Bits Bucket And Craigslist Finds For January 10, 2007
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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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Major mall operator warns of bankruptcy.
http://www.sun-sentinel.com/business/local/sfl-zmills10jan10,0,6199682.story?coll=sfla-business-headlines
Did you ever wonder what took Paulson and Bernanke to China recently? Here is an interesting posting at the GE Forum on the subject:
Subject: interesting from G-E forum
Pure speculation
(Scruffy) Jan 09, 09:44
We all konw that Paulscum and Break-the-banky donned their knee pads and went begging to China a month ago. We know who holds the real top dog position financially with near a $1 Tril in reserves and too many US bonds not to be taken very seriously.
So we have to ask ourselves what did the lead filth dogs have to bargain with? Well my dog speculated that they have their primary skill to barter, ehich is all most of us have.
And we know that the primary skill demonstrated over and over is the vile manipulation of what once were close to free markets.
Supposed that our filthh superstars promiced that they would trash the price of key commodities for China to offset the slow destruction of the $ for the US. The alternative is a rapid $ fall that would destroy the huge derivative positions of the major hedgefunds, banks etc.
So we see that oil is down despite increased geopolitical tension, - Iran, Russia, Venezuela, Iraq, all produce oil and all are acting in ways that are harmful to Us interests in the iol market. Oil has moved sharply down and we get the “Its the warm winter” reason. We have had worm winters in the past and very cold winters and the delat in energy prices was not like the last few weeks.
Copper is getting pounded. I read conflicting reports about real supply versus historic norms, but there is no denying that it had fallen unusually fast. Other commodities are faling and specifically those in demand by China in their rapid industrialization..
With increased tensions around the globe, (yesterday’s US attack in Somalia is a new worry stone), with more and more of the world beginning to reject the political and economic domination of the West and their corrupt and dammaging banking and international financial institutions, commodities especially the precious metals should be moving up and moving up strongly.
But we see that tracks of the giant paper hangers continuing their manipulation and preversion of what should be free markets. All with a political and financial interests of the US being the common thread.
Yes it is speculaition, but it fits so well. The manipulation, in its current form and effect, benefits China and may be the only acceptable item of trade the filth (on their knees) had to barter with.
If there such a thing as karma, it would be prudent to keep a safe distance from the key filth operatives.
Oh what a shock: gold and silver were both up last night, and are moving down in New Jerk. Never saw that comming :o(
BC BN
Scruffy
Commodity markets can be manipulated in the short term, but the long-term trend returns with a vengeance. Ever push a beach ball under water? Snapback is going to be huge.
It is significant that Goldman’s changing the weighting of their commodity funds to be bearish on oil is a significant reason for the recent sell-off…
and it is certainly NOT the first time they do something like that with commodities.
As for the previous comment from watcher: the manipulators have a huge advantage because they know when the snapback is going to occur - they will be ready to profit (again).
I’ll bet people are getting crushed on natural gas futures, too. Feb NG is at $6.60 MMBTU ….. in recent years, it’s been at 10-12 MMBTU on the spot market in the dead of winter —- and you just know that some traders went back to the well (ha ha) again this year betting on that volatility.
I think natural gas was a big part of that recent hedge fund blow up. You know they aren’t alone.
BINGO! Absolutely right. Dirty tricks from the crooks at Golmans Sachs. It’s useful to have their boys in Washington. Rubin/Paulson duo are the real presidents of the USA. Bush and Clinton are the clowns. Welcome to the United States of Golman Sachs!
It was a “conspiracy” when commodity, stock and real estate prices went up and now its a “conspiracy” when prices come down.
Someone please shoot these poor, paranoid, people and put them out of their misery. I’ve been reading this crap for thirty years (Lyndon LaRouche is the most prolific of these “theorists”).
When you had a few huge players ala JP Morgan’s era, a primitive marketplace and a world of primitive communications, sure, a few gigantic actors could collude in one market for a period of time. But those days are long gone and keeping a secret, much less one with a GLOBAL financial impact, from being discovered (before or after the fact) is a pretty tough thing to pull off.
Never in history have so many independent, intelligent, reasonably powerful and extremely well informed people followed closely EVERY market in the world. Could you get away with fooling all of them? Maybe with something small, yes. Maybe from time to time, yes. But the conspiracy nuts see constant, malevolent, “manipulation” behind every MAJOR market move.
Please. I’ve met a lot of smart people in my life. I’ve met a lot of malevolent people in my life. NONE of the malevolent were anywhere near as smart as the smart people. Could be wrong but I just don’t think there are some really clever puppeteers out there who could, constantly, pull off a “conspiracy” of any magnitude. Few are that smart, few are that malevolent, few have control of such resources and none can control the vast numbers of independent operators who would happily reveal a “conspiracy” should they encounter it.
What part of pump ‘n dump don’t you understand?
Well you can also dump and then pump.
Most manipulation is done by governments, or big financials with government approval. They can’t break the long-term trends but they can make short, sharp swings. If you doubt that there is market manipulation, read up on the Fed Open Market Committee. Intervening in the market is their mandate.
Open Racket Vommittee
jag… sometimes, collusion isn’t necessary for conspiracy.
And I’ll tell you something that you may not be aware of(yet). The vast majority of people don’t know that they don’t know.
The vast majority of people don’t want to know because they like being stupid and dumb. It’s too much depressing to know all this stuff. So they shut their brain off and never open it again. That’s the way people function. It’s called COMA. Economic coma. Political coma. Cultural coma. Coma is the word.
Jag
I agree with the point about conspiracies and malevolent people but it is not them I worry about. Someone said ‘The road to hell is paved with good intentions.” Someone else said “Hell, Hell is paved with good intentions”
No it’s paved with cadavres and dead bodies like in Irak.
They aren’t doing it to be malevolent.
They are not evil, and they often aren’t smart either.
They are from the government, they are here to help us.
And who are “they”?
Anyone here who knows anything about the financial world knows that word of what anyone is doing travels fast. Having knowledge about what manager or hedgefund is accumulating what or who is executing giant trades in various markets isn’t just a game, its the business.
And keeping big moves “secret”, without tipping the players in the market off, is incredibly hard. Patterns appear. Word spreads. Its impossible to surpress the information on who is doing what, big time, for long.
I get “pump and dump”. I’ve met Cramer. It happens, for sure, with touts playing the naive. But on a bigger level?
Playing with the big boys? Maybe you get a slider past them on occaision but no one fools the big players routinely. And you’d have to be doing that to “manipulate” the markets, no?
No. To help themselves.
Sure like the ENRON shhiiiit with Kenny Boy and his good friend George W. and senator Lieberman. Your democracy stinks. It really stinkaroo mucho. A big fricken banaaaannaa republic with kingpins from Golman Sachs and the fine folks from the Ben Laden family.
One of “Kenny Boy’s” bestest friends was Bill Clinton. Why don’t you look it up. In particular, check out Clinton’s special trip to India in an attempt to get the government to pay back Lay for a BIG project Enron did there. Corruption runs in both parties, pal.
Thanks, Jag, I am getting sick of the paranoia also. I guess when you lose money in the markets, you have to blame someone other than yourself. You know, trading is sooo easy, and I should be right more often than not. So when I am wrong, someone is playing unfairly.
It’s not being paranoid to see that markets do not reflect the whole story and there is always insiders and crooks in high places with loaded dices playing these games. And play they do.
I saw what these bastards did with all the New Economy bullshhitt, the teleCON gimmick, the NORTEL fraud.
All these companies were higly promoted by these CON men in banking and the media establishment but also backed by Republican but also Democrat F-cker politicians too. The list is endless. Phony inflation number, phony productivity numbers, phony budget deficits. Phony baloney all the way! Where were you exactly the last ten years ? On planet Mars. Sometimes I understand why some people hate Americans soo much.
It’s nice talking about personal resposabilities.
But strangely enough nobody talks to the average investors of all these dirty tricks. Nobody. So personal responsability is nice when you are intelligent as you are. Most people don’t even know or have the intellectual capacity to understand what is going on. “Only the paranoid survive.” Andy Groove of Intel was right.
MEANWHILE IN THE F–ked UP BRAINS of real estate investors……
NEW YORK, Jan 10 (Reuters) - U.S. mortgage applications skyrocketed during the first week of 2007 as interest rates fell for the first time in five weeks, lending support to the view that the housing market is stabilizing, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity jumped 16.6 percent to 671.1 for the week ended Jan. 5.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.13 percent, down 0.09 percentage point from the previous week. Interest rates were above year-ago levels of 6.08 percent.
The MBA’s seasonally adjusted purchase index soared 16.2 percent to 472.8, its highest since the week ended Jan. 20, 2006 when it reached 473.7. The index was also above its year-ago level of 457.4.
Reuters Pictures
Editors Choice: Best pictures
from the last 24 hours.
View Slideshow
The purchase index is considered a timely gauge of U.S. home sales. The group’s seasonally adjusted index of refinancing applications surged 17.3 percent to 1,923.8.
Oh là là. Ça va mall !
mort apps up16% almost all purchases- folks are getting back in
wake me up when it’s 110 x rent
I think that you must have heared the same thing that I did on Bloomberg. They reported WRONG. Refis increased 17.3%. They said that the refis were more or leas unchanged.
You can read the full report that I posted.
Jas
Jas
I sense a series of deceptive data releases over the next couple of weeks that equate to desperation moves to clear out as much inventory as possible before the spring selling season. All know the avalanche of listings that are about to come upon us. If todays listings cannot be reduced significantly, then it truly becomes a housing doomsday.
spring
sellinginventory avalanche seasonI have been checking zip reality for Phoenix inventory. It is going up a couple hundred a day. Should bread 50K by next week.
Didn’t we have to wait until June or so last year?
Yeah, everything is starting to leak, and no little dutch boy to plug the holes.
Maybe sellers didn’t understand the memo where they were supposed to wait UNTIL spring, not BEFORE spring…or maybe they are trying to get a jump on their neighbors.
