Bits Bucket And Craigslist Finds For February 16, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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bleak houses / who get caught holding the grenade (economist)
good summary of the sub prime mess
china raises the reserve requirements the 5 time in 8 month.
plus a must see from the daily show!!!!
please make sure you watch the video to see how 8.8 billion of physical $ …….disappear……. no copperfield needed…..
http://immobilienblasen.blogspot.com/
Rumours are that the GMAC, the affiliate of that bankrupted car manufacturer called GM, has lost 950 million $ with their loans in the sub prime market and is in great difficulty. Meanwhile Fannie Mae is going up. Don’t trust anything and anybody when it comes to real estate.
You guys are going to LOVE this.
Notice why she was unavailable for “services” for the past few weeks.
Actually, this is SO classic, I almost suspect that a HBB person put it out there.
DAP, is this you?
http://fortlauderdale.craigslist.org/ers/279111764.html
Umm, why were you surfing that particular category? LOL
Flagged that ad
Flagged it? Heck, I bookmarked it.
Prostitution ads are a CL TOU violation.
No wonder I never use Craig’s List. There are too many rules. She just seemed like a nice, young girl trying to make an honest living.
I believe in supporting small businesses.
Does your wife share that belief?
Oh geez, TX. You know I’m messing with you.
Does your wife share that belief?
That was my wife!
I dunno guys, woody took a look and went back to sleep. He didn’t say anything, but I’m thinking it’s the apparent razor thing.
A friend said that having sex is like cleaning your teeth. You can do it yourself once in the morning and once in the evening, but every six months you should pay a professional to get it done right.
I hope that you are just kidding. Americans have turned into a morally depraved population. Soon, they will have to confront material depravation. It will get ugly.
Jas
And the Islamic fundies agree Jas. I am wary of extremes on both sides of this “free love” issue. Given hedonism or the Taliban, I’ll take hedonism.
Me too.
Yes, our love of mini-skirts is emboldening the terrorists. And in fact mini-skirts actually use less material so they should align with the pending material deprivation.
–
“Given hedonism or the Taliban, I’ll take hedonism.”
Standard American response, like that of Pavlov’s dogs — trying to feel better by comparing againt the bad, or the worst. I only compare Americans against Americans’ past behavior.
I observe two types of trend behavior among “eductaed” Americans — moral corruption & moral bankruptcy to justify deceptive behavior. The most common problem is the intellectual prostitution. Housing Bubble has a LOT to do with it! Starting from the very top — Greenspan and Bernanke. The outcome is fairly predictable.
Jas
“Standard American response”
Standard human response…or are you saying that “the rest of the world” holds the moral and ethical “high road” over us silly Americans?
–
“Standard human response…or are you saying that “the rest of the world” holds the moral and ethical “high road” over us silly Americans? ”
Sorry, this is far more common among Americans than others that I have known and communicated with. I have had far better exposure to non-Americans, especially, Europeans, than most.
Jas
“Standard human response…or are you saying that “the rest of the world” holds the moral and ethical “high road” over us silly Americans?”
Good for you, arroyogrande. The only thing wrong with the US is too much globalization and as a result we are way too exposed to cultures that ought to be allowed to go to hell in their own handbasket, instead of infecting the US with their own repressive free-for-all criminality all covered up with lectures on morals. We can thank our guvmint for that.
I just love all the finger wagging, drooling lecturing to US citizens coming from natives of other countries (most of whom want desperately to be here).
A little “put up or shut up” advice from Paul Craig Roberts to foreign finger-waggers:
“If the rest of the world would simply stop purchasing US Treasuries, and instead dump their surplus dollars into the foreign exchange market, the Bush Regime would be overwhelmed with economic crisis and unable to wage war. The arrogant hubris associated with the “sole superpower” myth would burst like the bubble it is.
The collapse of the dollar would also end the US government’s ability to subvert other countries by purchasing their leaders to do America’s will.
The demise of the US dollar is only a question of time. It would save the world from war and devastation if the dollar is brought to its demise before the Bush Regime launches its planned attack on Iran.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration.”
“Sorry, this is far more common among Americans than others that I have known and communicated with.”
So then the appropriate phrasing would have been “Just like a lot of Americans I know”, not “standard American response”. That phrase is just as untrue and inflammatory as “standard French response”, “standard Muslim response”, and “standard negro response”.
“I have had far better exposure to non-Americans, especially, Europeans, than most.”
Good for you. People should get to know people across the planet. Maybe it would lessen the chances of them uttering phrases like “standard [insert nationality, religion, or race here] response”.
Now, back to The Housing Bubble, already in progress…
Comment by KirkH
2007-02-16 07:52:21
Funny, kirkH! Followed your link…love the Mark Rothko with iron stamp-layered-in graphic. Looked faintly oriental. Did you create?
–
OK, people, Americans are BAD. They blame Chinese, French, Germans, Japanese, Muslims, etc., etc., mostly unfairly. These spoiled “we are morally superior” people have never taken the time to understand their own moral failings, which exceed those of most groups. Trying to feel better by putting others down, unfairly, is a big problem in America today. It creates hatred for certain group that are considered okay to target while others are PC protected, for the time being.
