Bits Bucket And Craigslist Finds For December 18, 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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m&a surge.
lessons from the past mergers and acquisitions mania.
http://www.immobilienblasen.blogspot.com/
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Correlation does not imply causation.
Bill Fleckenstein has a new article up on Moneycentral.
“
No more bubbles to bail out the housing bubble
The negatives keep growing, this time unchecked. The stock market, the real
estate market and the economy will get in sync on the downside — it’s just a
matter of when.”
He has also opened his column archives up for the holidays.
“Now to end by saying I hope everyone has a merry Christmas, happy Hanukkah and a
happy new year. Until the Contrarian returns on Jan. 8, I’d like to invite folks
to peruse past columns from my daily Market Rap at FleckensteinCapital.com. A
complimentary username/password — free/free — has been established to allow
access to the site.”
Was Fleckenstein a bear in August/September? If so, then he has no credibility. Any prediction will come true if you allow enough time, and people like Fleckenstein count on the public forgetting how often he was wrong.
He has been bearish with the warning that there is no way to time it confidently. In fact I think he warns against shorting and instead just advises limit risk. All and all I think he does an accurate job of describing the situation.
You should buy a condo if you don’t believe him…
“Any prediction will come true if you allow enough time, …”
Then I predict here and now that the homebuilding recession currently underway will turn into a resumption of the boom, with 10%+ annual appreciation continuing unabated until a distant time horizon.
I was on the fence but I am buying today on GetStucco’s advice.
I like Fleck’s mullet. It make me laugh.
And then how about Bill Flekenstein’s latest column “No More Bubbles to bail out the Housing Bubble?”
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/NoMoreBubbles.aspx?wa=wsignin1.0
Very good read, but also very frightening.
“What has been surprising: not that the economy is weakening but that so many people seem to expect a soft landing, and therefore remain in denial about the seriousness of the slowdown.”
This is why I believe the soft-landing wishful thinking will be violently interrupted by the violent crash of the SUV into a brick wall. I see this huge oversupply of $500K+ homes in North County San Diego either recently built or at various stages of partial completion as a case in point. Nonstop happy talk from on high gives permabull home builders good psychological cover to keep building away until the point when it becomes painfully obvious that there is a severe McMillionaire shortage.
There will be one more bubble - investments in real estate law practices (see the next thread by ajh).
My crystal ball shows a bubble in foreclosure services.
The bubble of the new century is going to be in farming, tanning, and buggy whips. Everything old is new again. Goodbye mortgage brokers and interior decorators.
In paladin’s breathtaking post in yesterday’s bit bucket, he makes one significant error. Doing the figures for potential legal fees he states that 30% of $200K times 500 FB’s = $3 million.
Try $30 million.
Wow, good catch AJH. Hello Jacoby and Meyers!!!!….are you reading this? Some very deep pocketed home builders may be creating above market values by cooperating with fraudulent mortgagees which then create artificially high market values. The class action 30% legal fees in one tiny town of Lincoln, in one tiny portion of the large Sacramento MSA for representing 500 FB’s who lost and average $200,000 each, could total about $30,000,000. If you casually looked around, I bet you you could find about 30 such subdivions in this MSA. Let’s see if this math checks out” 30 times $30,000,000 = $900,000,000. Hmm. That number is very attractive and very amazing. Who is going to get the courthouse first?
Isn’t it JTS who built all those homes? They want to sell their CORP HQ on Watt and American River in Sacramento for $11.5 mil or something like that. They want to sell it, but rent it back. It looks like they are hurting for cash.
Which is great because the market for commercial office space outside of Sacto is so hot and strong. Reality is going to trout-slam these people in the face very, very hard.
I guess JTS being builder has just realized that it is better to own than rent.
better to rent than own.
Recently someone here made the statement that housing prices have to track inflation, no more no less. If pricing were to exceed inflation, then it would be unaffordable to everyone eventually.
Can someone comment on this? It seems to make sense but I’m not sure if it is reality. Is it logical and accurate to go back to 1998 pricing and add in 3% per year?
Actually, it needs to track income, not inflation. If income is going up faster than inflation, then if housing matches the income growth, affordability should be the same.
I would say affordability is more appropriate. Affordability counts on income, interest rate. Since affordability is well reflected in rent, rent/mortgage_payment ratio is also a good indicator. I believe each local market has its own normal ratio. For example, SF has lower ratio than most other markets.
Actually, it would probably track an inverse relation to a basket of all consumable commodities versus incomes. Income - Consumption = Savings would be a closed solution type situation. For example, if you look at housing as a percentage of income some time ago back when food and other consumables were relatively more expensive, you’ll see housing going down. As other necessities go down, it frees up income to pay for other items. Look at cars, etc and how much income was devoted to them prior to the current day. Ultimately, its all some form of dialectical materialism. In the short run though as a simplistic relationship, it should track inflation and income and right now its grossly out of whack with both.
Another factor with in the income factor is that the dual income households are now the norm. So if the percentage of total income spent on dwelling is the same historically, house prices have increased substantially now that women make up such a large portion of the workforce.
Then there is the ever increasing sqft of new houses. This drives up the costs just based on raw materials needed to construct one of these.
Just a couple things to consider when analyzing the intrinsic value of a house.
In CA it seems to not track anything but instead follow boom/bust cycles.
It’s more complex than this… on the way up, it exceeded inflation and income growth as money became cheaper and more available. Unless lenders start giving money away for free, it’s about as easy as it can get. So over the next decade (or pick your timeframe), houses will lag income and inflation growth as money tightens. Violently at first (2006-09). Then slowly after that until everyone says real estate is a terrible investment and one can buy for well under rental income. Also it will take most of a decade for many people’s credit and balance sheets to recover to buy houses in a 80 LTV - 30 year mortgage world.
it = housing prices - in the first sentence.
adjust for mort rates to
should be half of cost ,but the way people buy now interest is 70% of the bubble brains “buying” power
For God sakes flatffplan. Would you care to decipher that for us?
That might have been me that said that (although I have heard it plenty of times from other people as well, certainly not claming it as my original thought). And I do agree, price more closely have to follow income then inflation, however, income tracks with inflation as well, to the best of my knowledge. Its probabaly more like this:
Housing tracks from income which tracks from inflation.
Although income does not neccessarily have to track directly with inflation (anyone have historical data on this), I would think if median income went up (countrywide) there would be more competition for the same resources, and therefore the price of those resources with also go up. Which, in turn, would be “inflation” of the price of resources.
Also, I am not sure if 3% is a reasonable number to use for inflation. I will allow other, more qualified people answer this, but I think that 3% is probably a low number for inflation.
Thx.
It well may have been you that said it Mike. I’ve been thinking about it since. I know 3% inflation is grossly understated but I think that is the rough “official” number.
…however, income tracks with inflation as well, to the best of my knowledge.
Not any more. Inflation’s up but incomes are down. Unless, of course, you work for Goldman Sachs.
