Bits Bucket And Craigslist Finds For December 26, 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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Name:Ben Jones
Location:Northern Arizona, United States
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Anyone who is interested in gaining insight to the subprime lending debacle currently underway is advised to read this sobering account of deregulation run amok, which is also very useful for gauging the govt’s level of awareness (as of September 2006) of the housing sector’s problems which lie beneath the MSM veneer:
ALTERNATIVE MORTGAGE PRODUCTS
Impact on Defaults Remains Unclear, but Disclosure of Risks to Borrowers Could Be Improved
(Caution: .pdf file)
http://www.gao.gov/new.items/d061021.pdf
P.S. Ben — Happy Holidays!
BTW, “Bits Bucket And Craigslist Finds For December 24, 2006″ s/b changed to “December 26, 2006″ (and please delete this reminder if it is convenient to do so).
Thanks!
An now we begin to reap the “fruit” of mind numbing, shortsighted deregulation beginning circa 1981.
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franklin raines ran a tight ship.
Good to see you have a lucid moment from time to time.
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don’t make me sic russell on you again.
I am guessing Russell is once again happily shilling away back on the SDCIA board.
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he did give you a good beatdown, though.
I presume “Russell” is another yapping fool of the minority barking moonbat brigade?
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I get “CaptainCrispyStucco” all confused. Left-wing radical anti-establishment hippie-reject conspiracy theorists all sound alike to me.
“… he did give you a good beatdown, though.”
Maybe by your lame standards.
Everybody here knows all about your silly shaking in your boots fear mongering Gekko…. No confusion at all.
Try again.
‘I get “CaptainCrispyStucco” all confused. Left-wing radical anti-establishment hippie-reject conspiracy theorists all sound alike to me.’
You needn’t feel badly about that. Distinguishing other shades besides pitch black and snow white poses an unsurmountable mental hurdle to many of you ditto-heads who never tire of loudly proclaiming your conservative stripes.
BHAAHHAHAHA. I have no further comment.
“Lawyer demands classified Fannie Mae files”, DOW JONES/AP, Dec 22nd
http://www.tiny.cc/hSEZ7
The lawyer for former Fannie Mae Chairman and Chief Executive Franklin Raines filed a motion in federal court Thursday demanding that the Office of Federal Housing Enterprise Oversight produce more than 300,000 pages of documents related to the company’s operations that its top regulator has allegedly shielded as classified.”
What does a good laywer charge in paralegal fees for coping 300,000 pages of legal doc’s?
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maybe Franklin should go in and “pull a Sandy Berger”…
http://edition.cnn.com/2006/US/12/21/berger.documents.ap/index.html?eref=rss_topstories
Incredible!!!
doesn’t matter to Raines. FNM has to pay all legal fees per his employment agreement.
I want to know what on earth could be in those documents to be labeled classified. Maybe they don’t mean it in the military sense, but that’s the only one I know of w.r.t. government / government sponsored orgs.
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Franklin should send his buddy Sandy in!
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The notes dramatically described Berger’s removal of documents during an October 2, 2003, visit to the Archives.
Berger took a break to go outside without an escort while it was dark. He had taken four documents in his pockets.
“He headed toward a construction area. … Mr. Berger looked up and down the street, up into the windows of the Archives and the DOJ [Department of Justice], and did not see anyone,” the interview notes said.
He then slid the documents under a construction trailer, according to the inspector general. Berger acknowledged that he later retrieved the documents from the construction area and returned with them to his office.
“He was aware of the risk he was taking,” the inspector general’s notes said. Berger then returned to the Archives building without fearing the documents would slip out of his pockets or that staff would notice that his pockets were bulging.
The notes said Berger had not been aware that Archives staff had been tracking the documents he was provided because of earlier suspicions from previous visits that he was removing materials. Also, the employees had made copies of some documents.
In October 2003, the report said, an Archives official called Berger to discuss missing documents from his visit two days earlier. The investigator’s notes said, “Mr. Berger panicked because he realized he was caught.”
The notes said that Berger had “destroyed, cut into small pieces, three of the four documents. These were put in the trash.”
After the trash had been picked up, Berger “tried to find the trash collector but had no luck,” the notes said.
http://edition.cnn.com/2006/US/12/21/berger.documents.ap/index.html?eref=rss_topstories
“What does a good laywer charge in paralegal fees for coping 300,000 pages of legal doc’s?”
I am guessing those copying fees could run into the billions of dollars.
Wait a minute. How in the world can documents of a housing bureaucracy be “classified?” Are these things key to our national security? Maybe this came about under Raines: “Sneaky” and “Sneakier.” His bonuses would have been “Top Sneaky.”
