Bits Bucket And Craigslist Finds For December 29, 2006
Please post off-topic ideas, links and Craigslist finds here.
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
Please post off-topic ideas, links and Craigslist finds here.
Hee a new “everything is great’ take from the media. Horray, your appraised value (and taxes) are going up:
http://www.baltimoresun.com/business/realestate/bal-te.md.assess29dec29,0,7771553.story?coll=bal-home-headlines
House values in Md. up 18.7%
State assessments on a third of properties sent to homeowners
State assessment notices mailed to 661,000 Maryland property owners today show another huge jump in home values despite talk of a flat housing market, with lower-priced properties increasing faster than higher-priced ones.
topic- how hard will it be to lower tax bills w prices-about a year lag?
Hard to understand from the Baltimore Sun (BS?!) article: are they saying the assessments are based on 3-year-old data? If yes, they are just telling us prices were strong 1/1/04 (duh), and that property taxes will rise for another year and a half before abatement avlb.?
THE END OF THE HOUSING SLUMP APPEARS NEAR
We went to a Broadway show last night. We were walking through Times Square and right there, on the big Dow Jones streamer, were this headline. If the streamer says it, it must be so. WTF?
We saw the Drowsy Chaperone. It was awesome. I liked it better than Wicked, Lion King or the Producers. I would go see it again. If you are in NYC check it out.
THE END OF THE WORLD APPEARS NEAR.
If the zipper said that, why I’d believe it, too.
A barely-noticeable rephrasing of headline from p.3 of Thurs WSJ (”End of Housing Slump Seems to be Drawing Nigh”)- before this BS i had been skeptical of the notion that NAR $40M campaign had bought MSM complicity in the Big Lie.
The “big Dow Jones streamer” and WSJ are both out of the mouth of the Dow Jones news service company. Funny coincidence, neh?
THE END OF THE HOUSING SLUMP APPEARS NEAR
Translation:
AMERICANS KEEP TAKING ON MORE DEBT - OUR GREED DEPENDS ON IT
http://www.gold-eagle.com/editorials_01/seymour062001.html
“Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.”
- R. W. McNeal, financial analyst in October 1929
What’s really scary is that in 1929, intelligent people were buying stocks. In 2005, Joe Six Pack was buying RE.
Key word: “APPEARS”!!!!!!
Simple theory (maybe someone already hinted at it above): The $40m NAR ad campaign included some bribes to MSM outlets for propagating the “soft landing” story. If true, that $40m could prove to be well spent from David Lereah’s standpoint, as he needs to manufacture some GFs to buy his Florida condos…
IT’S OFFICIAL FOLKS! PINOCCHIO HAS SPOKEN!
“The housing contraction has bottomed,” said NAR’s chief economist, David Lereah.
http://business.guardian.co.uk/story/0,,1979630,00.html
wierd in UK lierahs market senario so far is fact- dip from late 04 to 05 since then rising prices
HMMMMMMMMMM ?????
Maybe the UK reality is one of the factors making Lereah think he can “jawbone” the housing market back to life here at home.
I believe the UK markets days are numbered. Some suited high faluting creep from their central bank issued a statement last week about the banks concern with spiraling housing prices so it is on their radar and probably more than a blip.
on cnbc this morning they said uk is the worlds highest priced market and actaully said nyc may be undervalued
and one shill actually said it is “different here”
I’m amazed at the UK market. The median salary is much less than US. Property is heavily controlled by local councils. Even building a wall, requires planning permission. However, the cure to high prices is high prices. Many mortgages are heavily leveraged.
I wonder how many Brits based their Florida investments based on great Xchange rates. If Dollas strengthens or more likely, pound weakens, they’ll not be happy.
Another 2 cents. Property has always been more expensive in UK than US. So yes, it is technically different there but it is completely out of wack with salaries.
I saw this story this morning on Drudge. Its about giving up on veggism.
http://www.dailymail.co.uk/pages/live/articles/health/healthmain.html?in_article_id=425287&in_page_id=1774
This is what struck me as funny.
“In return for this, the tenant grazier pays about £50 an acre per year. It’s not much, not quite enough to pay the accountant, but land isn’t worth a lot - about £3,000 an acre. In a bank, £3,000 would earn more than twice what a sheep farmer pays, but fields are nicer to look at than bank statements. Some people spend their money on art. I guess I bought some nature.”
And I thought England wasn’t making more land.
The Real Estate Pimp has spoken so it must be so.
This is at least the third time Lereah has declared a bottom:
http://tinyurl.com/sfexb
David
David Lereah Watch
‘But wait it gets much better. On May 25, 2006 Mr. Lereah uttered:
“This may be the bottom. It appears May is a little better.”‘
Keep up the good work, David. I hope in a few years, you can offer a post-bubble assessment of how many times DL called a bottom before it was actually reached…
Real estate still always goes up, at least in the global residential market.
http://www.ft.com/cms/s/7daea71c-975a-11db-a680-0000779e2340.html
As long as inventories are as high as they are, it’s going to keep downward pressure on prices,” said Alan Clayton-Matthews, an economic forecaster and public policy professor at the University of Massachusetts at Boston.
http://www.boston.com/business/articles/2006/12/29/housing_market_outlook_unclear/
The cited article includes an on-line poll asking readers what will happen to housing prices in 2007. Results seem to be running 63% for “keep falling,” 25% for “stay the same,” and 12% for “begin to rise again.” Y’all can vote too, if you think that will help the cheerleading on “our” side.
