Bits Bucket And Craigslist Finds For January 9, 2007
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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Any comment, Crispy?
“Future of housing market debated: Local real estate insiders scoff at predicted ‘nose dive’ “, BY RYAN SCHUSTER, (Bakersfield) Californian staff writer, e-mail: rschuster@bakersfield.com, Monday, Jan 8 2007 9:20 PM
http://tinyurl.com/y4tgw2
This article is entitled “Future of housing market debated…” but in the text there is no debate. It is just a series of quotes by people who make money when you sell your house. There is no counterpoint or statement by anyone else.
This is a fake article, presented as news, but giving Big Real Estate a chance to dump a few sound bites. But one sided as it is, the reader wonders why those folks are protesting so much.
“Future of housing market debated: Local real estate insiders scoff at predicted ‘nose dive’ “, BY RYAN SCHUSTER, (Bakersfield) Californian staff writer”
Sounds like the Local bakersfried realtors getting really defensive and a bit on edge! I would too given the fact that Bakersfried is exactly like the Scal IE: tons of RE overdevelopment, lack of hi-paying jobs, and sharp uptick in foreclosure rates.
True. One sided!
Once my site comes up I will have a rebuttal. I think blogger is down.
“They don’t see the whole picture,” Crabtree said. “They’re not here. They don’t have their feet on the ground. They don’t know what’s going on.”
ummm, the “whole picture”:
Bakersfield: Oil, carrots and pesticide dust.
Once a year in Bakersfield all the cotton farmers would spray defoliant on the cotton and everbody in Bakersfield would get a sore throat for a week. I wonder if it is still like that?
Here are two comments:
1) Bakersfield real estate is toast.
2) The “local real estate insiders” are lying.
One lie after another. “Lies, damn lies and statistics.” Mark Twain. Read this. If you think that these bastards in real estate aren’t playing with the numbers. You are soo right. Their numbers are phony as they get. How can real estate values stay soo strong when the real employment is going down the drain in most markets. That’s why all these numbers are a big fat lie.
December 2006 US employment data: An information of mass deception, hiding a strong decrease of US employment
Decoded news / January 8, 2006 -
“When the wise man points to the moon, the fool sees the finger” (Lao Tse)
Major financial medias and operators have made their headlines last Friday with the “unexpected strong US non farm employment data for December 2006″ (+167,000). Based upon this ‘factual data’, the same players immediately swept the markets with the key ‘conclusion’ they have been desperately clinging to for months now: the US economy is indeed showing resilience and the ’soft landing scenario’ is definitely taking place. Fair enough? Or is it another example of Lao Tse’s proverb?
For the research team of LEAP/E2020, it definitely is another of Lao Tse’s situation. And therefore we will try to clearly identify what is the moon and what is the finger in that situation.
Let’s have a look at the reliability of the data provided by the US Department of Labor by carefully analysing the ‘Reliability of the estimates’ chapter of the ‘Employment Situation Technical Note’.
There one may learn that because the confidence interval for the monthly change in total employment from the household survey is on the order of plus or minus 430,000, it means that there is a 90% chance that December 2006 figures range from - 263000 to + 597,000. And the technical note explains that “These figures do not mean that the sample results are off by these magnitudes, but rather that there is about a 90-percent chance that the “true” over-the-month change lies within this interval. Since this range includes values of less than zero, we could not say with confidence that employment had, in fact, increased.”
For the LEAP/E2020 research team, such a limit regarding the reliability of the concerned statistics discredit them into nothing more than mere contextual information (if not pure fantasy).
As Chris Isidore, CNNMoney.com senior writer, correctly stresses it in his article on January 5th, “The fourth quarter gain was below the third quarter and 2006 saw 143,000 fewer jobs added to payrolls than in 2005, or almost a month’s worth of hiring. And that’s a comparison to a year in which hurricanes Katrina and Rita took a bite out of jobs”.
While John Williams from the Shadow Government Statistics underlines that “Highly unusual reporting and revision patterns for the jobs data were seen again, for December. Employment conditions are close to showing a recession, but each month the Bureau of Labor Statistics keeps filling in prior periods with levels of upside revisions that are unprecedented outside of the annual benchmark revisions. The revisions are unusual enough for the BLS to have published a statement last month proclaiming that the changes were not unprecedented. Something very strange is going on in the reporting”.
More about the real evolution of US economy in GEAB N°11 to be released on January 15th (on subscription)…
Wow! The inventories went down one month like they do every year before the holidays. Make a report, call the press, announce the good news!
Come spring watch all the suckers who bought into their lies get burned..
naples / florida.com
plus a brilliant interview with marc faber
that covers all important topics like housing, stocks, $, oil, gold, carry trade etc… really worth watching!
http://www.immobilienblasen.blogspot.com/
I am still trying to figure out how to pronounce “immobilienblasen.”
I am trying to figure out how he’s “first” just about every time.
Lou, that one’s easy. Check out the time zone for German. Jan-Martin likely has had lunch already. By the way, I’m in Atlantic Canada (time one hour ahead of Eastern).
hi john,
you are correct. right after lunchtime
I think it’s one of those german words that pack a whole sentence into one word “run for the hills the cattle are dying”
immobilien is the german word for real estate
blasen for bubble
Seems to be related to the English “Immobile”, which is how many who are stuck in houses where they owe more than the house is worth certainly are….
I’ll settle for just a translation!
A certain ignominy occasionally results from posting a question in response before reading the entire thread. Unfortunately, this is one ‘a them times.
Observations from Chicago. I took my first wander around Lakeview in the New Year and there are more signs and more FSBO for sure than before. Several of the older signs have been tagged. Also the huge brick SFH that was previously content to sit empty has been staged with pretend furniture for the pretend people that can afford them. Oh and they are still building one sign proclaimed 33% sold, which used to happen before shovel hit the dirt.
Chicago: Over the weekend I saw a young couple, about my age, in their late 20’s, maybe early 30’s, foreign looking i.e. Eastern European, taking pictures and checking out their in-construction new home on Tripp Ave. in Old Irving Park. Their ‘castle’ is a former two flat gutted and converted into a SFH with a new facade to boot. It’s actually a decent looking place but it is the second or third conversion on the block.
Had I seen these exquisitely dressed fools before discovering this blog, I would have gotten bummed out and thought “what am I doing wrong, why can’t I afford a nice home like that, how can this young couple have so much money and do so well for themselves…”
After discovering this blog I think, “What a greedy bastard, buying an over-priced crappy SFH with an interest only, ARM, payment option 80/20 no money down, destroying the historic two-flat by making it a single unit. That faux stone facade is hideous too. I count the days before it goes into foreclosure and I get pleasure knowing that the fool who bought it can’t sleep at night because he can barely afford the payments. I hope he likes the granite countertops!”
Thank you Ben!
If they’re foreign the odds are pretty good that they get paid in euros. Currently the euro is worth more than the dollar. If you want to blame anyone for the Eastern European’s moving in blame Bush. If he wasn’t trying to Ronald Reagan his way to public support we wouldn’t be flooding the markets with printed money to fund a war.
so far the 35 have not offered a nickel of spending cuts
“If they’re foreign the odds are pretty good that they get paid in euros.”
If they’re foreign the odds are pretty good that they get paid in untaxed dollars.
I know a guy who lives in Israel and works for an Israeli company. His landlord makes him pay in US dollars.
