Bits Bucket And Craigslist Finds For January 19, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
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from msn foreclosure rates jump 35%
http://realestate.msn.com/buying/Article2.aspx?cp-documentid=2507006
After the boom fuelled by the baby-boomers, here comes the bust by the baby-boomers. Foreclosures. Well it’s just the beginning of the busting and the ruin of the baby-boomers.
SENIORS IN DEBT
by Tim Iacono
January 18, 2007
Recent stories about the plight of seniors bring to light the growing problem of money not stretching as far as it once did. Today, the elderly are in the unfortunate situation where they benefit very little from cheap imported goods manufactured in Asia - the key to what some call an “era of low inflation”.
Their money is increasingly spent on life’s essentials - food, utilities, and medical costs - all of which have risen at a brisk pace in recent years. In many cases, the combination of a pension and a paid off home has been replaced by a meager retirement income, high bills, and a reverse mortgage.
A decade ago, homes were routinely passed on free and clear to surviving children, ten years from now heirs may be surprised to find out how little is left after years of borrowing by their parents to make ends meet.
According to this report from the U.K., inflation is now running at almost 10 percent for pensioners. With interest rates rising, those on fixed incomes who must access credit to square the books each month find themselves getting further and further behind.
Stateside, an increasing number of senior citizens are turning to reverse mortgages and credit cards to make ends meet. It didn’t used to be this way and it flies in the face of government pronouncements that inflation is under control.
For decades, social security and pensions provided a stable income in retirement. That is still mostly true today, the problem is that living expenses are rising much more quickly than income as demonstrated a year ago when the average monthly social security increase was about $35 while Medicare premiums increased $28.
In this report from Texas, we learn first hand what it is like for some:
When Miss Daisy, 65, totals her monthly bills they amount to usually $200 more than her income. She relies on credit cards to bridge the difference. ‘I have no savings, so I have no choice,’ she said.
When she adds up her monthly bills for her mortgage, car loan, electricity, gas, water and phone, they exceed her income from Social Security and a part-time job by almost $200.
“I rely on my credit cards to make ends meet,” said the 65-year-old Dallas woman, who asked that her last name not be used. “I have no savings, so I have no choice.”
She owes more than $7,000 on three cards.
Seniors who grew up in frugal times and have usually been reluctant to go too far into debt are turning increasingly to credit cards to make do in retirement, says a study by the National Consumer Law Center.
“Older people have generally held less credit card debt than younger consumers, but their generation is catching up,” said Deanne Loonin, the principal author of the report by the Boston-based consumer advocacy group.
The study quantifies a trend that credit counselors have seen recently. It found that the average credit card debt for consumers 65 to 69 skyrocketed 217 percent over the last decade to $5,844. Researchers calculated the inflation-adjusted increase by examining Federal Reserve data on the assets and liabilities of American families.
The consumer advocacy group’s report blames the trend on a combination of seniors’ shrinking or stagnating incomes, higher expenses for housing, medical care and utilities, and creditor practices that push seniors to borrow.
“It’s not just that elders have more debt than before, but that many are buried in unaffordable debt,” Ms. Loonin said.
It’s a sort of long, slow squeeze for most seniors and it must be particularly hard for those who have eschewed credit and debt for most of their lives to be forced to rely on it now.
Ask retirees what they think of lower prices for iPods and PCs and the low inflation rate of only two percent - you are likely to get an earful.
Unfortunately, things are probably going to get worse as baby boomers enter their golden years - an entire generation has been conditioned to accept high debt loads in exchange for rising asset prices. In the end, this may not prove to be a very good long term plan.
A 2004 study by Demos, a New York-based research institute, found that consumers within 10 years of retirement are spending an average of one-third of their income on debt payments.
That’s partly because some had children later in life and are paying for their youngsters’ college education into their late 50s and early 60s. Others have become caretakers for frail parents. Still others have simply spent too much.
“For a variety of reasons, boomers won’t have the nest eggs they’d like, and they won’t have the pensions and health care benefits that many of today’s retirees enjoy,” Ms. Cobb said. “Things will only get worse.”
It looks like the baby boomers are going to get a retirement wake-up call in coming years.
It didn’t have to be this way.
When she adds up her monthly bills for her mortgage, car loan, electricity, gas, water and phone, they exceed her income from Social Security and a part-time job by almost $200.
Why does someone with no savings and negligible income feel entitled to a mortgage and a car loan? I have no sympathy whatsoever.
Complete agreement. From my own experience, when I couldn’t afford these things, I rented a room in a house, I walked, I took a second job, etc. She is 65. Even if some horrible experience came along and destroyed your savings (not mentioned here so not likely), you still are responsible for yourself. You can shut off your cable. You can take public transport or walk. You can move to where you can afford to live. Heck, I’m sorry, except in some areas you can turn off your gas or electricity and in the cases you can’t, I’d recommend moving.
You can’t walk if you’re disabled.
Some people here are really brutal. This woman did not ask for the insane inflation caused largely by loose credit conditions.
If she owned a home all her life, she’s entitled to live there until she dies. It’s HER home. While she shouldn’t have a car payment, she is entitled to have access to some kind of transportation to get to the grocery store, doctor, etc.
Even wonder how you’ll end up in your later years? I have a feeling you are very, very young.
It’s all good in DFW
Foreclosure lists near 1989 record
Adjustable-rate loans and consumer debt are blamed
08:08 AM CST on Friday, January 19, 2007
By STEVE BROWN / The Dallas Morning News
Dallas-Fort Worth home foreclosure postings are still growing – fueled by higher payments on adjustable-rate loans and rising consumer debt.
The latest statistics show that pending foreclosures in Dallas County are 12 percent higher than a year ago and foreclosure postings are up 16 percent in Tarrant County.
Because of weather delays and other factors, some monthly statistics prepared by Addison-based Foreclosure Listing Service were unavailable on Thursday, including figures for Collin County.
Even so, the 1,940 homes in Dallas County and 1,274 Tarrant County homes threatened with foreclosure are approaching record highs, said George Roddy, president of Foreclosure Listing Service.
“This is getting serious,” Mr. Roddy said. “This level is getting very close to the all-time records set in 1989, when an average of 2,000 postings were filed monthly on Dallas County residences.”