These things always end badly, especially, when economic times get real bad, as I fully expect. May not be a big problem today but it will be a big problem in the near future (over the next 5 years, for example). America’s economic elite, and not the “others,” are responsible for most of our problems today. And we have no recourse because they control the political process. They also feed us, using the Propaganda Machine, whom we should hate! Faux News is a fine example of that.
People are free to ignore my observations.
Jas
HELP!!!!!!!!!!
I’m a somewhat materialistic, formerly (but enthusiastically) hedonistic BAD American woman - with “heart of gold” tendencies - and I can’t get up!
I observe two types of trend behavior among “eductaed” Americans — moral corruption & moral bankruptcy to justify deceptive behavior.
So education is bad?
By the way, as someone who works with Europeans both in the states and abroad, I can assure you they are far more moral than Americans when it comes to sex. American’s preach purity and practice anything goes sex. Europeans preach anything goes sex, and practice the same.
Americans like to meddle (think of the young River Tam in the beginning of “Serenity”). I hope to see Rievers soon.
–
“So education is bad?”
Are guns bad? People forget that the most important role of education, formal as well as socialization, WAS to instill morality. People forget how important a role Puritanism, and the likes, played in the success of Western Europeans. It instilled physical as well as moral discipline among the masses and even those in power. Once stupid “educated” people “learn” that one can get far ahead with deception, in acquisition of Money and Sex, the society as a whole goes down hill. Yes, few always have and always will but when it becomes widespread, as it has in America over the past 20-30 years, it is bad for the whole society.
DECEPTIVE BEHAVIOR, MORE THAN IN THE PAST, FROM THE TOP TO BOTTOM, WAS THE MOST IMPORTANT FACTOR IN THE HOUSING BUBBLE.
Jas
“I just love all the finger wagging, drooling lecturing to US citizens coming from natives of other countries (most of whom want desperately to be here).”
Well said, ArroyoGrand!
–
“I just love all the finger wagging, drooling lecturing to US citizens coming from natives of other countries (most of whom want desperately to be here).”
Another standard American response! I am not lecturing anyone; I am simply pointing out a big problem that I observe. BTW, unlike some of you here I EARNED my US citizenship. It is disgusting to listen to intolerant Americans who were born here and invoke palce of birth when they can’t handle legitimate criticism. America has a moral problem, especially, at the top of economic power, and its consequences will become obvious in not too distant a future.
Jas
Jas, I get the feeling that you think morals are an absolute. They are not. Morals are transitory. As to your assertions, this is neither the place nor do we have the room to discuss the “success” of western Europe. I will say however that Puritanism stifled more than enhanced their prospects.
You know a lot of you are bashing Jas Jain. His delivery may be harsh. But if you’re honest and look at the facts without the emotion you’ll find he’s right. The corruption and moral failure runs from the White House in the current milking of Iraq to the illegal on the street burning out public services for everything they can. All the while countries like China, Russia etc are bolstering their international strength and position. America’s arrogance and greedy behavior will be our downfall sooner than later. I actually heard the other day that China believes they can beat us at war. Which led me to ask- When and how did that happen?? Don’t kill the messenger listen to what he’s saying.
No really, mrincomestream, I agree with Jas Jain - totally.
BAD American. No donut.
See? I got the “double J” memo!
Really, I just love to read his sermonizing and moralizing and pavlovizing…standardizing…”depravizingzz…zzz…zzzzzzzzzzzzz…dfjpoinvioaunbioabvnerpo
(oops sorry, my forehead just hit the keyboard)
So let me get this straight.
Americans have low morals.
Europeans, and the rest of the world, have higher morals than Americans.
The Housing Bubble is partly due to Americans’ ultra low morals.
Europe’s Housing Bubble makes Americans Housing Bubble looks rather paltry in comparison.
I dunno but somthin don’t look quite right.
“Jas Jain…if you’re honest and look at the facts without the emotion you’ll find he’s right.”
I don’t have a quible with him saying that some Americans are “bad”, my beef with him/her implying that Americans are “bad”, while the rest of the world population is not. I have to call “bullshit” on that one.
Oh, Jas is just back on his high horse again. His view of the world and americans from up there is and has always been skewed.
Jas, I appreciate your technical analysis…Top notch. Your social analysis, though, is too dogmatic, pedantic and generalistic.
If your other comments were as weird and skewed as your social ones, I’d have to accuse you of belonging to the tinfoil hat crew. Maybe it’s just a standard Indian thing, I dunno.
–
“Your social analysis, though, is too dogmatic, pedantic and generalistic. ”
That is because you have attained the wisdom that elludes me.
Jas
Can’t spel “eludes?”
Jas? WHo gives a flying f()ck what citizenship you earned?
It doesn’t make you any better than me for being born here.
Feel free to move back to wherever you came from and re-establish a fourth riech if you hate America that much.
I’m not going anywhere.
What’s the price of ‘roses’ in the Lauderdale area?
She was “doing some big real estate deals.” ROFL!
She was “doing some big real estate deals.” ROFL! Don’t flag this until the west coast folks get a chance to see it!
too late; it’s gone.
Damn….I hate missing all the fun
Mike,
Nope, not me. I couldn’t see the link (I’m at work) but I gather this poor soul is a “working girl”?