Just thought that was kind of funny, if not relevant.
Asgard — I will bet you that his landlord does not deposit those dollars into any account held in Israel, though that may already be your point. This is very common in high-tax countries. Your friend should negotiate a really healthy discount for such method of payment. I did once, to the tune of 25% or slightly more, on behalf of my U.S. employer.
Dollar to pound:
May-74 2.4010
Aug-75 2.1035
Nov-76 1.5875
Jul-77 1.7199
Feb-78 1.9410
Nov-78 2.0100
Jul-79 2.3290
Feb-80 2.3131
Jun-81 1.9400
Mar-83 1.4543
May-84 1.3830
Feb-85 1.0520
Jan-88 1.8250
Nov-89 1.5590
Aug-90 1.9483
Apr-91 1.6900
Feb-93 1.4215
Feb-95 1.5840
Jun-97 1.6343
Dec-99 1.6150
May-00 1.4705
Sep-00 1.4196
Nov-00 1.3997
Jul-02 1.5307
Dec-03 1.7200
Jan-04 1.8511
Notice the improvement in the dollar vs the pound under Reagan. Notice how the dollar was stronger under Reagan than under Clinton’s “miracle” economy. Notice that the bottom of the ratio came under Carter (and remember that also was concurrent with a middle east “problem”).
Could Bush have done better? Perhaps. Was it Clinton or the amazing development of our techonology market in the mid 90s that made the dollar more attractive (and the fact that oil prices bottomed at $12 in 2000)?
Bash Bush or Reagan, fine. But at least get your facts straight and EXPLAIN why some negative economic development can be DIRECTLY attributed to his policy.
The dollar went up under Reagan. Indisputable. If Bush REALLY mimicked Reagan’s economic approach (as well as Greenspan acting like Volker) I’d bet it wouldn’t have done as poorly as it has. But look at the history…it isn’t great but it isn’t all that horrible either, all things considered.
Euro != Brittish Pound
“Clinton’s “miracle” economy”
This is a housing bubble forum. Go bash Clinton at the Rush Limbaugh blog.
arlingtonva,
If a tepid QUESTION regarding the responsibility for SOME of the economic performance of Clinton’s administration amounts to a “bash” of Clinton in your mind so be it. Sounds like your a tad sensitive.
Apparently you haven’t read much stuff here. Bush bashing is routine here (and it isn’t provoked by any Bush praise either I might add).
And you are now the moderator of commentary? That should be news to Ben. I don’t care who bashes whom as long as they back it up with facts and or some logic. I don’t see how letting unsubstantiated and easily refuted claims linger unchallanged furthers anyone’s knowledge or understanding of economic issues.
I’ve never initiated political comments on this blog but when someone makes a unsubstantiated political claim here, I’ll answer it (at least until Ben edits out all such commentary). Heck, I thought most “open minded” people tolerated “dissent”.
arlingtonva wrote
“This is a housing bubble forum. Go bash Clinton at the Rush Limbaugh blog.”
Well then why didn’t you say the same thing about Shadash when he/she was bashing Bush? Oh, I get it. Double standard.
“blame Bush. If he wasn’t trying to Ronald Reagan his way to public support”
BWAH-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA!
Wow that was a good one, almost made me squirt diet pepsi out of my nose. The modern neocons (including G. W. “I never met a spending bill I didn’t like” Bush) bear little resemblence to Ronald Reagan.
I just meant get elected go and “gun crazy”. Scare the people into keeping you in power.
No, this is Chicago, new Eastern Europeans immigrants are common here; they work in construction, in hospitals or medical clinics, in restaurants and as programmers. They get paid in USDs too.
Had I seen these exquisitely dressed fools before discovering this blog, I would have gotten bummed out and thought “what am I doing wrong, why can’t I afford a nice home like that, how can this young couple have so much money and do so well for themselves…”
Same here, Chicago guy, I can’t thank this blog enough for making me understand what was going on behind the scenes of this movie. The first day I found it, I was kind of mesmerized and read every single post and every single comment, and it all started to make sense.
I also felt left out of the market and I couldn’t figure out what we had done wrong. Of course, I was always thinking of a 20% downpayment and a 30 yr fixed mortgage (scary enough for me). I drove around my area and I thought that every single family who had bought in the past few years me must make at least 30K per month to be affording those houses. I think no one really knows how this is going to play out in the end. What I do know is that it was not wrong to stay out of the market and save money. I’m still trying to figure out what makes the minds of some of the bloggers work the way they do. I have said many times that I want to bottle that and put it in my kids’ morning cheerios….
It’s refreshing to know that Las Vegas is different.
From the Las Vegas Review Journal:
“While national studies continue to predict double-digit declines, Reiss said there is nothing that suggests prices will drop significantly in Southern Nevada.
“Many have said that 2006 was a bad year for the Las Vegas housing market, yet this was a year that saw very little change in the median housing prices,” Reiss said. “While we do not discount the national studies that have come out, we recognize that the studies do not take into account local economic conditions, such as lack of private land for development and the continued job and population growth that make Southern Nevada different from other parts of the country.”
See…….it’s different!
Of course it different in Nev…. Just like Maine, NY and Florida.
Oregon too … things are peachy in this neck of the woods. Oh sales are down a bit (correction you know) but all will be
well in the spring. Everyone wants to live in Oregon. Just Google the United Van Lines report and see.
Dont fret isoldearly…. we’ve merely reached a plateau and prices are sure to go up from here. Just ask a few of our fellow bloggers on this site.
Things are definately different here in Vancouver BC Canada! After all we’ve got the Olympics coming in 3 years!
Yep, nothing like a two week winter sports event to double the land values every 4 years, right Salt Lake City and Calgary Alberta?
Caramello — I have long wondered why taxpayers put up with their governments spending so much money to one-up the previous host of an Olympics event.
I also have long been unhappy that the MSM prevents there being any national poll — by Internet or any other means — of the citizens of our country about how our tax dollars are spent, on things such as foreign aid (we are borrowing money in order to give it to other countries, so long as we are in deficit). I hope someday there will be a blog, run by someone just like Ben, that will attain a critical mass of following to make it credible in sample-size terms, to make this possible.
FWIW, and I have posted here longer than all but a small number of regulars, I find that political leanings herein are pretty balanced in terms of left-right, Dem-Rep, however one would wish to define it. Our common bond of interest in the housing bubble and its aftermath keeps raw partisan arguments out of the way most of the time.
/ramble off
I wonder what the next decade of water shortages will do for growth and new jobs.
China is already facing water shortages in the countryside…
http://www.bloomberg.com/apps/news?pid=10000080&sid=aWVfESld0zwQ&refer=asia
They can just buy there food from us.They have trillions of dollars.
Another China water issue….the Yalu. My son lives in China and wrote me the other day that the Party sez the river pollution isn’t an issue because it’s “too big for pollution to affect it”….HUH?
There is way to much population growth on the horizon for our parched West. This will be a huge problem.
Yes, there was a catch to living in a place that is sunny year round.
“Reiss said. “While we do not discount the national studies that have come out, we recognize that the studies do not take into account local economic conditions”
->>>>Unbelievable!!! May I suggest the Review Journal ask any agent with MLS access to run the sales numbers from Dec 1, 2006 to Dec 31, 2006 on Condos (under 100 went to contract) or sales of SFR over 1700
sq ft selling above $350,000 (75% of SFR’s that went to contract were listed under $350,000).
