“The Time Has Come For An End To Easy Credit”
Some housing bubble reports from Wall Street and Washington. “Black & Decker Corp., the biggest U.S. maker of power tools, cut its annual profit forecast for the third time after a U.S. housing slump ’significantly’ reduced sales. There may be ‘additional pressure on our earnings,’ said CEO Nolan Archibald.”
“The slowing housing market also caused Illinois Tool Works Inc., the maker of Duo- fast nail guns, to cut its profit forecast. ‘It’s spreading, and we don’t know how far and how wide it’s going to spread,’ said Marvin Roffman, president of Roffman Miller Associates in Philadelphia, which manages $390 million, including Black & Decker shares. ‘Be prepared for more disappointment from Black & Decker and others’ who rely on the housing market.”
“‘Most disappointing, in our view, is Black & Decker expects their disappointing trends will continue well into 2007,’ wrote Michael Rehaut, analyst with JP Morgan.”
The Wall Street Journal. “New home construction is plummeting. Car sales are weakening. Investors have driven long-term interest rates well below the short-term rates set by the Federal Reserve. All these factors are present today, and all have been precursors of past recessions.”
“But the U.S. central bank and much of Wall Street are now betting that the old rules don’t apply, and that a recession next year, while possible, is unlikely.”
“‘This time will be different,’ Ed Leamer, who heads the forecasting center at the University of California at Los Angeles’s Anderson School of Management, predicts in a report. ‘This time the problems in housing will stay in housing.’ It’s a prediction, he admits, that ‘keeps us up at night.’”
“Dean Baker, a co-director of the Center for Economic and Policy Research, said the rise in housing prices was unprecedented. Optimists are ‘missing the full impact of the housing downturn. They think it’s mostly, if not entirely, completed, and I think we’ve just seen the beginning.’”
The Associated Press. “In accounting circles, it is known as the ‘big bath’ when companies try to wash away as much bad news as possible with the hope that charges taken all at once will make their finances look better in the quarters to come. That’s something the nation’s homebuilders could be up to lately.”
“KB Home announced Dec. 8 that it expects to take non-cash charges of between $235 million and $285 million to write down the value of its land holdings and an additional $90 million related to its abandonment of certain land-option contracts.”
“Dallas-based D.R. Horton Inc. took a pre-tax charge of $199 million to write down the value of land, options to purchase additional land, and pre-acquisition costs. Luxury homebuilder Toll Brothers Inc. took a pre-tax writedown of $115 million, a big jump from the $1.4 million charge the same quarter last year.”
“‘We are getting a bit more concerned with investors’ passiveness toward these equity-destroying exercises,’ Stephen East, an analyst at Susquehanna Financial, said.”
From Reuters. “For U.S. consumers and companies, the era of easy access to cash may be ending. ‘A weak housing market can tighten credit constraints and raise the overall costs of consumer finance,’ said Suzanne Mistretta, an analyst with Derivative Fitch. ‘The housing market and financial health of the consumer will be the focus’ in 2007.”
“Subprime mortgage loan borrowers stand to be the most significantly strained by a housing slowdown, which may mean higher delinquencies and more rating downgrades next year. For consumers and companies, that means borrowing costs may rise and access to capital may dry up.”
“Lenders such as New Century Financial Corp and Accredited Home Lenders Holding Co already are tightening lending practices. New Century, for example, is making fewer loans to first-time home buyers with risky attributes such as high loan-to-value ratios and undocumented income.”
“Downgrades on subprime mortgage securities are expected to climb to a record 300 by the end of the year, twice as much as last year, and rise even more in 2007, Fitch Ratings said on Thursday.”
“‘You are starting to see signs of deterioration and evidence that you will see tougher lending standards in the future,’ said Mark Kiesel, a portfolio manager.”
“Delinquencies rose for all home loans, but most notably for adjustable loans to subprime borrowers who were already stretched before mortgage rates climbed, the Mortgage Bankers Association said.”
“‘After years of enjoying an ideal environment, the environment for RMBS has turned increasingly challenging,’ Fitch analyst Grant Bailey said on Thursday. ‘On the subprime side, we expect asset performance to continue to deteriorate.’”
“Some 29,000 construction jobs were lost in November, adding to a 24,000 reduction in October, also suggesting signs of a housing slowdown.”
“‘The time has come‘ for an end to easy credit, said Bob Moulton, president of Americana Mortgage Group Inc., a mortgage broker in Manhasset, New York. Moulton, who deals with prime and subprime loans, said lenders who were once aggressive in vying for high interest rate loans have suddenly made themselves scarce.”
“The pullback may affect the fifth of the 300 million U.S. population that would qualify as subprime borrowers, according to estimates of Fair Isaac Corp.”
“‘There’s still too much capacity in the market today,’ said Jim Konrath, CEO of Accredited Home Lenders in San Diego, California. The drop in home price appreciation has become a poison pill to the industry, Konrath said.”