As a follow up, look at the CDS (credit default swaps) chart of this PDF report:
http://www.ssga.com/library/esps/Growth_in_FI_Derivatives_Zielinski_Mauro_7.14.06REVCCRI1154097386.pdf
200% per year!!
There is nothing scary about CDS if they are used prudently.
I guess the problem in the US is that you have overregulation in some areas (Sarbox) and underregulation in others (banking regulator).
What is scary is that you think 200% a year is alot, but don’t know what the base figure was - it could have been $100!
Remember - lies, damned lies and statistics…
Loafer
Scary story (the true kind),
Christmas dinner. My dad is retired (15 yrs) and has the old time Machinist Union pension. The pension fund is managed by an insurance company with a name like “Lincoln Mutual” (my mom wasn’t sure) My folks are near eighty now. I was talking about my fears that there may be some financial trouble coming. My mom looked at me with a troubled face and said–”You have mentioned this before and I thought you were just worrying too much, and that you got that from me (I did), but I got the mail Monday and I was flipping though it on the way back to the house–there was a letter from the union and I had a feeling “this is trouble”. The letter said that it was just a reminder that if certain investment conditions occur it could affect our pension benefits. It was long letter with all kinds of technical jargon about future investment scenarios and what percentage of our pensions and survivor benefits we would get under the listed circumstances.” (my paraphrase) She said: ” I think something has already gone wrong and they are getting us ready for cuts coming soon.” (her words) She had forgotten to bring the letter so I could read it. There were two other relatives there retired from the same Union who had not yet gotten last weeks mail, due to holiday travel to their kid’s (the look on their faces was horrifying.) Some of you here are brilliant, and have made many spot-on predictions. One of these concerned pension fund fallout. The day may be coming soon. I wish the people who play fast and loose with other peoples retirement money could see the worry on an eighty year old face when fixed income, defined benefit pension funds starts looking in trouble. I calmed my folks down by letting them know that since they own their (modest) home and have no other debt, and given the financial resources of me and my brother, that they have nothing to worry about. My Aunt and Uncle I don’t know about. My folks don’t want to be a burden on us–it makes them feel terrible–they are not the kind of people who look for handouts. They are not sophisticated investors, they saved money, played by the rules, but their investments have not kept up with the inflation in their lives (energy, healthcare, RE tax, ect.) If there is a shakeout in this union pension–how many lives are going to be destroyed when the margin of error is gone–and maybe there are not affluent kids around willing to shoulder some burden (hell, maybe their heloc’d to the tits themselves and were counting on parents.) My parents’ generation had been taught to trust these financial institutions–I know better–but they didn’t. The government can’t fix this–it would be too big.
You have good reason to be concerned. My employer of 33 years filed bankruptcy to dump their pensons & I lost 40% of mine. This is one of several icebergs floating around.
Is SC Professor in the house? Do the new bankruptcy laws affect the treatment of pension liabilities in Chapter 11?
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pensions and social security are gravy and i’m certainly not counting on them for retirement income. you need to save and invest on your own in order to ensure a comfortable retirement. you can’t rely on your employer, your union, or your government to take care of you. you need to set yourself up.
Of course you are right, the fact is that most don’t & that will have social consequences. Not a subject for this board which is housing, but a fact.
you can’t rely on your employer, your union, or your government to take care of you”
Or even to keep their side of the bargain? Pensions are not gifts. They are paid into by workers for decades. They are negotiated as part of your compensation. Defending the looting of pensioners is right up your alley, Gekko.
I find it hilarious that the Gekkos of the world defend pession-looting as noble capitalism. They don’t seem as keen on laissez-faire capitalism when Wal-mart takes their land to build stores. Here’s hoping a Wal-mart comes to your neighborhood, Gekko.
Gekko is a troll. Shoot an email to Ben.
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i’m not defending pension looting, silly!
i’m simply saying that unfortunately, these days, you can’t rely on pension or social security!!!
incredible!
buh bye troll.
Sorry, I have to agree w/Gekko. No, I’m not one of those lasseiz-faire types. And not a troll, big housing bear here.
People who mess around w/people’s pensions should be put away, but what are you going to do when you’re stuck w/out any income and are waiting on a long, drawn-out legal battle? I’m not saying it’s right to take away what people pay into their whole lives, yet I’ve seen it personally and it’s very devastating.