“Can someone comment on this? It seems to make sense but I’m not sure if it is reality. Is it logical and accurate to go back to 1998 pricing and add in 3% per year?”
Liar loans and suicide loans can allow for a temporary but unsustainable divergence between incomes and home prices.
I said this several times, too. I think that the relationships between income, inflation, and home prices involve positive and negative feedback loops that within a normal range of behavior force them all to align. (Of course, there are unstable points in the system that result in disequilibria; we call them bubbles, depressions, and recessions.)
I’m just making the case that in a stable equilibrium in the economy there should be a fixed relationship between inflation and home values because home values are a basic component of what we think of as the cost of living. I know that people on this board will disagree, but I think that the government practice of factoring highly volatile products out of the consumer price index before calculating inflation make sense when you calculate the rate of inflation for the purpose of considering the evolution of the value of real estate. The government data, which seems consistent with my personal experience of inflation in nonvolatile prices, puts inflation at under 3%.
The other evidence that I’d cite for the fixed relationship between the value of real estate and inflation is the analyses of long-term markets. I read an account—I’ll see if I can find the link—of the growth in real estate values in Amsterdam, which has a four hundred year market history, and New York, which has a couple of hundred years of history, and the conclusion was that those markets followed inflation very closely despite short-term speculative bubbles or panicked declines. (Amsterdam grew around 2.5% and New York around 3.5%, if I remember correctly.) This only makes sense. How could you have rapid growth in the value of real estate without rapid growth in wages reflected in the CPI to compensate? You can’t. Either values have to come down or inflation has to rise. The government claims to be committed to containing inflation because inflation discourages long-term investment in the economy and scars investor psychology. (Why would you put money in the bank if your savings weren’t likely to perform at least as well as inflation? If there were recent periods of high inflation in nonvolatile indicies, would you trust the goverment to keep inflation low in the future?)
One more comment:
There seems to be some confusion about whether you’re asking how much a seller can get for a home in the current market or how much a house is really worth. My argument asddresses how much a house is really worth. Of course in the right economic phase a house will command higher or lower prices than the inflation indexed value from a stable economy, but you shouldn’t buy during those highs or sell if you can avoid sellling during the low. I only offer these appraisal for the purpose of determining the condition of the market, not designing an offer if you’re intent on buying a house now.
No interest in buying here. I didn’t state my point very well in the post. How do you assess what a house is really worth irrespective of what the owner or seller says? The 1999 price plus 3% has been kicked around here.
Secondly, when Mike stated that housing MUST track inflation or else it will be unaffordable for most seems to make alot of sense. Housing is a human necessity, therefore, there must be a means for the average person to acquire it ….. without committing financial suicide of course.
“what a house is really worth”
How about a standard based on what one could rent it out for.
Price times interest rate = Annual rent minus (tax,insur,maint).
Rents track pretty closely w/ wages and other inflation measures.
I’d agree with the 1998-1999 value of the home plus 3% compounded continuously, but only because 2.5-3.5% is the annual rate of inflation excluding volatile prices like gasoline. If inflation were 10% or 1%, I’d advocate a different number. The market won’t likely experience those conditions for any significant amount of time because of the inclinations of the people steering the economy. The people running the federal reserve believe that some low level of inflation is necessary and good; they seem to aim for 3% inflation. I think that we agree: inflation and housing prices should correspond to one another. The only point of disagreement that I have with others in this post is over the method of calculating inflation and the actual level of inflation. Some want to consider inflation to include volatile commodities like gasoline, which I understand since it impacts your perception of costs, but I don’t think that volatiles impact home prices (so you should rely on the method of calculating inflation used by the government).
Correction: replace “perception of costs” with “costs” but note that the impact is transient rather than permanent like the contribution of nonvolatiles to inflation.
Long term, it’s feasible for housing prices to exceed inflation. What it means is that over time:
- A smaller and smaller percentage of the population can afford houses.
- Likewise a smaller percentage of homes are standalone single-family homes, and a larger percentage become condos and apartments.
These are both very feasible, and in fact happening in various places around the world and in the U.S. In some highly populated areas only the very rich can afford standalone homes, and this has been the case for 100’s of years. Others have apartments, condos, or row-type houses.
First of all, brownstones, townhouses, and condos are homes and figure into the rate of increase of real estate prices. They’re not a separate market from the point of view of the real estate bubble.
Secondly, there is no land crunch. There is an enormous amount of land available for homesteading.
Finally, even if the model of delivery of housing to consumers changed from a sell-through market to a rental market, the change in price of housing by renting should correspond to inflation which means that the change in worth of the underlying property should correspond to inflation, too.
Your point seems to be more of an objection to comparisons of fundamentally different markets. What matters is standard of living over the course of a lifetime rather than renting instead owning property. Owning property isn’t an economic end in itself; it’s a way to secure a future standard of living by hedging against inflation. You can live quite well—most people do—in European or Japanese cities of the median income, but living well means something different, an apartment or condo. This is true of New York. No one no matter how wealthy owns a stand-alone home in Manhattan. There just aren’t any stand-alone homes. When you choose to live in Manhattan, you have to accept a different style of living but not a lower standard of living in as much as different styles can be compared.
Wow. Thanks NeverBought. Excellent post.
Perhaps reflecting their transient stage of life as well as their remarkably intensive use of
the internet, 9% of online Americans ages 18 to 29 reported in August that they looked
for housing information on a typical day, more than double the percentage (4%) in this
age group who said the same thing two years earlier.
http://www.pewinternet.org/pdfs/PIP_Place_to_Live_2006.pdf
“Surviving the Real Estate Bust” :
http://money.cnn.com/magazines/fortune/fortune_archive/2006/12/25/8396764/index.htm?postversion=2006121805
Don’t think buying a $400,000 house in Mesa is a good first step.
400 grand in Mesa? Come on, people, it’s not Scottsdale!
If I weren’t so PC, I’d suggest that there’s a reason they chose Mesa.
But of course I won’t
Through the Looking Glass:
http://wallstreetexaminer.com/blogs/winter/?p=205
For those of you who enjoyed the first video, here’s part 2!
Housing Boom in Billings
This one is a little more focused for a local audience, but you still might find it interesting. I hit the fundamentals pretty hard.. price/rent and affordability.
Montana seems to be lagging the rest of the country by a year or so, but things are beginning to turn here.
My first video made a pretty big impact around town. It resulted in a local TV interview (they quoted me alongside the MT Real Estate Assn. president). Lots of Realtors around town saw it. So far three contacted me saying they agree that there’s a bubble.
Also, the editor of a local business journal saw the video. She’d done a housing article a few months back. She believes there’s a bubble, but she couldn’t find any Realtors or mortgage brokers to talk about the problems. Now she’s found a market “analyst”, and it sounds like she’ll do an article about the dark side of the housing market.
