“California Has A Long Way To Go”
The Recordnet reports from California. “Sales and sales prices of existing homes in San Joaquin County dropped in January, and statewide, the picture wasn’t much better. Closed sales in January were down from 417 in December throughout the county to 266 in January, a decline of more than 36 percent, while the median sales price slipped from $400,000 to $376,000, according to the latest Coldwell Banker Grupe-TrendGraphix monthly sales report.”
“Statewide, the California Association of Realtors reported Central Valley, sales slipped nearly 23 percent for the month, while the median sales price of $334,810 fell 2.1 percent.”
“In the Bay Area, sales were down 27.5 percent from December to January, while the median sales price slid by 0.9 percent to $719,320.”
“The association’s chief economist, Leslie Appleton-Young, said the unsold inventory of existing homes also took a jump to more than nine months after an average of about seven months in the last half of 2006.”
The Press Enterprise. “Nationwide, new single-family home sales dropped 16.6 percent compared with the prior month. It was the largest drop since a 23.8 percent skid in 1994, the Associated Press reported.”
“‘It’s disappointing,’ Chapman University economist Esmael Adibi said of the report. ‘Everybody knew the numbers were going to be weak but not as weak as this 16 percent.’”
“Builders in Riverside and San Bernardino counties had 45,485 permits to build single-family homes in 2005. By the end of 2006, there were 33,508 according to the U.S. Census Bureau. Comparing January 2006 to last month, U.S. Census data showed a 37 percent drop in permits.”
“Adibi has forecasted that the weak residential market will do away with 13,500 jobs in California. But he’s more concerned about the resale market. Builders can choose to pull back and build fewer homes, but a market flooded with homeowners holding onto properties that are losing value would be worse for the economy, he said.”
“This year, Adibi predicts prices for existing homes should drop about 5 percent to 6 percent. ‘We don’t think there’s a quick rebound. I think that’s a false hope that builders had late last year,’ he said.”
“Palm Springs Modern Homes developer Dennis Cunningham said he’d feel panicked if he were competing with many national builders who could afford to cut prices drastically to get rid of inventory. Instead, he’s taking the current housing situation for what it is and continuing to build.”
“‘We’re not getting 100 sales a month. We’re getting a couple here and a couple there,’ he said. His 132 units near Tramway Road are being graded and he expects it to be finished in two years. He said he could carry his empty homes for 18 months if he needs to.”
“‘The national guys, they don’t suffer well with standing inventory,’ he said.”
The Santa Maria Times. ” A drop-off in homes sales and new construction is generating less property tax than anticipated. During a mid-year budget update presented to Santa Barbara supervisors, administrators warned there may be a widening gap between income and expenditures after 2008.”
“‘The bottom line,’ added County Executive Officer Michael Brown, ‘is that the period when house prices were going up, and (revenues from) property taxes were increasing’ as much as 11 percent annually are over.”
“‘Probably the big message today,’ he told the five-member Board of Supervisors, ‘is that we’re going to struggle to keep the current level of services.’”
“When the county’s $171 million budget was approved by the board in June, it projected more money from construction of new homes in the North County. ‘However, this has not happened due to a downturn in the housing market,’ administrators noted in their written budget update.”
“The cooler housing market has also meant less revenue from ‘property transfer taxes,’ which are now predicted to be down 20 percent from last year’s total.”
From Fortune. “Equity-addicted homeowners have long hung on David Lereah’s every word. He’s also seen as a booster for the housing boom. With his latest book, ‘All Real Estate is Local,’ due out in April, Fortune’s Ellen Florian Kratz talked with Lereah about where the market is headed.”
“Q: Many think we still have a long way to go. A: If you look at local areas, that statement is true. California has a long way to go. I expect them to continue to experience pain all throughout this year. Southern Florida, same thing. Las Vegas is probably going to take a little longer to correct as well.”
