“A Sharp Turn Nationwide”
The Times Dispatch reports from Virginia. “Gordon and Martha Mabey don’t know their neighbors. But they don’t have many any way. The Mabeys bought into the newly renovated Nolde Bakery Condominiums at Church Hill last fall. Now, some of the unsold units are for lease. ‘It’s better than cutting the sales price by umpteen thousand dollars,’ said Gordon Mabey. ‘We were told the units would not be leased unless it became necessary.’”
“About a third of the 77 condos sold, said Jason Dodd, VP of marketing for the developer.”
“Nolde is not the only condo project struggling in the Richmond area. Inventory grew as investors tried to sell off property and more new condos came on the market. The Nolde condos were on the market for the low $200,000s to the mid-$300,000s. They are renting for $985 to $1,600 a month.”
“‘If it ends up that we spent more than it is worth, that is the luck of the draw, and we will have to live with it,’ Mabey said.”
“Several blocks away on East Main Street, a sign hangs from the newly finished Cutters Ridge at Tobacco Row: ‘Apartments for lease.’ These same 12 apartments, which look like town houses, were marketed for sale last fall as single-family attached row houses. They were on the market until January for $449,000 to $485,000. None sold. They are renting for $3,000 a month.”
“‘The good news for us is we only had 12,’ said Kirsten Brinker of Forest City Enterprises, the developer.”
“A total of 3,675 town houses and condos in the Richmond area went on the market in 2006, up 52 percent from a year earlier, according to the Richmond Association of Realtors. Meanwhile, the number of closings fell to 1,721 last year, down from 1,788 a year earlier. Another 161 condos will hit the market soon.”
“New home construction is way down in the Richmond area. But that is good news, said David Lereah, chief economist for the National Association of Realtors. ‘You want to see construction activity down when real estate is contracting so much,’ Lereah said during a visit to Richmond last week. ‘Richmond is looking a lot better than most areas of the country,’ he said.”
“Speculative investors, who got into the market to make a fast dollar, turned the recent boom into a frenzy, Lereah said. ‘When lenders offered exotic mortgage loans, that was fuel for the fire.’”
The Record Herald from Pennsylvania. “Home prices are cyclical, but many in the business say the most recent downturn has been the worst in decades. Developers enjoyed a fruitful, above-average market in Franklin County for nearly a year. Building lots were plentiful, and the demand for new homes was high. But last spring, the market took a sharp turn nationwide.”
“Ron Koontz of Creative Homes said he’s accustomed to industry ups and downs, but this dip was severe. ‘It’s probably the deepest we’ve seen it. I’ve heard other developers say the same thing,’ Koontz said. ‘There were definitely layoffs because of the slowdown.’”
“‘High cancellation rates, mainly due to people not being able to sell their current home, were a big factor in the decline of new home sales,’ said Mark Boastfield, VP for Richmond American Homes. According to Boastfield, there was a nationwide slowdown in home sales in 2006.”
“When prices go through the roof and developers get caught up in the market, there comes a point where the rush inevitably ends, Koontz said. Many buyers overshot what they could afford, Koontz noted.”
“‘First-time home buyers in the past several years were buying much bigger homes. Interest rates were down, and decisions were made on monthly payments,’ he said. ‘It was much bigger than they needed … It scares me to think of foreclosures on these houses.’”
“He said a lot of people in the construction business are laid off right now, and developers are offering increased incentives to potential buyers.”
“As prices have dropped, Dan Ryan Builders’ Gil Ohler said the profit margin has definitely suffered. Last year, the company was building 12 to 15 homes at time. Now, they’ve had to close two of four local offices and lay off workers, he said. ‘It was pretty major, pretty quick,’ Ohler said.”
The Herald Leader from Kentucky. “Snowmen lined Lexington’s streets in past winters; this year it’s For Sale signs, often in front of vacant houses.”
“The signs have been multiplying since last summer when the national housing slump arrived in the Bluegrass, and even the most optimistic of forecasters say this unwanted visitor is unlikely to leave before next summer.”
“Falling prices and weak demand can be good news for buyers, but sellers face long delays and financial stress. ‘You just have to wait and see what you get,’ said Kate Blair, who has been trying for about a month to sell her house on White Chapel Circle in Andover Hills for $235,000. Their four open houses have attracted a few people and they’ve had some nibbles, including one offer they rejected.”
“Across town on Bay Colony Lane in Masterson Station, Eric and Kristy Little put the ‘for sale’ sign in the yard on the first of October. The price was about $217,000; today it’s $205,000. They have had only a few expressions of interest.”
“‘It’s just really frustrating, because I know this is a really good location and the area appreciates so quickly. I just think this is a great deal,’ Kristy Little said.”
“The selection of new and existing houses is the highest in years and prices are beginning to fall. The economy is strong and employment is strong, so why are home sales so sluggish? ‘I think they (buyers) are sitting on the sidelines waiting to see if prices maybe aren’t going to go down a little bit,’ said Becky Murphy, president of the Lexington-Bluegrass Association of Realtors.”
“Meanwhile, more and more housing units, those being offered for sale and for rent, are vacant. Landlords have no tenants, or owner-occupants have moved on to better digs while attempting to sell their older homes.”
“The U.S. Census Bureau has surveyed the Lexington and Louisville markets annually since 2003, and estimated the number of vacant units. Lexington’s vacancy rate has doubled from 5.1 percent in 2003 to 10.25 percent in 2005, while Louisville’s rate increased from 8.6 percent in 2003 to 9.1 percent in 2005.”
“‘People either continue to hold onto their asking price or withdraw their house from the market’ if it doesn’t sell immediately, said Brent Ambrose, a Pennsylvania State University economist. Eventually buyers will get ‘a phantom price decline. Vacancy rates will go up first, because sellers are reluctant to cut prices. Eventually prices will start coming down to clear the vacancies.’”