First,
Sorry if I offended anyone, I did not want to start a pro vs con of prostituion discussion.
Yes, DAP, she is a working girl who was “unavaible to see clients” for a few days because she was “conducting a large real estate transaction”.
Again, I was not trying to start a moral debate, only poke fun at the idea many of us have of “REwhores”. This was a real one, and that was my only intent/point.
It was just so classic how she put everything..
Oh well, I suppose it was probably a bad idea. For those who saw it; it was pretty funny though.
Maybe she was buying property. There was a very interesting piece on the History or Discovery Channel a while back about a huge U.S. government-run whorehouse in Hawaii during WWII. Seems the girls weren’t allowed to own property there, but they earned so much money and gained so much clout thereby, that they eventually were able to get the discriminatory home-ownership rules changed. They never worked out of their houses, and many of them became some of the richest people on the island.
Interesting parallel to the missionaries that ended up rich over there as well. Maybe this was the genesis of the “missionary position?”
Folks, maybe you could grab at least the text from these CL postings. They are always removed before I get to see them!
These CL ads get pulled quickly, so please try to include the text of the ad in your posts. By the time I saw your post, the ad had been nuked.
My FB buddy Bob walked off the only think he had going for him — his job. Thereafter, he asked his wife for a divorce. Now, he is awaiting foreclosure and preparing to file bankruptcy. The end.
Typical of that ez money type. Wonder if he can file bankruptcy (7 anyway). How much was he making at his job?
Roughly 70K. Not sure how far this is away from income mean in PBC. Questions: (1) What is the best order — divorce then bankruptcy OR bankruptcy then divorce? (2) What impact will bankruptcies have on future housing market? (3) Will increasing divorce rates increase or decrease future housing demand?
P.S. The guy is now looking for work in construction. Some people never listen/learn.
It doesn’t matter. I doubt he qualifies for chapter 7 there.
How many cans of worms can one person open and consume?
This is the end……….poor Jim Morrison…..
Lets hope your bud isn’t on Drudge in the next: kill em all bad real estate deal/suicide.
Breaking news. Jan housing starts down 14.3 pct. Where is the bottom Uncle Al?
Starts down 14.3%! OMG we’re running out of houses! Definitely a good time to buy.
Expect another big rally in the homebuilder stocks. That must be good news somehow. TOL will be up 5% as will KBH and PHM. WCI might hit 50 on this news.
Goldilocks is a skank.
Goldilocks is a skank.
Hmm “tasting” everyone’s porage, “sitting” in everyones chair, “sleeping” in everyone’s bed…..sounds kinky
It does not matter which way the housing numbers went, stocks would go up
Housing starts drop, good news that no more excess inventory in the pipeline, prices soon to rise, bubble idea a bust.
Housing starts rise, Homebuilders confident that housing on the upswing, no bubble worries
Housing starts remain the same, Homebuilders are now in a “normal” market, fears of bubble subside
Because of balance of payments, lots of US dollars are in foreign hands and those folks want to do something with it, so put it in the US stock market. To know the stock market direction IMHO requires knowing foreign investment psychology in a stock market they may not understand very well.
Nicely put Graspeer, there is no bad news in this economy, we have witnessed the end of economic history, its all onwards and upwards from here.
at least the Dutch stockmarket rallied immediately on this news …
That is just the sequential comparison. It’s much worse YOY. Starts down -37.8% and permits down -28.6%.
–
The Housing Has Bottomed crowd would have to wait until the starts get into 05.-1.0M annual rate. Once the depression takes root, it will fall below 0.5 million and stay there for few years.
Jas
“Beginning construction in the Northeast rose 8.9 percent.”
January here wasn’t all that bad. In fact, the first half was downright balmy. February, though, has been brutal. Let’s see how the national composite holds up next month.
Is it just me, or are Ben’s posts getting longer, not to mention the comments? Ben used to be 1-2 short articles, now he posts 5-6 in each entry. And the articles themselves are more substantive.
Not just you. Definitely longer posts by Ben and many more comments by posters.
I used to obsess about reading every post on every thread until I just couldn’t do it anymore. Got to the point I was only getting 2-4 hours of sleep per night! I wonder how people like GS manage to have lives and seemingly read/post all over here.
GS certainly is prolific, and he manages to maintain decent quality even with all the quantity.
Agreed!
GS brings a lot of good humor and insight to Ben’s blog.
GS is actually a computer program, running on some heavy iron in Duluth, MN.
“That does not compute.”
I think arroyogrande is on to something.
Housing starts figures for January were ugly with a capital “U.” Here’s my analysis…
http://interestrateroundup.blogspot.com
Anyone who wants to sugar-coat the housing industry’s state of affairs better look at this morning’s housing starts report. Construction of new single-family and multifamily properties plunged 14.3% to an annualized rate of 1.408 million units from 1.643 million units in December. The year-over-year drop was even more dramatic — 38%. Not only was January’s starts figure well below the forecast for 1.6 million, it is the WORST TO DATE for the down cycle in housing. It leaves starts at the lowest level since August 1997. Both single family and multi-family starts dropped.