Many people in town know there’s a problem. They know the Realtors aren’t telling the whole truth. They’re glad to find someone who’s straight about RE. Things are getting interesting here!
Billings Housing Market Blog
Thanks for the update. Great video
Outstanding work…I look forward to you next video….
Hoo-boy. Realtors not telling the whole truth. Was that ever the theme of my weekend!
On Saturday, I went to an art studio open house run by someone I used to work with. Very good art, BTW.
However, I found an underlying current in our conversation to be downright tragic. One of the other guests at this opening was a woman who is moving into a house near where I live. But she can’t move yet because she hasn’t sold her current house.
Her real estate agent is the same fellow whose name is out in front of a now-vacant house in the next block. And the couple who own that house just moved into their new house.
So, let’s see what we have here: One single woman homeowner carrying two mortgages who can’t move because she hasn’t sold her house yet. And a couple, both of them retired, who are also carrying two mortgages.
All three people took advice from this agent, and I know for a fact that the couple has been hurting financially for several months. The woman at the studio open house was just getting over being sick, and I’ll bet you that financial stress helped bring on whatever she had.
All three consider this agent to be a friend. But, IMHO, with friends like him, who needs enemies?
Why blame agents? It’s ones duty to take advantage of stupid people. It’s good for the country that finally the stupid and irresponsible will hopefully be culled from the economy. I’m tired of this reverse economy where irresponsible consumption and financial stupidity get rewarded. This also applies to the stupid rich and foreigners who financed this huge debt and who in the end will be the ones left holding the bag.
Are you from Bozeman. If you are, curious as to how the market is up there? I owned a condo in neighboring Big Sky for awhile.
I can’t speak for bozonian, but I’m somewhat familiar with the market. It’s toast. Much worse that Billings. Median asking price tops $350k now, which is probably 8x incomes or so. Inventory:Population ratio is around 1:40 in the Gallatin Valley. I think sales are finally dropping, so this spring should be the beginning of the end.
A friend of mine, young engineer, lives in Bozeman. He knows little about the market, but even he can see there’s a problem. He matter-of-factly said, “I can’t afford to buy a house here.” Smart man! If everyone thought like this, we wouldn’t be in the situation we are.
How did the Big Sky condo treat you? You could have sold it for a fortune this year. I’m curious to see how resort condos fare during the downturn. A guy could probably pick one up in 2009 and sell for a great profit at the next peak. Except for those dern condo fees.
Thanks for the update. Sold out my condo in early 05.
Have to agree with Tango…
Things are really getting dark in Bozeman. Including FSBO’s we probably have 1500 units on the market in teh Gallatin Valley (not including Big Sky), and much of this is new construction and/or vacant homes. Sales are way down, prices dropping slightly over the past 3 months. I personally know three people that have pulled their homes off the market and plan to relist “when things pick up in the spring”.
Psychologically, I would say that the general feeling is confusion with a touch of fear. What happened to all the buyers? Why isn’t anything selling? My guess is that this spring we will see a surge of anger with sellers really beginning to cave in late summer/fall.
Sounds like a mirror image of Bend, Oregon. Both beautiful places ruined by over-speculation.
This is just plain wrong. Enforcing some extremely basic rules and even just adding some more disclosures regarding historic values could potentially make a huge difference in property bubbles and keep things from getting so far out of control. When lots of people are flaming out, no matter if they are rich or poor or stupid or quote smart unquote, the result is lots of lost value and chaos.
The situation is much like that with the pathetic long term mentally ill homeless. Wanting to give no pity or special treatment the initial reaction has mostly been to let the problem fester. The result of this is huge bills in emergency responses, additional police enforcement efforts, and more. Simply giving these people a room somewhere can actually save a great deal of money.
The issue isn’t one of compassion or straightforward efficiency. The system breaks down to a degree when too many are allowed to drown themselves. The right thing to do is to throw out life preservers whether they are deserved or earned or not.
“Simply giving these people a room somewhere can actually save a great deal of money”
Probably a lot of people don’t know this but the mentally ill were “deinstitutionalized” in the 70s and early 80s as part of a campaign to give them “freedom” from what were (admittedly) pretty horrible institutions in many, many, cases.
It was considered a “compassionate” choice at the time. It was considered feasible because many antipsychotic medications did work wonders. Unfortunately, many psychotic people have problem staying on their meds without supervision and they often end up wandering the streets.
So, the choice is; force, often unwilling, psychotic, people to take drugs and live in a room you provide or be “compassionate” and let them wander the streets “free” but often out of meds as well as out of their minds.
It isn’t simply giving them a “room”. You have to get them to cooperate, of their own free will, or else you’ll get slammed with a suit by your local ACLU branch.
THat really was a nice video. To bad you don’t live in Bozeman. Now THAT would be a wild video.
Great video. I would LOVE someone to do this for any coastal CA area. But we all know the situation. It probably costs about 2k more a month to own vs buy here give or take a few hundred.
Maybe I’m living in the “Little house on the prairie” theme … but at one time wasn’t it a common standard that your purchase reflected your medium income…my father always warned that …3x was the comfort zone…anymore and you were asking for financial heartache….seems like alot of people out there like the thrill of balancing massive loads of debt ..or does the toothfairy now drop 20G’s per tooth…..and that’s their safety net….
I have heard that many times as well, and I have a feeling that’s where we are heading again. There is a reason those numbers came up, and it’s not because someone just thought 3X was a better number than 5X or 10X (ewww).
Honestly, 3X my HH income right now would not be a fun amount of debt to carry. I am not sure how this number works as you get into higher income brackets, but I do know that I would really not want to go that high myself. At 3X my HH income, my carrying costs on a home would be almost 5K a month. That seems crazy to me, I can’t imagine where I would get that much money! And before I get bashed, yes, I like to live a very comfortable life, I enjoy having nice things, and if I cut all them out, yes, I am sure I could afford that much a month.
But no way I would want to! I just can’t understand why people would choose to pay that much for their homes (or that much of their income to it anyway). I would be much happier at 2X (or, be like some lucky posters on here and be at 1X!).
Anyone have any stats on what the average multiplier is now? I would imagine like 4-5X would be average, but I don’t have any numbers to support it.
Ah, the long term benefits from Prop 13 and no mortgage. Now if I could just do something to keep that damn homeowner’s insurance policy premium from going up so much each year……….
Met two people working at opposite sides of the Vegas mortgage industry this weekend:
First, our new neighbor in the next townhouse is a manager at a mortgage brokerage. She said that she just moved back to Vegas after living on the East Coast for a few years for family reasons, so apparently she missed the local housing price run up. She told me that when she called to inquire about job openings, she was told that mortgage lending is still booming here. She was given a choice of positions as well as a flexible start date. She said that she works mostly with the upper end of the housing market and specializes in mortages for homes priced at $1mil and above.