I personally feel that the latest bullsh*t numbers (trust me, they will be revised) and the subsequent rah-rah by all the typical characters is a desperate attempt to get some of the stagnant inventory moving in the next couple of weeks before the flood gates open up. The industry knows the inventory avalanche that looms overhead, and if the inventory of today cannot be substantially reduced, there aint no amount of made up numbers or rah-rah that can overcome the common laws of supply and demand.
Interesting thought. I guess there’s no outside audit of the Homebuilders numbers. And why can’t they just count “almost sold” in addition to the cancelled sales?
Oh you know the numbers are a bunch of crap. Those guys will say anything. Look at the KB Home guy who back dated his options, do you think he would not bullshxx his own sells number. I bet that guy lies to his mistress about how long he lasted in bed. He probably says he pumped at an extra couple that won’t close tell next month, but it makes me look good this month. She says sure honey, when do I get my new porsche. See how this starts now we got the KB CEO giving builders incentives to his mistress. This will never end until the shxx hits the fan.
Another ‘great’ article from Conkey in today’s WSJ. He says, “Sales of existing homes rose for the second consecutive month in November, a sign of rebounding demand that suggests the economic fallout from the housing market’s slump will be limited next year.
Conkey adds, “together with a recent upturn in the rate of new-home sales, the modest rise in existing-home sales indicates that home-buying activity may be stabilizing after a yearlong downturn.”
It’s over! Everything will be fine. The sky is not falling anymore. The fallout will be limited. The market is rebounding. The carnage in FL and MA and CO and MI is meaningless. (Sarcasm off)
None of these “signs of rebounding demand” articles address the gaping hole between the rate of new building and the rate of new home sales. The hole will continue at least through the middle of next year, as orders are still running at around a 1.5m annual rate, compared to 1m current annual rate of sales. It looks to me like a combination of considerably further negative appreciation and less building will be needed to realign supply and demand, but I guess that has nothing to do with the fact that the housing market is going to have a soft landing next year…
“compared to 1m current annual rate of sales”
and as we all know the rate of sales for new homes is a complete BS number to begin with.
I’m amazed when I scan listings in some areas and see old (1970s & prior) houses at wishing prices close to post-2000 ones. I’m talking in the boonies, not the ones in gentrified older urban neighborhoods. Lots of shock coming up for these clueless sellers, many of whom likely are boomers ready to head to their retirement home.
Some broker bravado and BS from this week’s Easthampton Star:
http://tinyurl.com/y5pzyz
What may have happened, however, was a general cooling that could have taken place because “those with money don’t want to be the last one who paid the most” for a property here, Mr. Brennan said. When the market is hot, such considerations do not matter, but when things are slower even the very rich, who in this area have often made their money by shrewd investing, do not want to appear foolish.
According to Mr. Brennan, the market will pick up again when investors perceive that the value here has not kept pace with the rest of the national luxury market. Then, the Hamptons will seem like a relative bargain and the pent-up demand of those waiting on the sidelines will drive up sales and prices again. “Next year will be a big year,” he predicted.
Is anyone else sick of seeing the words “pent-up demand” in print???? There is no such thing as “pent-up” demand. I don’t think I ever heard that phrase until this year, when the RE liars started using it.
I wouldn’t mind if they would talk about pent-up inventory and how it’s far greater than the pent-up demand.
or penned up agents. like sheep in a pen.
it seems everywhere i go there a groups of qualified buyers milling about just waiting to buy
not!
Yesterday’s OFHEO report
http://www.ofheo.gov/media/pdf/capclassfnm3q06.pdf
title: “OFHEO announces third quarter 2006 minimum and risk-based capital classification for Fannie Mae; reclassifies fourth quarter 2002 and 2003 as signiicantly undercapitalized”
Only MSM mention of the “undercapitalized in late ‘02 & ‘03″ angle seems to be a German source that picked up and translated a Dow Jones feed.
http://tinyurl.com/ylqd7w
thanks John. i’m always interested in hearing the latest on FnF.
“…the safety and soundness regulator for Fannie Mae and Freddie Mac, classified Fannie Mae as adequately capitalized as of September 30, 2006. This classification is based on estimated numbers submitted by Fannie Mae and not financial statements released to shareholders.”
so from the latest 10-K (for 2004!) and estimated figures from FnF, OFHEO has determined that Fannie was significantly undercap’d in 02/03 but now miraculously classified as adequately cap’d in 06? did someone in Congress tell OFHEO to play nice this time around?
If CitiGroup breaks up, Fannie Mae will likely become America’s largest financial institution. I don’t think OFHEO needs anyone to tell them to play nice.
Thought you heard it all with regards to housing? Think again. Troy McMullen reports in today’s WSJ, “house-proud Americans have a new way to show off their trophy homes. Taking the pricey playhouse concept to the next level, some homeowners are building Mini-Me McMansions for their kids. The lavish replicas, which can include such grown-up amenities as hardwood floors and media rooms with satellite TVs, generally cost from $10,000 to $100,000. Some run even higher than that, exceeding the median price of a single-family home ($218,000 in November).” WTF is going on out there?
The dog and cat are next. Why should this be a surprise when we have grown (overgrown) balding men dressing up like the village people just to look the part when riding a motorcycle?