And I have given up any hope that the government will take care of me in my old age, I see how they’re doing with my dear grandmother. The solution is to save now, the younger you begin saving the better. Spouse and I are putting the maximum plus the employer match in our 401k’s. We’re giving up a few luxuries for now, but I don’t want to have to rely on an inefficient government or corrupt corporation when I want to retire. Unfortch w/a negative savings rate in our country ($1.22 dollars spent for every dollar we earn!!!) it looks like many are still expecting a bailout in our old age.
While this all may seem off-topic, I would argue that these ridiculous housing prices have driven many people into dumping $$ into their houses instead of retirement (”but my housing *is* my retirement!”).
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liberals expect the government to take of them from the cradle to the grave.
I would argue that these ridiculous housing prices have driven many people into dumping $$ into their houses instead of retirement”
Yes and no. Inflation, gutted pensions, low interest rates, low real stock market returns combined to push real estate. If I can’t make money by saving or investing, I will leverage and make money on asset inflation. It works except for two problems; the asset prices stop inflating, and you can’t really cash out. You have to live somewhere! If you make a lot of money selling your over-inflated real estate, but then you have to buy another piece of over-inflated real estate to live in…what have you gained?
“It works except for two problems; the asset prices stop inflating, and you can’t really cash out. You have to live somewhere!”
That’s why it is wise to purchase a few extra houses besides the one you live in as investments, silly.
This was supposed to be funny.
What lies ahead: we’re old -
The western world is aging, we’ll need income
From our pension funds
Where’s it coming from?
The yields we see won’t fuel the party
“Capital is Raining on My Head: A Message from Sam Zell”, FT blog “Alphaville”, Dec 20th
http://www.tiny.cc/RxxSc
“Illiquid assets alchemized”
Prophetic Poetry!
The word chemistry comes from the earlier study of alchemy, which is basically the quest to make gold from earthen starting materials (i.e., like materials that make houses, just kidding). Alchemy, generally, derives from the old French alkemie; and the Arabic al-kimia: “the art of transformation.” (i.e., how to take a POS house and sell it for $400,000 to a 19 year old using a: 0% down, stated income loan that resets when he turns 21)
“I wish the people who play fast and loose with other peoples retirement money could see the worry on an eighty year old face when fixed income, defined benefit pension funds starts looking in trouble.”
No need to worry, as the government has an insurance safety net in place in case private defined benefit pension funds get into trouble (PBGC = Pension Benefit Guaranty Corporation).
And then, of course, there are millions and milllions of people now retired who worked hard and diligently all their lives, but never had a pension. There are retired barbers and mechanics and storekeepers and so many people who get no such pension, and whose savings returns may be taxed to help fund the PBGC so that those who do have pensions are protected.
Assuming of course there are any returns on their long standing savings, given the decision of the FRB to shaft such savers in favor of debtors.
Watch the eyes of these 80-year old retired clerks and bartenders and warehouse workers who have no pension, and who talk about what has been happening to their savings accounts.
I’ve always found the lack of clarity surrounding pension obligations troubling as an investor, a pension-holder, and even as a taxpayer. My sense is that so many of these are underfunded, and somebody is going to be holding the bag - but cetainly not executives or elected officials.
Until the sheeple start exacting revenge the old fashioned way, the geezers will keep seeing their hard earned money stolen. The ‘justice’ system will not punish these people.
Folks need to start culling the fund managers. If 10 - 20 of them ended up shot to death by some now-broken retired pensioner, the next 10 - 20 might not be as quick to screw them.
Besides, in jail the geezer will be a hero, get full medical and have no need to worry about where the next meal is coming from…
From what I gather, here’s the deal with pensions these days. Please feel free to let me know if I have it right or wrong.
Many pension funds took big hits in 2001 when the stock market tanked. Spooked by the stock market, pension funds decided to stay out of stocks and instead invest in “safer” fixed-income securities. But when the Fed dropped interest rates to historic lows, the pension funds realized that those “safe” fixed-income securities would not yield enough to support the pension funds. So the pension funds, seeking higher yields, have been buying billions of dollars in riskier mortgage-backed securities — MBS — (and probably corporate junk bonds, too) in order to garner that elusive 6-7% yield.
This scenario should scare the heck out of anyone who is depending on a pension because as mortgage defaults continue to increase, the yields will drop. Then, the pension funds will be holding MBS’s that are worth 80 cents (or less) on the dollar and the pensions will be underfunded.
the next stock market bubble will bail the pensions out as the MBS landmines go off.
