Bits Bucket And Craigslist Finds For November 15, 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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are foreclosure rates anywhere close to 1990 ?
My understanding is no.
Not sure about the level, but they were climbing at a rapid and exponential rate the last time I checked…
Where’s a good site to check the regional and national foreclosure rates, including historical?
I’ve been checking foreclosure.com occasionally, but that only provides current #’s, no historical. Also I’m guessing it doesn’t include a full count (e.g. like Zip doesn’t include full #’s for MLS).
Climbing rapidly in Massachusetts. The Globe posted new numbers today.
This spreadsheet is terrifying:
http://www.boston.com/business/special/foreclosures/foreclosures_pctchangeup.html
Here’s the accompanying story:
http://www.boston.com/business/articles/2006/11/15/foreclosure_filings_surging_in_state/
Meanwhile the “economists” paid for by the Realty Clowns say the slump “may deepen” but prices will “perk up” by Spring.
Massachusetts Realty Clowns and Wish Pricers are in deep denial, and deep doo-doo.
I wouldn’t expect foreclosure rates to really get serious until next year. I read somewhere that foreclosure rates rise something like seven months after rate resets and I think the bulk of the rate resets are next year, not this year.
I keep a tally (cut and paste into a text document) from foreclosure.com. Not very scientific, but it satisfies my curiosity about rates of increase. Virginia was at 580 on 10/31 and today they’re at 801. Northern Virginia especially is growing in foreclosures.
Please amend the above Virginia foreclosures to be 580 on 8/31, not 10/31.
I do the same thing. The rates have been going up quite dramatically since I started keeping track in May
San Diego foreclosure stats:
http://www.foreclosureforum.com/stats.html
They’re going up…
I haven’t posted any “tin foil hat” fare for a while so I thought I’d let those of you interested in on the implications of the latest law provisions Bush has signed into law.
http://ww4report.com/node/2710
What will be interesting is how agressively (or not) the Dems move to undo these provisions.
I was aware of this, but I don’t do MSM. I imagine most folks
were too busy hearing the “breaking news” about Emmet Smith’s chances on “Dancing With The Stars”.
Everyone knows that if Barry Sanders had the Cowboys offensive line that Emmit had, Barry would be winning Dancing With The Stars today.
D’jall catch those “Hammer Time” moves by Emmit last night? Too legit to quit, indeed.
You won the election, now can you talk about something other than Bush?
I’m pretty sure auger-inn isn’t a democrat.
I’m a libertarian (registered independent) for the record. Not sure why the mention of something egregious that Bush (or anyone else for that matter) does should elicit a negative response since he did it to ALL OF US. These are constitutional issues, not partisan. Everyone needs to be aware of these. Sorry for the thread jacking.
Augur-in,
Thanks for the link.
The Trustee’s Deeds (property returned back to the bank) were at 197 for Sept. That was the highest number I saw in your history. It tells me the banks ARE NOT doing short sales, they are taking their bad loan properties into inventory. Are they carry them as assets at pre foreclosure prices, therefore making their balance sheet look good with figures higher than the current market?
I think the government auditors are out-to-lunch one more time in understanding the manipulation going on.
Greenlander-
That was an excellent chart. Thanks for posting that.
We have been in central NC for about six months. I have been having a few conversations with some RE Agents in the area and they seem to be pretty busy commenting that all the relocations to this area are keeping the market active. In our current neighborhood, there are 9 houses for sale out of about 150, 1 has just closed and 3 are pending (High 200’s, low 300’s……about 100 above median). The appreciation in this area has apparently been steady in the mid to low single digits for most of the bubble period. I’m not sure what to think about what will happen here when all is said and done.
“I’m not sure what to think about what will happen here when all is said and done.”
Prices will fall back to 1999 levels at least. That is why we are renting in Florida for now and will buy in Murphy N.C. when prices come down. I remember in the late 90’s you could get a nice 2 bedroom cabin in Murphy for $50k.
fall beck to 1999 levels? NOT a chance.
Why not?
“NOT a chance.”
You must be speaking in nominal terms. I would guess the chance of reverting to 1999 levels or earlier is good, given the apparent massive inventory glut accompanied by falling prices, which tends to send buyers into hibernation mode.
“fall beck to 1999 levels? NOT a chance.”
Like back in the smaller runup in the late 1980’s where national median fell 50% from peak to trough on a 5 year chart between 1989-1994?
captain credit - i would like to see this chart from 1989 - 1994 showing 50% fall in national median home prices.
Based on what i’m finding, national median home prices INCREASED during this time period from $120,000 to $130,000.
http://therealreturns.blogspot.com/2005/08/us-median-house-price.html
Maybe you were joking and i didn’t get it - if so sorry!
It was a bubble page with a raft of charts incorporating HPI data from OFHEO. Here is a link but I’m not sure the chart is available from OFHEO.
http://www.ofheo.gov/HPI.asp
captain credit - I think i’ll keep working with the information i posted, which is that prices increased in the 6 year period from 1989 through 1994, which i think most would identify as the roughest patch of the last housing downturn.
Thats quite laughable bubbleboi.
Captain, I tried the link, it just shows the home page. I would like to see the data. I have to say I think 50% decline 1989-1994 is off the mark.
I’ll find the link eventually but any denial as to the magnitude of the correction from 89-94 will require psychiatric help. HI corrected that much during those years using NAR’s recent powerpoint charts.
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IMO, prices will revert back to about 1997 prices + 3.5% Annual Growth rate. 1997 Is when things started to deviate from the mean and 3.5% is the historical mean.
“Annual Growth rate.”
I assume you meant “annual inflation rate.” Because, little known to real estate investers, built homes don’t “grow” — in fact, they are a depreciating asset.
Yeah I agree with Gekko, provided he use “annual inflation rate”. I look at houses on-line on zip realty and realtor.com, and I glance at realty brochures that are free at grocery stores, but I am fully aware it could be 6 years or more before houses are fairly valued. This is why it makes me laugh when a few bloggers and some shills think the time to buy is in 2008! The bloggers should buy T-bills instead. Keep buying them through 2012. By that time it may be more expensive to rent than to own. When that time comes, that’s the time to buy. My rent has gone up 2%. Houses in the city where I want to buy are still 90% overvalued. And the prices are barely dropping (South Bay of the LA area).