Interestingly, she also said that she and her partner chose to rent in our complex for the same reason as my husband and I: They wanted a rental that felt like a home so that they could wait and watch the market without feeling pressured to buy. That leads me to believe that despite the rosy talk, she at the very least has serious doubts about the true value of high-end homes here.
On the other end of the spectrum, I met a woman who assists homeowners who are struggling due to ARM resets. She works mostly with middle- and lower-income homeowners. She told me that despite what is being reported in the local newspapers, housing prices are down at least 5% and in many cases much more in the lower end of the Vegas housing market. In the past three months, her office has seen a very large increase in the number of people who can no longer pay their mortgage. She says that some of these people have run into trouble due to layoff or illness, but the majority just never understood their ARM and were never able to afford their house. Everyone on this blog will also be happy to hear that she referred to these supposed homeowners as “unwitting renters.”
Yuh. I’m sure they understood just fine when they were feeding their gluttony with a new house. Now when it’s time to pay the piper they’re suddenly stupid.
Please.
LOL. You may be right. The woman assisting with ARM resets also said that if she had her way, every prospective homebuyer would be given a math test. If they couldn’t pass the test, they wouldn’t be allowed to buy a home. Heck, that might work better than No Child Left Behind…
Math test? I love the idea. But the politically correct police wouldn’t ever let that pass.
I love how everyone was so smart getting into a home any way they could on the way up… but now they’re too stupid to have understood the loan. No… they were too greedy and deserve they pain. If they couldn’t do basic math to figure out if their monthly payment was above or below interest… tough! When I purchased a home in the past (long since sold, pre boom), I compared every month Quicken’s estimate of my principal/loan and what the mortgage company stated.
I think everyone here would note that it really isn’t that tough…
Neil
“I love how everyone was so smart getting into a home any way they could on the way up… but now they’re too stupid to have understood the loan.”
This really gets to me, too. And even if they truly didn’t understand the loan, why in the world did they go ahead and sign the paperwork?
I stand corrected; it looks like I was $1 trillion short on my US budget deficit estimate-
http://worldnetdaily.com/news/article.asp?ARTICLE_ID=53413
Hmmm. No headlines about Poulson/Bernanke delegation to China. I guess no news is bad news in this case. Uh oh.
The commentary noted that should China balk at the US “light-handed nudging” that no news meant big trouble for the US… remember folks you can’t bluff your way out of a poker game when you don’t have any cards to bluff with….The rules have changed…better get use to it.
Merger Monday!! yeah! …you guys ready for Takeover Tuesday? Geko is… its just too easy.
Business week has a nice piece out today.
Businessweek says the market will remain flat in 2007. I think this housing market is putting the fear of God into a lot of people. They know if the housing market goes so does the rest of economy. Mainstream Wall Street, has to prop up the housing market or they will be next. They are trying to hold this housing market together by a thread.
I just don’t see how “flat” is possible with ARM resets, I/O pressures, speculator/investor inventory still to be worked off, uncertain economic prospects (including likely little or no change in Iraq debacle) AND the first full spring of activity after everyone has realized that the run-up in real estate is untenable.
Flat is terrifically oprimistic, in my opinion.
Hey Crispy,
I think I may have read the wrong Business week article. This one says housing is pretty much screwed for 15 years.
Was down in el lay and the dreaded i.e., for a few days this past week and in just my mostly freeway drive-bys, I never saw so much ill-advised real estate being built in truly awful spaces, a result of there really not being much new land availiable in the core area of the city of the angels, so the developers squeezed in things like a 30 condo development, right off the 5 freeway, in a neighborhood not destined for gentrifcation in anybody’s lifetime, or the odd McMansion or 2 going up (my mom told me of this ginormous one on Colima going up into Whittier that is stalled out about 2/3rds done and all around $20k worth of fixtures have gone missing, folks helping themselves to some) and the end result of these newer houses and condos being that in a small way, probably not as hurtful to L.A., as some other cities, as when these get priced down to whatever # it takes to move them, the developers are in the end game.
Profits from this last batch of houses they’ve built is meaningless. They played the game for a solid 5 years and killed em’, so, just move these bad boys and the effect will be much worse in places like the Inland Empire, (1880’s civic boostery name) where nearly every little bit of prosperous citrus land has been graded over and new bright and shiny houses that look like every other one, faux shutters to the ready, to give you “that” look of landed Mediteranian Gentry, perhaps?
My mom told me tales of 3 friends in Hacienda Heights (old school buyers from the 1970’s) that decided to get out of dodge this year and put their houses up for sale. Same saga: 6 to 8 months and nodody is even really looking.
My mom’s friends have a lot of bargaining power, in selling their houses, as most are into them $50-100k, paid off and most importantly, they’ve made up their mind, to go somewhere else. Inertia, baby~
Combine recent io/arm buyer, with old school house owner selling and developers that just want to clean house and the mixins for a strange brew have just come together.
The Asian buyers have certainly stalled out in my mom’s neighborhood in Hacienda Heights, and as all the houses above I described that aren’t selling, are all within a mile of the Budhist Temple, a magnet for newer arrivals from the far east.
Aw, come on, Sane, you can’t say that the LA area has more ill-advised construction projects than Phoenix. IMHO, Phoenix leads the nation in this category.
Yeah, i’d say it does, just from the places they are situated in. McMansions on busy corners or developments in neighborhoods, where the neighborhood is downright skanky, but it was “available” land.
You just bulldozed Phoenix (and San Diego and the Central Valley and, etc. etc.) and built in the hinterlands on heretofore useless land too far away, until a bubble of this magnitude came along, to give the illusion of it being closer than it actually is.
Awesome story about Buckeye in the Republic. It’ll be bigger than Phoenix soon! They have a plentiful water supply as long as they can figure out how to pump just as much water back into the acquifer as they are taking out.
A huge temple is under construction w/in a mile of my home and rumor has it that house prices will go up once completed. Do you have any insight as to whether this is true or not?
In Chinese Boomtown, Middle Class Pushes Back
http://www.nytimes.com/2006/12/18/world/asia/18shenzhen.html
” . . . Red-hot real estate markets have given birth to a new class of people, known as mortgage slaves, because the financial burden of buying into the middle-class dream of home ownership has suddenly become so great. The new property owners have poured their energy into everything from establishing co-op boards to spar with landlords, to organizing real estate market boycotts to force down prices.
Others, meanwhile, have begun running for office in district-level elections, where they hope to make the city government more responsive to their needs, though, like governments at every level in China, the ultimate power here rests with Communist Party officials. . .”
New found individual property “owners” meet historic Communist property “collectivists”.
Should make for interesting politics in China very soon.
From this story:
http://tinyurl.com/ylqoza
“Retired insurance executive Ed Thompson, 72, hasn’t had much luck selling his Estero, Fla., home. He’s asking $799,000, but if prospective buyers don’t start showing serious interest by spring, he may tempt them with a $45,000 golf membership and a new golf cart. Why not just cut the price? He explains that he’s already come down $80,000, and going much lower would impact his friends’ houses in the gated community. “It would be too damaging to take the money and run,” he says.”