“Too many vacancies also can mean that builders misjudged demand and built too many units, Ambrose said. ‘As more supply comes on line and fewer buyers are out there, those houses are vacant.’”
“Melissa Brown, president of the Boone Creek Neighborhood Association, said she and her husband drove through new subdivisions along Hays Boulevard last fall. They counted 175 houses that were vacant or for sale, more than 300 building lots and ‘a couple hundred acres slated for development.’”
“‘Some of the houses, I know, have been sitting there three years because I know the builder,’ Brown said. ‘With the market so stagnant, it’s obvious this area has been overbuilt in the last 10 years.’”
“Speculative investors, who got into the market to make a fast dollar, turned the recent boom into a frenzy, Lereah said. ‘When lenders offered exotic mortgage loans, that was fuel for the fire.’”
Take it from a speculative investor…
In other words, blame it on speculators and bankers don’t blame realtors. Why then did he taunt non-buyers with the title, “Are you missing the boom?” and a pages filled with advice on the steps necessary to buy real estate investments? There is too much evidence out there for DL to escape culpability.
“Speculative investors, who got into the market to make a fast dollar, turned the recent boom into a frenzy, Lereah said. ‘When lenders offered exotic mortgage loans, that was fuel for the fire.’”
This is a great development!
The figure pointing has begun…
Looks like Bozo the NAR Economist is ready to jump of the “Spring time for sellers” bandwagon.
Remember Bozo, when you hit the ground…..try to have a soft landing by rolling with your shoulders at first contact !
Yikes,
The finger pointing has begun….
No excuses, other then blaming the public school system, my local library for wanting back my checked-out books back, and a late night with my beer goggles firmly in place………..
I think we will look back a year from now, and agree that my social life bottomed in the first quarter of 07′
When the “fire sales ” begin , remember to stop, drop , and roll!!!!!!!
Actually, I was planning on doing an end-zone dance.
Does Dave Lereah still own property in … Florida was it? Didn’t he claim to own 5 properties? Weren’t they condos? Hmm, wonder what he really thinks?
Roidy
“Didn’t he claim to own 5 properties?”
No conflict of interest when the NAR’s national megaphone in chief owns investment property in Florida, is there?
I wouldn’t be the least bit surprised if the NAR where to compensate him for his losses in his FL condo-closets. Not that much different when CEOs borrow millions of dollars from the corporate treasury, only to have their debt forgiven.
I’ll do you 1 better, here’s a graph of his house on zillow (courtesy of DL watch). I wish they would have plotted the points where he called the market’s bottom
http://davidlereahwatch.blogspot.com/2007/02/zillow-david-lereahs-house-declining-in.html
Any word on how his FL condos are doing? Didn’t he say he was “strong in FL condos”?
“New home construction is way down in the Richmond area. But that is good news, said David Lereah, chief economist for the National Association of Realtors. ‘You want to see construction activity down when real estate is contracting so much,’ Lereah said during a visit to Richmond last week. ‘Richmond is looking a lot better than most areas of the country,’ he said.”
“Speculative investors, who got into the market to make a fast dollar, turned the recent boom into a frenzy, Lereah said. ‘When lenders offered exotic mortgage loans, that was fuel for the fire.’”
Liar-eah says:
“You want to see construction activity down when real estate is contracting so much,’ Lereah said”
“‘Richmond is looking a lot better than most areas of the country,’ he said.”
““Speculative investors, who got into the market to make a fast dollar, turned the recent boom into a frenzy, Lereah said. ‘When lenders offered exotic mortgage loans, that was fuel for the fire.’”
“real estate is contracting”, “Richmond is looking a lot better than most areas of the country” (So most other areas are worse?), “Speculative investors…turned the recent boom into a frenzy”, “When lenders offered exotic mortgage loans, that was fuel for the fire.’”
Holy s**t!!!! Wait a minute, who is this really and what have you done with the REAL David Lereah!!!!! The new guy is a truth telling SOB!!! We were so used to the Liar Lereah, you can’t fool us with this new guy.
Notice how everyone piles on Lereah’s comments first.
It sucks to be him.
And what about our “Goldilocks” economy?? You know, all that strong job & income growth, moderate inflation? DL has been saying that’s been the driver for the home boom. Now, he’s saying it’s speculation & lax credit.
There’s no way this recovery will be short-lived. That level of speculation isn’t coming back any time soon, and “real” buyers are priced out based on real income metrics.
“The U.S. Census Bureau has surveyed the Lexington and Louisville markets annually since 2003, and estimated the number of vacant units. Lexington’s vacancy rate has doubled from 5.1 percent in 2003 to 10.25 percent in 2005, while Louisville’s rate increased from 8.6 percent in 2003 to 9.1 percent in 2005.”
Unbelievable! I thought everyone wanted to live in Kentucky!!
I actually do feel that that Louisville “is different”. It’s a great city to explore and hard to believe it’s in Kentucky sometimes.
But that doesn’t make it immune from bubbles.
Every place is different from every other place where it is the same.
“Eventually buyers will get ‘a phantom price decline.‘ Vacancy rates will go up first, because sellers are reluctant to cut prices. Eventually prices will start coming down to clear the vacancies.’”
WTF?
They can call it whatever they want. As long as the prices do, indeed, keep coming down.
I’m not sure of the use of the word Phantom…
But the “invisible hand” has started the price correction.
My only question is how much will it overshoot?
Got popcorn?
Neil
100% down on the overshoot, it’s in the bag
Is this like the phantom limb FB’s think they still have after it’s been cut off?
“He said a lot of people in the construction business are laid off right now, and developers are offering increased incentives to potential buyers.”
Luckily many of these folks are illegal immigrant laborers (aka economic dark matter). Otherwise the national labor market statistics would suffer.