Bill,
Prices in the South Bay have actually dropped quite a bit (Its where I want to buy). Ok, a 250k drop on a 1.4M home that should of been priced at 600k or less isn’t great… demographia.org did a survey and found LA/OC to be the most overpriced market in the world! Yikes.
As to when, I’m still an optimist. We’ll see if that is 2008 or 2012…
Neil
Not everyone on the blog is planning to wait for the bottom. Some of us are just waiting for a certain percentage drop, and then we will buy although we expect the prices to still drop further.
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semantics.
A small portion of the deviation kicked off in 1997 was due to the changes in the tax law that made owning a home more attractive on an after tax basis. Fair value is probably above 1997+inflation by a one time increase. I’d guess that we overshoot fairvalue pretty substantially especially in certain parts of the country.
http://tinyurl.com/ydrjln
There is currently a 2 Bed, 1 Bath on
0.92 Acres in Murphy, NC 28906
MLS ID#: 138782
listed at $49,900.
I’ve been to Murphy many times. The area appeals to retirees, but there’s not much work there other than service jobs.
There are lots of little cabins like this in the area around Murphy, as well as in neighboring North GA and Tennessee. Obviously, I don’t know how this particular cabin has been constructed, but most have no insulation and are designed for weekend get-aways. People do add HVAC, but only so that they can use the cabin periodically throughout the winter. Usually, the furnace is powered by propane, which of course must be trucked in and therefore is more expensive than natural gas. Of course, this cabin may be different and may truly be comfortable and affordable year round.
Regardless, Murphy is located in an absolutely beautiful area of the country. There’s superb hiking nearby, as well as a fair number of folk artists in the surrounding area thanks to Murphy’s proximity to the John C. Campbell school. A person could do a lot worse for $50K. Now you’ve got me wishing I was retiring soon…
NC is the new FL
FL is toast w tax resets and cane insurnace
There is no work up in those mountains. You need to have a fixed income to live there. Also we used to vacation there in the 90’s and most of those mountain shacks were owned by Florida residents then as second home investment properties. Once the speculation stops prices will fall.
In my community, sales were hot last year but dropped off significantly this spring and summer. However, homes are selling once again, and the inventory is declining. Compared to areas like Florida and Northern VA (which I know), home prices here are incredibly cheap.
Did the prices drop before homes started selling again? Is the completed sales rate up or could the decline in inventory be because people are taking homes off the market for the holiday season?
what are the property taxes like in n carolina.Ben this might be a good topic as people may want to buy in lower priced areas but if its like texas with very high property taxes it might not be worth it.
Are there good paying jobs in Central NC that is driving the relocations? The prices there aren’t THAT high that they couldn’t be somewhat sustained as long as the people buying are able to afford the houses. It’s the areas where people are just buying up to flip or rent places out that are sure to take big haircuts.
Despite there being a nationwide housing bubble, there COULD be some valid economic reasons that a particular geographic area will be immune. Say if they build a big new auto plant in a small area and it brings a huge influx of new good paying jobs. Just like the closing of a plant can kill a town, the opening can have a similar effect but positively.
Big news piece this morning on the local news about Walmart’s big sale. Walmart spokesperson gave several reasons but amongst them was something like consumers have no more money to spend because of the housing squeeze…….
The soup continues to thicken.
Technically, this was never their money to spend. They did not earn it. To use the HELOCs, etc. to fund WalMart purchases is disaster waiting to happen - this should be obvious!!!
I think the real reason is Walmart is not a pleasant place to shop. Competitors are nicer, cleaner, have a better corporate reputation, and their prices are the same.
Amen, Brother Lou. Wal-Mart sucks. Occassionally I have to venture into that caverous, soulless outlet for Chinese slave labor products because my wife insists on developing film there. Egad. The place is lousy with fat, tattooed chromosomal disasters and their feral spawn running wild in the aisles. I’d rather pay a little more and not have to be reminded of how rapidly the cretins are proliferating.
Where were you when I was single? LOL
chromosomal disasters…
LOL! Excellent.
That’s awful. But I laughed crazily because it is true.
it IS true, which is why we are all laughing and saying amen, brother!
I was in the local Wal-Mart yesterday to buy a name tag for my cat. I don’t recall hearing anyone speaking English. There were plenty of Mexican kids running wild.
Our local Walmart store is refered to as El-Mart, or El Walmart, because of the lack of english in the store.
You’re killing me!
That just may be the funniest comment on this blog of all-time. How true! The Wal-Mart in Fontana/Rancho Cucamonga is the worst on earth. First, the parking lot is filthy. Wrappers and oil stains everywhere. Parking spaces are built for bicycles, but 90% of the swine there drive F-350s or whatever the biggest truck Ford makes now. On top of that, these trucks are all jacked up about 5 feet. Then, if you survive all that and get in the store, you have to navigate through aisles that are only wide enopugh for Olive Oil to walk through. Of course heffers are everywhere shopping for $2 tops that won’t even cover all the celluloid they have. After these experience, if you make it to the checkout, of course you will wait 45 minutes because Wal-MArt can only afford 2 checkout clerks and one of them always gets someone whose credit card is rejected, checks are rejected, and has no cash, which means getting rid of stuff or cancelling the entire sale, or putting it in the closet for them while they go home to get some money and pickup the stuff. I have told my wife, and she finally gets it, that we no longer shop there. It is disgusting.
Celluloid. That’s funny on so many levels.
For people that hate Wal-Mart you guys sure seem to know a lot about it. I always look forward to visiting because it’s like going on a little nature safari to an exotic land.
Dude, you only need to go there a few times to be scarred for life.
90+ percent need gastric bypasses
90+ percent did not finish high school
90+ percent are missing at least one tooth that they did not replace
You will ALWAYS see a mullet (usually on the women)
You will ALWAYS see children with snots running down their faces.
I do not need to go there to go there, if you know what I mean Trailer trash unite!!!!
Here’s a little different twist on the WM experience. My son is in China and HATES to go there. He’s in Jilan, small city by their terms, and the WM has over 100 registers online all day. The problem is they have over 20k customers a day and the Chinese have NO concept of getting in line. Everyone makes a mad dash to their register of choice and the resulting shopping cart traffic jam is of epic proportion. It’s the same thing trying to get a train ticket but you HAVE to do that whereaw the WM trama is optional.