Back then, it was a regional recession that caused the number of home foreclosures to spike.
This go-around it’s often because of poor consumer choices, credit analysts say.
“Some of them got into more house than they can afford,” said Gail Cunningham with Consumer Credit Counseling Service of Greater Dallas.
Rising interest rates on home mortgages have also caused some homeowners to default on their loans.
Many homeowners are also swamped with credit card bills, Ms. Cunningham said.
“During the Christmas holidays, everyone gets caught up in the moment and overspends,” she said. “Now the bills are beginning to arrive.”
While many analysts are predicting that the inflated housing market will have a “soft landing,” Ms. Cunningham said she isn’t as optimistic.
“In the trenches where the real folks are, they are feeling the pinch,” she said.
The increases in February foreclosure postings in Dallas and Tarrant counties follow even bigger percentage jumps in January, according to Foreclosure Listing Service.
And Mr. Roddy said he’s noticed some subtle changes in the types of loans facing foreclosure.
“I’m seeing a little pickup in home equity loans, but adjustable-rate loans still lead the pack,” he said.
February’s foreclosure postings appear to be the highest in the current housing cycle. But based on the size of today’s housing market, the number of home foreclosures in the D-FW area is less alarming than it was in the late 1980s, Mr. Roddy said.
“Proportionately, we are not in the doghouse like we were in 1988 and 1989.”
E-mail stevebrown@dallasnews.com
“During the Christmas holidays, everyone gets caught up in the moment and overspends,” she said. “Now the bills are beginning to arrive.”
This is the kind of quote that kills me. As if some form of collective amnesia overcomes “all” Americans, who are then unable to remember that their ARM is adjusting and they are already in cc debt. Nope, this kind of soft-pedaling encourages people to think that the financial abyss they’re teetering on is ok, because everyone is in the same position.
Except everyone is not in this position. There is no collective amnesia, and anyone who suggests in print that there is should be bitch-slapped.
What gets me is all this horseshit we’re fed about how Dallas is such a great market, everyone’s happy, no bubble, houses are cheap.
Then how are we at 1989 foreclosure levels?
The real estate market in Texas during the ’80s taught me a lesson not to be forgotten. Now no mortgages and no cc debt. Happy horseshit indeed.
“During the Christmas holidays, everyone gets caught up in the moment and overspends,” she said. “Now the bills are beginning to arrive.”
It svcks to face those bills with no home equity gains to pay them off.
THE END
What’s the current cold snap going to do to all those large home owners that need to turn on the heater? Those higher energy bills aren’t going to help their finances which probably weren’t budgeted for.
This am news reported that the average person is carrying $15K in cc debt and has 7 or 8 cards. Gotta love the banking industry!
Good thing oil prices are crashing, even against the backdrop
)
of a deep freeze over most of the US which must certainly be driving up heater utilization in McMansions across the land. (Good thing so many McMansions are vacant
And yet Capital One’s earnings report was butt-ugly. What’s it going to be like when things really get rough.
They recently sent me another of their Fabulous! Offers! I scribbled all over the application, wrote “Remove from your list!” next to my name, then sent the whole kit -n- kaboodle back to them in their post-paid envelope.
And you can do this too. After all, it costs you NOTHING to cost Capital One some money. Make their future earnings reports look even worse!
Maybe because Capital One doesn’t work hard enough to fleece their customers. That’s just a guess, but they seem to have some good policies. I got a Capital One card specifically because they don’t charge any foreign currency conversion fee. All other Visa/MC issuers charge 1% to 3%. I also note that they don’t have a universal default clause and don’t do double-cycle billing. Are they customer-friendly, or just not good at banking?
Both?
Not to mention that if a late payment hits then all the CC’s go up in the 20-30% range. This alone should get the ball rolling a bit faster downhill for these FB’s.
“Not to mention that if a late payment hits then all the CC’s go up in the 20-30% range. This alone should get the ball rolling a bit faster downhill for these FB’s.”
Try googling: [ Universal Default Clause ]. Thousands of careless people have already been caught in this trap.
and they’re just beging to adjust= woof
Believe or not I have some friends looking at speculative property in TX at this very moment. They bought in FLorida last year. Now, they are spreading their wings across country.
Makes a lot of sense. Do a dumb thing once and it is certain to get better if you do it twice.
“Some of them got into more house than they can afford,” said Gail Cunningham with Consumer Credit Counseling Service of Greater Dallas.
“Some” of them? If you’re being foreclosed, then by DEFINITION you are in “more house” than you can afford.
Well there are always some people who have unfortunate occurances jobloss or medical bills that they could not anticipate. But MOST of these people just bought more house than they could afford.
“During the Christmas holidays, everyone gets caught up in the moment and overspends,” she said. “Now the bills are beginning to arrive.”
This is also obvious nonsense - there’s no way that Christmas shopping bills can already be pushing people into foreclosure, when Christmas was less than one month ago.
Unless they’re talking about Christmas 2005!
And 2004, and 2003, and 2002, and …
copy from the other post
lots of stuff
from the capitalized interest mania at wamu
to the reit bidding war for eop
to private equity and executive pay etc
have a nice weekend
http://immobilienblasen.blogspot.com/
Apparently 20/20 is going to have a special on how badly Americans are in debt this evening.
A couple of interesting bits for the DC metro market.
I saw a television commericial this morning offerring 900 off of the first three months rent for a building I’m guessing was supposed to be sold as condos as they described it as ‘brand new’.
Also a friend knows someone who runs a property management company who told her that they are getting tons of new rentals. Investors holding out I suspect. Lot’s of rentals will negotiate short term leases.
By that do you mean people are going to the management company with condos they want to rent out? As opposed to renters looking for a place to live.
Yes people with houses and condos going to the PM company to rent them out.
900 off for the first three months is for renters. For homeowners, you have: “How would you like to remove your NEXT TWO HOUSE PAYMENTS! Imagine! ReFi Now!” Anyone who would be attracted by that argument _should_ be avoided like the plague by the sub-prime lenders in this market. Instead they are trolling specifically for people who shouldn’t be renting a house from the bank.
“[The Petersons] live in an upscale California neighborhood in a 4,000-square-foot home with a pool, a huge walk-in wine cellar and even its own movie theater. They drive nice cars and own a second home and two vacation time shares.”