Syracuse listings, CNYhomes.com usually pretty darn quiet this time of year has a listing of just under 200 homes under their “just added” link. Of course, some are not new, or are relistings after holiday break but it’s still an eye-catching number. I watch my town closely and there are new listings.
manipulation. error my assss
flat, it won’t fall that far in SoCal… somewhere near 150 times rent, and $325-350/sq ft is my guess, and where I’ll buy, and hopefully not just in my dreams.
Why do you think it is different this time? Are you an invester? Or did you miss all my recent posts about subprime? What gives?
–
Is the Commodities Bull Getting Buried Under the Housing Rubble?
http://www.financialsense.com/fsu/editorials/jain/2007/0109.html
OR
http://safehaven.com/article-6675.htm
Errata (Second paragraph, just below Fig.1):
“The home sales peaked in 2005Q3, but the residential construction, in all likelihood, peaked during 2006Q3.”
Should read: “The home sales peaked in 2005Q3, but the residential COMPLETIONS, in all likelihood, peaked during 2006Q3.
Fig. 1: Commodity Bull: Lived By the Housing Bubble and Is Dying By the Housing Bubble?
Should read: Commodity Bull: Lived By the Housing Bubble and Is Dying By the Housing RUBBLE?
Jas
Its important to remember though that gold and silver are not affected by a decrease in manufacturing output.
Deflation leads to financial uncertainty and worries about banking stability. Gold and silver historically do well under those circumstances.
So… yes, copper, steel, nickel, zinc… all screwed.
Gold and silver… load up.
wish you could hold it and get paid to wait- like w canroys
I’m not so sure that’s true anymore though. Gold and silver are indeed affected by manufacturing, because that’s where they’re used in large part - e.g. electrical contacts in cell phones and such. The other use of them is jewelry. Both of these demands would be reduced during hard economic times.
The other use - coins - is now relatively meaningless now that the monetary system is no longer based on metals, as far as I can tell with my admittedly limited expertise on the subject.
Not trying to present a position, just being devils advocate actually. In fact I am indeed buying gold and silver, knowing that there’s a good chance they will go up in an economic downturn and wanting to diversify/hedge. However I think such a price increase may be based mainly on speculation-driven demand, rather than true need for the commodity (sound familiar?).
The current monetary “system” is based on… nothing. This will in time be replaced by a system that is based on something, and that something is very likely to be precious metals. See history for hundreds of examples.
Modern growth becomes artificially restrained under a currency that guarantees deflation. Because the rate of growth of a properly functioning modern economy is robustly greater than the mining of any metal or other such substance there are only now fiat currencies. This is not a problem because one can always make another fiat currency if needed, and all of the fiat currencies in trade are balanced against each other such that all large downturns are now global just like the large booms.
This is not a problem because one can always make another fiat currency if needed, and all of the fiat currencies in trade are balanced against each other such that all large downturns are now global just like the large booms.
And whoever controls the currency can suck the wealth of savers like a vaccuum cleaner, using the standard pump ‘n dump methodology that we see again and again on Wall St.
No. It will be replaced on a basket of diverse commodities. The system is unjust for everyone and as OIL runs out, you can bet thar countries like Russia or Iran, will not accept the monopoly money of the FED. The EURO is already making a big difference. But the EURO suffers from the same problem. It’s still monopoly money.
–
I fully agree on GOLD. I am a deflationist but a big gold bull. Gold is the best protection against the failure of the fiat currency regime. So, gold is an insurance, not to be thought of as in investment, per se. Although, it would prove to be one of the best investments.
Jas
I’m a deflationist but a gold bear. Earn interest in MM and CDs. Buy DBV and PSQ on any dips. Once the 10-year reaches 5.7% or so, buy IEF, maybe this summer or fall.
To be or not to be a deflationnist, that is the question. Funny but the bus tickets in Montréal have gone up 10%. The price of milk is going up 4%. City taxes are going upi 5%. School taxes are goinf up 20%. Auto insurance is going up 20%. WOW! Wake me up! It’s really funny hearing about that bi-tch deflation. But strangely enough everythinh is going up up up like gangbusters.
To be or not to be a deflationnist, that is the question. Funny but the bus tickets in Montréal have gone up 10%. The price of milk is going up 4%. City taxes are going upi 5%. School taxes are goinf up 20%. Auto insurance is going up 20%. WOW! Wake me up! It’s really funny hearing about that bi-tch deflation. But strangely enough everythinh is going up up up like gangbusters.
The fact is that inflation has already happened. It has expanded into some prices, such as the price of houses. The only question is whether the Federal Reserve will allow those prices to deflate. Since deflating those prices will likely wreck the financial system (it will break the credit machinery), you can bet that they will do whatever is necessary to prevent it. The rest of the financial system, like equities isn’t a first order threat to the credit system although it will bleed over so I expect the ‘real’ damage there to be worse (nominally maybe little if CPI rages). If Bernanke has to choose between a siezed up financial system and a rising CPI, he will choose a rising CPI. Consider yourselves warned. But you shouldn’t take my word for it, you should read Bernanke’s own research papers. He and Friedman even had a good laugh about it when he apologized to Friedman about the Fed’s mistakes in The Great Depression. Neither seemed to acknowledge that the true problem was that excessive speculation before The Great Depression had created the exact same Finish-Inflating-Or-Die scenario that we have now. Last time they gave the strong medicine to the speculators it didn’t turn out so well. This time they will play chicken with hyperinflation. Bernanke’s own essay discusses the correlation of a country’s decision to leave the gold standard with it’s shortened time to recovery (i.e. ability to print money at will). If you worry about it excessively, split your assets between short term treasuries and gold. If there is no banking crisis and it is a mild recessionary slowdown, the value of your gold is toast. If the banks turn out to be insolvent due to the over extension of credit, your treasuries will be trashed. I expect the outcome to be economic stagnation with enough monetary inflation to keep the banks alive, i.e. stagflation. If there was no Fed, the outcome is obvious. Serious deflation, banking crisis, reset of the Gini coefficient (their existance allows the coefficient to reach higher levels of wealth concentration, but maybe the extra progress is worth it?). The poker aspect of the problem is predicting how much the Fed will intervene. One final thing. Even if they manage to “save” the credit system and keep the current game going, people will eventually elect other people that will lead to inflationary policies to rebalance the distribution of wealth to fix the Gini coefficient problem (via protectionism, wage increases, government programs, etc.) which is why I like gold over a longer time horizon regardless of this next correction. That’s my outlook at least. The best advice is not to believe a word I said, do your own research, and decide for yourself. Best of luck everybody.
Deflation ? What deflation ? Where ? Prices of everything is going up. M3 is exploding. Monetary mass is exploding in Russia, India, China, South America, Europe, the UK PARTOUT, EVERYWHERE ! What deflaton ?
You are confounding a correction because of these stupid hedge funds and real deflation. Deflation is a myth. In reality central banks of the world are in one big orgy mode of perpetual accelaration of liquidity and credit creation.
Q&A on the Psychology of Deflation
Following are questions and comments in regard to “Significant Shifts In Psychology.” The volume of responses was enormous, but many of the questions keep getting asked time and time again in response to various posts. I decided to take as many of these questions as I could find, including some from the Motley Fool and address them in this post.
Typically, the questions or comments are about cultural differences in Japan, a belief that printing presses can always defeat deflation, that we are in some sort of ’70s rerun situation, public obligations will cause inflation, the Fed can reflate the housing bubble, and comparisons to the Weimar Republic. Let me address these questions and comments.
Culture
“To even compare the citizens of Japan to the U.S. is stupid, stupid, stupid, Forrest Gump!”
“Culturally, the Americans are spendthrifts compared with the Japanese”
“Japan’s culture is older than 200 years, and culturally, they are different and it does matter”
“The comparison to Japan is hollow. North Americans have become drunk on excess and will keep spending until the repo vans appear in the driveway.”
Ummm, no. Gold and silver will get pounded in deflation also. Happened the last time. Just be sure to have some when the “re-inflation” occurs.
Ummm, no. Gold and silver will get pounded in deflation also.
Ummm, no… they won’t.
hey pretty good. I like the Safe haven articles. Deflation and recession starting about now? Well I’m betting on it but being a nervous type I keep expecting the FED to meddle and cause Inflation like crazy to bail out the housing bubble busting.
Looks like commodities are going down hard ( too bad Jim Rogers often wrong anyway ). That would make sense in a recession. So does the inverted yield curve. Yep Thats my bet, big one too, sold my Townhome in cali and moved to Phoenix to rent. Moved whole family-not easy and I didn’t want to do it but the Cali Housing bubble was just too obscene. Now I just have to wait. and wait.
–
Vow! Huge Volatility in Mortgage Applications Data
DATE Composite
01/05/07 671.1
12/29/06 575.6
12/22/06 555.8
12/15/06 647.8
12/08/06 721.2
12/01/06 647.6
11/24/06 599.0
11/17/06 623.6
11/10/06 647.5
11/03/06 620.9
10/27/06 570.8
Is it because of the end of the calendar year and now the start of the year?
Jas
-x-x-x-x-x-x-x-x-x-x-x-x-
WASHINGTON, D.C. (January 10, 2007) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 5. This week’s results include an adjustment to account for the New Year’s Day holiday. The Market Composite Index, a measure of mortgage loan application volume, was 671.1, an increase of 16.6 percent on a seasonally adjusted basis from 575.6 one week earlier. On an unadjusted basis, the Index increased 33.2 percent compared with the previous week and was up 12 percent compared with the same week one year earlier.
The Refinance Index increased by 17.3 percent to 1923.8 from 1640.4 the previous week and the seasonally adjusted Purchase Index increased by 16.2 percent to 472.8 from 406.9 one week earlier. The seasonally adjusted Conventional Index increased by 16.8 percent to 1001.5 from 857.3 the previous week, and the seasonally adjusted Government Index increased 13.5 percent to 120.4 from 106.1 the previous week.
