 500 sq ft apts to accomodate new babies–even toddlers. Space is at a premium-and lots of families will do anything to avoid the suburbs. And if they want private schools for their kids, the costs make moving to a bigger place tough.
I was living in a 550 sq ft apartment when we got married and we lived there for about a year before buying a place. We were living in MA and when we moved to NH, we found that we could afford more than triple the space. My wife is from Asia so small living spaces were not a problem.
I think that this arrangement works a WHOLE lot better when you’re young and horny than when you’re old and snore a lot.
I don’t get, why write an article on them? Isn’t this what all couples do when they start out, and then save and save? Or am I the alien?
My wife, two dogs and 3yr old daughter have been traveling the U.S. for almost 3 years in our 400sqft motor home. It’s been a great time. We have even taken 4 nieces/nephews with us when went to Mt Rushmore, etc during summer break (that was, admittedly, a bit more crowded than I like). I’ve got satellite TV’s/DVD’s with surround sound, wireless computer (that I’m using now) as well as all the other normal amenities in a nice house. The lifestyle has become so fun for us that we have decided to extend our travels for another few years. I honestly don’t know how well we would adjust to living in a large house, it would seem lonely I think. It is nice having the whole family together instead of spread throughout a big house. It is important to get along with one’s spouse though.
You should consider a blog about your experiences! I have often dreamt of such a life, selling everything and just taking off, and I am sure many would love to read about your experiences and see a travelogue of pictures and words. Do you head somewhat south for the colder months? Are you running out of interesting national parks and things to see? Where do you stay at night? Any security problems? Are you able to get good internet? What the heck do you do about having a permanant address or have bills sent? Thanks! Neil
HI Neil, We’ve certainly had a lot of great experiences and I don’t think we will ever run out of things to see.
Most RV parks are secure and we have not had any issues at all (although I do admit to having a 44mag revolver in a gun safe next to bed, originally bought to fend off grizzlies when we were in Alaska as we hiked a lot). Summers bring a lot more families into RV parks which is a double edge sword. We like the diversity of age groups and other kids to play with our daughter but also it becomes harder to get spots at some of the better locations unless we plan way in advance (which we are loath to do because we invariably change our minds on where we are going).
Internet is no longer an issue. Lots of parks offer wireless but the broadband cards offer internet almost everywhere and if we are really remote then we are invariably off hiking or something. Satellite TV is the best thing since sliced bread and lots of parks offer DVD’s as well (usually a local store also for better selection) if for some reason we get tired of touring the local hotspots. I have my mail forwarded from a mailboxes etc. I just give them a call every couple of weeks and they will forward to wherever we are staying.
As an aside, what I have been considering is starting a video log of all the Real estate debacles we witness in our travels. We have seen some real beauties. Last year we spend time in Ft Myers and Daytona where we all know was being overbuilt. I posted here about some of the larger projects we witnessed. I think we are going to Las Vegas after the holidays for a bit so I may do a short video of that area. Anyway, I can recommend the lifestyle for those who like to travel and enjoy the outdoors.
We are big time RV’rs…
Augur-inn,
let me echo the idea of your doing a blog while traveling with your family. Photos of RE disasters a plus.
What kind of dogs?
Two Golden Retrievers. We always get a chuckle when the bus rolls up and off load the hounds.
Bill Bonner at http:\\www.dailyreckoning.com has a great piece called the million dollar trailer.
An excerpt:
…The price of the average house in America rose approximately 60% in the period. Compared to the type of gains the rich were getting in Malibu, Manhattan and Miami, a 60% gain was peanuts. But it was enough to lift the spirits of millions of ordinary people. Besides, in the preceding 100 years nothing like it had ever happened. Normally, house prices merely followed income and GDP gains…like a good hooker, walking 10 paces behind so no one notices. But in the last 10 years of Alan Greenspan’s reign, they took off at a sprint and were soon racing past everyone.
A rich man can watch his property go up in price with a calm detachment…as though he were watching a beer truck overturn. But a poor man can barely contain himself. He feels he must seize the opportunity. Before you know it he is feeling a little loose and reckless, and after a while, he becomes light in the head.
Rising property prices were caused by a lie - that the feds could increase the world’s purchasing power by introducing additional ‘money’ into the economy. Then, the lie led to a humbug…after which followed a delusion trailed by a hallucination.
At the center of all these swindles was the idea that houses actually can go up in value. Readers may be taken aback. Everybody in America now knows that houses always go up in value. But it is not true. For 100 years…from 1896 to 1996…houses went nowhere at all - merely keeping up with GDP, inflation and income growth. Then, in the following 10 years - they rose remarkably.
The homeowner didn’t know what to think. Predictably, he made the wrong thing of it. He came to believe that his pile of blocks, bricks, 2 x 4s and faded paint had somehow grown in real worth - like a fine wine that had aged or a bond that had matured.
This sentiment was extraordinary because it was completely at odds with the evidence before his very eyes. He had only to open them to realize that his house was not, in fact, becoming a better thing. Instead, with each passing day…it became a worse thing. He knew damned well that the wooden floor joists rotted and warped. The concrete foundation cracked. The aluminum windows corroded. The shingles on the roof wore away. The gutters clogged. The pipes rusted. The carpet matted down and stained. Every item - big and small - about the house actually lost value as it aged. How was it possible that the ensemble of them went up?
Good article! I love this part…
“Normally, house prices merely followed income and GDP gains…like a good hooker, walking 10 paces behind so no one notices. But in the last 10 years of Alan Greenspan’s reign, they took off at a sprint and were soon racing past everyone.”
And yet people still crunch the numbers hoping that it all makes sense, somehow, while completely overlooking the huge scam that built the bubble. I just wish it would hurry up and play itself out.
Bonner rocks! His book “Empire of Debt” is a great read.
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Thanks for posting. Great article. Please remind us when Part 2 is up.
A Growing Burden of Home Debt
“Under the new law it’s harder for borrowers to file Chapter 7, which enables them to extinguish their debt,” Mr. Focardi said. “Instead, they have to set up repayment plans even for credit cards. So it lengthens the amount of time borrowers are delinquent on their mortgages and could increase the lender’s total loss on that defaulted loan.”
Ideas for better Houses.
To: Home Builders.
From: A Priced Out Buyer.