Main Stream Media deserves the bad rap it is getting. Absolutlely no regard for honestly.
“Reiss said there is nothing that suggests prices will drop significantly in Southern Nevada”
Easy…if/when prices do drop YOY, just redefine what “significantly” means. If prices drop 10%, just say that that is not a ’significant’ drop. If they drop 20%, do the same. And so on, and so on.
Just like we haven’t seen significant drops in other parts of the country, just ‘corrections’.
Casey’s posted a spreadsheet listing his financial liabilities:
http://iamfacingforeclosure.com/131/liabilities-spreadsheet/
Not sure how he’s gonna swing that on a $3,000/mo job.
He continues that blog in the hopes that someone will come along and make it all better or that the blog itself will pay him something if he puts enough garbage on it. He’s very calculating and of course most of his posters are too dumb to figure that out.
I feel for the friend and in laws with their “loans”
if i had 10% of that debt i could not sleep at night
I don’ get the wraparound mortgage. He just cant makes things simple and sell the damn house.
His posters comments are pretty funny.
TxChick - “He’s very calculating …”
You called that first and I have belatedly come to agree 100% — he’s a manipulator and impressively skilled at that for his apparent age.
Holy Cr@p! His minimum monthly payment is more than half of the ballance on my mortgage. There is no way that he can come out of this. The only question is which creditors get pennies on the dollar and which get bumpkis.
YIKES!
I cannot believe people have loaned him money, ever. And the mortgage company accepting a promissary note? from this guy? They must be selling it off to some sucker. Even if they get 5 percent of face value, THEY know that’s more than the damn thing is worth.
ISTR that he closed on several properties in the same week so that the lender’s wouldn’t realize how crazy indebted he was getting. This is one of the cases where I could have a little pity for the lenders, and none at all for the borrower. And he’s so humorously disconnected from reality that he thinks that avoiding bankrupcy would be a GOOD thing.
He’s just creating his “Get-out-of-jail” monopoly card to present to Judge Judy.
“But I didn’t deceive anyone your Honor”… “in fact I’m doing a public service by “educating” the innocent and unknowing souls about the dangers of trying to get rich fast in real estate.”
“Please your Honor, let me stay free to perform this important public service that is so desperately needed in today’s treacherous loan lending environment.”…“a lot of people can learn from my mistakes!”
And Judge Judy’s reply?
“Don’t pee on my leg and tell me it’s raining.”
Hwy50 - “He’s just creating his “Get-out-of-jail” monopoly card…”
That’s exactly what I thought at first, but this guy has been too public AND stayed out of jail too long for this to be as simple as he paints it. I bet there is some major undercurrent that we are unaware of — from day one, TxChick had the right instincts about this shyster, IMO.
History Channel take note. In a few years when you start a new spin-off of Modern Marvels “Engineering Disasters” called “Financial Disasters” here’s episode #1, complete with all the gory details already spelled out.
Just the credit card balances alone would give me nightmares.
I live in an older addition, likely paid a little too much for my 3br, 2bath, 1,300sq ft on an acre home. It was built in the 60s and needs updating. However, I have it nice because there are homes selling in the $200K range just down the street (and right next door is an all stone/brick home..brand new!). However, the town (which I am not in) allowed Davis homes to build on a dead end street. They are building north of a very nice housing addition. They are building a vinyl village next to all stone homes. This addition is a ghost town. They have built four spec homes and I think they may have sold two lots/homes. Going into the winter, I doubt they will sell anymore. Next spring summer will be interesting. This addition could end up being a ghost town for many years given its location and the down market.
Where are are you located?
“A worse-than-expected housing slump has left homebuilders with less cash flow to cover debt interest, and some ratings could be cut if that trend continues, Moody’s Investors Service said in a report released on Monday.”
Sorry for the megalithic link.
http://us.rd.yahoo.com/finance/external/reuters/SIG=11vg30000/*http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh96899_2007-01-08_22-17-17_n08187863_newsml
tidbits from article on CNN titled…
Credit guru: Most don’t know what they owe
(CNN) — The holidays might be over, but holiday bills often last well into the new year. Howard Dvorkin, the founder of Consolidated Credit Counseling Services, joined CNN’s Gerri Willis to help strategize how consumers can get out of debt.
WILLIS: OK, Howard. You say job No. 1: Put away those credit cards if you’ve got a lot of debt.
DVORKIN: Absolutely. You’ve got to stop using the credit cards in order to get out of debt. If you start paying down on some and keep charging up on others, you’re not going to get anywhere. So it’s very important. Start paying with cash. If you can’t afford it, don’t buy it.
WILLIS: Pay down the balances, you say. But also, figure out what you owe. How it is possible that people don’t know how much credit card debt they have?
DVORKIN: Most people that call our offices at Consolidated Credit Counseling Services are significantly understated in the amount that they owe.
WILLIS: What do you mean? That they don’t know or they don’t understand?
DVORKIN: They don’t know. They don’t know. You have to understand that most people carry balances anywhere between four and eight credit cards. And as such, it’s very difficult for us to add up four to eight credit cards and the balances.
—————–
for the rest of the article go here:
Credit guru: Most don’t know what they owe
I know. Zero, and I worked hard to get there. Perhaps I am actually a Canadian born in the wrong country.
I know - Zero also, BUT…. my gf of now 9.5 years… she had NO clue… and she hated me for making her find out… but when she wanted to progress further in our relationship I required that she address the issue. For the past year+ she hasn’t charged up a thing and uses only cash and we track her progress in paying them down….but once you let them get that high, at 23 percent or whatever most cards are, it’s just not that easy. She makes a multiple of the US Median income and the only bills she pays for us are for groceries and laundry. She’s making some debt holder somewhere very happy. I’m a heartless bastard and offered her Fed Funds with the caveat that I would not have to buy a house until she fully paid it off. Despite how much more of her payment would go to principal rather than interest, she didn’t like the caveat. Thankfully she’s not pushing for the house now as she agrees with the opinion here but I think she’s hoping it turns around faster than I’m anticipating.
Hi Maz -
sounds like your girlfriend is doing well on the austerity program being forced on her…
but IMHO once her status changes to Maz Wife she’s going to remember her fondness for Mr. Capital One and that hot hot young boy Macy’s card.
But, putting away the credit cards means I cannot buy all that STUFF, right? Bwaa-bwaa!!!
Seriously, the chances of people “putting away the credit cards” are nil. As long as the credit card mafia continues to peddle their “amazing offers”, people will charge on them. And in this country, even with the new BK laws, discharge rules are pretty lenient, so there is no motivation to be serious about debt. I know people who erased their bad credit history with a couple of RE auction sales.
Hey, you can occassionally abuse the living hell out of those amazing offers. Presuming you’re not looking to acquire new credit at the drop of the hat and you have several cards with large 5 digit available balances and you never charge on them and they offer you cash or balance transfer etc at 0 percent for some period of time with a capped transaction fee, you can print money with them. Sure, your credit report shows you have 100K in outstanding revolving debt, but for a total of say $150 in transaction fees and plopping it into an ING or TBill and collecting 5 percent for a year, you make $4850. Then you just wash it back in (of course make the min payment required during that time also, but that’s just principal anyway and you can just pull it out of your online savings if that’s what you used).
