Bits Bucket And Craigslist Finds For December 11, 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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looks like the chinese have adopted the “core” rate with excluding the 30% food portion of the basket.
plus
London House Prices Boom on Demand From Bankers
London house prices rose in the past month at the fastest annual pace in at least four years, fueled by demand from bankers as bonus season approaches, ……
http://www.immobilienblasen.blogspot.com/
From the above link:
“Russian Influx
The biggest annual gain was in Kensington & Chelsea, where home values rose 56 percent. The district has London’s priciest homes, which cost an average 1,116,041 pounds. Demand from Russian and French investors has driven up prices, Rightmove said. (also the home to lots of hedge funds!)”
Sounds like London is a year or 2 behind us. No wonder our gov wants to drill in Alaska. Those Russian petro-incomes moved them beyond bankruptcy pretty quickly.
plus make sure you read this from hussman
Phase Three: The Speculative Blowoff
with some great quotes like
Though CNBC briefly seemed professional in the wake of the 2000-2002 market plunge, airing short conversational spots where the anchors emphasized journalistic responsibility, that tenor has now been replaced by carnival-barking shows like “Mad Money”
full story http://www.hussmanfunds.com/wmc/wmc061211.htm
summary
http://immobilienblasen.blogspot.com/
Speaking of Mad Money, Cramer just quit his radio show. After pumping for years he’s bailing out. The final message of his show was that he’s getting back into real estate.
CNBC decided to get “professional” and acknowledge downside risks once the Nasdaq bubble popped and daytraders started losing their shirts.
Its trastment of RE from 2002-06 has been exactly the same as its treatment of the stock market from 1996-2000.
UK ? are we all wrong on this BB re USA market
early 2005 prices here near DC
UK is situated on islands, and unlike HI, they are not making any more land over there…
Just like in Japan (another island nation) where the bubble popped is still in (overall) decline 15+ years later.
They’re not making more land other than land fills in the bays/harbors which some are (were? maybe they fixed them) sinking due to poor foundation, etc. Classic is the Kansai International airport which they have fixed or are still fixing….
Japan is my favorite counter example for all the ‘real estate always goes up!’ and ‘they arent making more land’ bs artists. Consider that Japan has a population about half that of the US, crammed into an island the size of California, with less that 30% of the land suitable for building (those volcanic mountains are extremely steep). They are the very definition of a “tight supply” when it comes to RE, yet prices are only now starting to turn around after 14+ years of depreciation.
drtomaso — good point — lost each time, of course, on those seeking easy riches.
Please get your facts straight. The big island of Hawaii is indeed “making more land. However the new land has the nasty habit of peeling off and falling into the ocean. All the other islands are shrinking due to erosion. If you go diving of the north shore of Maui you will find pillboxes fron WW2 in 20ft of water. Go further out and you will find a railroad track that was on dry land in 1920. Maui is not getting any bigger. It is slowly shrinking. One day millions of years from now Maui will be as big as Midway island. Eroded to nothing with coral island on top. Another reason not to buy here. With a lot of time your house will fall into the sea.
Ah! but, millions of years from now, the Pacific Plate will have migrated northwestward over the Hawaiian “hot spot”, and there will be a brand-new island southeast of where the big island is now. I agree everything in Hawaii that doesn’t immediately Crash and Burn is eventually washed away.
The Jungle: Subprime Credit Crunch, the Cult of Greed, and “Liquidity”:
http://wallstreetexaminer.com/blogs/winter/?p=173#more-173
Russ, great stuff. These subprime lenders are way over lending on stuff in Sacramento. The market has dropped 20% and they are lending at 10% above the peak. Amazing they have not fallen sooner.
……economist Robert Shiller studied housing prices back to 1890. They follow certain patterns, he noted…just like everything else. When they depart too far from the long-term trend - roughly the same trend as GDP growth - they regress to the mean thereafter.
Well, today they are farther from the long-term trend line than ever before. They have a lot of regressing to do, in other words. If you project pass corrections into the future you get a 43.5% fall in housing prices coming…which will take until 2011 to accomplish.
Half off. I got flamed by some Arizona readers of my blog who thought I was all wet about Kingman, where the average price is $250,000. A quarter million bucks for a tract house in Kingman is insane. The nation (hell, the world) is filled to the brim with this idiocy. WTF are these people thinking? Prices need to come down at least 50% in Bubbletopia.
The idiot probably has an “investment” house in Kingman.
