“Unavoidable Consequence, As Supply Outstrips Demand”
The Morning Call reports from Pennsylvania. “Average home prices in the Lehigh Valley fell last month, the surest sign yet that the local home market is in retreat from the sales frenzy of the past few years. The number of homes sold, which has fallen six consecutive months.”
“Buyers have their pick of properties, and agents say they can make offers that are below the listing price. ‘The sellers who are getting good buyers are pricing their homes very competitively, because buyers have just so many options they will walk away and go to the next house,’ said Ellen Shaughnessy, a real estate agent in Easton.”
“Experts have said the rate of home appreciation in the Valley was unsustainable. The market was bolstered by strong demand from home buyers moving to the Valley from more expensive towns in New York and New Jersey, and to a lesser extent the Philadelphia area. The newcomers found Valley home prices more affordable and often offered more than the asking price.”
“‘We were expecting it to slow down. The market took much longer to give, but eventually it happened,’ said Bethlehem economist Kamran Afshar.”
“Last month, the number of homes sold fell 22 percent, compared with last year, and the number of pending sales fell 25 percent. It was the lowest number of pending sales contracts since December 2003, according to LVAR statistics.”
“The glut of homes on the market is slowing the pace of sales, experts say. The number of homes listed this year is almost double the number that have sold. There have been more new listings in the first 11 months of the year than all of last year.”
“As supply outstrips demand, an unavoidable consequence is a decline in home prices, said Afshar, the Bethlehem economist. ‘We expect further declines in volume, and maybe further adjustments to price,’ Afshar said.”
“Agents say sellers still want to set their own prices. Deb Dahlinger, an agent in Hanover Township, Northampton County, warns sellers they may have to consider a price reduction if the home does not sell after a month on the market.”
“I tell them: ‘Don’t expect the house to sell right away. It is going to be sitting like all the other ones,’ Dahlinger said.”
The Providence Journal from Rhode Island. “One classified newspaper ad says ‘1st Mo. FREE.’ Another: ‘Free Heat, Free Hot Water and FREE RENT!’”
“The latest ‘promotional giveaways’ to lure new tenants even include a free spa getaway weekend. If that’s not enough, one property manager offers $500 to anyone who makes a referral that lands a new tenant.”
“The reason is simple: rental properties are going empty. ‘Our occupancy rates are off anywhere from 2 to 5 percent’ from last year, said Cheryl Martin, VP of Residential Property Management of Warwick. ‘We need to do something to be more aggressive in order to compete.’”
“Property managers and real-estate agents say the demand for rentals priced at $1,100 per month and up has gone soft. Not since the recessional mid-1990s, Martin said, have they resorted to freebies to lure new tenants.”
“The large number of rentals going empty is reflected statewide in the ‘rental vacancy rate,’ which has nearly doubled in the last three years, to 7.7 percent last year, according to U.S. Census data.”
“‘We’re flooded with inventory,’ said Diane Barone, a real-estate agent in Cranston. ‘The rental market is terrible; it’s just terrible. You get a bunch of people and you show, you show, you show, and they’re just sitting there.’”
“The construction of hundreds of condos, many in downtown Providence, has also flooded the real-estate market, and some of the spillover is driving up the inventory of rentals as condo owners who can’t sell their units decide instead to rent them out.”
“‘I have a client right now, he’s got a little house on Ninth Street for $1,600 a month, and he’s down to $1,300 and nobody even wants to look at it,’ said Suzanne Knight, a real-estate agent on Providence’s East Side. ‘It’s been vacant for four months now. … There’s just much more supply than demand.’”
“East Side property owners are competing with new downtown properties, Knight said. ‘There are hundreds of rental units downtown that weren’t here two years ago,’ Knight said. ‘You’d think landlords would lower their rents, but it takes a while. So they’re empty.’”
The Baltimore Sun. “One-fifth of the ’subprime’ mortgage loans that Marylanders took out this year will end in foreclosure and home loss, according to a report released yesterday that predicts problems nationwide.”
“The findings are especially worrisome for Baltimore, where, according to one recent survey, about half of mortgage loans made to homebuyers in recent years are subprime.”
“Several independent experts said the center’s forecasts, though disturbing, seem reasonable. ‘It’s based on very sound assumptions,’ said Greg McBride, senior financial analyst with Bankrate.com. ‘Let’s hope it’s one of those worst-case scenarios that never comes to pass.’”