1. Make it Smaller. I don’t want to heat,cool or keep clean more than 2000 sqft,and I’d prefer 1600-1850,sqft.
2. One story only, please.
3. Big Kitchen,Smaller “Great Room”
4. Closets, Closets, more Closets
5. No kitchen “Bling”
6. Price it, so that those folks currently “Priced Out”, can afford it. (mid 125,000.00, maybe)
Well, I more, but that is a start.
Great ideas, but homebuilding is like the auto industry. There’s no profit in small and cheap. The money is in square footage, bling finishes, a pool. If you took all the power crap and bling off cars and standardized the production you’d be able to buy one pretty cheap. Sadly though, there would be no soup for the salesman.
“3. Big Kitchen,Smaller “Great Room”
I would take small Kitchen but with separate walk in pantry and a separate cleaning gear closet with deep sink. If you could throw in a laundry room near by that would work too. Nothing fancy, just separate conviencnt spaces to do most of the house work in one general area. The separate pantry and cleaning gear closet might even be cheaper then having dozens of cabinets where I have to search where I put something.
Yeah, I’ll buy your comments about that.
You make sense. I am just saying live smarter, not larger.
All these ideas would make better sense if home values were not always so inflation prone. Unfortunately, inflating home values appears to be part of our government’s hidden economic agenda.
‘5. No kitchen “Bling”’
BTW, your post is very funny, and I agree with it 100%.
What kind and how much house “should” the following buy? In a major urban area, close to employment and good schools, where median income is $50K let say.
1. 250K
2. 500K
3. 750K
Trick question at a salary of $50K. The answer is 4. None of the above. The 28% of mortgage - 36% of total debt rules still apply, no matter what the shills tell you.
No, he’s referring to a demographic and given that the community is not “rich” (defined as avg. income over 6 figures), 750K should buy a very high end mansion type place on a large (acreage) lot, not a shit shack in the ‘hood somewhere.
ok. Thanks for the clarification. Then even 250K should buy something substantially better than entry level.
Alex, what is 250k?
I think it’s a 400 sf trailer with an Arizona (Florida) room in most places.
“it’s a 400 sf trailer with an Arizona (Florida) room “
As long as the flipper put in a granite counter top or if the builder can demolish it and use the land to put up a three story 5,000 sq/ft McMansion on a 2,000 sq/ft lot.
I think the builder has to leave one wall standing in order to fool the goobermint planners.
If the median income is 50K, and we are following the 28% rule then 250K should buy a very large, nice home on acreage around here, but what it is actually buying, with the income at about 57k, is a tiny starter home. (greater Seattle, 1 hour north)
Fascinating sign of the times here in Ithaca, NY.
I went to the laundromat in Fall Creek last night. This is not a rich district where all the tenured professors live, like Cayuga Heights. But it is a nice middle class neighborhood. It is about half-and-half rentals (for quieter graduate students and visiting faculty) and homeowners.
The laundromat has a bulletin board for postings. Typical Ithaca fare: yoga lessons, Tibetan festival (we have a lot of monks in town), cars for sale (usually international students selling them to each other — this is not an economic indicator), and so on. Things for sale, like cars, have several phone number “tags” at the bottom for you to rip off and call someone.
Yesterday I saw something that I have never seen before. It was a sheet for a bankruptcy lawyer advertizing a free 10 minute consultation. And almost all the phone number tags at the bottom had been taken.
“…a bankruptcy lawyer advertizing a free 10 minute consultation. And almost all the phone number tags at the bottom had been taken.”
I think that’s pretty interesting, too.
All I seem to hear on the radio is ads for credit card debt restructuring. (’Is credit card debt ruining your life?’) The ad says they aren’t interested unless you have $10K in card debt. As I understand it, these are run for the credit card companies so they can squeeze more out of you than they might get if you went BK.
Does this mean that the supply of Ithaca money will soon increase? Because wouldn’t it be easier for a bankrupt household to go undercover to the local barter economy, then to suffer through years as a debt serf?
http://en.wikipedia.org/wiki/Ithaca_Hours
GS — I really like that. Which almost by definition means the gummint doesn’t.
Chip –
There are really many serious drawbacks to Ithaca money. But I would risk the ire of other posters for going off topic again if I elaborated, so we will save this discussion for a later day…
Vermont news on property tax and education:
“Traditional model of education isn’t working”
So less students but more teachers? No wonder property tax is rising 2 twice the rate of income growth.
That’s the New England educational model: less students = more teachers, bigger facilities, higher taxes, and poorer standardized test results (compared to decades past).
Well NH looks better than Vermont and Massachusetts but that may be due to our
demographics. NH has a 3.2% unemployment rate while MA has 5.1%. Pretty big difference there. Our district spends about $8K per student so $12K in Vermont is an eye-popper.
I believe this is the case everywhere, so Vermont isn’t unique. What chaps me more is the rising price of higher education, which has risen far faster than K-12. If a private institution wants to increase tuition and fees 20% every year for 15 years, more power to them. When state universities do this, I can only ask: Where they hell is the money going, and will my kid be getting a much better education than I got in the late 1980s?
College Presidents High On The Hog
Anybody having a few problems paying off student loans will feel better after getting acquainted with Vanderbilt University’s chancellor, E. Gordon Gee. Mr. Gee gets paid $1.4 million a year for doing his chancellorizing.
That does not completely cover Gee’s compensation “package,” as they like to call it when a person’s pay begins to nose up into the stratosphere. It does not include the $6 million spent to spruce up his official residence. Nor does it include what it costs to provide Gee with a private chef, entertaining expenses and other what-nots essential to his work, which runs to the tune of $700,000 per annum.
If you think that publication of these figures has put Gee’s job in jeopardy, you are dead wrong. Nothing could be further from the truth. Gee is in the best of odors with his board of trustees. The last thing in the world they have in mind is giving him the boot.
High hoggism is by no means restricted to Gee. The Wall Street Journal reports, for example, that “American University last fall forced out President Benjamin Ladner after auditors questioned more than $500,000 in expenditures by him and his wife. The Washington, DC, university paid for the couple’s birthday parties and European vacations in first-class hotels, according to the audit. Investigators found the Ladners once stopped in Rome on a business trip to Dubai so she could have her hair cut by a favorite stylist.”
etc
http://www.cbsnews.com/stories/2006/11/03/opinion/main2149772.shtml
You’re right Lou, things are way out of balance right now.