Ed is either:
a) Neighbor of The Year
b) An idiot
c) A liar
Yeah right, it wouldn’t be fair to take the money and run……
If he could GET his price, he would be outta there in a heartbeat.
The truth about Ed:
The home is all of his retirement savings that he has HELOCed to pay for his Caddy, hair & teeth implants, lots of golf plaid and all the golf he could play ’til the day he dies.
Median price for new homes in Yolo County down 21.8% YoY per DataQuick.
http://dailydemocrat.com/news/ci_4853357
Sacramento Landing(ing)
I’m writing an article for the local rag, anyone know how I can obtain this data?
Before the spring 2007 diluge gets here:
AS OF Dec 2006:
Total National number of houses (new, resale, condo’s) for sale.
Total National number of real estate agents.
Thanks!
Ask the NAR. Their numbers are absolutely reliable and credible.
Eh…as Bugs would say to Daffy…”I don’t think so”….
JimmyB: “That’s Desssspicable!” Daffy
despicable [diˈspikəbl] adjective
contemptible, worthless and deserving to be despised
Example: NAR behaviour is despicable.
Arabic: حَقير، خَسيس
Chinese (Simplified): 可鄙的
Chinese (Traditional): 可鄙的
Czech: opovrženíhodný
Danish: foragtelig; ussel; modbydelig
Dutch: verachtelijk
Estonian: põlastusväärne
Finnish: halveksittava
French: méprisable
German: jämmerlich
Greek: ποταπός
Hungarian: megvetendő
Icelandic: fyrirlitlegur
Indonesian: patut dibenci
Italian: disprezzabile, spregevole
Japanese: 卑しむべき
Korean: 경멸한 만한, 비열한
Latvian: nicināms; nievājams
Lithuanian: niekingas
Norwegian: foraktelig, ussel
Polish: nikczemny
Portuguese (Brazil): desprezível
Portuguese (Portugal): desprezível
Romanian: condamnabil, vrednic de dispreţ
Russian: презренный
Slovak: opovrhnutiahodný
Slovenian: prezira vreden
Spanish: despreciable, desdeñable
Swedish: föraktlig, ömklig
Turkish: aşağılık, alçak
“Official” figures for December 2006 on inventories won’t be available until late January. Each month, the Census Bureau puts out a new home sales report with a record of home many homes are for sale. The National Association of Realtors does the same thing for existing homes. But they’re delayed — we won’t get Nov. stats until 12/27 (new home) and 12/28 (existing)
You can get inventory data through October at this page for existing homes, however:
http://www.realtor.org/Research.nsf/Pages/EHSdata
New home inventory/sales stuff is available here:
http://www.census.gov/const/www/newressalesindex.html
I also have some information about current inventory and how it compares to what we’ve had historically speaking at my blog. Just scroll through some past posts at:
http://interestrateroundup.blogspot.com
Mike, Thanks very much…that’s what I’ll do…also, I’m ass…suming that these stats include: condo’s, townhomes, and mobilehomes?
Now about the total National number of real estate agents, any ideas for that data net?
These figures include condos, townhomes, coops and single family, but NOT mobile homes. The Manufactured Housing Institutue has some stuff on mobile home shipments/supply/pricing that you can poke around at here:
http://www.manufacturedhousing.org/statistics/default.asp
As for real estate agent numbers, I’m not sure if the NAR makes them public. You could poke around the group’s “About” section here:
http://www.realtor.org/realtororg.nsf/pages/NAROverview?OpenDocument
Or you could call their public affairs number. Maybe they’d be willing to share. Good luck!
Mike,
Thanks again for the links, as I suspected, this information is scattered, you’d think so simple a statistic would be readily transparent…alas.
I found conflicting data, the bls list 150,000 by occupation nationally, and a blogger list 400,000 RE agents licensed in Los Anglese alone. NAR say’s they have 1.2 million members, whatever.
I’ll post some things tomorrow for you all to laugh at…:-)
Interesting news from the FBI:
Violent crime is up, with arson leading the way, up 6.8%, in the first 1/2 of 2006.
The fire escape clause is being utilized already~
http://www.breitbart.com/news/2006/12/18/D8M3CMLG0.html
The rise in crime is just the beginning of a widespread collapse. Wait until local governments cannot afford to pay their welfare bribes.
State and Local governments have to “mark to market” their retirement benefits for current and future retirees next year.
I can hardly wait.
beebs
anarchist
Murder, rape and violent assaults increased a significantly insignificant
Yesterdays Mercury News had the following ad:
OPEN HOUSE
Mortagage Sales Originators
COME JOIN US !
The Lending Center is a non-conforming residential mortgage lending company. We Invite motived individulas to join or team !
~No experience required
~Training Program Available
~Base+Commission
~Full Benefits Package
Hiring ASAP! Positions Won’t Last !
Seems a little late in the game to set up a high pressure mortgage boiler room operation but what do I know ?
Well it’s out:
The new lies are:
WASHINGTON (Dow Jones)--The National Association of Home Builders' index of builder confidence for sales of new, single-family homes slipped one point in December to 32, as the index remains near its lowest level in 15 years, the association said Monday.
The dip in December followed an unrevised reading for November of 33. The housing market index, compiled by the NAHB and Wells Fargo, is based on a survey of home construction industry perspectives on business.
"The HMI has come off September's low point, and other recent indicators confirm that buying conditions have improved and that demand is stabilizing - including improvements in measures of housing affordability, strengthening consumer assessments of home buying conditions and an upswing in applications for mortgages to buy homes," said NAHB Chief Economist David Seiders in a statement.
Within the NAHB's housing market index, the component for present sales of single-family homes was steady at 33 in December. Expectations for sales in the next six months rose three points to 48, while the traffic of prospective buyers fell three points to 23, the NAHB said.
"This was the third consecutive month in which builder expectations for sales over the upcoming six-month period have improved, and it's a good sign of things to come in the new year," said NAHB President David Pressly, in a statement.
Regionally, the NAHB housing market index grew in one area and fell or stayed flat in the other three. The index was up seven points to 22 in the Midwest, while the South dropped one point to 39 and the West fell four points to 31. The Northeast was unchanged at 37.
My quick and dirty analysis of the latest NAHB figures? We’re basically bouncing around at a low level (historically speaking) without making much progress up or down. Here’s the full write-up…
The National Association of Home Builders’ monthly index measuring builder sentiment was just released. The overall index dipped to 32 in December from 33 in November. The sub index measuring present sales was flat … the index measuring the outlook for future sales rose 3 points … and the index measuring prospective buyer traffic dropped 3 points.
The index’s cycle low to date was 30 in September. These latest figures show more of the same — we’re floundering around near very low levels, with no discernible progress lower OR higher.
http://interestrateroundup.blogspot.com
You mean we’re dancing on, or slightly above, the bottom?
