Bits Bucket And Craigslist Finds For January 30, 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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a summary of an outstanding post from pimco on the liquidity impact on us assets / very very good
plus an video from a reit funds manager that offers a honest view on the mania
http://immobilienblasen.blogspot.com/
And now…for something a little different:
Posted at RumorMillNews:
THE CROWN, LAND, PROPERTY & FORECLOSURE
To this day the heirs of the owners that patented the original Virginia Company, to wit, The Crown and King James are the legal owners of the lands, so-called United States of America. Notwithstanding legal jibberish and doubletalk neither people nor corporate ‘persons’ can own land in the ancient customary sense.
The situation is comparable to a feudal system whereby tenant farmers lease the land. The hoax of course, is that purchasers imagine they’re securing ownership replete with papers detailing title. The reality is the USA is a feudal order: Life in the matrix causes the citizenry to image it’s free and and land can be owned forever. (Perhaps in a Republic, but the USA collapsed into a Democracy when its first Dictator Lincoln declared Martial Law).
The tenant, mostly via the use of The Crown’s fiat currency, and imagining he actually owns the land, proceeds to improve the land by sowing crops or building structures on said land. He often…
http://www.rumormillnews.com:80/cgi-bin/forum.cgi?read=98759
Someone on that site needs his tinfoil hat replaced, I think….
What would you call a system whereby you lose title/ownership/use of property if you fail to pay an annual payment to the government (and the gov’t determines the amount)? I sure don’t consider something “owned” if I have to continue paying money to keep it.
Then no RE is owned. You have to keep paying property taxes on an ‘owned’ house, right? If you don’t pay, they take it away.
I think you have correctly assessed the situation. All RE has an annual rental fee that comes in the form of property taxes. Don’t pay it and you will find out who really controls the property.
Don’t get me started on this again. Property tax is the scourge on all home owners. Sure, if the money was really used in an efficient way I would have no problem. We all need to use roads, etc. However, people would overcome those things just like they always have. Some dude(tte)s would get together and get a roda into their neighborhood. Same groupd would build a bridge. Hell, most people would actually do work that is productive and useful while getting som necessary exercise. Instead, we want some other fools to do the work (usually crappy, too) and get some protection while we go to watch Bailey and Hailey at the Karate Palace. Any place you have to pay or else lose it is not freedom. DOn’t get me started on this crap!
Move to Darfur…sounds like exaclty what you are looking for…well maybe not all the black people, but hey life is a series of tradeoffs right.
Reminds me of the fact that the only US embassy not owned is the one in London - currently under 999 year lease. The US tried to buy the property and the owner agreed if the US would transfer back a small piece of property owned by the US government property located in Florida. The US agreed subject to determining the property. The deal was never consumated because the US chose not to give up Cape Canaveral and chose to rent instead.
Hoz — I am very familiar with the London lease, and that is true, but I did not know that the “reciprocal collateral” was Cape Canaveral. Assuming that is true, even my wife won’t outlive the lease and see the eventual outcome of this stalemate.
–
As the year-end data for 2006 were released last week the two data points put a kibosh on Housing Has Bottomed:
New Completed SF Homes for Sale = 172K (All-time high)
Increase In Vacant Units, Year Round = 818K (All-time high)
Both suggest that lot more pain is ahead for sellers in 2007 than in 2006. No?
Jas
Yes
I HOPE! Lord know, I’ve bet virtually all on that being true.
UK housing news; apologies is this has already been seen:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/01/29/nhomes29.xml
no wonder that
Mortgage approvals fell to 113K in Dec down from 129K Nov, analysts expected 126
and this was before the surprise rate increase in jan.
yet Uk is up after 2004 dip ?
every housing related stock points to similar action here
At this point in time, it is indeed a nit, but shouldn’t the phrasing, instead of “People under the age of 35 who own their own home are now in the minority, because soaring prices make it impossible for young people to get on to the housing ladder.”
be…
“People under the age of 35 who want to own their own home have, unfortunately and in increasing numbers, borrowed impossible sums in the hope of doing so.”