Hey, Lou, what does your gardener, maid, pool man, nurse, school janitor look like in your neighborhood? This is what the minimum wage service people look like and where they shop to survive. A little gratitude for these people, and the homeless that can’t even shop at Wal Mart and look a little funny, might create a less threatening world.
Can someone give me the name of a retailer who doesn’t bear the same sins of Walmart? And no, I won’t shop at Whole Foods Market or Neimann Marcus.
Growing up in Newport Beach, we used to call NM, “Needless Mark Up”. This was back in the 80s and it hasn’t gotten any better.
Thanks Chili;…..I was hopeing someone would say something about the other extreame (Neimann Marcus). Some excellent examples of the elitists sugar britches that are amongst us….
“elitists sugar britches”
Bwwwaaahhhaaaaa
In Boulder CO Whole Foods is commonly reffered to as Whole Paycheck Foods.
We do Costco for just about everything, but it doesn’t make much sense if you don’t have a family to feed and a big freezer.
Costco reportedly abuses eminent domain more than any other business in the country.
“Costco reportedly abuses eminent domain more than any other business in the country.”
They probably do but at least they pay their employees well and provide health benefits. WalMart cost taxpayers an average of $250,000 in social services (medical, Food Stamps,etc) per store.
I’ve heard Costco’s people are union and have benefits. I can always do better with my double coupons and Club Card specials at the big grocers than I can at Costco.
But the point is that everybody, from Walmart to Sears to Target to Home Depot, sells crap made in China, their employees are unhelpful even if you can find one, their stores are cold and ugly. And yeah, the customers, aka Americans circa 2006, are pretty depressing.
My company did Costco’s benefits - highest in the industry. Best starting pay. Very paternalistic considering its retail
Neiman’s carries a lot more clothes made in the usa than other stores, forget finding anything made here at the gap, jcrew, etc.
You’re going to be hearing a lot of happy talk today about how housing has “bottomed.” Just be prepared. Looks like bears are in hibernation through year end or at least through early December.
Mortgage Applications Rise on Refi Highs
11/15/2006 7:47 AM EST
The MBA’s Weekly Mortgage Applications Index rose 4.3% for the week ending November 10. In a sign that housing may be bottoming the index is now just 1% where it stood a year ago, though it should be noted that much of the gain came as a drop in rates boosted refinacing activity which stood at its highest level in 13 months.
Applications for new purchases rose 2.7%. while refinances increased 6.5% from a week earlier and now represent 48% of all activity. In sign that people are looking to lock in the recent decline in rates the percentage of peope choosing adjustble rate mortgages (ARMs) slipped to 25.5%, its lowest level nearly 3 years.
The average interest rate for 30-year fixed mortgage decreased to 6.15% from 6.24% and the average rate for 15-year mortgage dropped to 5.85% from 5.96%.
what I do not understand is how the stock market is continuing to up - and by how much.
I would have thought the dead cat bounce would have declined by now.
10 yr treasuries is one of reasons for both bounces..
mortgage marked index has bounced nicely off the lows (due to high refi) but the purchase index still languish…
Gold and oil/copper not doing as well which is a little puzzling…even CRB has had a little bounce..
Last May I mentioned the long term downtrend tops line over the treasury interest rate. This downtrend goes back to the 1980-81 interest rate high. The treasuries have been in an interest rate decine away from that resistance since June. It was at 5.25% at that time. The line currently comes through at around 5.15%. Since it falls slowly it will be broken to the upside in the future. A break of this downtrend will probably set up a rise in the 10 year treasury rate to 6.7-7.%. This equates to a 30 year fixed of around 8%.
A break out above 5.15% will probably herald stocks and real estate in general. Patients.
Three words. Short hunting. Bonuses.
Splain short hunting (is this something like Enron’s “Get Shorty?”)
Real simple. You look for stocks with very high short interest (semiconductors, biotechs, one product companies like CROX, which I sold yesterday for better than a double!) or alternatively, you look for fibonnaci spots on the index charts or logical resistance areas where there are a lot of buy stops. Then you run your programs right through them. Bingo, another layer of shorts wiped out.
Only question then becomes. Who’s left to buy when everyone is “all in” and there are less shorts to buy on the way down?
Gee, I think we’ve seen this movie before.
Thanks, TxChick — great explanation! Do you notice the parallel between the problems facing the stock market and the housing market? Both face an imminent shortage of GFs. But I have greater faith in the ability of behind-the-scenes manipulation to keep the stock market humming; it is awfully hard to hide a McMansion glut.
txchick- You used alot of stock lingo in your explanation that i dont comprehend. I am a novice at these things but, would like to know a good place to start educating myself. Is there a path to take short of going and getting aseries 7 lisc (or whatever it is)? I do all the things that i am supposed to do like maxing 401k and IRA but, would like to get in the game so-to-speak.
You can email me off line if you wish. gymnastgal32 at yahoo dot com. I’d rather not clutter up this thread with stock stuff.
What she means is that the exchanges publish data on which stocks have a large number of borrowed and sold shares (short selling or short shares). The trick of borrowing and selling is that if the price rises the borrower has a very short period to contribute additional cash or securities to the account or the broker reverses the trade (in this case buying back the shares).
In the second case there are a large number of people who watch stock prices for “resistance levels” under the theory that certain prices are more valid for a security (say multiples of $10 or more complicated calculations).
As a result, a common game for those who can buy or sell enough stock to make the price move is to move a stock that has a large number of borrowed shares above a resistance level (which results in more people buying the stock) followed by brokers buying back even more stock to close the short positions of their now overlevered clients. At which point the original buyers sell their shares at the higher price and collect a small profit. If this is repeated frequently small profit becomes very large profit.
“But I have greater faith in the ability of behind-the-scenes manipulation to keep the stock market humming;”
I disagree with you, mainly because I don’t think there is any entity large enough to keep the stock market humming; I am sure they would if they could. I think you are underestimating the power of the mania, which has returned for a last hurrah.
GF’s with HELOC money! From a yahoo message board yesterday who describes himself as a “realtor”. http://tinyurl.com/ygjfz3
thanks bluto, still hoping for some suggested guidance on how to “get smart” about the market in general. Any suggested reading?