Building permit issuance also dropped — 2.8% to 1.568 million units from a revised 1.613 million. Permits declined for single-family homes, but increased ever so slightly in the multifamily sector. Speaking of revisions to December data, they were mild on the starts front (+1,000 units), and a bit larger on the permits front (+17,000).
I’ve been saying it for a long, long time: The housing boom was the biggest in U.S. history in terms of construction activity … sales … price gains … and speculative buying activity. That has left us sitting with near-record levels of homes for sale — condos, town homes, single-family homes, you name it.
We had “see-through” office buildings in the commercial real estate boom that ultimately went bust in the early 1990s … and we have “see-through” condo buildings and subdivisions now. It will take quite some time to work through that inventory overhang, and one component of that are sharper cutbacks in new housing construction like we saw this month.
This needs to go to 500K per year or less as Jas points out. Those 500K starts need to be $75K-$150K starter homes…
exactly army, we need affordable houses no matter how small they are, and in a price range that is approximately 2.5 times the median income for any given area
how much starter homes can you make out of those 500K McMansions?
Yeah, $500K is ridiculous, but I’m not sure it’s possible to go overlow. I’ve been on building-cost.net (great site) where you can estimate the cost of building a house.
I calculated for a hypothetical 1100 sq ft simple house with 900 sq ft unfinished basement with “average” quality everything, placed in average Lancaster PA. The calculator said it would cost $127K just to build, no land.
So unless the price of materials (and labor) crashes, or deflation or other outside factor hits, I think we’ve seen the end of the $100K new house.
my view from Netherlands:
out of the total cost of a home something like 50% can be the land, the rest is building cost and some financing etc.. The building cost is at least 2/3 labor and at most 1/3 materials (unless it is something very special). Both land and labor prices are extremely inflated here; land prices are 5-10x higher than 20 years ago, and a construction worker in the housing market will produce a bill for his work that is higher than that of most people with an academic level job. I live in the most wealthy area of my town and the richest guy in the street by far (judging from his many cars like Maserati etc.) is a plumber. Two other very rich guys in the neighborhood have the same occupation. Many other construction workers (except for the youngest ones) live in big luxury villas at the edge of town. As for materials: if you read on a daily basis that people are stealing lightning rods, railway parts, bronze statues etc. to sell as scrap metal you know that something is wrong (it’s not exactly a third world country here).
20 years ago a starter home in my city cost 20-30K euro; now developers say they can’t build anyting below 150-200K euro. And all the while inflation has been 1-2% … according to the burocrats. It’s all inflated to extremes. I don’t see why we can’t have sub 50K (dollar or euro) homes when this bubble finally gets done. Maybe that requires deflation, we will have to see.
I thought the cost of materials *was* crashing, or at least falling? If starts are way down, it stands to reason that demand for materials (and thus prices) would also be falling?
“The calculator said it would cost $127K just to build, no land.”
Does it make mention of how current its materials cost are? For example, check wood prices - this from an article this month:
“The upward activity arrives against bleak fundamentals. Due mostly to the slowdown in new home construction, lumber prices have sunk from a peak of about $1,000 per thousand foot board 18 months ago to around $200 per thousand foot board.”
http://www.chron.com/disp/story.mpl/ap/fn/4527474.html
“So unless the price of materials (and labor) crashes”
If (when?) housing crashes, you will see this.
Folks,
They base their figures on the National Building Cost Manual, which is published annualy. So the building-cost.net price is probably 2006 peak. (But I’m not sure how much labor can fall. Depends on how tight those illegal belts are.)
I think we’ll see two things:
1. The new starter homes will be 3-5 year-old SFH shitbox. REO –> agent + small fee –> single family.
2. Starter homes single-family will no longer exist. Everybody’s first “house” will be a condo. I get a negative gut reaction whenever I hear the word Condo.
To what extant is this a function of the square/cube law? a 2200 square foot house does not, i suspect involve twice as much labor and materials as a 1100 square foot house,
Likely no $100K new starter home….but plenty of $100K existing homes. Prices in Austin fell to as low as $35K for a 1100sf 3-2 by 1990. That same house would have been $70K-$75K in 1985.
This means that the building of new homes will likely almost come to a halt like it did in 1930-33. They’ll always be some….but go to any city and see how many houses were built in the 1923-29 period (many) and compare that to 1930-33 (virtually none) and again to 1934-39 (back up a lot again - but on average quite a lot smaller).
maybe they’re building big soviet style apartment blocks
Good observation, flatffplan.
“WASHINGTON (Reuters) - The pace of U.S. home construction fell 14.3 percent in January, the sharpest drop since October that bucked two months of increases and that was much worse than economists had expected, a government report on Friday showed.”
As bad as this is, my guess is that the HB stocks will rally on the news. And the disconnect with the reality of realty will continue.
what will the effect of the war winding down be ?
lots of manufacturing is war goodies- we might lose the Indian fighter contract to the Russians
I am seeing more positive / denial articles on real estate these days, some from stock mutual fund companies. Still, I see new Phoenix starter homes of 1,200 square feet starting at $200,000, which is still about $65,000 too much. In the meantime, I’m not crying that my stocks and stock funds are doing very well. I just sold my Unilever stock and bagged a $2,000 8 month gain, which is about 14% for those 8 months. Some of you have been saying stocks are too high. I agree. So I take acceptable profits and add them to a 5.1% money market fund, where it will be parked for at least the next 18 months. New money of mine goes into more stocks though. I’m comfortable with my strategy. In fact, I have more money in money market funds than in individual stocks.