Ha, proof that CA hasn’t budged on the bubble front:
http://www.realestatejournal.com/buysell/markettrends/20070129-fletcher.html
METRO AREA* 4Q 2006 4Q 2005 PERCENT CHANGE DIRECTION
St. Louis $858,500 $925,000 -7.2% [Down]
Edison, N.J. $875,000 $937,500 -6.7% [Down]
Miami-Miami Beach-Kendall, Fla. $876,250 $915,000 -4.2% [Down]
Chicago-Napierville-Joliet, Ill. $870,000 $900,000 -3.3% [Down]
San Francisco-San Mateo-Redwood City, Calif. $870,000 $888,000 -2.0% [Down]
Santa Barbara-Santa Maria, Calif. $910,000 $925,000 -1.6% [Down]
San Jose-Sunnyvale-Santa Clara, Calif. $849,500 $860,000 -1.2% [Down]
Riverside-San Bernardino-Ontario, Calif. $850,000 $858,000 -0.9% [Down]
Charleston-North Charleston, S.C. $937,500 $942,500 -0.5% [Down]
Nassau-Suffolk, N.Y. $885,000 $886,000 -0.1% [Down]
Philadelphia $900,000 $899,900 0.0% [Unchanged]
Seattle-Bellevue-Everett, Wash. $880,000 $880,000 0.0% [Unchanged]
Oakland-Fremont-Hayward, Calif. $870,000 $870,000 0.0% [Unchanged]
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V. $861,000 $860,000 +0.1% [Up]
Los Angeles-Long Beach-Glendale, Calif. $877,000 $875,500 +0.2% [Up]
Phoenix-Mesa-Scottsdale, Ariz. $887,660 $882,020 +0.6% [Up]
Atlanta-Sandy Springs-Marietta, Ga. $872,500 $862,600 +1.1% [Up]
Newark-Union, N.J.-Pa. $885,000 $875,000 +1.1% [Up]
Baltimore-Towson, Md. $889,330 $877,000 +1.4% [Up]
Sacramento-Arden Arcade-Roseville, Calif. $878,000 $865,000 +1.5% [Up]
Cincinnati-Middletown, Ohio-Ky-Ind. $925,000 $910,000 +1/6% [Up]
Dallas-Plano-Irving, Texas $889,200 $875,140 +1.6% [Up]
Houston-Sugar Land-Baytown, Texas $916,870 $897,750 +2.1% [Up]
Bridgeport-Stamford-Norwalk, Conn. $930,000 $907,500 +2.5% [Up]
Richmond, Va. $990,000 $960,000 +3.1% [Up]
Bethesda-Gaithersburg-Frederick, Md. $895,970 $869,000 +3.1% [Up]
San Diego-Carlsbad-San Marcos, Calif. $900,000 $870,000 +3.4% [Up]
Salt Lake City, Utah $929,670 $896,420 +3.7% [Up]
Minneapolis-St.Paul-Bloomington, Minn.-Wisc. $935,000 $899,000 +4.0% [Up]
Oxnard-Thousand Oaks-Ventura, Calif. $900,250 $865,250 +4.0% [Up]
New York-White Plains-Wayne, N.Y.-N.J. $906,750 $870,000 +4.2% [Up]
Santa Ana-Anaheim-Irvine, Calif. $917,750 $880,000 +4.3% [Up]
Areas with 100 or more “starter luxury” sales.
SOURCE: National Association of Home Builders
‘SOURCE: National Association of Home Builders’
Never mind that I have posted reports of six digit price falls over and over. Fraud, skyrocketing defaults. What flavor is your kool-aid?
Yes, as if we believe NAHB “official stats”.
Hey, let’s give lainvestorgirl a break: She did post a link to the article, even though the numbers she did post were a ridiculously limited subset of the market numbers, given by the NAHB, and also conveniently left off the preface:
In the fourth quarter of 2006, only 32 metro markets had 100 or more sales in the “starter luxury” category — new and existing single-family homes costing between $750,000 and $1.25 million-down from 65 markets in 2005.
So by definition, these are ONLY THE HOMES IN THE 750k-1.250M range! That practically lends itself to weird stats, since a house that sold for $780k in 2004 gets included, but if the new owner sells it off for $700k a year later, it’s NOT included?
There is a lot of good stuff in that article, though, even if it *was* based on the homebuilders’ reports. (And as I think Ben said once, go check out the whole article when you see a link, since what’s posted here is usually, and properly, just excerpts.) For example:
Nationally, median home prices during the same period fell 10%, to $225,000 from $250,000 the study showed. The National Association of Realtors, which tracks existing-home prices only and will release its fourth-quarter report Feb. 15, is projecting that overall median prices will drop just 3.9%, to $216,500, in the fourth quarter of 2006.
Ouch. All is not well in Medianland!
But then neither is all well in million dollar land. You can’t tell from the limited “price window” they used, but their statement that only half as many markets (32 vs 65) are selling 100 or more of these McMansions this year compared to last year is really telling.
Next I’d like to see any resale stats for the 100+ houses that sold in 2005 in each of those markets and see how they’re doing on a cost per sqft basis, meaning let’s compare apples to apples instead of last year’s apples to this year’s pears.
I agree that that’s the weirdest statistics you could dream of. So they look at the median price in the 750k-1.250M range? What the hell is that supposed to tell us? It’s almost a random number between 750k and 1.250M. If all the 1.250M - 1.500M houses in San Diego dropped to 1.2499M, then this wacky median would go up….
OB_Tom — Excellent point! Changes in the median on a price range are completely impossible to interpret through time if they reflect the price of different houses in each period, which is probably why the NAHB (and LaInvestorGirl) like this statistic so much…
New home builders can, and often do, report the sales incorrectly. They can do this by not including incentives (free upgrades) and/or price reductions (buy this weekend) in the sales price (not adjusting the sales price down) when they deliver the sales docs to be recorded. They can report whatever they want for the doc stamps and that is what is recorded as the sales price. The local government officials dont normally verify whether the numbers are right. And frankly, the government knows that this is going on, but the higher the recorded sales price, the higher tax property tax revenues they can expect. Many times, the builder gives an incentive to use their in-house lender, so it is easy to not include all the facts in the transaction. Again, the lender gets more money for a higher loan amount, so there is an incentive on their part to not adjust the sales price downward. So everyone in on the game has an incentive to keep the prices up and make it look as if the market is not tanking, for as long as possible.