[...]
“Their monthly household income of $8,750 isn’t enough to cover all of their expenses, which total $15,000 a month. For over a year, the Petersons have relied on credit cards to keep afloat financially.”
Unreal. Gonna have to catch this one.
I bungled the URL and it was deleted. Let me try again:
20/20 “Digging out of Debt”
Jan 19, 10 p.m. (EST anyway) on your local ABC affiliate.
Now this is what is really pissing me off. Alone, I make more money than the family of Petersons combined. And I live in a modest two-bedroom apartment and drive a modest car. Sucks to be young, aren’t it?
What’s amazing is that these people have to be told how to reduce their monthly payments. Sell your assets and STOP spending! Wow!
No, what makes me mad is HER relunctance to go with the plan that was laid out for them to escape bankruptcy. The article notes that she wasn’t happy that they’d sell everything and come out with “no place to live and $3,000.” Jeez lady, you’ll still be able to rent in your “upscale” neighborhood. People like this just kill me. Find happiness in your family and the small pleasures in life. Not 4,000 square foot mansions and 3 vacations a year that you clearly can’t afford! What a shallow sad existence!
How Will Home Prices Fare? Look at Condos
Some experts say condo prices give a truer read of home-price trends. Find out why — and what the figures are indicating…
http://tinyurl.com/2p8v86
I am hoping this media volley on the subject of fiscal prudence might somehow signal the beginning of a Fed move to reassert their independence from political influence. Because there is a substantial body of research to suggest that when the central bank gets too cozy with elected officials (not to mention The Street!), their ability to fight inflation is severely compromised. (I guess that is why the unholy trinity of Wall Street, Fed and Treasury make me so uneasy…).
On the other hand, this could merely signal the first step in a move to steal promised entitlements from senior citizens…
———————————————————————————-
Bernanke warns US of ‘fiscal crisis’ fear
By Krishna Guha and Eoin Callan in Washington and Tony Tassell in London
Published: January 18 2007 14:33 | Last updated: January 19 2007 00:30
Ben Bernanke stepped up the pressure on Congress to address the budgetary impact of soaring spending on entitlement programmes on Thursday, warning that they could one day cause a “fiscal crisis” in the US.
The Federal Reserve chairman told the Senate budget committee that the recent improvement in US public finances was only the “calm before the storm”.
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He urged immediate action to head off the looming Medicare and Social Security funding gap, saying the right time to start was “ten years ago”. But Mr Bernanke refused to comment on whether this should be done by curbing spending, raising taxes or some combination of the two, saying that was for elected officials to decide.
His uncharacteristically hard-hitting intervention came as data revealed that US inflation rebounded in December, all but ruling out any chance that the Federal Reserve would cut interest rates soon. The Fed chief said that without new policies, entitlement spending would result in mounting fiscal deficits, and the effect on the “vibrancy, efficiency and growth rate of oureconomy” would soon be “palpable”.
His tough talk will make it more difficult for the newly elected Congress to shy away from politically explosive entitlement reform, and may help Treasury Secretary Hank Paulson’s efforts to entice some Democrats into joining a bi-partisan push on Social Security.
Mr Bernanke, though, identified Medicare as the core of the threat, describing it as a “much bigger problem than Social Security”. He called for a root-and-branch overhaul of the US health sector to cut costs and increase efficiency. In other comments, Mr Bernanke expressed mildly more concern about the external deficit than did his predecessor, Alan Greenspan, saying there was “good reason” to consider that it “needs to start coming down slowly”.
http://www.ft.com/cms/s/ff4eeb60-a6ff-11db-83e4-0000779e2340.html
http://econ.ucsc.edu/~walshc/cbi_newpalgrave.pdf
pressure from BB ?
like what- he should say cut spending or I go up .25% at every fckin meeting
Krishna and Eoin.
Does anyone else see the humor in that?
Those two could be my parents!
The Priciest — and Cheapest — Places to Rent
http://tinyurl.com/36l3ye
LA Times/Dataquick median Year-Over-Year numbers for Southern California counties and cities for December is out:
http://www.dqnews.com/ZIPLAT.shtm
County, %change:
Los Angeles County : 5.8%
Orange County : 0.8%
Riverside County : 4.5%
San Bernardino County : 0.0%
San Diego County : -1.8%
Ventura County : -1.6%
Santa Barbara County : -2.9%
Look up your favorite city for an indication of what’s-a-happening.
Looks like LA is trying to postpone the inevitable.
That will be hard to continue if “around 100 or so” mortgage lenders close shop in the foreseeable future. LA prices only work with massive amounts of subprime debt to drive a large wedge between household incomes and home sale prices.
The counties as a whole are not showing big drops yet as cheaper zip codes trailed the more expensive areas in big appreciation.The bubble expanded outwards from the center and it will contract quickly.There are alot of big price drops in those numbers from expensive areas.Looking at dataquick charts from the early 90s this crash is going along the same way only the price drops are looking larger.
Think of current inventory buildup as future price drops…
Whadya all think of Bernarke’s comments yesterday?
Seems like he’ll go back to it many times in the future, warning that he’d told people the you know what is about to hit the fan.
Klassik CYA stuff
How come Greenspan never spoke to what happened to his 1982 promise to our generation — pay higher payroll taxes than prior generations and retire later, but this will allow a huge social security trust fund to build up and same the program?
HIS generation and Bernanke’s generation cut income taxes and spent increased spending, leaving us with a trust fund that is little more than an unfunded IOU giving us permission to tax our children into poverty to offset the extra money they gave themselves.
Greenspan sold his convictions. Remember when he advocated going back to the gold standard and reducing deficits? He was bought and paid for in the later years.
I think what happens with Economists and Politicians is that they know what is going on and early on they fight for the little guy and make it look like they are agaisnt the Establishment. Then the Establishment starts to fear them and then buys them out. It funny how all of a sudden when one of them gets into power they quit solving problems and just create more. Like you said, Greenspan’s early professional years were spent pushing the gold standard and then he quickly abandoned once he “joined the club”.