You gotta admit, flame wars are fun. In the right mood, I love participating in them, particularly when there is strong ideology of some sort, but I know you don’t want them on your blog.
Never fight with a pig; you both get dirty and the pig likes it.
I love getting dirty. The people you’re arguing with are inevitably about 4 rungs down the evolutionary ladder and very manipulable emotionally. It should be illegal, it’s so much fun.
Passthebubbly, you’re right on the money.
not this arizona reader. I agree that $250,000 is insane for a house in Tim McVeigh’s town of Kingman.
And, viewing those quarter million dollar Kingman home prices from Tucson, Arizona Slim has decided to stay put.
Shiller’s graph is scary but worthless. It neither adjusts for hedonistic changes nor does it use aconsistent measure of inflation. Sure housing is overpriced but Shiller’s work is nowhere near good enough to say how much.
“hedonistic changes…”
I agree that hedonism is on the increase, but I am not sure what that has to do with Shiller’s graph?
Yeah, it’s not like I’m getting 3.6% more sex every year. Maybe other people are, I dunno.
I have figured out my problem — you have to be a homeowner to get 3.6% more sex each year!
Haven’t you heard those ads? “With your [credit score...] that new boat and condo will make you iiiiiiirrrresistable!” I thought it was a spoof when I first heard it. Sadly it was not.
Don’t you have enough kids already, Stucco
I think now we have finally settled the question of why men and women have bought into the bubble: women think they will get more house, men think they will get more sex.
cassiopeia - LOL.
So Robert, you don’t think hedonistic changes are in step with or influenced by the bubble?
I think Robert Cote meant to use the term “hedonic” which refers to quality adjustments in goods and services in calculating inflation not “hedonistic”.
“hedonistic”. “hedonic”
I love learning all these new words…..
Wow, a reply without the joke. Don’t get me wrong, the jokes are good too. The new house of 1950 didn’t have 2 baths and two car garage and 180 amp service and was half the size. Shiller doesn’t seem to care. Nevermind his use of “inflation” to get to his 1%. If he had used a single consistent defintion rather than the annual reported figure that has been modified several times more than half the recent “uptick” would be wiped out. Finally The time line is just too long; changes in lifespan alone could justify spending more on homeownership at these scales.
Which is why the best measure of the current ownership premium is the monthly rent/buy comparison. You don’t need to control for anything else once you have that number.
OT, everytime I see your name with the accent above the e I get a Buckaroo Bonzai flashback.
“That’s Cotay.
TAY
TAY!!!!!!!!!”
big-boot-tay…
Where are my overthrusters?!
OvurrrrthrrRUSTERS! No matter where you go, there you are.
Okay, serious, sorta, for a minute. Hedonic is the “correct” term of economics but we are talking about the paridigm in housing in the last decade so I use hedonistic. Okay, show of hands. How many still think hedonistic is the wrong word? Pergraniteel surrounds for whirlpool tubs w/wraparound windows in master suites larger than the average home of generations past.
Since we are in Backaroo mode a science fiction experiment: A time bubble captures a brand new Levitt Home in Levittown in 1948 and drops it down in situ 2006. You couldn’t sell it even if people wanted to buy it. Nothing would be to code and buyers would balk at the lack of features or space.
“Since we are in Backaroo mode a science fiction experiment: A time bubble captures a brand new Levitt Home in Levittown in 1948 and drops it down in situ 2006. You couldn’t sell it even if people wanted to buy it. Nothing would be to code and buyers would balk at the lack of features or space.”
********
Well, except in the SF Bay Area.
Where, until very recently, that crap would garner million $ offers in very average to below average neighborhoods…
Actually, people are still living in those 1948 Levitt houses (at least the ones in Levittown, Pennsylvania). Of course, many of them have been upgraded, but some haven’t. Those aren’t very good neighborhoods these days, but I believe they are a lot better than some in Philadelphia.
Nice to see Robert back in the game, enthusiastically, at that!
Over at Patrick they’re actually trolling (in the fishing sense) for Robert. Starting up a thread on Rail Transit, no less.
Although this always is SHOCKING to people who are watching the bubble grow/counting on the appreciation to bail them out of debt, the only answer to this is “OF COURSE!”.
Of course housing mirrors inflation. It has to! If housing grew 2% faster then inflation (historically), then people really would be priced out (probably about 50 years ago) forever. It has to mirror inflation; its an asset that everyone “needs”.