MDMORTGAGEGUY –
Benjamin Graham, “The Intelligent Investor”. Or Malkiel, “Random Walk Down Wall Street”.
You can read the books, or you can listen to this: “buy low cost index funds and hold them a long time.”
If you think you’re going to get a book and figure out how to short the market properly, or find stocks that are going to go to the moon, you’re wasting your time.
The DOW has had a nice run-up lately, but in inflation adjusted dollars, and compared to gold, it’s still not at the level where it was back in 2000, so it doesn’t really scare this guy.
The P/E ratio of the market as a whole is at about 15, a pretty normal historical evaluation, not nearly what you’d call out of whack, which it was back in 2000.
But, I’m not shilling for it. It might go down in the short term (and by short term, I could mean over the next 3 years).
I’ll worry about its value in 2035, when I retire.
It’s not really a subject where you can read something at “get smart”. Essentially you are competing against people who have spent the better part of their lives trying to beat everyone else, so it’s one of those do or do not fields.
If you want to learn for a lifetime, there are generally four broad schools of investing (technical trading (charting), speculative trading/risk transfer, growth, and value). It helps to know a little of each of them even if they will not be how you invest. But recognize that each is an entire discipline of it’s own with very little overlap. The first two of my lists tend to be shorter time frames while the latter two tend to be longer, but those aren’t always the case. Wikipedia has had some pretty insightful folks update most of the investment related pages, useful queries are technical analysis and black-scholes.
I don’t know enough to reccomend a good technical trading book, perhaps Practical Speculations (although that’s more about the mind set required for trading than anything). There are a zillion books and web sites that will explain the basic concepts (fibonacci levels, resistance, and the basics of the main indicators).
Options as a Strategic Investment is probably the bible of risk transfer strategies, although there are a few other good ones. This school is generally heaviest in math, so if you didn’t enjoy calculus this might not be your preferred area.
Cramer is a pretty decent caracture of growth investing. His 20 rules outlined in “Real Money” are a decent short read. “One up on Wall St” is a the best thesis of the growth at a resonable price sub-group. Things like the Stock Trader’s Almanac are decent reads, although this school is constantly about finding the current trend (right now the Flat World concept has peaked and newer things are coming up). You’ll probably have a shot at this school if you know what Cramer will be talking about in the evening before the market opens.
Ben Graham’s “The Intelegent Investor” is the be all end all of value investing. A shorter read is “The Little Book that Beat the Markets.” This school tries to find things that are hidden in a business and typically communicated only in the footnotes to the financial statements.
Reading Barrons is a good way to get exposure to several schools throughout the year.
“Essentially you are competing against people who have spent the better part of their lives trying to beat everyone else…”
That’s why I stay away. I suppose if I were really compelled to “get in,” I’d try to find someone like TxChick and pay them to invest for me.
That wasn’t so much a warning not to, but one to ensure that you are ready. Many folks have the same attitude toward investing that Casey has toward buying homes (it’s easy and I’ll mint money with no work). It’s not digging ditches, but you do have to put some work and time in or you’ll just be another feeding the machine for sure. There are diminishing returns in this just as everything else, so the guy who spends 15 hours a day keeping up with everything in a small sector is a head of the guy who spends 8 in all sectors or 2 in the one sector but the gap is smaller than most of us experts would like to admit. Besides looking up and taking a breath once in a while allows some room to get a different perspective (the basic thesis of Lynch’s book). Another good idea is to fish in pools that attract smaller numbers of pros.
The folks who invest like TxChick for others generally charge enough (2 and 20) that you would be better off sticking with index funds (the investors have superior performance, but can rarely exceed the market by much more than their fee strucuture for any length of time).
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3 Reasons: EARNINGS, EARNINGS, EARNINGS.
66% of my net worth is in Equities and I feel fine.
http://tinyurl.com/yzhl4b
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Paul in Jax summarized it well:
(1) S& P 500 corporate profits have risen at a double digit pace for 13 consecutive quarters.
(2) Stock prices have underperformed corporate profits over that period.
(3) Stock P/Es are in the middle range of their values over the past 40 years.
(4) Interest rates are relatively low.
(5) Wall Street bulls always drive while looking through the rear view mirror.
(6) Wall Street bulls don’t understand mean reversion.
Don’t get into it with him. He’s an idiot.
There is also the issue of open interest in the various option strikes. That’s usually the biggest determining factor.
Sorry, thought I would be OK as long as I didn’t mention the wompin’.
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The rich get richer.
But if the EARNINGS are made possible because people are pulling out equity in their homes and spending it, then the earnings will fail as the housing market falls.
Solving sets of second order differential equations isn’t easy even when you have all the data sitting in front of you, in the economy you rarely have that luxury even when looking at the past.
Gee, if you expand your S&P 500 chart for a decade (10 years) the figures show you are still below the 1500+ high of 2000. Thats almost 6 years to get back to breakeven. And the 6% return in CD’s you missed over the last 6 years would put your SP 500 investment further back. And you consider this a good investment???
I am retired and used to manage an S&P 500 hedge fund.
The best long term measures of market value are dividends rate and book to market value. By those calsulations we are more over valued today then in 1929.
PE ratios are not good measures. The reason is that both earnings and price fluctuate. You have no constant to measure historic change. To make matters worse the idiots on WS use forward earnings.
In 1973-74 earnings rose 45% and the Dow fell 48%. The broad market was worse. So much for earnings. They don’t work exactly when you need them to work and protect you.
Blue chip dividends are more stable then earnings and provide a better constant to measure over and under valuations.
I note remarks about Ben Graham on this blog. It is common knowledge that Graham’s biggest cheer leader is Warren Buffet. Buffet has huge cash reserves and has been very nervous about the stock market for years. Gates also has large percentage cash balances at Microsoft. Let us see the two riches guys in the world with huge percentages of portfolio cash?
A bit of history about Graham. He began managing money in 1927 and out performed the Dow through 1929. In 1930 he lost so much money that he destroyed his out performance since 1927. In 1931 he lost 50%. In 1932 the market turned and he matched the market. He had to get a loan from his father to stay in business….sounds like Trump in 1990-93. Graham then retired and started teaching at Columbia in the mid 1930’s.
He then wrote his book while a professor.
What did the DOW do from 1929 to 1982?
