Bits Bucket And Craigslist Finds For January 16, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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centex eps minus 2$ / almost 500 mio “adjustments”……
and
NO KIDDING / Pimco load up o mortgage bonds……
http://www.immobilienblasen.blogspot.com/
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You see, Jan-Martin, if the Fed keeps the rates at the current levels longer (Gross has been predicting rate cuts), it is good for the mortgage market. Go figure.
Jas
Low interest rates are good for MBS, but high foreclosure rates are not, unless the principle is effectively protected by insurance. I am personally not sure what kind of insurance is in place, but if my sense of the ubiquity of MBS in pension funds is accurate, the insurance may well turn out to be of the “too-big-to-fail, taxpayer-provided” sort.
That’s right. If the insurance doesn’t have either a) money behind it (OR) b) reinsurance with money behind it, then things will not be good for the bagholders.
“then things will not be good for the bagholders.”
But the important question for investors is “will I be the bagholder, or will it be the taxpayer?” An assumption that a taxpayer-funded bailout is highly likely would go far to explain the conundrumishly-low spread between MBS and Treasury yields.
“Pimp Co.” is buying garbage ?
They are expecting a government bailout big time.
What is he really trying to say?
Tim Eller, Centex Corporation chairman and CEO, said, “We are navigating through one of the most challenging housing environments in the past 25 years. We are responding by reducing our land position and inventory, aligning our workforce to the current sales pace, and improving our overall cost structure.”
Tim Eller, Centex Corporation chairman and CEO, said, “We’re fuc**d! We are trying to bail out of our land now, as it’s going down in value faster then a sunset strip hooker. Also, we are laying off our entire workforce as there is no more need for homes because we have built enough to last the next 5 years”.
That’s what he is really trying to say.
Stop sugar-coating the story, Michael. Otherwise, you are at risk of getting snapped up into the MSM media journalism pool.
(Sarcasm off…)
From WSJ, KB Homes, Centex, and lender IndyMac are all hitting the skids this morning.
What is land option?
How does it work?
How HB can lose money on land options?
Thanks.
A land option is a right to buy at a given price over a given time. For instance you have 40 acres of land. You sell the right to purchase that land for 100000 during a year period.The buyer of the option will pay you a premium for this right to buy.They might give you 8000 for the right to purchase.The hb loses money(the 8000) if he does not exercise the option.It could also save them money if the property value falls during the option period.Instead of buying property all at once the builders like to buy options in to protect themselves.A lot of builders are faceing a softening market thus forfeiting a lot of option premiums rather than buying the land and faceing losses down the road.
But they are not making any more land, why would they sell the option? I mean that’s the bullshxx they fed to everbody else.
interesting perspective on global liquidity and asset bubbles
http://news.goldseek.com/ClifDroke/1168921800.php
Old news. I don’t know if it was posted earlier. Thanks to Jan-Martin.
I want this saved: “The current housing market may be the best opportunity for home-shoppers in the next six years, McGee said.” I wonder as the president of ForeclosureS.com what she is peddling.
Jas Jain
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http://losangeles.bizjournals.com/losangeles/stories/2007/01/08/daily7.html
Foreclosures increase 51 percent nationwide
Los Angeles Business from bizjournals - January 8, 2007by Sacramento Business Journal
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Foreclosures increased 94 percent last year to 157,417 homes in California, as homeowners struggle with fast-rising home payments and a slow-selling market, according to a Fair Oaks real estate investment advisory firm on Monday.
California had the most foreclosures filed nationwide, while Nevada had the largest percentage increase at 175 percent last year compared to 2005, according to ForeclosureS.com.
Nationwide, almost 971,000 foreclosure filings were reported last year, 51 percent more than the 641,000 in 2005, according to the annual report.
The Southwest region was the hardest hit, accounting for one of almost 2.2 foreclosure filings. The region includes Arkansas, Louisiana Oklahoma, Texas and the Western states. Four states in the region — Louisiana, New Mexico, Oklahoma and Oregon — reported fewer foreclosure filings last year compared to 2005.
Despite the dismal national and state reports, the housing market will improve, said Alexis McGee, president of ForeclosureS.com. The company has been tracking the foreclosures since 1992.
“Home inventories now are dropping and markets are improving,” she said in a news release. “That means relief to overextended homeowners who bought homes they couldn’t afford with the help of little money down and low teaser-rate mortgages. Until now, with mortgage payments adjusting upward, housing inventories climbing and prices stagnating, these homeowners have had few options but to lose their house to foreclosure or capture some of their equity with a fresh start with a quick, honest investor purchase.”
The current housing market may be the best opportunity for home-shoppers in the next six years, McGee said.
The only angle I can come up with for her is:
Boost confidence market is going up so bagholders hold on a little longer. Watch foreclosures hit stratosphere when reality hits homeowner like a truck. Watch foreclosures.com have more listings than http://www.realtor.org.
““Home inventories now are dropping and markets are improving,””
That may be two-month-old news. In the California markets I’m tracking, invnetories seem to have stabalized about two months ago, and started creeping up again at the begining of the year.
Dataquick monthly median house price YOY numbers for SoCal should be comming out in a couple of days, it should start to get interesting…
What Makes a Market Bubble-Proof?
http://promo.realestate.yahoo.com/
A community with educated buyers free of fraudsters and greed.
Where can you find this ? Paradise ?
–
“Business 2.0 magazine has its own list of the top five “bubble-proof” markets — areas where annual appreciation outpaces the national average by at least 30 percent.”
Vow! “annual appreciation outpaces the national average by at least 30 percent” makes it a bubble-proof market?