The crime statistics will start showing it when these laid off construction workers need to eat and can’t get unemployment checks
http://www.daylaborers.org
That site is a joke–the “news” jumps back in time to 2005 … 2003 … 1993 … all within the first ten items. Give me a break.
Show me some proof of the day labor crime wave, not just hysteria. You should see some bump, as you always see crime associated with transient labor, whether they speak Spanish, English, or “Ign’ant”. Away from their social network, men sometimes do bad things (or become the victims of crime themselves). Show me a carefully done study and we can talk.
To me, the real “crime” in day labor is the way business has a situation set up where they destroy the collective power of labor–they set the wages, and they control the laws, so that labor is completely fungible. Labor can and should vote with its feet, but business ought to be subject to the same laws. Either its illegal to hire undocumented labor and the business should suffer the consequences along with the workers, or it’s legal for employer and employee.
If it were not for the power capital has over “illegal” labor, businesses would not hire illegal labor. There are plenty of Americans willing to do the same job even at the same pay. They just demand things like safe working conditions, pee breaks, payment in cash instead of scrips (see Cal. slave labor issue) and right to leave place of employ, etc, etc.
The only exception is migrant farm labor. This is because in this country no man can support his family on farm labor wages, and sending children out into the fields to pick fruit is frowned upon these days. But a Salvadoran (for example) in a migrant labor camp *can* make enough money to make a difference for his family back in El Salvador. This is the other side of global wage arbitrage. We could raise the wages to where Americans could do it and live on it, but then we’d have to pay more for food, and so far, I sense a certain reluctance in the Force.
“Show me a carefully done study and we can talk.”
Here’s a carefully done study: Mission Accomplished!
http://www.nypost.com/seven/11072006/news/regionalnews/stars_suicide_was_killer_cover_up_regionalnews_larry_celona__murray_weiss_and_dan_mangan.htm
Why don’t you ask Shelley’s husband for a “carefully done study?” I’m sure he’d be happy to oblige. BTW, is 2006 recent enough for you?
OH, got another “study” for you. My buddy Steven, who lost his wife to a macho illegal immigrant construction worker drunk driver, right on 301 in lovely South Hillsborough County, FLA. He’ll give you a “carefully done study”.
‘We could raise the wages to where Americans could do it and live on it, but then we’d have to pay more for food’
We are paying more for it already. Spend some time in a Phoenix emergency room and then tell me about ‘cheap labor.’
‘Spend some time in a Phoenix emergency room and then tell me about ‘cheap labor.’
Same in Florida. What’s insane to me is the issue of illegal immigration is even something that’s up for debate.
Yeah, the problem with the nation’s addiction to cheap labor is that everyone wants the cheap labor only where they don’t care who does the work.
Illegal labor is the most expensive labor in the country. They use roads, highways, parks, libraries, and other public facilities without paying a nickle. Wherever they camp, property owners are forced to build extra schools, and hire teachers,often bilingual, for illegal children, since it’s unlawful to deny a child an education. They swamp emergency rooms, and use bogus names and addresses to escape any bills. There are more than 1 million illegals currently in prisons in the US. They traffic in forged documents and identity theft. Many states, Cali and NY among them, will hand them section 8 vouchers, on the taxpayers dime.
Those who hire illegal labor keep the profits, but dump the costs on law-abiding citizens.
A military serviceman came back home to Phx recently. He was killed a couple of weeks ago in his front yard by an illegal. I’ve heard that the killer was illegal mentioned exactly once in the MSM (heard probably 10 stories covering it), and I bet that one was a slip-up.
“Illegal labor is the most expensive labor in the country.”
Appropos of the housing bubble, wait until the bill comes due for the “cheap construction”. When I was representing a US subcontractor of fixtures in the commercial construction business, we used to have a saying “Done Fast, Done Cheap, Done Well: pick any two”. Since most if not all of the construction during the bubble was done fast and cheap, guess which of the three above has gone by the boards? Also google “chagas disease”, a byproduct of substandard housing south of the border.
http://www.theaustralian.news.com.au/story/0,20867,21224667-2703,00.html
To the toolboxes in here who support the Democrat or Republican Parties, you have long since lost the right to complain about immigration, illegal or otherwise, since you are aiding and abetting it by continuing to vote for politicians who continue to perpetuate our insane immigration policies. The Republicans, who are a wholly owned subsidiary of the multinationals and military-industrial complex, see immigrants - illegal or otherwise - as cheap labor and a foil for Big Labor. The Democrats see them (probably correctly) as Democrats-on-Arrival, who will swell the Entitlement programs and social parasitism and increase the sheeple’s dependence on the Nanny State.
It isn’t just illegals who are perpetrating crimes. Every cesspool in the world is emptying its dregs into this country, such as the Bosnian Muslim refugee who repaid this country’s hospitality by going on a shooting spree in that Utah shopping mall. Again, if you give a dime to the Republican or Democratic Parties, rather than supporting individual opponents of our current immigration policies, you have lost all right to complain about our out-of-control immigration and its costs to society.
The actual “Labor” cost in a box of strawberries picked by migrants is relatively small. If the growers raised the working standards and pay so citizens would take the jobs, it would raise the actaul retail price very little. I know some strawberry and orange growers in central Florida. Working migrants is not so much an actual cost issue as it is the HR issues that would come with Citizens.
The super strong ag lobby has all the politicians in their pocket.
I agree the other costs, crime, welfare, health care, etc would more than offet the very small increase in th retail price of food.
As Adam Smith noted.
Interesting tidbit by him. If the working class cannot maintain a certain minimum standard of living, they will resort to crime to achieve it.