You want to read more about overprivileged jerks and their rotten brats:
http://www.creditslips.org/creditslips/2006/12/a_horses_eye_vi.html#more
The little bastards need a good old fashioned beatin’.
Oh thank you TXChick, this gives me an entree to rant about my SIL’s kids. This is a very wealthy family (if you play music you’ve heard of them). Just moved into a custom-built home on LI - beyond excessive. The lot alone cost twice what my house is “worth.” Every room a flat-screen; every child (they have three preschoolers) a prince or princess.
We visited for Christmas and while we consider ourselves to be doing quite well, obviously we are not in this league. I was horrified at the excess at Christmas, the way the little ones behaved (or didn’t behave), the nasty way they treat adults and especially their (illegal) Guatemalan maid/nanny … gah. If they’re like this at 2-5 years old, what are they going to be like at 10-13?!?! I shudder to think.
I just hope I can teach my own children to be better people than this. Actually, I can use their own cousins as a cautionary tale! So in that way they’re sort of useful.
Any child who abuses an animal is already an anti-social menace. Any stable that allows this is irresponsible and potentially liable when some fine horse finally throws one of these useless brats and injures him/her severely. And parents who permit this are parvenus who certainly did not grow up around horses. The stable is a disgrace, the parents are overpaid Darwin award nominees, and the children richly deserve any injuries they incur.
I like the reference to the Super Nanny show. Watched it twice when bored and was amazed at the cluelessness of the parents. In one, I remember the exasperated mom telling her brat, “I’m asking you to go to the corner” or something similar. Of course the brat didn’t go. The Super Nanny scared the crap out of her, just like our parents did and the transformation was unnecessarily miraculous.
Some quotes from the article, pg W1:
“Annual playhouse sales numbers, including this pricey niche, aren’t available, but manufacturers say demand for the custom-made replicas is growing. Lilliput, a playhouse manufacturer in Finleyville, Pa., that sells a dozen styles, including Tudors and Victorians, says 5% of its customers requested replicas of their homes last year. The little houses start at about $13,000, with more elaborate models — equipped with working kitchens, central air and bathrooms — costing as much as $50,000. Denver-based La Petite Maison produced about 15 luxury replicas this year, nearly doubling 2004’s output. Their playhouses start at $8,000, but top-sellers are in the $25,000 range, with prices running as high as $75,000 or more, depending on the add-ons. The company, which recently began building replica doghouses with price tags nearly as high, has a waiting list of about half a dozen customers.
“Doting parents have been spending handsomely on tricked-out playhouses for their kids for years. But the tiny facsimiles, some observers say, represent more than extravagant outlays for pampered children. Lois Vitt, a social psychologist who studies the psychological relationship people have with their houses, says the replicas not only reflect homeowners’ efforts to stand out from their neighbors but underscore the degree to which people identify with their homes. “It’s the most important non-human relationship in their lives,” she says.[...]
“Some homeowners believe a pricey replica will boost the value of the property, adding a special kind of curb appeal. Carol Massaro and her husband, Joe, had a miniature version of their white-brick, Georgian- style home built on their property in Oakmont, Pa., six years ago for their grandchildren. Wedged between the tennis court and the swimming pool on the 4.5-acre property, the playhouse has tall, white columns in front, a side terrace and Dutch doors, just like the big house. The Massaros recently put their property on the market for $2.9 million and say the playhouse has been a draw. “We’ve had three families view the property so far,” Ms. Massaro says. “We offered to remove it, but all them said no because they just loved it.”
Yeah, they loved it but I notice they didn’t buy it.
It’s funny, I would feel inadequate if I BOUGHT a playhouse for my kids. I would want to make it myself! I am not especially handy with tools, and I don’t have that much spare time, but isn’t it one of the duties of a father to make stuff for his children with his own hands?
It was like that in the old days. My mother’s dad was a banker in New York City. They retired to this really wealthy area of rural Connecticut, where my grandmother still lives. They pretty much fit the old-fashioned stereotype of east coast WASPs to a “T.” To illustrate, I once saw my grandfather eat a cheeseburger and fries with a knife and fork! Seriously!
But my grandfather still made toys for all of his grandchildren. I still have a little wooden tugboat that we made together. It is a really big deal when you are 6 or 7 to help your grandfather/dad make a toy.
So I can’t imagine buying a playhouse for my kids. You’ve got to build them yourself. Part of the fun is getting your kids to help you build it, I would imagine. The finished product will certainly not be as nice as a $50,000 replica McMansion — yours will probably look more like the original address of the Beverly Hillbillies — but you’ll have made it yourself.
My grandfather would not buy something if he could make it himself, and all of us grandchildren were always his helpers. What we all learned from him far surpasses any toy that would now have been long broken.
Down the road, all this cheap crap that clueless parents stuff at their kids feels very empty, even it it’s a $100,000 playhouse.
I think most kids would rather live closer to their grandparents.
I wonder which house will take the bigger bludgeoning in price come 2007? I guess this is a way to teach children first hand about real-estate speculation.
What ever happened to the tree house with plywood and a rope ladder ???
I was happy with just an old tire hanging by a rope, a BB gun and my dog.
Wook Wama! I bwoke my teewth on my granite counwnter!
Do you suppose they take out a miniature suicide loan in the children’s name, also?