The four week moving average for the seasonally adjusted Market Index is down 2 percent to 612.5 from 625.1. The four week moving average is up 0.5 percent to 426.6 from 424.4 for the Purchase Index, while this average is down 5.1 percent to 1784.4 from 1879.6 for the Refinance Index.
The refinance share of mortgage activity increased to 48.4 percent of total applications from 48.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 20.1 from 20.4 percent of total applications from the previous week. The ARM share is at its lowest level since July 2003.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.13 from 6.22 percent, with points increasing to 0.94 from 0.92 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.85 percent from 5.93 percent, with points decreasing to 0.98 from 1 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 5.79 percent from 5.84, with points remaining unchanged at 0.83 (including the origination fee) for 80 percent LTV loans.
Isn’t this industry always cyclical, with rushes to refi when rates turn up or down, followed by lesser activity when they are stable, plus variation based on the seasonal nature of home sales?
Its hard to tell in this environment, could be people trying to find ways out of their ARMS.
“…could be people trying to find ways out of their ARMS.”
That’s what I think.
For all the talk about CNBC/Bloomberg being relentless REIC cheerleaders, I watched an interview with Caroline Baum (sp?) on Bloomberg recently and she was tremendously bearish on the current prospects for the housing market, homebuilders etc.
And the interviewer didn’t contradict her at all.
–
Caroline Baum is among the best reporters. Another one is Gretchen Morgansen who writes for New York Times exposing Corporate Crooks.
Jas
I am sure the crooks at the FED and in corporate are really scared.
I just hope the government and corporate capitalism duopoly collapses during my lifetime. If the housing bust is bad enough, combined with a lost war (and maybe a lost army if Iran cuts them off from the sea), it just might happen.
supersize my home ….and my energy bill
plus some gold stuff
http://www.immobilienblasen.blogspot.com/
just added
hedge funds “schadenfreude” / hollywood
looks like there is almost no business left where the hedge funds are not involved
–
The same crowd.
Jas
Well maybe they will try to buy a derivative contract on God but in their case I think they are more tempted by Satan. He has a bigger bank account.
And LOBOTOMIZE my brain.
Dumb question from a far-off land.
Is the recent announcement by FNM (that borrowers must soon qualify at full amortisation) connected to the surge in subprime lender closures?
I don’t think it’s FNM or FRE that are driving that. I think it’s the shunning of subprime mortgage investments by the bond market. The secondary mortgage market (where whole loans and mortgage backed securities are bought/sold/traded) has tightened up significantly in the past couple of months. THAT, in turn, has caught primary lenders in a cash squeeze. They’re having a harder time selling off newer loans at a decent price AND they’re being forced to buy back loans previously made and already sold (due to early payment defaults). That can be a deadly combination for lenders without much cash/capital on hand. I’ve got some posts from the past few days on the subject at my blog…
http://interestrateroundup.blogspot.com
The EFFECT of that secondary market turmoil is that primary lenders, as well as FRE, FNM, are tightening lending standards for loans going forward. It won’t prevent past defaults/delinquencies from causing havoc. But they’re hoping it will bring down defaults in the future. Hope this helps.
Mike, your figures on Mortgage Apps seems to support the sales activity of Single Family homes from the Las Vegas MLS. Smaller sq. ft. homes (1100 to 1600) priced under $275,000 are selling very well. With unemployment around 4% and emplyment growth up 10% from last year, it seems like first time buyers are still out there getting mortgages, willing to settle for smaller homes at lower prices.
I expect a year-to-year decrease in median prices in Las Veags, but a somewhat robust market in lower prices, smaller homes, as long as employment stays healthy.
“With unemployment around 4% and emplyment growth up 10% from last year”
Just curious as to what is fueling the increase in employment in LV…Aside from construction and gambling what else is there?
The mob ?
There was Federal regulatory guidance similar to that policy. Many of the states have also adopted the guidance. The most bubbly states have not adopted the guidance, most likely because of the crisis that would ensue immediately after adopting the guidance. That should have everybody very worried.
“…that borrowers must soon qualify at full amortisation…”
I wasn’t aware of the “must” part — though all of it consisted of suggestions. If it is a “must,” I’d want to know the enforcement mechanism. It would turn things around on a dime — therefore I’m skeptical. My money is on “suggested.”
“though” should be “thought”
Chip,
OFHEO notice to Fannie & Freddie to follow the guidelines in the October 2006 release:
PDF WARNING
http://www.ofheo.gov/media/pdf/PRGuidance121306.pdf
Real Estate and Housing Watch
http://wallstreetexaminer.com/blogs/winter/?p=287
Great work, Russ!
Hosuing Demand in California sucks.
Jas
Well their governor is ex expert in sucking. But that’s another matter. But is it ? Maybe not, after all ?
Amazing post, as usual, Russ! Thank you for providing an island of sanity in the midst of all the propaganda the REIC spews out. I can’t resist shining the light on what I believe is an important development:
‘But now we are at last seeing signs that builder pricing (utilizing Orwellian Bubble double speak like “incentives”) is being slashed, which will in turn bring down profit margins and replacement costs. Will it bring starts down enough to shift housing production towards equilibrium? Perhaps only slowly, thus dragging out the overbuilding and delaying the necessary adjustment process. Apparently this condition and the fact that homebuiders are burning up cash on stock buybacks has finally even caught the attention of the “credit rating” rocket scientists at Moodys.’
I like the graph on job growth in RE vs. other industries. It will be very interesting when that reverses.
Well done Russ!
Neil
That’s a real eye-opener, but what gets my attention is the locations……………60% (6/10) are FLORIDA towns.
Everyone here is either a broker or an “investor”.
Well, they’re investors now because they are still holdin’ even when they should have been foldin’.
Yikes, Sarasota dead last in demand, and tied for last in pricing.
I think every housing bull needs to drive through some neighborhoods in Sarasota-Bradenton. If that doesn’t convert you to a bear, I’m not sure what will!
great post, thanks
Thanks Russ. My question is: Why are prices not coming down when all other indicators say they should? (I apologize if the question is elementary, not educated in econ) but your data helps me understand some of the why. Thanks again.
If the Realtor feedback is any indication prices are indeed declining in about half the markets. If we use about a 2.2 pricing (on scale of 5) to indicate more severe price drops, 9 out of 50 markets fit that.
I believe prices haven’t fallen severely in most markets because 2006 turned out to be the biggest year yet for toxic loans like subprimes, IO, pay options and 40 years. But those are quickly seeing problems now, and are being shut down at the margin.
Because when you buy at “top dollar” you will sell at a LOSS.
Do you want to sell something for 240 that you “bought” for 360?
Sigh. It is tough to be an old fart and to, of necessity, address this market at the same time. My mother was better off, being oblivious to everything outside her neighborhood. Nevertheless, I’ve bet all my chips on one roll of the wheel — that house prices will tumble and that I’ll be able to buy back in at a substantial discount relative to when I sold out. Ben’s blog is my “handicapper” and I’m very confident of a favorable outcome.
Good news! According to an ad on WFAN, a major sports talk station in New York and home of Mike and the Mad Dog, “condo hotels are hot.” For as little as $99,000, New Yorkers can by units comparable to those that have sold for as much as $140,000 in Orlando Florida. Call this number to “Get the return you deserve.”
No doubt anyone who buys will get the return they deserve.
It makes it sound like that deal is only for New Yorkers. I imagine some fools would believe that.
There are alot of fools from NY who already jumped in because it was “cheap”. When it comes to the RE game, there is a fool born every minute in NY.
I hope the government-loving fools on both coasts get it good and hard from their real estate “investments”.
I LOVE government. BIG GARGANTUAN GOVERNMENT.
Hear hear! Give me Sweet, Gentle Oppression!
BIG BIG BIG government. It’s fantastic. USSR of America and it’s under “CON-servatives” that it really rocked and rolled. Mister Bush will be sending another 22,000 soldiers in Irak. Bravo !
You have to give credit where its due - Irak has been a bigger success than anyone imagined. At diverting flow of taxpayer funds into CON-servatives wallets.
Imagine you are in charge of the magic bag of endless money, its not easy finding crazy shit to spend trillions on.
I figured out that for the same cost of the iraq war we could tear down and rebuild every home in CA with average price of 550k for contruction.
Sorry New Yorkers, same radio ad is playing in Wash, DC
speculators drove the florida housing boom! breaking news lol
http://www.post-gazette.com/pg/07009/752410-28.stm
“In late October, Ms. Dresner tried auctioning off 28 of her properties, but some bids were as much as 40 percent lower than what she paid.”
This is the third day straight that someone has posted this story. It must have made quite an impression on the blog community to discover that some flippers owned 28 Florida homes. A high rate of price appreciation certainly does trigger the hording instinct!
a few nuggest to help you spit your morning coffee
“If you look at the last two contractions you can see what caused it: high mortgage rates and a slumping economy,” says David Lereah, chief economist at the National Association of Realtors. “Today we don’t have that. The economy is still good. The thing that sent us into a contraction was that house prices were getting high and affordability was aggravated by investor speculation.”
Many economists and housing industry executives had previously estimated that as few as 10 percent of the buyers in hot markets were investors. A survey by the National Association of Realtors found that 28 percent of buyers in 2005 were investors. At the peak of the Naples market in 2004 and 2005, as many as 50 percent of buyers may have been investors, local real-estate agents say.
The Naples boom and bust also illustrates how some savvy investors can help rebalance markets, by coming back in and picking up the pieces left by previous investors. Indeed, some of the buyers who placed bids on Ms. Dresner’s houses at the auction in October were other investors. One of them was Jerry Krecicki Jr. “It’s all about timing,” says Mr. Krecicki, a local real-estate investor and real-estate agent who believes the market will rebound.
Mr. Krecicki, a former car salesman with salt-and-pepper hair, decided to enter the fray and got his license to sell real estate in September 2001. His brokerage, Remax Elite Realty, encouraged him to focus on selling homes in the areas he knew best. So Mr. Krecicki chose the Lake Park neighborhood, where he lives, near the heart of quaint downtown Naples and just across a highway from the ritzier neighborhoods closer to the beach.