“A quarter of the country is still feeling pain, and I can’t guarantee that it’s going to be over by the end of 2007 for some of those areas.”
“Q: So they could decline into 2008 or longer? A: They could. It’s hard to tell right now. The real key for some of these areas that are having problems is prices. Prices need to come down to bring buyers back to the market. And until they do, they’re going to experience drops in sales. California is experiencing some serious drops in sales - 30 percent drops in some places.”
“Q: So you don’t think California and Florida could bring the whole country down? A: They’ll bring themselves down. But will it bring the whole country down? No.”
“Q: What about the problems in the subprime market? A: I was giving a speech in Atlanta about two years ago. During the question and answer period, someone asked me something about interest-only loans. I said, they’re kind of dangerous and you have to be careful. Someone rose their hand and said, Did you know that in Atlanta, the percentage of interest-only loans in 2005 was 40 percent of the market? Atlanta didn’t even have a boom.”
“That’s when I knew we were in trouble.”
“Q: Will problems with subprime have any effect on your sales numbers? A: I think in some areas yes. Foreclosures are going to happen in California.”
“You may see a rise in Las Vegas or Phoenix or Washington DC and parts of Florida, but it’s not all over the country. The big problem right now is borrowers with a loan balance that may be greater than the value of their home. They have no incentive to make the mortgage payment. They’ll say, I don’t need it, take it. That’s going to occur in some of the real unaffordable areas, like San Diego and San Jose.”
“Q: What surprised you about the boom? A: The share of second home buying. It was 40 percent of the market in 2005. I was in shock. When you have a lot of second home buying, that’s volatile, whereas when people buy a primary residence, they’re buying it to live in.”
“I never anticipated that type of market share in second home buying. That proved to be the end of the boom.”
‘What surprised you about the boom? A: The share of second home buying. It was 40 percent of the market in 2005. I was in shock. When you have a lot of second home buying, that’s volatile, whereas when people buy a primary residence, they’re buying it to live in.’
‘I never anticipated that type of market share in second home buying. That proved to be the end of the boom.’
This is really something, because when the second home numbers were announced for 2004, I was just beginning to understand what the NAR did. As I recall, the 04 number was 36%. That’s spec homes and vacation homes.
DL was shocked; for about a day. Then they came out with a polished line about how second homes were some new paradigm, and baby boomers would own multiple houses in retirement. He also was quick to dismiss the speculative element that was the real explanation. And what was causing this new found second home demand? DL said it was the stock crash and September 11th. No kidding.
I swear the nearest job description I can think of for DL is that of “RE Fluffer”. Akin to the fluffer’s job in the porn industry, the RE Fluffer’s sole function is to keep the market “up” and prevent it from “getting soft” no matter what it takes.
Thanks for that! Laughed so hard you cured my cough…
Post of the day.
Perhaps YTD.
that’s damn funny. but must get image of DL fluffing out of my head.
getting nauseous. out of my head now.
DL should be careful or he’ll get his A$$ kicked by “Roller Girl”.
Funny, but I could have done without the visual thank you.
This comparison is an insult to the porn industry.
This whole “I knew it 2 years ago” revelation is so disingenuous and disgusting on so many levels. Our society has given up all notions of public shame. This guy has been spewing nonsense and writing books about it for years and honest (though senseless) people have taken action based in part on Lereah’s opinions. But it’s all great for him if he gets to sell another book and keep his job for one more day.
95% of all books about Real Estate is crap!
aka How to shaft the next guy!
I agree, the “I knew it 2 years ago” while he kept spewing just makes me gag.
The sad thing is all he had to do was say RE is historically cyclical, that there are risks involved in investing in RE, and not to undertake a RE purchase, even your primary residence, lightly.
From his book description (Amazon website), sounds almost like Kiyosaki’s “Rich Dad, Poor Dad” drivel,
” In this book, I am following Grandpa’s lead. My objective is to offer you some valuable lessons on purchasing real estate. My Grandfather was not the only person to make a mistake in real estate. Mistakes are made by many households and investors every year. The common thread among them— they did not pay attention to local influences and activity.