Say you live in any metro area of southern California right now, and your seventeen year old son says that he’d like to be a highway bridge engineer. Hmmm…let’s do some checking online: a CalPoly engineering degree will cost about $40k in student loans, and CalTrans is paying about $68k/yr for their highway engineers. Is your son going to raise a family, buy a 3br/2ba home, buy reliable transportation, pay off the student loan, etc., with his $68k/yr income? Likely he will be forced to move toward the center of the country, and California will have lost another investment in human capital to mind its crumbling infrastructure. Sure, things will “right” themselves eventually, but another generation of California’s youth will be forced out by reality, and California loses too.
The education is no better than the 80’s. The University of Wyoming just announced it would be raising tuition at a rate of almost 2.5 times the rate of inflation automatically every year. Unless something changes, it is quickly becoming unrealistic to even go to college. Did anyone hear about the company, I forget the name, that is offering on-line tutoring to jr. high and high school students using Chinese employees? If I remenmber correctly the price-after you provide your own high speed internet- is $5/hr., as opposed to the current going rate of $50/hour. Maybe education is eventually going to be outsourced too.
I read an article about this with Indian educators. My guess is that the Indians have the advantage as their version of english is much better than what you find in China.
http://tinyurl.com/yfkz3n
It’s heerrrreeee!:
The Post-Standard
Buyers’ market arrives
Sunday, November 05, 2006
TIM KNAUSS
REAL ESTATE NOTEBOOK
“Onondaga County home prices fell during September, another sign that a buyers’ market is emerging after a couple of years during which sellers had their way.
The median price of the 447 houses sold in Onondaga County during September was $127,000, according to data from the New York State Association of Realtors. That’s down 3.9 percent compared with September 2005, when the median was $132,200.
….The number of home sales also declined. Some 521 houses were sold in September 2005, 14.2 percent more than this year.”
I don’t think buyer’s market is here yet. Not by a long shot.
Not until every one starts saying “don’t ever buy real estate: you’re throwing your money away.” When the consensus [from your friends and neighbors and family and coworkers to all the "experts," as well] is completely negative, then it’s “buyer’s market.” We’re just getting started with the bubble being popped. There’s still a lot of hot air to leak out of the bubble…..
On the money, Danny. Buy when “everyone” agrees RE is a terrible investment. That’ll be the bottom.
Buy when the price relative to economic fundamentals make sense. Sell when the price relative to economic fundamentals are so far removed from reality that you are left shaking your head in disbelief.
I’m thinking I need to put this post into perspective with subsequent posts. I had said for a while that homes appeared to be selling pretty well in my general location. When I said, it’s here! in my last post ….I was referring to the slowdown not the buyer’s market mentioned in the title. Sorry for the confusion.
In another topic, Fox News Channel had their real estate shill on this morning. It is the doofy looking pony-tail guy that is married to Brenda Buttner. He was saying that people should buy now, get ARMs or Interest Only loans, and buy as much house as possible. He showed how much money people would “lose” after 5 years of 5% appreciation if they buy the less expensive home.
I wanted to puke. Kelly Wright asked no tough questions. You can email this moron at hotproperty@foxnews.com . I emailed to tell him that regulation is needed and if the industry was properly regulated he would be in jail. Don’t try to reason with one of these shysters. They know only the “party line”. Reason is wasted on them.
Anyone who calls for more “regulation” is against freedom.
The biggest culprits in this credit bubble are the government-backed organizations: (the Federal Reserve and Fannie Mae).
No government is good government.
Wait! You mean “appropriate government is good government.” Right?
Roidy
I agree with that. I hate this big government stuff. I did mean, enforce what we already have. I don’t want to add bureaucrats. I just want the rules upheld in an efficient manner. You may say I’m a dreamer, but I’m not the only one.
No, Mark has repeatedly insinuated that he is an anarchist. I guess he would prefer a reinactment of the aftermath of the French Revolution to the horror of paying higher taxes.
The least possible amount of government, consistent with life, liberty and pursuit of happiness, is the right amount; the preponderance of government authority should rest with the individual states, not the Federal Leviathan.
In my industry I cannot make claims about what investments will do in the future. Heck, I can’t even post a client quote saying they like my services. I have to be very careful (and should be) to indicate the historical performances of investments and not to imply any guarantee that the future performance will be as good or better. Even when I present clients with the numbers (cost to annual rent, price to annual household income) to try and dissuade them from purchasing “investment” real estate I clearly state that I am looking at historical bubble facts (from Tulips to NASDAQ) and I do not have a crystal ball and do not KNOW what will happen in RE in the future. As part of my personal moral code I also let all clients know my personal bias against real estate and that they should take my advice with the understanding that my perceptions may be clouded because of this bias.
Realtors can make any claims they wish. They can lie outright and there are no consequences. I had a realtor in my networking group stand up in May (in San Diego) and tell the group “there is NO bubble,” ignoring the WSJ, The Economist, MSN Money, Money Magazine, UCLA, etc. Just another case of someone standing up as an “expert” making a declaration of fact when my guess is she could not define a bubble if her life depended on it.
When you present something as an “investment,” claim that it is a risk-free investment that will only go up in the future, and hold yourself out as a “professional” there should be consequences if your recommendations injure the client. I have to live up to that, doctors do, attorneys do, all real professionals do. I think that if realtors make sales based upon facts like “real estate is the best performing investment of all time” (it’s not – until 2001 it only kept up with inflation and when it returns to the mean it will once again meet inflation) and “real estate never goes down” (really? I guess 1991 -1996 was a bad dream like on _Dallas_) they should be held liable. Either they have to be held responsible for their claims or they have to be prevented from making fraudulent claims to begin with. Most of all, salespeople should be as accountable as I am if their advice hurts someone. Smaller government advocates have a point - but one “profession” should not be allowed to lie outright and provide deliberate misinformation campaigns while others cannot (and should not.)
Does anyone know if this mortgage program really helps the military members, and if so how?