Part of a chapter of his famous books both sides like to ignore. Anti-capitalists don’t want to acknowledge he had a few chapters on workers rights/conditions and how capitalism can benefit society. Too many capitalists read later printings of the book where those chapters have been removed. If your copy of “Wealth of nations” doesn’t have a long discussion on slavery and the macro economic perils of it… buy a new copy. If you haven’t read Wealth of nations… do so.
And yes, I’ve also read Marx, and quite a few other economics books to balance it out. But Smith’s writings work well.
Got popcorn?
Neil
“…The Nolde condos were on the market for the low $200,000s to the mid-$300,000s. They are renting for $985 to $1,600 a month.”
There is a price to rent comparison. What should I do? Rent? Buy?
Looks like renting is a 50% discount, within one order of magnitude. (Depends on the size of downpayment, but why put up real money to overpay?)
My daughter & her boyfriend just rented a newly-purchased 1BR condo in the Langley/Reston area of VA from a FB who paid $ 237,000 for it, and whose mortgage payment is $ 2700 per month. I don’t know if that includes the condo fees or not. Their monthly rent ? $1,000 per month. My daughter got him to come down from $ 1,100 per month. On a bet, I’d advise renting over buying right now…..lol.
Yeah, just tell them to be careful and watch the mail. I’ve had about a dozen people come through my office in the last year asking me to help them against their landlord, who took their rent, got foreclosed and never told anyone. When the sheriffs come and put up the 72-hour eviction notice for the tenants, they are rightfully outraged, but there is very little they can do at that point. Their rent is gone, their security deposit is gone, and they need to find a new place and move all their stuff in three days.
I suspect this will happen more and more as the situation deteriorates.
“I’ve had about a dozen people come through my office in the last year asking me to help them against their landlord, who took their rent, got foreclosed and never told anyone. When the sheriffs come and put up the 72-hour eviction notice for the tenants”,
I just rented a house in SFV area of Los Angeles, and there is a clause in my lease that protects me against being evicted by a new owner. I made sure the clause was there because most of the houses I looked at for rent were also for sale. Not making sure that you are protected in a lease is as bad as not making sure that your Mortgage is fixed.
I didn’t do the actual calculation but I don’t think its that large of a difference between renting/buying. While I do believe prices in some area are way overboard, in a case where the difference is 600-900 bucks a month (just an estimatation), factoring in tax breaks, sometimes thats enough for some people to go out and buy a home. I know some of these people personally. I’m still holding out here in California as the differences are a bit larger here as far as actual dollar amount.
I don’t think we will see a total collapse of the housing and economy partly because of some people being able to afford a home still even though prices may be slowing/dropping. Most of the time, when people buy homes, they don’t look at it from an investment standpoint.
“Most of the time… they don’t look at it from an investment standpoint.”
That’s the truth. 1776-2001 (Home) vs. 2001-2005 (Invest/Flip)
About 98% of the time!
ROTFL
Prices will go down nationally. In areas less out of balance, prices will drop less as incomes will be able to justify prices after a small drop.
But don’t forget the impending layoffs. It doesn’t matter if you care about the typical construction contractor. His purchases drive part of the economy you are dependent on in one form or another. We’re looking at about ~300,000 job losses in April and May and then another 400,000 (total, 1 million) by about September.
There is no way that large of a drop in employment won’t create ripples in other sectors like… oh… automobiles? (Specifically, pickup trucks…)
Hold on. This is national. Florida alone is a bad enough meltdown to rock the national mortgage market. Add to that Phoenix, San Deigo, Sacramento, and DC… and you have enough to drive the entire market down hill.
Sit wait…
and we’ll debate if late 2008
is a time to buy or not.
Got popcorn?
Neil
“Most of the time, when people buy homes, they don’t look at it from an investment standpoint.”
I don’t think that’s true, especially here in California. Even now, you see Realtor adds with phrases like “good investment”, “get on board the appreciation train”, “houses appreciate over the long run”, etc. I had not seen phrases like these in house advertisements prior to 2003 or so.
One of the reasons that people were willing to pay just about any price with just about any loan (no matter how risky) was that they expected house prices to keep appreciating.
Times have changed.
“I don’t think we will see a total collapse of the housing and economy partly because of some people being able to afford a home still”
“Afford” a home? In California? Using what type of loan product? At what teaser rate? With what sort of pre-payment penalty? Using what inflated income on a lia-er, I mean “stated income” loan? Or are we talking about buying in Trona?
You might want to make sure that you can carry those Saratoga Springs rentals long term, “just in case” the housing market doesn’t react as you hope. And make sure the builders aren’t over building in the area, flooding inventory and stalling or even tanking your rental income (been there, done that).
Wealth Journey
“I didn’t do the actual calculation but I don’t think its that large of a difference between renting/buying. While I do believe prices in some area are way overboard, in a case where the difference is 600-900 bucks a month (just an estimatation), factoring in tax breaks, sometimes thats enough for some people to go out and buy a home.”
Correct-a-mungo, pal. You got the concept.
The problem is that the differance between renting and buying in most markets definitly favors renting. In normal markets, it costs just a little bit more to buy than rent. We’re saying this market is not normal.
If you can find the 600 vs 900 market of which you speak, let us all know. 3rd world countries don’t count.
Thats our point here. It is now smarter and cheaper to rent because you can rent for less than you can buy and you know the value of your house is going to depreciate.
In fact one way to value a house is based on your rate of return, should you rent it. Another way to say “Bubble” is that you can’t rent a house, make say a 10% ROI and cover your expenses.
As far as your view on the “total colapse”, I hope you’re right and I think you are. If you and I are wrong, we are in major Do Do.
Moreover, we use conservative interest rates to calculate total mortgage payment. Consider the interest rates zero down subprime buyers are paying — beyond 7 or 8 plus percent.
Apparently in FL, you can rent a for-sale-at 485000 for 3000 per month. (162 times rent.) Sounds pretty good! Except the townhomes aren’t selling. Maybe they weren’t renting either!