New home builders can, and often do, report the sales incorrectly. They can do this by not including incentives (free upgrades) and/or price reductions (buy this weekend) in the sales price (not adjusting the sales price down) when they deliver the sales docs to be recorded. They can report whatever they want for the doc stamps and that is what is recorded as the sales price. The local government officials dont normally verify whether the numbers are right. And frankly, the government knows that this is going on, but the higher the recorded sales price, the higher tax property tax revenues they can expect. Many times, the builder gives an incentive to use their in-house lender, so it is easy to not include all the facts in the transaction. Again, the lender gets more money for a higher loan amount, so there is an incentive on their part to not adjust the sales price downward. So everyone in on the game has an incentive to keep the prices up and make it look as if the market is not tanking, for as long as possible.
900k in Cincinnati, Baltimore, and WV? Doubtful
We’ve (Balto) got the new Ritz Carlton Condos downtown that are supposedly selling and skewing the sales #’s in the city.
I meant prices, not sales #’s.
Yeah right!! Fraud.
Well, well, well…look who came out of the woodwork.
on the local news in nyc last night
nassau county foreclosures up 82%
everything is just fine all the buyers will storm the gates
after the superbowl i am sure
–
Foreclosures would be the big stroy of 2007. That (the news) is what is going to trigger the recession led by drop in consumer confidence.
Jas
i agree, when the masses get wind of all the foreclosure activity they may think twice before diving in headfirst into a pool with no water (a no down i/o liar loan scenario)
Where is a good place to get official nationwide foreclosure statistics, including history?
I’ve been keeping track the last few months on foreclosure.com and emailforeclosures.com, but that’s obviously not official, nor do I have a long-term history. That being said - I’m *shocked* at the increases just over the last few months in some states -
(numbers from mid-month, from foreclosure.com) -
CA Nov 5635
CA Dec 6939
CA Jan 8149
VA Nov 771
VA Dec 906
VA Jan 1079
FL Nov 1234
FL Dec 1386
FL Jan 1574
That’s generally a 30-40% increase in just two months!
And the numbers continue to increase exponentially - e.g. CA is now 9345, just two weeks later. Is it really *this* bad? If so, then why the heck isn’t this making headline news every day??!! I see no way out of a deep recession, or depression, in the very near future, if these numbers are even a reasonably accurate representation of what’s going on.
The trick to interpreting them is remembering that they are sort of like the rate increases in 2004, sure short term rates doubled, but it was pretty meaningless because a) they were so close to zero that even a tiny increase doubled them and b) they remain well below historically normal levels. The game begins to get interesting when they reach high levels and that’s when things might get a little exciting outside blogland.
Here’s what’s going on in a lot of Florida homes right now I suspect:
“What is the name of your state? FL
I’m from FL.
I’ve read a lot of the posts here and respect the advice of the forum. I have a couple of questions about Chapter 13. I make over 50K, so I think Chapter 7 is out. I had a real estate deal gone bad. I bought a house and construction was slowed down because of the hurricanes so I had to buy another in the mean time, when it came time to close my wife didn’t want to move, so we tried to rent or sell it. A year later no luck. Now the bank is going to foreclose on it, and to top it all off my mortgage payment on my primary now went up $500 and month because they didn’t calculate the taxes correctly. They used the value of the land only to get me to qualify for the payment knowing that they wouldn’t hear about it until a year or more later. There is also no way I will ever be able to sell my primary no because with the taxes and insurance having gone up so much, and the properly values have gone down ( my neighbors house is better and they had to sell it for 150K less than I paid) I will never get close to what I owe. I’ve had some good real estate deals in the past, and was able to cover my mortgage for year, but have put everything I had into it. I do have some unsecured debt, but could pay all of it if I had to. Can I get out of my primary, and what happens to the primary if you are behind and want out, or stay? With my investment house, I don’t know weather to let it go into foreclosure. I can’t catch up with the payment and I’m concerned about get a judgment that I will have to pay for the rest of my life, because that will never sell for what I paid for it, and at a foreclosure sale that will never get ½ of what I own. I’m really ready to go back to renting until the market stabilizes, but who will rent to me if I have a foreclosure and a bankruptcy? Thanks, Richard”
Link to this sad story here.
Whoa…wait a minute. Sad story? Read this comment again, “I bought a house and construction was slowed down because of the hurricanes so I had to buy another in the mean time…” HAD to buy another home while waiting for yours to be built? HAD to? Come on.
A real estate flipper who’s deals have caught him.
He’s trying to “sell” the story as a poor guy caught up in things beyond his control………..so typical!!
A real estate flipper who’s overzealous deals have caught up with him.
He’s trying to “sell” his sad story as a poor guy caught up in things beyond his control………..so typical!!
I don’t buy it. He tells about his “primary” and “investment house”, so we know what he’s been up to.
A real estate flipper who’s overzealous deals have caught up with him.
He’s trying to “sell” his sad story as a poor guy caught up in things beyond his control………..so typical!!
I don’t buy it. He tells about his “primary” and “investment house”, so we know what he’s been up to.
I was more focused on, “…when it came time to close my wife didn’t want to move…”
There has been a fair amount of debate here about whether females exert undue pressure to buy houses in, presumably, unfavorable markets. This seems to be another example. Examples to the contrary are welcome, though those in the first person would seem to have somewhat less credibility.