I believe that if you master the lessons that I have learned over the years on how to evaluate and purchase real estate the local way—you will become a successful real estate investor—and make Grandpa proud.”
Who’s going to document his real estate investing results on the book’s Amazon.com page?
(On the other hand, why make your own mistakes when you can read about his.)
Ventura County Star had an article about the DA going after mortgage fraud.
I want to see undercover investigation of Realtors riggin fake multiple bids on buyers broadcast on 60 minutes nationwide. That would make my day and them some.
LMAO!!! Made my day!
All it took me was watching my first episode of “Vacation Home Search”. Regular folks buying 2nd homes that were more expensive than their primary residence so that they had a place to visit 2-3 weeks of the year. Buying timeshares would have lost them less money.
I miss the assets displayed on that show…
I like the show where the guy refused to buy a home where the market wasn’t going put at least 20% a year. He was a “genius” and “pro”. They liked one home, but the market was up less than 20% in the area, so it was a deal breaker.
In Deer Isle Maine, there were two B&B’s that had pretty good business. A few years back, everyone who used to visit the B&B’s took it into their heads to buy and renovate second homes, with the idea that they could be rented out when not being used by family members. What happened? B&Bs’ business dropped off, many rental properties going begging. Asking prices (for resales and/or renovated houses) are still way, way above what they were three or four years ago, but I believe this will change.
Some great quotes in this press release:
“David Lereah, NAR’s chief economist, said all the factors at play in the second home market were favorable in 2005. “To begin with, the baby boom generation is driving second home sales–they’re at the optimum point in life when people become interested in second homes, they’re at the peak of their earnings, interest rates remain historically low and boomers want to diversify investments,” Lereah said.”
http://www.realtor.org/press_room/news_releases/2006/secondhomesales05.html
nice find, email that to the Fortune writer.
Does the Fortune writer even realize that she enabled the seminal CYA “work” of David Lereah to date?
One doesn’t even have to be that informed to realize it.
I think I will, although I won’t hold my breath for a follow-up story.
You’d be doing us all a favor, thanks.
When I was an investment advisor, a public relations guy said that if I paid $1,500., he could get a favorable article about us in Fortune. Because we were bearish on the stock market, he wanted us to make the article more bullish. I decided not to do the deal.
I will never know if the pr guy was just scamming us or if he needed the funds for the into to Fortune.
Great find. As long as David Lereah keeps getting interviewed, this kind of contradiction needs more attention.
David Lereah Watch
http://davidlereahwatch.blogspot.com
i think this signals that DL knows this shit is really about to hit the fan…before all of the inventory, sales and pricing figures get disastrous this spring, he can sell his book of “research” and say - “told you so, i knew the market was going to tank.” now he will switch from trying ever pathetically to call the bottom. he HAS capitulated that there were bubbles, but they were local - so keep buying overpriced crapholes in TX, UT, WA, etc cuz those markets are ok. no mention of WHY the markets got out of hand tho…
Yes, little mico-bubble, like in Perrier water. They don’t POP. They fizzle, 15%/yr, until there are no bubbles left.
Nice micro-brew… with a long lasting aftertaste.
Yum!
Did someone just steal David Lereah’s body and replaced it with a more honest and anti-california version. DL 2.0???
Thanks Dave for letting the people know you were shocked back in ‘05. That could have helped alot of people
confused, I was thinking the same thing. Who is this guy and what have they done with the real DL?
you also said “Thanks Dave for letting the people know you were shocked back in ‘05. That could have helped alot of people ”
He did help a lot of people: REALTORS!!!! Of course he helped screw a lot of other people.