They should sell it as a kit: My First Foreclosure
From the WSJ, pg A2:
“Home Sales Bode Well for Big Picture; Second Consecutive Rise Points to Limited Fallout From Market Slump in 2007″
“Sales of existing homes rose for the second consecutive month in November, a sign of rebounding demand that suggests the economic fallout from the housing market’s slump will be limited next year.
“The National Association of Realtors said sales of existing homes last month increased 0.6% from October to an annual rate of 6.28 million units, down 10.7% from a year earlier. Spurred by lower interest rates and home prices, sales have now increased in back-to- back months for the first time in more than a year.
“Together with a recent upturn in the rate of new-home sales, the modest rise in existing-home sales indicates that home-buying activity may be stabilizing after a yearlong downturn.[...]
“If the housing slump is indeed bottoming out and starts to reverse itself in the months ahead, it would gradually lift a great weight off the broader economy. Housing-related industries have been shedding thousands of jobs in recent months, and builders have been forced to scale back construction to match waning demand. That has been a major factor behind the slowing economy this year, and many economists say growth — now running at an inflation-adjusted annual rate of about 2.0% — won’t fully bounce back until the housing correction has run its course.
“Of course, it is far from certain that the housing slump is over. Inventories of unsold homes remained large in November, with a 7.3- month supply on the market at current sales rates, according to NAR data, up from a five-month supply a year earlier. That suggests builders will continue to cut production until supply is better aligned with demand. In the meantime, large inventories will continue to put downward pressure on prices.
“Last month’s median home price — the price at which half of homes sold for more and half sold for less — was down 3.1% from a year earlier. November was the fourth month in a row that median home prices were down from a year earlier.[...]
“Additional support for a rebound is coming from the competitive labor market, which is producing solid wage gains and lifting consumer sentiment. Yesterday, the Conference Board, a private research group in New York, said its gauge of consumer confidence rose to 109 in December from 105.3 in November.
“As with the recent data on housing, which generated more relief than enthusiasm among economists, the improved sentiment reading was due more to a moderation in pessimism than any surge in optimism. Indeed, the proportion of those surveyed who said economic conditions are “good” fell slightly to 27.2% this month from 27.5% in November, but that was more than offset by a sharper decline — to 14.6% from 16.2% in November — in the number who said the climate is “bad.”[...]
“Meanwhile, the number of people filing initial claims for unemployment benefits rose slightly, to 317,000 last week from 316,000 the week before. The figures point to steady job growth.”
I don’t believe it, I don’t think NAR or Wall street believes it either. I think it’s a way to dress up the pig so to take the pressure off the Fed.
I hope they do take pressure off the Fed and rates go back up where they should be.
cut the bull..
inventory is way up and permits are way down = housing slowdown
All the other words are just B.S.
“If the housing slump is indeed bottoming out and starts to reverse itself in the months ahead, it would gradually lift a great weight off the broader economy. Housing-related industries have been shedding thousands of jobs in recent months, and builders have been forced to scale back construction to match waning demand.”
They don’t even see their own contradiction. They are on the one hand reporting that house sales have been trending upward for two months, while during the same period jobs have been disappearing.
If things have been so good for the last two months, the proof should be in the housing related employment figures.
There is a far-flung mechanism slowly starting to mesh together to talk up this market.
“many economists say growth — now running at an inflation-adjusted annual rate of about 2.0% — won’t fully bounce back until the housing correction has run its course.”
first time I’ve seen that in print.
More WSJ, pg A7:
“Politics & Economics: Dropping Dollar Is Pushing UAE Toward the Euro”
“The wilting U.S. dollar is pushing the United Arab Emirates, a close U.S. ally, to convert eight percentage points of its foreign-exchange reserves into the healthier euro, the central-bank governor said.
“The Emirates’ nearly $25 billion currency reserves are currently 98% dollars. That percentage will drop to 90% in six to nine months if the bank’s directors approve the switch, as is expected, Central Bank Governor Sultan Bin Nasser al-Suwaidi said.
“The sale itself is a small one, worth about $2 billion. But the implications of a cash-rich friend of Washington selling off its dollars is a sign that central banks elsewhere may be looking to cut losses from a dollar widely expected to slip further in 2007.[...]
“A bigger worry for the U.S. Federal Reserve is that the six energy- rich Gulf Arab countries may consider converting dollar holdings in their far larger government investment funds, which Mr. Williams said keep more than $1 trillion under management. Gulf governments typically don’t release the compositions of those funds.[...]
“Selling dollars on that scale could force the Fed’s hand toward tightening monetary policy to help support the dollar. That would mean higher rates for adjustable mortgages, auto loans, credit cards and other debt.
“The six Gulf Cooperation Council countries — the Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman — enjoy a collective current- account surplus of about $220 billion this year, which must be invested in foreign assets.”
My gut is saying that part of the increase in sales might have to do with the warm weather we’re having.
Over the holiday break, I went from Boston to Michigan. No snow and mild weather the whole way. Normally at this time of year, there is a lot of snow on the ground, making it hard to look at homes.
More WSJ, pg C2:
“Treasurys Are Hit by a Selloff As Rate-Cut Expectations Wane; Upbeat Economic Reports On Business, Consumers Lower Odds of Fed Easing”
“Treasury prices fell back again yesterday, pushed by stronger-than- expected economic data and continued investor repositioning.
“The selloff at one point pushed the yield on the 10-year note as high as 4.71% — the strongest it has been since Nov. 7.”