One other way to look at it is that pension funds were freed around 1990 to invest their money in something besides bonds. Reasonable enough on the surface, but it allowed management to project whatever return rate they liked, and fund the pension fund accordingly. A company I used to work at projected 9% returns indefinitely, though in practise it had negative returns from 2000 to 2003. It was substantially underfunded, with three times as many retirees as employees.
I have a feeling that you are right!, and there will be a lot more fallout from the real estate implosion on pensions. I have read that the Illinois State funded pension are in trouble too. They are way under funded and if they are holding MBS’s this will add to the grief. I wonder if there is info available on the holdings of the gov / state pensions ?
The TSP’s F fund holds MBS products, but I don’t know the quality ratings or depth of these holdings. I recently attended a two-day pre-retirement conference, and I saw this MBS snippet about the F fund buried in the fine print toward the end of a brochure; they weren’t proud enough to publish any supporting data, so I couldn’t imagine being involved with them, IMHO.
It is kind of cool that for some the Sword of Damocles is only ever a legendary thing, but your dad actually had one mailed to him.
“…cool that for some…”
Oh, man, I vote for that as the tackiest comment of the week. The poster was just passing on what a lot of us consider to be interesting information. Whether or not you favor unions or defined benefit pension benefits or longevity or whatever, it’s pretty low to gloat over someone’s misfortune who, in the context of this being a housing board, is not a flipper, mortgage broker or other foister of pain upon buyers.
What’s a pension?
It’s kind of like a downpayment.
Happened to my dad here in the UK.
“Equitable Life” my ar*e!
I hope it turn’s out OK for him.
Regards,
Loafer
What you describe is the horror of inflation, provided by our government. It makes you feel good, for a while (hey, my house value is going way up!). Unfortunately, it isn’t just asset prices that rise; so do all your other costs. You can’t really cash out that equity increase in your house because all the other houses went up too. Let’s face it, if every house is worth a million dollars, no one is getting wealthier. It’s just debt creation. Meanwhile, the money you save buys less and less, year after year. Finally you retire, and your fixed income is worth less and less, year after year. Inflation impoverishes the nation.
Yes too many dollars out there still. The dollars are out of housing and now in the stock market.
“The dollars are out of housing and now in the stock market.”
And don’t forget all that home equity that has been liberated from the boomers also found its way to wall street — the original intent of the bubble blowers.
ljaycox — thanks for passing that along - a very interesting and timely anecdote. What interests me greatly is who it is at the union that has developed these conclusions and how. I suppose it is very likely that the union concerned is involved with either the airline industry or the automotive — they have had big-time danger signals for a while now. I think it would be interesting to many of us to learn more as the disclosure process unfolds for your relatives, should you feel inclined to pass that along.
Interesting stuff. Recommendation: Clarify disclosures. This is the thing that really gets me about this. Something as simple as having the loan documents actually say in plain language what is going on may have a huge impact on how out of control bubbles blow up. Hopefully this kind of change will not get shot down over fears that such additional disclosures mean the communists are about to take control.
And don’t forget the millions and millions of barbers, automechanics, pizza shop owners who grossly underreported their income (LIED) year after year, not playing by the rules, who ought to be audited and forced to pay what they OWE.
Taxation is extortion.
deregulation ?
gov subsidy run amuck is more like it- when the community banking bill was past you should have felt quesy. same as the failed gov insurance sceem that caused S&L sht
Does “community banking bill” refer to CRA or something else?
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Regardless, there is a bitter irony in the fact that anti-redlining provisions have given rise to widespread carpet bombing of minority communities with subprime lending programs (zero down, no doc, option ARMed and dangerous, etc) which are about to come a cropper of minority household bankruptcies.
the government “helped” them
BTW W just extended the 5k TAX CREDIT you get to move to DC to develope more programs and regulations to “HELP” folks
This is what I’m seeing at a frightening level in many low/moderate income NYC neighborhoods
“Regardless, there is a bitter irony in the fact that anti-redlining provisions have given rise to widespread carpet bombing of minority communities with subprime lending programs (zero down, no doc, option ARMed and dangerous, etc) which are about to come a cropper of minority household bankruptcies.”
All that the lenders are doing are providing initial low mortgage pmts of 1-2 yrs, at basically rental rates, to immmigrant/low-income minority buyers, after which said buyers will simply vacate at first reset, without much harm to their credit. Immigrant latinos as a rule don’t use credit cards, dealing mostly in cash for virtually all transactions. It will be lenders/SBA’s who will swallow the loss.