The economy is strong and employment is strong, so why are home sales so sluggish?
I’m really getting tired of the assertion that the economy is strong. On what basis are people making these statements? Does the economy equal the price of the Dow? What about the record debt and deficits this country is responsible for? What about the dollar being worth less than one-tenth what it was 90 years ago? What about unemployment numbers that have been cooked to show employment in the best possible light? What about manufacturing of anything virtually eliminated in this country? What about GDP numbers being revised downward months after the initial overly optimistic came in way too high when no one is paying attention anymore.
Strong economy my a$$.
Good point, and one many here had to assert going into the downturn, because apparently the MSM can only see as far as their nose:
‘He said a lot of people in the construction business are laid off right now, and developers are offering increased incentives to potential buyers. ‘As prices have dropped, Dan Ryan Builders’ Gil Ohler said the profit margin has definitely suffered. Last year, the company was building 12 to 15 homes at time. Now, they’ve had to close two of four local offices and lay off workers, he said.’
How could the nation come off the biggest building boom in history and not suffer some kind of economic pullback? It is similar to the people who used to say, ‘when the economy slows, the Fed will lower rates.’ But then I pointed out that if rates were lowered, it would likely mean we are headed into recession; not exactly a good sales point for homes. This isn’t rocket science.
don’t for get MIC and the war- as it winds down we enter the 70’s
again
Is that the reason for the war reflation effort underway?
No. We cleared Iraq out of the way. We should be able to hit Iran in the next couple of months.
probably how its going to go is a the Dems will lower our troop strength and the Iranians will hit them pretty hard.
Boom. Bigger traget with a tougher army. Russians are sending more and more and more advanced arms to Iran in preperation for this. They double cash in because they think oil will shoot up to 5$ per barrel.
Pretty good chance the Iranians get one of our aircraft carriers out there… They might try one nuke against the fleet as well.
This is the long war strategy of China and Russia… they want more influence and we have our ulcer… much like Napoleon and the spanish ulcer.
Once our influence wains its party time for china & russia… I say good luck to them.
If Iran lights off one nuke anywhere in the middle east the entire land mass of Iran will be pea gravel in 35 minutes. It would/will? be a good test for our Boomers.
How many missile tubes does a Los Angeles class nuke sub have? I think 24; with I think 5 or 6 warheads each. You Navy types help me out here. It’s pretty impressive at any rate.
I’m sure there are several in the Persian Gulf area just waiting for that greasy Iranian president, the goofy eye doctor that runs Syria or anyone of the Cartoon Cavalcade to screw up.
They all know that. We just don’t have the Balls to use them. They know that too. I’m sure they were all shakin’ in there sandals when Pelosi and the Dems took over. Maybe GW will leave a parting gift and push the red button. Come on, Georgie Boy, give them just a little taste!!!
What do you think they would do to us, if they had our military?
If we make all those oil fields radioactive, we are screwed big time.
James - the US blew its wad in Iraq with negative results, and it’s got nothing left for a land war in Iran.
As for attacking Iran - on what basis? If nation A supplies arms to nation B to use against nation C, and nation C holds nation A accountable, then the US is in big trouble. The US the world’s biggest arms dealer and has given billions of dollars of weapons to support one nation against another. Now Bush & Co. are posturing to attack Iran for doing the same thing?
Even if it’s true, which is debatable. Remember the WMD’s that were supposed to be in Iraq? Fool me twice, won’t get fooled again.
“James - the US blew its wad in Iraq with negative results, and it’s got nothing left for a land war in Iran.”
The U.S. doesn’t want a land war in Iran, nor does it need it.
“Now Bush & Co. are posturing to attack Iran for doing the same thing?”
It may be only the excuse. The U.S. (and Israel) want only one thing: A non-nuclear Iran.
“On what basis are people making these statements?”
Didn’t you notice how many new records the stock market has recently set?
I know you’re being sarcastic and that you know this already, but the stock market no longer is limited to companies whose infrastructure and employment is completely based in the U.S.. All the big corporations are heavily invested in foreign labor and markets. The success of corporations based in the U.S. no longer directly translates to the success of the U.S. economy.
“the stock market no longer is limited”
The housing bubble is not limited, either. I happen to agree with AG’s repeated insistence that the housing is not national. For the first time ever, the residential real estate market is global.
“…the housing market is not…”
Also, according to Ben Stein (whom I rarely listen to, but he had a special commentary on CBS Morning Show today), 90% of stocks are owned by the top 10% richest people. So, of course, when you are filthy rich, the economy is always good. But once stocks start to go down, you know it has to be bad because the rich aren’t buying anymore.
Ford to lay of 44,000 and close 16 factories.
Chrysler to lay off 13,000
GM is in the process of laying of another 30,000 (so far)
Hell, the economy is great as long as you define the economy as large corporations’ profits. If you include the average person in the equation…oops. Any good paying jobs are disappearing. Whole industries are awash in red ink…airlines, autos, steel. Money shufflers are the only ones people profiting from this lunacy.
Inflation is the only lie bigger than the unemployment numbers. Inflation adjusted GDP (if one uses REAL inflation rather than the Fed’s hedonic numbers) has been in recession for a couple years.
If you’re not one of GW’s ‘base’ you’re in deep s*** and most people don’t even know it yet.
The american car companies are struggleing because their car pirces are too high.Lower the dam prices and you will sell some more cars.I will never buy a new car again.I buy used with low mileage.If you add up insurance, sales tax,registration fees and the payment you are in a state of sticker shock. They need to somehow lower their costs and get the prices down and maybe they will start selling again.
Arizonadude,
U.S. car companies are stuck with health car costs, built into the sticker price. Countries that have national health care escape this burden in price–Sweden, Germany, Japan etc. Or, they will have to relocate to Mexico, like Ford’s Fusion plant.