So yes, Shiller is right, however the research really did not need to be done. It cannot outpace inflation for the long term. So, I would agree with Shiller, we have to come down back to the historic trend lines! Which, depending on the area, is 10-35% off the prices we have today.
Actually I beg to differ. Housing very much can outpace inflation over the long run. What happens then? Fewer and fewer people, as a percentage of the population, can afford houses. However that fact doesn’t necessarily mean that prices will come down. It just means that a smaller percentage of society will live in houses and instead live in apartments. That’s a very feasible scenario for areas that truly are “running out of land” - it’s already happened in places like Hong Kong, Manhattan, Palm Beach (not West Palm Beach), San Francisco, etc. - places that have severe restrictions due to limited available land. In these places, many of the people who live there *are* priced out forever - they simply will never be able to afford a house in the place they live, ever. There’s a higher percentage of such people in these places than there are in say Kansas City.
The problem with the current bubble is - this factor was already priced in to these locations. San Francisco and Manhattan were already the most expensive places to live in the country - before the bubble started. So the astronomical rise in prices in these places wasn’t justified. Also other places that *don’t* have severe land restrictions - Phoenix, CA central valley, Florida, etc. etc. had no reason for a rise from their previously-low values, other than the temporary increase in demand compared to the then-current supply. Eventually they’ll even out again, mostly. However even a lot of areas that previously had near-zero land restrictions are not so much so now, for various reasons. One thing I’ve seen in most places I’ve lived is an increasing desire to have a “rural” or “semi-rural” landscape nearby, in some form, and enforced by zoning. Here in Loudoun Co VA there are some huge fights going on for zoning to allow more housing, and in the end compromises are made such that some new housing is allowed, but not as much as originally proposed, and 2/3 of the county is basically “off limits” for any new housing at all - basically it’s defining the western edge of how far the DC suburbs can grow, at least along the Potomac.
Summary is that over time it is feasible, and IMO actually inevitable, for housing to outpace inflation by at least some small amount.
I live in the California Central Valley (in the best spot) and my wife and I and a couple of friends from town went skiing up @ Sierra Summit yesterday and the fresh powder was excellent~ Winter has arrived in The Sierra Nevada…
On the 3 hour drive to get there, I never saw so many newer housing developments in truly awful places, their main attribute being cheap land, as per packman’s comments.
in the best spot;….
Where ????
Three Rivers, Ca., next to Sequoia National Park, above the Tule Fog (nasty stuff~) and surrounded by The Sierra Nevada in all it’s glory. Here’s some photos:
http://people.tribe.net/a97e761b-eb82-4285-b28a-1d723690451a/photos
Just remembered I asked you before….emerging dementia I guess….
One interesting difference in the last CA bubble versus this one is that the Central Valley did not see the speculation and ridiculous price increases that it has this time around. Prices barely budged when things came tumbling down elsewhere in the early 90’s. It seems like last time, more people just decided to move out of California entirely than try to manage a 2+ hour commute from one of the valley cities.
Some of the stuff I have seen thrown up in the past few years is truly terrible and badly located, with some of the homes squashed together so tightly that I’d think I was in SoCal with major zoning restrictions and a real shortage of large tracts of buildable land. There hasn’t been a sudden local creation of $100K+ jobs in the SJV for the care and feeding of a Mcmortgage when the dust finally settles. The median household income for Tulare, Fresno, and Kern counties is between $33K and $35K, but home prices have more than tripled, even in the small communities. As many have stated on this blog, these places have nowhere to go but down. It will be interesting to see how the underlying fundamentals sort themselves out.
Great response!
I do see your point; however, I think I see a condtradiction in your argument. If I am reading your reposonse correctly, you argue that housing can outpace inflation because of the areas that are desierable (where there really is NO more land) will bring up the median price, while normal property will continue to track the pace of inflation? However, then you state that those areas already have, priced in, this huge apprecation (because it happened a long time ago). So, I do understand; those areas of land restriction are pushing the prices of homes ever higher, while the “normal” homes (95% of the market) continue to mirror the pace of inflation.
I just don’t think that any asset class, no matter what it is, if we really “need” it to survive, can actually outpace inflation forever. If we extrapolate this out long enough, you will come to a sutaiton where NO ONE except those who already own can buy. Once that happens, the system is closed and there can be no new buyers, hence, no appreciation (because the demand side is fixed) only depreciation (because the supply side is not fixed).
Again, really interesting reply, I think you may be onto something.