I’m concerned about get a judgment that I will have to pay for the rest of my life, because that will never sell for what I paid for it, and at a foreclosure sale that will never get ½ of what I own
Perhaps you might have considered this scenario BEFORE you decided to become a McTrump? I predict you will spend many years renting and living the life of indentured servitude.
I’ll give you the benefit of a doubt, jstab, and assume you were being facetious when you used the word “sad” to describe the ridiculous, and might I say, predictable, predicament that idiot got himself in.
No doubt a lot of Floridians got set back on homes they purchased a couple years ago. In fact, it happened to an aunt and uncle of mine.
But my aunt and uncle are quite a bit smarter than this sad sack. They sold their house in CT. and when the FLA. house was delayed, they rented for a year ,then moved in with my parents for a few months waiting for their house to be finished.
It was a hassle, but NOTHING compared to owning 2 houses at the same time. They are very happy in their new home now.
Renting and storing furniture was a minor setback in the grand scheme of things and , of course, their finances are completely intact.
Oh yeah, they got to rent a tiny apt. at the beach (studio!) which was a cool adventure for them for one year.
The only sad thing about that story is how stupid and irresponsible some people are. Now THAT’S sad!
The new fraud is apparently ripping off people facing foreclosure:
http://www.msnbc.msn.com/id/16875601/
I guess the theory is that those who signed mortgages without understanding the consequences will also sign other documents without understanding the consequences.
i read that yesterday, unbelievable
ripped off on both ends of the transaction
i hope karma catches up with these hucksters
Well FBs are a pool preselected for foolishness and desperation.
My take on the article:
These guys are smart a$$s:
they delayed foreclosure and won judgement:
the house price had 4 years to appreciate (from 2001 to 2004),
House appreciation will help to pay bankruptcy bills: happy ending ?
(or zero sum game at the end)
Someone please tell me, which one is Dolores and which one is Ivan? My eye doc told me I would develop cataracts — I suppose they’ve arrived.
On the serious side: The Eichers have lived in the house for 20 years, so it’s fair to presume they bought it circa 1987. From the photo, they certainly do not look like they blew their paychecks each Friday night on hookers and slots. As for valuations, we’re talking Nebraska, the home of no-boom-ever housing, as I recall.
Would a lurker-of-sympathy please outline a plausible scenario in which this couple could have ended up as the “victims” in all this? Please don’t leave out any details.
National data on rising home vacancy rates (via Angry Bear):
http://www.prospect.org/deanbaker/2007/01/housing_vacancy_rate_hits_new.html#015279
This is another piece of data in the “unprecedented” category.
Wow. A 2.7% vacancy rate for ownership units, vs. a historical average of 1.5%, with much of the jump in the past year. I guess those are the holdouts who will not sell at the new market price.
I went back and got census data for the NY metro for 1990. I’d say that year was to the prior housing bubble/bust here what 2006 was to the current one nationally. Ie. things started slipping but didn’t really collapse — the economic disaster of 1991 was the trigger for the real fall. Here is the data from the 1990 census.
New York–Northern New Jersey–Long Island, NY–NJ–CT CMSA
Owner occupied 3,373,702
Renter occupied 3,247,537
New York–Northern New Jersey–Long Island, NY–NJ–CT CMSA
For rent 168,879
For sale only 82,349
Rented or sold, not occupied 43,977
For seasonal, recreational, or occasional use 112,919
For migrant workers 517
Other vacant 66,861
Owner occupied vacancy rate — about 2.4%. About what it was nationally in the third quarter of 2006 (2.5%). We’re higher now.
Owning an empy house is like setting fire to your dividend checks.
This is the one thing that irks me about this bubble almost most of all.
We rent in a McMansion community in the Virginia exurbs of D.C. The original owners (homes built 2002-2004) paid 300-500K ($100 and less a square foot, which really isn’t terrible by CA standards).
Fast forward to 2007. The beautiful model here has been empty for 2 years, and neighbors have no idea why. Apparently the roofer for the builder owns it.
There is another couple who are leaving (for what appears to be permanently) for an overseas job with the DoD. Apparently their living expenses will be covered there, so they don’t care to sell their home back here. Although they tried, with a “wishing” price at least 100K over what the market will bear. They couldn’t possibly sell the home at a loss, considering their low purchase price a few years ago, yet they are stubborn.
So that will be two vacant McMansions on nearly the same block. The large house we rented last year (in another neighborhood) has also been vacant for nearly a year.
I can understand leaving a vacation home vacant. I can’t understand how it does the neighborhood any good to leave a house in a residential commuter neighborhood vacant.
Also, I don’t understand the foolishness of the owners. I am flabbergasted that they would think this a wise idea. It will take years of price declines for them to wise up about a non-income producing “investment”.