He is also preparing to continue Alan Greenspan’s time honored tradition of keeping the Social Security ponzi scheme going for a while longer through some combination of benefit cuts and tax increases for future beneficiaries. (Gotta make sure today’s Social Security recipients can keep making payments on Winnebagos and McMansion investment properties…)
If all the money i have paid into ssi was invested all these years instead of stolen to fund other programs i would be a millionaire.They keep talking about cutting benefits and raising the age to get benefits as if it is welfare.It is our own money they are stealing from us.It makes me sick.
I’m with you. We boomers cheerfully agreed to pay more SS tax on a higher percentage of our income to enable coverage……only to find out later there existed no “trust fund”….merely token IOU’s….while the pay-go excess was used to fund all manner of bridges to nowhere. Rape by any other name is still rape.
Actually I think he could have done far worse. He didn’t directly suggest raising taxes.
He’d be my hero if he suggested raising the retirement age as soon as possible, though. Yes, this is implicitly both a tax increase and a benefit cut, but that is my point. Doing it ASAP spreads the pain out evenly and does not target a specific dempgraphic.
The only thing I’ve willing to accept is elimination of a set retirement age and a particular payment level. They would be be replaced by a rule that the ratio of contributors to beneficiaries shall be three, and the ratio of payments in to payments out shall be one. Workers do better, retirees do better, and vice versa. Everyone gets to retire in age order, when there are three workers to support them but no sooner. No generation is left with nothing.
Then extend the payroll tax base to the top and cut the rate. The truth is it’s just another tax, and should not be a regressive one.
Finally, take the entire “trust fund” and distribute it to those who paid in. Cause a financial crisis is they choose to sell treasuries and buy other assets? Fine. Let the pain come now, when the g-g-generation that caused the problem is around to feel it.
Then extend the payroll tax base to the top and cut the rate. The truth is it’s just another tax, and should not be a regressive one.
No. No. No. This turns SS into a means test.
This turns SS into a means test.
————————
I believe that was the intention. It’s meant as a safety net for those who need it.
“He didn’t directly suggest raising taxes.”
FICA = contributions. Taxes are baaad.
That might happen, but the political fallout would be unpalatable for either party, since older folks (those over 50) tend to vote the most (as a percentage of their age group).
the political fallout would be unpalatable for either party
Which is why Bernanke is the best person to recommend it.
At some point, it will happen. They’ll appoint a “blue ribbon” commission with members from both parties to give political cover and whatever they recommend, it will be enacted on the last day of the session for the year at 2:02 AM immediately after some disaster someplace so the news will end up on page 25. The only thing you can count on is that they will continue to exempt themselves from all this BS and whether or not you look, you’ll be screwed.
It is “social” security. Do folks not understand what socialism is? A central agency is planning the production and distribution of goods, in this case money. In theory, it should be utopia (if you believe the masses welfare outweighs the individuals welfare). In reality, it is highly inefficient and breeds laziness and lack of responsibility. Health care is next.
Let’s see. If demand for healthcare goes up since everyone will be entitled to it, what happens to the price? Well, it’ll be “free” to the unknowning, but costly as all get out for those who are forced to pay (those with jobs). We get the goverment we ask for.
Not quite.
It’s called “social security” because that’s what it does. Without a federally guaranteed pension fund this culture would explode from the inside. Just imagine what would happen if an entire generation was homeless and penniless. Not all forms of security come from guns and bombs.
Geez, how did America survive the 150+ years before Social Security? Horrors!!!
Geez, how did America survive the 150+ years before Social Security? Horrors!!!
——————————
Well, for one, they didn’t live as long. Additionally, **families** provided the social safety nets. With today’s divorce (and anti-marriage) culture, that option is gone for now.
It’s the lack of (social) safety nets which caused the volatile, boom/bust economies of the past. I’m not necessarily advocating either way, but we all have to decide which we prefer (relative stability — but we pay for it OR instability, where everyone is only concerned for his/her own welfare).
The WSJ has an article today on soaring debt levels among the merely rich, who are hocking their multiple homes to keep up with the super rich.
Were I thinking like a rich person, I suppose I would have hocked my house at the super-low interest rates of 2003 and invested the proceeds. Not sure it makes sense at the somewhat higher (though still low) interest rates and inflated asset values of today.
I helped a guy monetize his “equity gain” on a house in Ca like that. He heloced it, put the money into BRWG in the 4s, sold for more than a double and paid the heloc off. Shazzam, gain monetized, has a nice tax bill but he’s hedged against a California dump now.
Too bad that the “merely rich” are concurrently trying to cash out of their $1m+ properties in droves around San Diego, while coping with such high debt levels. Cry me a river.
Those people are rich only in the monetary sense. They are not true upper-class; in fact they epitomize the middle-class tendency to attempt to emulate the true rich in all the wrong ways.
This attempt to emulate the rich (by purchasing large move-up homes as often as possible) is very lucrative during a period of rapid real home price appreciation (like during 1998-2005). Sadly, it amounts to household financial suicide during a real estate bust (2006-???).
Marketing 101. First principle. “MONKEY SEE, MONKEY DO.”
Bottom line is if you have to get up in the morning and go to work (not by choice but by necessity) then you are not rich - you are working class, maybe with a little bit nicer pot to piss in, but you are working class nonetheless.
Right — and you are also a prime target for home builders who are trying to play on your desperate desire to be wealthy by luring you into purchasing a McMansion at a price you can’t afford.
What’s neat about this is that if you have reasonable savings, you can instantly jump from working class to leisure class by reducing your expenses sufficiently!
Of course that might be difficult if you’re a $1 million bagholder in this real estate market.
“What’s neat about this is that if you have reasonable savings, you can instantly jump from working class to leisure class by reducing your expenses sufficiently!”
Yes — just make sure you have sufficient diversification (and I will not elaborate as we have discussed this at length already).
That said, it is worth mentioning that if you build up 401(K) assets and then kiss your job farewell, it is worth considering that your marginal tax rate can be dropped to near or at zero by reducing expenses. You can even cash out of pension assets without paying much in taxes, provided you keep your expenses low (and that said assets are not inflated to nothing).
Gotta love that 5% capital-gains tax for the bottom two brackets. I believe it’s going to 0% next year, in fact.
If you’re being facetious, exactly how do you plan to get more out of someone in those income brackets? They **have no money** to tax.