As far a DL hurting people, did you ever go to a car lot and while your looking at a car, asaleperson comes over and you say “Is this a good car?” I swear most people say that. What does the salesperson say? “No, this car sucks!!” He says “Man, this is the best car on the lot. I was thinking of buying it for my wife! A lot of people have their eye on this beauty!!!”
If people made buying decisions soley on DL’s spewing’s they deserve what they get.
“Life stinks when you’re stupid” John Wayne
i think this signals that DL knows this shit is really about to hit the fan…before all of the inventory, sales and pricing figures get disastrous this spring, he can sell his book of “research” and say - “told you so, i knew the market was going to tank.” now he will switch from trying ever pathetically to call the bottom. he HAS capitulated that there were bubbles, but they were local - so keep buying overpriced crapholes in TX, UT, WA, etc cuz those markets are ok
“Its a great time to pay a realtor’s commission!”
DL sounds like a drug addict to me.. Cocaine induced BS. How else could he keep living in his fantasy world? Hey, DL, time to have the NAR check out your urine!
He gets a bonus from the NAR every quarter!
Sell your soul for a handful of silver!
I’m tellin’ you guys, DL’s next gig is for Big Tabacco.
Being the consumate liar, I’m sure they have their eye on him as their spokesman.
CNN” So, Mr. Lereah, you’re saying that smoking is actually good for you??”
DL. (Chain smoking Marlboro’s) …(cough)…Yes, Diane…(hack, choke)..and now we.. (hack).. have a new..(DL hawks a lugie)…product!!! It’s revolutionary!!…(he lights a new ciggarette using the last one..hack, cough)
We have the “variable nicotine rate” product. (hack, choke)…the first pack is half priced and has no nicotine…but to get the second pack…(choke, hawk another lugie)… you have to drink a pint of liquid nicotine and tar….(hack, choke). It’s our way to help the little guy…(DL passes out and falls off his chair)
Dl’s recognition of the markets change is a critical ingrediant in the public’s recognition that the “good ole days” are gone in the Real Estate market…. This recognition sets the stage for the steep slide in pricing that has yet to avail itself.
Could be why the Ground hog is calling for an early spring,
“Let’s get the party goin’.”
Did you see, among all the recent “27 todate, sub-prime mortgage implosions, a bank in Pittsburgh is closed, 1st in 2.5 yrs…Also in Ann Harbor Michigan, a Credit Union goes into “conservatorship.”
Yes DL a credit crunch has arrived to blow down your real estate dominoes for a soft landing!
If you try to step into the shoes of a Realtor ™, you’ll actually find DL’s comments rather logical. All the way to 2006, DL was trying to keep the party going by the over optimistic permabull$hit. What would have been better for the fellow realtors? I can’t imagine anything else, he did what he was paid to do. As ugly as it is.
Now that the sales have practically collapsed and everybody knows the party is over, and the commissions are just about gone, DL has a new story to tell. The size of the commission doesn’t matter if you don’t sell anything, so in order for the Realtors not to starve, something has to change. And in this economics 101 supply-demand-scheme that has emerged after the late “it’s different this time ponzi-scheme”, the thing that has to give is prices. It’s obvious that there is no other way to prop up the demand. There is no loose money left to give to the crowds. The prices have to drop.
And wonder of wonders, that is exactly what DL is now saying. Pretty big difference from the “RE never goes down” spin that he was chanting just a while ago.
What is disgusting about all this is his claim that he knew it all along that the boom was going to go bust. Well, actually I believe he did know it - anybody with an IQ over 50 probably did - but he sure as hell wasn’t saying so two years ago.
Finnish;
You are correct.
This is what the bubblites have been predicting, prices are coming down to normal, historical levels. Or in other words where they would have been had the crazy bulls**t that happened between 2003 and 2006 not happened. Lereah knew what was going on and where it was going. So did a lot of other people. Hell, we knew. They had to know.