Mr. Krecicki, 43, also decided to buy investment homes to build a retirement nest egg. His strategy was to rent out some homes and sell others to use the profits to buy more properties.
In October 2002, Mr. Krecicki and a partner bought their first investment property — a three-bedroom, one-story house on 10th Avenue in Lake Park. They paid $200,000, using a mortgage loan secured by the equity in their primary residences, and spent $30,000 on renovations in hopes of selling it for a profit.
You gotta love realtors like Krecicki. Sells his specuvestor client his personal speculists then after she goes belly up buys back the exact property at auction. I guess they don’t teach realtors ethics anymore. If the NAR really cared about its brand, it would get rid of scumbags like Krecicki. His behavior is probably an acceptable realtor norm, however. Where is the trust?
mrktMavenFl,
there was some interesting speculation on an earlier thread that this agent may be in cahoots with Dresner in a mortgage fraud scam. Prior to the auction, she did major cash-outs of the properties heading for the block, and was very blase about her apparent losses. The fact that she’s Canadian may give her some legal protection. As someone noted, acting dumb and an easy mark might be her best cover. This one is worth watching.
My take on the subject is a bit different as noted below. A lot of people including specuvestors foolishly, lazily, and wholeheartedly trust their ‘market expert’ realtors. The facts in the Dresdner case shames the realtor profession — it exposes an ethically challenged double dipping broker. Moreover, if the speculation in yesterday’s thread is true, it makes realtors look even more corrupt than the WSJ article portrayed them.
What is even more infuriating is local realtor responses to the WSJ’s national coverage of the ongoing real estate debacle in Naples as documented here on thehousingbubbleblog dot com, thread number 2145 labled “Florida Downturn ‘Came out of Nowhere.’” The local reators ignored the negative national exposure bestowed upon their profession and ironically without skipping a beat continued twisting the truth choosing to focus their remarks on ‘improving’ market conditions. Hat tip to Corkery and Hagerty of the WSJ for their Naples realtor expose.
Too bad their subtle warning comes very late in the game for past specuvestors. However, they did put current and future speculvestors on notice about trusting realtors. The underlying message: Not only will you get screwed speculating in Naples, your trusty realtor might be the one doing the pounding.
Pinocchio sez “The economy is still good.”
For who? The WhiteHouse and Wall Street charlatans keep kicking this deadhorse but nobody believes it. Ya think maybe it’s because the economy is great for a very narrow sliver of the population?
MeThinkSo.
“A survey by the National Association of Realtors found that 28 percent of buyers in 2005 were investors. At the peak of the Naples market in 2004 and 2005, as many as 50 percent of buyers may have been investors, local real-estate agents say.”
Austin had 30% speculation/investors in 1985. By 1990 prices were down between 25%-45%. That in an environment of declining interest rates and strong technology employment.
50% speculation will drive prices down at least 50% or likely more.
“Mr. Krecicki, a former car salesman with salt-and-pepper hair, decided to enter the fray and got his license to sell real estate…”
That’s only half of the qualification- only if his hair is also well-sprayed will he enjoy full real estate selling credentials.
In today’s WSJ, Jennifer S. Forsyth update readers on the booming Atlanta real estate market. After describing and justifying the needs for a multitude of upcoming city projects, she ends the piece with these two cautionary paragraphs:
Overbuilding is a risk. “It’s a city in a perpetual state of boom,” says Keith Pierce, director of research for greater Atlanta, for CB Richard Ellis, a real-estate services firm. But recent absorption — the change in the net amount of occupied space — has been strong enough in the city’s office market to justify new construction, despite a relatively high vacancy rate, adds Duke Doubleday, senior vice president for brokerage at Atlanta-based Ackerman & Co.
The condo market has been bumpy recently, but hasn’t halted. While sales in the city center dropped by 43% from 2005 to 2006, the former was an aberration and 2006 sales were in line with the seven-year average, according to Haddow & Co., Atlanta-based real estate consultants. Nonetheless, condominium inventory is considerably higher than in previous years and developers are hoping that strong growth in the Atlanta market will fill all those units.Two million new residents are expected to move to the Atlanta area in the next 25 years….
In other words, swashbuckling Atlanta developers are belching the same old tune: Damn those pesky little market data torpedoes! Full speed ahead! I need to gets paid. The sooner the better. Boohyaah!
“It’s a city in a perpetual state of boom,”
IT’S A NEW ERA! THE OLD RULES DON’T APPLY!
please, please, PLEASE…
This time, IT’S DIFFERENT
The crime in Atlanta makes it unlivable. General Sherman, where are now when Atlanta needs you most?
…..where are YOU now….sorry.
I lived in Atlanta as a kid for a few years from 1985-1988. Longest three years of my life (being in middle school age had something to do with it). Atlanta sucked as a city then. I went back in 2002 expecting it to be the great city it was suppose to be. Still sucked. Can’t imagine who would want to live there. Nothing going for it.
Is this news already priced into LA basin home market values? (Puzzlement for stat geeks: What is the chance the 30 percent to 70 percent chance prediction is wrong?)
————————————————————————————————-
Quake experts predict Katrina-like damage
Scientists urge region to boost emergency plans
By Gordon Smith
COPLEY NEWS SERVICE
January 10, 2007
U.S. Geological Survey
The 1857 Fort Tejon earthquake caused a 30-foot horizontal shift near this stretch of the San Andreas fault on the Carrizo Plain northwest of Los Angeles.
LOS ANGELES – A major earthquake along the San Andreas fault could bring Hurricane Katrina-scale devastation and disruption to Southern California, earthquake scientists and government officials said yesterday as they kicked off a yearlong campaign to ratchet up emergency planning and encourage residents to prepare for the inevitability of a powerful quake.
The warning came on the 150th anniversary of the largest earthquake in California’s recorded history – the 7.9-magnitude Fort Tejon quake, which ruptured a 225-mile section of the San Andreas fault from Parkfield in Central California to the Cajon Pass in San Bernardino County. Scientists said new computer simulations show that a quake of similar magnitude along the fault today would cause shaking stronger and longer than previously predicted.
Such a quake, lasting up to four minutes, would cause an estimated 150 deaths, 5,000 injuries and $150 billion in economic damage, primarily to homes around the region, said Patricia Grossi, an earthquake-risk specialist with RMS, a risk-management firm.
Thomas Jordan, director of the Southern California Earthquake Center at the University of Southern California, said there is a 30 percent to 70 percent chance of a 7.9-magnitude quake on the southern part of the San Andreas fault over the next 30 years.
http://www.signonsandiego.com/uniontrib/20070110/news_1n10quake.html
“… which ruptured a 225-mile section of the San Andreas fault from Parkfield in Central California to the Cajon Pass in San Bernardino County.”
San Bernardino is often touted as one of the hottest growth areas in California. Do homes there come with warnings about potential 30-foot ruptures in the San Andreas fault, which passes right through the neighborhood?
HA, HA, HA, HA - thanks for the laugh. Do most Western homeowners know they don’t have mineral rights on their properties? Do they even know what minerals rights are??
In Colorado Springs, developers have put houses in “bentonite clays” - clays that expand so much when wet that they will eventually cause cement to turn rubble. It only takes a season or two for a foundation to fail. They’ve also put houses over old coal mines, causing collapse of the old empty mines. As you can imagine, it’s harder to live in a house that has suddenly gone “underground”.
I understand people not being interested in geology in general - but it might be nice if they has some interest in the ground holding up their homes. *sigh*
Is that nuclear reactor on the San Andreas still online? Can only imagine how that would add to the fun.
In the SF Bay Area there is the dangerous Hayward fault, and it is loaded with essential public service facilities and moderate to high population density along it length. Some day…
Maybe it’s because I have a degree in Geology - in the short times I spent in CA the earthquake issue was never far from my mind. I am still in awe of the amount of denial that it takes for millions of people to build around that fault. I even took a small San Andreas fault tour - there are houses built, for all practical purposes, *on top of* the fault.
The impression I got in the short time I spent in CA is that it’s just cheerfully put out of people’s minds most days, if they think about it all.
Vermonter, good point. The U.S. is also due for another major depression, if you consider the 80 year cycles, as discussed by Harry Dent in his “Roaring 2000s” books. Earthquake + depression means no Katrina-like aid. Ammo will be very valuable.
My father is a geologist, and he instilled in me a healthy fear of the San Andreas. “It’s 10 months pregnant” he always used to say. I think similar things about the buildings near the fault every time I drive through the pass on the 15 to Vegas (which will probably also be damaged when it goes off). “Guess what created the mountains right behind your houses, folks! That’s right! The San Andreas fault!” WHEN it happens (not if), look for the news footage of acres and acres of flattened McMansions and a few malls to boot.
Earthquakes are history….not a future event…..at least that’s how they justify sticking their head in the sand, I mean fault line.
“Earthquakes are history”
Just like California real estate crashes?
Its different now. Earthquakes don’t happen anymore
It’ll be different this time…
The best part of this all is look at the number of people who don’t carry earthquake insurance. A huge percentage. First, you have a $25k deductible and then the insurance is super expensive…..glad I rent.
In 1989 while looking at homes in Palmdale i looked at a KB homes model.I asked the salesperson why there were empty lots across the street only 50 feet away.The answer was its the San Andreas fault and they couldnt build there.KB HOMES are crooks.
“Thomas Jordan, director of the Southern California Earthquake Center at the University of Southern California, said there is a 30 percent to 70 percent chance of a 7.9-magnitude quake on the southern part of the San Andreas fault over the next 30 years. ”
What is more likely to happen is a 6.5-7.0 quake along any one of the thousands of faults which crisscross the LA basin. The 1933 LOng beach quake was caused by the newportbeach/inglewood fault. 1971 sylmar and the 1994 northridge quake were caused by lateral branching faults off the SAndreas running thru the SF valley(e,G Santa susanna fault?). Some of these faults running deep into the lA basin may lie dormant for hundreds, even thousands of years, then suddenly spring to life in a sudden slip/jerk. Thw 6.1 Whittier Quake was caused by a slip along the Whittier fault. Hell, there are a dozen or so dormant faults running right beneath LA city, dozen’s of kilometers deep. It is these lateral faults, often branching off the main San Andreas trunk, which Scal residents need to worry about.