I see this quite often in my neighborhood in the Netherlands. I’m in a residential area with expensive mansions (I think they are called ‘canal row houses’ in the US). At least 20% of them are empty, some have been empty for years. A large % is for sale, sometimes already for more than five years. Most owners are asking at least 5x the price they paid for the home 10 years ago or so. Some of the homes are being converted into apartments in order to split the sales price into acceptable chunks (asking prices for these homes are 30-60x median income). As long as the ECB keeps pumping money into the market, home price appreciation more than offsets the carrying costs for the home (mortgage rates still extremely low over here) so people don’t bother finding a renter either. Renters are too much trouble, and no chance to find someone who will pay a rent that offers a decent return relative to the asking price. I guess that some of these homes are owned by the mob from Amsterdam (drugs money etc.) but you never know …
I’m curious what will happen when average sales prices in Netherlands start to decline (no sign of that yet, unfortunately); sellers here are definitely more stubborn than in the US.
Will the government buy those surplus homes through a plausibly-deniable back door route, maybe like injections of money into REITS or purchase of CSW options on the CBOE, in the interest of protecting recent price gains?
Good question I’ve also had thoughts about. You can bet your bottom dollar they have considered options close to your thoughts.
Condo Crazy in Galveston:
http://louminatti.blogspot.com/2007/01/condo-crazy-in-galveston.html
Might as Well Have Jean Claude Trichet & Bill Gross Write My Blog
http://wallstreetexaminer.com/blogs/winter/?p=374
“In reality though, a derivative is essentially a contract between two parties, to take the opposite side of or hedge against an event. For instance, one of the contracts that we have been following is default insurance on certain subprime mortgage cohorts such as BAA 2006-02. In fact an update on that one’s pricing seems in order, down quite sharply again. The contagion has spread to the subprime 06-01 (second chart) as well. And for those who think this is just a 2006 cohort subprime issue, here’s the latest foreclosure report from affluent New York City suburbs.”
Mish joked that Madame Merriweather’s Mudhut Malaysia owns the counterparty risk on these hedges. But I am wondering if it might not turn out in retrospect to have been taxpayers in first-world countries?
http://seekingalpha.com/article/25467
Vacant Homes on the Market Hit Record 2.1 Million
I’m seeking alpha in a few REIT shorts
Way to go ! Congratulation USA !
3 million vacant homes by year end ? Why not 4 million !
And only 300 billion left before the total US debt goes to 9 trillion. Next year ! 10 trillion !
GO GO GO ! Hip hip hurrah ! Hip Hip Hurrah ! Number one USA!
N.B.: Spoken by a Canadian.
Hey Chip,
it’s true, he claims to be a canadian, but no matter how often he’s asked, he has never posted anything indicating that he is really Canadian or knowledgeable about the Canadian market. Asked about sub-primes in Canada, his response…”the same as the US”. No way Jose…don’t know who he is/but it seems unfair to blame Canada.
Housing bubble domain name auction on Ebay has it’s first bidder! 5 housing bubble domain names including housingbubble.us and housingbubble.biz to name a few are being sold right now.
These are great domains for homebuilders to sell value priced condos or homes! Really! Standout above the other builders in your advertising campaign.
The first step is to admit a problem - and this may be the perfect step for the homebuilders. Hurry ends soon.
Click here for auction link.
Bidding is now up to $ .06 ! Yawn…
A number of posters have suggested ideas for how to preserve capital during the downturn that may be coming. I wonder what peoples opinions are on the Norwegian Krone as a currency which is likely to hold its value over the next few years. Norway is the only large western oil exporting state. It has a large (~$50B) trade surplus due to its oil and quite low unemployment rate. The central bank/government seems to be fairly committed to containing inflation and is in a rate pattern at the moment.
I have most of my savings in British pounds and have done well over the last 4 years but I am worried that Britain has many of the same problems as the US has: housing bubble, big deficits, trade deficits etc.
Ben also has a metals and currency blog. IMO the krona is better than many currencies; I also like the ruble. I like precious metals more than either. The value of this advice is exactly equal to its’ cost.
Price of a Troy Ounce of Gold in Mexico
Circa 1976: 1,750 Pesos
Circa 1990: 4,000,000 Pesos
Unless we are somehow immune to hyperinflation, just disregard.
And in Russia ? 20,000 rubles.
And in Venezuela ? 30,000,000 Pesos ? I don’t know the number. But you are have a darn good point. The same will happen in the “In God We Trust.” piece of paper.
krona, norwegian or swedish?
isn’t the canadian dollar also another currency that is a western country and exports oil(among other energy and commodities) too?
What about Canada? The largest oil exporter to the US, and is ramping up production due to massive investment in oil sands. Also a relatively speaking stable government with low debt, government surplus, and positioned for hard times with oil and gold resources. The only thing is it’s hard to say what would happen to the Canadian dollar if the US buck tanks.
I think Norway Oil has peaked and is on the downward slope, but I’m not sure.
It has. Like the oil and gas production in the UK. In Norway they still have left a good 20 years of it. After that fini. It’s the same thing in Alberta for conventionnal oil and gas, not more that 10 years of cheap reserves left. The tar sands are huge in theory but the production costs are going up and the environnemental mess will be incredible.
I would like to know more about the environmental mess about extracting oil from tar sands. Outside of Ben’s blog, there is just screeching and opinion. Plss tell us what is the truth about this.