Don’t beleive the soft landing crowd?
Bill in Phoenix and Cactus. I am planning a Bubble party in Phoenix on March 7th (Wednesday) at 6:00 PM at the Vintage Market in the Biltmore Fashion Park. Try and make it.
Dang, Golfer! You Phoenicians have ALL the AZ bubble fun! Now we Tucsonans are going to have to come out of our caves and meet each other.
Sorry if this was posted yesterday, but if not: http://money.cnn.com/2007/02/15/real_estate/latest_prices_q4/index.htm
this can’t ever happen according to LIErah
how about last 90 days - get real numbers forget yoy BS
U.S. $225.3 $219.3 -2.7%
YOY only works well during a period of trend stability. When the market is turning down, YOY is a lagging indicator — when YOY change = 0% (like in OC price statistics just released), prices are already falling, as the past 12 mos symmetrically span the parabola which describes the top of the price trajectory.
The MSNBC link on housing starts: http://www.msnbc.msn.com/id/17184424/
Key point not given — annual rate of 1.4 million isn’t even that bad. Historically a BIG year is 2 million — we’ve had a lot of those lately. An average year is 1.5 million. A bad year is 1 million.
Anyone looking for a bottom had better wait until we have average 1 million starts for a year or two. Perhaps longer, given the number of homes vacant.
I would not be surprised for RE to have sluggish sales and stubborn prices into 2010. Major tax decisions by an economic leftist (socialist) congress at that time. Will they allow the tax breaks to expire or will they renew them? In 2010 more boomers will be trying to downsize and sell each other their extra houses to finance their retirements - like the Chinese doing each other’s laundry. I figure sharp RE price drops won’t really happen until 2010 or 2011. single digit percentage drops in home prices in most places will be the rule the next 3 or 4 years. Just my stupid prediction.
that is roughly what happened in Europe - housing market bailed out by ever more money printing an all kinds of new stupid socialist housing subsidies and tax incentives. Most of this comes from (relatively) rightist governments in Europe; apparently it doesn’t matter which way the political winds blow, all major political parties will support the RE markets until the bitter end.
Raising the revenue to pay down existing debts is all about responsibility for property and hence inherently Capitalist.
Since the last period of successful Democratic national initiatives saw massive stripping of government services including but not limited to dismantling of Welfare your conclusion seems way off.
To bring this back to housing, your implied point is that inability to keep passing everything off to future generations as debt will add to the negative influences on the housing market in the time frame of this downturn?
shouldn’t there be an adjustment for pop growth- if you compare to the 90’s the gross number is a little worse
“Anyone looking for a bottom had better wait until we have average 1 million starts for a year or two.”
Not looking for a bottom just yet, just looking for all of that juicy inventory to impact prices. Keep flooding the market with new construction, while the number of vacant houses hits a record high…
Zillow: David Lereah’s House Declining In Value
David Lereah’s primary residence, like other houses in the Washington, DC metro area, is losing value. According to Zillow the peak price for Mr. Lereah’s house was 959K in June 2006. Since then the price has declined about 11% to an estimated (Zestimate) price of 852K.
http://tinyurl.com/27ecw5
David
David Lereah Watch
So Atlantic City NJ leads the US in housing appreciation - I guess the hookers are doing quite well!
(See second post above)
Today’s WSJ has several housing-related stories:
- Home prices fell in about half of all metro areas in the 4th Q, sez NAR
(p. A2)
- “Housing Report May Not Shed Much Light” (AHEAD OF THE TAPE By Justin Lahart, p. C1) — the bar graph pretty much tells the story: “Annualized number of new homes started, in millions” was on a permanently high plateau of 2.0m/year through all of 2005, but recently has fallen off by 25% or so to 1.5m/year +/- statistical blips (Jan 2007 est. = 1.6m/year).
HOME FRONT — As home prices drop, owners scale back on remodeling projects. (p. W10)
Can anyone suggest two home builders, one strong enough to weather the implosion and a weak one who might not make it? A co-worker needs to analyze two companies for his law school accounting class and I suggested two home builders.
My bet would be:
NVR - survivor
SPF is not
The main consideration is debt. When the company has no debt it can linger for years with virtually no revenue. And vice versa, with the load of debt the death is usually sudden.
NVR has none. SPF is up their eyeballs, they are not that big and almost all of their construction is in CA, AZ and FL.
There are lots of other companies on the “weak” side, but I would speculate there are a lot fewer on the “strong” side.
NVR is littering our beautiful Carolina countryside with their butt-ugly clone houses.
Had to be said.
How about Horton and WCI.
Thanks bubblewatcher and albrt! He works full-time as a mechanic, has a family and goes to law school at night so I’m sure he’ll greatly appreciate the leads.