“Until recently, loans ‘continued to perform because the buyer always had an out if (he) got in trouble,’ said Konrath, who guided Accredited though the industry’s last shake-out in the late 1990s. ‘As the market started to change, credit was still expanding. The industry didn’t react’ fast enough, he said.”
“Revelations about Fannie Mae’s accounting flaws and lobbying push offer proof that the U.S. leading mortgage finance company needs a tough regulator, a leading member of the Senate Banking Committee said on Thursday. ‘We need a world-class GSE regulator to assure America’s taxpayers that we are not headed for a financial fiasco,’ Sen. Chuck Hagel said.”
“The companies enjoy a favored place in the capital markets because investors believe the government backing would trigger a bailout if Fannie or Freddie were to fail.”
“In his statement Thursday, Hagel pointed to two media stories that Fannie Mae dipped below its required capital level years ago and continues to spend millions of dollars on lobbying work.”
“‘The time has come‘ for an end to easy credit”
I see, so “the time” wasn’t in the last four years during a horrific run-up in housing prices with zero fundimentals behind it; it’s now, when the mortgage industry is getting chewed to pieces by their poor decision-making and lending practices.
Gotcha.
there appears to be more realistic evaluation of the house bubble bursting coming from the media, such as the slump in florida will last three years etc and time to end easy credit etc. these news report will put more pressure on the sellers to come out of michael jackson’s dreamland into the real world and lower the prices. haha.
Though now is obviously STILL the time to get rich quick as a real estate investor!!
From the Boston Globe editorials:
“The dreams of weekend strivers”
http://tinyurl.com/vs45w
Prices down 10%-20%, sales volume down 40%, attendance at Get Rich Quick Real Estate conventions down 58%. A good start.
lol! great observation!!!
Whoopee. Yeah. Great!
What? Oh, it says “easy” not “captain”.
Never mind.
Decision making?
You have to have to have brains to make a decision.
Look maaaaa Look Mae. No brains required.
“‘This time will be different,’ Ed Leamer, who heads the forecasting center at the University of California at Los Angeles’s Anderson School of Management, predicts in a report. ‘This time the problems in housing will stay in housing.’ It’s a prediction, he admits, that ‘keeps us up at night.’”
Von Mises has a timeless comeback for Professor Leamer’s rosy prediction:
‘”This time, it’s different” are the four most expensive words in the English Language.’
“This time, it’s different” are the four most expensive words in the English Language”
“The check is in the mail”, “I love you”, “I promise not to c….”
I’m from the government, I’m here to help you”
With that comment, Ronald Reegun destroyed what John F. Kennedy and LBJ built. May he rot in hell.
Be careful what you say about St. Ronnie. The funny-money conservatives have essentially deified him.
I agree with your sentiment. The Reagan years were the beginning of America’s current unending greed fest. The “greatest generation” started to approach retirement and did everything they could to lock in their own wealth.
Ronnie’s Trickle Down Voodoo provided perfect cover for voting themselves a bunch of tax advantages and wealth increases.
What Kennedy and LBJ built? What, exactly, was that?
The Vietnam War and the “Great Society”?
To those who didn’t live through the Carter years I’m sure its easy to mock Reagan. The country was a basket case when Reagan came in. The economy recovered, optimism grew, the Soviet Union collapsed and interest rates fell, oh, about 10 points.
What was that that JFK and LBJ “built”?
Regan hardly destroyed what JFK and LBJ built (actually they just expanded what Roosevelt started).
The welfare state is alive and well in the US and the road to socialism has turned from and uphill climb into a downhill slide.
Regan did his best to preserve the country that the founding fathers envisioned and created, but it was all for naught. When you give someone something for nothing don’t expect a “Thank you” just expect the other hand to come out wanting more…then next domino to fall will be health care and with that the government will account for over 50% of the GDP of the nation. If that isn’t socialism I’m not sure what is…..
Binko and MacAttack:
Agreed and then some. Reagan’s mantra for the country…greed is good. Of course, who can forget his insightful…”trees are the major source of air pollution” comment?
Say what you want about Reagan. But come on! Kennedy? LBJ? Are you kidding me? LBJ was a crap president who only expanded the welfare state and helped bury 58K Americans in Vietnam. Kennedy was no saint either. That family has gotten what they deserved, IMO. Now if folks in MA would just stop electing that fat, drunken clown Teddy.
All I saw was “Kennedy” and “rot in hell”. Sounds about right.
Don’t forget the Deep Pockets Liability that Ronald Reagan signed into law (”everyone will get their fair share”); welfare for the lawyers at the expense of small business!
Lawsuits “it’s not about the money”
Or it’s mostly about the lack of it ?
Lack of money and lack of brains.
I promise not to c….”