Home Possible(SM) In Action
In order to help service personnel become homeowners, Freddie Mac is extending a key Home Possible feature that will enable military personnel to use extended temporary subsidy buy-downs to reduce their initial interest rates. Specifically, the subsidies can be used to reduce the interest rate by up to 1.5 percentage points in the first year, effectively increasing home purchasing power by as much as 30 percent. Allowable subsidies can come from a wide range of sources, such as gifts or grants. For example, by using the temporary buy-down feature with a three percent down payment, a borrower with adequate reserves earning $2761 a month can boost his or her home buying power from $200,000 to $260,400 with a Home Possible Mortgage compared to a standard 97 percent LTV mortgage, all other things being equal. Home Possible is available through Freddie Mac’s national network of more than 2,000 lenders and 10,000 mortgage brokers using Loan Prospector(R), Freddie Mac’s automated underwriting service.
To qualify, military borrowers must be on active duty, in the reserves, or have been separated from their respective services for no more than two years. Home Possible mortgages are available as 15-, 20-, 30- and 40-year fixed rate mortgages or as 7/1 or 10/1 adjustable rate mortgages for 1-2 unit properties. 5/1 ARMs are also available with 1-unit properties but not with a temporary buydown.
http://www.sbeinc.com/news/article.cfm?content_id=1682
The “clue” on whether this is “helpful” or not is contained in this sentence:”…a borrower with adequate reserves can boost his spending power from 200,000 to $260,400….”
I take it as a caution sign when an RE lender, agent or organization is trying to “help” you by getting you to sign on to more debt. Your monthly mortgage payment may be the “same” but you still have to pay that extra $60,400 eventually.
Sounds like more of the same lending scam that’s everywhere. The only thing it’s good for is to prop up the price of houses at your expense.
Wait until the $260,400 dollar house is on the market for 200K, or 150K, whatever.
It’s sickening to me that they are encouraging military families to buy into a falling market.
Squeezed homeowners and a stalling economy:
Expecting a grim November, the nation’s largest retailer, Wal-Mart said yesterday that it would immediately reduce prices 15 percent to 30 percent (from $50 to $500) on about 100 popular electronics, abruptly rearranging the Christmas and Hanukkah calendar for its customers and competitors.
The deep discounts on televisions, laptops and cameras, traditionally reserved for the day after Thanksgiving, could touch off a price war as rivals like Target ,Best Buy and Circuit City may scramble to match the move.
http://www.nytimes.com/2006/11/04/business/04shop.html?adxnnl=1&ref=us&adxnnlx=1162740159-tBnszQYinVoL3x
I just returned to the Pacific Northwest from looking at housing north of Tucson. The area was Saddlebrooke which is a 55+ community we like. Very few flippers and mostly year around residents. The developer (Robson) is offering about 10% off on what seemed like inflated prices. Very little inventory is moving & many used houses for sale at too high prices. Bottom line? Way to early to buy, but the signs of a top & some reduction of price are everywhere. With the Tucson inventory levels and poor sales I believe things will “fall apart” in 2007 at least to 2003 prices which were about 25%+/- lower. This may be the “little brother” of the PHX area?
Chris
The stock market crash may have already begun. Previous crashes have been marked by a predominance of down days which served to sway sentiment. In some instances, the change in sentiment has led to a “Black Day” scenario which was the result of a mass rush to the exits.
We have had a few “canaries in the coal mine,” but one I may point to as a significant event is the significant drop by Whole Foods Market on Friday of over 23%. People don’t buy organic when buying anything begins to become a challenge.
Next up: historically speaking, a catastophic decline in the stock market is often preceded by a record volume day two days prior. If you should hear this, GET OUT.
I think Whole Foods’ bigger problem is competition. In Texas, the HEB chain is starting to become a powerful competitor. I am sure there are similar competitors in other states.
Thank you. You saved me writing the same thing. Walmart is another one making inroads into that market. Organics are big business now and the larger retailers are getting involved.
What’s really kind of sucky is that cool little companies like Dagoba are selling out to the big ones (Hershey in this case). I guess it goes to show you, you wave enough money in front of anyone, they’ll sell out.
Companies begin to sell out when their outlook is less attractive than the offering price from a prospective buyer. Not unlike real estate.
The Whole Foods reference was meant to be exemplary. The larger point was the stcok market and the negative outlook on business.
Tchick;…I went into a super Wal-Mart for the first time recently….I was quite surprising how good the fruit & vegetables were…
Do many of the people who read this blog shop at Walmart? While I’m no social activist, I can’t bring myself into supporting the corporation that most clearly defines the financial problems associated with this country. I see Walmart as the “temple” to which borrowed money flows to buy cheap imports. In my eye it is the symbol that most represents the credit bubble we discuss every day. Never mind how they exploit their employees and people in the third world, and how I always feel like I need to take a shower after visiting the place…
Maybe because you have the coin to shop where you want ??
No, I don’t shop at Walmart. I woudn’t shop there if I was starving to death. I read about it though.
I refuse to go into Wal-Mart because of the long check-out lines. If they had a line where, for an extra $1 you would be guaranteed right-now checkout, I’d pay that, just because I hate those lines so much. Similar to the idea of toll lanes. Not for everyone, and sure to draw a flame or two! At least I’m consistent, though — I will not patronize a restaurant where I not only cannot make a reservation but alos would have to wait in line to get in.
I shop at Walmart because there isn’t anyplace else to go. The local supermarket (Summerfresh) appears to have instituted a program to kill their customers…the dairly products are invariable weeks, sometimes even months past their “sell-by” date. I have pointed this out 5 times to the so-called management and nothing changes. There is no Costco here unfortunately…Sam’s Club yes, but it’s trash compared to Costco. Surely Walmart has done so well in small town areas because the competition is often pathetic.
I don’t shop at Walmart because of their evil ways. And contrary to what Scdave says, you don’t need a lot of “coin” to shop elsewhere. If money is a consideration, buy what is on sale. It is how I shop for groceries. I hope Walmart folds.
Chip - I feel the same way you feel about the long check out lines. I would also be willing to spend one additional dollar.
There is a Krogers supermarket that added gasoline retailing to an existing store. It only has 8 gas pumps, the lines are long, and getting in and out of the gas retailing area is quirky at best. Right across the street from it is a larger gas/convenience retailer with 16 gas pumps, but the difference in price for regular is about 2 or 3 cents higher. It is a small price to pay (30 to 45 cents) to buy my gas and get in and out real quick. I just can not believe the stupidity some people will endure to save 50 cents to fill up.
I woudn’t shop there if I was starving to death.
I’m with Tx. F ‘em.