Front page news in the SD Union Tribune today:
Some condo investments just went up in flames (literally!)…
——————————————————————————–
Escondido chief describes blaze as city’s biggest ever
By Kristina Davis
and J. Harry Jones
UNION-TRIBUNE STAFF WRITERS
January 19, 2007
EDUARDO CONTRERAS / Union-Tribune
Fire yesterday swept over a 122-unit Escondido condominium development that was considered to be a centerpiece of downtown redevelopment.
ESCONDIDO – A monstrous blaze devoured a multimillion-dollar condominium development yesterday afternoon in what a fire official called the largest structure fire in the city’s history.
Flames towering 100 feet jumped from building to building, engulfing the complex before firefighters had a chance to put water on the blaze.
The fire started at 1:35 p.m. at The Paramount, a 122-unit complex near Washington Avenue and Escondido Boulevard that has been under construction for nine months.
The complex of loft-style homes priced in the $400,000 range was to be a centerpiece of downtown redevelopment in Escondido. It was part of a plan to add 2,000 condo units. The Venue, a neighboring condo complex also under construction, was not damaged, city officials said.
* Council members won’t let hopes for new downtown go up in flames
“This is the largest structure fire we’ve ever had at this point,” Escondido Fire Chief Victor Reed said.
http://www.signonsandiego.com/news/northcounty/20070119-9999-7m19condos.html
Council members won’t let hopes for new downtown go up in flames
By Lola Sherman
UNION-TRIBUNE STAFF WRITER
January 19, 2007
ESCONDIDO – City Council members see the fiery devastation at The Paramount condominium project yesterday as only a small setback in their goal of turning downtown Escondido into a vibrant commercial and residential area.
“It was one of our most exciting projects,” Mayor Lori Holt Pfeiler said of the 122-unit complex. “My hope is that they will rebuild.”
The upscale, five-building condominium complex was being constructed by D.R. Horton, one of the nation’s largest builders, across the street from the California Center for the Arts, Escondido and two blocks from the Grand Avenue downtown district. Four buildings were destroyed in the fire that started at 1:35 p.m.
Horton’s regional offices in Carlsbad would not comment on future plans, referring media to the firm’s Fort Worth headquarters, which did not respond.
The Paramount offered some of the first of 2,000 residential units the city hopes to usher into downtown, supplying patrons to its restaurants, shops and attractions.
“This project would have been setting the standard, setting the bar for what we were looking for in urban living,” Councilwoman Marie Waldron said.
Councilman Dick Daniels said development plans would go forward without much setback.
“It does not really have an impact,” Daniels said. “It certainly does not diminish the desirability of downtown Escondido as residential.”
Councilman Ed Gallo estimated that the fire would delay the influx of downtown residents by about a year.
http://www.signonsandiego.com/news/northcounty/20070119-9999-1mi19firesid.html
—————————————————————————–
THERE MAY NOT BE ANY SUBPRIME MONEY LEFT BY THEN!
It’s the rotisserie plan!
Anybody want to start a real estate rotisserie league?
Call it the fantasy fire league. It’d be based upon cities and the amount of highly suspicious blazes they have.
I thought it up, so i’m taking Vegas, baby.
So after 9 months of construction, the loss of the 122 unit complex amounted to “at least $6.6M”. That makes it $6.6M/122 = $54k average per unit. You’d think they would estimate it higher if it was insurance fraud?
Or is all they managed to finish in 9 month the frame structure you can see in the picture? Even demolition of most of the foundation and rebuilding that plus the frame would be higher than $54k per unit, wouldn’t it? Strange.
motorola to layoff 3500
http://biz.yahoo.com/ap/070119/earns_motorola.html?.v=11
rising layoffs=rising homeprices
it is a brave new world
And Pfizer too. Big time layoffs too.
I missed Pfizer, do you have a link as to the number and locations?
Neil
Time Inc announced 289 layoffs yesterday, This is in addition to the December layoffs of 80+.
Pharmaceutical company Pfizer says it is likely to cut thousands of jobs under a strategic restructuring plan it will announce next week.
http://www.ere.net/inside-recruiting/news/awaiting-pfizer-cuts-business-expert-says-180142.asp
Technicolor in Camarillo announced it was laying off 650 employees and shutting down it’s 500,000 sq. ft. facility yesterday.
Luxury wrapped in gridlock
http://tinyurl.com/2ec7ol
Wow. I used to work for the owner of that property. Was wondering what he was up to these days…must be nice to be rich.
Here’s a story about a fire in a condo complex which was under construction in distant Escondido, a suburb of San Diego. In the past, people who lived all the way out in Escondido couldn’t afford to live in SD. $400,000 for a condo WAY out there? Tell me this wasn’t arson. That’s one way to get rid of the units…notice how fast the blaze went up.
Fire levels condo development
Escondido chief describes blaze as city’s biggest ever
By Kristina Davis
and J. Harry Jones
UNION-TRIBUNE STAFF WRITERS
January 19, 2007
EDUARDO CONTRERAS / Union-Tribune
Fire yesterday swept over a 122-unit Escondido condominium development that was considered to be a centerpiece of downtown redevelopment.
ESCONDIDO – A monstrous blaze devoured a multimillion-dollar condominium development yesterday afternoon in what a fire official called the largest structure fire in the city’s history.
Flames towering 100 feet jumped from building to building, engulfing the complex before firefighters had a chance to put water on the blaze.
The fire started at 1:35 p.m. at The Paramount, a 122-unit complex near Washington Avenue and Escondido Boulevard that has been under construction for nine months.
The complex of loft-style homes priced in the $400,000 range was to be a centerpiece of downtown redevelopment in Escondido. It was part of a plan to add 2,000 condo units. The Venue, a neighboring condo complex also under construction, was not damaged, city officials said.
Council members won’t let hopes for new downtown go up in flames.
“This is the largest structure fire we’ve ever had at this point,” Escondido Fire Chief Victor Reed said.
Four buildings, which were under various stages of construction by D.R. Horton of San Diego, burned to the ground at an estimated loss of at least $6.6 million, Reed said.
Firefighters were able to save the fifth building, which was near completion and almost ready to be shown to prospective buyers.
Firefighters were allowing two buildings to burn themselves out late last night.
“The heat was so intense, I had to back up,” said Joel Brown, an Escondido resident who headed toward the towering plume of smoke out of curiosity. “There were golf-ball-size embers coming down at one point.”