“These perennially healthy markets will come as no surprise to anyone: San Francisco · Los Angeles . Seattle · Boston . New York ”
Do these people have eyes and brains?
Jas
When I saw the top five list, I thought it was a list of those markets most likely to see 30% or greater declines in prices. When this shill was suggesting these were bubble proof markets, I had to laugh.
Why is the web address for this story start with “promo.realestate.yahoo”? Most Yahoo stories just start with plain “realestate.yahoo.”
Maybe because it’s part of the NAR campaign, which is supposed to ramp up to full steam this spring and summer IIRC.
“which is supposed to ramp up to full steam this spring and summer IIRC”
To coincide with the spring inventory flood…that will be so funny!
–
Is SF Bay Area Housing In Deep Dodo Or What? Here Are the FACTS to Answer That
Picture this, folks. Between 2000 and 2005, the POPULATION of the Bay Area and Santa Clara County has gone DOWN, about 1%; EMPLOYMENT has gone DOWN EVEN MORE, 3-5%; and to top it all off, the TOTAL HOUSING UNITS have gone UP, 4-5%. And what do you suppose the result would be? Fully predictable — VACANT HOUSING UNITS HAVE ALMOST DOUBLED! To hell with the supply-demand, PRICES OF HOMES HAVE MORE THAN DOUBLED!!
Data Source http://census.abag.ca.gov
Santa SF
Area à Clara Bay CA
County Area
Data Item Change From 2000 to 2005E
TOTAL POPULATION -0.8% -1.0% 4.2%
Employed civilian population
16 years and over -5.0% -3.3% 8.8%
Total Housing Units 4.5% 4.4% 6.3%
Vacant Housing Units 85.6% 88.7% 25.2%
It was speculation, pure and simple, and NOT the demand that had driven the prices up. When prices are going up 20% a year who cares about if the home one is buying is going to be vacant. And why worry when you can borrow close to 100%. Can’t lose, no brainer? Only for a short while, but long-term it is a sure loss, no brains! The no-brains got sucked onto “Location, Location, Location” mantra.
Just the facts, ma’am.
-x-x-x-x-x-
And here is a reply from a Silly.conman:
“Jas… there you are again with your worthless statistics.
.
“I believe in 2000 we had about 100,000 Indians (from India) working in the Bay Area while living two and three to a room since they were saving on expenses while doing short term contract work on temp visas. If I recall, they were doing software work to help with the Y2K date change as well as work in the internet jobs. They left in the first year or two of the slowdown and now we are seeing people return as well as decent job growth. With the decent job growth, I think I am seeing the price of 4b/2b homes on 1/4 acre go up again… but it could be too early to tell…. the listing prices are going up which is a good sign…. but we’ll have to see if they get the ask…
.
“In Los Altos and Palo Alto there is a huge housing shortage and tiny inventory. THey are starting on several conversions of commercial space to high density housing which will really bring down our averages for these condos, but it will give working people a place they can afford to buy for under $1M.”
Tells you something about the mindset of some people in denial.
Jas
“…..but it will give working people a place they can afford to buy for under $1M.”
If a million dollars is considered the affordability threshold for working people…..to borrow from Jim Lovell on Apollo 13….”Houston, we have a problem”.
We need high wage inflation, and fast!
The federal government just up’d their GS table by only 1.81% for 2007 since there’s not much inflation say the experts.
How in the heck is 1M considered a place for the “working people”. The way I figure, you should make between 300 and 400K to even consider a 1M dollar home? WTF?
–
That is why they are losing population. They are losing jobs, so there are lot of non-working people, like our Silly.conman, who lives in an ordinary home that is valued at $1.5M. There are people in his ritzy neighborhood who have been out of job for years and have been using the home as ATM.
Sooner or later, the supply-demand will bring prices down to the level that honest working people would be able to afford. Most people don’t have the patience and get pushed into a Debt Camp.
Jas
“There are people in his ritzy neighborhood who have been out of job for years and have been using the home as ATM.”
Yes! there are way to many of these f@ckers around here, that are really screwing up the local economy (present and future). Key phrase is: “sense of entitlement.”
How in the heck is 1M considered a place for the “working people”.
avg salaries in the valley for good engineers is > 100K and Los Altos/Palo Alto is driven almost entirely by engineering.
It’s truly insane there: LosAltos = $1.5M for a 70’s ranch-style box. No charm, no granite, no stainless steel. Just a box.
If I owned one, I’d sell that puppy fast.
–
“LosAltos = $1.5M for a 70’s ranch-style box. No charm, no granite, no stainless steel. Just a box.”
How did you know about Silly.conman’s home? Perfect description.
Jas
Some people who move to Los Altos don’t even need a job believe it or not…Lots of wealth transfer going on in the valley right now and Los Altos is considered the best place to live….
The ones I spoke to were contemplating what the increased mortgage was going to cost them + the change in Prop 13 base.
Maybe Los Altos is the new Atherton, but I think it’ll get hit pretty hard by the fraction of those living beyond their means.
FYI: the $1.5M place I described above was marked down from the original $1.7M.
–
“Passing on the comment:
“FYI: the $1.5M place I described above was marked down from the original $1.7M.”
Would appreciate the link. Thanks.
Jas
–
“Lots of wealth transfer going on in the valley right now”
Quite true. From the shareholders to scamsters.
“and Los Altos is considered the best place to live…. ”
As they say: Easy come easy go.