LOL… von Mises was wrong it’s
“I’m on the pill”
On Prozac and Cristal Meth.
“This time Iraq won’t be like Vietnam”
“Mission Accomplished”
I am the decider.
You’ve done a hecka job, Brownie.
“I’m not a crook.”
Someone should put up a giant stone monument to speculative financial bubbles and engrave on it the words, “This Time It’s Different”
My father always tells the story of how his uncle had sold a lot of land to invest in a company that made ropes out of some kind of natural fiber. It turned out that around that time they came up with the synthetic fibers and he was left with worthless shares. According to my father, he always said he would paper a room in his house with the shares and a big sign reading: Don’t get yourself into businesses you don’t understand.”
“‘This time will be different,’
I almost choked when I saw that quote from the Anderson School. That right there just eliminated the last shred of credibility they may have had. What a bunch of freaking morons. Industry shills, nothing more. If I was a UCLA grad I would be ashamed, writing the school asking for Ed Leamer’s resignation.
IMHO they eliminated their credibility when they sold the name of their school to “Anderson”, whoever he was. It just screams “shills ‘r’ us”.
“stay the course”
splat
“the U.S. central bank and much of Wall Street are now betting that the old rules don’t apply”
They’re going to party like it’s 1999. Literally.
My, how that quote sounds just like it was taken from the tech stock bubble.
http://www.bloomberg.com/apps/news?pid=20670001&refer=&sid=a6my7bTOmk0c
Morgan Stanley’s Mack Gets Record $40 Million Bonus (Update2)
Morgan Stanley’s Mack Gets Record $40 Million Bonus (Update2)
By Christine Harper
Dec. 15 (Bloomberg) — Morgan Stanley gave Chief Executive Officer John Mack the biggest bonus for the head of a Wall Street firm, awarding him $40 million as the company headed for the best profit in its 71-year history.
Mack, 62, was granted stock valued at $36.2 million as of Dec. 12, and about $4 million in options to buy Morgan Stanley shares, the company said yesterday in a filing with the U.S. Securities and Exchange Commission. The firm also granted more than $57 million in bonuses for seven other top executives.
The payout for Mack, 44 percent more than Morgan Stanley awarded him last year, eclipses the $38.3 million in total compensation Henry Paulson received in 2005 as CEO of Goldman Sachs Group Inc. Shares of Morgan Stanley, the second-biggest U.S. securities firm by market value, are having their best year since 2003 after Mack put the firm on course for record earnings.
“You expect performance to be reflected in the compensation,” said Laura Thatcher, an Atlanta-based partner in charge of the executive-compensation practice at law firm Alston & Bird LLP. “You’re talking about staggeringly big companies with huge market caps and huge performance.”
http://www.nypost.com/seven/12132006/news/regionalnews/16_bil_sachs_of_loot_regionalnews_roddy_boyd_and_zachary_kouwe.htm
$16 BIL
SACHS OF LOOT
By RODDY BOYD and ZACHARY KOUWE
December 13, 2006 — Wall Street giant Goldman Sachs is set to throw gigantic bags of money at its bankers, traders and stockbrokers this year - lavishing them with more than $16.5 billion in bonus loot, the most ever doled out by a Wall Street firm.
Most of the Wall Street trading houses had a great year - but Goldman’s was spectacular, and its blockbuster numbers generated blockbuster bonuses for the fat cats.
Between regular salary and bonuses, the average pay of Goldman employees will be a mind-numbing $622,000 this year - and that includes all the low-end workers.
At the top end of the pay scale, it has been reported that Goldman was likely to pay a “golden 25″ managers, bankers and traders at least a cool $25 million each.
But a source close to the firm told The Post that some of the top performers may actually get four times that.
The $100 million bonus babies are in charge of making big bets with Goldman’s money on the direction of the prices of commodities, including oil and natural gas. And this year, they won big.
Santa will bring Goldman’s most senior executives - who are called “partners” and who bring in much of the firm’s revenue - between $10 million and $20 million each, according to one executive recruiter.
Many of the company’s 26,400 employees around the world will make less than the $622,000 pay plus bonus average.
But most employees are expecting a bonus increase of 30 to 50 percent over last year - and almost no one will find a piece of coal in his or her stocking.
A Goldman partner told The Post that the generosity extends all the way down the ladder.
“It’s a pretty democratic firm, and if you’re a manager who isn’t paying a [bonus to] a secretary or clerk, there better be a pretty damn good reason,” he said.
Goldman’s profits this year - after the bonuses - climbed 70 percent to $9.5 billion, up from $5.6 billion last year.
This prompted its chief executive, Lloyd Blankfein, to leave a voice-mail message for employees cautioning them not to be “irrational or arrogant” to ensure no damage to the firm’s reputation.
Blankfein might be tempted to be a bit “irrational” himself, with Goldman sources telling The Post that he is likely to rake in at least $50 million in bonus cash.