Here is some rich propaganda from the ‘It’s a great time to buy’ commitee, a subchapter of the REIC: http://www.jaxhomefacts.com/
Note: posted last night; if you have read, sorry and please ignore; otherwise, start with the FAQ button.
WARNING: May induce vomiting, coffe spitting, or cursing.
no kidding….I feel like the questions come from this blog’s advice and NAR has taking it upon itself to offer their counter….what a joke. And where did these guys study business/economics???
“WARNING: May induce vomiting, coffe spitting, or cursing”
Some day, people who bought into this load of crap (on the FAQ) are going to be hunting Realtors and other REIC liars with dogs!
Anyone know how to get coffee stains off my keyboard & screen?
I saw the ad for that site on TV. Looked through it, had to laugh, they forget to mention initial costs (closing), monthly carrying costs, or selling costs on their road to investment.
Some of yesterday’s posts expressed puzzlement about the stock market’s new highs. This is normally a sign that Wall Street has concluded the Fed has lost its resolve to fight inflation. Is there anything else to say?
It’s way more cynical than that. But timing is everything and a lot of people (moi included) were looking for a cycle low in October which we never got. Now on the P&F chart we’re at major S&P resistance (1390-1395) but programs can push it right through there.
TxChick — I personally am looking for a long-term cycle low that we never got after the tech stock bust.
” I personally am looking for a long-term cycle low that we never got after the tech stock bust.”
I agree, the low has not been reached. The mass mania never really died. Manias ALWAYS end lower than their starting point. There is not one exception in history, so it would be foolish to think that this time is different, that we corrected the imbalance with a soft landing; the correction isn’t over. When the correction is over, the public will be totally against stocks as a long term investment. Most of them won’t want to touch them as a short term investment. I figure that the DOW will go under 4000 although most of you will think I am crazy for saying so.
It will be interesing to see if housing follows the mania rule, and goes under the starting point, and I mean in nominal terms and real terms, which would involve a general deflation such as Japan has experienced. It does seem that it could be classified as having reached a mania at least in some areas.
Me too - but it appears as though this will continue for a bit…
Fed scared of consequences, just small hike freezed RE market…BUT not an easy job to keep rates low, China set to diversify F/X on their $1Trillion reserves, probably higher rates in US are un-avoidable at this point.
probably higher rates in US are un-avoidable at this point.
I agree….I think when faced with a colapse of the dollar or a recession, the FED will choose the later…
SHTF time in San Diego:
SEC SLAMS CITY ON PENSION DEBT
http://www.signonsandiego.com/news/metro/pension/20061115-9999-1n15sec.html
I wonder what the SEC has to say about FNM.
How about putting a financial penalty on the buffoons managing this debacle. Obviously not on the taxpayers.
Q for the brilliant economists on this board:
Do you ever feel like taking major drugs so that the stupidity you see everywhere around you does not bother you as much?????!!!!!
I stopped arguing history and fact. After I was referred to blogs of University of Chicago profs that talk about a golden era future, I gave up trying to warn people. My mother always said, “You major in your weakness.”
Is this good news to the Fed, or does it trigger the deflation alarm bells, with the concomitant signal to commence helicopter drops immediately and the reminder to Wall Street bulls that stock prices always go up?
http://www.signonsandiego.com/uniontrib/20061115/news_1b15economy.html
the pension deficit was expected to increase dramatically, from $284 million in 2002 to $2 billion by 2009.
Any SD employees or retirees out there worried about the ability of your fair city to pay up when its time?
“No one’s being held accountable,” said Lynn E. Turner, a former chief accountant for the S.E.C. “Doesn’t it send a message to government officials that they can live on the edge?” Mr. Turner served on an independent panel that conducted an investigation of San Diego’s financial problems, trying to identify which laws had been broken, and by whom.”
NY Times
http://tinyurl.com/yxypdx
Well, there’s a reason we’re called Enron-by-the-Sea
From the analysis I read, The PPI drop was due mostly to a drop in auto prices and gasoline. Take that away and you have a slight uptick.
Here’s the money quote from the article:
“The overall picture of wholesale inflation last month was heavily colored by plummeting prices for light trucks, which include sport utility vehicles, pickups and minivans, and declining oil prices. Light truck prices fell 12.4 percent, the biggest year-over-year decline since the Labor Department began tracking them in 1964. The price of wholesale gasoline dropped 18.5 percent from October 2005 to October 2006.”
The drop in car prices, from what I understand is due to agreements with unions to provide N number of shifts regardless of the market’s ability to absorb more cars. This leads to glut and the Big Three are forced to hold big sales to clear the supply. Consumers in turn have grown so accustomed to the big sale that they delay purchase until the sale comes around again, thus leading to a perpetual cycle of glut and deep discount.
It’s a rare person who agrees with the inevitable deflation scenario. I for one, do agree with the deflation scenario. As I have said before, all credit inflations end in credit deflations. The liquidity that sloshes around the world is driving everything from stocks to corn up into the sky. Eventually, the liquidity dries up and ALL markets come down while cold, hard cash becomes valuable.
I reread this every day. Great subscription service too.
Drink No Wine Nor Trade No Top Before Its Time
Woody Dorsey
Oct 13, 2006 12:30 pm
We may all want to drink the 2005 Bordeaux vintage now. But it isn’t ready yet.
Drink No Wine, Trade No Top?
I noted some weeks ago that the market was destined for more strength. However, I have been somewhat quiet of late due to some HATE mail. (H)ow (A)re (T)he (E)quities GOING UP? No one wanted this move! No one liked me being tactically bullish. I actually had to hide. Well, I was just “in the rough” as usual. But, the Behavior of Breakouts argued and still argues for more time. Sure, you can “save a bunch of money on your car insurance” but you can also save a bunch of money by not “Trading a Top before it’s Time.” Again, as I said this is an ending move and thus, stocks are in an Adoration/Mania phase. Markets often make their biggest and most unbelievable moves at the beginning and end of a trend. My firm’s experience suggests that: “Sentiment is often generic rather than specific unless there is an acute emotum tell or a cohesion of other cognitive metrics.” The most important tell would be a reversal rather than just high sentiment. Our daily sentiment is 96% bullish today! But we recorded a 99% bullish last week! It’s not the sentiment; it’s the cognitive changes which tell you to try to trade the top.