Arizona: Can you say Union? Thats the problem with the American Auto Industry and it has to go away or the whole industry will.
Fla Bubble Meister:
Can u say my cars in the shop again?
The unions had no control of the what was the actual shot in the heart.
Those asshats at GM… arrogance. Had to deal with them for half my life and hated it. Too much of “your talking to the big boys now”. We remember telling them back in the 80’s they were going to get in trouble. “They” said no way the Japanese could build a good luxury car or truck.
Not so fu&king arrogant now you sons of Bi%$hes!
Toyota has gotten so good at changing line production that a new design can roll off in 1 1/2 years (vs 4 yrs for GM). They have unmatched quality per $. Good entry in to all markets. Honda is pretty close.
I just want to watch those guys go under. They deserve it perhaps more than any other company.
Arrogant union workers, arrogant management… now they will all show up hat in hand for a bailout. Then right back to being the same arrogant pukes.
Die slime! Don’t go throwing this load of shyet on GWs doorstep. This is all about Y O U… take some fricking responsibility dangit!!!!
James, tell us how you really feel.
Wow, very well said !!!!
Damn straight. The time is ripe for some new auto companies to emerge in this country, especially if they can help transition us away from fossil fuels.
A “strong economy” has job mobility. Companies face staffing shortages… and will take a chance on a willing applicant with a job history a little different that they were searching for. A “strong economy” also has openings for the inner city uneducated thugs. They may not be getting good jobs, but employers will hire them.
This was true in 1986 or 1998. THOSE were strong economies.
Actually, according to a recent study of American’s health, the “inner city thugs” are not uneducated. It’s Southerners who are uneducated. (When we’re talking about black people, that is. White Southerners always have and still do send their children away to private schools.)
According to the study, inner city Blacks have a similar life expectancy to Southern Blacks because of the higher rate of violence in the inner city versus the poor diet (sat. fat, etc) of the Southerner. Even by such a simple metric as years of schooling completed, inner city Blacks are much better educated that rural Southern Blacks, and we know that Blacks in, say, Connecticut and Minnesota well out-perform even whites in places like Alabama and Mississippi on standardized tests. This squares with my experience of the politically involved and radicalized Blacks of the North versus the complacent and easily-hoodwinked Blacks of the rural South. Life may be fairly good down here all things considered, but the degree of ignorance and complacency is almost enough to make you cry.
Hmm, now in terms of your comment, your typical inner city teenager does deal with a worse school system and limited secondary education opportunities versus the suburban kid in the same metropolitan area. (Though inner city kid was statistically less likely to do drugs than rich suburban kid.) It just bothers me to see that disadvantage so casually equated with REAL ignorance, I’m talking people who CANNOT READ AT ALL. There’s no comparison, in my mind.
A “strong economy” has job mobility.
With “full employment”, it will also has wage inflation…I’m not seeing it.
“The selection of new and existing houses is the highest in years and prices are beginning to fall. The economy is strong and employment is strong, so why are home sales so sluggish?
I had this copied and all ready for pasting below - and I mentioned it yesterday. Since it ONLY makes sense to shell out multiple times the rent on a given house when one is sure that you’d make a fortune on appreciation, the party ends the MINUTE that people aren’t still CERTAIN the price will continue to go UP. Stagnant prices are a death blow. People knew that their own homes were unaffordable three years ago - but they were convinced that there was no risk in buying anyway. The perception of risk has changed. It no longer makes sense to pay so much more over rent. Tax considerations be damned. Pride of “ownership” be damned. Maybe a 10% premium, tops, for putting down roots for your children.
This is why “home sales are so sluggish.” The prices could only be justified by the very fact that they were rising.
“I’m really getting tired of the assertion that the economy is strong. On what basis are people making these statements?”
Rising wages (at least the past year). Rising corporate profits. Low unemployment. High and competitive worker demand (even with illegal labor and outsourcing).
Look, I can see ya’ll having a beef with “the official numbers” to some extent, but we were using “official numbers” to show a strong economy in the “booming late 1990s as well”.
Your beef should be with the UNDERPINNINGS of the economy, namely cheap credit, and how long this can last.
For Joe average, the economy is “not so bad”, and he still thinks he’s doing “pretty well”. But that economy is based on credit.
However, with the current underpinnings, we don’t have far to go for things to change…see Joe average’s NOD rate for an example.
amen
http://www.youtube.com/watch?v=9Ht8sS91wVo
Not to get political - I despise both parties - but Senator Jim Webb in his Democratic response DESTROYED Bush’s State of the Union claims about the strength of the US economy. Webb is not a typical Democrat - he was a former Marine Platoon Leader in Vietnam, and his son is currently a Marine in Iraq. I’d love to see him run for President.
You right.
I admire Webb’s speach.
I would vote for him. ( It will be my first vote).
The record home sales in 2003 to 2005 were an anomaly, driven by rampant speculation. We all know that. Try extrapolating the curve of sales from 2000 to 2002 and I’ll bet you’ll see that 2006 sales weren’t that far below the curve.
As far as the economy is concerned, how do you explain record income tax receipts? Not capital gains tax but income tax. That means more people are working and/or they are getting raises. Last quarter’s Wall Street bonuses can’t explain the size of the gain.
People are getting raises. The high-paid recieved big raises and huge bonuses and the other 95% of workers recieved a 3-4% raise while unofficial inflation runs along at 7%.
Hooray for record tax reciepts the economy is soaring!
Alternative Minimum Tax?
I can explain it:
The printing presses have been running overtime.
Who cares if we’re experiencing record tax receipts? The Gov’t has been devaluing the dollar.
That’s inflation coming home to roost. Remember the stories last year about how the highest-paid wage earners (medical consultants, for example) were getting paid much, much more than they were even five years ago?