Transaction fees are going to be waaaaay higher than $150 to pull $100,000 out of “large 5 digit available” (say five at $20K?) credit cards. I think cash advances are usually 3% — or the CD company is going to charge you their processing cost if it’s done as a straight creditcard transaction (like a municipal government charges you extra for paying your vehicle taxes or parking tickets by credit card).
While credit card companies are very generous with those zero percent teaser rates to pay off other balances (and get you to change your credit card affilliations), I am pretty sure it’s hard to get essentially zero-interest loans out of them, even if your credit is sterling.
On many of the 0% CC offers the balance transfer rate is 3%, but with a max of $75 or $100. The max amount I can get is $10,000 for about 1 year. Still that’s $500 in interest - $100 = $400 free money. I think the real reason I like it is the satisfaction of beating them at their own game.
Right - the “balance transfer” fee may be capped (I transferred about $3,000 to a zero % intro fee card a few years ago with absolutely no fees) — but that’s just for credit card transfers. The fees to actually get cash out are usually much higher.
I’d make sure I have ALL the numbers before I tried to play this game.
Abuse the hell out of those amazing offers? Balderdash! I don’t want them sent to me in the first place! So, whenever I get one, I scribble all over the application, put it back in their post paid envelope, and fire it right back at them.
Also fun to send unsolicited offers with postage paid envelopes back to sender with rocks or anything else. Grocery flyers work especially well.
Time to repost the link to “Don’t Buy Stuff You Cannot Afford”:
http://tinyurl.com/s4gx9
A classic for the bubble age.
http://www.youtube.com/watch?v=Ubsd-tWYmZw
One classic deserves another - I give you the infamous Century 21 “Suzanne Researched This” commercial.
it’s very difficult for us to add up four to eight credit cards and the balances
Are public schools even worse these days than I thought? Oh my.
“Are public schools even worse these days than I thought?”
NoVa — I’ll bet they are. I find that calling them “government schools,” which is absolutely accurate, if unpopular, gives people pause. Anything that makes folks think a tiny bit about government-run education is better than nothing at all, IMO.
barry ritholtz has some fascinating stuff
GSCI Cuts Energy Exposure
“It might be a better idea to thank Goldman Sachs, not the weather, for the recent plunge in oil prices. While recent balmy temperatures have certainly played a role in last week’s dip in oil prices, a lesser known, but equally powerful, move by Goldman at the start of the year might bear some responsibility as well.
Goldman cut the energy portion by as much as 50 percent in some of the sub-indexes that comprise the widely followed Goldman Sachs Commodity Index, tamping down moves to buy them by large investment funds who mimic Goldman’s index.
The changes took effect this month and apply for all of 2007, a Goldman spokesman said. Crude oil futures plunged 9 percent Wednesday and Thursday to $55 a barrel, before settling Friday at $56.31. The two-day decline was the sharpest since December 2004.
The GSCI is influential because large institutional investors like pension funds and endowments invest according to its allocation model.”
Nice try, but that would have been priced in well before the start of the year.
Even if it were to be priced before the reweighting the move just buys time for the dollar. The true measure of a “strong dollar” is in oil prices. Remember that GS did the same thing with Gasoline and prices have crept up ever since. Desperation while the sun is still shining….
“…that would have been priced in well before the start of the year.”
It was:
http://www.kellerkomments.com/2006/10/gasoline-price-manipulation.html
http://www.lewrockwell.com/orig7/stojan1.html
They must have done this for the election……:)
It was in the news on October 7.
USO is at 46 right now…wow!
from market watch
Homebuilder D.R. Horton (DHI : D.R. Horton, Inc
News , chart, profile, more
Last: 25.39-0.45-1.74%
8:38am 01/09/2007
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Sponsored by:
DHI25.39, -0.45, -1.7%) said first-quarter net sales orders dropped $2.3 billion from $3.2 billion a year earlier, while cancellation rates fell to 33% from 40%.
Gini Coefficient, the Missing Element:
http://wallstreetexaminer.com/blogs/winter/?p=284
Karl Marx didn’t have a very good solution, but he was right about this problem:
Every business has an incentive to cut wages (eliminate health insurance, eliminate pensions, convert employees to freelancers, outsource).
But business in general has to turn around and sell things to those same workers.
We’ve “solved” that problem in the short run by having people spend more than they earn, promising (although they don’t understand this) to live in poverty and work for nothing someday.
The long run?
Agreed. Keeping things going by Pushing Debt, but for how long?
Jas
Yes, there is an incentive to cut but then, in a vibrant economy, one with worker mobility, the owner who continously squeezes his workers will find the costs of hiring and training new employees far exceeds the costs of paying for ability, continuity and knowledge.
Business history is replete with stories of business who failed shortly after hacking away, mindlessly, at their workforce. The talent leaves (seeing the abuse) and what remains is the worst dregs.
Intelligent owners know they have to achieve a balance. Marx, never having run a business (much less anything else in his life) naturally did not understand the other motivations of a sound businessman. Pushing out those with an “institutional” knowledge is the oldest penny wise/pound foolish business policy known. Since most people are never business owners they don’t know this motivation exists. Heck, obviously many stupid business owners and managers don’t get this fact (I’ve seen it myself many times).
But as much as I’ve observed this stupidity I’ve also observed the intelligence of many owners and managers in this regard. Business, like everything else in life is messy. Sometimes you succeed by luck, inspite of yourself…sometimes the “most brilliant” don’t succeed even with all the economic winds at their back. Those who think there is some perfect way to make businesses grow, risklessly, profitably and continously are hopelessly naive.
To my knowledge, no one directed anyone in society to “spend more than they earn”. Those were all individual decisions made under free will. Yeah, it will end in a mess for those who were reckless and (unfortunately) many who weren’t but the alternative (according to Marx) is to eliminate the dynamic risk in an economy by removing the freedom to make dynamic gains as well.
Maybe you feel comfortable giving up your freedom to reduce the possibility of loss. But that means giving “bureaucrats” control….and I doubt many people on this blog imagine government “experts” to be any better than the “experts” in the REIC, the financial markets or anywhere else for that matter.
Society has a choice; encourage and enable individuals to take individual personal responsibility or discourage those values and accept the consequences…..a society of people who expect others to provide food, housing, work, healthcare, transportation, education, communication and…..what else? Vacations for them?
Please see Henry Ford. Many brilliant ideas, Many instances of short-sightedness, but his anticipating of social capitalism greatly helped advance the state of this country.
Society has a choice; encourage and enable individuals to take individual personal responsibility or discourage those values and accept the consequences…
——————————-
The problem with your theory is you (and other Darwinian capitalists) assume those who profit most are taking the greatest risks. Nothing could be further from the truth.
Thanks to our laws of incorporation, those who suck the most capital out of our economy are NOT held responsible for their actions. Witness Donald Trump and his assertion that bankruptcy is a business tool which should be used — and is expected to be used — so businesses can begin with a “clean slate” after they’ve failed miserably due to those worshipped here as “brilliant capitalists and risk takers”.
Hogwash. The rewards of production should go to those who produce — the workers.
Oil - Everyone is selling. Buying opportunity?
i think so
Not yet. Part of what drove commodities so high is traders betting on the trend. Until their positions are cleared up… I think commodities have a lot more correcting to do.