Jas
Here is part of the attraction;…
For population 25 years and over in Los Altos
High school or higher: 97.2%
Bachelor’s degree or higher: 71.3%
Graduate or professional degree: 35.8%
AND;…
Crime in Los Altos by Year
City-data.com crime index (higher means more crime, U.S. average = 325.2)
Year’s 1999 2000 2001 2002 2003 2004 2005
94.8 76.1 77.3 63.6 64.8 64.1 73.2
Would appreciate the link. Thanks.
It was a last minute walk-in, and I never checked the MLS. I’ve been meaning to search it, but no time at the moment. (so why am I reading ben’s blog?
) I’ll drop it in the bitbucket later this week if I find it.
Must be 1 M turkish liras.
My answer to these shills, as always, is to ask why they don’t buy up the properties themselves. After all they can sell them to us potential buyers down the line for a hefty profit.
Check your hand after you’ve shaken hands with a realtwh*re - it may be missing 6% of the fingers.
Affordable housing sparks Vineyard fight
http://www.boston.com/news/local/articles/2007/01/16/affordable_housing_sparks_vineyard_fight/
The Finklesteins own a home in Marblehead and a home on the Vineyard and want to block a family who live in tents from achieving affordable housing. The ugly side of capitalism.
Geez - these people are treating three affordable houses (on one acre lots) like they were giant power lines being installed.
My God - get a little humanity and allow your fellow man — who repairs your cable TV line or works at the ferry or collects tour garbage — to have a decent life as well. Heaven f***ing forbid that such a person and his family live next to your precious second home.
The wealthy off-islanders on why 3 small houses, each on one acre lots, disturb them..
“A particular kind of person chooses to live on an island off an island, in a wild area, and if you chose to live there, it’s because it’s the environment you wanted,” she said.”
There you go, and a working family with 2 kids should continue to live in a tent in the summers because their having a small house would destroy your “environment.” They mean it too, they spent 287K to buy that acre to make sure this family could not have a home.
May the gods of Karma throw lightening on the heads of these selfish bastards.
Saw this ad and am posting the link. Smirnoff Tea Partay
http://tinyurl.com/y5qv8d
appropriate to Martha’ Vineyard
enjoy
The Finkelsteins are not the type of people I want as neighbors or friends. Selfish people with no sense of humanity. It is all about me kind of people.
From UK
Oh Dear!
Banks withdraw fixed-rate mortgage offers
http://www.telegraph.co.uk/news/main.jhtml;jsessionid=DTNW4F3QVKHXTQFIQMFSFF4AVCBQ0IV0?xml=/news/2007/01/16/nbanks16.xml
“Lenders claimed they have acted because customers rushed to buy fixed deals and have used up all the available funding for the mortgages, which has been bought in the money markets at a lower rate than is now available.”
“Lenders might argue that the cost of fixed-rate money has gone up, but re-pricing existing money is a very profitable exercise. In the next few days, you will see almost all mainstream under five per cent fixed-rate deals disappear and any that still exist will have whopping arrangement fees attached.”
“He also claimed providers were increasing their profit margins by stealth as they increased fees customers pay to change their mortgages.”
…increasing their profit margins…
Maybe other profits are suffering?
In the early 1980s, virtually all mortgages in London were variable-rate. I don’t believe it was possible to get a fixed-rate then.
Is the supply of FB’s never going to end??? Who would play the multiple bid game in this market?? http://www.latimes.com/business/la-fi-homes16jan16,1,528808.story?coll=la-headlines-business It’s very depressing!!
Don’t talk to Brandon Brennan about it being a buyer’s market for real estate.
Despite a widespread slowdown in sales, Brennan made bids on four Westchester houses — all below asking price — and was rebuffed by sellers waiting for a better offer.
“I didn’t feel like it was a good time to pay full price for a house,” said Brennan, relocating from Ventura because of a job transfer. “But with every offer, the sellers didn’t bother to counter because they were getting other offers.”
Such was the housing market at the end of 2006: Although Los Angeles County’s median home price rose 6.5% from the previous year to reach a record $522,000 in December, the number of sales fell 12.9%.
Brennan, the Westchester house hunter, and his wife, Christina, eventually had an offer accepted on a fixer-upper that had been reduced to $799,000, in part because they were willing to close within two weeks. They wound up paying about 2% below the asking price, but that was still more than they had hoped to spend.
“We went through a major ordeal,” Brennan said, “trying to find a decent deal.”
I am willing to bet his offers never got presented, or were so tainted from the lying realtors that they were not taken seriously. Those houses will still be for sale in the months to come. Those other offers are fake I am betting, someone should call them on that. I will never believe that there were other offers anymore unless I can see them myself. I had that crap pulled on me before.
I have been negotiating for a new rental lately, and I have been viewing properties on the MLS. Each and every time I call about a property, the realtor tells me their is an application from another already in hand. Some of these properties have been on the market for 6-8 weeks sitting vacant, but the moment I call there are multiple offers in waiting. I have to stop myself from laughing at them.
If you read further down in the LA times article you would see some goober (Hsii) decided it was a good time to buy in the Play Visa development, the only residential area in the US that is built on top of a methane storage facility!
Home prices climb in county from the LA Times.
http://tinyurl.com/yddyk4
I think sometimes these articles are written for the FBs that purchased during this insanity and are continuing to buy in this insanity.
Well if it’s any consolation to people in the US/Canada and Europe, Japan is in the middle of their own real-estate bubble. Mansion boom is on in Japan, well OK Tokyo, well alright, certain areas in Tokyo really close buy to trendy train stations.