The problem is that people in SoCal have been warned that The Big One is coming for the last 25 years or so…short in geological terms, but long in human terms. Now, ehenever someone warns of The Big One, people just say “yeah, yeah, yeah, I have my trash can full of food and water in the garage, big deal.” So, yes, The Big One has been priced in for the past 25 years (or more).
I’m not a statistical genius, so I’m confused by the “30% to 70% chance” part. Shoudn’t a probability be a single number? Or is this the same as a 50% chance with +-20%?
Well it would be good for construction industry. You could also use the army to bomb the overbuilt sectors. If it works for Irak why not try it home ?. Zap! Boom! Boom! Boom! No more real estate bust. Remove a little of supply from the LA market.
cant remember seeing this one posted yesterday or not:
Origen is transferring its Wholesale Lending operation, effective immediately, to its select correspondent partners. If you have real estate loans already in progress with Origen, they will be processed through our Texas funding group.
http://www.origenwholesale.com/owl.asp
Posted yesterday - http://bakersfieldbubble.blogspot.com
Along with another one…
Time for yet another contrarian bad news rally on Horton share prices?
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BUSINESS BRIEFS
Horton reports drop in sales
January 10, 2007
D.R. Horton Inc., one of the nation’s largest home builders, said its late-2006 sales orders fell 28 percent, dampening sentiment that the housing sector might be recovering from a slump. The news was even worse from another builder, Meritage Homes Corp., which said net sales orders fell 42 percent and cancellations hit a record 48 percent.
Fort Worth, Texas-based D.R. Horton said it received orders for 8,771 homes worth $2.29 billion in the last three months of the year, compared with orders for 11,463 homes worth $3.17 billion a year earlier.
http://www.signonsandiego.com/uniontrib/20070110/news_1b10bizbrfs.html
Good advice, if only the horses had not already fled many moons ago through the open barn door:
————————————————————————————————
Now is a good time to weigh mortgage
By Holden Lewis
BANKRATE.COM
January 7, 2007
Whether you already have a mortgage or you plan to buy a house this year, here are seven mortgage tips for 2007:
…
2. Watch out for a reset. Have you ever seen a cartoon where Bugs Bunny stands at the base of a cliff and he yells at someone standing on the cliff’s edge, “Watch that foist step. It’s a doozy!” Same thing with a lot of adjustable-rate mortgages: The first step is a doozy – but up instead of down.
The rate adjustment is called the “reset,” and on hybrids such as 3/1 and 5/1 ARMs, the rate can jump as much as 5 percentage points. More realistically, a lot of borrowers face jumps of 3 percent to 3.5 percent in 2007. For interest-only borrowers, that might mean a doubling of the monthly payment.
Don’t let a rate reset catch you by surprise. Refinance if necessary.
…
6. Think about getting mortgage insurance instead of a piggyback loan. If you buy a house in 2007, and you make a down payment of less than 20 percent, you’ll either have to buy mortgage insurance or get a piggyback loan – a primary mortgage for 80 percent of the home’s value and a second mortgage for the rest that you owe.
For a long time, piggyback loans were almost always a better deal because the interest on both loans was tax-deductible and mortgage insurance wasn’t deductible. But that changed when the both houses of the 109th Congress passed a new tax law. For loans originating in 2007, the mortgage insurance premiums will be deductible from federal income tax.
7. Be skeptical. “If it sounds too good to be true, it probably is,” Habetz says. He sees plenty of customers who got mortgages (usually option ARMs) at 1.25 percent from other lenders. Then the borrowers are surprised when the rates start rising abruptly just a year later. “Now they find out there is no such thing as one-and-a-quarter percent, they’re facing huge prepayment penalties to get out of these loans or they’re facing a rate that’s well above the market at this point,” Habetz says.
http://www.signonsandiego.com/uniontrib/20070107/news_1h07real.html
“The first step is a doozy – but up instead of down.”
I believe the writer is referring here to the effect of resets, but in my analysis, that “step up” is the second one. The “first step up” is typically into a neighborhood which is priced far above a subprime borrower’s affordable budget limit.
From the WSJ, pg. D3 (no link):
“Think Small: Getting Started as a Real-Estate Investor; Even in a Sinking Market, Carefully Buying and Managing Properties Can Bring New Riches
“Even in today’s uncertain climate, novice real-estate investors can make money, especially in smaller properties that are easy to acquire and manage.[...]
“The most basic form of property investment is a so-called in-law unit or guesthouse on the site of your home itself, sometimes attached to the main house, sometimes not. No one has ever gotten rich renting out such properties, but they can significantly reduce the cost of homeownership. Renting out an in-law unit for $400 a month and using that money every month to pay down principal on a $350,000 30-year mortgage will shave 10 years from the mortgage term and reduce total payments by more than $165,000. And you will be able to write off all your costs on your income taxes — including depreciation on the unit — up to your actual rental income.
“Just as with an in-law unit, renting out your weekend house is not a way to get rich. Many of the same numbers that applied to in-law units can be applied to your weekend home, although the tax situation is decidedly different.[...]
“Throughout much of the country, the market for single-family homes is seriously out of whack. As prices fall and inventories rise, that’s changing. But, compared with rents, prices are still quite high, outstripping the ability of such properties to cover their mortgage and operating costs.
“Avoid this segment of the market unless you have a chance to buy a property at a 30% or 40% discount from its previous price. Don’t think this is out of the question. In the late 1980s and early 1990s, when the government liquidated the real-estate loan portfolios of bankrupt savings-and-loans, speculators picked up properties for just dimes on the dollar.
“Managing a house that pays for itself is what it’s all about. You can do it in one of two ways: Renting or “flipping.” Renting is a “buy-and-hold” strategy, while flipping calls for quick turnarounds of fixer-uppers that can be spruced up and sold quickly.
“But in the current environment renting is probably the more prudent path, although it can be very difficult to make a house pay for itself at today’s prices. That’s because if your house carries an 80% or 90% loan, the renter will have to pay more per month to rent the house than he would to buy it.
“Look at it this way: There’s a handsome three-bedroom, two-bath house in Tampa, Fla., for sale at an asking price of $199,900. If you bought it with 10% down and a 90% loan at 6%, your monthly payment will be about $1,550 (that’s PITI — principal, interest, taxes and insurance). As a landlord, at a minimum, you’ll want to budget at least $200 a month in additional expenses. That puts your break-even point at almost $1,800 a month. That’s far more than you can reasonably expect to earn where comparable properties in the same neighborhood can be rented for less than $1,300.
“But it turns out that there’s a similar house available less than a mile away. This other house is roughly the same size. The difference is this one’s being taken over by its lender, and the house has a mortgage loan of $110,000.
“A buyer with cash can drive a hard bargain and make out very well. And the worse the market, the better for the buyer. But don’t get carried away. If you simply take over an existing 90% or 95% note, you won’t make any money. Let the lender foreclose and take over the place. Then lowball the lender.
“A housing market that saw the price of single-family homes skyrocket was not quite so generous to smaller two-family or multifamily properties. Because the universe of home buyers expanded so much in the past 10 years, the universe of renters contracted, and the market for smaller rental properties contracted with them.[...]
“Good deals on smaller buildings can be found throughout the country, even in some of the hottest markets. In trendy Pasadena, Calif., where even modest homes can sell for $400 to $600 a square foot, two-, three- or four-unit rental buildings can be bought in the $250 to $350 range.”
Schwarzenegger wants to build new prisons, schools, dams
By Laura Kurtzman
ASSOCIATED PRESS
5:41 p.m. January 9, 2007
SACRAMENTO – Gov. Arnold Schwarzenegger on Tuesday proposed another huge round of borrowing to build prisons, schools and dams in a state of the state speech that also called for cleaner fuels to help curb global warming.
The borrowing proposals, which add up to $43.3 billion, are similar to ideas that were cut out of the enormous borrowing plan the governor put forth last year. The Legislature changed it and cut it in half, and voters eventually approved $42.7 billion in bonds in November.
Addressing a joint session of the Legislature, Schwarzenegger said he was bringing the ideas back because, “We are a big state, and we have big needs. And we have made a big down payment, but the job is not finished.”
The governor is calling for $29.4 billion in general obligation bonds, which require voter approval, and $13.9 billion in lease revenue and other bonds, which the administration says would not need to be approved by voters.
http://www.signonsandiego.com/news/state/20070109-1741-ca-stateofthestate.html
Whoever follows this guy in office is going to have a big problem. Hey California, what about pay as you go?
People showed the respect government deserves by electing a clown like Conan…er, Arnold. The very pro-freedom movie “Total Recall” exonerates him , however.
This is an Arnold scam. Look for the “hidden agenda”. First, it’s a device for tracking citizens. Currently “tracking devices” are on the top of the list where all western governments are concerned. Not just the USA and not just to track people who might be involved in terrorist or criminal activities but to micr-manage and manipulate the economy. In order to get treated under the “free” healtcare system, applicants are going to have to provide a lot of personal and financial information.
Second, it probably will NOT happen because he needs the co-operation of a lot of different entities. Including the medical community. He wants a cut (or in his words a contribution) in their earnings. Doctors will have to pony up at least 2% of their incomes. The AMA has already screamed that it isn’t going to go along with the plan.
Third, the bond issue. I think even the most liberal californian is getting worried about property prices, taxes, debt, etc. Business entities are already pissed off at the costs of being in california.
I’m going to be very surprised if this gets off the ground. Good publicity for Arnie but, above and beyond all that, one has to remember he’s a republican and you cannot get further away from republican values than a National Health Scheme. Me thinks something stinks in this proposal.
I don’t know what his agenda might be, but this is getting out of hand! Sweet Jesus, how are we ever going to pay for all of this?