“Mark Zandi, chief economist of Economy.com, said he too expects significant increases in subprime loan defaults, fueled by ‘bad underwriting,’ weaker house prices and a softer job market.”
“Nervous regulators and lenders now are tightening standards, he said. Though that’s good news down the road, it’s bad for people stuck in mortgages they can’t afford, he said: ‘It’s going to be harder for homeowners … to refinance out.’”
“Carol Gilbert, co-chairman of the Baltimore Homeownership Preservation Coalition, thinks the state needs to offer temporary loans to homeowners in danger of losing their homes; to better promote its new ‘lifeline’ refinancing loan that can get Marylanders out of bad mortgages; and to help connect more people with nonprofit housing counselors.”
“‘It’s very troubling, but there are some things we can do,’ said Gilbert.”
“The root of the problem is that residents have taken out loans they clearly cannot afford over the long term, said Vinnie Quayle, executive director of the St. Ambrose Housing Aid Center in Baltimore.”
“Speaking in support of the report’s conclusions, Pat Vredevoogd Combs, president-elect of the National Association of Realtors, said: ‘We want to make sure that Americans who achieve the dream of homeownership do not see it turn into their worst nightmare.’”
“‘We’re flooded with inventory,’ said Diane Barone, a real-estate agent in Cranston. ‘The rental market is terrible; it’s just terrible. You get a bunch of people and you show, you show, you show, and they’re just sitting there.’”
LOWER THE PRICES, IDIOTS!!!
Do they need a PHD to figure this out? I think the new home builders have figured it out. You know I was thinking if it would be possible for home sellers to somehow act together and limit the supply of homes? With the internet, people are able to communicate much faster and efficiently. You have the people that have to sell and have no choice but to list their house. I think there are a lot of other folks that are just fishing.
This is the same phenomenon/dynamic that won the nobel price in economics for the guy in Beautiful mind played by Russell Crowe. Game Theory/inefficient markets occur when many market players chase the same prize. On the way up too many buyers chased too few homes. Now its too many Sellers chasing too high a price. Once this is over then you will ahve too few sellers chasing too few buyers and prices will be in a death spiral down equal to the one going up!! All of this inefficiency results in just one thing, waste/dead weight (both in the economic sence and in the literal sense). I’ve experienced it first hand both being a seller (in comand w/ a huge unearned profit) and a buyer (at the developer’s mercy) and seller again (at the buyer’s mercy). I’m happy to be on the sidelines renting, watching and still ahead of the game overall financially. When the time is right the developer/seller will be at my mercy so I can transfer the dead weight loss/waste I’ve accepted to them and just live a normal life for once after this craziness is over.
“You know I was thinking if it would be possible for home sellers to somehow act together and limit the supply of homes?”
LOL. I can see it. Remember the movie It’s a mad mad mad mad world when they all were talking about how foolish the old man was then one by one they left from the group and started hauling a$$ down the highway to prosperity.
Is this a case of Realtor antitrust?
“I was thinking if it would be possible for home sellers to somehow act together and limit the supply of homes”
That’s what that whole “don’t list now if you don’t *need* to sell, wait until the Spring ‘07 selling season to list (when buyers will be back in force)” thing is all about.
Wasn’t there even a powerpoint presentation or a memo from someone in the REIC stating that realtors should tell their clients not to list now, and instead wait until Spring ‘07?
As for limiting supply…kind of the way a earthen dam limits water supply down river until it starts leaking over the top…
“I was thinking if it would be possible for home sellers to somehow act together and limit the supply of homes”
I think it’s possible for some to wait, but not others. We’ve talked about the “strong hands” and “weak hands” currently trying to sell. The weak will screw it up for the strong, as they go into foreclosure, have short sales, drop their prices, making the comps lower.
Strong hands will weaken with time, as they are negative every month on cash flow.
I suspect the wave of ARM resets will make it pretty hard for people to limit supply.
From the WSJ Real Estate Discussion Board -
What you said, arroyogrande!
“The facts are we need to work through the excess inventory or backlog. If you have to sell, give the home curb appeal and hold the line. Never sell for less than last years comps. No exceptions. Don’t get robbed.”
Anyone who follows this dumb advice will get robbed by homebuilders who sell new inventory for less than comparable new homes. It is already happening. In fact, it would not surprise me at all if it came out that someone working in a homebuilder’s marketing department wrote that blog post.
comparable
newused homes.“it would not surprise me at all if it came out that someone working in a homebuilder’s marketing department wrote that blog post.”