Fred Tobin, 48, of Escondido was sitting in Signature Bagel looking out the window when he saw a puff of smoke come from the top floor of the southwest corner of the building closest to Centre City Parkway.
“Within five minutes that whole building was totally engulfed,” Tobin said. “I’ve never seen anything go up that fast. This was unbelievable.”
Fire officials said the lumber used to frame the buildings was a tinderbox .
“That’s one way to get rid of the units…notice how fast the blaze went up.”
Wouldn’t it be interesting to know how the insurance settlement works out?
Getstuck-Sorry, didn’t see that you posted it first. There is NO WAY that is not arson. A fire in the middle of the night that had the building totlally engulfed in 5 minutes.
Strange thing…the fire started in the middle of the afternoon, just before 2:00 p.m.
Weird that none of the construction workers saw anything, no?
http://www.gazette.com/display.php?id=1328957
Two low-lifes just caused an apartment fire in Colorado Springs that burned down 135 units and caused at least one death.
Double, double, toil and trouble,
presses print and markets bubble…
————————————————————————————
Unease bubbling in today’s brave new financial world
By Gillian Tett
Published: January 18 2007 17:45 | Last updated: January 18 2007 17:45
Last week I received an email that made chilling reading. The author claimed to be a senior banker with strong feelings about a column I wrote last week, suggesting that the recent explosion in structured finance could be exacerbating the current exuberance of the credit markets, by creating additional leverage.
“Hi Gillian,” the message went. “I have been working in the leveraged credit and distressed debt sector for 20 years . . . and I have never seen anything quite like what is currently going on. Market participants have lost all memory of what risk is and are behaving as if the so-called wall of liquidity will last indefinitely and that volatility is a thing of the past.
http://tinyurl.com/ysgf9b
Blah blah blah. He should sign onto Minyanville and read what John Succo is writing on that subject.
And here’s the latest from Tucson…
http://www.azstarnet.com/business/165292
Judging from that pic, I’d say Susan Bies is bullish on Big Macs too!
just gotta love those who can interject cynicism towards those who’s physical appearance may not be to “THEIR” liking….get real will yeah!
http://www.youtube.com/watch?v=QG8WUpHdpVA
“The nation’s housing correction was “badly needed,” she said. Nationally, while less then 10 percent of homes are usually bought by speculators, during the run-up that figure increased to up to 40 percent in some areas.”
So I guess she is saying she is not in favor of reflating the bubble if the housing market crash continues. Because that would encourage speculative buyers to continue keeping that percentage of speculative purchases near 40 percent, and simultaneously perpetuate the shortage of homes for families to live in as owner occupants.
The weather explains everything, and it’s all good.
Global warming is good for the world economy, but bad for the Wall Street cargo cult’s rate cut hopes!
———————————————————————————
CAPITOL REPORT
Economy stronger, but is it just the weather?
By Rex Nutting, MarketWatch
Last Update: 4:34 PM ET Jan 18, 2007
WASHINGTON (MarketWatch) — After a weak patch in the fall, the U.S. economy is heating up. Job growth, retail spending, industrial output and even the housing market have all perked up.
What’s not clear is whether it’s just the warm weather we’ve been having or whether the economic fundamentals have improved.
“This could be the first sign of a recovery [in housing] — or a blip,” wrote Gabriel Stein, an economist for Lombard Street Research, in a research note.
November was about 2 degrees warmer than usual, while December was 4 degrees warmer and the warmest in 50 years. Temperatures remained mild in the most of the East for the first half of January as well.
The calendar says it’s winter, but tell that to the cherry trees blooming in Washington and to the construction workers busy starting houses in New England.
The economy has certainly benefited from the warm weather. Energy prices have tumbled on reduced demand, freeing up cash for other purposes. Ground-breaking on new homes increased in November and December. Fewer workers are losing their jobs.
Some of the boost from the weather is real, but some of it is economic activity that’s just been borrowed from the spring months. We probably won’t know for several months how much it is real and how much of it is just people taking advantage of a few warm days to do now what they planned to do in March.
Whatever its cause, the burst of economic activity has lessened the pressure on the Federal Reserve to cut overnight interest rates to stimulate the economy. In essence, warm weather, falling gas prices and lower long-term interest rates have provided the stimulus many thought the Fed would have to provide.
http://tinyurl.com/3xop3p
They are serving koolaid to the poker players at Ocean’s11 casino in Oceanside. 3 guys I was playing with last night (they were together) were trying to convinve people that they needed to quit there jobs and get into real estate/insurance. There scam is to purchase real estate and then front load their deserved equity into life insurance policies. I wonder how much home equity has ended up going this route??
random thought - could another tech bubble be the last refuge of the last several years of liquidity???
Someone in my building recently posted a flyer advertising a 1br condo for $300K. I am sooooooooooo tempted to go down tonight and write on the flyer something like:
Mortgage payment (30yr at 5.75%) = $1750
Taxes/assessments = $500+
Total = $2200+
———————-
vs. Rent = $1100-1200
It is an updated unit and that is about market-clearing rent. I actually pay a good bit less in the same building. Someone talk me into or out of doing this.
I think you should do it. And use a red magic marker to do it.
Do it! But make your own flyer and post adjacent, rather than deface the existing flyer. I’ve thought of doing similar things in condo developments where multiple flippers are struggling to unload.
I would do it. in my building i always put some smart remark on the open house flyers in the laundry room of the building
those figures would go over the head of the average “imustbuildequityrobot” anyhow
Just write on it:
“Free Tickle-Me-Elmo & PS3 if you sign by this weekend”
You also gain the chance to have an underwater mortgage. Try doing THAT as a renter!
Regulator says Fannie Mae posted 3Q loss on GAAP basis
By Damian Paletta
WASHINGTON (MarketWatch) — Fannie Mae (FNM) saw a loss in the third quarter of 2006 on a GAAP basis, said James Lockhart, director of the Office of Federal Housing Enterprise Oversight, which regulates the safety and soundness of company.
Jim Vogel, an analyst at FTN Financial Capital Markets in Memphis, Tenn., predicted the loss to be around $400 million, based on OFHEO’s capital classification released Dec. 28.