Last time the builders were dancing on a bottom level of 32, the floor subsequently dropped out from under them, and the NAHB Index fell further down to 20 (see below). But this time is different…
Wasn’t that the guy from TOL’s contention? LOL. Seriously, though, it’s entirely accurate that RIGHT NOW, several indicators of activity have stabilized (mortgage purchase APPS, the NAPM index, etc.). But I do NOT agree that we’ve seen “the” bottom for pricing or “the” peak in inventory/supply. I fully expect inventories to march higher after the first of the year as homes that were pulled from the market this fall hit the market again, overwhelming the slight increase we’ve seen in demand. I would also note that the minor pick up in sales we’re seeing appears to be driven by price-cutting … in some cases, aggressive (30%+ off) price cutting. And given the magnitude of the inventory overhang, I’d expect more of the same next year.
In other words, far too early to call the ultimate bottom for the housing market as a whole — at least, that’s what it looks like from where I sit.
http://interestrateroundup.blogspot.com
The good news: Homebuilder sentiment has stabilized.
The bad news: It has stabilized at a level near 30, and the six consecutive months below a level of 40 represent the first time the index dipped below 40 since 1991. I know this time will be different, but the last time the NAHB Index dropped to 32 was at the onset of a nasty recession (July 1990). That time, the index bottomed out at a level of 20 the following year (but remember that this time will be different!).
THE NAHB/WELLS FARGO HOUSING MARKET INDEX
(HISTORICAL DATA)
Housing Market Index (Historical data)
(Seasonally Adjusted)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1985 50 58 54 49 51 54 58 58 56 59 58 57
1986 57 55 57 62 64 65 59 55 57 64 59 64
1987 63 60 60 59 55 56 55 54 52 50 56 51
1988 53 51 51 52 54 49 54 56 53 49 58 60
1989 54 53 48 44 44 45 46 50 51 48 46 43
1990 42 44 40 39 36 36 32 30 31 28 25 22
1991 20 27 36 41 40 42 41 36 37 37 37 35
1992 44 49 46 46 47 45 46 49 48 50 54 56
1993 55 52 53 52 51 53 57 60 62 66 71 71
1994 70 64 61 61 59 57 53 53 50 49 50 43
1995 40 42 40 42 43 45 49 50 51 55 52 53
1996 54 49 59 60 61 59 58 56 55 56 54 55
1997 54 52 57 56 55 56 55 58 59 59 58 60
1998 60 65 66 67 67 70 71 72 71 73 77 78
1999 75 71 71 71 75 77 75 72 72 69 70 70
2000 69 68 64 63 63 58 59 60 60 62 63 57
2001 52 58 60 59 58 59 57 59 55 46 48 55
2002 58 58 62 61 61 61 61 55 63 61 62 63
2003 62 63 56 55 60 63 65 67 67 69 68 69
2004 68 66 66 69 69 68 67 70 67 69 70 71
2005 70 69 70 67 70 72 70 67 65 68 61 57
2006 57 56 54 51 46 42 39 33 30 31 33 32
I have one further observation.
On casual inspection, I would say this looks like a soft landing:
1987 63 60 60 59 55 56 55 54 52 50 56 51
1988 53 51 51 52 54 49 54 56 53 49 58 60
1989 54 53 48 44 44 45 46 50 51 48 46 43
1990 42 44 40 39 36 36 32 30 31 28 25 22
1991 20 27 36 41 40 42 41 36 37 37 37 35
and this looks like a hard landing:
2005 70 69 70 67 70 72 70 67 65 68 61 57
2006 57 56 54 51 46 42 39 33 30 31 33 32.
What’cha think?
Considering it dropped in half in 1990 from a much lower level of 42 to 20 (91) and it fell by half from a much higher level of 68 in late 02 to 33 in less than a year….yeah, it looks a lot harder.
“68 in late 02 to 33″
That looks like a typo.
But I believe you refer to the following:
Oct 2005 68
Oct 2006 31
YOY Percentage decline in builder’s sentiment index = 54.4%
Official magnitude of construction slowdown (thus far) = 29%
NAHB Dec Housing Index 32 Vs 33 in Nov
Against my own best advice, my sister and her husband just put down a contract for $300K on a home that sold a couple of months ago in a foreclosure sale for $248K (in Lake St. Louis). I told my brother-in-law that they were probably handing over $52K to the seller with no strings attached (my sister badgered him into going along with the purchase against his better judgment).
I had two suggestions for my brother-in-law as possible avenues to getting out of the contract:
1) Have an independent inspector conduct a very careful inspection, and walk away if any hidden defects are uncovered.
2) Get their own independent appraisal (even though the Realtwhore assured them it would not be necessary to do so, as I am sure the lender and appraiser are already lined up to get the deal to go through) and the independent appraisor to conduct the appraisal without revealing the contract price.
Any chance either of these ploys might enable them to weasel out of the contract before the albatross is hung over their necks? And does anyone have any other bright ideas for walking away from a contract (actually they only have $1500 earnest money at stake, but they are a bit on the penny-wise-pound-foolish side, so I doubt they will muster the gumption to walk without further cause).
Get a “vigorous” inspection done by the best person they can find (actually EVERYONE should do this, routinely, but they don’t). Any inspector worth his salt will come up with something about a house that needs correcting.
I’d also suggest they get an independent appraisal and OF COURSE given to an appraiser who has no idea of the contract price. In fact, if it isn’t illegal to reveal the contract price for the home to an “independent” appraiser, it should be.
“Against my own best advice, my sister and her husband just put down a contract for $300K on a home…”
GS, I would have thought that you’d have your family members “dialed in” regarding the RE bubble issue; sorry to hear this news.
The big problem with the RE cycle is the period between the mean. Most people have a tough time waiting that long or relocating to reasonably priced area. And $300k is still a lot of money no matter how you slice it.
“GS, I would have thought that you’d have your family members “dialed in” regarding the RE bubble issue;”
I am frankly a bit shocked, as no less than thirty days ago, I coached my sister to at least wait until next summer. As they say, you can lead a horse to water but you can’t make it drink.
“And $300k is still a lot of money no matter how you slice it.”
What if a giant printing press slices it in half?
“What if a giant printing press slices it in half?”
Yes, it could happen; It might even happen to me too, but likely it’ll be stagflation with my luck. My personal experience has been contractual promises for me while the opposite parties practice without guarantee.
GS,
We were contracted to buy a house in Escondido in 2004. By using a very good inspector, whom we know personally, I was able to get us out of it.
Hope you’re sucessful at getting her out at this late stage of the game!! Good luck!
Remember a few months ago when posters predicted crime would rise as the bubble burst began?
http://tinyurl.com/yf26nl
U.S. violent crimes jump in first half of 2006: FBI
Mon Dec 18, 2006
10:15am ET
By James Vicini
“WASHINGTON (Reuters) - Murders, robberies and other violent crimes reported in the United States jumped 3.7 percent in the first half of the year, continuing a troubling upswing that began in 2005, the FBI said on Monday.