(I live, work in Tokyo)
“If you read further down in the LA times article you would see some goober (Hsii) decided it was a good time to buy in the Play Visa development, the only residential area in the US that is built on top of a methane storage facility!”
Those playa Vista Condos, those already built and ones still to be built, will have no problems getting GF’s to buy in, regardless of methane problems or The Block-type aspect of the units. Location is the reason:45 min to dwtn LA, 1/2 hr to LAX/El Segundo or LA westside, and close proximity to the beach.
The Type and quality of the contractors on this site seems to be far superior to the slash and burn contracting in the IE. Remember, Beverly hills/century city also have Methane Gas build-up problems and have various disguised pumps(One is located right next to Bevery Center, another in Cent city off Olympic blvd)to release the built-up methane gases.
The Playa Vista master-Planned Community, as it proceeds slowly to it’s ultimate finish, looks about par with the Developments in the South OC along Jamboree/Michelson, and has far more promise than the overhyped rediculous LA Dwtn Developments along Grand Ave and the equally ludicrus Anahein Platinum Triangle.
Man, I don’t know how those residents with the methane lots sleep at night. I guess they don’t understand the danger.
About a mile down the road, a couple experienced an explosion in their home a few years ago. Local departments claimed it was the propane tank. After spending many months in the hospital they moved back into their home after repairs and retrofitting to oil.
Last year there was another explosion. Both people died this time and the house looked like something from a Bugs Bunny cartoon with the outside boards blackened and curling to the outside, with everything inside disintegrated. This time authorities discovered the lot contained a build-up of underground methane. Wouldn’t want to be their neighbors. Yikes!
What killed me about that guy, was that he is 28, in technology (so am I) and he can somehow afford a (slightly discounted) $700k home. There are very few jobs in technology in L.A. that pay upwards of the kind of salary you’d need to buy a 700k home - assuming a 3x income, 30 year fixed. Somehow, I don’t think that’s how this kid financed it. I’m seeing an interest only and/or arm in his future.
“Who would play the multiple bid game in this market??”
The latest generation of subprime borrowers, plain and simple.
Who says their were multiple bids? A reamtor? Just as an exercise, tell an agent you want to make an offer on a house, they’ll get back to you with the bad news… someone else is making a bid!
When this kind of lying results in jail time, the world will be a better place.
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Lots of revisions.
LA County Prices
Jun-05 $475,000
July 2005 $485,000
Aug 2005 $495,000
Sep 2005 $495,000
Oct 2005 $495,000
Nov 2005 $500,000
Dec-06 $490,000
Jun-06 $520,000
July 2006 $520,000 (Revidsed Down from $522,500)
Aug 2006 $522,000 (Revidsed Down to what?)
Sep 2006 $520,000
Oct 2006 $520,000
Nov 2006 $510,000 (Revidsed Down from $520,000)
Dec-06 $522,000
As you can seem, prices are flat for the past six months and don’t be surprised in Dec’06 is later revised down.
Jas
It is freezing outside this morning in San Diego! But yesterday, as I looked at the US national weather map drawn in various shades of icy blue and white, I realized how lucky we are in San Diego to not be shivering in sub-zero temperatures like much of the heartland. So it was with a bit of puzzlement that I was awakened this morning to the sound of an NPR news story about the oil price crash, which some analyst claimed was due to unseasonably warm weather. As I recall, that was the same factor that hurt the Christmas retail shopping season. Are these guys sure the cold weather that matters is not in the US residential construction sector?
The weather is something the msm is comfortable reporting. The don’t understand an economic inflection and don’t even have an historical comparison so they ignore it.
The Weather in this Book
Mark Twain
No weather will be found in this book. This is an attempt to pull a book through without weather. It being the first attempt of the kind in fictitious literature, it may prove a failure, but it seemed worth the while of some dare-devil person to try it, and the author was in just the mood.
Many a reader who wanted to read a tale through was not able to do it because of delays on account of the weather. Nothing breaks up an author’s progress like having to stop every few pages to fuss up the weather. Thus it is plain that persistent intrusions of weather are bad for both reader and author.
Of course weather is necessary to a narrative of human experience. That is conceded. But it ought to be put where it will not be in the way; where it will not interrupt the flow of the narrative. And it ought to be the ablest weather that can be had, not ignorant, poor-quality, amateur weather. Weather is a literary specialty, and no untrained hand can turn out a good article of it. The present author can do only a few trifling ordinary kinds of weather, and he cannot do those very good. So it has seemed wisest to borrow such weather as is necessary for the book from qualified and recognized experts–giving credit, of course. This weather will be found over in the back part of the book, out of the way. See Appendix. The reader is requested to turn over and help himself from time to time as he goes along.
Clemens has some choice words for the pollyannas we are skewering:
There is no character, howsoever good and fine, but it can be destroyed by ridicule, howsoever poor and witless. Observe the ass, for instance: his character is about perfect, he is the choicest spirit among all the humbler animals, yet see what ridicule has brought him to. Instead of feeling complimented when we are called an ass, we are left in doubt.
Phoenix had its coldest two consecutive days since 1978. In my area it was a low of 30 on Sunday morning and 27 yesterday morning. Then there is that ice storm that swept a great deal of the nation yesterday. I expect oil usage and prices to rebound. It’s funny how gold is seemingly detached from oil prices and is now “focused” to reacting to the value of the dollar, as it should.
Strawberries suffered but tree crops dodged the worst in my microclimate, Las Posas Valley. No freeze last night was lucky.
Next years avocado crops are seriously F’d here.