GS… I used to work in a mktg dept for HBs, and your post almost made me cough out a bite of my tuna wrap.
If it’s not someone in the HB’s world, it’s out of a high-producing RE broker’s office…
lol
“I was thinking if it would be possible for home sellers to somehow act together and limit the supply of homes”
Oh, I see. OPEC for crappily built stucco hovels that nobody wanted to live in in the first place. Sounds like a great plan.
Get a job, Diane.
So much for the theory that you’d better buy now because rents are going up! NOT!
I’m sure rents are going up somewhere, just not in Rhode Island, and not Providence specifically.
Keep in mind that there are not many high paying jobs in Providence as there are only a handful of good companies in the area. The same job in Boston would pay roughly 10%-15% more and it is only 45 minutes away (by commuter train). They are trying to attract more businesses to RI with tax incentives, but I’m not sure how successful they’ve been.
The idiots are still hoping that Saint-Bernanke and his bunch of goons will be lowering their interest rates.
Right GetStucco . The sheep are taking their houses off the market while the homebuiders are paying the used real estate agents big commissions to bring the buyers their way .
Also , this isn’t the first time in history that people tried to control inventory so the prices wouldn’t fall .
It was just a shame that the prices got jacked up the way they did ,but I don’t like the attempt to hide the problem by the RE industry .
Yes, good advice. Let someone else cash in on their home lottery winnings first, before the pile of money is gone.
wierd,property reits have gone up over 35% in 06
“The reason is simple: rental properties are going empty. ‘Our occupancy rates are off anywhere from 2 to 5 percent’ from last year, said Cheryl Martin, VP of Residential Property Management of Warwick. ‘We need to do something to be more aggressive in order to compete.’”
LOWER THE PRICES AND LOWER THE RENTS.
Lower the rents?!
You can’t expect them to just give the property use away !
LOWER THE RENTS.
As a landlord myself there is sort of a conundrum. At a certain rent point it becomes self-defeating to lower it further. You do not want the tenants that cannot afford your rent unless you want to be a slumlord.
I bought 12 years ago so I can afford a LOT of vacancy.
feepness,
I’m not sure I follow your logic here. Doing a thorough credit/background check and calling references should take care of most obvious ‘undesirables’. And if you can attract quality tenants than generate positive cash-flow for you (vs. carrying costs & no income), then why wouldn’t you rent?
Sure, you can afford a lot of vacancies, but why would you want them? I can “afford” to lose half my savings and still manage, but would I want to if I didn’t have to? Do you just hate renters or something?
Sure, you can afford a lot of vacancies, but why would you want them? I can “afford” to lose half my savings and still manage, but would I want to if I didn’t have to? Do you just hate renters or something?
Not everything shows up on a credit check, and the further you lower the price the more credit checks you have to make to find the right person and the more problems you will have anyways and they will end up moving anyways!
And of course I hate renters… I’m a landlord. They’re always complaining about the heat not working or the toilet’s flooded or there are cockroaches biting the baby again. It’s just a terrible inconvenience.
Seriously, I’d rather wait 6 months and find the one tenant who STAYS because they can truly afford it rather than shuffle in/out 5 different tenants in three years because I knocked $50 off the price. That’s the difference I’m talking about. Fortunately I have a good renter and I have not raised the rent since 2004, and I am under market (and proud of it!) They’ve already been told the rent will go up in January. January 2008 that is.
wierd,property reits have gone up over 35% in 06
Supply-and-demand for rentals is apparently disconnected from supply-and-demand for the stocks of rentals.
It’s because it is a new economic model. New economy applied to bricks and mortar. “This time it’s different.” We will see in a couple of months.
We need to do something to be more aggressive in order to compete.’”
Lower your rents. I think that is how it works. Also start an ad campaign informing people on how renting is better than buying. You need to directly compete with the NAR.
I think you are on to something here. I don’t know if REITs are involved in buidling for sale properties as well. If so, they may not want to do that.
‘We need to do something to be more aggressive in order to compete.’
you could burn down the competition.
“wierd,property reits have gone up over 35% in 06″
If I were on the PPT, this is how I would pump money into the housing market — use my proxies to buy REIT shares…
Or just flood the market with liquidity and people will buy everything; stocks, bonds, etc.