2007, 2008 and 2009 will be interesting, but the time to buy is rapidly approaching. Banks will fail, debt will be erased (oh excuse me, somehow the taxpayer will foot that bill, bank bailouts whatever) the economy will bump somewhat, but the RE market will return to equilibrium, until the next round of stupidity. I’ve lived this several times. Wheather its bad or godd for you depends on how you are positioned.
The other scenario is that the economy willnot be able to handle the strain of the bubble mess and colapse. Not likely but possible. At that point the price of a house won’t matter. You can’t eat it.
Finnish; On the Realtor thing. I am a Real Estate Broker and I have a RE Corp, amoung other business interests and i agree with the Realtor Critics for the most part. I consider my self ethical and I always try to work in the clients best interests. Yes, there are honsest Realtors, folks.
From the front lines I can tell you that, Realtors are dropping like panties at a frat party. NAR expects a 30% decline in memebership this year. Fine with me. I think inexperience is a bigger problem than unethcial realtors, although some Realtors, bankers, mortgage brokers and appraisers definitly bend the rules. Fraud? You bet!! I’ve seen it and I stay away from it and keep my customers awayfrom it also,
If sales decline 30%, prices, commissions will be lower but the market will approach stability. Thats a good thing.
Right now??? Lotssssss of DEALS???? Tooo many and more by the day.
But at this point, I still do not know what a good deal is in my market. I know what sells today and where you have to price it and as many on this Blog have pontificated on, the sellers have to get the message and lower the price. If you want to sell and we think your price is unrealistic, usually we won’t take the listing. I’ve ALWAYS done that, in any market. Thats just plain good business.
But, I honestly cannot tell you if we have bottomed (IMHO, I don’t think so) when we will bottom (IMHO, i think end of 2007, first of 2008) or what the prices will go to. IMHO I think when the median price of a house is 2.5 to 3 times median income, thats a good price point. I personally think prices will for a time, due to the huge inventory for sale go below that stat. Good time to buy.
IMHO !!!!!!!
To price a house, we still have to go by Comparatives. I will tell buyers and sellers that the market is in flux and there is no way to know if a particular house will be worth more or less next year. It’s probably cost me deals but I’m not playing Lereah and preaching the NAR line, “Nows the time to BUY!!!”. Because. I DONT KNOW!! In my market if you buy a house 30% below the 2005 price peak and you plan on living in it for 5 years or more, you’re probably OK. I don’t even talk to “second home buyers” read ‘investors, flippers”. Oh yea, believe it or not there are still a few out there. Talk about being the last ones to know! I’ve been to foreclosure sales and seen these Morons pay 10% less than the house originally sold for in a neighborhood where the last week we sold an virtually identical house for 20% less than moron just paid. Foreclosure doesn’t mean good deal.
I’m not going to tell you to buy, I’m not going to tell you not to buy. I never have in any market. We can have an opinion but, It’s not the Brokers place to give Market Predictions. In Florida,Brokers will do comps but banks don’t loan an comps, they loan on appraisels. The bank loan is on the appraisers head. Hint; if you’re a realtor, let the bank select an appraiser. They usually do. The whole process is out of your hands. Don’t meddle in it.
Don’t get me wrong, If i think a buyer or seller is really obviously screwing up, we will say we don’t think its a good deal. I won’t let anyone step on an obvious land mine. I’ve advised people in the past that the deal they are looking at is obviously over priced and have been accused of wanting the deal for myself. Go figure.
When it comes right down to it, my opinion is just my opinion. Opinions are like butt holes. Everyone has one and most of them stink.
If someone buys or doesn’t buy based on my opinion, and I’m wrong, I have a problem. There is potential liability. Subsequently, my clients don’t get my opinion. They get comps and they get appraisels, make your own decision.
Honestly, I don’t know how Lereah can look at himself in the mirror.
Great post! Thanks.
This day about did me in. Frustration level at all time high.
TxChick, please explain.