Maybe It Ain’t That Hard After All?
I look below at the SloganSearch for HARD LANDING. This macroeconomic assumption has become very popular rationale for buying both stocks and bonds. On 10/3, the Contrary Asset Allocation Model inferred: “Maybe the slowdown will be short-lived. Bonds remain at risk and stocks could continue to rally a bit further!” That trade is happening and the media popularity/propagation of the HARD LANDING slogan is confirming that the macroeconomic spin is a consensus curve ball. The big slowdown trade has become a “Foul Tip!” At the end of the day (adoration phase) rising rates and the recycling back up in the repricing of the planet will dive an inflation stake into the heart of the earnings lovers. The landing likely isn’t as hard as Goldloxers thought. Big Ben hasn’t tightened tightly enough.
Can You Pick the Top Too?
We can send a man to the moon, but we are far from understanding the psyche of the markets. “Cognitively unacceptable” market behavior occurs more often than we expect. No one likes that. The market recycled back up and is having an “unbelievable” final rally. A mania phase is usually “unbelievable.” As I said last week: “Stocks are in a silly season but we may try to play along with it. This is an Adoration/Mania high. Do you believe it? Mr. Market may make a believer out of you yet. He doesn’t want to tell you about the high…at least not yet. That is his job. Let him do his job.” We all want a “hole-in-one.” We all want to “pick tops.” We may all want to drink the 2005 Bordeaux vintage now. But it isn’t ready yet. Well this market high may still be in the barrel too. Yes, it has now become much closer to being bottles but not yet? The ideal signal would be a cohesive reversal of the triune (3 brained) bullish rationale. Drink no wine before its time, trade no top before its time.
No positions in stocks mentioned.
THIS CONTENT IS FOR EDUCATIONAL PURPOSES AND IS NOT INTENDED AS ADVICE.
Woody Dorsey welcomes your comments and feedback at dorsey@minyanville.com……
Woody Dorsey is the founder and president of Market Semiotics, an independent research firm that analyzes the market based on behavioral finance. For the past 20 years, his weekly Market Semiotics report has been read by many of the world’s top hedge funds and institutional money managers. Mr. Dorsey also launched a trading research service, called AlphaBips in 2006.
I got short too early (thankfully via index options which I hedged when I realized I was going to be wrong). So all I’ve done is run in place and make enough money on the long positions I do have to stay positive in the 10% area. That sucks when the market is running like this.
Did somebody forget to tell the new Fed chairman about the importance of taking away the punch bowl before the revelry gives way to debauchery?
“The job of the Federal Reserve is to take away the punch bowl just when the party starts getting interesting.”
– William McChesney Martin, Jr. –
http://en.wikipedia.org/wiki/William_McChesney_Martin,_Jr.
I keep watching the stock market each day to see if there is a sign of a top approaching. It is depressing because I don’t think that the housing market will really start to come down until the stock market starts seriously coming down too, because of the positive sentiment it generates; I don’t think it has as much effect financially on the housing market as psychologically.
I don’t think that the housing market will really start to come down until the stock market starts seriously coming down too, because of the positive sentiment it generates; I don’t think it has as much effect financially on the housing market as psychologically.
—————————————
I think you are absolutely correct on this one. So much for many (most?) of us thinking the markets would decline after the elections.
Some information on resale incentinves in North Jersey:
http://njrereport.com/index.php/2006/11/15/do-big-cash-bonuses-sell-homes/
These go from the basic:
$$$$$3,000 bonus to S.A.
$3,000 BONUS TO SELLING AGENT AT FULL PRICE.
$5,000.00 *BONUS* IF IN CONTRACT BY 11-15-06- SHOW M-F 10:00-6:00 S & S 11:00 TO 3:00- MUST SELL
To the more interesting:
$10,000 AMERICAN EXPRESS GIFT CERTIFICATE BONUS TO SELLING AGENT.
$6500 commission + $10,000 bonus to selling agent - must have $5000 deposit and credit report!
$10,000 bonus to selling broker. Call listing agent Nanette 201-###-#### for more details
To the jaw droppers:
$20,000 BONUS to SELLING AGENT for full price offer!!!!! $10,000 towards the BUYER’S CLOSING Costs
$25,000 BONUS at closing to selling agent
$25,000 bonus payment to selling agent / broker for acceptable offer.
An excel spreadsheet pulled from the local MLS documenting the incentives is available at the link above.
Caveat Emptor!
jb
Some housing news from abroad, a report on how the South Koreans are handling housing price rises.
http://tinyurl.com/y2akrc
Two general points: i) huge difference in culture between US and South Korea; ii) a reminder that the housing bubble, and behind that the credit bubble, is worldwide and that we are still swimming in a sea of liquidity, another factor explaining heady stock markets.
Take a look at Bank of the Cascades (ticker CACB on Nasdaq). Its heavily exposed to the Central Oregon real estate crash, but this has not yet shown up in the stock price. Its P/E and valuations are still way above its peers, and its up 55% in value this year. But insiders have been selling heavily. Some say that it is in for a big fall in the next few months. Any other regional banks in similar situations?
Mortgage Fraud by a Member of the Gangster Disciples in the Chicago Area at
http://www.suntimes.com/news/metro/136610,CST-NWS-tinley15.article (Chicago Sun-Times)
“Maybe Terry Faulkner should have settled for an old Honda.
Instead, he cruised the Far South Side in a $165,000 Bentley Continental last spring, catching the eye of cops staking out a Gangster Disciples drug operation, authorities say.
The cops dug into Faulkner’s business dealings — while his neighbors in south suburban Tinley Park tried to tune out the foul-mouthed basketball games on the driveway of his home, which was valued at about $600,000.
On Tuesday, his neighbors sighed with relief as Faulkner, 40, was led away in handcuffs, accused of ripping off people in mortgage-fraud schemes. Rodrigo Navascues, 32, a mortgage broker with Hammer Financial, also was arrested, police said.
Both were charged with organizing a continuing financial crimes enterprise, which carries a prison sentence of up to 30 years. Cook County prosecutors said they also plan to charge the men with money laundering, and Faulkner with tax evasion. Other arrests are expected.”
Police drove off with Faulkner’s Bentley, a luxury Maybach sedan, a BMW 645 convertible and a Chevy conversion van and will move to seize his home, too. Police seized two of Navascues’ properties in Chicago.