Last year, his predecessor, current Treasury Secretary Henry Paulson, get a measly $40 million.
The bonus money the firm will dispense is going to prime the city’s economy as lucky recipients buy fast cars, big apartments and luxury goods.
In October, state Comptroller Alan Hevesi said Wall Street’s wealthy workers earned an average of $289,664, or about 5 times as much as other employees in New York City last year.
Wall Street employees generated $2.1 billion in 2005 tax revenue and each new position filled in the industry created three additional jobs: two in the city and one in the suburbs.
On Wall Street, traders, bankers and salesmen earn their big bucks in a two-step fashion.
They get an annual salary of between $100,000 to $200,000, and then they get a year-end bonus, which can easily be several dozen times their base salary.
Better still, with half the bonus paid in stock, Goldman’s employees have made even more money - their share price has jumped 57 percent so far this year.
That’s why I divested from the mutual funds I owned and placed it in two stocks I have known for a while… to the dismay of my investment banker.
From Charles Smith a day or two ago:
“The average pay of the top 126 hedge fund managers last year was $363 million, up some 45% from the year before”.
I’d be happy with the % increase alone …..
If you’ve ever lamented that “people nowadays” would rather flip houses than do “real work”, then save this article.
These stories make it quite clear that the preferred path to wealth is to shuffle someone else’s money around and take a cut of the profits. That’s essentially the model the house-flippers are following.
I’m not saying these investment bankers aren’t doing real work. But they demonstrate precisely why people would rather flip houses than do “real work”.
Cape Cod Labor Day conversation –
My host: I don’t know why Anne’s brother won’t get a Real Job. He takes these dopey temp jobs where he just Xeroxes.
Me: Like what Real Job?
My host: I mean, he could be an account executive at Fidelity or something.
[Later, behind host's back]–
Me: I don’t see why Xeroxing is any less of a real job than being an account executive at Fidelity.
Anne: My husband doesn’t like to do Xeroxing.
Me: So he should be glad someone is willing to do it for money.
Anne: Right.
Annata,
100000000% CORRECT!!!
This is exactly why I do not blame the flippers half as much as I blame the lenders (and guess where the lenders’ money is also coming from — the same institutions and people who are reaping these huge bonuses!). We cannot blame people for thier lack of a work ethic when all we see are the “dealmakers” and entertainers making such vast sums of money for doing very little “work” (defined as something **productive**). The people who work in factories, provide necessary services (police, fire, teachers, nurses, sanitation workers, etc.) are losing more and more as the elite rape the US for ever-larger compensation “packages”. Yep, I’d rather pay 100 union workers this wage than one fatcat CEO, but that’s just me…
“The payout for Mack, 44 percent more than Morgan Stanley awarded him last year, eclipses the $38.3 million in total compensation Henry Paulson received in 2005 as CEO of Goldman Sachs Group Inc.”
Poor Paulson, He could be eating $40M cake right now but instead he’s kissing Chinese butt, begging them to not make his $36M bonus from last year worthless
Itulip has a nice comment on all of this
http://www.itulip.com/forums/showthread.php?t=708
Man this is going to be fun to watch (if I keep my job)
Paulson got a waiver on paying taxes with his government job.
Alibaba and the 40 theives work at Golman Sachs and in Washington.
Who gets to pay for the sacks of loot? And why do I have the sinking feeling that it is everyone who is not in the top 1% of the US household wealth distribution?
The people who pay for the bonuses are all the dopes who hand their investment money over to these clowns. Every time I hear about a company like Microsoft reporting record profits and everyone’s getting all excited I think “Yeah, but you’re not getting any of it”. Most of these companies with record profits pay little or nothing in the way of dividends and the record profits go to pay bonuses to executives or to stock buyback programs that are used to balance out issues of stock options to executives.
Very true. That’s why I’m done buying stocks that pay no dividends. Why the hell should I “invest” in a company if the only thing I can possibly gain is the ability to unload my shares to a greater fool for a higher price?
how come no “windfall profits ” tax
and the homebuilders in 05
These are huge numbers, but not compared to what the hedge fund managers make. But that is just a side point, much of this doesn’t make since to me. I have a hard time understanding what could these people possibly be doing that justifies this type of pay over the long haul? I think in the future this will all come crashing down and people will look back on this and shake their heads saying, how could we have not seen this coming?
Take for instance the aforementioned hedge funds, they seem to be making a killing (and the IB’s seem to be more hedge funds than investment banks recently), but how? Where are they making their money? I don’t think there are that many distressed companies out there that can be turned around to produce 40% annual returns. Therefore they must be going somewhere else for these returns? I think the recent rise in CDS’s on MBS’s was done by the hedge funds as a way to get huge returns for minimal risk. The question will be, how smart were these quant gods and where did they place that decimal for default rate? was it .3%, 3% or 30% I would not be surprised to see another LTCM type crises in the next few years only bigger, where these companies will be wishing they had kept some of this money to pay off their obligations.