RE: lending in Minority ghetto areas:
After the 1992 LA riots there was a great cry and hue for the Gov’t to ‘invest’ in businesses and affordable housing in the burn’t out LA ghettos. Some companies and programs did come in, but the effort was short-lived. Anyone ever try to set up a business in Scentral LA? You’re not running the business, you’re trying to survive from being shot at or assaulted. More time and money is spent in securing your business from burglary and armed robbery than in selling your product/services.
That is why any talk from inner city activists about ‘investing’ in businesses and RE in the ghetto is simply a scam and a joke.
Here’s a question…once the banks are left owning 40% of the houses in CA after all the ARMs reset by ‘08, are those banks responsible for property taxes on those houses?
where you getting 40% ?
just pulled it out of my @ss. really just curious if the banks will owe all the property taxes on all those million dollar tract homes.
Yeh, the noteholder becomes responsible for the taxes, including any back taxes. Real estate taxes are a primary lien, and take a position ahead of even a first mortgage. Had a foreclosure property recently assigned that the city and county had sold for unpaid taxes (2 years I believe) about 1 week after it went through the foreclosure sale at the courthouse.
No wonder banks don’t mind dumping REO on the auction block at fire sale prices! No point in holding on to an albatross for any longer than necessary…
pick…It has to be 5 years delinquent on taxes before the County can sell it. Interesting thing though…whereas you can appeal to have the current years tax assessment re-appraised…any un-paid back taxes have to be paid in full, even if the property was “over-valued” when they were assessed. I’ve bought 3 foreclosures over the last 3 years…and every one was “over-valued” by at least 50%. As soon as I bought them, I had them re-appraised and dropped the taxes on each one.
In Pennsylvania, once it goes into the third year it can be sold for taxes due. In the instance I had this Fall, the property was probably worth about $50 or 60K and the guy bought it for $10 or 11K, three years taxes.
http://boston.craigslist.org/sob/rfs/253471339.html
Anyone want to help this guy out? Looks like the spigot might be drying up.
It has already been flagged. What did it say?
Harvard’s Retsinas spins furiously
http://marketplace.publicradio.org/shows/2006/12/26/AM200612262.html
“NICHOLAS RETSINAS: If you just look at the raw numbers of 2006 in terms of sales and transactions, money spent on new construction, it’ll look like a pretty good year, probably the fourth or fifth best year in terms of those volumes on record. On the other hand however, it is the year the market changed. It is the year the market changed from being a seller’s market to a buyer’s market.”
I think of 2006 more as the year the market changed from being a seller’s market to a liar’s market, as in all the lying housing experts who insisted that there was never a better time to buy, despite the rather troubling fact that any household who bought soon discovered that falling prices had hit their net worth squarely in the crotch.
What is Nick “predicting” for 2007? Maybe the tenth- or fifteenth-best year on record for transaction volumes?
as pop grows total number of sales needs to be adjusted like for price/inflation
L.A. Times on florida:
Winter storm rips into Florida counties: Hundreds of homes are damaged; two people are reported critically injured. Winds reached tropical-storm speeds.
As if hurricanes weren’t bad enough weather problems there. What will happen to insurance rates (if this is a new risk factor)?
Sounds like The Day After Tomorrow has arrived.
http://www.thedayaftertomorrowmovie.com/
“The Day After Tomorrow” scenario would actually help Florida RE because the northern part of he US would be covered in ice! How ironic.
Rebuttal of GaveKal’s Bully “Wealth and Platform” Theory;
http://wallstreetexaminer.com/blogs/winter/?p=228
I couldn’t believe Barrons was touting that crap again this week, like it was news.
The WSJ has a nice article on gloating renters including quotes from Davidlereahwatch. According to the article, “Now, with the housing market in a slump, renters who sat out the boom are finally getting some satisfaction.” Here is the subscriber’s link: http://tinyurl.com/yjnuvs
Congrats to Patrick and Professor Piggington for gaining in plain view on p. D1 of today’s WSJ (and condolences to David Lereah…).
gaining“gaining recognition…”
BTW, which one of you bloggers wrote the article?
How do you tell an article written by a blogger from one written by a journalist who reads blogs?
I cannot. So, I ask the question hoping to get a response. You responded.
Truth can only be denied for so long. It doens’t matter who writes it as long as the statements are correct.
I did a little comparison of a blogger’s article about housing compared to that of the MSM one day later. You decide…
Wall Street Journal Journalist wrote the article. They interviewed Patrick and I (David Jackson from David Lereah Watch)
Nice work David. Congratulations! I’m glad you got some recognition for your hard work. Your and every other housing bubble blogger’s credibility is soaring.