Even min. wage has trended up slightly, although food and fuel increased so much I’d hardly say that the poor are now on easy street. Tip percentages have crept up from .15 to .20 because everyone knows that those piddling amounts aren’t enough to live on and they don’t want to look stingy–of course (if the desperation of restaurants is any indication) total eating out among the middle class is dropping.
As the gap between rich and poor continues (and the middle class disappears), more and more of the tax revenue will depend on a smaller and smaller pool of people (who of course will try to push to lower their taxes–”tax burden”–yet again).
Though I do agree that we aren’t seeing particularly high unemployment, we didn’t see that last year either, so the incomes of those lowest on the economic food chain is not the variable in question.
This is why
rich peoplehigh income earners whine that they pay too much in taxes, when of course with a more progressive tax system (ie, one they hate, that makes them pay higher and higher marginal rates) there is a larger middle class which, as a class, will be paying more and more of the taxes … yes, rich people, lower the top marginal rates, pay more taxes in toto and %-wise … but you took more home, so why are you whining again? When the “greatest middle class” was created, the marginal tax rate was the highest in US history.“…more and more of the tax revenue will depend on a smaller and smaller pool of people (who of course will try to push to lower their taxes–”tax burden”–yet again)…”
Really? This article http://www.wtop.com/?nid=111&sid=1065460 says that several states are looking at imposing business taxes on corporations who do business in their state.
Might the problem actually be an over-spending, over-reaching governmental structure which is trying to be a nanny-state?
my county has a dept of “womens affairs”
you mean free healthcare for anyone that tumbles into an emergency room? free meals at school,ss,medicare, medicaid
“‘If it ends up that we spent more than it is worth, that is the luck of the draw, and we will have to live with it,’ Mabey said.”
Props to Mr. Mabey for taking it like a man. At least this is one FB who isn’t crying in his beer.
I thought the same. They seem like decent folks,but living in a building with that many vacants seems like an invitation to criminals.
I assume they’re also stuck with the higher HOA fees.
Well - he can probably afford it, even if it’s overpriced — and maybe he has one of those rare crazy “fixed” mortagages, and is actually planning on living in the place for 5 years — not trying to flip it 6 weeks or 6 months from now.
I have a friend who’s son got a new job in Richmond (from D.C), and decided to go down and buy a townhouse over a weekend. Of course, several months later, he decided the job wasn’t for him, and went off to work in California — where he is a happy renter, but is having trouble selling his Richmond place.
The funny thing is - Richmond seems to have a nice stock of small (8 to 20 unit) apartment buildings and large townhouses that have been converted into 2-6 units. Maybe some of the neighborhoods are a little rough - but not awful.
Except that it was not “luck of the draw.” It was his bad decision to buy a luxury condo in an old bakery building in Richmond. At the top of the market, no less. I wonder how much they paid for their unit…asking rents now start at $985 in the building.
“‘It’s just really frustrating, because I know this is a really good location and the area appreciates so quickly. I just think this is a great deal,’ Kristy Little said.”
TRANSLATION: It’s Special Here!
Geez
As a matter of fact, the appreciation is SO great that nobody is willing to buy your house for fear that it will put them in a higher tax bracket! Yeah, that’s it.
Now buyers think in terms of short term investment in real estate rather than the long term investment it always was . Why anyone would think that it was in the bag to get a profit on home ownership within 6 months to 2 years is strange .
I can understand that there would be some urgency to buy a fixed rate loan on a house while rates were down (2001-2003) but why would a borrower have urgency to get in on a toxic adjustable rate note ? The only answer is that people who didn’t qualify for homes/condos and speculators that were gambling were using these loans .The speculator figured they only needed the loan short term and the unqualified buyer figured the appreciation would allow them to get a better loan within a short time . With no/low down payment requirements what did these people have to lose ? (They lose alot if prices crash . )
When Florida and Arizona went up about 40% in one year you knew that this wasn’t because it was a underpriced market ,based on the local incomes . It’s really discusting what happened to these areas that use to have reasonable priced real estate .
If the bread -makers all of a sudden started charging 10 dollars a loaf for bread the public would be in a uproar ,yet buyers did not back off from the home prices with the power they had because they wanted prices to go up to get in on the get rich quick money . Now you have many long term owners that have to sell because they can’t afford the taxes and insurance anymore . So this housing boom is going to end up forcing homeowners out of property ,which isn’t putting people into affordable home ownership .
It USED to appreciate here…until everything became overpriced…
If it appreciates so quickly, then why are selling?
…are you selling?
I looked up the Littles’ house on the local PVA. They’ve owned it for less than a year; paid just under $198,000 in late February ‘06. The other couple mentioned in the article, the Blairs, have purchased 3 homes in the past 5 years. Both these couples sound like speculators to me.
–
“‘Some of the houses, I know, have been sitting there three years because I know the builder,’ Brown said. ‘With the market so stagnant, it’s obvious this area has been overbuilt in the last 10 years.’”
And there is no need to build for the next ten years. Begining in 2008, residential construction in most parts of the US will grind to halt. The prices of resale, or existing, homes will fall well below the cost of land and construction. That is what gross overbuilding, induced by Reckless Mortgage Lending, does.
Jas
The economy is strong and employment is strong, so why are home sales so sluggish? ‘I think they (buyers) are sitting on the sidelines waiting to see if prices maybe aren’t going to go down a little bit,’ said Becky Murphy, president of the Lexington-Bluegrass Association of Realtors.”
Becky, if employment is strong - what is the hourly wage? Can it support the price level of the home?
The median household income is what $70K or thereabouts for upscale areas and $30K in depressed areas?
If I am not mistaken house prices which tip much over 3.5 times this amount on average are considered inflated, unaffordable, and unsustainable over the long run.
By this standard, Homes in most of Southern California are over 8 X median income and would need to correct by over 50%. Rent values also support this figure.