Lockhart made the comment during a meeting with reporters to discuss his agency’s agenda for 2007 and his concerns about how long it is taking for both companies to recover from their accounting scandals.
“Their ongoing business shows some volatility that we have to be aware of,” Lockhart said. “On a GAAP basis, for instance, they both lost money in the third quarter.”
Fannie Mae had not previously disclosed the loss.
http://tinyurl.com/2bupa2
everyone there is getting a raise-why should they care
Sorry if this has already been posted.
http://www.federalreserve.gov/boarddocs/speeches/2007/20070117/default.htm
Remarks by Governor Frederic S. Mishkin
At the Forecasters Club of New York, New York, New York
January 17, 2007
The Role of House Prices in Formulating Monetary Policy
————
I’ll have to read through it again and diagram a few sentences to attempt to understand it. Seems like he’s in favor except when he isn’t. And he isn’t in favor except when he is.
A summary might be: Don’t try to detect asset bubbles in progress because you can’t. Instead, be prepared to “act quickly” when they pop. (Quicker than the Japanese central bank.)
Of course, the wind might have disturbed my tea leaves and I might have misunderstood some of that.
‘Don’t try to detect asset bubbles in progress because you can’t. Instead, be prepared to “act quickly” when they pop.’
Greenspeak translation: Keep buying, speculators, because we are going to pump in liquidity like crazy when this thing really tanks.
A soft landing is in the bag (but ignore the outline of the elephant hidden under the living room rug, please…).
———————————————————————————-
Builders look for 2007 housing recovery
By John Spence, MarketWatch
Last Update: 3:01 PM ET Jan 18, 2007
BOSTON (MarketWatch) — Homebuyers have been backing out of sales contracts and forfeiting their down payments during the housing slowdown, but cancellation rates should steady in the first quarter and taper off later in 2007, said the chief executive of one of the nation’s largest home builders Thursday.
“Cancellations are likely to stabilize and stay level this quarter, and then decrease,” said Ara Hovnanian during a Web cast of a real estate conference sponsored by Deutsche Bank in New York, adding cancellations should get back to “normalcy in a quarter or two.”
The Hovnanian (HOV :Last: 31.99+0.51+1.62% 11:09am 01/19/2007) CEO said many cancellations are for older contracts signed when the market was booming and home prices were rising. He said one way the company is avoiding cancellations is to negotiate with buyers at the closing table.
“We don’t like to do it, but it can prevent cancellations,” Hovnanian said.
Home builders have been reporting surging cancellation rates driven higher by sagging consumer confidence and difficulty in selling existing homes.
When asked to pick an indicator he’s looking at to spot a potential bottom for housing, Hovnanian said “we’re watching [home] resale listings, which is something we never used to focus on.”
Home builders face an inventory glut sparked by overbuilding and speculative demand drying up, but are hoping the spring selling season can jumpstart a recovery in 2007.
“The time between Thanksgiving and the Super Bowl is a slow time, so it’s difficult to gauge anything,” Hovnanian said. “We’re waiting to see if things stabilize.”
Meanwhile, Toll Brothers Inc. (TOL :Toll Brothers, Inc Last:32.42+0.75+2.37% 11:09am 01/19/2007) Chief Financial Officer Joel Rassman said the speed of various markets’ recoveries will depend on the amount of “speculative” building and the use of incentives.
http://tinyurl.com/2b5tdk
Here’s another wowza foreclosure. DeSoto, TX (really pretty area south of downtown Dallas, shunned by the Plano snobs though). Owned by Accredited Home Lenders (LEND). Dallas County tax appraisal: 350K. Offered at 280K and I’ll bet you could get it for quite a bit less.
MLS #: 10674790 on Zip Realty (10 pics)
I guess you could say I’m a troll sometimes. I take postings on craigslist, and re-post them with lots of comments about all the issues of the market, that I’ve learned from the various blogs and news stories over the past 3 years. My hope is to get people to step back and question the market.
After totally ripping up a rent-to-own posting, yet again, I receive someone interested in the property. I mean, you can see the posting at http://norfolk.craigslist.org/apa/264401445.html … It can’t be any clearer that it’s not legitimite. Of course the email from a mother looking for a place for her daughter/husband/kids or whatever, with bad or no credit. Totally serious, oblivious to the meat of the post.
I think it’s hopeless. I think the average intelligence of American citizens is just too low, and that the rich will be able to take advantage of them forever, weather it be from Payday loans, rent to own or no credit/bad credit car loans. I just saw the movie Idiocracy, and well, Mike Judge summed up some of my fears of the future.
Wait until you see “Maxed Out” which is coming out in March, I believe.
It’s been removed — can you summarize it a bit further for those of us who missed it?
Specifically it said things like “Don’t waste your money only renting, and buy this mediocre house at an obnoxious price at the peak of a housing mania like no other that has ever hit the US! True, chances are you will never own this, because we will screw you out of it somehow. Heck, it might get forclosed out from under us, while your renting it trying to buy it.”
And someone responded, interested.
I saw the trailer for Maxxed out, and I can’t wait. I’ve got a number of documentaries including The Corporation, American Jobs, various Walmart ones, various Robert Greenwald films regarding the war in iraq, Return to Suburbia and others. I’ve actually read a book called Credit Card Nation a few years ago that went into history and details on credit cards, and some of the tactics. The credit card companies are running out of consumers. College kids were the growth market, now tapped out. Then senior citizens. Now illegals. Capitalism requires constant optimization for profitability and the bottom line, and growth (to satisfy the stock market.)
Just to make sure I understand: you disparaged the advertisement, and a potential customer emailed you their interest, instead of the advertiser?
So basically, you have saved a baby seal from the club.
(Unless it figures out how to get in touch with the clubber itself.)
Ha ha ha … read these msn story names in order.
# How I lost my home: 3 stories
# When mortgage firms don’t play fair
# MSN Money: 9 options if you’re facing foreclosure
# Talk about it: Are you afraid of losing your home?
# 3 scary mortgage scams
# MSN Money: 5 tips for tapping your home equity
The last one in the face of the ones before it is funny.
“Tap your home equity before you home taps your equity…”
Affordable home woes in SF — I feel sorry for this person. And, while the article doesn’t make this clear, I think she must have an ARM, as well — judging from the payments. Rising condo fees are slamming her now.