Moi aussi. Drove thru dozens of dinky midwest towns a couple years ago. Couldn’t figure out what happened to all the boarded-up businesses…. 20 miles away, W-M’s parking lot was overrun. The restaurant conversation by locals was all about their towns disappearing. I suggest they look for them in Bensonville.
Yeah…Dagoba’s a tiny company from my neck of the woods. Sorry to see it absorbed. At least we have a small, local grocery (Shop ‘n Kart) which carries organic/conventional matches for literally everything in the store……..and at comparable or reasonable prices. Always crowded.
I agree the environment has become more competetive, but I think it is about to become less so. Organic products are a luxury that a consumer will cost cut away from as their finances get squeezed. The whole category is going to contract. I think of the big boxes getting into organic like the shoeshine boy talking about his real estate investments. Once that happens, it’s time to get out.
I think that Whole Foods has a huge overvaluation problem. The issue
of consumers pulling back on luxury goods just compounds the problem
of their current stock price.
BTW, there’s some interesting banking analysis at the Wall Street
Examiner this weekend with the conclusion that the consumer appears
to be tapped out.
http://wallstreetexaminer.com/?p=161
Same goes for purveyors of fine coffee at exhorbitant prices (PEET, SBUX). But luckily, their stock prices are protected from falling to a level that reflects market reality.
And by the way, I know everyone is sick of hearing about the PPT, which is why I seldom bring it up these days, but how can prices stay stuck in such narrow ranges for such protracted periods of time without a bit of help to keep it from passing below some lower bound? Standard financial models do not assume that there is some kind of invisible floor which keeps stock prices from ever drifting lower (formerly known as the Greenspan put; don’t know if it still goes by this name now that BB is in charge).
I agree there has been market manipulation, but I attribute more of it to Hank Paulsen than the PPT. It amounts to electioneering. There hasn’t been a 100-pt. drop since July. Just wait until after Tuesday…
Hank Paulsen = the PPT
I realized that after I reread my post.
So you’re sayin’ I should sell my SBUX?
No — I am saying you should thank your 800 lb gorilla friends on Wall Street for making sure your SBUX stock does not correct to reflect the inevitable shutdown of the housing ATM machine which made it so easy to buy $3 coffees for the past five years.
The Plunge Protection Team plays with my home builder short positions every day. I get to watch it reverse plunging prices day after day. It doesn’t matter how bad the news about the housing market the home builders just go up and up and up. And the gold and silver mining stocks just went down and down. Last week seemed to be different. The housing stocks actually fell and the mining stocks rose.
Maybe Mr. Paulson has accomplished what he needed for election purposes and has moved his attention to how he will deal with the coming crash in the stock market?
Here are some interesting comments about the PPT:
“The founder of the Gold Anti-Trust Action Committee says the U.S. government’s so-called “Plunge Protection Team” is helping prop up the U.S. economy, dollar and stock market – “ntil Election Day.
“Then, says Bill Murphy, “all hell could break loose” as the government’s “strong-dollar policy” completely breaks down and is exposed as nothing more than a “keep-gold-weak policy.”
“For the last seven years, Murphy says, GATA has pounded the table, insisting to the world the gold market is manipulated, but government leaders, the banking establishment and their captive financial press have refused to debate the issue, dismissing it as “conspiratorial” nonsense.
“But Murphy contends “GATA has proof on the public record that central bank gold reserves on deposit are only half of the 32,000 tons they officially claim to hold and are now starting to hit the wall as gold prices keep rising.”
http://tinyurl.com/yegrh5
This should be a most interesting week. Gold and silver prices have risen sharply, mining stocks are up and housing stocks are down. Can the PPT keep its finger in the dike once the election is over?
We shall see. It promises to very interesting. I am happy with my housing shorts and my mining stock longs.
Michael — I particularly like this, from that article:
“But this is scant relief. The overall debt burden remains crushing. And as evidenced by the flat revolving home equity, and flat consumer lending data, consumers have reached the end of the line. They may be willing, but they are no longer able to behave irrationally. As they begin to repair their balance sheets, willingly or unwillingly, the economy will be adversely affected. The crunch will come when declining real estate values prevent those in
trouble from refinancing to reduce their debt burden. That day has arrived.”
Therein is the kicker we have been waiting for: “They may be willing, but they are no longer able to behave irrationally.” That line could be a blog topic or a news story line.
Postcards from the edge…
My wife and I took a month-ling roadtrip from our perch in Three Rivers, Ca. to the southwest and the 4 Corners area, in particular. A great trip~
Upon our return, we stopped in el lay and I cruised around the city for a day, doing a little biz and seeing friends (we sold our house in RPV in August of 2005 and became “equity refugees”) and not having driven around the city much since then, we were amazed by all the condos in truly awful places that had sprung up like unwanted weeds, that were 1/2 done or almost done or never will be done, our favorite being on the 5 freeway, going north, a couple of miles before Stadium Way, near a grafitti stricken cops and flag mural and not 10 feet away from the freeway, was la piece de la resistance, the ne plus ultra of overbuilding…
“My wife and I took a month-ling roadtrip from our perch in Three Rivers, Ca. to the southwest and the 4 Corners area, in particular. A great trip~”
I always fantasized about living out in Three Rivers, just outside Sequoia N.P. I envy you folks!
I know which condo projects you’re talking about. Near Anaheim Stadium just past the 57 junction. That area is part of the Platinum Triangle Redevelopment of Anaheim, a massive white elephant project in a dismal razed warehouse zone. Those condos/apts you referred to are cramped right between two fwys along busy Chapman blvd. Originally slated to be Condos, the developers took off all the signs advertizing the units. I am guessing that they will be converted to apts. The reason is obvious: who in hell would invest $400,000-500,000 in condos in such a dismal, noisy location squeezed between two busy fwys. These re-partments will become tenement housing for the numerous immigrants in that area od Anaheim.
That’s funny, I was talking about fugly condos near Dodger Stadium, and oddly enough, they sound just as horrible as their Anaheim Stadium counterparts, you describe… ha
3 Rivers is a wonderful spot to live, kind of a tom sawyer/huck finn quality about it, in the foothills of the Sierra Nevada~
Sorry i thought you mean’t the condos off the 5 fwy in Anaheim. Startling Similarities but no matter. I go all over LA and the OC and have seen as you say Condo projects put up in some awful places. Dwton LA has some of the worst sitings; sticking Condos right next to Fwy onramp entrances, plopping condos along Alameda st. smack in middle of huge homeless population,ect.