Now 3-month T-bills are slightly creeping back up above 4.85% yields. I keep buying them. If I see 10 year treasury notes back above 5% I will start buying them again.
At least the PPT stands ready to defend the stock market against price reversion to (lower) fundamental values as the bond yields grow increasingly attractive…
Yahoo Finance news Headline: “Renters Gloat Over the Housing Slump”
Great article chock full of famed (to us) pundits jabbing David Lareah. Rich Toscano is mentioned in the article too! This is an “I told you so…For Us!”
http://biz.yahoo.com/weekend/rentgloat_1.html
“But Ms. Killelea seems more open to the idea of homeownership. ‘We haven’t really talked yet about when we’d want to start looking again,’ she says. ‘I think we’re going to need to discuss that.’”
Patrick, look out! Do not respond to messages from anybody named Suzanne!
Was talking to a young kid (20s) last night who works in the mortgage business. A few things to share. First, I asked him how many questionable loans he’s placed people into and he said none - that he’s very ethical, but has seen others preying on the unknowing. Appreciated his honesty.
Then, he went on to say how he’s buying up several investment properties because prices are “so low” right now and it’s the best time to buy. I, obviously, disagreed with him. Others joined in the conversation saying they, too, think now’s the best time to buy and that I’m crazy for thinking otherwise. Mortgage guy also went on to say that prices will not get any lower, they’ll stay flat for a while, but they absolutely will not get lower. Uh, ok.
Finally, we touched on the subject of a recession. He laughed at the idea that we may be headed into one saying the economy is doing so well and all. Again, I disagreed, but left it alone and just said, “Well, I’m hoping my job is recession-proof.” (I work in a lab) He said, “My job is definitely recession-proof! People will need to come to me for money!” I said, “Don’t you deal in mortgages only?” He said, “Yes, but people will need to buy houses in a recession.” Really?…
Either I’m crazy for the way I’m thinking, or the majority of people out there are. I like to think it’s them, but they have the numbers…
no you are certainly not crazy. What is this need in “need to buy?” This is a pet peeve of mine. A roof over your head performs the same function, whether rented from a landlord or rented from the government (property taxes) and bank (mortgage interest).
“…First, I asked him how many questionable loans he’s placed people into and he said none - that he’s very ethical…
…Then, he went on to say how he’s buying up several investment properties …”
And as a 20 year old paid them cash or with 20% down ……….
….or with some questionable loans?!
The pervasive “this is a great time to buy” attitude is what may disguise the continued drop in the RE market. The drop in prices may be slow and barely noticeable for a while because a lot of these morons are convinced that they are “buying on the dips”. Also, this belief that prices can’t go any lower will prevent many flippers from selling now; they, too, are waiting for the rebound.
With as little luck, the NAR’s PR machine may have even allowed prices to bump up a bit because of all the “this is the bottom” nonsense.
Please take a moment to look at this chart of the Nasdaq. Today, we all remember that March 2000 was the top. But few of us remember what happened in August 2000: the Nasdaq seemed to “bottom out”; in fact, many “experts” were saying just that, telling people that the worst was over. Of course, it wasn’t…
http://finance.yahoo.com/charts#chart4:symbol=^ixic;range=19990503,20021101;indicator=volume;charttype=line;crosshair=on;logscale=on;source=undefined
“Mortgage guy also went on to say that prices will not get any lower, they’ll stay flat for a while”
I don’t have a clue how all these boosters make the same outrageous claim that prices will stay “flat”. Can anyone point to any evidence that suggests this theory is factual?
No, they can’t. They are just repeating what the NAR says because it is in their best interest to be optimistic about their careers.
I figure 10% of mort banker/brokers are gone already
Something tells me that the opinion of a kid in their 20s with regard to markets or the economy isn’t worth a bucket of warm spit. I would consult them on how to beat “Zelda the Twighlight Princess” however.
Agreed txchick but that retard’s robotic parroting of the same line I hear elsewhere is like an endless, mindless episode of fox news.
CC-redundant (def.)- endless, mindless episode of fox news
It’s warming to see that you honest enough to admit they distort…. and you comply.
Thank you.
oopsy… misread. sorry.
Endless mindless parroting is a terrible pandemic for which there is no cure.
“First, I asked him how many questionable loans he’s placed people into and he said none - that he’s very ethical, but has seen others preying on the unknowing. Appreciated his honesty.”
Q. How do you know when a mortgage broker is lying?
A. His lips are moving.
Either I’m crazy for the way I’m thinking, or the majority of people out there are. I like to think it’s them, but they have the numbers…
“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
— Mark Twain
LMAO…Good one Toast!
“…prices will not get any lower, they’ll stay flat for a while…”
I hear that all the time as well. The problem is, people quote that as if it were a fact, rather than an assertion. If you ask them to dig beneath the assertion and provide some concrete numbers or trends, they revert to the usual baby boomer/rich foreigner/government bailout mantra. Ask them if they have any recent statistics on net foreign purchases of residential properties (for example) and they retreat to even fuzzier platitudes.
Why bother to persuade them? Just buy their house from them in 2009 at the 40% discount.
For someone paying interest every month, flat prices are the same as losing money. Time is the most misunderstood concept with mortgages and home-buying/selling. Every month, you’re wealth decreases through interest while your house sits flat, the building itself depreciating.