Here’s an OT thread I’d like to see: “I Have a Dream” posts from the Faithful in here, where we foresee sanity returning and the worst scoundrels of the housing bubble getting their just desserts.
“I have a dream…I want to see Casey Serin and David Lereah in the same prison cell, arguing about who gets to play who in their nightly game of ‘The Escaped Convict Meets the Warden’s Wife.’”
No!
Bubba want Casey for roomate.
Guards show Bubba Casey’s picture.
He look real petable.
Bubba know he make right noises.
Bubba know who play what.
Casey learn to like Bubba.
Bubba try hard not to break Casey.
Getting tired of breaking roomates…
Too many too squissy. Oops.
It Ok.
Guards say so.
But next time Bubba no try flipping roomate.
Guards wrong. Flippers don’t flip well.
They squish when bubba flips them.
If they no flip, why they called flippers? Bubba confused.
Why do guards always trade money when Bubba squish roomate?
Guess this didn’t work for this dude
http://dallas.craigslist.org/for/235129274.html
Today’s business section of the Honolulu Advertiser:
http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20061115/BUSINESS08/611150334/1071
The gyst is that Ashley furniture is closing here due to “the softening housing market”, and anyone who made deposits on not-yet-delivered merchandise is SOL:
“Ashley Furniture Homestore, which abruptly closed its store at Waikele Center on Friday, doesn’t plan to give full refunds to all customers who had pending orders.
Instead, certain customers awaiting orders are being promised a store credit to purchase merchandise remaining in the store that may not be similar to what was ordered.”
Wow!
I smell a lawsuit brewing.
That’s why you should always use a credit card for furniture. If the store goes belly up, you can file a non-delivery claim w/cc company.
The new path to increased shareholder value: Fire the CEO…
http://tinyurl.com/vqcbo
Opening bell bungey jumping, anyone?
http://tinyurl.com/yxn9zl
P.S. Who picks the winners in this Keynesian beauty contest? Or is it just another version of Get Shorty (Enron again)?
Is Paul Volcker still young enough to serve? Because his services may soon be needed again…
—————————————————————————————————————————————
TODD HARRISON
Where’s that sweet spot?
Commentary: looks like good times, but stagflation lurking
By Todd Harrison
Last Update: 1:26 AM ET Nov 15, 2006
“The general who became a slave. The slave who became a gladiator. The gladiator who defied an emperor. Striking story! But now, the people want to know how the story ends.”
Commodus, gladiator
NEW YORK (MarketWatch) — Maximus once said that death smiles at us all, and all we can do is smile back. The same can be said for the modern-day financial fray.
The mainstream media will have us believe that life has never been better for industrial America. The Dow Jones Industrial Average is at all-time highs, interest rates are low, inflation remains in check and earnings are trending in a positive direction.
So why doesn’t it feel like we’re in a societal sweet spot?
I speak to a lot of folks around the globe. Many are in finance, others are not. All seem to think that it now takes thrice the effort to make half the pay.
Yes, there are plenty of “haves,” those who skew the demand for luxury items and trophy homes. And there are the “have nots,” on the other side of our societal barbell, who have seemingly drifted from our collective conscious.
In between, where the middle class once existed, the meat of America is struggling to find its way to the right side of the fork.
There is a word for coincident inflation in things we need healthcare, energy and education and deflation in things we want, be it plasmas, cell phones or laptops. It’s called stagflation. While that assertion will raise eyebrows in academic circles, it’s a concept that will become all too familiar with time. And rest assured, by the time you see it on the front page of tomorrow’s paper, it’ll already be baked into the marketplace.
http://tinyurl.com/ucepv
Stucco;….Good Stuff….I read the link…This is what stuck with me;
These are historic times as we edge our way through the mindset of immediate gratification.
I think this can only end badly….
Opportunities are regained easier than losses.
Witnessed one of the first major Atlanta condo auctions on the web last night. 58 units up for bid, 15+ selling absolute. 11 story, 125 unit condo building, luxury lofts in fashionable buckhead. Auctioneer provided web-bidding option with streaming video so that I could watch from the comfort of my nice rented apartment.
6 top units (1700 sf, two bed+, two story loft, 2 balconies, top end kitchen - beautiful) advertised price $380k-$499K went for $308K, $300K, $300K, $288K, $279K, $261K plus 10% auction fee).
Smaller one bedrooms (1,215 sf + balcony) advertised from $289K-$339K went for $204K, $195K, $189K, $160K, $160K plus the 10%.
Another 5-10 units were sold without reserve. The other units had reserves which apparently weren’t met so they never went to auction. I did not watch the whole auction as I elected to waste my time watching “Failure to Launch” on DVD.
Local news that evening reported that downtown Atlanta (inside perimeter) had 9,000 condos for sale with 17,000 planned.
Wonder how many Atlanta developers were tuned in? Can you say “Failure to Launch?”. Sure I knew you could.
Well, I woulda bought at their reserve if they had thrown in Sarah Jessica Parker.
I really don’t get the Sarah Jessica Parker attraction. Kim Catrall any day over SJP.
Thanks for the report, Bart. If the $499K unit went for $308K + 10%, that’s a net cut of 32%. Not bad, but not there yet either, IMO; likely it was not the primo $499K unit in the building. Hopefully these prices will find their way into the comps quickly, assuming they all close.
Sometimes, the monkeys win, at least temporarily. Then the game becomes seeing which ones are smart enough to take the bananas and leave the tree. Haven’t seen too many of those around here so far. LOL. I think we can all relate to this.
Inversion, Inversion and More Inversions
Bennet Sedacca
Nov 15, 2006 9:30 am
Much of why I feel humbled at present is the way the market (perception) is diverging with economic stats (reality).
I woke up this morning and felt…well…stupid.
I really hate to admit that, especially in a public forum. But, hey, that is what the market and my job is all about. Honesty.
Why do I feel stupid? Well, I have been underweight equities since SPX 1365 (not short, just cautious) and the economic fundamentals have played out exactly as I suspected. So I guess I am not really stupid–but Mr. Market is having his way with me.
Much of why I feel humbled at present is the way the market (perception) is diverging with economic stats (reality). And the chasm is widening for those watching. So, while not stubborn, I keep getting more data to support my view. Curve inversion, deflation, slowing housing, credit contraction, etc.