Neil
an artile on speculators impact
http://money.cnn.com/2007/01/09/markets/oil_prices/index.htm
Ben,
Here’s a BusinessWeek link that supports some of the more bearish sentiments of the fellow bloggers in regard to Real estate:
http://biz.yahoo.com/special/pf010907_article2.html
Housing: Curb Your Enthusiasm About a Recovery
By Peter Coy
BusinessWeek Online
Housing booms are short and exciting. Housing busts, on the other hand, are long and painful. So don’t put much faith in those oft-heard assertions that the worst is already over.
Prices are likely to fall further in many markets in 2007. In some others, prices may rise, but at less than the rate of inflation.
A BusinessWeek analysis of the past three decades shows that if history repeats itself, it’s likely to take 15 years or more for many parts of the country to get back to their inflation-adjusted peaks.
For residential real estate, the outlook for 2007 ranges from mildly positive to awful.
The major markets that do least badly will be “revenge of the nerds” cities like Dallas and Houston that the boom bypassed. Even if all they generate is low-single-digit price gains, they will look good by comparison. Seattle and Raleigh, N.C., with healthy job growth, should also do O.K.
The biggest losers will fall into one of these groups: cities like Detroit that are suffering economic contractions; cities like Los Angeles, San Diego, and others in California where prices are extraordinarily high and have barely begun to adjust; and cities like Miami, Las Vegas, and Phoenix that have a huge overhang of unsold houses or condos.
———————————–
In other words, it could take 15 years for houses to adjust to their proper value in places such as Los Angeles, San Diego, Phoenix, and Las Vegas.
Choose your poison: Do you want a quick 50% haircut (2 years) or a long slide (15 years)? I prefer the long slide in RE prices. It gives me more opportunity to build up assets in other investments and have at least 5 times my net worth than the dream house I would buy through cashing out Equities or T-bills.
Regards!
You misread. The article said it will take 15-years for houses to get back to their inflation-adjusted peaks, not their proper value.
why would prices ever return to their inflation-adjusted peaks?
Why would they return to their inflation-adjusted peaks? Probably because of a future bubble.
Well the old fashioned thinking is tha real wage growth would eventually raise real prices. But then I’ve argued that we should use wage growth as an adjustment for housing prices and not the cpi.
Precisely, Jim A.
The major markets that do least badly will be “revenge of the nerds” cities like Dallas and Houston that the boom bypassed
Bullshit.
I think the point this author was trying to make is that if you lived in areas in California (like where I live) and you were seeing 20% annualized price increases from 2000 to 2005, well those that bought at the peak of the market paying something like $500K for a stucco crackerbox are looking at seeing their castle bottom out at about $300K. The point is most of the people in Texas who bought the typical priced home at the peak of the market are not going to loose $200K like they are in my community. That is simply because the average price of the average home is substantially lower in TX than it is here in CA.
You think so? I’ll bet I could go out and find you 100 houses in Dallas where people will lose $200K plus in the next five years if the market craps like we think it will. That would be easy.
But not the average home like in San Diego where the median was almost $600,000.
Does it matter? Losing $100,000 on average versus losing say $240,000? Either way if you bought in 2003-2006 with ARM’s you are probably walking away. Texas may have protected itself somewhat with laws passed after the last HUGE crash there but California sure did not. Will be interesting to see what both states do after this correction.
I like percentages.
“One housing bear, Ian Shepherdson, chief U.S. economist of High Frequency Economics in Valhalla, N.Y., guesses that prices nationally could fall 5 to 10 percent from the end of 2006 to the end of 2007, going by the Office of Federal Housing Enterprise Oversight housing price index.
Using that same measure, Goldman, Sachs & Co. predicts a 3 percent decline from 2006 to 2007. Before 2006, the index’ worst performance since its origin in 1975 was a 0.3 percent increase in 1990.”
With every RE Bull saying that there is no national RE market, and that all RE is local, even a 3 percent decline NATIONALY portends a BIG drop in some local markets. We saw what happened to Cali in the late 80s/early 90s, and that was without this historic national drop.
I read an article this evening about a guy named “Dr. Bob,” who is a phenom at predicting the outcomes of college football games. He sells subscriptions to his punditry and is not personally a gambler. He has been so successful that his predictions are getting into the hands of the bookies in time for them to change their odds.
Does anyone really believe that GSax is going to publicly state that “x” is going to happen, before they have long since harvested most or all of the profit from that information? If you do, there’s a property in Florida that I can let you in on.
Based on a TV commercial here in SVa the housing “Bubble ?” issue has garnered enough sheeple recognition to warrant advertising $’s. A degreasing/tile cleaning product named “ZAP” (I believe) is recommending use of its product to increase the value of your home appraisal - do not renovate - use “ZAP” - money back guarentee that the appraised value of your home will go up!!! Wish I was witty enough to come up with a combo gaff that included GF, FB, BK’d, Zapped statue planting hopefulls but it is beyond my abilities. I will leave that to my betters on this blog…….
Spring Will be No Saviour:
http://tinyurl.com/y3w99u
David
Bubble Meter Blog
Wow. How do you put up with that “Lance” fellow? Straight from the REIC, spouting the NAR script, line for line.
Add up how far ahead you’d get by renting for $2000 per month less than buying the next 5 years, and putting the $2,000 per month into T-bills (state tax free and averaging 5% yield). If RE drops 6% per year the next 5 years while T-bills yield 5% per year, you are roughly earning an 11% relative gain. Or try Series I savings bonds instead. You don’t have to pay any tax at all on them until redeemed, and it’s only a federal tax. If that Businessweek article above is correct about some of the markets taking 15 years to recover, you are better off renting the next 15 years and throwing as much money as possible into Municipal bonds, Series I savings bonds, or T-bills.
If that Businessweek article above is correct about some of the markets taking 15 years to recover, you are better off renting the next 15 years and throwing as much money as possible into Municipal bonds, Series I savings bonds, or T-bills.
Unless the dollar gets massacred, which is quite likely.
many in NE went from 1989 to 2001 for even money (nominal)
2002 w inflation
Same with So California. Exactly the same timeline. 1989 sales saw even money in 2001 — that’s nominal pricing, as well — NOT inflation-adjusted.
Beautiful graph in USA today, the “Money” section, lower left corner of page.
The image shows the price first-time homebuyers pay for a home:
19% Less than 100k
45% 100k - 200k
20% 200k- 300k
8% 300k- 400k
10% 400k and up
Conclusion: Good luck Florida, Boston, DC, California, Washington, Chicago etc. First time homebuyers are DONE with your market. See you at the bottom.
Those kind of numbers show just how whacked this market is. It shows the only way a first time buyer can get into a home is by uisng a toxic take it in the axx loan product.
Not done just yet — but the coming wave of foreclosures coupled with subprime subsidence should finish the job.
http://us.rd.yahoo.com/finance/external/reuters/SIG=11vg30000/*http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh96899_2007-01-08_22-17-17_n08187863_newsml
Excuse the long URL, here’s what appears to be news of the first shot across the bow against the “big boys” of HB.
“A worse-than-expected housing slump has left homebuilders with less cash flow to cover debt interest, and some ratings could be cut if that trend continues, Moody’s Investors Service said in a report released on Monday.”
In summary it tells us that profitability may not be the real issue, the real issue is credit rating and cost of carry. With high leverage and low cash on hand, some of these bonds may revert to junk and then the roller coaster ride gets going with gusto.
January 09, 2007
NFIB Small Business Index For December 2006
NFIB, National Federation of Independent Businesses.