Could be the final straw. Chile and Mexico are gonna flood the markets and make ‘cados a gentleman farmer proposition. Get ready for hundreds of 20 acre “estates” with a doctor/dentist owner with a Stucco Manse and an old caretaker’s shack that used to be the farmhouse.
It’s also freezing cold here in Tucson. Many locals are waking up to busted pipes, frozen citrus, and what’s that going on again? It’s my furnace, that’s what! (Sigh.)
It is freezing outside this morning in San Diego!
Still not as cold as Sunday after the game………
I think about all those vacant houses that might of not had the heat on when the weather went below 30 degrees. If the owner lied about the house being vacant than the insurance company might not even pay the claim if the pipes break .
Also freezing here on the WA. coast! To think I moved back from upstate NY for this!
So many school days cancelled this year, everyones in a tizzy and pissed that B’ham sold most of its snow removal equipment a few decades back.
Winter Wonderland…
coomercial RE market - small office buildings- do they lag the residential market by 12+ months ?
The REIC’s latest sheeple confusion strategy: Claim that though the median price has fallen, some areas are doing well and others are suffering. Why am I highly skeptical? (Perhaps it is just my nature
)
(In all fairness, if I were a San Diego homeowner with a bully pulpit in academia, I would probably be telling the world the worst is over too…)
———————————————————————————————
2006 housing decline paints uneven picture
County prices fall for first year in over a decade, but not all areas or types of housing feel pinch
By Roger Showley,
Emmet Pierce
and Lori Weisberg
UNION-TRIBUNE STAFF WRITERS
January 16, 2007
(Blah, blah, blah…)
James Hamilton, an economist at the University of California San Diego, said things might get worse if prices decline further and consumer confidence falters.
“We’re in the midst of a pretty significant housing downturn and it’s begun to slow the rest of the economy,” he said. “I don’t think San Diego is going to be immune from what I see as a national slowing.”
But Hamilton did not think such a worst-case scenario is likely.
“I think there’s some indication, as far as home sales are concerned, that the worst may be behind us,” he said.
http://www.signonsandiego.com/news/metro/20070116-9999-1n16housing.html
Actually it may not be too long before the worst is behind us in terms of sales. Depends on how quickly and badly the banks are going to want to unload those foreclosures.
Nah, we’ve not even gotten started.
This morning when I read the Union Tribune, it struck me how all their analysis and interviews were just a waste of paper. Why don’t they send a journalist to the top of a roller coaster? He can interview the people in the first car (”we’re going down a little bit, but we’ve gone up very far and this might just be a small drop”) and the people in the last car (”were still going up, it’s different here”). I guess they have to write about something, but all that analysis will look pretty silly in 6 months. You can see that all the graphs are pretty much the same, but some of them are delayed 3-6 months…
“Why don’t they send a journalist to the top of a roller coaster?”
Tom — the reason I skipped the bozo fluff at the beginning and jumped to Hamilton’s quote is that he is not your average run-of-the-mill economist who frequently gets quoted in the SD Union Tribune (e.g., Alan Gin or what’s-his-name at bo-diddly-tech). He is a full UC professor and his spouse is a renowned housing economist.
http://weber.ucsd.edu/~jhamilto/
I just annoyed me endlessly to see the UT turn this “historic” news (first full year drop in 11 years) into a story about how some places still go up. As far as I remember they showed Poway, the epicenter of cookie cutter development, Neg.-AM-IO-mortgages, HELOC, whatever, as going up 10%. OK so people buying in Poway were slower to realize they are the last GFs (not all that surprising), but in 6 months Poway will have caught up with a vengeance.
I put some quick hit things up on my blog this morning — on Centex’s big write-down … KB Home’s big writedown … IndyMac’s mortgage problems … and a potential rate hike in Japan — source of all those carry trade/liquidity trades that in my opinion, have been boosting the markets.
http://interestrateroundup.blogspot.com
These blogs remind me of the TV series of the 1990s, “Early Edition.” Every time the real news comes out about the economy, cement prices, whatever related to the housing and credit bubble and bust, it feels like the yellow cat (the blogs) had brought the newspaper account of it the day before and I had time to act.
Primer on Asset Backed Securities:
http://wallstreetexaminer.com/blogs/winter/?p=321
Primer on Asset Backed Securities:
http://wallstreetexaminer.com/blogs/winter/?p=321
“One of the tricks of the trade of these pools is churning their subprime borrowers (JULS: Joe Ultra Light Sixpack) at a fast clip. It’s just basic Ponzi finance at work. As long as JULS can get another loan before reset, he can be funneled into a later series. This works fine as long as housing prices rise. However that’s no longer the case, and in addition avoiding a reset is increasingly a shallow victory as the new rates offered by NFI in Dec was 8.74%. This new rate avoids the worst of the reset, but is higher than two years ago nonetheless.”
Good thing for subprime MBS investers that real estate always goes up.
This may be old news, but I see where Carl Icahn has been buying much WCI stock (16% share.) Stock up about 30% in last month or so. I don’t see it as a smart move on his part - Florida condos have to be crashing and burning - but maybe he knows something we don’t know.
The MSM is talking about Fence Sitters (why is anyone not jumping into the furnace that fuels REIC always called derogatory names like “fence sitter”?):
“Home buyers who think they can just sit there (on the sidelines) and control the market completely, they’re losing out on something,” said John Gieseker of Prudential California Realty and outgoing president of the San Mateo Association of Realtors. “They’ll be kicking themselves later.”
Still, fence-sitting is common, and the reasons for waiting are as unique as the people doing it. We talked to four people at different stages in their lives who have decided to wait.