“Revelations about Fannie Mae’s accounting flaws and lobbying push offer proof that the U.S. leading mortgage finance company needs a tough regulator, a leading member of the Senate Banking Committee said on Thursday. ‘We need a world-class GSE regulator to assure America’s taxpayers that we are not headed for a financial fiasco,’ Sen. Chuck Hagel said. The companies enjoy a favored place in the capital markets because investors believe the government backing would trigger a bailout if Fannie or Freddie were to fail. In his statement Thursday, Hagel pointed to two media stories that Fannie Mae dipped below its required capital level years ago and continues to spend millions of dollars on lobbying work.”
FNM = Sword of Damacles hanging above the US economy
http://en.wikipedia.org/wiki/Damocles
“In accounting circles, it is known as the ‘big bath’ when companies try to wash away as much bad news as possible with the hope that charges taken all at once will make their finances look better in the quarters to come. That’s something the nation’s homebuilders could be up to lately.”
What do accounting circles call it when firms hide bad news off the books? I call it Enron again…
“‘After years of enjoying an ideal environment, the environment for RMBS has turned increasingly challenging,’ Fitch analyst Grant Bailey said on Thursday. ‘On the subprime side, we expect asset performance to continue to deteriorate.
it should read it has turned downright scary these days
anyitme i feel the correction won’t happen to the extent
i feel it should i just read some articles here and i am sure it will
“Dean Baker, a co-director of the Center for Economic and Policy Research, said the rise in housing prices was unprecedented. Optimists are ‘missing the full impact of the housing downturn. They think it’s mostly, if not entirely, completed, and I think we’ve just seen the beginning.’”
Why don’t we see more from Mr. Baker? He seems to be forgotten by the media as one of the earliest bubble believers.
Speaking of Dean Baker, I thought this was an interesting read:
http://www.cepr.net/index.php?option=com_content&task=view&id=644
“According to the most recent data, construction in the non-residential sector was already falling off before the end of the third quarter.” Which reminds me of a detail I failed to mention in my recent account of sights along WB I-10 in Palm Springs area: a bunch of stuff under construction clearly labeled “Industrial Condos” (WTF?) and somewhere in the Inland Empire a building marked “Medical Condos”. Don’t know much, but this smells like condotels, time-shares, and other creative ideas for getting rid of RE.
Interesting…
If you find out what those condos are for, would you mind updating here, please? Thanks!
This is like watching a train wreck in slow motion.
Don’t you mean a 12 mile train wreck.
“Lenders such as New Century Financial Corp and Accredited Home Lenders Holding Co already are tightening lending practices.”
Lenders such as az_lender, formerly an initiator and holder of 9%-10% mortgage notes, now funnels all available cash to the sovereign govt of Australia despite the much lower interest rates.
Aren’t Black and Decker tools the crappy ones? I know some contractors and they all use good tools like DeWalt, Makita, Bosch, Milwaukee, Etc. Nobody in construction uses B&D. The sulmping sales of B&D would imply that the recession has already hit the consumer, not just the housing industry. Just a thought…
Yeah you don’t see much B&D on the job site, tho they make craftsman tools as well which you see I think because of the return policy.
The home handyman / flipper is tapped out I think.
Black and Decker owns DeWalt, Porter Cable, Delta and some other brands according to the intarweb.
From the article:
‘ Archibald said most of the sales decline is for industrial tools such as its higher-priced DeWalt line, without giving specific figures. Black & Decker’s own inventory hasn’t changed materially since the same period last year, and the company hasn’t lost market share, he said.’
‘We’re taking the pain in the fourth quarter here by the actions we’re taking,’ Archibald said.’
B&D owns Dewalt.
oh…
Yes Dewalt is the “industrial” version of B&D. Most tools are treated like throw aways on the job site. Being how it is cheaper to buy a new tool with 2 batteries than it is to buy the 2 batteries alone, my tools never get past the dead battery day.
The gears are trashed by then anyway, they are Chinese pot metal.
This just in:
‘Moody’s Investors Service on Friday said it may cut its ratings on KB Home, citing the homebuilder’s announcement that it will restate results from 2005 and 2006 because of options expensing errors. ‘Due to the recent investigation surrounding option backdating, Moody’s believes that a material weakness existed pertaining to the company’s option granting practices,’ Moody’s said in a statement.’
“… because of options expensing errors.”
“errors” = Newspeak for theft.
My immediate thought was, “errors”=”lies”. Your interpretation “errors”=”theft” may be more accurate.
Options backdating is a subtile form of theft, as (1) most people do not understand how issue dates relate to the value of an option and (2) it may even be legal (the best kind of theft is that which is above the law…).
this backdating of options stuff is all over the entire financial secotr these days. what a bunch of crooks!