The NYTimes, talking up Port St. Lucie in Florida, as a great place to buy a home or vacation property. No mention, in a long piece, of insurance, prop. tax issues, or even that the whole state is on sale.
http://www.nytimes.com/2007/02/16/realestate/greathomes/16havens.html?pagewanted=2&_r=1
“Though prices have risen sharply in recent years, real estate agents and developers still talk up Port St. Lucie as a Florida bargain. The median sales price in December of existing single-family homes in the Port St. Lucie-Fort Pierce area was $240,000, compared with $368,200 in West Palm Beach area and $380,100 in Miami, according to the latest report from the Florida Association of Realtors. (The city says that in Port St. Lucie itself, the median for single-family homes was $255,700.)
New construction generally begins at around $250,000, but can go higher in the more exclusive, amenity-rich communities. At Verano, for example, prices begin at $300,000 for a unit in a two-family building, but reach as much as $600,000 for the largest single-family homes…
Can’t see one single pedestrian in the photo of the New Urbanist pedestrian friendly “Tradition”, quite some sophistication here.
Not only are there no pedestrians walking around, I don’t see anything in the windows of the ground floor businesses, which would explain why no one is walking around, there nothing to do there unless you like looking in empty shop windows.
“Despite price, homes within reach”
http://www.sbsun.com/business/ci_5237128
Great: tax welfare for future FB? Maybe the “way out” for the current FB? Like I said before:
Borrow a few billion, it is the bank’s problem
Borrow a few trillion, it is the taxpayers’ problem
Ugly, ugly. Pay 45% of the take-home pay, with taxes on top of that. That’s at good thing? It’s terrible!
How about cutting one-third off the price and getting that ratio back to 30% where it should be!
“Generally now you can get a mortgage for up to 45 percent of your monthly take-home pay…”
…so you can enjoy home ownership and a steady diet of ramen noodles.
I can assure you that in Europe it’s already worse. People in Netherlands can get a government-sponsored mortgage insurance up to 275K euro (soon 350K euro), that’s about 10x median income. If you have to sell the home and cannot cover the cost of the mortgage, the insurance will pay for you - zero downside risk. Also, in most areas there are starter loans for 25-50K euro that are totally free in the first years, and if the home does not appreciate enough they are free forever. If the home appreciate you can grab the gains, if it depreciates local government(taxpayers) will eat the loss. Works miracles to keep the housing bubble inflating.
Coming soon in other anglosaxon countries I guess
Why it is never “different this time”:
I thought everyone would enjoy reading this excerpt from a great book written on investing back in 1991. It is as pertinent today as ever (substitute the word “houses” for “securities”):
“High levels of greed sometimes cause new-era thinking to be introduced by market participants to justify buying or holding overvalued securities. Reasons are given as to why this time is different from anything that came before.”
“As the truth is stretched, investor behavior is carried to an extreme. Conservative assumptions are revisted and revised in order to justify ever higher prices, and a mania can ensue. In the short run, resisting the mania is not only psychologically but also financially difficult as the participants make a lot of money, at least on paper.”
“Then, predictably, the mania reaches a peak, is recognized for what it is, reverses course, and turns into a selling panic. Greed gives way to fear, and investor losses can be enormous.”
-Seth Klarman, Margin of Safety, 1991.
somebody mentioned yesterday that the FB’s can’t lower their prices, because THEY paid 500k. Question is when these houses go back to the bank, how much will the banks be willing to cut? The “bank-owned” homes I see out there are still 500 and up. ps. OT, but I really get tired of the american bashing by some people on this blog. I don’t think anyone on here is ready to convert, so enough already
I believe that was me. I’ve seen some pretty big losses on bank owned properties in my neighborhood (San Diego 92123)
I can think of 2 right off the top of my head with nearly 100k price cuts.
Home #1 was orginally listed at $729k, went into foreclosure, bank purchased on 11/06/2006: $586,823 sold on 12/06/2006 for $500,000.
Home 2 was purchased on 4/11/2005 for $555,000, bank purchased for $477,039. It was originally listed for 469,000 and was reduced to 461,900. I can find a new sales price yet but its gone inactive.
…. I’ve seen some pretty big losses on bank owned properties in my neighborhood (San Diego 92123).
My first house was in 92123, 1982 on Mission Village Dr. A 3/2 built in the 50’s. Purchase price $85,000.00. According to Zillow®, it sold in 2005 for $497,500.00. The only good thing about the house was that you could walk down the hill to Jack Murphy/Qualcom stadium and the Chargers were kicking butt back then.
The bashing is well deserved Patricia. Spend some time watching arrogant Americans behavior overseas. I have and it’s not pretty.
I have too, and it makes my blood boil. Seem to recall being told, back in high school, that when you go to another country, you should be an ambassador for your country.
You mean like John Bolton?
Brits and Germans are no charmers either.
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I don’t know if this was already posted. My forecast is that when the foreclosure rate hits above 1.5%, nationally, we will have big problem in the financial system.
Jas
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Sorry, no link was posted (from another forum):
February 15, 2007 6:10 PM
foreclosure
Credit Suisse
ON MONDAY, REALTYTRAC PUBLISHED its January Foreclosure Report. According to the company, the report includes homes in all three phases of foreclosure: preforeclosure (notice of default), foreclosure (notice of sale) and real-estate owned (those properties that have been foreclosed on and repurchased by a bank).