The FBI said law enforcement agencies reported that robberies soared by a startling 9.7 percent, followed by an increase in murders of 1.4 percent and aggravated assaults of 1.2 percent.”
See link for rest of report.
Get ready for a gunocracy.
Imagine what happens when disatisfied minority g.i.’s come home as losers, (we like to play the blame game and they’ll be an obvious target, once it becomes clear we have lost the war) to no jobs and the trauma of having watched friends be horribly maimed or killed, to a completely apathetic society, who paid lip service to them, vis a vis an Americanized Flag, in the shape of a ribbon, on the back of their cars, and little else.
We’ll reap what we’ve sown~
Jeez, “disatisfied minority GI’s, apathetic society, Americanized flag” dogs living with cats, total DESTRUCTION! Does anybody else miss the good old days when this was just a housing bubble blog?
SteadyKat,
Actually, with the exception of the first few months, it has always been like that. If you are going to open a blog up to the public, good luck trying to stop it.
I remember once in June 2005. There was no registration or anything. I did a post, and went out to eat. When I got back there were over 400 comments on that thread. Of course, I had to delete 150 racial slurs, etc, but you get the idea.
Housing has a lot to do with race, and always has.
Folk in the ‘hood get irritable when they can’t finance custom rims anymore.
Go away racist troll.
i didnt see where he identifed a race but, your identifying him as one only means that you clasify his statement as appling to a particular race. This in itself means that you share the same racial bias as the accused. I dont care, just pointing that out. Pc can go the way of the do-do bird
The comment was a response to an earlier one about “minorities”. The commenter referred specifically to the “hood”…I think his meaning is pretty obvious. I think the implication that minorities are more likely to spend more than they can afford on vanity items by snidely singling out custom rims is racist. White people in the suburbs are equally likely to overspend on Hummers, SUVs, home movie systems, etc.
White people don’t live in the hood? I drive to work every day here in Sacramento through a “hood” and see lots of white people. White people can live in hoods to you know.
No, not a racist comment, Katester. Violent crime primarily occurs in ghettos, which these days are often called “‘hoods”. Really. Ask anybody. And as examples of ostentatious overspending on useless items by poor people…. can you do better than custom rims?
I guess I could have said “lawn ornaments” to satisfy the PC Police. Rare sightings in the ‘hood.
Kate is the racist, OpusFluke the realist. Over 30,000 white women are raped by minorities each year; I guess Kate wasn’t one of them.
“Folk in the ‘hood get irritable when they can’t finance custom rims anymore”
I believe the favorite method of financing in the hood is thru transactions involving 8 balls and kilos.
Just a guess but i expect the ‘import’business in compton will pick up again. Back in the roaring 80’s-90’s There was nothing you could’nt get off the streets in Compton. The expression frequently used is ‘jacking’, a term used by the LA homeys to describe jumping and assaulting someone(robbery). It was a favorite recreation of LA Gang-bangers to cruise the streets looking for someone to jack. I knew someone who narrowly escaped being caned with a pimp-stick by one of these drive-by thugs.
BTW i used to work in some really hard-core areas of SCentral LA and had to deal with some real-life hard-core ghetto homeys. Actually some of them were quite intelligent but they decided that being a ‘gangsta’ was far more hip and cool than the drudgery of working or going to school. Just to sum it up, the most dangerous places in Scentral are the public housing projects in the inner LA ghetto areas such a nickerson gardens.
http://www.forbes.com/home/free_forbes/2006/1225/142.html
“Bet The House
All can agree that the housing data are grim enough today. From their recent respective peaks, single-family home sales are down by 15%, single-family housing starts by 35% and single-family home prices by 3.5%. The question is whether the stock market and the famously resilient U.S. economy will continue to shrug off the bad news.
Gary Gordon, a member of the investment committee of Annaly Mortgage Management (nyse: NLYPRA - news - people ), has built a coherent and persuasive case that they won’t. The housing downturn will proceed in three phases, Gordon postulates. In Phase I, now under way, home sales will drop to cure what are politely known as “affordability issues.” In Phase II, starting soon, job growth will falter as the pace of lending and borrowing downshifts. In Phase III, lingering into 2008, mortgage lenders will relearn the fine art of saying no. The resulting withdrawal of easy credit will add new downward pressure on house prices and consumer spending.
The fundamental problem, Gordon observes, is that the typical American home buyer can’t afford a home at today’s prices. “We Americans have tested the limits of affordability over the past five years,” he says. “Since the end of 2001, disposable personal income is up about 25% and mortgage rates are little changed. That argues for 25% higher home prices. Instead, home prices rose by an average of 50% and in many markets by 100% or more.” In fact, according to data compiled by Yale economist Robert Shiller, inflation-adjusted house prices in the past five years logged the second-fastest cumulative growth since the administration of William McKinley 110 years ago (the late 1940s hold the record for the fastest rise in real house prices over a half-decade).
Falling house prices in isolation would constitute no grave peril. A housing-induced downturn in job growth is what would cause a bear’s pulse to race. Gordon insists it’s coming, because the formerly potent stimulus of above-trend borrowing growth is about to be removed. Consider, he notes: “Americans pulled out nearly $500 billion of equity in their homes last year in order to buy other stuff. That number shot up from about $100 billion in 2001.” The source of this borrowing? Why, the 12%–or $2 trillion–bump-up in the appraised value of the 2005 U.S. housing stock, double the 2002 increase. Reduce or reverse this appreciation and you stymie the borrowing boom.
The bulls will counter that, at the first sign of serious weakness, the Federal Reserve would engineer a collapse in mortgage-borrowing costs. Gordon points out that the Fed can do only so much. By trimming the funds rate, it can invite lenders and borrowers to do business together. But it can hardly hold a gun to their heads.
And a large-caliber weapon would be needed if losses on the recent crop of exotic, nonconforming mortgages (i.e., loans not guaranteed by Fannie Mae (nyse: FNM - news - people ) or Freddie Mac (nyse: FRE - news - people )) continue to work higher. And why wouldn’t they? In 1998 “liars’ loans” (those with little or no documentation required) amounted to 24% of mortgage originations. To date this year they account for 62%. Interest-only mortgages have vaulted in the same period from virtually no market share in the mainstream lending business to a 50% share.
Already, despite a still low jobless rate, delinquencies, foreclosures and other signs of distress are surfacing in the subprime segment of the nonagency market. Even a mild business downturn could cause a revulsion against the kind of easy credit that put so many houses within financial reach (or seemed to).
Investment strategies to deal with this predicament could involve two exchange-traded funds. Bears on residential real estate could sell (if they own it) or short (if they don’t) the StreetTracks SPDR Homebuilders (35, XHB ) or buy the puts thereon.”