I am not sitting on any fence. I have my popcorn and a warm blanket out, and I am settling in for a LONG episode of Realtwh*re starvation. I can watch the show FAR longer than REIC worker bees can remain solvent. Thank God for the low rents (going lower here in PDX as I type).
There ain’t no fence. I have a great, unobstructed view of the carnage.
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Has this guy looked at the supply-demand situation in his county?
Jas
Supply demand ? What’s that ?
This is an antiquated measure today.
It’s the new e-CON-omy.
PDXrenter:
Here’s a good one! Talk about a pos…
http://portland.craigslist.org/mlt/rfs/263027953.html
2006 was the year of Spring inventory glut in FL, AZ, CA, NV and other leading edge bubble markets. They’ll be even worse in 2007 (just compare Jan’06 numbers with current inventory).
Portland, Seattle, Boise, Salt Lake City and other secondary bubble markets will see inventory flood in this year. It is going to get ugly. Sally’s Hood River POS isn’t selling anytime soon.
And yes, Silicon Valley & SF Bay area RE prices will be coming to papa this year, too.
In the Old South, that house is worth $30K, maybe $40K tops.
I’m not a fence sitter. I’m a spectator. Yes, I will buy someday. But when the ratios make sense.
Got popcorn?
Neil
Here’s what some guys do when the home is gone!
http://www.local6.com/news/10755744/detail.html
Jesus, he is one sick man.
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Sadly, Melody, there will be too many such sick man in America and it would become a very unsafe place for women and elderly. Ignorant American People don’t know the consequences of “Bankers’ Mischief,” which is what the Housing Bubble really is.
“Documents obtained by Local 6 showed that Wood declared bankruptcy in November and banks foreclosed on his home.”
http://www.local6.com/news/10755744/detail.html
I am forecasting tens of millions of homes will be foreclosed and people will be bankrupt in the coming depression, 2008-10 (recession to begin in 2007 as the housing prices really tank after a poor showing during the Spring).
Jas
Wow. Could’ve done without reading that this morning.
Can I buy a video of HIM getting raped in jail?
(And before someone goes all PC on my fanny - I am kidding. Not a video I would want to watch. I’m content just knowing that the odds of him landing in a rough prison are high.)
From one thing I did not need to read on a housing bubble blog to another. Dare I suggest to you that the common association of prison time to male rape is not entirely a good thing? This is not political correctness, this is just an observation that makes a lot more sense than your smiley. Sometime you might be falsely accused or have to share space with someone who had been, shall we say, processed by our justice system. Are you still sure this is smiley territory where only the politically correct would bother to egg you?
One horrible wrong doesn’t fix another horrible wrong.
The guy who tried to do this video, is clearly mentally deranged.
Typical Central Florida flipper there?
Trump project may be in trouble as he is now screwing the F&F buyers. I’d love to see prices drop below what they paid originally and see Donald explain that one.
http://www.chicagotribune.com/business/chi-0701160194jan16,1,2295743.story?coll=chi-news-hed
CausticSoda, do I detect a little schandenfreude in your tone? If I’m right, please elaborate. You see, I’m still feeling breathless because I got in the mail and invitation from Donald Trump himself to one of his seminars in which his lovely daughter will share with me and other VIP’s some “unique wealth creating secrets and strategies”. He wants so much for everyone to be a real estate millionaire that he has waived the tuition of $149 and will give me a free copy of his book “TRUMP-Think Like a Billionaire” as a special gift. I still can’t get over how lucky I am!
yesterday there was some discussion about mm funds. If more subprime lenders go under, credit spread surely will increase. Any idea how much impact it will have on agency?
I had a broker I have been working with call me today about homes in Dutchess county, NY. I had told her before I was now in a neutral standby phase and wanted to wait till the spring to start looking again. The broker told me all of a sudden they were booking a lot of showings. The broker also told me the listing prices were going to go up.
I think this broker is honest, but I’m seriously doubting the hype and pressure to buy now.
He is trying to create Urgency to Buy a la SynergySteve. If he was booking a lot of showings, he’d be too busy to bother calling you back. Tell him to take it easy with you - you’ want wait so he can take care of these lot of showings first. With rents as low as they are (comapred to PITI serfdom costs), you can AFFORD to wait for YEARS.
I think this broker is honest.
Have you ever seen that Seinfeld episode where George says why he lies so good? Its because he believes his own lie, which makes it true.
“I think this broker is honest” 30 years of successful real estate investing, NEVER met an honest broker…never. Trust everybody, Verify Everything
What does is it mean when the status of a house changes from Active to Inactive on ZipRealty? Has it sold? Been pulled from the market? Either?
What’s the best way to figure out what happened to the house? I know I can check Zillow for sales, but it takes a long time for the info to get there. Is there another place to check for recent sales (I’m in Mass)?
What it means here in los angeles is that the listing term ended with no sale and you need to re search that zip code and lo and behold a fresh listing with new pictures and zero days on the market.frikkin crook re whores.
Personally, I think that days-on-market, at this stage of the bubble and collapse, is pretty much a useless statistic. My only concern would be how long a house has been vacant, relative to potential for infestations and similar results of non-use.
http://www.chicagotribune.com/business/chi-0701160194jan16,0,520551.story?coll=chi-business-hed
“Trump also benefited from the early sales, she added, because he “could say that a certain percentage of units are presold to get his financing and tell the public a certain percentage was presold. People didn’t know they were friends and family sales.”
What does Donald suck on to make his lips pucker like that when he speaks?
im getting about 13 new listings/day emailed to me from the Remax website based on the criteria i set up. I wish there was a way to see how many get sold per day. This is in Baltimore county. Anyone tracking Zip realty for total listings from the begining of the year?