Last few times i went thru 3rivers i noticed a row of newly built townhomes/SFHs right off the generals hwy. Aslo they have that recently built restaurant/lodge built right next to the Kaweah River. I know that restaurants and stopovers/giftshops in 3 rivers constantly go out of business due to fluctuations in tourism: a long time favorite eatery of mine was closed last i went thru there in 2005. Nice attractive area, 3 rivers, the gateway to Sequoia NP.
There are just 3 somewhat planned housing areas in 3R, one you describe, condos that have been there for around 20 years or so now, Deer Ridge and South Fork Estates. Virtually every other house is a one of a kind…
The only vestiges we have of korporate amerika here are a few motels & gas stations. Nearest stop light is 22 miles away. No fast food possible in town, due to the excess amount of grease they contribute and the fact that they’d have to be fairly close to one of the 4 rivers, in 3 Rivers (perhaps the most modestly named town in the land?) so it’s a no go, which is nice.
Our restaurants are ok, but nothing special and as you say, they tend to come and go, especially when things slow down in the off season.
What makes this place a joy to live, is that most everybody that lives here, isn’t ever going to move away, because it truly is paradise here. On my road (we live about 6 miles back on the South Fork of the Kaweah River) my neighbors are from Santa Monica, Santa Barbara and Connecticut. Perhaps my neighbor Pete summed it up a few months ago, over dinner. He said, “3 Rivers, where every day is Saturday”
Other perks of living here:
Above the Tule Fog
More swimming holes than you can shake a stick @
Surrounded by mountains
A giant lake 4 months of the year
equidistant to el lay or sf
Visalia and everything you’d ever need is 45 minutes away, great place to shop, wouldn’t want to live there.
We look into Sequoia NP, from our house
Here’s some videos of our house and some fiery moments from Burning Man…
http://s92.photobucket.com/albums/l6/jsequoia/?action=view¤t=DSCN2252.flv&refPage=&imgAnch=imgAnch1
Nice videos! You appear to have a good location with a view. Have always enjoyed driving thru the Sierra Foothill region, abounding with Black Oaks and riparian stream vegetation along the Kaweah forks. Hospital rock is good place for a dip in the plunge pool.
Don’t let the word get out about 3rivers or you may start a RE land stampede up there.
The Rise in Homeownership
Via Economists’ View, “This Economic Letter from the Federal Reserve Bank of San Francisco examines the reasons for the rapid increase in home ownership since the mid 1990s.”
Wow, just read the text, and all I can say of the author is: “rookie”. It could be easily summarized in a single, short paragraph; and if someone posted such a paragraph here, the overwhelming response would be “yeah, duh.”
Also, it’s hard for me to take seriously someone who repeatedly refers IO/ARM/NegAm as “innovations” (5 times, actually, in 2.5 pages of blather).
Makes me wonder if it was written by an intern.
Your link (thanks) shows a nice neat, well packaged explanation but leaves out one element. Government planning. These various creative loans which have replaced the traditional 30 years fixed with a 20% down payment, had their roots in loans which were only available to professions. Doctors, lawyers and those with a guarantee of earnings which would increase over time and those not subject to downturns in the economy.
Banks ain’t stupid. In other words, prior to this free money period, banks only loaned to the select few who, most likely, would be in a position to pay back (handle the burden) and who would do anything possible to stave off bankruptcy in order to maintain an unblemished record and who would probably never fall into the unemployed column.
However, as I’ve posted before, a more likely scenario is that the Washington bean counting hacks put their heads together for several years and attempted to come up with a solution to the serious and growing social security and healthcare problem. Those who own property are (state and federal government) cash cows. Their taxes can be manipulated far more than most realize. For instance, if you DO NOT own property, and the state increases either sales or property taxes, you can up and leave and go somewhere else. Those who own property are not so lucky and, more than likely, will accept small (but ever increasing over time) property taxes and the odd 1% increase in sales tax, etc.
By turning on the money spigot (pre-arranged in my opinion) so that money poured, literally, out into the banking community, the government reached their (pre-arranged) objective and created hundreds of thousands of new property owning cash paying cows. As the cash cows age they can reverse mortgage their homes to top up their pensions or pay for medical expenese.
Also, the Fed and the government probably planned for collateral damage like the military does when planning battles. A percentage of these newly created property owning cash cows will get badly hurt but those that end up mortgage slaves will far exceed those who end up going bankrupt.
That article is constructed in such a way that it looked as if many reasons couldn’t be found. The “reasons” are simple and the arrow points to the Fed getting instructions from government. If anyone is still under the illusion that the Federal Reserve is a “private” bank, I suggest you stop drinking your bath water. The Fed controls the money supply and obey the wishes of government. They turned on the spigot when they decided their plans to create hundreds of thousands of cash cow property owners would work. They left that spigot open for several years WITH NO ATTEMPT WHATSOEVER to control the property owning rush. Not even a word from the Fed or the government to the banks such as, “Be more cautious with sub-prime borrowers.” If a borrower had a pulse - he got the loan. Fake appications, bankrupties, sketch employment record, bad credit - meant nothing. Nada. I find that extremely suspicious in an industry (banking) which is adverse to risk.
I am always wary of the intentions of those who control money via banks or the stock market. They are usually rich and as the old saying goes, “The poor plan for Saturday night - The rich plan for decades.”
“Not even a word from the Fed or the government to the banks such as, “Be more cautious with sub-prime borrowers.” If a borrower had a pulse - he got the loan. Fake appications, bankrupties, sketch employment record, bad credit - meant nothing. Nada. I find that extremely suspicious in an industry (banking) which is adverse to risk.”
Why bother with risk when the money is coming from Joe Sixpack’s pension fund?
“Your link (thanks) shows a nice neat, well packaged explanation but leaves out one element. Government planning.”
The omission was deliberate. The Fed has quite a cottage industry of pumping out explanations which exonerate the government (esp. themselves) from cupability for anything that goes wrong.
Bernanke himself provided a good case in point — blaming overly aggressive Asian savers for the credit deficit problem, without mentioning the Fed’s role in driving US household savings rates to negative levels for the first time since the Great Depression.
“If anyone is still under the illusion that the Federal Reserve is a “private” bank, I suggest you stop drinking your bath water.”