In any event, whether you call it theft, or unjustified bonuses, it is indisputable that in many of these schemes, they have given something of value to someone, and haven’t taken a charge against earnings–and those who have received the something of value haven’t declared income on the grants.
So, even if it’s not theft, it’s a nice combo of securities fraud and tax evasion (which is theft from you and me).
Actually, most of the backdating issues are occuring because of sec and irs interpretations. If a company grants a bunch of options on say, Monday, but it doesn’t get all the paperwork done and filed with the sec until Tuesday, the sec is interpreting this as backdating. Previously they didn’t.
There are some cases of actual wrongdoing, but you’ll see people charged if this is the case.
KBH ends the fiscal year Nov 30. All the options held by the execs have probably been cash in by now, and an extremely favorable price on their recent stock rise. The bubble has been pricked. I’m betting KBH seeks BK protection before allowing anyone to look at their books. First the CEO bails out last month, the year ends, and the investigations begin. Very, very interesting.
I used to work in the KB Home architecture department which does all of their architecture nationwide. They have downsized about 50% of their staff since May. Obviously, they are not expecting an upturn in the market any time soon, or they would not be laying off architects.
So are you the bastard that designed the McMansion? I want to know who’s ass to kick. Just kidding. I’m sure you have some tales to tell. Like cost-cutting vs longevity.
Actually, I think I’d be interesting to hear stories about why they build McMansions instead of the obviously superior single-story, better quality, smaller homes of the past (other than cost/pricing issues). From our travels through model homes, it seems builders have chosen form over function, in almost all respects. For instance, why does the foyer have to be 400 sf? Why do they locate the garage all the way across the house from the kitchen? Why do they put laundry rooms downstairs (upper-floor flooding problems can be largely mitigated by using good drains & a waterproof barrier, etc.)? Do homes really need a “great room” and a living room? What’s up with those “parlors” which measure about 9X9? So many questions…
One realtor’s optimistic view of real estate conditions
“Scott Steiner, managing broker of Help-U-Sell Lakeview Realty in Lake Elsinore, Calif., says he’s getting fewer calls and doing fewer showings for the properties he’s listing. But fliers describing the properties are being snapped up faster than ever before — a sign, he says, that many first-time buyers are taking their time and waiting for the market to stabilize before making a move.”
must everything to do with real estate be “snapped up”. Flyers! - come on!! Great indicator by the way - people probably just ran out of toilet paper!
Naw… way too slick, and you’ll get the paper cut from hell.
Perhaps over-leverage GF’s are burning the flyers for heat?
I just get those flyers to see how the listing prices are dropping ,but I’m not a buyer .
Does anybody think that the late call on the housing turn-down was just a little to late for comfort, (like who twisted the data and miscalled the situation so they could get out .)
How about that 2006 was a total hype to get the last pit of GF’s before the overwhelming data came in .
I contend that the housing turn -down was clear in late 2005 ,Katrina is kind of a marking point in my mind .To bad thousands of more loans were made to suckers that will likely go into foreclosure ,or the inflated purchase will make these families miserable for years to come .Yes it’s their own fault ,but who gave the wonderful RE investment advice ?
It wasn’t get in before your priced out or before interest rates go up ,it was get in before the tanking market is revealed so I can get my commission and sell my 3 flips.
Wiz,
Agree that the downturn was evident way before the MSM and “experts” got on board. In San Diego, the downturn became visible in mid-2004, to those who were paying attention. Sales were highest here in 2003, lowest inventory point in March/April 2004 (and it started climbing very quickly right after that), prices were largely flat after that, but really peaked in Q2/Q3 2005, IMHO. This turnaround was NOT quick.
This is completely OT, but I read somewhere that when the Persians (?) conquered Egypt that the commanding general (or king?) burned the books and scrolls in the Library of Alexandria to heat the water for his bath.
Couldn’t have been the Persians. Alexandria was founded by - surprise - Alexander the Great, who had previously defeated the Persians. Around 300 BC or so. Didn’t you see the movie ?
In fact I think the Library of Alexandria was destroyed by Christians. Must be where Pat Robertson gets his ideas.
People want a good laugh at crazy asking price, thats why they snap em up.
In a couple of months this Scott Steiner will be snapping up his unemployment check.
Actually, if he’s self-employed, he won’t be doing that.
I think a lot of people besides us bubbleheads are being seduced into at least a relatively passive fascination with the bust process.
That’s why I pick them up.
I was looking at one of those listing in those books and it cracked me up that they advertised that the built in appliances stay with the house .
Another ad was wasting space by advertising ceiling fans as a big feature of the house . Still another listing said that the current landscaping is included in purchase price .