Don’t get me started on his idea that MDs should have to pay 2% into his health care scheme. Great idea, financially punish someone simply because they work in a certain field. Why not the RNs as well? Why not everyone who works in the hospital? If CA gets any dumber we just may find ourselves with the lousiest health care in the USA. I am deathly afraid of hospitals, but I hope the AMA and all the doctors in the state tell Arnold to take his plan and shove it. It is times like this when I really question why I continue to live here.
Also, the Law of Unintended Consequences will rear it’s ugly head; all children, including those that are of “illegal residency status” will be covered. Isn’t that an incentive for even more people of “illegal residency status” to move here?
Illegal aliens are already covered. No Hospital ER in America can turn down a patient or ask about the patients financial circumstances before treatment. Arnold claims that money will be saved because Illegals will see doctors for medical help instead of crowding emergency waiting rooms. Unfortunatly, Illegals don’t care about saving any money because they do not pay into the system.
All the problems that the Gov covered on his address of the State yesterday, prison overcrowding, school overcrowding, medical services overcrowding and the states debt could be solved by enforcing existing immigration laws.
There will be a time, maybe now, when the number of individuals that take benefits from the state of California will become greater than the number of people who pay into the state.
All the problems that the Gov covered on his address of the State yesterday, prison overcrowding, school overcrowding, medical services overcrowding and the states debt could be solved by enforcing existing immigration laws.
—————————
Exactly. And it’s because of these problems that most people are strongly opposed to illegal immigration. It’s has nothing to do with “racism”, it’s about quality of life, and the ability to feel safe and secure in our own communities.
I’d honestly like to know why the taxpayers are expected to pay for the education, healthcare, feeding, housing and law enforcement expenses for the people who are eliminating good paying jobs with good benefits. Sorry, saving a few cents on a head of lettuce (or whatever we “save” on the cheaper, and lower quality, products & services) is simply not worth it.
This is kind of a case study of what is happening in Northern Europe and any area that has poor southern neighbors. We tried to build a decent society without allowing too much garbage in. Keep in mind that historically most immigrants came from similar religions and values and added to our society. Now a much different bunch are flooding in who mostly suck off the system and what can we do? Shoot them all? That would at least be a non-hypocritical response. Because we’re heading for a struggle for survival. California seems to lead all trends. It will lead this one as well.
This is all part of the plan. Spend, spend, spend, file bankruptcy and let uncle Sam bail you out. Its what flippers do, what corporations do, and now governments. Didn’t you folks get the memo?
“In order to get treated under the “free” healtcare system, applicants are going to have to provide a lot of personal and financial information.”
I have to submit to random drug testing on demand to earn my income, but a person on social welfare can receive money without any drug testing. Who would create such a backward system?
Pay as you go makes way too much sense for California politicians. Maybe when the state is utterly broke the courts might try to force some kind of basic discipline? What is happening now is madness. Even with the big $35 billion in bonds there were questions about who the buyers might be. Who now is going to buy $40+ billion of California junk promises? The Chinese?
“Pay as you go makes way too much sense for California politicians”
Just WAIT until we get a Republican governor!
Oh, wait. We do. Dang!
California Republicans have been more socialistic than Alabama Democrats for at least the last 35 years. I was the campaign manager of a Libertarian Party California State Assembly candidate in 1982. If 50 people like him were elected back then, California would not be a beacon to Illegal aliens.
There is a great SD Union Tribune business section story on affordability today, but I cannot find electronic access (maybe they avoided putting it on their web site to preempt a blog post?). Here is a portion (my comments in parens):
————————————————————————————–
Locked out of the market
Moderate-wage workers can’t afford a home, report shows
By Emmet Pierce
STAFF WRITER
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SIDEBAR: “San Diego housing costs and salaries”
Shows a bar graph of “Average annual salary” for a broad swath of professions, with the highest paid category shown, “Construction manager”, earning $105,343.
Also shows “Annual salary needed to qualify for a mortgage” = $163,404, with a footnote that reads “Assumes the average prevailing interest rate and 10 percent down payment. Median price used was $477,000.” (Get real! Nobody buys in San Diego with a downpayment.
For reference on San Diego-area incomes, “According to estimates by the San Diego Association of Governments, the median household income of San Diego County in 2005 was $64,273.”
en.wikipedia.org/wiki/San_Diego_County,_California )
————————————————————————————————-
The buying frenzy that took home prices to dizzying heights in the first half of the decade is over, but low- and moderate-wage earners in the San Diego area still struggle to keep a roof over their heads.
A study to be released today by the National Housing Conference’s Center for Housing Policy finds that teachers, police officers and health care workers don’t earn enough to afford a median-priced home with a 30-year fixed mortgage payment (but then nobody in San Diego uses 30-year fixed mortgages, do they???).
People in many lower-paid occupations, such as retail workers, janitors, telemarketers and hair-dressers, can’t even afford to rent a two-bedroom apartment at current market rates, according to the center’s “Paycheck to Paycheck” report. (Then how on earth can these people afford to flip SFRs for a sideline?)
While there have been recent drops in home prices and interest rates, they haven’t closed the breach between housing costs and wages, said Barbara Lipman, research director for the policy center.
“I don’t think declining interest rates and even declining home prices will solve the problem of this particular group, because the gap is so large,” Lipman said. (Would the disappearence of subprime loans get the job done?)
Even in occupations that have experienced increases in wages, “it’s not enough to gain ground against the high level of home prices and rents. Really, the only way to address the problem is to find creative ways” to increase the number of affordable units, she said. (How about ending all the creative ways to help low income folks get into homes they can’t afford, and set themselves up for future foreclosures?)
County home prices dropped by 7 percent in November, marking the greatest year-over-year decline on record, according to DataQuick Information Systems. The overall median was $482,000 in November (2006), down from the record of $518,000 in November 2005.
Undsoweiter…
I believe I have solved the California affordability puzzle, and the solution is maddeningly obvious. Get subprime lending out of the picture, and people who “can’t afford to buy homes at current prices” will no longer be able to afford to buy homes at current prices. Prices would quickly correct to affordable levels.
Amen, GS!
A couple more go bust:
http://bakersfieldbubble.blogspot.com
A little plunge protection, please…
http://www.marketwatch.com/tools/marketsummary/
Hedge fund selling due to commodity losses allegedly.
Aren’t plummeting commodities prices normally bullish for Treasury bonds? (Unless the market expects respiking operations in response, that is…)
Did an earthquake hit the T-bond market?
http://www.bloomberg.com/markets/rates/
Watch what happens when S&P 1400 breaks. Should be interesting.
FWIW, note that 10 year treasuries are starting to fall. This is not good. As they fall, ARM reset rates will eventually go up, which is what the Fed has been trying to avoid for 2007. The irony is that it looks like the collapse of the housing bubble is causing this. As commodity prices correct ( due to falling demand in the housing industry), it is causing hedge funds to start to sell into a declining market. Even for commodities that seem to have no link to the housing market. Like Amaranth, many hedge funds made no-brainer one-way bets on commodities. So far, the damage is a trickle down every day, but it is entirely possible that this will pick up steam and turn into a deflationary rout. So unfortunately, while most here are happy to see the housing bubble collapse, the knock-on effect is not good for any of us. Sure, real estate will drop in value, but you could end up with not much in the way of assets to buy down the road if you rely on stock/bond investments. The problem is where is a good safe haven. If you think gold, you may be right, but in a real collapse the government will end up grabbing that gold and giving you a replacement currency in an attempt to stay afloat.
Governments collapse in hyper-inflation, not usually in deflation. The dollar will get stronger as interest rates rise.
True enough, but don’t forget, inflation favors the debtor, whereas deflation punishes him brutally. Today, we are the greatest debtor nation in history.
“in a real collapse the government will end up grabbing that gold”
Gold? What gold??
Check out goldmoney.com
Buy and hold gold & silver offshore
Northern Virginia Update - some random musings.
I was a little ticked when I read the latest newsletter from Samson Realty, a local discount broker. They claimed to have had the best month for sales since August, 2005. (That newsletter is not online yet). Their attitude was like everything else we’ve been hearing from Lereah and Co., which is that we are “near bottom”. In my opinion, this is all just an attempt to generate hype for the coming Spring, and try to spark the market. I thought to myself, well, if Samson Realty did indeed have such a great December, then it was due to those figuring they’d “catch a deal” before “things went up again in the Spring”. I saw this occur in the Fall of 2005, and many of those would-be flippers are belly-up as of 2006.
Before I go on I’ll copy verbatim the November [insanity] report from Samson Realty, which is online at http://tinyurl.com/ynarad.
I still recommend buying as soon as possible if you’re a first time Buyer or if you’re buying up (a higher priced home). I feel that right now the perfect scenario is to not sell your current home. Rent, while buying up. Every case is different, but for example, if you could rent your current home at a negative cash flow of $1000 - $2000 per month (tax deductible) and wait a year or so until the market comes back, that would be very advantageous. It certainly beats having to cut your price by $100,000 or more in the current market conditions. I would pull cash from the equity on my current home to put down on the home I’m looking to buy, or do a low money down loan on the home I am buying. This way I’m buying a $1,000,000 home for $850,000. I might even pull out a little more equity to help with the negative cash flow.
Now, here’s the URL from the end-of-year Northern Virginia Association of Realtors’ report. The charts are amazing for 2006; I was surprised at how much lower each month’s sales were than even I realized.
http://www.nvar.com/market/Year_End_Report_2006.pdf
Based on ??? they determine that sales will improve in 2007 and that prices will be up 3-5%. Quote: “The message buyers should read in this news is that the Buyer’s Market is possibly the best it will be, right now, and it may not last long.”
I haven’t a clue how they can draw this conclusion. They are basing it mostly on a pickup in November activity.
Now the December stats for Northern VA are out at http://www.mris.com/reports/stats/ and at http://www.nvar.com
YOY results
2005, 2006
Arlington: Total Units Sold: 250 217 15.21 %
Fairfax: Total Units Sold: 1,223 1,621 - 24.55 %
Prince William: Total Units Sold: 457 855 - 46.55 %
Loudoun: Total Units Sold: 472 710 - 33.52 %
The NVAR’s little bump they were so excited about in November seems to have levelled quite thoroughly in December in the outlying counties at least.