I have a small community set up with Zip Realty search and last year I received about 4 listings per week now I am receiving ~ 20 listings per week. Over last weekend I received 40 new listings.
i did a zip realty total at the time that i posted the above by clicking on their “Maryland” link. There were 45540 homes for sale. Just did it again and it came up with 45569. Note this is for Baltimore and Surronding areas not all of MD.
Maybe we are not different after all. The first faint signal the RE boom may have reached its peak shows itself in Moscow…
Apartment Prices See a Rare Drop
The Moscow Times
Prices for Moscow real estate dipped over the last week, the Real Estate Market Index said on its web site Monday.
The average price of Moscow apartments, calculated over the period running from Jan. 8 to Jan. 15, has dropped by 0.1 percent to $4,210 per square meter, the site said in its roundup. The rate of increases in real estate prices has been following a downtrend over the last few months, the site said.
Vladislav Lutskov, head of analysis and consulting at Miel real estate agents, was skeptical about such a small decrease, suggesting that the margin of error for such statistics usually ranged between 0.4 and 0.5 percent.
“There is currently a small fluctuation in prices but that is, as they say on the stock market, a sideways trend. In the long term, this is most likely just a sign of prices stabilizing,” he wrote in an e-mailed statement.
The only properties to appreciate in value over the surveyed period were contemporary brick apartments. Costs for this type of property have increased 0.4 percent to an average of $4,711 per square meter, the site said. Meanwhile, prices for apartments in Stalin-era buildings have remained steady over the previous week at $4,905 per square meter.
The cost for low-grade paneled and brick building apartments dropped by 0.1 percent, from $3,863 to $4,134 per square meter. The biggest drop over the period was for apartments in modern paneled buildings, which reached $4,189, representing a 0.3 percent decrease.
Moscow is undergoing a classic repeat of the NYC 1980’s commercial real estate boom…and bust.
Did anyone here read the latest sonnypage story on Mish’s blog? What’cha think? I’m thinking the smart money is starting to cherry-pick the real bargains, as they feel we’re near the bottom.
I agree, if you put “smart money” in quotes and then say [irony off] at the end.
From Mish’s comments page re: sonnypage
“I can see how the choiciest properties at Lake Lanier may remain a strong corner of the market. Down here in town, there is blood on the streets.
But Lake Lanier may very well end up croaking as a market soon — we’ve already been getting serious droughts lately, and this seems set to only get worse with global warming.”
Aaron Krowne
When you posted this yesterday I thought you were kidding, if you really believe that the historical average for a downturn in housing is 47 months (shortest is 45 months) and that the new norm is now 11 months, then by all means buy! But google Aaron Krowne and read some of his well researched reports and maybe you will understand why many expect this downturn to last a decade or more with prices going back to 1994 levels.
–
A good quote from CR blog (I don’t know the original source):
“If you want to know where real estate is going, look at the inventory. It’s just another commodity like a stock or gold.”
Jas
“It’s just another commodity like a stock or gold.”
Especially when a glut of condos and tract homes in close proximity results in numerous virtually-identical units sitting on the market at the same time with a price spread wider than the Pacific Ocean. This makes the buyer’s job of picking the best value for his money rather like shooting fish in the barrel. If it weren’t for the substantial risk of catching a falling knife when the market faces the perfect storm of a simultaneous inventory glut and a subprime meltdown, I would agree with MSM opinion that it is a buyer’s market.
“look at the inventory. It’s just another commodity like a stock or gold.”
Don’t the Fed’s PAY farmers not to grow certain crops?
Hasn’t NAR been telling people, Don’t list your house for sale if you don’t need to.
Can’t foreclosed house’s just sit vacant while the Banks wait for the market to…umm, go back up in 2008 or 09 or 10 or 11 or…
Aren’t these the best of time’s to buy a house.
2007: turn out the lights, pass the bubbly… Mike, it’s beginning to look like a death_spiral, where’s Jas?
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Looks like revisions of some of the past numbers. — Jas
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Southland home sales: New price peak, slowest December in ten years
January 16, 2007
La Jolla,CA—-Southern California’s housing market continued to send mixed signals last month as prices reached a new peak while sales volume remained at a ten-year low, a real estate information service reported.
The median price paid for a home in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties was $495,000 last month, a new record. That was up 1.6 percent from $487,000 for the month before, and up 3.3 percent from $479,000 for December a year ago, according to DataQuick Information Systems.
The previous peak was $493,000 last June. Year-over-year price increases have been in the single digits for nine months. Last month’s record median was in large part due to strong sales of new homes, which is normal for December.
“The market is still readjusting after the frenzy in 2004 and 2005. Market indicators tend to point in different directions during a turn. We are watching the San Diego market carefully, sales and price trends there have tended to lead the region,” said Marshall Prentice, DataQuick president.
A total of 22,485 new and resale homes were sold regionwide last month. That was up 10.3 percent from 20,388 in November, and down 22.3 percent from 28,952 in December a year ago. Last month was the slowest December since 1995 when 19,202 homes were sold. DataQuick’s statistics go back to 1988, the December average is 23,699 sales.
DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.
While year-over-year sales in the region have declined for the last 13 months, San Diego County’s sales started to decline 30 months ago. San Diego County’s median peaked in November 2005 at $518,000 and was $483,000 last month, a 6.8 percent decline. When seasonality and shifts in market mix are factored in, San Diego County’s drop from its peak is just over four percent. Indications are that San Diego prices will stay where they are, at least for the short term.