In January, 130,511 homes were in foreclosure, up 26% from last year. January’s level was 19% above December’s results, and represents the highest monthly level since RealtyTrac began disclosing the data in the beginning of 2005.
In January, five states represented 47% of all foreclosures in the country. For comparison, these five states represent 32% of the nation’s total households. Texas was the highest contributor of foreclosures, at 11.3% of the total. California came in second at 11.1% of the total, while Florida (9.0%), Michigan (8.9%) and Ohio (6.5%) rounded out the top five.
Given monthly volatility within states, we look at trailing three-month changes in foreclosure activity to assess current trends. On this basis, foreclosures increased 41% nationally from last year. Key state changes include Michigan (up 109%), California (up 101%), Colorado (up 92%), Nevada (up 88%), Arizona (up 51%), Texas (up 21%), and Florida (up 8%).
To adjust for the differences in size of each state, we calculate the number of households in each state per every foreclosure. Across the country in January there was one foreclosure for every 954 households based on the most recent census estimates of 124.5 million housing units.
This compares to 1,136 households per foreclosure in December and 1,203 in January 2006. In 2006, 1.0% of total households were in foreclosure compared to 0.7% in 2005. The states with the highest level of foreclosures in 2006 based on this calculation were Colorado (2.7% of households), Nevada (2.1%), Georgia (2.0%) and Michigan (1.4%).
Foreclosure activity in January continued to increase, rising to its highest level since RealtyTrac began disclosing the data two years ago. As we have written previously, we believe the upward trend in foreclosures is indicative of the heightened leverage taken on by home buyers through the past several years of robust price appreciation and record-low interest rates. Recent failures from regional subprime mortgage lenders further illustrate this point.
We remain concerned with the potential inventory overhang that may result from these foreclosures, as default notices do not typically show up as inventory for six months following the initial notice.
In addition, we believe it is becoming increasingly likely that rising foreclosure rates may result in tighter lending standards, higher spreads on both subprime and prime products, and the inability for marginal buyers to qualify for financing as easily as they had in recent years.
All of these events should impact the demand side of the housing equation — an issue that investors are not paying enough attention to, in our opinion.
– Ivy Zelman
I was at an NHL game last night watching the awesome Teemu Selanne secure an overtime victory for Anaheim over Phoenix. Well, before the game, one of the advertisements over the loudspeaker and on the big screen was for local (AZ) Centex Homes developments. The part that made me chuckle was the announcement that several Phoenix hockey players would be at the subdivision to meet visitors.
I know that athletes sometimes do cheesy events, but I just pictured a couple of these knuckleheads in an empty model house, busting up the place. An unplanned scrimmage across the upgraded tile, smashing some glass table, fistfights in front of a bewildered sales agent.
http://tinyurl.com/2u92n6
“victory for Anaheim”
Gotta love a team named “The Ducks”.
Ducks beat Coyotes…would have made a great cartoon.
Anaheim vs. Phoenix, huh?
I quit caring about the NHL once they started putting teams in places that never get cold.
That’s too bad.
Since the LA Kings and California Seals began play in 1967, you must have stopped caring about the best professional team sport some 40 years ago.
Getting in Front of a Moving Reality Train:
http://wallstreetexaminer.com/blogs/winter/?p=436
Russ –
That “Household Cash Less Liabilities” graph is stunning, and the devastating part coincides with a recent Fed chair’s reign in office.
Heck of a job, Greenie!
At some point can we expect economists to stop saying that problems in the subprime market will be contained and not affect the larger economy? This month? Next month? Still waiting for shills like Diane “”there is no bubble” Swonk to correct herself.
I was at an NHL game last night watching the awesome Teemu Selanne secure an overtime victory for Anaheim over Phoenix. Well, before the game, one of the advertisements over the loudspeaker and on the big screen was for local (AZ) Centex Homes developments. The part that made me chuckle was the announcement that several Phoenix hockey players would be at a subdivision to meet visitors.
I know that athletes sometimes do cheesy events, but I just pictured a couple of these knuckleheads in a model house, busting up the place. An unplanned scrimmage across the upgraded tile, smashing some glass table, fistfights in front of a bewildered sales agent.
http://tinyurl.com/2u92n6
Cannibalism can lead to indigestion…
http://www.marketwatch.com/quotes/gm
http://money.cnn.com/2007/02/15/real_estate/latest_prices_q4/index.htm
It’s getting really annoying that bubbles are popping like mad but all that’s happening is they’re starting to inflate in my area (Salt Lake City). How can the state with all the stay-at-home-moms, and solitary breadwinning fathers (being paid less than the rest of the country to boot), the state that leads the nation in personal bankruptcies year after year, afford the 2nd largest hike in housing prices in the U.S.?
All those comparisions of the median income to the median home price in most other places represent a ratio of TWO of those median incomes going toward ONE of those median home prices. In Utah, it’s way too often just one income and one home price.