Dirty money needs to washed into something. Probably money from a stupid african dictator.
My guess on REITs is that they’ve been bought by “investors” simply because they have “Real Estate” in the title. Just a variation on the home bubble.
They’re easy to buy and they’ve appreciated just like the home market. My guess is that they are going to correct with a dotcom like vengence as, from what I’ve read, they’re valuations are ludicrous….even dumber than the residential RE market.
Don’t forget the private equity bubble. From what I’ve seen, the PE folks are looking at many of the companies owned by REITs, esp. commercial RE.
I live in So Cal and spent a week on the east coast two months ago. We drove from Virginia through Gettysburg and on to Long Island. The new homes for sale in PA looked like Barns at first….but as we continued to see more of them - they looked more like garages with a 2nd story and porch.
Yep, the garage with accessory house is popular in PA. Saw them years ago when a friend moved there and rented one. The nice part of the house faces the rear. It’s kind of like mooning the rest of the neighborhood.
NYC banned front yard parking and limited front curb cuts in many areas, although enforcement isn’t the city’s strong suit.
‘We want to make sure that Americans who achieve the dream of homeownership do not see it turn into their worst nightmare.’”
Too late. You helped peope get into those homes with loans that were at insane fractions of their incomes with higher downstream payments. 2007 is indeed going to be “Auction heaven.” But still not time to buy. We need to let a few rounds of REOs go through to “season” the price expectations.
Ugly hasn’t yet begun.
Neil
Agree on all counts - especially the last, that ugly hasn’t even begun yet.
Reminds me of an old, old story: A man on horseback approaches the edge of a swampy area. He asks a boy standing nearby if the swamp has a hard bottom. They boy says it does, so the man proceeds to ride his horse into the swamp and immediately starts sinking deeply into it. He looks back at the boy and says: “I thought you said it had a hard bottom.” The boy replies: “It does, but you have not got half way to it yet.”
Yeah, let me get this straight: This is the same NAR who in 2004-2005 was telling all the sub-prime FBs-to-be to “buy now or be priced out forever”? These pithy little platitudes do not detract one bit from the shameful role the NAR and its willing minions played in shoe-horning FBs into houses that would be their (the FB’s) financial downfall, but produced fat commission checks. I almost hope the Rev’rend “‘Jus’ Me” Jackson and the NAACP shakedown machine actually goes after the NAR for damages, though they’d quickly buy him off.
The NAR was right. Those who didn’t buy did get priced out. There are no buyers left. They were wrong when they thought it would last “forever” though-
Exactly.
Or to rephrase it, what exactly happens to home prices when everybody is priced out?
REO’s acronym should be changed to BORE’s ( bank owned real estate), for greater transparency.
Weird to see the Lehigh Valley on here! Everyone local (in the LV) seems to think ‘we’ didn’t experience a bubble. It can’t happen here right!? Of course, prices went up huge amounts, equity locusts from NJ and NY have flips, and failed flips, all over the place.
Here’s a new construction flipper who bought ten units and can’t sell them. Why? Because the builder is giving ‘twin homes’ like these away right now. Link.
Gawd, that may be the ugliest house I’ve seen this year.
are you sure?
http://mayhem-chaos.net/photoblog/images/eyesore_of_the_month_march_2006.jpg
Nothing yet has beat the “Mausoleum” home in GA someone linked to. I can’t even imagine the conversations with architect. - Well, yes, I’d like a home - elegant, where I can “age in place” for the next 1000 years or so.
Rents won’t cover PITI. Good luck with that one. He’s a bit shy of a million high.
My thoughts exactly. Unless you “believe”, buying this with leverage at that price makes no sense.
If you have $2.6MM that you want to invest for cashflow, you can either:
a) buy his nightmare all cash and earn 4% on a depreciating asset with management hassles; or
b) you can put your money in the bank or buy Treasuries and make more and be more liquid.
Hmmmm. What to do…what to do?
She bought them new in 2005 for 219,000 per unit. Didn’t even get a discount for buying ten (regular ‘joes’ were paying the same price)! Been listed for months and months. Many other flippers in the same situation around here…
I want to point out to flatffplan and GetStucco that jstab has spelled “weird” correctly. I before E except after C, except in weird and seize
…and height, and heifer, and neither, and sovereign, and leisure, and foreign, and some others I’m forgetting…
Am I the only one who is amused by the fact that the MLS write up states that, “All are currently rented at $1,500/month” yet there are large “RENT” signs in both of the 2nd story windows?