I agree that the British Pound looks vulnerable by now. But I think Norway is vulnerable as well, being strongly dependent on just one commodity (oil). I would prefer currency of other commodity countries like AU$ (hard commodities) and NZ$ (soft commodities) - but at the moment these look pretty overvalued too (after last years decline there might be a second downleg coming). As for Canada the big question is what will happen there when things go seriously wrong in the US economy; sounds pretty risky to me as well.
Who (as a genre) always profit in the end, and never lose? The bankers. Where are the most bankers, relative to tax and governmental immunity? Svitzerland! Just don’t try to become a Swiss citizen. They don’t want you, they don’t need you and it ain’t gonna happen. But zey vish you all ze best!
If there are any EU-based Swiss lurkers on the board who wish to counter my observation/opinion, please reply in a thread “tomorrow,” as I am writing in eastern US time and am soon to retire for the night.
Switzerland and Japan are also the short currencies in the current carry trade mania. The last time it reversed the Yen strengthened considerable in a matter of hours.
Just a brief post from my blog on one of the latest indicators of home prices, and what it showed this morning:
One of the newest indicators of home prices is the S&P/Case-Shiller home price index. The index uses data from sales of individual properties. It attempts to improve on some of the other price measures out there, including the median price figures reported by the National Association of Realtors.
Anyway, in November, prices fell from a month earlier in 17 of the 20 U.S. metropolitan areas tracked. The U.S. composite index showed a -0.41% drop. That’s the fourth monthly decline in a row, following changes of -0.24% in October, -0.2% in September, and -0.18% in August. On a year-over-year basis, the index was still up 1.71%. However, the rate of appreciation has been slowing month-in and month-out and the gain is the smallest the group has on record (its index dates back to January 2001).
http://interestrateroundup.blogspot.com
pretty amazing that the drops are so tiny; I assume that this index takes the incentives on current new home sales into account?
Vacancy rates that are almost 50% higher than a year ago (2.7% vs. 2.0%, per Mike’s 1/29 post) are notable indeed. They portend both lower selling prices and lower rental rates. Deflation. Take that, Greenspan!
–
Found this gem:
“A report published in the November 24 [2002] edition of the New York Times, “Easy Credit and Hard Times Bring Foreclosures,” reports on conditions in Indiana, the state with the highest foreclosure rate.”
http://www.wsws.org/articles/2002/dec2002/fore-d07.shtml
US home foreclosures hit highest level in 30 years
By Shannon Jones
7 December 2002
Low wages, rising joblessness and predatory lending practices by banks and mortgage companies are contributing to a record number of home foreclosures in the United States.
…
One of the most flagrant offenders is CitiGroup, headed by Bill Clinton’s former treasury secretary Robert Rubin. In March the Federal Trade Commission charged CitiGroup with deliberately “steering” and “misleading” borrowers into accepting predatory loans.
It is alleged that CitiGroup, its affiliate Associates First Capital and sister company CitiFinancial engaged in predatory lending practices such as inducing borrowers to take out high-interest loans even though they qualified for prime-rate loans. It is also charged that CitiGroup engaged in another predatory tactic known as “flipping,” where borrowers are pushed into progressively higher-interest loans by repeatedly refinancing their mortgages. The bank is also alleged to charge “excessive and unjustified” fees and impose impossible loan terms that lead to foreclosure.
…
Powerful financial interests have intervened to block even token reform. For example, the Ohio legislature enacted a bill in February 2002 prohibiting local communities from passing laws against predatory lending.
-x-x-x-x-x-x-x-x-
Bankrupters and Fradsters of New York City (BFNYC) at work?
Jas
sounds like the right time to appoint Rubin as ambassador to some top EU bubble country (unfortunately for him, the post in the Netherlands is already taken, but maybe Ireland or UK would suit him?).
Very interesting. So in 2002 Ohio blocked passage of predatory lending laws and then in 2006/07 was one of the first states to begin passing such laws, right?
Who’s the biggest, baddest real estate agent in Tucson?
http://www.azstarnet.com/business/166805
You’ll enjoy the comments that follow the story.
Confirms my suspicion that the “biggest” agents use underlings to do most of their work. So you virtually never work with the “star” anyway. Reminds me of fraternity rush, when the gorgeous sweetheart puts the (very temporary) make on you.
Slightly OT, but if you live in San Diego, this will make you sick (unless of course you’re one of the developers runnning this city):
“After tomorrow, the 30 foot Coastal Height Limit is history. 01/29/07
by Pat Flannery
ITEM-331 (Amendments Related to Affordable Housing Density Bonus, page 34) on tomorrow’s (morning) City Council Adoption Agenda, is a sneak attack on Prop D, the 30 foot coastal height limit law.
The City Attorney’s Memorandum of Law (MOL), dated September 8, 2006, said that “the height limit set forth in Proposition D has previously been certified by the Coastal Commission as part of the City’s land use plan. The City does not have any authority to grant a permit that is not in conformance with that certified land use plan”.
Far from warning them (DSD) off, the City Attorney’s MOL told them what needed to be done. Betsy McCullough, the recipient of the Memo, and DSD staff, got busy. I doubt that is what the City Attorney intended.
Their Report to The City Council, 07-021, dated January 24, 2007, states in the last paragraph of page 4: “The ordinance approving the amendments to these regulations will be crafted to allow implementation in those areas of the city outside the Coastal Overlay Zone 30 days after the second reading by the City Council. Implementation in areas within the Coastal Overlay Zone will become effective upon the unconditional certification of the regulations by the California Coastal Commission” [emphasis added].