“It’s just really frustrating, because I know this is a really good location and the area appreciates so quickly. I just think this is a great deal,” she said.
Wait a second, if it appreciates quickly, then… oh, never mind.
“Kristy Little is also hoping that with good weather and tax refunds in their pockets, the buyers will come out to look.”
Wow, very creative. She could almost be a realtor with that kind of logic. Personally, when I get a significant income tax refund, I look at it is poor tax planning on my part. But I guess that if auto dealers can advertise the use of tax refunds for down payments, house dealers may do the same.
Oh, they are. I’ve seen it already.
Isn’t it funny how the two university Econmists from Virginia and Arizona that always used to be cheerleading in the press are completely quiet and rarely heard from anymore. One was Jay Butler, the Va. one slips my mind…
guy at Geo Mason
he’s a paid shill for developers- better keep his head down for a few years
Jay Butler continues to release monthly reports on RE. The reason you don’t hear him anymore is that he’s reported the facts (RE on a major decline), so the MSM stopped quoting him.
“They were on the market until January for $449,000 to $485,000. None sold. They are renting for $3,000 a month.”
I wonder how many people in Richmond Virginia who don’t already own a house can afford $3,000 a month in rent?
Not many. They all own already. Prices are actually still reasonable in comparison to many, if not most places. $3,000/month on a 30-year fixed will buy you a nice five bedroom 3 1/2 bath house on half an acre in the nicer areas west of Richmond where the schools are good and the taxes lower than in the city.
Look at the medium family income in Richmond ~ 60K. I don’t think any of them are buying a 450K+ property let alone spendin $3K per month on rent.
I have live in Richmond for the last 2 years and am enjoying watching the market. One freind said he spoke to some realators and the market is begining to pick up again. However, I know better.
LMAO!
$3000 a month in Richmond?! not likely. that is laughable… yeah good thing they only built 12.
“Housing values are down 35 percent since you last talked to me in this area, and America is on the verge of a recession. But that is good news, said David Lereah, chief economist for the National Association of Realtors, who thinks everything is good news for Real Estate. ‘You want to see some numbers going up and some numbers going down or some numbers staying that same and that’s what we have in this area that makes it such a great place,’ Lereah said during a visit to our area last week. ‘Your area is looking a lot better than most areas of the country and there’s never been a better time to buy here,’ he said.”
“We’ve lost 35% of the passenger cars, and the train is on the verge of a cliff. But it’s never been a better time to come aboard!”
“‘You want to see some numbers going up and some numbers going down or some numbers staying that same and that’s what we have”
…..Brilliant economist, well educated at Virginia, did this clown actually attend classes and get a degree.
Busy week - but i thought that i saw that 40 out of 50 states have falling prices. Was there an article or explaination on the other 10 states? i dont understand what is holding up the prices. It continues to be frustrating in Seattle, where there is still a rush on expensive downtown condos (you need an appointment to actually talk to someone).
Bob, my guess is that people are seeing the NW defy the price declines in other areas, deduce that “wow, the NW really IS different”, and use this justification to purchase. Investors are probably all over this line of thinking too.
IMO, we are just lagging the rest of the country.
Sleepless,
I hope you are right, as $550 for 2 br condo in belltown makes absolutely not sense. How far are we lagging the rest of the country (1yr, 2yrs?)? As i hinted, we were having brunch with friends who had to leave, because they had one of the few appointments allocated with the Gallery codo on 2nd - sheesh …
Bob-
Median in Seattle dropped 40K last month.
It’s not just in Belltown that fools are out buying condos, they’re doing it all over the country. Yes, even in those places where we’re getting the screaming headlines from on these blog articles.
Caution: Do not confuse people buying into a screwed up and falling market as evidence that the market is NOT screwed up and falling. There will be fools buying all the way to the bottom.
And if you really follow the MLS you’ll see there’s a lot more available in the @300K range (SFH) this year than last. A year and a half ago, that was unheard of.
I can’t say for sure but believe that Portland peaked around May or June, 2006. Maybe not in median price, but declines in price and increases in inventory really started happening around then.
If California peaked in Fall 2005, I’d say we’re about 6 mos. to a year behind.
Lots of inventory still in Portland, but I still see lots of Cali plates (ugh!!) and stuff going pending quickly if it’s “special” (house on large lot, unique to neighborhood, etc). Nearly every for sale sign has “price reduced” on it, however.
Seattle might lag a little longer as, in my opinion, at least you guys have some industry. The only thing we really have are a bunch of Linux folks doing who knows what and people at OHSU beating up on monkeys for the sake of science.
About my original post, I just think people are chasing yesterday’s returns by buying in the NW. Kinda like they chased the mutual funds with the best recent returns back in 2000.
Yeah, I think we’re getting a last gasp of speculation here in Seattle, primarily in condos. The outlying areas will drag everything else down before long, though.
“Several blocks away on East Main Street, a sign hangs from the newly finished Cutters Ridge at Tobacco Row: ‘Apartments for lease.’ These same 12 apartments, which look like town houses, were marketed for sale last fall as single-family attached row houses. They were on the market until January for $449,000 to $485,000. None sold. They are renting for $3,000 a month.”
Let’s see now… I could go get me one of those townhouse condo thingies down on Main Street where the taxes are high, the schools are crap, and the bums are many, OR….. I could pay $100K less and get the following…
Open 1-4 PM $379,950 2815 Waterford Way East Gorgeous home on acre lot w/2358 sq ft. New kit maple cabinets, granite top, stainless appls. Wood flrs, new lighting inside & out, new bath w/jetted tub, sunroom, lg deck, vinyl siding, new shed, paved driveway. See photos at: http://www.MarkAdamsTeam.com
Geez, I wonder why those Main Street apartments aren’t selling.
Publication Date: 18-Feb-07