” The Index of Small Business Optimism fell 3.2 points to 96.5 (1986=100), back to the mid-summer 2006 levels. If confirmed by the January survey (a large quarterly sample), this will indicate a much slower domestic economy.”
“In particular, job creation, which was solid in December, appears set to weaken in the early months of
the year. Job creation plans weakened substantially from recent levels and the percent of firms with unfilled job openings fell, pointing toward an increase in the unemployment rate.”
http://www.nfib.com/object/IO_31697.html
It is near its 7-year lows; the recent double bottom is very similar to 2000-01. Job Creation conditions component is near the lows since 2001-02 (when the employment was falling). Inflation (Prices) component is falling nicely, i.e., the inflation pressures are abating,
Anyway, what do these people who own small businesses know about the conditions of the economy? I would take Scam Lovers’ read on the economy any day because they know how to listen to the respected e-con-meisters from Wall Street and the Fed officials and figure out why recession is nowhere in the cards. Don’t worry about what is happening to the small businesses; just listen to the e-con-meisters. Easy does it!
Falling Crude Prices
Also, crude oil prices falling, DOWN 3% this morning, has nothing to do with the falling demand in the US due to a weakening economy. There are multiple explanations that are bullish for Scams and the economy. Pick and choose an explanation that fits the wish.
Jas
Jas if this market doesn’t “correct” soon and by that I mean more than one pissant -75 points day, I’m going to lose my mind. This is beyond annoying.
“I’m going to lose my mind.”
Me too. My Mom is going to disown me. I can’t get the Flinstones tune out of my head this morning. I AM going crazy.
Thanks a lot. Now neither can I!
–
Patience, chick. I have a 3-5 years time-horizon and for my leveraged speculative positions 6-month horizon. It is useless to time the market too closely in time.
2007-08 would be far worse for Scam Lovers than 2001-02; that much I am convinced. The Housing Bubble burst would do far more damage to the economy and to the psyche of average Joe and Jane than did the tech bubble burst.
Be patient and hang in there. The big decline in Scams is coming; just don’t know exactly when. When the Spring bounce in housing doesn’t materialize that might be the trigger. I am forecasting the recession to begin in 2007Q1.
Jas
Jas — hurray! Hope you’re right. I have been figuring that the recession would appear in Q2, but a lot of “analysis” by big cheesoise, including some whom I’d have thought would be bearish, have gone soft lately, buying into the “goldilocks” theme. I am very cynical and will be totally unimpressed by the “trigger,” as to be proclaimed by the MSM.
I still hold that we’re already in a recession. Spend some time over at Shadow Government Statistics and you might be convinced, too.
Beyond annoying is right.
Today’s market goal is simple though — just finish down, even if by only a dime. I don’t want to hear a single peep about that “first 5 trading days” theory.
Don’t underestimate how many people are holding, tring to capture the last bits of gains, until they have to sell to pay the tax man.
“There are multiple explanations that are bullish”
Same for the semi-inverted yield curve.
Who will be proven right? Only time will tell.
DHI and MTH just came out with orders numbers and details on order value for the most recent quarter. Looks like some pretty big unit order declines (42% at MTH and 23% at DHI). Average order value appears to have dropped 15% and 6%. Cancellation rates also remain high. More details at my blog:
http://interestrateroundup.blogspot.com
“that the official new home sales and inventory figures are flawed.”
Exactly!
Thanks, Mike.
how does house humters and scripps sell ads
07 should have house haters- all the hurry up buyers from the earlier shows
Well, I’m sure glad the spring inventory explosion hasn’t happened yet here in NJ. For instance, in the townhouse development I live in in North Haledon (decent area, quite nice townhouses, really) in ONE ROAD (Magnolia Way) there are 10 houses listed for sale on the GSMLS web site. The asking prices range from $550K to $620K, laughable really. This is not a long road, I estimate only 60-70 townhouses on it in total. My wife and I walked it on the weekend and saw an additional three FSBO signs. A total of 13 houses for sale on the same small road.
I think I’ve found “Flipper Central” in NJ, or can someone do better?
I’m really looking forward to the spring, and just loving paying my rent!!
Very ironically funny headline. I would not disagree:
N.J. eyed as source of stench over NYC 2 hours, 5 minutes ago
NEW YORK - The gas-like odor that hung over Manhattan’s streets was gone Tuesday, but city officials were still trying to pinpoint its source — and eyeing New Jersey.
Maybe some ‘For Sale’ signposts are piercing the gastubes as they’re put in deeper and deeper to resist an average 7.5 months before… falling apart.
it was a stench from the nj property tax bills!
nj has the some of the highest property taxes in the country
I just discovered this blog yesterday. It’s fascinating, if somewhat disturbing.
Does anyone know of a blog that covers the RE market/bubble issues for Long Island, NY? I’ve been watching the RE Listings with an eye toward buying in the second half of ‘07.
I’m looking for the same thing. Here in New York City, people still seem delusional about real estate. The cost of owning is far greater than the cost of renting, prices are dropping everywhere else, but the city will be immune. Am I missing something?
http://nychousingbubble.blogspot.com/
new one
Yeah, It will never be cheap to live in New York, but there should be some kind of correlation between rents and prices. That’s what those who say “But you just have to pay alot to buy a place in New York” just don’t realize.
Not specific to Long Island, but the NJ real estate report covers NJ, and often has information related to NYC/LI.
http://njrereport.com/
That blog, Grim’s site, is top notch. There are a few reliable NYC posters here who might know of others.
Thanks for the links.
I’ve been predicting a bubble burst for the last two years, arguing back and forth with my friend the mortgage broker and his wife the realtor. It’s odd now that it seems it’s actually here.
This is interesting re the Monthly Payment Consumer:
http://www.itulip.com/forums/showthread.php?t=808
“The Burnsian consumer gets more joy and gratification from not buying each and every dispensable product she doesn’t purchase than the folkloric consumer of economists’ models gets from, in the words of George Carlin, “spending money he doesn’t have on crap he doesn’t need.” The question is how many consumers go Burnsian on us next year.”
For the economy, that is THE big question. I’m still predicting that Christmas ‘07 will be telling.
For the economy, that is THE big question. I’m still predicting that Christmas ‘07 will be telling.
————————–
Agree. We’ve not heard the end of the Christmas shopping season. Need to see how the retailers’ margins held up. From what I’ve seen, not too well.
MSM is trying to suss out the data here in Tucson:
http://www.azstarnet.com/business/163746.php
Slim — I like that article. it seems as if the writer wants to get the word out that he believes the Tuscon market is going to tank, but in order to get the article past the editors, he had to add appropriate multiple mea culpas and contrary predictions.
“Still, demand for investment properties remains healthy in some parts of the country. In the Charlotte, N.C., area, investors have been snapping up raw land and developing it for builders who are moving into the area as other housing markets cool, says Wallace Perry, president of Coldwell Banker United, Carolinas region. Land prices are rising at 10 to 15 percent annually, nearly twice as fast as home prices”. (http://biz.yahoo.com/special/pf010907_article1.html)
I found the last statement about land prices rising twice as fast as home prices interesting. I would think that typically they move up and down together at similar rates.
2 factors: The cost to construct a house hasn’t changed as much a house prices. Therefore it makes sense that the change in house prices would disproportionately affect the price of unimproved land. Secondly, the price of land is going to be based on the anticipated price of a house A YEAR FROM NOW, after completion, minus carrying costs; so there is more speculation in raw land.