My point is that there is a wide spectrum of “running out of landness” for the various physical areas of housing in the U.S., and the world for that matter - it’s not a black and white thing where a given set of areas is out of land, and all other areas have essentially infinite land.
Instead, I would say that *most* areas in the U.S. now have *some* kind of land restriction, in varying levels. Normally this is in the form of various zoning guidelines, where say within a given county or state there are some areas that are fairly open to development, but many others that are not. Additionally many areas that are open to development have restrictions, e.g. no more than 1 house per acre, per 3 acre, per 1/4 acre, or whatever.
These restrictions all directly affect the housing prices in that given area and surrounding areas. Often the affect is small or even miniscule (perhaps 10’s of dollars per acre), but often it’s very large - like 10’s of thousands of dollars per acre, and in some cases 100’s of thousands of dollars.
As time goes by, these restrictions only get tighter - rarely do they ever get looser; partly because the population in the U.S. is increasing, and partly because of the desire to maintain rural landscapes in many areas. Thus the tightening of these restrictions, combined with the population increase, drives up prices over time, slightly faster than the pace of inflation.
Some areas of the U.S. (say Oklahoma or Iowa or places like that) probably have near-zero restrictions, and thus are pretty much going to go at the pace of inflation, until such time as restrictions do start to make their way into those areas (maybe 1000 years from now). There are a lot of “tweener” areas though - really about any area that’s not a flyover area - that do have some levels of restrictions. As a strictly off-the-cuff estimate, seems like probably 70-80% of homes are in an area with some kind of land restrictions, thus causing the homes to be value higher than they otherwise would in a restriction-free area, and also higher in value (inflation-adjusted) than the same home in the same location would be valued at 200 years ago when no land restrictions existed in that area.
All that being said, even though they truly are “making no more land” (Hawaii anomoly aside), these housing bubbles, especially the current one, always way over-compensate for the actual long-term value increase. Prices will revert to the slightly-higher-than-inflation norm.
I’m no where near as clever as you guys. But, I have seen, in the flesh, what has happpened to both Manhattan and Hong Kong in previous downturns. Both, of course, are smallish islands where no new land is being made. Both have experienced breathtaking real estate appreciation followed by sickening, even near-violent price declines.
You guys can hedonist each other all ya want. I ain’t a buyer ’till no one else’ll touch it with a flagpole.
That’s about right.
And let’s include Tokyo.
Sure, if you like. But I’ve never been there, except once, as a refueling stop. They had cute little bonzai trees on the side of the runway…
“Fewer and fewer people, as a percentage of the population, can afford houses. However that fact doesn’t necessarily mean that prices will come down. It just means that a smaller percentage of society will live in houses and instead live in apartments.”
Yeah right — either 90% of everyone will live in the few apartments that did not get turned into faux luxury condos, or else they will have to live with their parents, while vast tract home developments out in the middle of the desert sit indefinitely vacant because nobody can afford to buy them. This sounds like something Robert Toll might say! LMFAO!
Perhaps Hong Kong and Manhattan are too large for his point. But certainly there are locations for which there are no substitutes (primarily, if not exlusively, natural beauty) : Yosemite Valley, Waikiki Beach… Venice? Jerusalem? Mecca?) Has the price of the Mona Lisa outpaced inflation in the last 100 years?
agreed!
I am using Toll Brothers “quick delivery homes” site to track inventories and the condition of the higher end market.
http://www.quickdeliveryhomes.com/#
Will post update every Monday. I suppose if someone were even more diligent, a spread sheet could be created, and sales recorded as homes dropped off? Or price reductions noted?
Offerings:
12-4: 612
12-11:615
“Quick Delivery.” LOL — these days they are “Cancelled Order” homes for the most part, IMO.
New England housing market reverses..
http://hosted.ap.org/dynamic/stories/R/RI_NEW_ENGLAND_HOUSING_RIOL-?SITE=RIPRJ&SECTION=HOME&TEMPLATE=DEFAULT
must be one of those “regional” thingys that LIErah talks about
since jan all are down excpt some oil/gas drilling areas
Nice find CalmB4. A quote from the article:
New England is seeing a return to what it experienced at the end of the last century: “The region’s home prices grew at a faster rate than the nation’s through most of the 1980s, only to take a steeper dive when boom turned bust in the early 1990s.”
I’ve often stated here on this blog that prices here took a 50% haircut in the early 1990’s offering anecdotal evidence… and this is more supporting evidence of that.