So, finally it starts coming out what I have kept saying. Not only do you have a pricing problem, you have more housing that was built THAN AVAILABLE PEOPLE TO OCCUPY THEM.
Not only will prices go down to match the demand, you will still have houses at that time that cannot be sold, because there will be no one available to buy it. And this is regardless of the price or mortgage available.
No, some crackhead will be more than happy to have it.
And BIG houses. A young couple buys a 4/2.5, when their ARM adjusts, they’re renting rooms to help maximize the probability of not losing their house. That’s 2 more studio apartments on the market.
Excellent point, SMF. The apparent shortage was due to a lot of “investor” purchases. Once it becomes apparent that housing is not always a good “investment” unless occupied, it will take a while for people to spread themselves out into the available supply. I’ll help, since I like having two or more domiciles. Just now, though, I will continue to accomplish that with a mosaic of seasonal rentals.
And I know of at least one ‘investor’ purchase that was done as temporary housing for their kids going to university. So the amount of speculation could easily top 50%.
And in my line of work, were I do a lot of residential design, I have already been told and have witnessed the shift from investors towards serving the low-income market, since during the last boom, that was the only market that was not served.
From Toll Brothers quick delivery inventory, quite a surge of for sale spec inventory in the last week:
12-4: 612
12-11: 615
12-18: 659
Russ Winter,
That’s up in Portland right?
Here they come! The boo-hoo whiners who, just a few months ago, were the gloating financial genius brigade when they bought properties which, “Can only go up in value,” are starting to appear. Now they want help from the state or anyone else who’s stupid enough to feel sorry for them. They want cheap loans because they are are in danger of losing their crappy over-valued homes.
If they are struggling to pay the mortgage, here’s a revelation for those stooopid idiots……….YOU DON’T OWN THE PROPERTY ANYWAY! The bank owns the damn property. If they are underwater and they were smart they would do what the banks do - look after their own interests. WALK AWAY!! Live there for several months without paying the mortgage until they kick you out and put the money in your pocket. So you will have bad credit for 10 years, Great! That means you cannot buy crap you don’t need in the first place and maybe you will do what everyone used to do in the old days. Save up for something you want to buy. In 10 years you might have 20% deposit for a house.
To many that might sound irresponsible but, sadly, times have changed and we now live in a world of total greed which filters down from the top. The broker CEO’s making $50 million a year or the oil executives making $400 million pay-offs. Or stock market tour guides like Grasso making $150 million and the banks, the mortgage companies who sell dangerous financial instruments and the realtors who change their yada-yada depending on the direction of the market and with no thought or sympathy as to how these loans will hurt people. Just as long as they get the money.
I’m now an old fart, brought up to be responsible for my debts as my parents were before me but, if I were younger and in mortgage trouble or had wracked up big credit card debts - I would have no hesitation in doing to the banks and the credit card/mortgage corporations what they do to others. Shaft ‘em.
Here’s a lesson I learned years ago from a very close friend (now long gone) who was raised by Jesuits in Ireland. (I’m not religious by the way.) He told me the Irish Jesuit’s taught the kids that if they saw something they wanted to buy, NOT to buy it straight away. To go home, think about it, then go back and look at it again. Think about it some more and then decide if you really need it. He said (and it’s true because I used the technique over the years) that usually you end up deciding you don’t want or need it. I’ve also used the same “technique” when buying a car. I NEVER buy on impulse or allow any sales people to pressure me into buying on the spot. I ignore their pissed off looks when I don’t buy. I go home - think about it for a long while and then decide. Just imagine how many of these fb’s would have lost out if they had “gone home to think about it” when the smarmy realtorwhore told them, “If you don’t buy now you’ll miss out.” Now think about the thousands of fb’s who wish to hell they HAD gone home to think about it - and lost out on that great deal which is now a horror story.
He told me the Irish Jesuit’s taught the kids that if they saw something they wanted to buy, NOT to buy it straight away. To go home, think about it, then go back and look at it again.
The fact that the term “layaway” ever existed is a monument to human stupidity. The fact that it has gone away in favor of credit is an even greater one.
Mike for president!!
Just imagine how many of these fb’s would have lost out if they had “gone home to think about it” when the smarmy realtorwhore told them, “If you don’t buy now you’ll miss out.”