I keep seeing “pergo” as a feature. Maybe its the desert climate, but in the SE you don’t bother advertising your flooring unless it’s heart of pine or some other (lesser in our opinion) hardwood like mahagony or oak.
fliers describing the properties are being snapped up faster than ever before
Buyers are depleted, and pent-up demand is a pipe dream. So why is there a greatly increased demand for the fliers?
Prime projection: homeowners are snapping them up to get comps. Some are sellers waiting for spring, the rest are checking because they’re fearful that (a) the Home ATM is running out of money; and/or (b) a re-financing nightmare awaits them.
italics off…mea culpa, my bad.
I must have a collection of ~150 fliers. I collect them when I’m curious about a new listing, how they are pricing an old listing, etc. They are filed by date collected. One of these days I’ll get more organized and start collecting by property.
I agree the competition is snapping them up as an indicator of how to price their home. Smart sellers know to drop the price.
Bulls get rich.
Bears get rich.
Pigs get slaughtered. Most home sellers are being pigs. If they turn smart and become a bear… they might avoid the slaughterhouse.
Neil
“— a sign, he says, that many first-time buyers are taking their time and waiting for the market to stabilize before making a move.”
This is the RE shills spin. In reality, neighbors are snapping up these fliers, to see how much their property values have dropped. I know first hand. I have dozens collected over the past year from my own neighborhood, many from the same house. I enjoy checking out how much the prices have been reduced.
“Lenders such as New Century Financial Corp and Accredited Home Lenders Holding Co already are tightening lending practices. New Century, for example, is making fewer loans to first-time home buyers with risky attributes such as high loan-to-value ratios and undocumented income.”
I will believe that they have stopped targeting the penniless idiots of america when I don’t see those maddening “Lower Your Mortgage!!!” ads with the moving, dancing characters on my computer. I hate those f-ing things - I mean, who but a complete moron would ever click on one?
Those ads are on a par with the never ending Penis enlargement spam I get, thank god for ad aware.
Well, if you’d stop clicking on the ads, they’d stop sending the to you.
They make me sick as well!
After going over the numbers of the US Treasury report released today, on an accrual basis according to G.A.A.P., the true annual federal deficit number is $3.6 trillion! I come to this conclusion by taking the Net Operating Cost deficit of $449.5 billion plus the year over year increase in Open Group obligations (Medicare, Medicaid, Social Security) of $3.162 trillion (in today’s dollars). See Executive Summary Table 1.
http://www.fms.treas.gov/fr/06frusg/06frusg.pdf
This $3.6 trillion figure is over 12 times the “official” deficit figure using only cash accounting. If a public corporation reported its earnings using a cash basis its officers would be doing hard time under Sarbanes-Oxley.
invest3
Those damn big-government Democrats! It’s barely one month after the Nov. 7 elections, and they’ve already reversed 12 years of fiscally responsible government!
Oh wait …
Hate to break it to you sweetheart, but it wasn’t the Republicans that started the big government social programs Medicare, Medicaid, Social Security, etc…
These bogus reporting numbers have been going on long before 1994.
No, hunnybunny, they just ensured that we weren’t gonna pay for any of it on their watch.
We’ve had zero deficits and useful government programs before. The two are not mutually exclusive.
Zero deficits under a cash accounting basis yes, never on an accrual basis. I’m not defending either party here as I believe both are guilty.
’sweetheart’, ‘hunnbunny’
Feel the love here…
Annata, invest3. I don’t know about you. I can live with the pain of Medicare, but I find it hard to live with the 7billion per month that the war is costing us ON TOP of Medicare.
“I’m not defending either party here as I believe both are guilty.”
Agreed. I was only poking fun at the Republicans because they like to say that they stand for “small” or “limited” government when they are very obviously not. There’s not much irony in calling Democrats big spenders.
Most of the “Republicans” in office now are RINO’s. That goes all the way to the top RINO. The last election was less about the democrats winning because people agree with what they want to do, it was more about the conservative base being pissed off at their elected RINO’s and showing them a lesson it what happens when you don’t live up to what you say you are for. The republicans are bad for the country but IMO the democrats are going to be even worse. The only saving grace right now is there is split power and as the old saying goes “Gridlock is good”, although on the illegals aspect the country is going to get the royal shaft…
Hate to break it to YOU, but that’s BS. Have a look at the national debt. Enjoy the Kool-Aid, though.
B.S.? Here’s your history lesson 101-
http://www.ssa.gov/history/briefhistory3.html
FDR started redistributing the wealth and the Republicans perpetuated it.
only one cure
http://lp.org
less taxing…………..
Uh Sweatheart, the senior drug plan piloted in by our brave Captain Bush was the biggest obligation at its inception like ever. SS was a tiny plan when enacted than the prescription drug plan from Bush that does little more than protect the profit margin of domestic drug companies at the expense of the US consumer. So much for free trade.
I see the revisionist nincompoops never give up demonizing humanity.
Get a life.
Captain Morgan,
Agreed, Bush is a spendtrift.