DFW market continues down. But it’s a great market for investors! LOL
http://www.dallasnews.com/sharedcontent/dws/bus/stories/1211dnbusResales.21ce01a.html
California: a new exodus:
For the first time in a decade, the number of residents who left California for another state in 2005 exceeded newcomers who moved here, according to the newest figures from the state Department of Finance.
So much for: everyone wants to move to California!
U-haul reservations were pointing to this, during 2006 summer when I looked at quotes from Austin,TX to SoCal (and vice versa). So 2006 may be worse outflow than 2005….
When they say 29,000 net loss do you think they consider all factors such as death’s, births etc…??? Seems to me that a new baby has a difficult time leaving the state and that the exodus may be greater than this report suggests….???
http://tinyurl.com/srka3
More credit tightening:
HindustanTimes.com
Manic Monday on bourses, Sensex crashes 400 pts
Press Trust of India
Mumbai, December 11, 2006
“Volatility risks high in Indian stocks Sensex plunges 155 points in early trade on funds selling
The Bombay Stock Exchange bellwether Sensex today crashed by 400.06 points on all-round selling triggered by Reserve Bank’s decision to hike Cash Reserve Ratio of banks by half a percentage point.
The 30-share Sensitive Index had tumbled by 537.76 points, the biggest intra-day fall since September 11, but gained partially toward the end but closed 2.9 per cent lower at 13,399.43.”
I could show you a Sensex vs. Nasdaq at 5000 chart that would flip you out. There’s about to be an ETF for the Indian market which will make it easier to short.
“I could show you a Sensex vs. Nasdaq at 5000 chart that would flip you out. ”
Gotta link?
A true “Holy Cow!” moment.
Lereah’s meme (”Reality Check” — 8/06 powerpoint presentation title) has hit the MSM…
—————————————————————————–
Housing market’s reality check
‘Short sales’ called an emerging trend
By Emmet Pierce
STAFF WRITER
December 11, 2006
* Talk to lender if you can’t make payments
In a sign that San Diego County’s once-soaring housing market has returned to earth, analysts say the number of homeowners seeking mortgage debt forgiveness is on the rise.
Such transactions, designed to prevent defaults, often are called “short sales.” They occur when home prices fall and mortgage debt exceeds the value of the property. If the lender agrees, homeowners can sell the depreciated homes and settle their debts for reduced sums.
After the great gains in equity that occurred in the recent housing boom, short sales are “something new and, to be honest with you, something kind of scary,” said Erik Weichelt, a San Diego real estate broker who specializes in foreclosures. “If a short sale doesn’t work, it becomes a foreclosure. When prices went up, people got in over their heads.”
One of those people was José Padilla, a 28-year-old social worker who used an adjustable loan to become a first-time homeowner last year. He recently decided he no longer could afford to pay his mortgage or the homeowner fees on his three-bedroom condo in Paradise Hills. Facing foreclosure, he views a short sale as his “best option.”
http://www.signonsandiego.com/uniontrib/20061211/news_1n11sales.html
P.S. I thought José Padilla was a terrorist? Now I learn he is one of those rich first-time San Diego homeowners, whose household income doubtless exceeds the CAR’s $105K affordability threshold for first-time buyers in San Diego.
http://news.yahoo.com/s/uc/20061207/cm_uc_crrscx/robert_scheer20061207
From the article: “Padilla said he took out an adjustable loan with a starting interest rate of 8 percent. Long before his monthly payments were scheduled to adjust upward, he began to buckle under the weight of his debt…..”
Eight Percent!! I wonder who’s buying a new Escalade off this transaction? Jose’s goose was cooked the minute he signed the papers (which he probably didn’t have time to read).
“(which he probably didn’t have time to read)”
which he probably didn’t have the ability to read…
“One of those clients is Padilla, who purchased his Paradise Hills condo in April 2005. Tired of “throwing my money away” on rent, he visited a mortgage broker to see if he could qualify for a home loan.”
Here it is again, the RE shills have done a great job of brain washing the sheeple. I guess it’s better to throw money away on a high interest rates, closing costs ($11,000 in this case), and a depreciating house?
Sounds like Jose got sheared like a sheep.
Oil producers shun dollar
By Haig Simonian in Zurich and Javier Blas and Carola Hoyos in London
Published: December 10 2006 20:11 | Last updated: December 10 2006 20:11
Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.
The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.
Market liquidity is traditionally low in December, and many traders have locked in profits, potentially reinforcing volatility.
Russia and the members of the Organisation of the Petroleum Exporting Countries, the oil cartel, cut their dollar holdings from 67 per cent in the first quarter to 65 per cent in the second.