“In any real estate cycle, when prices peak, they don’t level off at that peak, they come down some. The question is, how much? We need to remember that prices have gone up 100 percent in Southern California the last four years. Most of that increase is here to stay,” said Prentice.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,265 last month, the same as the previous month and up from $2,255 a year ago. Adjusted for inflation, current payments are 1.5 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 6.6 percent below the current cycle’s June peak.
Indicators of market distress are still at a moderate level. Financing with adjustable-rate mortgages is flat. Foreclosure activity is rising but is still in the normal range. Down payment sizes are stable and flipping rates and non-owner occupied buying activity is down, DataQuick reported.
All Homes No Sold
Dec-05 No Sold
Dec-06 Pct.
Chg Median
Dec-05 Median
Dec-06 Pct.
Chg
Los Angeles 8,845 7,703 -12.9% $490K $522K 6.5%
Orange County 3,826 2,719 -28.9% $621K $642K 3.4%
San Diego 4,262 3,613 -15.2% $516K $483K -6.4%
Riverside 6,305 4,318 -31.5% $411K $432K 5.1%
San Bernardino 4,580 3,154 -31.1% $361K $372K 3.0%
Ventura 1,134 978 -13.8% $630K $593K -5.9%
So. California 28,952 22,485 -22.3% $479K $495K 3.3%
In one of our local central Florida papers on Sunday, a Lincoln dealer had an ad that included, “2007 Lincoln Navigator only $30,988.” My wife insisted I call about it, even though I knew it was a typo. Sure enough, it was an error — of course many people called. Just reinforces the immutable truth that anything will sell, if the price is right. At $31K for an undamaged ‘07 ‘gator, they could sell all they could truck in.
Once people figure out they’ll likely make no profit at all on their house, they might get realistic before they have to deal with the possibility of an outright loss, as many others already face.
–
http://www.bepress.com/ev/vol4/iss1/art2/
Housing Collapse? Bring It On!
Abstract
Aaron Edlin confesses his selfish reasons to root for a collapse of housing prices and explains why many who worry should not.
Recommended Citation
Aaron S. Edlin (2007) “Housing Collapse? Bring It On!,” The Economists’ Voice: Vol. 4 : Iss. 1, Article 2.
Available at: http://www.bepress.com/ev/vol4/iss1/art2
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When an economist says Don’t Worry, start worrying!
Jas
OMG, I can’t believe how desperate some people are getting:
http://reno.craigslist.org/rfs/263339423.html
Another try - I don’t think my first one posted.
http://reno.craigslist.org/rfs/263339423.html
I think I will win my long-standing bet that Castro will be in the ground by the end of winter. Don’t bother to take a sweater, ‘ol buddy! His evil rotting cadaver probably will kill all the vegetation within 100 yards of his plot.
Follow-on prediction: thereafter, there will be a whole lotta talk about oil drilling in the area between Florida and Cuba.
Whoa — talk about bearish:
Dan Forshee — Real Estate Will Underperform Inflation for Decades
http://www.prudentbear.com/articles/show/130
“Real Estate Will Underperform Inflation for Decades”
Chip……..that says it all and is what the public should get into their head.
“never been a better time to buy”……..what B/S
–
It is OFFICIAL: “US housing bust getting worse”
Straight from the mouth of one of America’s rulers. Of course, they always understate such things. So, the reality must be – US housing bust will get nasty.
“”Americans have shown a complete lack of self-control.”
Look who is talking! God save America!!
Jas
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US housing bust getting worse, warns Goldman
By Ambrose Evans-Pritchard
The US Federal Reserve will need to slash interest rates three times this year as the housing slump goes from bad to worse and the American consumer begins to buckle, Goldman Sachs has warned.
“Americans have shown a complete lack of self-control. The personal savings rate is at its lowest point ever, and has actually been negative since April 2005.
“We believe that housing will soon become the proverbial ’straw that breaks the camel’s back’,” said David Kostin, the investment bank’s US strategist.
Goldman Sachs said homeowners had treated windfall gains from rising house prices as if they were “recurring income”, using home equity withdrawls to subsidize over-stretched lifestyles. This artificial boost to spending has already dropped from 7pc to 4pc of GDP over the last year, and is likely to halve again in 2007.
Mortgage equity withdrawal will fall from 13pc of “discretionary household cash flow” in 2006 to 7pc this year, causing spending power to contract for the first time since the dotcom bust.
The bank predicted in its closely-watched global outlook that the US would stave off recession, notching up growth of 2.1pc in 2007. Interest rates will fall briskly from 5.25pc to 4.5pc by the end of the year.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/15/bcngold115.xml
NPR Marketplace gets a clue!
http://marketplace.publicradio.org/shows/2007/01/16/PM200701161.html
That’s a pretty sad commentary about the level of education among writers and copy editors at what arguably should be one of the more erudite government institutions:
“Economists spent hours pouring over data to figure out when the bubble would burst.”
It’s “poring,” folks.
10:55 p.m. EST — realtor.com has almost no pulse. Only got one screen to pull up, from many bookmarked searches, and a click on a listing sent me straight to a dead screen.
[url]http://tinyurl.com/yqsv4m[/url]
GMAC ResCap to cut 1,000 jobs in mortgage-related business
“The company attributed the move to a number of factors including slower loan originations, a cooling housing market, a challenging interest-rate environment and the continued deterioration in the business of lending to people with less-than-perfect credit histories.”
Ah, it’s the underwriting…
ooops, http://tinyurl.com/yqsv4m