We were looking at a new neighborhood that was going up around 2002. They were having $5000 per month increases and holding lotteries for available lots. You did not get to pick what floor plan you wanted or lot only that you won a chance for one of the available homes to be built. You did get to choose from 3 different elevations however, yeah. When they filled up that neighborhood and got ready to release the next subdivision about 2 dozen familys started camping out at the trailer. They camped there for two weeks prior to the release. I’m telling you we really started to believe that this is the way it’s going to be now. We were convinced that there were going to be more and more people moving into the area and that developments would never keep up. I kept saying to anyone that would listen that this was nuts and the builders were going to regret it at some point. The saleslady at the models would tell us that the price sheet would be increasing next week with a great big grin on her face. I recall times when passing the model homes cars had to park in the dirt lot accross the street from people looking. Now as I drive home from work in the evening, passing similar new subdivisions that have row after row of new finished and partly finished homes on several streets there is not a single light on in any of them. I really feel for the dozen or so that bought late last year or early this year in that neighborhood. Talk about a sinking feeling. I have been duped out a few dollars here and there in my life but to be out tens of thousands would be devastating I’m afraid.
Try “being duped out of hundreds of thousands of dollars”.
This may be for the “bits” section but it seems that the phrase “excess liquidity” has been appearing more and more and is quite the new mantra on CNBC. I think this might become the scapegoat du jour as the markets (dow, RE, global credit) descend down the big tube.
Commentators on CNBC mentioned that the recent upswing on the dow is “excess liquidity” from the RE market looking for a home and that a substantial correction is on the horizon. If that’s the case, how can anyone be out there arguing for rate cuts when there are already trillions of dollars floating around in the ether with nowhere left to go? This should prompt the fed to print less money. It would hurt the RE market but save everything else from collapse.
“Excess liquidity” has caused the mania on the way up and will probably crush everything in it’s path on the way down. I’m ordering my t-shirts now.
I think the GS exec who just got a $100m bonus knows a thing or two about the excess liquidity situation.
After a week of dipping slightly against USD, Australian dollar has been resuming its rise for the past day or two. Excess liquidity in USD certainly has been flowing to euros lately, but there is no kind of decent yield available on euro-denominated bonds. This morning I’ll probably buy some more Australian govt bonds (YTM about 5.4% for 7 yrs). No excess liquidity here.
t-shirt slogans:
I rode the flume of excess liquidity.
Excess liquidity; if it swells, ride it.
Excess liquidity; dunk, splash, crash.
‘Manufacturing in the Philadelphia region this month contracted by the most in more than three years as orders continued to fall, a Federal Reserve survey showed today. The Fed Bank of Philadelphia’s general economic index fell more than expected to minus 4.3, the weakest since April 2003, from 5.1 in November.’
‘The factory sector as a whole is having a hard time,’ said Kevin Harris, chief economist at Informa Global Markets in New York. ‘It’s losing jobs. It’s struggling because it produces components for houses and autos.’
But Ben, the housing slump will NOT carry over into the rest of the economy.
[sarcasm off]
you mean Goldilocks??
Hmmm… goldilocks.. Which TV personality uses that moniker?
maybe……..Cocaine LARRY!
That’s right!!! Cocaine Larry Kudlow. The current President and CEO of the Liars Club of America. His next gig will be co-pinnochio with Dave Liareah.
Goldilocks ended up eaten by bears. They always forget the ending of this story.
You’ll get a lot of people going “say what?” to that statement.
This is because Disney et al gave all those European fairy tales happy endings, and the sanitised version is what most people know.
Manufacturing down in Philly?
No prob…our next growth industry…TADA!!!!!!!!!
CASINOS!
Two just greenlighted in the city, and Harrah’s about to open in beautiful downtown Chester, PA.
BTW, tl are you out there? The pix you posted in the gallery re: Phila. Bubble were a perfect visual of the housing mania of the insanity that has gripped this town.
Richard Russell to Wall Street: “Bah, humbug!”
PETER BRIMELOW
Russell’s stingy with holiday cheer
By Peter Brimelow, MarketWatch
Last Update: 1:34 AM ET Dec 21, 2006
NEW YORK (MarketWatch) — Santa Claus may have come and gone. But the Grinch is still here.
The Dow industrials’ stall after making a new high Tuesday upset some commentators. Stocks have been strong for six months. How long can it go on?