If you read to the end of the article, you realize it amounts to more stupid journalist schlock. The writers are “reporting” the normal way — quoting ideas they don’t comprehend as though everything is a matter of opinion.
On p. C1 of today’s WSJ:
“Housing Falloff Hasn’t Troubled REIT Funds
By Diya Gullapalli
Real-estate focused mutual funds are shaping up as the best U.S. stock-investing story for 2006 by far — a fact that’s surprising even some top managers given that they’ve already seen big gains for several years.
Undsoweiter…”
mostly commercial RE?
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Trump mortgage chief inflated resume
Donald Trump said his new mortgage-brokerage unit would inject honesty into an industry with a bad reputation. But his lieutenant’s resume raises credibility issues.
By Stephen Gandel, Money Magazine senior writer
December 26 2006: 9:04 AM EST
NEW YORK (Money) — Donald Trump may have hired one more apprentice than he thinks. When the real estate mogul launched Trump Mortgage in April, he said it would inject integrity into an industry that has the reputation for giving customers a raw deal.
To head the mortgage broker, Trump hired E.J. Ridings, who the company’s Web site touts as a seasoned pro. “Trump Mortgage is going to take better care of people than anyone in the mortgage industry ever has,” Trump said at the time.
Ridings, of course, agrees. “The housing boom has attracted a variety of people into this business, not all of them honest,” he told Money Magazine in September. “I really believe that the public needs and wants a safe place to get a mortgage.”
But if Trump is trying to build a mortgage brand on honesty, he seems to have said ‘You’re hired’ to the wrong executive.
In interviews with Money and on his company’s Web site, Ridings has made a number of false or misleading claims about his professional experience. Last week, following inquiries by Money into Ridings’ background, Trump Mortgage altered its Web site, removing some of the claims it contained about Ridings’ past employment.
http://money.cnn.com/2006/12/26/magazines/moneymag/trumpmortgage.moneymag/index.htm
what? trump make a mistake?
it is rosie’s fault!
there is no one i i like to see take a hit then trump
btw-at all the home’s i visited this holiday season it is
strange that no conversation’s were real estate related
quite a change from 12-18 months ago
His timing could’nt be worst. The mortgage industry is saturated and needs consolidation.
There was real estate conversation at my holiday events, but the tone was more somber.
The #1 request? Contacts to get into “high ground” jobs as this debacle unfolds.
Man… I wish Christmas had been at Mammoth with all of those condos for sale…
Neil
http://www.miami.com/mld/miamiherald/16317798.htm
“Boom’s retreat leaving cities in hole.
If the real estate market remains flat or falls, South Florida cities may be forced to raise taxes, cut services or even both.”
Pretty soon all of South Florida is going to look like one big sinkhole, a financial one.
“Many cities will have three options if property values flatten or fall: increase tax rates, cut services or both.”
Fourth option: cut politicians. Recall them, elect replacements, rinse and repeat until the majority of the commission votes to sell properties acquired during the boom, or their equivalents, and cut back services to what they were before the boom — or, heaven forbid, contract it out.
I spent some time over the Christmas weekend talking with some homebuilders/contractors. Everything is fine -the market is picking up in Arizona - the worst is over - no more slowdown.
Happy times are here again.
Quotes from bankers and real estate brokers/agents at our Christmas party [even before the drinks were poured]: “The bubble has burst, it didn’t hurt us much here (we are different and everyone wants to live in the Northern California!). Spring is coming and now with this “correction” under our belt, the market is going to fine. Yep, this is a great time to buy.”
Remember this was BEFORE the drinks when all were cold, stone, sober. I thought liquor would loosen them up and the truth would come out — no way! They said the same only louder, a bit slurred and even more ridiculous. Is it me? Am I living in a bubble of some sort and just out of step with reality or are they just convinced the illusion is truth? How can they not see what I’m seeing. Feel I am living the allegory of Plato’s cave!
Those people actually believe what they are saying, so even alcohol won’t change their tunes.
The human capacity for self-deception is vast.
Yes, Virginia, you are living in a bubble.
OT:on yahoo bob komikazi is preaching peace through socialism- wonder if he’s sending all his in to his favortie gov agency
translation: sorry about the RE slump
An earlier poster here mentioned Florida’s insurance rates. It appears that high or unavailable homeowners insurance is indeed coming to all coastal areas. Talked to a relative yesterday who moved to the South Carolina low country near Hilton Head earlier this year. He says he’s worried about his current carrier jacking up annual rates to the low five figures(!) or canceling altogether.
Anyone else near the coast, or who knows someone who lives near the coast, hearing things like this?