Good explanation above with the fluffer reference. I can’t stand this happy horseshit another day. Denial everywhere. The housing market is dead and so is the bull market in stocks but they won’t just let them fall and be done with it.
I agree.
Nikkie and Seoul down 1/2% in early Friday trading. Keep the faith.
People with vested interests know how important psychology is in both markets. They are merely trying to speak their hopes and dreams into existence.
Also important to make sure bloggies don’t get in front of the biggies when its time to head for the exits.
DL is yet another expert who “knew” what was coming! (Lying sack of human excrement.)
Is anyone else suddenly finding they are surrounded by a bunch of people who “knew the bubble bursting” was coming? I find it very interesting that three years I was totally alone in being a bear and still remember the extreme relief I had when I found someone who shared my views. (And steered me here - thanks Kevin!) Now I keep running into all these people who supposedly were just as negative as I was and were warning everyone they knew too.
All I can say is that they were a lot quieter than I was because I sure felt like a solo voice for a long, long time.
(And I’ve started taking notes on who says what. If someone predicts another 10% decline but says my 30% prediction in SD is insane I make a note of the date and prediction. I am tired of rewritten histories and people who are supposed geniuses after the fact.)
Totally share your frustration & have experienced the same thing.
We sold our house in 2004 and **not one single person** supported our decision. All we heard about was how we were going to miss out on “all that appreciation” by “throwing our money away” on rent.
Needless to say, there were some who were downright nasty and threatening when we divulged our intention to rent “while the market dropped”. Many told us we were stupid because we’d be “priced out…FOREVER!” (love that one)
Oh well, at least we on Ben’s HBB know the real truth.
Top policymakers have staked their reputations on their collective assurances about the soft landing underway. Now they have to make sure to successfully engineer a soft landing, or once again rely on Americans’ soft brains to ignore its absence. So you can see why they might be reluctant to let the markets go where the invisible hand wants to take them at the moment.
Stucco;
Lots of truth to your post.
This whole soft landing issue I think depends on your position. Assuming that a soft landing is defined as prices slowly declining, units sales smoothly increasing, a little tightening of credit, but not enough to kill the market.
Does this ever happen in any market? No. Some get killed, some profit, depending on your position. Some land hard, most don’t and most of the soft brains are to
busy watching American Idol to even comprehend the situation.
A lot of debt has to be erased. Like I’ve said the taxpayer will absorb the loss, like in the S&L debacle.
If you don’t work for, invest in, own a piece of, or have purchased mortgages from say, a subprime lender, who gives a s**t if they go belly up. They landed hard. I didn’t feel a thing.
The guy two house down is at least 200K upside down in his house. He’ll never sell it, it’ll be foreclosed on and he may be financially ruined. Hard landing for him. I didn’t feel a thing. etc, etc, etc. The comp on my house is effected, but I’m not selling so, so what. My taxes and insurance will eventually go down. Good for me bad for him.
Some people will land hard, as you say most won’t realize what’s happening. The tax payer will take up the slack in increased taxes, it’ll be relatively painless.
In the S&L thing, did you feel anything? I didn’t. The Feds picked up the tab for the whole mess so we all paid and probably still are.
It’s not like we are all on the same crazy bus going over a cliff. We have to pay the cops and Paramedics to cleanup the mess, but I didn’t feel a thing.
The upshot is some will fell the hard landing, most wont.
The critical factor is that the RE market will return to equilibrium, prices will become sane, with lots of bargains for a limited time while sales eat up the excess inventory.
I don’t think the policy makers can agree upon what to do, let alone enact any type of legislation before the market takes care of itself. Thank God for that. Who the hell got us here in the first place!!1
Hang in there Txchick. This is where you earn your money.
Amen, brother. This is what we’ve been waiting for.
David knows the “bear” is in the room with him and he has his eyes closed trying to “wish it away” before it bites him on his sorry @ss.
The RE “profession” is a stinking pool of scum. I hope this crash buries this “profession” forever.