So we shall have to wait and see what the new year will bring. Listings are now growing at a nice clip, and there are still price reductions every day on the leftovers. Most of the new listings, in my opinion, are too richly priced for the current market. I think it’s based on a mistaken assumption that with a new year, properties obviously should be priced higher.
I”ve seen a lot of realtors trying to get loans on Prosper to buy further properties. My guess is they’re being turned down by other lenders because they are over-committed.
A 30 year veteran of Wall Street reduced his expert advice to this one quote “The Trend is Your Friend”. Any real estate expert who projects a bottom right now is fighting this Trend advice. There is nothing in the real estate world to buck this trend, no matter how hard the hypesters try.
Thanks for this No.Va. update. The numbers in that NVAR report are truly astounding. One would expect the association to spew some optimistic blather, since they have to keep the troops motivated, but anyone who has ever seen a previous housing bubble knows that this thing ain’t remotely over yet.
copied from full article:
From a Buyer or an invertor’s standpoint there has never been a better time to buy a home.
HAHAHAHA…talk about a Freudian slip! It’s like he knows the investor is going to end up…upside-down!
“invertor” - new HBB moniker for F@cked Flippers?
I love this quote “There was no magic number or invisible
ceiling that prices would hit and then fall. Yet, buyers in Northern Virginia had been in sprint-mode for a long
time. Simply put, they had to hit the wall eventually, and they did”
Another sweet quote: “All of those potential sellers, traditional homeowners and investors alike, who had been hoping to sell at the market’s peak started to act together….The ones who had been thinking every month, “I’ll just keep my home a little bit longer. Just a little bit longer and then I’ll sell it at the top of the market” decided in unison to list their homes. And of course, higher inventory lessens pressure on prices.”
Loudoun County which a second tier suburb of Washington DC in Northern VA started the fall with approx. 13 foreclosures on foreclosure.com. Currently it is: 95.
The farther out suburbs seem to have multiple problems here.
Gang activity
A really, really bad commute due to lack of roads and overbuilding.
A multitude of town houses whose owners are trying to sell while competing with single family houses. The problem is the price difference between the two is really starting to narrow.
New building still going on.
This same county had some huge “estates” built on swamp land.
NOVA,
how do you end up with gang activity out in the countryside? This one really confuses me. Have the 4-H kids gone nuts?
It’s imported gang activity.
NOVA, I’ve also been watching the foreclosures. Prince William and Fairfax are continually increasing as well. (Both now well over 100 each).
Mr. Krecicki, 43, also decided to buy investment homes to build a retirement nest egg. His strategy was to rent out some homes and sell others to use the profits to buy more properties.
——
An newer agent I met recently bought 4 rentals here in Reno over the past 5 years and said now is a buying opportunity before prices resume upwards…since they are so heavly invested in RE, I would guess they really do believe this sernario to be true.
I wonder how many agents in high bubble areas are doing this?
I’ll bet it’s a lot.
Refer to Russ Winter’s comments about “picking up nickels in front of steamrollers.”
Maybe the agent who is snapping up rentals is investing for the long term - like…35 years! LOL
I forgot to mention, this realtor said her and her (broker) husband were looking at “buying another rental, during this temporary downturn” (as she put it).
I know a couple of people who have bought in the past two months because they are investing in RE (not planning to live in these homes), and they say the market will resume upward appreciation in the spring.
Think anyone had a downpayment???? We all know the answer to that.
Also, heard of another acquaintance who bought a million dollar home a year or two ago. Seems they are selling their possessions and pulling our “equity” from all their RE (they have some rentals, too), so they can pay their bills.
This bubble bust is nowhere near over. Lots of people really scrambling right now, as they are barely hanging on. Give it another 6-9 months, and I think blood will be in the streets. Still not time to buy, but we will see the Lereah’s “balloon” deflate at a rather quick pace, IMHO.
since they are so heavily invested in RE, I would guess they really do believe this scenario to be true.
Your earlier post and this comment about the “temporary downturn” takes me to a gloomy place…
If these folks are putting their money on the line based on the absolute certainty that prices are going to spike this spring, and then continue upwards…to infinity…what happens to them when reality hits them like a Mack truck that jumped the median at 60 mph?
A suicide bubble? Seriously, I don’t think these folks are mentally and emotionally prepared for what is about to happen. I predict florists and anyone who services the funeral industry will do very well starting autumn 2007 going forward maybe two years or so.
Morbid.
I still believe other posters on this blog are correct about the upcoming divorce attorney bubble. Multiple foreclosures will be occuring at once for many couples — couples that have been smoothing over prior money issues via ‘equity liberation’ in many cases — and a lot of those marriages are not going to hold up.
how are the florists and funeral industry going to get paid?
on msn why you cannot afford a home.
apologies if already posted
http://articles.moneycentral.msn.com/Investing/Extra/StudySaysHomesUnaffordableForMany.aspx
(Sorry to repeat myself so soon, but like the Romans pointed out long ago, Repetitio est mater studiorum.)
“Get subprime lending out of the picture, and people who “can’t afford to buy homes at current prices” will no longer be able to afford to buy homes at current prices. Prices would quickly correct to affordable levels.”
Another anecdote about credit cards:
We have a Citibank cc with the “cash-back” feature, and pay it off at least once or twice a month, on-line. I paid it off (completely, not just the statement balance) mid-December, and when I checked the balance again on the Jan 5th so I could pay it off again, saw the due date was Jan 4th. The statement cycle started two days after I paid it off in Dec, so I was technically a day late.
Called them up because the period between the statement date and the due date was less than three weeks. The call basically went like this:
Me: I always pay off the total balance on our cc, at least once or twice a month, sometimes three times a month. How is it that we are past due by a day when I paid everything off just a few weeks ago?
CS rep: Yes, we see you pay it off multiple times a month, so our software recognizes this and shortens the time between the statement date and due date because of your payment pattern.
Me: Oh, you mean you guys are trying to trick us into paying late…
CS: Don’t worry, I’ll reset it, so your payment will not show up as a late payment, but the software will keep shortening your payment window as long as you pay as often as you do. You’ll have to call back in six months or so to reset it.
————————-
Anyway, just thought it was interesting with the bankruptcy bill, universal defaults, and SUPER high interest rates after a late payment, that they would try to trick their customers into paying late. It’s not a problem for us because we always pay our cc off, and don’t have any other debt.
Imagine what it would do to an overdebted FB, though, with mulltiple cc’s, loaded to the max, when that universal defaut kicks in, and their rate goes to the 25%+.
Somehow, I think that if we peons did this, we would be in jail right now.
overdebted=overindebted.
Also, for those who are aware of it, the universal default clause means that ALL of your cc rates can be hiked to a max rate when you default on just ONE card. This is going to be a mess!
Actually you can pay your water bill late and trigger rates to go upto 33%.Check and see what casey serins % rates are.CC companies are crooks i paid mine off and am debt free.
Did you have any problems with them once you stopped the card? Thanks
overdebted=overindebted.
Also, for those who are not aware of it, the universal default clause means that ALL of your cc rates can be hiked to a max rate when you default on just ONE card. This is going to be a mess!
FYI: We have Citibank autocollect the balance at the end of every cycle from our checking account. There’s never an excuse for them to give us a late charge, and the money collects interest until the last possible date (No big deal in this interest rate environment, but it’s intellectually satisfying.)
Simplifies life, and all the transactions download into quicken nicely.
Don’t be anal, just pay off the monthtly balance the week the statement comes. I’ve been doing that for years and it hasn’t been a problem.
Thing is, I don’t even pay attention to the paper statement. I always check everything online. While I’m there, I like to pay just so I know everything’s on time & all charges are valid.
Also, we have small kids and are very busy. Don’t have time to go through all the paper stuff all the time. I try to automate as much as possible.
Ca renter,
That’s just AWFUL. Thanks for sharing that, as I do the same thing and was unaware.
I have been sticking to my sharecheck card lately as a result of all of these shenanigans. Of course, when one wants a mortgage, one’s credit rating ends up looking poor because one doesn’t use credit cards. It’s all such a scam and it’s getting so much worse.
I use cash and my debit card. I don’t have to deal with someone who is always trying to rip me off. But hey, I am an unsofiscated person who isn’t getting rich on my credit card rewards.
Chase’s default rate is 32.9%. They are our cheapest card at 9.9%. And we only have one other. But I am shopping.
Anybody seeing inventory increases? Here in Sacramento I think it may be leveling off and increases are soon to come.
Yes, quite a few of us are seeing trickles of increases again, after falling inventories going into winter (which the REIC has been calling ‘a turn-around’).
Too soon to say that the Spring Inventory Flooding Season has started early, but what with global warming and all, maybe sellers are liquidating earlier in order to get a jump on their neighbors.
So far as I know, saber rattling with a lack of follow-up action makes inflation worse, not better…
—————————————————————————–
Fed’s Moskow says inflation is still his top concern
By Greg Robb
Last Update: 12:32 PM ET Jan 10, 2007
WASHINGTON (MarketWatch) - Inflation has been moving in the right direction, but it is still too early for the Fed to relax, said Michael Moskow, the president of the Chicago Fed bank. “Although the recent news has been favorable, risks to the inflation outlook remain,” Moskow said in a speech prepared for delivery to a business conference in Iowa. The threat of higher inflation remains “my predominant concern,” Moskow said. Core inflation, as measured by the personal consumption index, eased to 2.2% in November from a high of 2.4% in October. Moskow said the Fed must be certain that this improvement is not “transitory.” Moskow is a voting member of the Federal Open Committee this year. Moskow said he remained optimistic the economy would pick up in coming months and return to its potential growth rate, estimated by economists to be around a 3.0% real GDP annualized growth rate.
Berson: Warmer weather explains why mortgage apps are up. (”Warm weather and good housing always go tothether.”