Meanwhile, they increased their holdings of euros from 20 to 22 per cent, the BIS said. The speed of the shift may help to explain the weakness of the dollar, which recently fell to a 20-month low against the euro and a 14-year low against sterling.
The BIS, the central bank for the developed world’s central banks, is customarily cautious in its language. However, it noted: “While the data are not comprehensive, they do appear to indicate a modest shift over the quarter in the US dollar share of reporting banks’ liabilities to oil exporting countries.”
The review shows that Qatar and Iran, whose foreign exchange policy has sparked widespread market speculation, cut their dollar holdings by $2.4bn and $4bn respectively.
Such shifts may be modest compared with the total assets held, but they provide a crucial indication on future thinking.
Currency switches are likely to be progressive, subtle and discreet, as untoward attention could hit the dollar, lowering the value of depositors’ remaining dollar-denominated assets.
http://www.ft.com/cms/s/277471c2-8889-11db-b485-0000779e2340.html
“He, a critic of the rapid pace of growth in China’s currency reserves, said that diversification by global central bank’s was likely to be an “uncertainty” for the dollar. He said The People’s Bank of China is more conservative than other central banks in its diversification, who are buying currencies such as Russia’s ruble and South Korea’s won. …
“China plans to let more foreign institutions sell yuan debt in China and to convert the proceeds to foreign currencies and repatriate,” he said, without elaborating. More local companies will get the government’s support to invest overseas, he added. …”
Bloomberg 12/11/2006
http://tinyurl.com/ycvmly
I do not expect any substantive changes from this weeks meetings. But I do find it interesting that I will soon be able to buy Renminbi denominated bonds - another way for me to play the dollar.
Thought I would contribute a little holiday shopping report. I wandered around a few chain stores yesterday. The weather was decent for the first time in a week and the Bears weren’t playing (they play tonight), so there were few excuses not to shop.
Circuit City was dead. D-E-A-D dead.
Kohl’s had some traffic, better than Circuit City but nothing great.
Best Buy was a little better, but looked absolutely no busier than a typical non-Xmas weekend.
Bed Bath and Beyond looked OK, again you wouldn’t know it’s December from the traffic though.
Target was jam-packed. Every register was open with lines four or five deep. There wasn’t much in any of the above other stores you couldn’t also find in Target for the same price or less.
We also have a store here called Micro Center, kinda like a CompUSA or scaled-down Fry’s. Traffic was brisk, almost as good as Target.
I didn’t buy anything, but I did want to price some various consumer electronics I’m in the market for.
I was at one of the bigger outlet malls in my area on Sunday and again there was lots of foot traffic, but very few shopiing bags (rather than multiple bags per person it was one or none).
I should clarify only Target and Micro Center had impressive lines at the cash registers. Best Buy had a Disney-type serpentine dealie set up so there was only be one line for all its registers, but the line was never more than two or three people deep.
I went to Best Buy on Sunday in South OC, CA. Crowd was light. No problem parking. No wait in checkout line.
Went to Target as well, and noticed the same thing. Took longer to park. Inside, Target was more crowded. All registers open. Lines were only one or two people waiting though.
How’s this one? This weekend, my local Dollar Store was more crowded than Walmart and Best Buy combined.
:/
I saw two things here in the northerish part of Seattle that I’ve never seen in the 8 or 9 years since I came here. The first was about a week ago when I saw a property with great big signs out fron advertising an upcoming auction.
The second was a couple days ago when I saw a house with the standard gallows-type for sale sign from a RE agency(I think it was Re-Max - it was red, white and blue) and in the space just underneath the placard or whatever that hangs from the “gallows” was another sign attached that said “Buy this house with $0 down!”
I guess that should be followed up with “…So you can swing from a gallows of you’re very own.”
I’ve seen those 0% down signs lately up here in the Everett area, too. (Even more north of Seattle)
I should also add that about a week ago I got a recorded call urging me to push 1 now to talk with a specialist because after checking county records they had pre-approved me for a 1% 30 year loan. They really have no scruples whatsoever.
Here is a great ad on msn.com this morning …
400k loan $1334 mo No SSN Required
The wife and I went to a developer in Littleton Colorado this weekend just to check on the price of a ranch that we like and what insentives are being offered. The price has gone up 5k and the incentives are down to 20k from 40-50k range a couple of months ago. When we asked the sales goon about that he stated that sales were great this last year and that they closed well over 100 houses. Not sure if it was a BS tune or not but it is kind of disapointing. Anyone have any insite on why despite the huge number of forclosures here that prices have yet to start moving?