We all know the move up in equities has been coordinated. All countries, all asset classes, sans health care. So I decided to look at yield curves around the world to see if they were also inverted and if so, I probably have company in the stupid category. And lo and behold! Most of the civilized world (ex emerging markets) is inverted as well.
To be honest, I have never in my 27 years seen stocks and bonds and economic statistics and valuations at such odds. So, what to do? We stay the course. It is unpopular and I may need some anti-stupid pills with my iced tea this morning, but hey, that’s cool. I have felt stupid before, like in 1999. I am a disciplined guy that is a protector of wealth.
There are four goals at my firm:
Protect hard earned capital.
Earn a solid income.
Low volatility (standard deviation) of returns.
Capital gains.
My firm is sticking with our philosophy no matter how unpopular. It has worked for my whole career, just not at every moment.
Below I will show the yield curve inversions around the globe. The one glaring example is Japan, buy hey, how can you have an inverted yield curve when short rates are 0.25%! Note that inversion simply means that short-term rates are higher than long-term rates. MOST of the time, this is a great predictor of slower (recession anyone?) times ahead for the economy.
Canada
France
Germany
United Kingdom
United States of America (The Poster Child For Inversion)
Japan (The Poster Child For Steep Yield Curve - Staving Off Deflation…)
In summary, I don’t believe that these conditions can last forever. I would also note that the worst performing stock market this year, far and away, of all of these countries, is Japan. This is so counter-intuitive to me that here comes that stupid feeling again. In my experience over 27 years, stocks markets do the best with easy monetary policy (steep curves) and the worst with tight monetary policy. This time it is different. Why? I guess due to all of the money supply growth.
Oh yeah, see that chart below of M3. While the government stopped providing that number to us when Bernanke took office, many folks still calculate it and use it - like my firm. I think this explains it all. A picture tells 1000 words.
Have a great day.
I’m finding em everywhere today! This one is a riot!
http://dallas.craigslist.org/tfr/235168070.html
Most ‘virgins’ at this point are subprime. Undoubtedly, they would be looking for way more than they could afford. I say this will be a dog.
I vote for Design on a Dime!
This program is shown on a regular basis here in Canada and centers completely on Toronto real estate purchasers. Typical premise - newbie home buyers are shown completely overpriced, unaffordable real estate until their hopes are completely dashed and finally the snake of a RE saves the day by ‘helping’ them land their first home. Usual comments of course apply about ‘wasting money renting’ and ‘buy now or priced out forever’. Interesting to see how this will play out in the US where the housing bust is at least a year further along that in Canada.
Chip,
Regarding your post yesterday on your tour through the Jack Daniels distillery (sp?)…I’d like to hear your story!
CA — LOL — write me at:
jrknyrchayn at nowai.com
As in, I was just…
Maybe I ought to actually make up a story to go with that. Thanks for being a good sport.
AZgolfer, any word on how your friend is doing with her real estate holdings?
There’s no end to the good advice you can get at Realty Times:
http://realtytimes.com/rtcpages/20061115_pensioninvest.htm
“Many of you buyers have a source of investment capital that they haven’t considered — your pensions.
Many people don’t know that they can use their pension funds to invest in real estate. The truth is it’s entirely possible and perfectly legal — with a self-directed pension plan.”
What’s next? Sell your kids organs?
Her web-site is at taxloopholes.com, that kinda says it all…..
A true example of “high ethics”.
She dreams of the “trillions of dollars just sitting in pension funds” and how it could all go into RE investments.
Another marketing genius.
A refreshing does of reality at Realty Times:
http://realtytimes.com/rtcpages/20061115_marketstandout.htm
“As 2006 winds down, experts, forecasters and pundits are trying to put a positive spin on change in the residential real estate market, but the boom-gone-bust may have just begun, according to a new, well-respected forecast”
I think this is a description of the multitalented NAR chief echonomist:
“By 2007, anyone who tried to make sense of 2006 by labeling it a fleeting real estate market correction could be too busy scratching their head and wringing their hands to spin fast enough to avoid egg in their face.”
Updates from Pacific Beach, San Diego.
A house on Hornblend has been on the market over a year with no price reduction. Houses here are still selling, but slowly and at lower prices. There’s plenty of choices with several houses for sale on each block.
Short sale on a Grand Ave. condo. Six monthes ago he was asking $330K. Now his flyers say short sale for $230K. Flyers also say “Easy to Rent” and the most you could rent for is $1100.
CalPERS commits $500M for new commodities investment program
http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2006/11/13/daily12.html
“CalPERS currently invests 8.4 percent of its assets in the natural resources sector, across its stock, bond, and real estate portfolios, focusing mostly in energy and raw materials production and distribution. The pension fund also has other investments in utilities, transportation, and chemicals that are affected by developments in the natural-resources arena.”
This just in from Scottsdale, Arizona:
http://www.azcentral.com/arizonarepublic/business/articles/1115biz-bigsale1115.html
Check out the price drop. And time on market.
Happy Valley, that’s where Monty Pythons prince Walter ended marrying the princess. Must be the kings castle they sold.
FOMC officials unanimously concur that inflation is too high — not the sort of news that normally coincides with a new high on the stock market. Something does not quite smell right here…
http://tinyurl.com/yhsucg
Does anyone have some fun Zillo numbers to post? Just for kicks I checked out a property in 92392 Victorville CA - down over 21,000 in last 30 days! About 5% of price.
Down 12% in last year, $24,693 in last 30 days. So much for Barstow-adjacent.
http://www.zillow.com/HomeDetails.htm?city=VICTORVILLE%20&state=CA&zprop=17481005
Chili - really - what is in Victorville?! Other than military, I am not aware of anything.
I would be interested in finding out what people do for a living in Victorville. Really! Anyone know how they earn a living and how why they purchased something expensive there?
I am interested to know…
They buy real estate and get rich - didn’t you get the memo?
I wish I had a better answer for you.
-
January, 1980 - Rep John Murtha and FBI discuss Housing Bubble:
http://www.youtube.com/watch?v=Pujo8mCQZcw
No kidding - It starts as soon as Murtha walks in - they start discussing housing prices/appreciation in DC and Florida.