Seattle: a lot of good honest realtors out there.
Don’t let the few taint the rest of us.
Chick;
This is good!! Cracks in the Dam!!
I love how David Learah can only state the obvious. EVERYTHING he projects forward past about 3 months is wrong, always. It is interesting to look at it from his perpesctive though. He doesn’t care that much about housing price drops, he cares about the $$ volume because that is where realtors (R) (with ethics classes) make their $$.
Didn’t he state a couple of months ago at least 5% appreciation this year? Everyone and their brother is down on housing, sub-prime, now mid-prime is getting hit yet the HB’s were basically up again..Go figure…
http://finance.yahoo.com/q/bc?s=TOL&t=1d&l=on&z=m&q=l&c=kbh,dhi,hov,phm,hov,bzh
This is why I don’t short stocks. I forgot who said this but: The market can remain irrational longer than you can remain solvent.
John Maynard Keynes, smart guy but his central economic planning ideas makes me a little nauseas.
Keynes was quite successful as an investor too. I must say I prefer his shtick to Uncle Milty’s (Milton Friedman, U of Chicago) self-regulating free market monetarism. Have you heard this one? How may U of Chicago economists does it take to change a light bulb? None…if the light bulb needed changing, the market would have done it already.
No, it goes like this:
How many Chicago economists does it take to change a lightbulb?
The invisible hand will do it.
Lereah’s previous book:
Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market by David Lereah
Lereah’s new Book:
Why My Real Estate Lies Will Not End – And How I Can Profit from It: How to Alter the Facts in Today’s Imploding Real Estate Market
by David Lereah
Paperback: 288 pages
Publisher: Lieman & Shyster
Language: Bullsh*t
Product Dimensions: 8.1 x 5.5 x 0.7 inches
Shipping Weight: 3.20 ounces
Customer reviews: 0
Be the first to throw up.
OT:
OFHEO housing price index was released today. I have graphs for all the MSAs here:
http://www.housedata.info
That’s interesting, we have criticized OFHEO for not showing the debacle as it is, but the CA data in today’s OFHEO stuff look pretty ugly.
Looking at the historical data of the last housing bust, it appears HPI lags 2-3 quarters behind other price measurements (and then takes forever to be published).
The homebuilders rallied today because of this report. On average it is positive…..
WooHoo a 200k Bay area house..
http://sfbay.craigslist.org/eby/rfs/286667052.html
LOL! I seen worst… and was asking more.
Sacramento Housing Market: 9th Biggest Loser
So far, so bad:
1990’s bust: -2.34% after 1 year
2000’s bust: -2.41% after 1 year
FL has no decline in the 90’s
it is different this time
thanks for the link
OT. A warm and fuzzy article from WPB. Don’t these idiots realize they have too many condos already?
http://www.palmbeachpost.com/localnews/content/local_news/epaper/2007/03/01/m1a_DIGMUP_0301.html
Wonder who’s giving Ahmed the dough to build the approved 58 units. Or maybe he has a private oil well somewhere in the Eastern Hemisphere, and just needs the 58 condos as money-losing tax dodge.
So, how does it feel CA, NV, AZ, FL now that DL is cutting you loose? You have become the problem child that needs to be sent away.
Does DL need a list of foreclosures from every damn podunk town and big city to prove to him this market is indeed national ?
im in CA but i feel great cuz im gonna buy tons of investment properties in CO. DL didnt mention it so it must still be a great place to buy!
“FL”
Did he cash out of those condo investments then?
Last night we had some people we know in Real Estate (the family is involved in every gamet) trying to get us to buy. Said the state of NV is sponsoring a new loan program that would be great for us. Only have to come up with $500 up front and the payments are low. Even went so far as to tell us someone they got into one of these last month has already built 40K in equity. In one month?? Please!! Things are getting desperate. Not 10 minutes later one of the moms at the function I was at mentioned that she had just gotten laid off - from an Escrow company. She said all the Real Estate people are hungry.