Median price of new homes in Yolo County down 21.8% YoY per DataQuick.
sacramentolanding.blogspot.com
http://dailydemocrat.com/news/ci_4853357
MARK AUSTIN THOMAS: The Iranian government has ordered its central bank to dump the country’s dollar reserves. And Venezuela has also cut its dollar holdings. From London, home of the world’s largest foreign exchange market, Stephen Beard reports.
STEPHEN BEARD: The Teheran government has reportedly instructed the Iranian Central bank to switch its $20 billion worth of reserves into euros.
Venezuela says it has already cut its dollar holdings by a hefty 15 percent. The proceeds have also been ploughed into the European currency.
In both cases, dealers say, the scale of the sales was largely motivated by hatred for the U.S.
Neil MacKinnon of the ECU currency fund management group does not expect many other central banks to follow suit since they don’t want to damage the value of their large dollar holdings.
NEIL MACKINNON: By exiting the dollar as well, they could easily precipitate a very sharp dollar decline which could also impact on their investments.
OPEC countries as a whole own $632 billion in reserve. The figure for China is now over a trillion.
In London, this is Stephen Beard for Marketplace.
http://marketplace.publicradio.org/shows/2006/12/18/AM2006121810.html
This is an aside but related to the global imbalance of dollars. I believe it was in the mid ’80s that it was postulated that the US was a net agricultural importer. The reason was that illegal drugs imports amounted to 80 billion dollars a year. “U.S. growers produce nearly $35 billion worth of marijuana annually,…Tom Riley, a spokesman for the U.S. Office of National Drug Control Policy, said he could not confirm the report’s conclusions on the size of the country’s marijuana crop. But he said the government estimated overall U.S. illegal drug use at $200 billion annually.”
California’s Marijuana crop is 13.8 billion
by comparison
The total value of 10,000 metric tons of marijuana at $1,606 per pound would be $35.8 billion.
By comparison, the United States produced an average of nearly $23.3 billion worth of corn annually from 2003 to 2005, $17.6 billion worth of soybeans, $12.2 billion worth of hay, nearly $11.1 billion worth of vegetables and $7.4 billion worth of wheat, the report said.
http://tinyurl.com/yzjo42
Happy Christmas Y’all
Wow. Lot of good that “War on Drugs” is doing, I suppose…
What is the consequences of the fact that this housing down turn is caused by over price, not a recession? Will market correct more or less than previous down turn?
IMHO, housing downturns are almost always caused by “price”. If you ask people who were watching, the LA downturn was going on before the defense sector meltdown. There was the frenzy, with multiple bids and claims that you would be “priced out forever”, until people couldn’t afford it anymore. Remember, buyers actually had to **qualify** for a mortgage back then, as well.
Housing downturns **cause** recessions, not the other way around.
“Since the end of 2001, disposable personal income is up about 25% and mortgage rates are little changed…”
Let me think about that. Since higher personal revenue equates to higher additional taxes, not to mention higher tax tiers and the onset of AMT, that means that gross personal income must have gone up 30 or 35% to result in a 25% disposable income increase.
He really wants us to believe this is typical?
Figures don’t lie, but liars figure. Virtually all of the recent income gains have been realized by people that already make insane amounts of money. Naturally, any new funds in their accounts is disposable. Doesn’t mean jack sh!t to j6p.
U.S. Files Charges vs Ex-Fannie Mae Exec
See full article at finance.yahoo.com
AP - The government on Monday filed civil charges against former Fannie Mae chief Franklin Raines and the mortgage giant’s former finance chief and controller, seeking fines and the return of millions in bonus money said to be tied to an improper accounting scheme.
I must say I am shocked. Truly shocked.
And………here is my mea culpa.
As you may recall, I said the guvmint would Never go after him for all the money he and his cronies have stolen.
Well, never say never.
They are going after him, but just like O.J., will he recieve his comeuppance?? I doubt it.
But if he goes to prison, a destitute man, may faith in the US guvmint will be renewed.
Missed the “Observed” heading yesterday, but here goes (SoCAL).
Took the weekend to go up to Big Bear & grab a cabin for some R&R. First stop after checking in was for a late (2:30) lunch @ the Log Cabin restaurant. Two other couples in the place. One of em, the guy’s on his cell (manners–F). Telling the other end of the line that he can’t close on the place. Seems he can’t get the loan funded. Barks at the woman he’s with about not being able to do anything about it.
As we’re heading back to the cabin, my wife comments on the HUGE number of For Sale signs. Now there always seem to be quite a few up there (second properties, guess people tire of em). But this time, they’re everywhere. And open house signs, LOTS… A week before Christmas, in the rain, er, then snow.
Sunday, go for a drive around the lake (& Baldwin lake as well). Over in the Baldwin area, WOW. Lots of stuff built in the last 2-3 years. Looks like most of it’s now back for sale. We stopped at one for wife to grab the flyer….In the two blocks ahead of me, no less than 10 more w/signs out. In winter!
The prices don’t appear to have slipped much………YET.
Thanks for the info! Sounds like fun.
I’m not making this up …
CNN/Money article today, sub-headline:
“Corporate profits are at their highest level since 1929.”
A quote from the article:
“I think profits can stay at their lofty levels as a percentage of GDP,” says Banc of America Investment Advisors chief market strategist Joseph Quinlan. ”
Here comes more “permanently high plateau” stuff, recycled for the new era.
“Strategists at 12 of the biggest Wall Street firms agree that U.S. stocks will rally next year. The last year that happened was for 2001, when the Standard & Poor’s 500 Index dropped 13 percent….
The unanimous view among the strategists tracked by Bloomberg that have made 2007 forecasts is just one signal of growing complacency about the market. An option-based index of investor concern dropped to a 13-year low last week, when the S&P 500 rose to its highest since November 2000.”
http://tinyurl.com/yxvp65
Wow. Those quotes are classic. We’ll be laughing at those for years to come!
Gawd, how can so many bright people be so totally clueless???
-
Hovnanian posts loss; shares sink
The homebuilder blames land-related charges for fourth-quarter loss; stock tumbles in extended trading.
December 18 2006: 6:38 PM EST
NEW YORK (Reuters) — Homebuilder Hovnanian Enterprises Inc. said on Monday that $315 million in land-related charges led to a quarterly loss in a weak U.S. housing market.
For the fiscal fourth quarter ended Oct. 31, Hovnanian posted a net loss of $117.9 million, or $1.88 per share, compared with a profit of $165.4 million, or $2.53 per share, a year earlier.
Revenues fell to $1.7 billion from $1.8 billion.
Hovnanian said it incurred $336 million of charges related to inventory impairments and land option write-offs in all of 2006, including $315 million in the fourth quarter.
Shares of Hovnanian (Charts) sank 6 percent in after-hours trade.
Time to buy the dip.
Most definitely. I expect a nice rally in HBs tomorrow, right on schedule.