This means that DSD is putting us on notice that they intend to apply to the Coastal Commission for “unconditional certification” of their new height regulations, which will effectively neuter Prop D.
Proposition D became effective on December 7, 1972. It imposed a 30 foot building height limit within the City of San Diego’s coastal zone: “The Coastal Zone was defined in Proposition D as the area from the US-Mexico border to the northern border of the City of San Diego, and from the Pacific Ocean to Interstate 5.”
If the City Council adopts this Ordinance tomorrow, the developers will be able to circumvent the 30 foot height limitation anywhere, so long as they include a set percentage of moderate income units. Note the requirement is for “moderate”, not “low” income units. That will be easy for the developers to meet, and well worth it.
Developers will gladly swap an “inclusionary” housing element for unlimited building height. This single Ordinance, if passed, will change the face of San Diego forever. (Miami Beach?) If passed, it will demonstrate that the people of this city are no longer represented at City Council. The developers (and the unions) ARE the Government.
Don’t imagine for one moment that all the City Council members are not fully aware of what this Ordinance will do to our coastal zone. Here is what the actual Docket for tomorrow says:
“The proposed amendments to the Land Development Code would apply to the Coastal Zone, therefore the City Council’s decision requires amending the City’s Local Coastal Program. As a result, the final decision on the amendments to the Land Development Code and associated Local Coastal Program amendments will be with the California Coastal Commission. The City of San Diego must submit the amendments to the Land Development Code as an amendment for certification to the Coastal Commission. The amendment is not effective in the Coastal Zone until the Coastal Commission unconditionally certifies the amendment.” [emphasis added].
What could be clearer than that? That stuff didn’t just write itself. The clear intent of this City, through its City Council, is to abandon the 30 foot height limit all across the city, including the coastal zone.
The only thing that now stands between the final demise of our 30 foot coastal height limit is a Coastal Commission hearing sometime later. The developers will be there en masse with their highly paid propagandists. They will tell the world that they did it all for the poor folks. If they have got this far with little or no opposition, the Coastal Commission will be as snap. Nobody seems to care! That is what flabbergasts me!
“Comical” Jim Madaffer will be priceless advocating for the poor folks tomorrow. It would be hilarious - if it wasn’t so tragic.
He will tell us how our socially-conscious developers, the very engine of our County’s economy, have fought the “enviro-nazis” (to quote Doug Manchester last week) and finally busted that loathsome 30 foot height limit, imposed by narrow-minded, tree-hugging, welfare-sucking, liberal obstructionists, who just don’t get what real progress is all about. His nice builder friends will now be glad to include a number (the absolute minimum, of course) of “moderate” income units in their high priced skyscraper condos, so they can qualify for their well-deserved “height bonus”.
Ah! the genius of American business. It turns obstacles into opportunities. And what an opportunity low and moderate income housing has turned out to be! That wonderful State “Density Bonus” Law. Now whoever came up with that? A San Diego developer no doubt. What a small price they will have to pay for their vertical freedom (they’ll figure out later how to get around actually building these pesky units - plenty more genius left).
As a final gesture of defiance to us “enviro-nazis” (yes, you and I), the DSD staff wrote:
“If you wish to be noticed of the Coastal Commission hearing on this issue, you must submit a request in writing to the Development Services Department, Attention: Dan Joyce, Senior Planner, 1222 First Avenue, MS 501, San Diego, CA 92101 before the close of the City Council public hearing. If you wish to challenge the City’s action on the above proceedings in court, you may be limited to addressing only those issues you or someone else have raised at the public hearing described in this notice, or written in correspondence to the City at or before the public hearing.”
It is more painful every day to have to witness the steady destruction of everything that made this city the place of my dreams. I suppose I was blessed to be able to enjoy the last 30 years before the deluge. My children and grandchildren will not be so lucky.”
There goes Coronado.
There goes Coronado housing prices.
Coronado is not part of the city of San Diego. Coronado actually tried to pass a law making it illegal to split lots up in two, lengthwise. I’m not sure if it got shut down by lawsuits. They are trying hard to preserve Coronado.
If this new San Diego law is passed, the coastline from Imperial Beach to La Jolla will be very different.
After the tech bubble, with Enron and Worldcom, we got Sarbanes Oxley and investigations into backdating options. (after the damage was done)
After 9/11 we got the Depertment of Homeland Security, the TSA and war in Afghanistan. (after the damage was done)
After Hurricane Katrina we got $90 billion in aid for Louisiana, where was the aid for improved levys and rebuilding wetlands before the hurricane
After the real estate bust what will we get? Anti-usury laws, criminal investigations of sub-prime lenders, FBI investigations of mortgage fraud, tighter lending standards.
Government is always reacting to crises, not proactive to lessen them in the first place.
” After the realestate bust what will we get ?” How about a 60,000 plus recuitment pool for the forces in Iraq. You wont have enough jails to hold all the criminals , so just have them work it off in the army.