You need to back out the opportunity cost of not renting a comparable home + whatever premium (or discount) you personally would pay for the various nonpecuniary advantages (or disadvantages) of owning over renting in order to get a valid answer to the question, “What is my preferred way to ‘throw away’ money: Owning or renting?” I suspect that many folks would conclude owning is much more expensive than renting at current market prices with flat appreciation, which is one reason why real prices have to fall considerably before the ’soft landing’ is over.
“…prices will not get any lower, they’ll stay flat for a while…”
Thats what I tell anybody who asks me…. I don’t want to get stoned by an angry Phoenix mob.
yes, that’s how I feel in San Diego sometimes as well…
Yeah. Same with Studio City, 91604.
It’s , apparently different here.
We still have speculators everywhere….because it never goes down here…makes me want to puke.
Same here in L.A - I’ve heard it from so many friends now. I just nod….and think to myself ‘yeah, because median income households can really afford median house prices in L.A county right now, so prices “levelling off” will have no impact on affordability’.
Same in Philly. “It’s not NY. It’s different here.”
I’ve had a version of that conversation before. Usually all it takes is framing a few simple questions - a) has real estate shown unusually high returns over the previous years? b) show me any asset class (including real estate), during any time, that has shown ‘unusually high’ returns over a substantial period of time and then simply ‘leveled’ until returning to historically justified values. Anywhere, anytime, any asset class.
Have yet to have anyone provide it and have had a few people say they’d research it and get back to me.
Although like many others here as well, I’ve really stopped arguing with anybody anymore since it’s just become too depressing when you see how little perspective people have on this asset bubble. Have a feeling they’ll be learning about it in 07 and 08.
Please focus on the soft landing that is coming next year, and recognize that history does not matter because it is different this time.
I too have tried to persuade the RE zombies, but alas it is in vain. People are trained to follow the herd and to parrot whatever sound bites are being thrown at them. In this case we’re talking RE, but it is the same with much of life; religions, politics, prejudices, etc.
Pondering socalrugger’s questions would likely cause most to self-implode.
Agreed! That’s why, when the fall or big change comes, and it will, it will be so bad for so many.
We really haven’t had a big change in lifestyle since WWII (rationing, turmoil, etc.). people have grown complacent because life has been good for most. However, since 1972 (peak in real wages) it has started to change (slowly). Since 1972 we have lost many manufacturing jobs (they went overseas to cheap labor). People have been working longer hours and most households need two incomes. This has been the (slow) adjustment that people have made to keep up thier lifestyles. And now we are borrowed to the hilt to try to maintain that “American Dream”.
Our lifestyle has been slipping away for 40 years. Most of us just don’t know it because this is all we know now (and the TV tells us this is normal).
Housing is a big part of this lifestyle, perhaps the last refuge. That’s why this housing bubble and bust is so important. That’s why this information being exchanged on this Blog is also important.
Well put Suspicious 2~
It’s amazing how the world caught up with us and left us in the dust and we don’t even know it yet.
I was born, along with the space age, in 1961, and was fortunate to watch it all unfold. I’d say our country peaked on July 20, 1969.
The information on this here blog is akin to the numbers for a winning lottery ticket. Just like the lottery, most will lose, but a few will win big. Place your bets wisely.
“Why bother to persuade them? Just buy their house from them in 2009 at the 40% discount.”
Sooner, perhaps 4th quarter 2007.
the 100 year PE of RE is 110
price/monthly rent
little bumps up for the hud-deduction and gov subsidies
and 140 if you consider lower int rates
otherwise ? speculation
“otherwise ? speculation”
Do you include subprime lending in your definition of speculation? Because I don’t believe the speculation could have ever reached the level it did without the widespread availability of liar loans and suicide loans to people willing to buy houses they could only afford if prices went up at double-digit real rates forever.
I’d say the subprime debacle is the effect of the financial wizzards speculating that they have removed all traces of risk from all markets. That includes lending 20-something bartenders $500K for condos in San Diego.
Speculation is rampant in everything right now. Although I’ve been short the market for some time now (and losing), there’s a great temptation to join the herd and go long. Heck, why not ride another bubble into the stratosphere. You know as well as I do that the stock market should be heading lower at this point. Very powerful people/institutions are making sure everything “goes up”.
Get with the program, GS.
Reliable Economic Data:
http://wallstreetexaminer.com/blogs/winter/?p=247
“Lately I have looked hard at the nature of the US economy. I have always felt that two areas in particular hog up and create the greatest imbalances: finance, or loaning money to people that can’t be paid back, and what I call the sickness industry perp, standing by as Americans get fat, sick and diabetic, and then cleaning up financially on their treatment and care.”
Awesome! Thanks for reminding me (again) why I avoid docs.
Here are some important announcements from the NAR’s Minister of Truthiness (comments from the peanut gallery are in parens):
———————————————————————————
Home sales on rise as owners cut asking prices
By Jeremy W. Peters
NEW YORK TIMES NEWS SERVICE
December 29, 2006
The sales rate for previously owned homes rose in November for the second consecutive month, an industry group said yesterday, as homeowners eager to unload their properties in a crowded market cut their prices.
The group, the National Association of Realtors, reported that sales of existing homes increased 0.6 percent over October, to a seasonally adjusted annual rate of 6.3 million. But sales remained significantly behind last year’s levels, falling 10.7 percent from November 2005.
The median price – the midpoint of prices for homes sold – dropped to $218,000 in November, down 3.1 percent from a year earlier.