“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money”
Alexis de Tocqueville
Rich said, “SS was a tiny plan when enacted…”
Don’t all Ponzi schemes start small?
I think the occasional partisan bickering on this board is a good thing. It shows that common sense and belief in a housing price bubble crosses party lines.
Yes, but it’s odd that those he think they are Democrats (with a capital D), think the Democrats are going to step aside, and let the bubble pop. No way, thems Greater Fools are Democratic voters, and the “blame someone else” party will be there for them.
All those clowns going to the Donald Trump seminars are Democratic voters? Did you take a survey?
I don’t claim to know either, but I do have a gut feeling that people who want to emulate the Donald financially are also going to emulate him politically.
Um, I tend to have fairly socialist leanings, economically, but I absolutely DO NOT think people should be bailed out of their poor decisions. I’m a registered Libertarian (don’t think the govt should be involved in people’s private lives), but would blend well with the Democrats.
IOW, not all “lefties”/Dems believe in bailouts for everyone.
Fannie Mae and Freddie Mac are heavily supported by the Dems in Congress which helps to prop up this bubble. Lenders dump a lot of the garbage loans on these GSE’s which will likely be bailed out by the tax payers when this thing finally implodes.
Link to Portland, OR November stats here:
http://www.bizjournals.com/portland/stories/2006/12/11/daily36.html?jst=b_ln_hl
Things are slowing down somewhat.
Excellent data for a bubble watcher here in portland - thanks for the info.
I love this “slowing down ” word . How about “it’s crashing “. But , to be fair ,I can understand why the media doesn’t like to use panic-provoking words ,but don’t hold out on the data and don’t hype the opposite of what is really happening .
when is it a crash for the MSM
20% you have that in NE now and AZ and FL
need 30 ?
Its becomes an officially recognized crash when the deserted towns in Arizona are referred to in history books and all those in charge are dead.
We were talking about this months ago on the blog .
Thousands of years from now when they dig up the remains of these tracts in Arizona and they will wonder why there wasn’t any sign of life . They will wonder why staged furniture was in the home with no evidence of being lived in . They will find for sale signs and wonder if the whole town was up for sale because of a lack of water before the big blast came .
They will find documents that speak of speculators and builders engaged in competition to sell and they will wonder why people of the same tribe would fight .
“The drop in home price appreciation has become a poison pill to the industry, Konrath said.”
That’s a clever descriptor, using ‘poison pill’ to describe the impact of slowing price gains on the lending industry. However, can you imagine the impact of real YOY price declines? It will bury the industry.
These Democrat vs Republican flame skirmishes that periodically erupt on this board are silly and annoying. Go to one of the plentiful blogs that specialize in this and have at it.
Plenty for supporters of both parties to be embarrassed about. Each week on this board, there are more intelligent ideas floated than have been proposed by congress or the executive branch in the last decade.
How about we all start proposing solutions to the problems that the idiots from both parties have gotten us into (since they can’t seem to do this without devolving into partisan bickering), or vote for the candidate (if there are any) that does likewise.
The NAR should urge sellers to cut their prices dramatically in order to spark demand. Whether a Realtor sells a house at a loss or a gain is of no concern when compensation is based on a percentage of the deal. In fact, the NAR’s members could benefit from sales volume resulting from a real estate panic.
This blog initially caught my attention because of the reasoned, coherent discussion about the housing bubble. Now it seems a reader can’t scroll down eight posts without seeing another poster being called a “nincompoop” or a “moonbat”.
Go to one of the plentiful blogs that specialize in this and have at it.
Well said. All of us know where to find those blogs, if we are so inclined.
A little OT but seasonal: Happy Hanukah to anyone who observes!
We’re Catholic, but “Happy Hanukah” so much better than “Happy Holidays.” We’ll accept your good wishes even though we don’t observe.
OK, I meant the post to nest below Clogged Drain…
what the heck everybody have a Happy Hanukah and a Merry Christmas whatever your persuasion!
Just be Happy!
On top of that they are wasting Ben’s bandwidth!!!
For the Muslims amongst us.. Happy Eid, i think its on the 31st this year.
isnt hanukah spelled with a C
Telling line that no one commented on:
“‘We are getting a bit more concerned with investors’ passiveness toward these equity-destroying exercises,’ Stephen East, an analyst at Susquehanna Financial, said.”
I would have expected TxChick (and several others) to be all over this one. I must admit that I am very very happy with the performance of my commercial equity REITs for the last few years, but once the “equity destroying exercises” hit the commercial RE market, I hope to be long gone.
Who is still trading the HBs? I lost my nerve a long time ago.
I usually don’t get on here ’til late, so didn’t comment.
Still trading HBs (largely puts), and regretting I didn’t stop in June/July. Things have been relatively flat, lately. Have to believe that “investors” in HBs will see the light at some point, right? Right?