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/archive/2007/01/19/carollloyd.DTL
Barbara Hernandez was like thousands of other lifelong renters in San Francisco: a native whose modest income made her desire to stay in the city relatively dependent on a rent-controlled apartment. Then, at the age of 50, she won a homeownership lottery and her prospects seemed utterly changed ……
…… Two years later, her dream of homeownership has turned into a complicated morass of unpaid bills and anxiety. Last year, she was slapped with a $4,000 assessment (an extra fee) for unforeseen building maintenance. She gave up her treasured Giants season tickets and sent the homeowners association a partial payment with a letter explaining that she didn’t have the $4,000 immediately available. For the next nine months she received notices from the HOA that she was accruing $300 per month in late fees.
Association dues are the new rising rents (or for CA condo owners who thought Prop 13 protected them, the new tax increases). Own now, and get priced out of your home forever.
My favorite quote in the article (Hernandez): “Why would anyone ever buy a house if they could lose their down payment?”
There are going to be a whole lot of people asking themselves this same question in the next two years…
http://sandiego.craigslist.org/rfs/265087833.html
$349000 *********3 bedroom 1175 Sqft!! We need an offer to avoid Foreclosure (San Diego) pic
= $297 / sq ft
Any one know the national average for cost of an exisitng home per sq. ft.? Recently told it was $200 per sq ft. to build a new home not taking cost of land into account (that was last fall). Where to check this data on the internet would be welcome info.
Interestingly, the dirt patch behind the house is more attractive than the living room in the 2nd photo!
That’s about what $300/sq ft will get you around SD — a nice looking dirt patch.
Homeless in Vernal UT, thanks to the oil price bubble…
http://marketplace.publicradio.org/shows/2007/01/18/AM200701181.html
Here’s your next bubble. We’re long beans and corn in this “shoppe.”
http://www.nytimes.com/2007/01/19/business/19futures.html?ex=1169874000&en=d5ab8da7a80e1c74&ei=5070
Maybe this year will be OK for the grains but farmers up here in central Illinois have proved that they can produce when it pays to do so.
Through the Looking Glass:
http://wallstreetexaminer.com/blogs/winter/?p=335
“The FCB buys were all into housing agencies, and in fact they sold $0.8 billion in Treasuries over the two week period to buy $5.7 billion worth. The story rarely mentioned is how FCBs now have 34.24% ($607.2 billion) of their holdings in housing agencies. This compares to 24.6% held in agencies at mid-year, 2005. In fact $252.7 of the $322.7 that FCBs have added to total custodial holdings since then have been housing agencies. Mid-2005 corresponds to the peaking of housing prices suggesting that the underlying collateral, and ultimately credit quality of the vintages that FCBs have purchased are suspect. Looks like the master plan is to make them the ultimate bagholders?”
Why would a FCB want to try and catch falling MBS?
Stock bears be sure and read this. Luskin has been a consistent bull for years:
http://www.smartmoney.com/aheadofthecurve/index.cfm?story=20070119
A housing bear has to love the gloom-and-doom tone:
“Let’s pass over the matter of what the heck atomic scientists know about climate change. Nothing, basically. But when it comes to hopping on a bandwagon of hysteria, everyone is welcome.
Fed Chairman Ben Bernanke was in a doomsday mood, too, testifying before Congress on the long-term budget outlook for the United States. All I can say is he made global warming look good. With any luck, we’ll all drown in melted polar ice water before spiraling Social Security and Medicare obligations melt the economy.
But the real end of the world Thursday was something else entirely. It was when the Democrat-controlled House of Representatives voted to raise taxes. It’s the first time the House has voted to raise taxes in 13 years.”
“But the real end of the world Thursday was something else entirely. It was when the Democrat-controlled House of Representatives voted to raise taxes. It’s the first time the House has voted to raise taxes in 13 years.”
It’s going to be several warm fuzzy cozy years under them. I already loaded up on assets that I won’t unload until after those clowns return control back to the Repubs in 2013 (Post Hillary-Obama). Then in 2014 when we get the Repubs to abolish capital gains taxes altogether, I will cash out and buy RE.
Don’ worry, Bill. Hillary is not electable. But then on the other hand, Dan Quayle was VP — go ahead and worry!
Here’s a fun game for ya… I (being obsessed ), check ZIP Realty daily in an area about 2 miles around 90048 (L.A.). Since the first of the year, about 1-2 houses a day get listed in each of about 10 zip codes. for these, I click the “estimated value” link to see recent sale prices. the vast majority of new listings were bought in the last 2-3 years. Of course, they’re asking more than they paid, but in a lot of cases… not that much (ex- paid 1.3 million, asking 1.45). IMHO, this ain’t gonn work out too well for them, since houses similar to these higher priced ones (owned for longer) are coming on at just over 1 million or less. Try it in your nieghborhood. Flippers trying to “beat” the Spring rush?
For the SF Bay Area, I searched the keywords on Craigslist to see what are the main selling points of the various POS sh*tboxes listed. Here is the Top Ten Search terms I came up with:
10. Foreclosure - 59 entries
9. Equity - 83 entries
8. Lease - 151 entries
7. Lighting - 453 entries
6. Stainless - 670 entries
5. Ceiling fans - 678 entries
4. Cabinets - 871 entries
3. Remodeled - 997 entries
2. Granite - 1,225 entries
1. Hardwood - 1,310 entries
“reduced” was only 353 entries. Why advertise the obvious. The overused term “motivated” only mentioned 298 times.
When I searched there were 7,056 listings.
Here’s a low priced “bait-n-switch” ad on craig’s list; only $62k in SLO, CA
http://slo.craigslist.org/rfs/265373061.html
http://www.signonsandiego.com/news/northcounty/20070119-1352-bn19fire2.html
Decent-sized condo development up in flames in Escondido (North county, San Diego).
Arson, anyone?
Absolutely!
http://www.gazette.com/display.php?id=1329011&secid=1
Two career criminals and gang-bangers upset with a girlfriend set a fire that burned up the girlfriend’s apartment, plus 134 other units in the same complex. Two dead, so far, and over 300 who pretty much lost everything. Not arson for profit, just malicious rage with no regard for the lives of hundreds of residents. The local prosecutors had multiple opportunities to put these vermin away, but failed to do so.