Dimon sees a sign of recession
J.P. Morgan CEO also says NYC’s place in world markets a ‘parochial’ issue
By David Weidner, MarketWatch
Last Update: 3:10 PM ET Jan 30, 2007
NEW YORK (MarketWatch) — Rising defaults in some of the riskiest home loans offered by J.P. Morgan Chase & Co. signal a recession may be looming, Jamie Dimon, the bank’s chief executive said Tuesday.
Dimon, speaking at Citigroup’s annual financial services conference, said high-risk loans - as measured by credit scores and loan-to-value ratios of 90% or more — make up 2% of the bank’s home equity portfolio, Dimon said according to a live webcast.
He also said defaults are rising at J.P. Morgan (3:20pm 01/30/2007 JPM50.12, +0.65, +1.3% ) “a little bit,” adding, “home equity is subject to deterioration” from a recession, but that the bank is well positioned to sustain a downturn in the economy. The bank has largely exited the subprime lending area.
http://tinyurl.com/2d4ajw
“…high-risk loans - as measured by credit scores and loan-to-value ratios of 90% or more …” This is scary because Morgan does not due sub prime. A high Risk loan for Morgan is 640 FICO, ‘A’ paper for many lenders. And many of the very best supercredits, borrow 100+% (knowing they can payback from their CD’s, money markets etc)
Others are starting to point out the foibles of this economy. I like the following analogy to being on a drunken binge.
“…But there’s an ill wind blowin’ this time around, or to put it another way perhaps, many of our proverbial 100 bottles of beer on the wall may have been taken down, drained, and have totally inebriated the asset markets to the point of preventing further significant price advances. Drunks do, after all, at some point stagger home, roll into bed, and at least sleep it off for a good number of hours. The suggestion of no more bottles of beer on the wall comes from several sources, the first of which appears in Chart 1 as a recent reversal in the trade deficit. While some of this improvement is due to the standard dollar weakness of the past 12 months and its dampening impact on imports, much of it is due to the decline of oil since August/September of 2006….”
http://tinyurl.com/2kfpnr
Bill Gross Pimco
“What would you call a system whereby you lose title/ownership/use of property if you fail to pay an annual payment to the government”
That’s why they call it (Spanish) REAL (ray AL) estate…literally “ROYAL Estate”, aka “KING’s Estate”. You don’t own it; the king just gives you certain rights to do stuff with it. If another army comes along and takes the land, well, then the new king is the one dispensing the rights of use. The land is not is not yours. If it was yours, it would be “personal property”, not “real estate”. It’s in the name…
Fortunately, Colonel Colt made us free.
There is an advertisement on a local radio station for a law group that wants to know:
“Have you refinanced into a Pay-Option loan recently?”
It seems that they want to go after loan originators, etc. for getting people into Option ARMs that really shouldn’t have.
The dogs of war have been released…
An update using figures from Dataquick:
LA County $/sq ft.:
Mar 06 : $400
Apr 06 : $395
May 06 : $399
Jun 06 : $405
Jul 06 : $401
Aug 06 : $405
Sep 06 : $397
Oct 06 : $396
Nov 06 : $398
Dec 06 : $399
(Sep 05 was $383)
What does this tell us…I don’t know, other than that the $/sq. ft. for LA county at the very least is not skyrocketing. Other than that, who knows? I don’t have enough data to tell what is trend vs. what is seasonal.
I’ve got the same data for specific zip codes in LA, if anyone is interested.
“My Currency is launching another take on the wisdom of the crowds, this time aimed at the real estate market. Unlike Zillow, My Currency derives its housing valuations from the marketplace of user opinions by having them assess properties as over or undervalued along with the strength of their conviction.”
http://tinyurl.com/3ey8g6
FWIW, my bet is that Castro is dead by March 31. A month later, tops.
Double double oil in trouble,
China stocks and housing bubble.
———————————————————————————————-
China right to worry about bubble trouble
Published: January 30 2007 22:00 | Last updated: January 30 2007 22:00
China probably does not have a stock market bubble yet. But when Chinese officials start to use the B-word – as Cheng Siwei, vice-chairman of the National People’s Congress, did yesterday – it is time for investors to worry.
In March 2001, Zhu Rongji, then China’s premier, warned that a bubble in the country’s B-shares was “un-avoidable”. It may have been unavoid-able but it was also unsustainable. There followed a crackdown on illegal bank loans used for speculation, reforms to the markets and a stock market slump that lasted for five years.
Now history seems to be repeating itself, especially in China’s A-share market, which is reserved for domestic investors. The Shanghai A-Share index went up by 138 per cent last year, rising at an ever faster pace as the year went on, with price-to-earnings multiples for some stocks reaching 40 or 50.
A fast-rising and highly valued stock market does not, in itself, imply a bubble. A bubble occurs when investors buy stocks, not because they believe shares are good value, but simply because their prices are rising. This can be rational behaviour if investors think that everyone else will do the same. But in the end the value of assets moves out of line with their fundamental worth, the supply of new buyers runs out and the bubble bursts.
The trouble is that it is impossible to know why investors are buying. It may be that they expect strong earnings in the future. In China, with economic growth around 10 per cent a year and structural reform ongoing, that is not an outlandish expectation. Valuations are high, but not yet ridiculous.
http://www.ft.com/cms/s/8a39fddc-b0a6-11db-8a62-0000779e2340.html