Funny how we just heard warm weather get blamed for poor resale results; I guess all the usual Christmas shoppers decided to go out and buy a house instead?)
http://tinyurl.com/yhrays
resaleretail (doh!)
Warning, if you’re regular tax-payer, this might make you sick:
http://realtytimes.com/rtcpages/20070110_surefireway.htm
“Because Real Estate Professional status gives you access to some incredible tax deductions. You may even find that you’re able to eliminate most if not all tax.”
“Diane Kennedy, the nation’s pre-eminent tax strategist, is owner of Diane Kennedy & Associates, a leading tax strategy and accounting firm and founder of TaxLoopholes. She is the author of The Wall Street Journal and Business Week bestsellers, Loopholes of the Rich and Real Estate Loopholes, and co-author of The Insider’s Guide to Real Estate Investing Loopholes, The Insider’s Guide to Making Money in Real Estate, and TaxLoopholes for eBay Sellers.”
No one should pay any tax, so more power to them. It is the sin of envy to be angry that someone doesn’t have to pay taxes.
I can imagine that you believe that all schools, hospitals (including emergency rooms), freeways (?) etc. should be privatized, but just out of curiosity: How would police, fire brigade, border patrol, road maintenance etc get paid? By corporate sponsors?
Private security and fire, toll roads, everything privatized. No national borders, just like we have right now (de facto not de jure), and no welfare, food stamps or Section 8 to attract non-working immigrants. Shoot-on-sight policy towards all gang bangers. No free treatment at hospitals. It wouldn’t be paradise, but it would be better than the police/welfare state that is heading towards bankruptcy (just like the USSR).
Sieg heil!
Mark,
What if all those gangbangers have a “shoot on site” policy where law-abiding citizens are concerned?
You want the U.S. to look like Iraq or Mexico??? Exactly what do you think will happen if we do not have healthcare for the poor (and a majority of the population, if we do things your way)? Think they will just drop off the earth and disappear, or will they infect you and your family/friends? Your thinking is short-sighted and naive. You need to think long-term about the consequences of your ideas.
What the Darwinian capitalist don’t seem to understand is that we ALL benefit from keeping the greatest number of people out of poverty.
You want a welfare state like Germany in the ’30s. When they ran out of money to pay for it they invaded other countries. Sound familiar?
I want a US more like what we had for the first 100 years or so, but with even more freedom. You and other statists are naive to think all good things come from only the gov’t.
You and other statists are naive to think all good things come from only the gov’t.
—————————
Nope, I think the very best things come from a combination — govt AND private enterprise. We need checks and balances, just like we’re supposed to have in the govt.
Power corrupts, so we must always have one group keeping the other in check. Extreme capitalism or extreme communism both lead to the same thing: those in power will ensure they benefit at the expense of everyone else.
The best we can do is find a solid middle-ground. Some things are better left in the private realm, some are best in the public.
IMO, it’s the basic & necessary goods and services which ought to be controlled by “the people” or govt (controlled by the people). Water, air (pollution), food (to an extent), healthcare, financial markets (very complex, but someone needs to regulate this), etc. are too important to allow profit-driven individuals/corporations to control the market.
I want a US more like what we had for the first 100 years or so, but with even more freedom.
——————————-
Mark,
My family was here in the first 100 years. You have some wild, romantic notion of what life was like here back then.
Life expectancy? Very short, especially for women who commonly died in childbirth. Malaria? How about freezing to death? It was very common for children to die at very early ages. Work was hard to find when times got tough — and they were tough more often than not.
My (very extended) family has a book about our ancestors, complete with letters and diary entries. The “good old days” in the U.S. were very, very bleak.
Look at the societies which have lasted hundreds or thousands of years with a fairly well-sustained quality of life. Chance are, you’ll find societies which provided safety nets for their citizens, whenever possible. They understood that their success was dependent upon the well-being of their friends, families, and neighbors — basically everyone else.
A productive society requires healthy members who feel secure enough that they don’t have to live in “survival” mode. People living in survival mode are too busy trying to stay alive — by whatever means necessary — to be productive.
“Private security and fire”
You pay for private firemen, you neighbor passes. His house catches fire, nobody cares. Wind blows sparks to your house which catches fire, private firemen respond. Your house saved, but you have water damage and from inferno next door, smoke damage. Burned-out neighbors can’t afford to rebuild, but still own land. Charred pile with drifting ashes will do wonders for your comps.
I would only live in a HOA. Problem solved. No government thugs wanting to get paid.
“Shoot-on-sight policy towards all gang bangers.”
You feel safe with that? Gangs are heavily armed, and many have already killed. These are the guys with the serious firepower and the willingness to use it. They decide home invasions easier than battles over drug turf. You and maybe a couple of your neighbors band together for protection…but it’s a full time job. Gang members are already ready to gamble with their lives…it’s part of being in a gang. You feel that way about your life, or your family’s? Arming and paying for a private militia to protect you could be costly…especially when said militia decides it’s more lucrative to rob you than wait to be paid.
Police have done such a terrible job there are gangs everywhere now; in fact, the police protect them from armed citizens.
Right now, they kill you whenever they want. If you are the wrong race, walking or having your car break down in the wrong neighborhood will get you killed. In the US. In 2006.
Is that acceptable? To the gov’t, it is.
Mark,
not rebutting your feelings re police, just wondering how practical your ideas are. So you have your HOA–with enough men and firepower to hold off heavily armed gangs that have decided to do a series of home invasions? Since this is your home, you’ll have family at risk. Some of your neighbors will be elderly, or too frightened to be useful. What level of casualties are acceptable? Remember, you’ve got no ambulance service, no emergency rooms, and if said gang has your gated community surrounded, you’re cut off from other help. Maybe they could just starve you out.
These are the kind of calculations folks in Mogadishu, Lagos or Darfur have to make. Imperfect as things may be, they are not yet at that level, by a long shot.
Comment by Mark
2007-01-10 17:17:44
I would only live in a HOA. Problem solved. No government thugs wanting to get paid.
——————————–
Now **that** is the funniest comment on this thread.
Umm, HOAs are far, far worse than any govt entity in the U.S. Doubt it? Go buy a condo and let us know how that goes after a few years. Good luck with that!
—————————
BTW, Spike, you are exactly correct, and see things very much the way I do. Best to keep the thugs fed enough not to be hungry, and healthy enough not to get desperate. Thugs exist in every community and country. Nothing like poverty, sickness and desperation to bring out their finest thug qualities.
ha ha ha, you guys have been trolled.
MUST READ!
Outstanding post on the new Realtor’s mantra…
———————————————————————————–
http://bubbletracking.blogspot.com/
Wednesday, January 10, 2007
That’s OK, We’ll Just Ride It Out
Gone are the days when Realtors everywhere encourage purchases regardless of your financial situation or place in life because “real estate always goes up!” These days, “real estate always goes up” is qualified with the phrase, “as long as you are in for the long term.”
With inventory heading for the sky, sales going south, and median price flattening and turning negative, the market condition in 2006 was blatantly clear to just about anyone willing to pull their heads out of the sand. One can thus say most homeowners who purchased over the last year pretty much all fell for this “long term play” strategy. But is it really OK to purchase at the very top of the market if you plan to hold on to the home long term?
We turn our attention to the small Cameo subdivision adjacent to the infamous 4S/4Closure Ranch in Rancho Bernardo/San Diego. This small subdivision was constructed in 2001 to 2002, with very similar floorplans, with homes in the ~3,500 sqft range, and similar lot sizes. Purchase price at the time: ~$500,000.
Undsoweiter…
Help if you can, what’s the scam on this ad I found on Craigslist? I searched the phone number and found a listing that said “cash back to buyer broker and agent split commision”.
Anybody seen something like this? If it is a scam on a lender and it closes escrow am I on the hook? Are there really that many “foreign investors” looking to buy raw land still?
SELL YOUR LAND FOR THE HIGHEST PRICE
LANCASTER . PALMDALE . ROSAMOND . PEARBLOSSOM . ADELANTO
ALL OF ANTELOPE VALLEY ALL OF SOUTHERN CALIFORNIA
WE WILL SELL YOUR LAND FOR THE VERY HIGHEST PRICE
THE LAND BROKERS OF SOUTHERN CALIFORNIA
310 259 XXXX
Came up with the company name Houston Investment.
Phillip Harvey - president
Study: 744,000 Are Homeless in U.S.
http://apnews.myway.com/article/20070110/D8MIM2B00.html
Very sad. However, I don’t think the homeless problem will be solved by building more “affordable housing”. We need to address the fact that some people, usually due to mental/emotional issues, cannot hold a job for very long. People can always live with roommates (I’ve done so all my life), and this can be quite inexpensive. Need to address the **jobless** problem in America, IMHO.
University of Southern Maine professor and former State Economist Charles Colgan says some of the risks for the coming year are the sagging housing market, long term debt and weakness in the dollar.
The whole study (42 slides) can be read at:
http://www.mainetoday.com/documents/2007_maine_economic_outlook.pdf
Some of the slide headers:
“Housing is on the Precipice”
“The Housing ATM is Shutting Down”
“Dark Message in the Yield Curve”
While the report has sections specific to Maine, much of it speaks to the national picture.
Just when you think commercial RE valuations can’t get much higher:
Cerberus Is Preparing Offer
For Equity Office Properties
By DENNIS K. BERMAN
January 10, 2007 6:00 p.m.
Cerberus Capital Management is preparing an offer for real estate investment trust Equity Office Properties and could launch its plan in the next few days, a person familiar with the matter said Wednesday.
Exact details of the transaction were not clear, and it is possible that a Cerberus-led group could pull back at the last moment.
But indications were mounting on Wednesday that Cerberus was set to top the $20 billion deal that the Blackstone Group had signed two months ago. With the addition of another $16 billion in debt, that deal was regarded as the largest leveraged buyout in history.
Cerberus = former Treas secretary’s firm?
What do Treasury secretaries know about bully investments that the rest of the world doesn’t?
3 stories of foreclosure
http://realestate.msn.com/buying/Article2.aspx?cp-documentid=2104117>1=9005