They have ranches in Littleton? Was that outside the 470 or something?
There was some talk over the weekend about new defense contracts up that way w/thousands of new jobs. Don’t know if it’s true or not.
Purely observational regarding property listings in Monmouth Co…
A) Recently supply was stagnant with steadily declining prices. Recently, brand new listings have shown up with RIDICULOUS prices compared to comps… and I mean houses that should be between 50 and 75 percent value of currently listed comps coming in 10 percent or more above them… example - Current neighborhood house listings at 800K, this comp is way inferior and should list at maybe 550 or 600K, listing at 950K… yet the 800K home is 0.5 years on market as of tomorrow. Many examples of this thoroughout Middletown, Shrewsbury, etc.
B) Completely ridiculous prices being asked regarding certain areas. Helped a friend on Sunday move into an apartment… told me it was in Interlaken, but actually was the Santander in Asbury Park. Owner decided to rent it out to friend rather than sell it… now Asbury Park for those familiar with the area is not somewhere someone chooses to live, but they unfortunately end up there because its what they can afford… and even then they might choose to live out on the streets somewhere else. The Santander is truly a beautiful building but…. Well, I saw apartments there listing up to 500K… in the ghetto… south of Long Branch meaning it would take multiple trains and 2+ hrs to reach NYC, presuming a direct connection is available. Two years ago they were trying to pawn off the things for 150K or less for the one beds. Oh well. At least they’re only paying 1500 including utils for their “500K” apartment.
What the heck are ground rents? Well, in Maryland, they’re a way to get a house for a few hundred dollars worth of archaic fees dating back to the colonial period. http://www.wtop.com/?nid=598&pid=0&sid=1001251&page=1
I just don’t get this concept… are these people renters? or are they property owners? I’ve seen around here townships owning the land and people paying rents on the land to the township, but can’t recall private parties owning the land underneath houses. Bizarre.
In Baltimore it’s pretty common, you can actually buy your home but not own the land under the house. You pay ground rent - it’s usually super cheap. But you are a homeowner …
aka property taxes
Yes Ryland has a new development there right near the waterton loockheed facility. I know that the springs is getting some work and that the new shuttle contract that Lockheed got but that is not set in stone as the other contractors have a shot to steal it back by filing with NASA (given that they wioll for a multi-billion dollar contract). I would doubt that you would see tens of thousands of jobs but rather a couple of thousand with many people from retiring projects getting moved. Guess we will just keep waiting and see what happens.
a friend of mine is a 50% holder of a seat on the nymex exchange and back in feb 06 he told me to buy shares in ice
i should have listened it was at $ 51 today an all time high of $113.25 and counting. the stock has been in orbit since the takeover talks in september
Ok. Are things really this good in Eugene Oregon? This is what a realtor told me this morning (12-11-06): “The Real Estate market in the Eugene and Springfield area continues to improve as the number of acitve home buyers seems to be on a steady increase. This has been the trend for several weeks and the number of recent or pending sales has increased as a result. This trend may continue through the Holidays and possibly even pick up more momentum in January and February of next year. If you are considering the sale of your home, the next few months may offer you the best opportunity to do so in the the upcoming year.”
I believe everything realtors tell me!
“If you are considering the sale of your home, the next few months may offer you the best opportunity to do so in the the upcoming year.”
I believe this - the months after that are only going to get bleaker and bleaker for home sellers.
http://www.marketwatch.com/news/story/story.aspx?guid=%7BE05B5DDE%2DE3A9%2D45EF%2D91F6%2D8420865257CA%7D&dist=rss
The U.S. economy is performing well despite the slowdown in the housing market, Paulson said.
“We have a diverse economy and consumer spending, the service sector and corporate profits remain strong,” he said.
Meanwhile, Paulson said, Treasury is trying to make sure Americans can access home financing without taking unnecessary risks.
“We do not want Americans to become over-extended and see their dream end in foreclosure,” he said in remarks to a national housing forum sponsored by the Office of Thrift Supervision.
Paulson said one of Treasury’s essential missions is fostering a robust mortgage-lending industry.
‘Housing becoming more sustainable: Paulson
By Robert Schroeder, MarketWatch
Last Update: 11:47 AM ET Dec 11, 2006
WASHINGTON (MarketWatch) — The U.S. housing market is becoming more sustainable after a growth spurt it couldn’t maintain, U.S. Treasury Secretary Henry Paulson said Monday.