It’s disgusting to see what a quarter-million dollars can get you anymore. You would think that people would wisen up and say “um, no. Maybe you CA equity locusts can afford this but we can’t. So we’ll wait until the locust supply is cut off, THEN we’ll buy.” But no, Utards don’t get it. We get married at 21, buy a house nine months later so we have room for our honeymoon baby and if we don’t, we’re losers. Yeah, it sucks that last year’s $200k cookie cutter house will now cost me $245k. But if we don’t buy now, its’ going to cost us $300. We can’t afford to wait another year!!! The housing market will go up 22.7% EVERY YEAR! And this, my friends, is the groupthink mentality that enables greedy sellers to dangle Maslov’s most basic human need over our heads until we hand over firstborns and valuable organs.
Well, as for me and my house, we won’t cross the picket line.
This is off topic. Check out this advertisement from the top realtor company in Kansas City. Chance to win a $1000 home depot gift card at any open house. Four drawings between Feb 22 and March 15. LOL. Panic or hunger? Anyone? (I find it interesting that Home depot is helping out in this endeavor.) LOL
http://reecenicholsimages.fnistools.com/images/uploads//RECos/9000002/ContentFiles/landingpage.pdf
Broker outpost topic… Intersting scuttlebutt on the extent of problems with the lenders.
http://forum.brokeroutpost.com/loans/forum/2/95063.htm
News Story
2:36 PM EST February 16, 2007
“Fed’s Moskow: Lenders Must Fully Disclose Subprime Risks”
The Fed is closing the barn door long after the horse has bolted.
Another Moskow quote from a different article in the WSJ. Sounds like it must be from the same presentation:
Moskow said that “to the extent that borrowers and lenders understand the risks involved and markets have priced this risk properly, these instruments present a net gain to society by opening up financing to borrowers who previously could not obtain it.”
Moskow doesn’t acknowledge that “opening up financing to borrowers who previously could not obtain it” in itself drove house prices higher. The increase in prices further increased the demand for non-traditional and sub-prime financing which drove prices even higher still. In this way a vicious circle was created which is just beginning to wind down.
‘Moskow doesn’t acknowledge that “opening up financing to borrowers who previously could not obtain it” in itself drove house prices higher.’
‘in itself’
Not sure what this means, but let’s just say subprime lending with a general abolition of underwriting standards provided the thin edge of the wedge…
‘Moskow said that “to the extent that borrowers and lenders understand the risks involved and markets have priced this risk properly, these instruments present a net gain to society by opening up financing to borrowers who previously could not obtain it.”’
That comment may soon come back to haunt him.
http://www.car.org/index.php?id=MzcwNzU
Maybe they have been posted already, but here are some stunning numbers from CARs State of the Housing Market:
“The median down payment for first-time buyers decreased from $25,000 in 2005 to $10,000 in 2006″
“The median first mortgage amount for first-time buyers increased 6.8 percent from $347,800 to $371,600″
“Home buyers with zero-down payments increased significantly from 4.5 percent in 2000 to 21.1 percent in 2006”
Hello, everyone. Longtime lurker and first-time poster here. Does anybody know where I might find information about housing trends in central Connecticut? (Not the suburbs-of-New York part.) Prices here are nowhere near the insane numbers I read about in California, but house prices over the last 5 years have gone up about 30 percent OVER the rate of inflation, despite the fact that the state has actually LOST a couple dozen thousand jobs during that time.
About a week or so ago I saw an article–I think on CNN–saying that home prices were likely to drop in places like Boston (I agree), but that my area should expect to see prices rise HIGHER, on the grounds that they’re already such a bargain. Is this true, or wishful thinking?
Rant off.
That feels better.
From another blog:
It was stated that foreign workers from India can’t afford apartments in San Diego, and are feeling desparate because they are missing the housing boom in India.
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There are so many things wrong with worldwide imbalances so wacky.
I think the filter got my last attempt so here goes again…..
From the credit board, a new homebuyer is worried about not having the required balance in her checking account at close. Here’s the soon to be FB’s financial health info. Of particular note, “baddies”, Hooters, and oh those FICO scores…:
My FICO scores: 500’s
My Approvals since CB:
HSBC Plat. $300
Orchard Silver $300
CJ $1500
Hooters $2K
DH’s FICO’s:
2/12/07 EQ -609(5 med baddies) TU-650 (4 med. baddies) EX-587 (12 med. baddies)
Dh’s Approvals Since CB:
HSBC Platinum MC–unsecured $300
Orchard Silver–unsecured $300
Crown Jewelers $1500
Zales $400
Gordons $400
Hooters $750
Paypal Buyer Credit $200
Target Red $200
I think the filter got my last attempt so here goes again…..
From the credit board, a new homebuyer is worried about not having the required balance in her checking account at close. Here’s the soon to be FB’s financial health info. Of particular note, “baddies”, Hooters, and oh those FICO scores…:
My FICO scores: 500’s
HSBC Plat. $300
Orchard Silver $300
CJ $1500
Hooters $2K
DH’s FICO’s:
2/12/07 EQ -609(5 med baddies) TU-650 (4 med. baddies) EX-587 (12 med. baddies)
Dh’s Approvals Since CB:
HSBC Platinum MC–unsecured $300
Orchard Silver–unsecured $300
Crown Jewelers $1500
Zales $400
Gordons $400
Hooters $750
Paypal Buyer Credit $200
Target Red $200