A couple of days ago I read something about this. I think it was about Allstate raising rates well up the coast, but I am not positive they are the company. The implication clearly was that the companies are taking into account the predictions of the weather people that bigger, stronger storms are due to pound the coast much further north than Florida (but not excluding Florida) during the next ten years.
BYOL: http://seattle.craigslist.org/est/apa/253471043.html
Translated: Be Your Own Landlord! Apart from the outrageous asking rent, note how this FB wants you to sublet the second unit for him.
Actually, I rent with that sort of arrangement. Wife and I rent a SFH in West LA that has a mother-in-law studio tacked onto the main portion of the house, but we’ve sealed the door connecting the two. We assume responsibility for finding a tenant, collect the rent, and take care of arranging maintenence in return for a *very* below-market rate. The owner clearly prefers doing this (has for 6 years).
‘ECONOMIC PREVIEW
No presents for economy in this week’s data
But housing figures could point to ghost of Christmas future
By Robert Schroeder, MarketWatch
Last Update: 7:00 AM ET Dec 24, 2006
WASHINGTON (MarketWatch) — When Santa comes down the chimney this week, he’ll be leaving the presents for the economy back at the North Pole.
But he may offer a few clues about the ghost of Christmas future.
Amid a light week for data, two indicators are on tap that may give economists some hints about whether the housing market has bottomed out or has further to fall.
Analysts will scrutinize data about both new and existing home sales to gauge the health of the housing market and its impact on the overall economy. See Economic Calendar.
Economists are, on average, expecting a bump up in new home sales but a drop in existing home sales. Taken together, though, the reports won’t add up to much of a gift for the economy this holiday season, analysts say.
“It is likely the peak of the [housing] correction is behind us,” said Bank of Tokyo-Mitsubishi UFJ economist Ellen Zentner, “but we still have a ways to go.”‘
Huh? I thought housing busts ended with a trough, not a peak. But then I do tend to keep forgetting that “this time is different…”
Here is a tiny link to the story:
http://tinyurl.com/y4fxhv
The peak of the bust is behind us. I think it’s true. There is just a long, long fall after this point still to go. Then we’ll reach the trough, which could also be called the “peak of the bust!”
“It is likely the peak of the [housing] correction is behind us,” said Bank of Tokyo-Mitsubishi UFJ economist Ellen Zentner, “but we still have a ways to go.”
Ahh yes, Japanese banks did demonstrate their real estate expertise in the late eighties, did they not?
Elite condo developers prepare for slowdown
Phoenix - On the heels of an investor-driven boom, luxury-condominium developers are getting ready for the worst: a slowdown in the condo market…
“There are just too many of these luxury condos,” said Bob Kammrath, a Phoenix commercial real estate analyst. “For the life of me I can’t fathom why they would be appealing here. People with that kind of money can buy a nice house and hire someone to take care of the yard.”
Looks like a meltdown in progress for some Kern County investeur/developere, ne pas?
http://sfbay.craigslist.org/sby/rfs/253411644.html
Worth reading in full, but here is the juicy core:
SELLER LIST PRICE IS NEARLY $5.6 MILLION, WITH QUICK CLOSE YOU CAN OBTAIN THIS PROPERTY FOR UNDER 4 MILLION. BUYER TO PUT $50,000 -$100,000 DOWN AS DEPOSIT IN ESCROW( DEPENDING ON OFFER AND BUYER QUALIFICATION), 21 DAY DUE DILIGENCE PERIOD, THEN CLOSE UPON RECEIVING TENTATIVE MAP APPROVAL FROM CITY OF TEHACHAPI WHICH CAN OCCUR QUICKLY.
THIS IS AN OPPORTUNITY FOR AN INVESTOR TO EITHER: LAND BANK FOR UP TO 2 YEARS AND NEARLY DOUBLE YOUR INVESTMENT, OR FLIP WITHIN A YEAR OR LESS AND TURN BIG PROFIT, OR FOR A DEVELOPER WHO WANTS TO BUILD OUT - THIS IS A HOME RUN!!
THE ONLY NATIONAL DEVELOPER IN TEHAHCAPI IS KB HOME AND THEY SOLD OUT THEIR RECENT DEVELOPMENTS AND NEW DEVELOPMENTS ARE SELLING AT AN INCREDIBLE RATE WHEN COMPARED TO OTHER AREAS IN THE CENTRAL VALLEY. TEHACHAPI IS DEFINITELY UNDER THE RADAR AND A PENT UP DEMAND IS EVIDENT. CURRENT DEVELOPER HAS OTHER PROJECTS IN THE BAY AREA AND CANNOT DEVOTE THE TIME TO DEVELOP IN TEHACHAPI AND PREFER TO HAVE THEIR MONEY WORKING PROJECTS HERE.