************************************************************************
But Mike, the Federal Reserve is a private bank. It is not an arm of the government. It is owned by private stock holders. It looks like it is part of the government but it isn’t. So all that interest we pay on Federal debt benefits the shareholders of the Federal Reserve. There is no reason for us to pay interest. The Constitution vests power to coin money in Congress. If the government issued dollars we wouldn’t need to borrow from the Fed and there would be no interest. Do you realize that the total of all the interest the government pays out is roughly equal to the total of all our income tax payments to the government? You could say the you are paying your taxes to the Federal Reserve! Congressman Ron Paul introduces a bill every year calling for us to get rid of the Federal Reserve.
The Federal Reserve is not the first central bank we have had in this country. In fact it is the third one. We got rid of the first two.
Andrew Jackson fought a hard and lonely battle to get rid of the second central bank. But he was finally successful. Here is what he said about central banks then:
“Events have satisfied my mind, and I think the minds of the American people, that the mischiefs and dangers which flow from a national bank far over-balance all its advantages. The bold effort the present bank has made TO CONTROL THE GOVERNMENT, the distresses it has wantonly produced, the violence of which it has been the occasion in one of our cities famed for its observance of law and order, are but premonitions of the fate which awaits the American people should they be deluded into a perpetuation of this institution OR THE ESTABLISHMENT OF ANOTHER LIKE IT. It is fervently hoped that thus admonished those who have heretofore favored the establishment of a substitute for the present bank will be induced to abandon it, as it is evidently better to incur any inconvenience that may be reasonably expected than TO CONCENTRATE THE WHOLE MONEYED POWER OF THE REPUBLIC in any form what so ever.”—President Andrew Jackson, State of the Union Address for 1834
Here is an interesting story that relates to this topic.
http://www.safehaven.com/article-6234.htm
It’s getting rough here in Denver (third item):
http://www.denverpost.com/husted
Real estate agents, behaving badly
Real estate agents in town are buzzing about a well-known Hilltop homeseller caught in the act of dismantling a rival’s bus bench, emblazoned with an advertisement for Vafa Sohi at Perry & Co.
Seems the culprit was seen dismantling it on the evening of Oct. 14 - but because of a history of being litigious, no one wants to name names. According to bench lessee Sohi, “A lot of people know about this and know who did it. It’s just so funny that someone over the age of 7 or 8 would do something like this. Ethically you just can’t do something like this. It was very petty.”
HOUSING SCENE
Measures that matter
Time is running out on bills that could help clear the path to homeownership
http://tinyurl.com/t85u8
“Fannie and Freddies’ mission is to bolster home financing- no matter what.”
Great line.
Let’s pray they let some of these bills die a quiet death.
Foreclosure-rescue scam can leave borrowers stranded
http://tinyurl.com/y72k6c
Here is another anecdotal story of a FB. My friends girlfried bought a home in Thousand Oaks, CA, back in 2004. She makes about 80-90k per year. she used a interest only, 103% financing and paid $515k. Well, 2.5 yrs later, my buddy tells me she is putting the house up for sale. Now I know she refi’d earlier this year to pull cash out and also had a HELOC 2nd to finance part of his failed business last year. He did not tell me the “equity” position as of this week based on the 1st and 2nd vs. selling price. He said they are asking for $589k. Making the situation even more odd he tells me she is moving her and her 2 kids into a 3 bedroom apt in TO - rent = $2600/mo. Furthermore, they both know the inventory is high - maybe 9-10 mos. Hummm…something just did not add up. Why would she move out before selling the house? So I looked the property up on title and it appears 2 weeks ago she had Ditech take out the Heloc of $80k with a stand alone second of $170k. I sense something is up. It looks like she will cash out the second and let the home go. But why move out now if you are going to let the house go? I think this stuff will become more common place as the market continues to tank.
Perhaps because your credit rating isn’t bad yet for getting rental approval.
Move while you still have good enough credit to get a rental?
Here’s one. I wrote about a co-worker a year ago. He bought in Goodyear, AZ. When I told him real estate was going to tank, he laughed like I was some dumb broad, said I didn’t know what I was talking about. I told him he should sell his “investment”. He said no way. About 3 months later, he decides to put it on the market for 339,000. Didn’t sell, I said maybe he should lower his price. Again, he said no way. When I looked it up on zip about 6 months later, it was down to 299. Another 6 months, down to 260. The house is on 176th street. Still sitting, empty, and he told me he pays 1000. a month. How low do you think this will go? From what he says Estrella Mountain area is very nice.
Anyone else suddenly getting credit card limits bumped up out of the blue? We just noticed this on a couple cards. One doubled in limit and one more than quadrupled, without it being requested.
Very curious to me…consumer spending needed?
btw, in my area (So Cal) not seeing any real drops. Still in the 500,000 for 3/2. Wondering how long this can last. Zip code 91724,91773
Ben,
O.K., I got it posted to my blog. For anyone here who wants something to read with their coffee this Sunday morning:
http://amisharesuffering.blogspot.com/2006/11/nobody-has-all-answers-l-rust-hills.html
Great Read!
Thanks!!
Fisher True Confessions and a Podcast:
http://wallstreetexaminer.com/blogs/winter/
‘In a changing real estate market, buyers and sellers freak out and come up with their own strategies, which actually affect the market,’ said Christopher J. Mayer, a Columbia Business School economist. ‘Buyers waiting for prices to bottom out can cause prices to drop, and in the ’90s that led to a recession.’”
I did not get back to the blog last night, so I missed the chance to comment on this great piece of insight from Professor Mayer. We have been assured by top economists that the housing slowdown will not affect the rest of the economy this time. So buyers can sit on their hands knowing that they will help the greater good by making prices more affordable, without hurting the economy in the process. Who says you can’t have your cake and eat it, too?
Stucco;…Replying to a question you had on a earlier post….When I said Multi family, I ment apartments…We are seeing groups of families buy small apartment complexes and literally take them over with 100% + financing…Its a trend that has accelerated….
Interesting development, scdave, but obviously one that will come to an end when subprime borrowers can no longer get 100% financing to do whatever.
“Anything which cannot go on forever will stop.”
- Herbert Stein -
excellent summary:
http://www.dailyreckoning.co.uk/article/031120063.html
Here’s an article that is interesting. It also points out some of the more ridiculous purchases/sales during the bubble:
http://www.lewrockwell.com/bonner/bonner307.html
Hey Ben!