“We have had a correction in the housing industry and we are in the process of transitioning to a more sustainable growth rate,” Paulson said in remarks to a housing forum.’
Does propping up homebuilder share prices help make the growth rate more sustainable? I think not — but I suppose GS will make out like bandits, anyway…
http://www.ustreas.gov/press/releases/hp193.htm
More from Paulson
Have you seen anything else from this conference - there were supposed to be sections dealing with Thrift Regulations and Mortgage Fraud?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEvsG0eZ.uU0&refer=home
“Dec. 11 (Bloomberg) — The worst of the U.S. housing slump is over, according to the National Association of Realtors.
Sales of previously owned U.S. homes will grow at an annual rate of 6.29 million in the first quarter, snapping five consecutive quarterly declines, the industry’s largest trade group said today.”
Thank God the worst is over!! Let’s dump this blog and go house hunting. If you can’t trust the NAR on this who can you trust.
The truth trickles down:
After disappointing 2006, real estate market expected to stagnate
“Donald Anthony has slashed the price on his four-bedroom, two-bathroom house by almost $80,000 - and added $40,000 worth of improvements, including a new kitchen and landscaping in the leafy yard…. But the 74-year-old retired physicist cannot unload the house, now listed at $489,950 - well below the price of comparable homes in the fast-growing region between San Francisco and Sacramento.”
Well, shucks, after a two-day trip to Bradenton, I though I had something halfway interesting to post, but after the 300+ post response to Ben’s Hertzberg story, I think I’ll wait for tomorrow to post my suddenly-very-humble offering. Go, Ben!
While reading the following, bear in mind that “higher interest rates = faster housing bubble collapse”
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Federal Reserve may have hit speed limit
By Stephen Cecchetti
Published: December 11 2006 18:48 | Last updated: December 11 2006 18:48
As the US Federal Reserve’s Open Market Committee meets on Tuesday, Ben Bernanke, the chairman, and his colleagues face a difficult challenge. Inflation, as the chairman said recently, remains “uncomfortably high” at the same time that the real economy may be slowing significantly. What is a central banker to do? Raise interest rates further to ensure inflation comes down; lower interest rates to head off the chance of a recession; or do neither, hoping that everything will work itself out? While it is a close call, in the end I believe that somewhat tighter policy is warranted.
As the Fed is relying on economic slack to bring inflation down, the rate decision requires an estimate of the degree of slack going forward. Unfortunately, economic slack – really the gap between current and potential output – is hard to measure. Not only are estimates of the current level of gross domestic product revised for years after the fact, but the growth rate of potential output – that is, growth in the economy’s capacity when resources are used at normal rates – tends to shift without warning.
Just because something is hard to measure does not let policymakers off the hook. Instead they do the best they can. Over the past decade, the Fed’s best has been pretty good. The critical decision came around 1996 when Alan Greenspan, then Fed chairman, his colleagues and legions of staff economists realised that the economy’s potential growth rate had risen by as much as 1 full percentage point from about 3 per cent to close to 4 per cent. A rising long-run growth rate makes it easier to lower inflation and keep it there.
Now, unfortunately, there are reasons to think that the US economy’s potential growth rate has fallen as low as 2.5 per cent. This “speed limit” depends on three things: growth in the labour force, capital investment and technological progress. Half the story is demographics and the other half is investment. On the first, both the size of the working-age population and the fraction choosing to look for jobs is growing much less slowly. On the second, overall investment peaked at 18 per cent of GDP in early 2000 and has averaged 16 per cent since then. Corporations are using their hoards of cash to pay extraordinary dividends and buy back stock, not make capital investments. Importantly, most of that investment drop has come in computer equipment. So, to the extent that information technology is responsible for the productivity miracle of the 1990s, there is reason for added concern.
There is tremendous uncertainty about whether the economy’s speed limit has fallen, though it may still be 3 per cent. But all the risks to this are on the downside and that is where policymakers should be focused.
Returning to the Fed’s current challenge, regardless of how it is measured inflation is running about 1 percentage point above what policymakers refer to as their “comfort zone”. If potential growth has fallen, then the recent slowing is not just part of a normal cycle, and there is virtually no slack in the economy. Without that slack, inflation will not come down unless interest rates rise further.
http://www.ft.com/cms/s/5379734e-8942-11db-a876-0000779e2340.html