CALL ME TO MEET AND DISCUSS THIS TREMENDOUS OPPORTUNITY. DON’T DELAY!!
Oh, no! Don’t delay!
With all the CAPS on - I think I will make an offer. LOL.
Tehachapi,
Huge State Prison, huge earthquake fault and 1000’s of low-decibel wind generators.
I noticed Mr. Jeff didn’t mention about these “little” things.
I read it in a Trump book. Everyone sells on Craiglist. Cuts out the middlemen, right?
great for cars, homes etc
even emplyment only $ 25………..
“UPON RECEIVING TENTATIVE MAP APPROVAL FROM CITY OF TEHACHAPI WHICH CAN OCCUR QUICKLY.”
There’s something very important-feeling about that. “Tentative?” For $4 million I’d want a lot more than “tentative.” If Florida, at least, property like this more often than not would be sold subject to rezoning/platting, not subject to tentative rezoning.
-
How bad will the 2007 housing market be?
Economists predict that next year will be tough, but say some metro areas will hold up nicely and the future may not be as gloomy as some fear.
By BusinessWeek.com
http://realestate.msn.com/Buying/Article_busweek.aspx?cp-documentid=1699105
Just saw guy on TV from the S&P housing analysis. Said the market is going to get worse.
I just came home from taking my son to his friends house in the next town over. While leaving his friends devoloping neighborhood of large expensive homes, I see a realty sign with a magnet sticker “Lots for sale”. I couldnt help but think “you got that right…just wait till spring”
Next strategy per Brokers Outpost:
Is there any lender that is allowing this. I know First Horizon does, but we’re not signed up with them.
Do any of you guys know of any other lender?
I’m teaming up with a Realtor and I want to offer him to add this to the MLS listings in order to move the listing quicker.
Thanks
first 6 mos mortgage payment paid by seller..
Both the Dallas Fed and Richmond Fed reported today that manufacturing in their respective areas went negative in December. New orders and employment down signficantly. This follows a similar report from the Philly Fed.
Manufacturing is getting weaker and weaker.
At least the stock market (still) always goes up…
Here is a very bearish signal — a permabull “contrarian” expressing doubts about the soft landing (with an intelligent rationale to boot!).
——————————————————————————-
MARK HULBERT
The looking glass world
By Mark Hulbert, MarketWatch
Last Update: 12:01 AM ET Dec 26, 2006
ANNANDALE, Va. (MarketWatch) — “A foolish consistency is the hobgoblin of little minds,” Ralph Waldo Emerson famously once said.
His comment often comes to mind as I watch investors’ reactions to various pieces of economics news.
Only sometimes do they react with joy when economic news is good; on other occasions, the stock market will sell off in the face of such news. The same could be said when the news is bad.
http://tinyurl.com/yzkk27
gekko- here is a true chart of the returns of stocks. in the early 1980s, stocks were LOWER(not including dividends) than they were in the year 1900.
DJI in constant dollars
-
bad link, bad data, bad conclusion.
also notice that your last 17 years have been a big-time bull market. the 17 years before that were not so kind. just look at the chart, there are plenty of 17 year periods that were terrible.
1901-1921 (20 years)
1929-1945 (16 years)
1966-1982 (16 years)
2000-????
Luckily, Gekko is a great market timer
I thank god for the dow/gold and dow/silver ratios which should be a good metric, combined of course with others, to get back into stocks.
Sorry if previously posted… (anyway, why do I suspect exotic financing is part of this story?)
—————————————————————————–
Housing bust ‘likely in the next few years’
By Chris Giles, Economics Editor
Published: November 22 2006 02:00 | Last updated: November 22 2006 02:00
A housing market bust is likely within the next few years because house price growth has been grounded in unrealistic expectations of double-digit annual rises, a report by a prominent economist and former adviser to Gordon Brown will warn today.
Throwing cold water on the current housing market euphoria, David Miles, chief UK economist of Morgan Stanley, says it is only possible to explain the more than doubling of house prices in the past decade if people’s demand for housing has been heavily influenced by expectations that the rapid price rises would continue.
Once house price rises come down below expectations, he thinks “significant” falls are likely. “A sharp fall in real house prices is likely at some point in the relatively near future, though it could yet be one to two years away,” the report concludes.
http://www.ft.com/cms/s/4dbd683a-7a00-11db-8d70-0000779e2340.html