In circumstances like this, I like checking with Dow Theory Letters’ octogenarian Richard Russell because of his record of calling major market turns, his strong market timing performance as measured by the Hulbert Financial Digest, and his endlessly active mind.
There are some readers who can’t stand Russell, who can be a slippery old beggar. But, hey, an editor stopped my once-annual interviews with Milton Friedman years ago on the grounds Friedman was too old. I don’t want to be involved in the same mistake again.
http://tinyurl.com/yltafo
“Carol Gilbert, co-chairman of the Baltimore Homeownership Preservation Coalition, thinks the state needs to offer temporary loans to homeowners in danger of losing their homes; to better promote its new ‘lifeline’ refinancing loan that can get Marylanders out of bad mortgages…”
Here we go- a taxpayer bailout of FBs.
“temporary loans” = FBers borrow more money, default on those loans too, hence “temporary.”
Why not just throw the money in a gigantic, 27-story toilet? Make it a tourist attraction and sell tickets!
they already have 27 story toilets in Miami. Oh, sorry those are condos.
Er, if they couldn’t afford the 1st set of loans and can’t pay them back what makes Carol think the “temporary” loans will ever be repaid ? What circular reasoning these fools have.
Hopefully it won’t happen in CA, where ~50% of us are renters. I will write a letter a day to my representative and the Gov. if such a thing is proposed here.
“Here we go- a taxpayer bailout of FBs.”
…and lenders.
“The market was bolstered by strong demand from home buyers moving to the Valley from more expensive towns in New York and New Jersey, and to a lesser extent the Philadelphia area.”
So close to NYC and metro NJ yet they don’t attribute the skyrocketing prices to 9/11?
“The market was bolstered by strong demand from home buyers moving to the Valley from more expensive towns in New York and New Jersey, and to a lesser extent the Philadelphia area.”
Some towns in Bucks County have been bedroom communities for folks working in Manhattan. I’m wondering if Lehigh Valley locations were added to the list of people working in NYC/living in PA.
It doesn’t seem likely that Baby Boomers would be retiring to the Lehigh Valley…
I’m in the valley and at the peak of the bubble, every open house had a NJ or NY plate parked in front. The locals have made out like bandits around here, selling run down shacks in crappy locations for mega bucks. There are whole developments in Lower Macungie that are made up of commuters who work in NJ (that has to be a killer drive…).
You know what, good for the locals, then.
I just hope they didn’t take that wad and “invest” in some condo in Naples, FL…!!
You’re gonna want to send them back in a hurry.
“The glut of homes on the market is slowing the pace of sales, experts say. ”
I would have said that the slowing of sales is what results in a glut, and not vv. WHich is how come I’m not an expert.
“The glut of homes on the market is slowing the pace of sales, experts say.
I’m glad they quoted experts on that one, elsewise it would be incredulously hard to believe.
I moved to the Lehigh Valley 4 years ago when I could get an existing 4BR 2.5BA on 1/2 acre for $250,000, instead of the $500-600M it would cost in Mercer County NJ. The Valley was a good deal in that you could get much more house for the money (and lower taxes) than living in NJ.
I noticed in the last 1-2 years that so much of the new construction is in the $500-600M area, with there being a development in Bethlehem that goes as high as $1.3MM!
So now you have a ton of houses on the market, prices are dropping, there is still a ton farmland available for more building houses newer than yours, and if you have to commute during rush hour it is 1 1/2 hours to eastern NJ.
People here are just as screwed as NJ, except with a longer car ride every day.
with the 100 bypass, 78 and 33 complete, the highway infrastructure is really pretty nice around the LV.
Plus a casino in Bethlehem, Minor League baseball in Atown, and high-end shopping in saucon valley, I totally see why there was a boom.
However, Lower Macungie? Thats OUT THERE from NJ and NYC. Got to be at least 30-40 mins to the NJ border.
The valley has been economically depressed for years, and truthfully, I thought the prices up there were still a little too low, at least in established neighborhoods. The new developments however, were crazy.
I don’t know man, 78 is a gawdawful mess with more craters than the moon. And you mean the 222 bypass, which STILL isn’t done and won’t really solve too many problems. 22 is choked at all times and LowMac was the fastest growing muni in the state for the past several years. It is exploding with developments… I do agree that prices in established neighborhoods were a little too low, but not anymore.