‘Economists said falling prices – November was the fourth consecutive month in which the price of a previously owned home declined year over year – were starting to draw back buyers who had been wary after years of double-digit home price increases.
(Buyers were wary back when double-digit price gains were providing home-equity-wealth-ATM spending money to help them buy Escalades, lattes and exotic vacations, but now that prices are falling, they are champing at the bit to get back in the market and buy, buy, buy.)
“Prices coming down are bringing people back to the marketplace,” said David Lereah, chief economist of the Realtors association. “That’s bad news for people who own houses, but it’s working.”
(But if I buy now, won’t that make those ‘prices coming down’ my bad news, too?)
While recent signs have led some economists to speculate that the worst of the housing slump has passed, many are taking a wait-and-see approach, including those at the Realtors association.
“Maybe we’ve hit bottom,” Lereah said. “I’ll need another month before I can get comfortable with that statement.”
(Everyone who took a college stats class ‘knows’ that two data points do not provide a reliable estimate, but three are certain to be sufficient to draw a statistically significant inference. But please ignore the seven times out of seven since the mid-50s when a real estate construction recession coincided with a GDP recession, as that has nothing to do with the soft landing in progress.)
http://www.signonsandiego.com/uniontrib/20061229/news_1b29economy.html
I went to my college stats class about 3 times. It was so boring I couldn’t stand it. Plus, there was little other incentive to go as there were no hot coeds in the class either (coincidently I don’t think I missed my women’s studies class). I guess I’ll have to live most of my life stats semi-illiterate. Damn it all.
It is a boring subject. Makes it hard to teach
Good housing commentary for ‘07 here. I avoid docs too, Stucco. They make you sick!
http://www.itulip.com/forums/showthread.php?t=743
Here is a housing bubble religion checklist, extracted from your post:
—————————————————————————-
Speculative markets are belief systems of convenience with six main ingredients:
1. Extremes of popular, positive investor sentiment–the general belief that the price of a stock, house, or commodity can only go up, such as gold in 1980, tech stocks in 1999, and housing in 2005.
CHECK
2. Valid Core Beliefs that are based on fact, such as the value of the Internet during the Internet bubble or of a home to a middle class household, that drive early adopters into the market.
CHECK
3. Invalid Apocryphal Beliefs that are later invented by those who are benefiting the most from the bubble, such as investment banks and venture capital firms during the Internet bubble, but readily accepted by everyone else who is also benefiting–notably owners of capital and politicians including government regulators–to explain extreme price increases that go far beyond the level justified by the Core Beliefs.
CHECK
4. A well developed system of sales, marketing and distribution, that includes the mainstream press, and employs an army of analysts, consultants, lawyers, accountants, and so on, all of whom adopt first the Core Beliefs and later buy into the Apocryphal Beliefs.
CHECK
5. A duration that exceeds the warnings of early bubble spotters by months or years.
CHECK
6. A re-distribution of wealth in the usual direction, from suckers to exploiters of the human desire to get rich quick.
CHECK
Move along folks. There is no bubble — it was all a fabrication of a bunch of feckless bloggers. Wishing you all a bubble-free 2007 as well.
Home price in Hawaii is falling off the cliff. Check this out: http://the.honoluluadvertiser.com/dailypix/2006/Dec/29/realestate.gif
There is obviously a soft landing in Maui:
“Sales were down 37.5 percent from the previous quarter, about equal to the 1998 numbers.”
Owning a home in Hawaii is pain in the axx the salt air eats the crap out of everything. I know guy who owned a home over there. Said it was nightmare in maintenance.
All depends where your house is. If you live on the north side of the island (big waves in winter and onshore wind) your house will show rust in no time flat. If you live on the south side (small waves in winter ond offshore wind) your house will last a lot longer. If you live up on the volcano above 2500 ft your house will last a real long time. I live at 3100 ft. My 1995 Accura has no rust. Neither does my wifes’ ‘93 Honda.
Woo-Hoo!!!
wierd w japs recovering an all
The report you highlight is for condos not SFR’s.
Txchik and Blackorchid do not worry about the nouve rouche life has a way of kicking them in the pantz… I ll give you an example I went to high school Murrow (in Brooklyn) pretty good school one rich kid came and had to leave after two weeks thinking he could buy friends and was entitled to push others around he got robbed every day and beaten afterwards. The girls usually cant find a guy willing to fk them because they are too stuck up or when they do he uses them relentlessly (can give example but will not) life has a way of establishing ballance…
Gee, sounds like a nice school…
“The group, the National Association of Realtors, reported that sales of existing homes increased 0.6 percent over October…”
When sales go down from one month to another it is usually attributed to something like the weather- “shoppers stayed away from malls/cars/homes because of the white stuff.”
How come when sales go up they don’t attribute it to the extremely unusually unseasonably mild weather that a good part of the nation has been experiencing?
Ronin. I’m there with you. I posted above.
Just drove to MI for the Holidays from MA. There were a lot of green lawns along the way.
I’ve been looking forward to seeing For Sale signs buried in snow banks .
hey i moved from hawaii in late 05 precisely because 50 year old house were selling for 400k, im talking termite eaten pieces of crap, falling down around your ears….
they “hawaii” are headed for a fall of nighmarish proportions
Regarding my post above, about an old tire hanging from a rope, it seems as though today or tomorrow there might be an old tyrant hanging from a rope, in Iraq.