Someone should do a story about how boston.com has taken to heavily moderating what used to be a very long, very useful forum thread. About a month ago, they removed the entire thread (which had thousands of posts) and are now moderating it very closely. I know, because last night I posted a message calling them out and this morning it was deleted. Maybe the MAR has them in their back pocket, and are sick and tired of the truth getting out.
http://boards.boston.com/n/pfx/forum.aspx?tsn=1&nav=messages&webtag=bc-re_mainboard&tid=288
Censorship at its finest.
Who could have predicted that censorship would become such a dominant force in a country whose constitutional rights include freedom of speech?
Sounds like the RE brokerages used the clout of their ad budgets to pressure the blogmaster.
Would love to see a stat on what % of people who are in the process of homebuying, or considering homebuying versus renting read these blogs. It must be high enough that the RE Brokerages are concerned. Also, even if it’s only 5% of that group, I have to believe that we’re a “noisy majority” in the outside world - always willing to throw in our two cents on a subject we know something about. So maybe we’re 15% of all the noise out there. Yeah, they should be worried.
I’d also add that we probably have a long term effect on those in the MSM too. So now w’re probably up to 25% of the noise.
They now have a ‘flog’ and people will realize it and not post.
Urbandictionary.com defines flog as a fake blog used by a corporation to pimp and agenda or something.
GS — Unfortunately, I don’t think we have had true freedom of speech in this country since about 1964. Excluding the obvious — you can’t yell “Fire!” in a crowded theater — our rights to speak freely have been eroded ever since, year by year. I probably am old enough to escape, by virtue of an underground rosewood chamber, the full censorship of the Internet, but it is coming, incrementally. Government is nothing except coercion — a means of forcing people to do what they would not do voluntarily. Government does not like competition nor question of its actions. When it can repress such and get away with it, it always does so.
It continues to look a lot like Christmas…
http://www.marketwatch.com/tools/marketsummary/
Iphone thru Cingular. Guess it’s time to toss the Blackberry in the trash. Unbelieveable.
iPodaPhone…go with the punches txchic, because I right behind ya.
Anyone in the market for a
Bubble Unit?
Philly posters: Did they tear down the Roundhouse to put this up? Or is the Roundhouse still where it always was? If it is, I can’t believe the developer put up a condo that mimics the City Jail.
It’s the old Metro Hospital all gussied up.
Sounds like a repeat of last year’s wildly successful NAR ad campaign:
Realtors Announce Campaign To Increase US Homebuying
DOW JONES NEWSWIRES
January 9, 2007 12:57 p.m.
WASHINGTON (Dow Jones)–A trade group for real estate agents is launching a $40 million campaign to drum up business as supplies of unsold homes in the U.S. sit at high levels.
The National Association of Realtors on Tuesday said the campaign will urge consumers considering a home purchase to contact a Realtor.
Next week, television and radio advertisements will begin running as part of the NAR’s public awareness campaign.
“It’s a great time to buy,” said Pat Vredevoogd Combs, NAR’s president. “There’s great amounts of inventory and interest rates are historically low. We’ve got jobs being created.”
The NAR’s latest report on existing-home sales in the U.S. said inventories in November totaled 3.82 million, a 7.3-months supply at the current sales pace. In November 2005, the months’ supply was 5.0. Inventories of new homes are also high, and economists predict builders will slash prices to reduce supply.
Combs said the U.S. is made up of different, local real estate markets. “I don’t think anybody sees the market as bad everywhere in the world,” she said.
A real estate agent in Grand Rapids, Mich., Combs said owning a home is a way to build wealth. A Realtor can help a consumer make the best possible deal, she said.
“You can walk into a marketplace and have a choice in what you buy,” she said. “In some parts of the country, it may be the best time to buy a home since 2001.”
“Next week, television and radio advertisements will begin running as part of the NAR’s public awareness campaign.”
I hope they hired the same people that did Century 21’s adds last year and brought us yet another bubble classic, entitled “The Debate”:
http://www.youtube.com/watch?v=Ubsd-tWYmZw
‘I love that house…plus the schools’
“It’s a great time to buy,” said Pat Vredevoogd Combs, NAR’s president. “There’s great amounts of inventory and interest rates are historically low. We’ve got jobs being created.”
It’s always a great time to buy. And, for that matter, never not a great time to buy.
…”interest rates are historically low..”
Huh?! Three months ago, HIGH interest rates were killing the market , according to the NAR! Did I miss something?!! Have they gone down?!!
I really hope, and I mean really really hope, that the last American consumers who still trust blindly in realtors as “smart professionals with their best interests at heart” are catching on to this latest bullcrap campaign and finally waking up about the NAR.
Ugh.
Dude, that was so last month.
““You can walk into a marketplace and have a choice in what you buy,” she said. “In some parts of the country, it may be the best time to buy a home since 2001.”
This is exactly what the agents told us in NY in 1991. We ended up making a bid in January and paid $267 versus the asking price of $289 on a house that was originally listed 6 months prior at $329. I think we could have waited because prices stayed flat for awhile after we bought. However, my wife had just gotten pregnant so we decided to jump in.
I had wanted to build a nursery in our apartment by putting up a wall in the living room to section off a place for the crib and changing table. My wife didn’t buy into this even though I had it figured on Excel (actually Lotus 123) that renting made more sense.
The selection at the time was overwhelming. The only reason we stopped looking when we did was the positive ept test. Easily, we saw 100 homes.
In retrospect, we should have bought one of those “expensive” homes in the $300’s at the time. But who knew?
The history of RE is that prices ALWAYS seem to high when you buy. Usually time heals this.
“The history of RE is that prices ALWAYS seem to high when you buy.”
I strongly disagree. It was very clear during the last trough in the early ’90’s that houses were relatively cheap. And I do mean during, not with 20/20 hindsight years later.
We are so far from that point today. The current downturn is just beginning. Which is why it rankles me when folks start writing that the downturn is already over. It hasn’t even begun.
I agree, but if you plan to buy a home someday, you can start your research now and go out with an agent to see the inventory. They get paid to do this and it starts giving you a feel for the market that you can’t get just looking at the numbers. My doing this over the course of say a year, you will really have your finger on the pulse of the market and be in tune with its rhythms. Not only will you start getting a sense of the relative values, but you’ll also get to shop neighborhoods. When you are ready to pull the trigger you will have far more certainty in your decision making including what type of offer to make.
The only problem with this is you might get a bit frsutrated seeing a home you like and walking away from it. For current renters who are first time buyers and readers of this blog, it might make sense to do this just to know the emotional pull that homes can exert. It may not affect you, but if it affects non-readers of this blog, it could affect you indirectly.
It is amazing how so man y non-readers don’t have a sense of the current market and obliviously go out looking at houses, dead set on buying. They love the selection and are unaware of the price drops to come. Some even acknowledege the price drops and figure they’ll buy anyway.
Clearly, the brokers’ “It’s a good time to buy” is a very effective seduction for the uninformed.
“Some even acknowledge that prices will drop further but buy anyway…”
Too true. And I can understand it once you get further into the downturn and closer to the bottom (that is the REAL bottom, not the “bottom” that David Lereah is claiming on a monthly basis).