How about a thread replaying some of the humorous excesses of the bubble. You know, squirrel feeding, 7million shacks in Malibu, that kind of stuff.
It’d be a kick to review how stupid some of this stuff really was.
Paul
Rich Toscano explains Credit Default Swaps for the financially semi-literate:
http://www.voiceofsandiego.org/articles/2006/11/03/toscano/970cds.txt
Ben, you made the news:
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2006/11/03/carollloyd.DTL&feed=rss.surrealestate
Congrats!
I cannot believe my eyes. The lead article in the SD Union Tribune’s Home section is openly entertaining 50% price declines. They do mention that not all areas are seeing price declines as large as those on Coronado Island — off by 63.4 percent from February 2006 to September 2006. Who wants to buy in San Diego now?
————————————————————————————————-
Prices are declining, but not all areas act the same
By Roger M. Showley
STAFF WRITER
November 5, 2006
Nationally and locally, home prices are trending downward for the first time in years, as buyers drive tougher bargains and some sellers, desperate to move, accept a cutback in their hoped-for windfall profits.
“I think it’s safe to say that prices are not going up anymore,” said Charlie Ahern, president of the Coronado Association of Realtors.
Judging by nearly two years’ worth of figures from DataQuick Information Systems, that is an understatement for his city.
DataQuick’s price reports back to January 2004 show that not only are single-family home prices down countywide on a year-over-year basis, but all except three ZIP codes in San Diego County have backed off their all-time high median prices.
Among neighborhoods with at least 10 resale-home transactions, Coronado is off the most, down by 63.4 percent – from a high of $3.2 million in February to the most current figure, $1.17 million in September.
However, Ahern said such a steep pullback as reported by DataQuick is not indicative of a sharp across-the-board decline in prices for the bayfront and seaside community.
“It would take quite a bit more data before we got a 50 percent drop,” he said. “The vast majority of people who are selling their homes are doing it for convenience. When they don’t get a decent price, they’ll just take them off the market. I’m noticing the volume has gone down a little bit because people are taking their homes off the market.”
http://www.signonsandiego.com/uniontrib/20061105/news_1h05peak.html
And in the ancient history department, PMI Mortgage says that San Diego prices are most likely to drop. What a bunch of dumbsh!ts.
http://www.signonsandiego.com/uniontrib/20061105/news_1h05offpeak.html
I have a question for anyone from the lender / appraisal community that reads here. Do you guys factor in articles like this that suggest SD prices may be headed for a 50% haircut into the appraisals on homes with currently pending loan applications? Or do you just ignore this and try to hit a number that is, say 10% above last year’s wishing price? Generally speaking, is there any effort to take forward-looking estimates of where prices are headed into account when doing an appraisal?
I would LOVE to hear some answers to that question too. It seems that during the run-up, many appraisals were done on speculation of where things *could* go in the future. So why not on the way down?
A YouTube piece from yesterday — fella trying to sell his house, Day 18. “Gettin’ a little nervous.” Yet he says he’s already turned down some bids.
http://www.youtube.com/watch?v=hT11LmMxOLg
What a moron. He will obviously have to wait until after the Super Bowl to sell, when all the buyers come back.
Hey guys: saw this article in OC Register…
Lender warns of obstacles next year
Irvine’s New Century Financial expects mortgage industry’s loan volume to drop by 10 percent.
Here is an Interesting part…”And lenders will continue to sell a chunk of loans at a loss as investors scrutinize loan purchases for problems, New Century said. It said more borrowers are missing early payments, forcing the company to buy back more loans that it sold to investors.”
oops forgot the link:
http://www.ocregister.com/ocregister/homepage/abox/article_1344237.php
“The lead article in the SD Union Tribune’s Home section is openly entertaining 50% price declines. ”
The way I read it, he’s talking about a 50% total-transaction-value decline (e.g. the sum of all sales, or sales VOLUME), not price declines of any given property.
The way I read it, he said prices are already off by 63% on Coronado Island, but some areas may not see that big a drop in price.
Anybody have any data on what normal, buying and selling, transaction volumn is? Obviously the last few years have been an aberation, due to the speculative mania. The brokers got used to abnormally high activety and thought it would go on at the same pace forever. So when they complain about things being slow, it’s relative to an abnormal time.
Please explain how this story has the vaguest connection to the asset markets — or is marketwatch.com just trying to distract us all from thinking about last week’s bond market mini-crash?
———————————————————————————————
Saddam Hussein sentenced to death by hanging
By MarketWatch
Last Update: 3:26 PM ET Nov 5, 2006
NEW YORK (MarketWatch) - A Baghdad court convicted Saddam Hussein of crimes against humanity Sunday and sentenced him to death by hanging. The verdict spurred celebration in some Shiite districts of Iraq, and protests in the ex-dictator’s hometown.
After hearing the verdict, Saddam shouted: “Long live the people. Down with the traitors. God is great,” according to a translator.
The Iraqi High Tribunal also sentenced Saddam’s half-brother and former intelligence adviser, Barzan Ibrahim al-Tikriti, and the former chief judge of Iraq’s revolutionary court, Awad Hamed al-Bander, to death by hanging, news media reported Sunday.
The former vice president of Iraq, Taha Yassin Ramadan, was sentenced to life in prison. Three Baath Party officials were sentenced to 15 years in prison and one was cleared for lack of evidence.
All of the sentences are subject to automatic appeal.
Saddam was charged with the 1982 massacre of 148 people in a Shiite town in revenge for an assassination attempt on him. Saddam’s lawyers said Sunday that he expressed a readiness to die “with honor and with no fear,” Reuters reported.
After the verdict Sunday, protesters paraded through Saddam’s hometown of Tikrit, chanting: “We will avenge you Saddam.”
http://tinyurl.com/wd9qw
My take is that they expect a lot of people to say, “Oh, Crap — Civil War in Iraq! Sell!, Sell! this and “Buy!, Buy!” that. A great excuse for churning.
Good theory. I believe the primary purpose served by MSM US financial journalism (like that found in the WSJ and marketwatch.com) is to shift perceptions in a way to drive a wedge between would-be buyers and would-be sellers of whatever. As long as there is a divergence of opinion on what things are worth, transactions will take place and middle-men will make money.