Wonder if this could engender one of Robert’s exogenous events, on which to base pulling the plug behind the curtain and on which to blame everything bad that results. Could be an interesting week, though the markets didn’t seem to pay any attention to the possibility, yesterday.
What a piece of rope and some scaffolding will do to Iraq … and maybe beyond.
Soon on Ben’s housing bubble blog!
Looks like Saddam and two of his henchmen will be swinging by 10PM EST tonight.
Not sure how Billy Graham would have made his invocation in such an event, but I doubt it would be anything close to this:
“Oh, God, you know what Saddam has done! He killed millions of Iraqis in prisons, in wars with neighboring countries and he is responsible for mass graves,” said Sheik Sadralddin al-Qubanji, a member of the Supreme Council for the Islamic Revolution in Iraq, known as SCIRI, a dominant party in al-Maliki’s coalition. “Oh God, we ask you to take revenge on Saddam.”
OK, now let’s procede with the guys that hired Saddam to do their dirty work.
OT, but did Ben finally add the word “Gekko” to his spam filter list?
housing bubble news from the Netherlands:
starting january, Dutch banks cannot provide home loans to starters at more than 4.5x income, unless they file a special report that explains why they use a higher income multiple (e.g. because of parents piggy bank to certify the loan). At this moment, income multiples of around 6x are the norm (below that there is no chance of affording a home anyway) and even 10x is not unusual.
The new rule was made because too many starters get into huge debts because of high leverage, 0-down loans (and also because of the Dutch 50% HMD and four-century low intereste rates courtesy of the ECB). Most starter loans are covered by a National Mortgage Insurance plan (backed by the government) that will pay the difference when the owner has to sell the home at a loss (so it’s kind of a free housing put option from the government). They don’t tell, but probably the mortgage insurance fund is getting hit by quickly increasing problems with starter loans. It is simply too attractive for starters to make huge bets. The banks are not happy, because the new rules could quickly lower the price for starter homes (well, I’m sure politics will find some way around that; maybe they have to redefine the word ’starter’ or increase the current starter subsidies).
No more than 4.5X income to starters? What are those Dutch authorities trying to do — crash the market?
yes, it’s a bit strange and as this rule is coming out of the blue one has to guess why now. Apart from the Mortgage Insurance Fund it could have to do with the new Dutch government that is under construction. They may have to make some minor changes to the extremely favourable Dutch HMD, probably only for new loans so this would mostly affect starters. If these starters are highly leveraged, any modification to the HMD would cause severe damage later next year and obviously politics would be blamed for the fallout. Maybe politics is trying to pass the hot potato to the banks?
Here’s to hoping US politicians pass the hot potato to the subprime substrate of the lending industry in 2007!
http://www.gao.gov/new.items/d061021.pdf
Together with Trichet’s (ECB)rate upticks in the making, the party will soon be over. Weren’t the medium home prices not already falling since two months?
I doubt the party will be ending soon: according to the official ‘Kadaster’, prices in Netherlands are still rising (in my region at 10% yoy). According to some of the realtor organisations prices have slightly declined in the last two months (so politics has to do something, now !!).
Mortgage rates in the Netherlands have barely moved despite all the ECB rate upticks; I guess many years from now we will officially hear that this was because of a conspiracy from the banks to keep mortgage rates artificially low (and protect their RE investment and loan portfolios) and ’subsidizing’ that with artificially low rates on savings accounts (still 2-3%, has not moved either despite the ECB upticks).
Finally! Some good news from the Netherlands, NHZ!
Looks like luck is starting to turn your way!
Yea!!!! Sounds like the screws are beginning to tighten.
Please continue to keep us informed, NHZ!
yes, the Dutch housing bubble still looks healthy from a distance, but the first cracks are appearing. Let’s hope things accelerate next year, after 15 years of +/- 1000% pricegains the downslide should be quite spectacular
I love this very, very much.
http://philadelphia.craigslist.org/rfs/254883712
A realtor tried to pressure me into buying in February of this year. As a first-time buyer, I was a plump pigeon in his eyes, no doubt. He pooh-poohed my concerns about the market going south. “Look,” he told me, “if you’re going to do it, you’re going to have to do it.”
Ass.
In the end I dodged the bullet. Lost my job before he could get me to sign. Now look at what’s happening in Philly’s housing market. You can smell the stench of desperation rising up from this CL posting.
I’m waiting a year before I try again. Should be some great deals out there.
That one was pulled pretty quickly, it seems.
i wish we could feel the desperation in san diego. ground zero for housing bubble. its different here. chinese torture…drip drip drip.
I’m seeing quite a bit of desperation in the North County area of SD. Been watching this thing for a few years, now, so know the areas & developments fairly well. Seen many houses being sold & re-sold & back on the market, again.
Beginning to see a lot (relative to the past few years) of homes for sale that are listed at or below their 2004/2005 sales prices. This is happening in all the areas I’ve been observing.
IMO, we will see an avalanche of foreclosures beginning next summer/fall.
I’m one of the posters who thinks this will take a looooong time. I don’t anticipate a good time to buy until 2009, at the earliest. Hope I’m wrong on that, as a swift correction would be the best medicine. That way, we can all get on with life, again.
Too many of us spending waaay too much time obsessing about houses & RE.
spend new years buying an overpriced pos
an open house on new years eve? the market is fine move along http://newyork.craigslist.org/jsy/rfs/255101623.html
I actually live right next door to that place