I feel some pity for those who are buying now even though they know prices are going down further. It’s like the “buy now or be priced out forever” NAR campaign grabbed folks so hard that they are terrified still- even in the face of drastically slowed sales, dropping prices and rising inventories.
A friend bought a few months back. A teeny tiny place that he knows he has to build onto to make it workable (ie. he’s going to have to throw more money into it, on top of the too-high price he’s already paid).
He was not paying attention to the market this past year and believed the hype about “it’s not happening here”, so when he saw that first little dip, he grabbed it, scared.
Now, just three months later, there’s several places availale in that same neighborhood that are double the space for the same approximate price he paid.
In other words, if he’d just hung on for a while longer, he could have bought what he needed. Now he’s stuck in a place that’s too small for his needs, too expensive for what it is and on top of everything else he’s got to throw more money into it just to make it liveable!
This manufactured RE scare has been a national nightmare. It will take a little while to get over it. Raw nerves for everybody for a while longer, both bulls and bears.
If you are tempted to make an offer this year, lock yourseld in a room, get on this blog and tell people you need help.
You will get talked out of it.
“You will get talked out of it.”
Well, you’ve got that right.
tiger, you are right. I remember at that time, in 1994, my husband’s boss was leaving the country and could not sell his house for what he had paid for it. He ended up mailing the keys to the bank. I should have known that that was the time to buy a house, but I had no idea about rent-to-own ratios and in those days, alas, there were no blogs.
PP said: ” My wife didn’t buy into this even though I had it figured on Excel (actually Lotus 123) that renting made more sense.”
Another proof positive that women control 80% of the money and 100% of…something else….and something else trumps Excel every time.
I live in Oceanside CA (north San Diego county) and on Craigslist today I found these four gems. They’re all the same house, all listed right in this order on the page. I’m going to go ahead and assume the realtor doesn’t know how craigslist works… my favorite is the first one: “the faster you put in an offer the lower the price will be”
HUH? and the next ad has the word “Reduced” in the title!
Jan- 8 $465000 HOUSE BY THE BEACH! (OCEANSIDE, CA) pic
http://sandiego.craigslist.org/rfs/259483499.html
Jan- 8 $465000 Beautiful Home By The Beach! Reduced Price (Oceanside, Ca) pic
http://sandiego.craigslist.org/rfs/259480114.html
Jan- 8 $465000 SURFS UP ! Remodled Home In Oceanside (Oceanside, Ca) pic
http://sandiego.craigslist.org/rfs/259469376.html
Jan- 8 $465000 TURNKEY PROJECT NEXT TO THE BEACH! (OCEANSIDE
http://sandiego.craigslist.org/rfs/259457128.html
Flagged those. LOL. They’ll be gone soon.
I know that area VERY well, and the house is nowhere near the beach. It’s about 6-7 miles away, and the area is smack dab where the O’side police officer was shot and killed a couple of weeks ago.
The house is worth (in real dollars, w/o a credit bubble) about $120K to $150K. They are trying to sell for $465K but larger houses there are sitting for months at much lower prices (under $400K, now).
Good luck with that one!
Way OT but be sure and check out the apple website to see this Iphone. If that isn’t the coolest device ever I don’t know what is.
Say what you want about Apple, they *do* know how to make a slick and (more importantly) usable user interface.
Another $600 device Americans dont need and can’t afford, but it will go on the credit card. It is cool looking, I admit, but it also looks really easy to break. I expect to see many i-phone clones within a year at half the price.
I’ll be first in line to get one. I hate to be such a scheep but I’m a total gadget whore. It’s my worst weakness.
Anyone want a great deal on a Blackberry Pearl? hahahah Barely used!
Yeah, just wait for the Zufone from MicroSoft soon….
We won’t see that - pound for pound Apple and PC prices are equitable once you configure the PC to match the Mac hardware specs and software package. Huge myth that PCs are cheaper.
And considering nobody has managed to wrest any sort of significant market share from the iPod it would be foolish to underestimate the appeal and value of Apple’s unique phsyical interfaces. I doubt we’ll be seeing “pinch” elsewhere anytime soon…
I suppose this was inevitable:
Apple Drops ‘Computer’ From Its Name
3:24 PM EST January 9, 2007
By Donna Fuscaldo
Of DOW JONES NEWSWIRES
In what appears to be the end of an era for an icon of the computer revolution, Apple (AAPL) announced Tuesday that it’s dropping the “computer” out of its corporate name after 30 years.
Amid a flurry of product news streaming out of Apple’s MacWorld confab Tuesday, Chief Executive Steve Jobs announced Apple will change its name to Apple Inc., effective immediately.
What next? Apple Music Inc?
Oddly enough, I’ve managed just fine so far without an iPhone.
TxChick — in case you ever feel “old,” I’m here to make you feel better. I don’t even have a cell phone. Not a $ issue, I just refuse. Seems like a leash. My sole worry is that if I break down along a lonely road some day, no one will stop to help me because they all will assume I have a cell phone.
Wow. Good for you, Chip.
You’re right, it is a leash. That’s why my husband and I never turn ours on unless we need to (logistical reasons when meeting up at various locations, etc.).
has anyone on this blog confirmed that casey actually owned property? He just seems like one big bull shipper to me, having fun at someone elses expense.
Yeah, he really does. I checked out the Dallas property on the county appraiser’s website when he first surfaced. He definitely “owned” it. Doesn’t any more though.
Sale or foreclosure? Or charitable donation since he needs more tax write-offs?
Anyone heard of this “rental assurance” coverage given by developers to investors buying condos? Sounds to good to be true, and they verify that developers don’t always follow through.
Forgot the link.
http://biz.yahoo.com/special/pf010907_article1.html
Here’s your key poison phrase: “One key move: As rents take off, buyers increasingly focus on …”
You likely are not old enough to have watched “Death Valley Days,” or similar black-and-white television shows, in your childhood. A hallmark was the skull of a cow/bull at a watering hole, with a crude skull-and-crossbones sign posted nearby. Personally, I’d see that “key move” above exactly as I’d have seen that skull and crossbones sign.
Somebody shoot me now -
please buy my closet
$372/sq. ft. for an apt. as big as my family room
Surely, the Craig’s List has got to be fake….PLEASE tell me it’s a joke.
Never mind prices falling off record levels of unaffordability in markets formerly known as frothy, rising foreclosure rates and subprime subsidence — 2007 is shaping up to be a great time to buy a home! Did the NAR bribe “everybody” in the MSM to help in the search for GFs?
And it still (always?) pays to buy and hold. (My guess is that her comment about stocks “only” having lost value in two twenty-year periods ignore the high inflation from 1966-1982…)
————————————————————————————————
Homes. Home sellers won’t be happy this year. Celia Chen of Moody’s Economy.com thinks that prices will keep falling until the second half. You’ll still make money if you’ve held your house for several years, but not if you hoped to buy, paint and flip. Buyers, on the other hand, should start looking now. Rates on 30-year loans are down nearly a point from their June 2006 peak and sellers—especially builders—are discounting heavily.
What could go wrong? Higher inflation than expected, signs of recession, oil sabotage in the Middle East or something we can’t imagine now. But there are always bad headlines—look at 2006. Over 20-year spans since 1901, U.S. stocks have lost money only twice—the periods starting in 1913 and 1929. Even if ‘07 goes bad, it still pays to buy and hold.
http://www.msnbc.msn.com/id/16498236/site/newsweek/