Thanks DL for cutting us loose!!
“Even went so far as to tell us someone they got into one of these last month has already built 40K in equity.”
Ok, you must of forgotten to add that after this comment you proceeded to shower your guest in an involuntary spewing of your favorite cocktail.
This comment was the nail in the coffin for me - they don’t know I’ve been doing my homework.
Reno Girl
You ought to send that realtwhore the latest OFHEO report. Reno-Sparks 3rd worst market in the nation. 40k equity my a$$.
I’m going to have to start checking in with some of the people I know who are still in the r.e. / mortgage / title / escrow business and see who is still standing.
Neil, the previews may be almost over, I better get my icee and a seat…
The one person I knew who was an agent in Sacramento is now a siding salesman - I’m not joking. I can’t make up stuff this good.
Neil, the previews may be almost over, I better get my icee and a seat…
And remember, the opening scene will be like “Saving Private Ryan.” Quite a bit of gore.
Part of me just cannot believe I can see the train wreck coming and just go “about time.”
OC, LA, and Ventura counties will have interesting job pictures pretty soon. Soon people will stop saying RE can only go up. Not yet… soon.
Got popcorn?
Neil
The one person I knew who was an agent in Sacramento is now a siding salesman - I’m not joking. I can’t make up stuff this good.
I know a guy who used to run a tech company who is now peddling vitamins in a multi-level marketing scheme. True story!
No offense Neil but I think it will look more like John Wayne in the Alamo. The FBs will be surrounded by angry Mexicans while a bunch of fires are burning around them and they will choose to blow themselves up instead of letting the house go back to its original owners.
Yes,
Gruesome. But not as bad as the sequel “Shaving Ryan’s Privates”
“I’m going to have to start checking in with some of the people I know who are still in the r.e. / mortgage / title / escrow”
I just got an email last night from an acquaintance that he left his former mortgage brokerage and joined Countrywide. Hmmm….just in time for the big layoff.
Last in, first out. Ouch.
Obviously, your female guest doesn’t have a clue about market pricing! “She must save alot of money when she shops/spends!
hey, your prediction about Mar 1st (and inventory) is pretty damn right…
inventory here shot up like a fluffer. I mean, 20% in one day.
Where can we see numbers?
San Diego’s dropped. From 17,5?? to 17,443. We are nowhere near our high of 23,000 last spring. Anyone know why?
Realtors won’t put them on the market unless they are priced right.
Because we were ahead of the curve. The time for increased inventory from private sellers was fall of 2004 through fall of 2006. Now, there is little/no equity in 2004+ purchases, so no motivation to sell (either to cash out or move up).
From this point forward, people will choose to rent it out, ride it out, or “live free until they kick me out”, IMHO. I believe we won’t see real inventory increases until late summer when more REOs hit the streets — after the “homeowners” have been evicted. The foreclosures will likely lead the market (should be a critical mass forming) by the end of the year. When this happens, along with the mortgage problems, we will begin to see significantly lower prices — probably continue into 2009 & beyond.
Thanks CA renter. Just wanted to make sure I wasn’t dreaming about 23,000 last spring.
“So, how does it feel CA, NV, AZ, FL now that DL is cutting you loose? You have become the problem child that needs to be sent away.”
Tis a mere flesh wound. Only most of the West and one of the most populous states in the South. And Mass and Wash DC how are they doing, huh Davey the Fluffster, The Fluffmeister, The Fluffy-Fluff, The Flufflynosa, The Fluffsinizzel Bobizzel, King Fluffy Boy, Oh Mighty Man with the Tired Hand, The Lying Priss with the Aching Wrist…… Mmmmmm?
I wish Lereah was a fluffer. At least his mouth would be too full to speak.
I love the old SNL
We were always the problem child out here.
Got a new signal this week: a Beverly Hills broker pamphleted my tenants with pitches for houses for sale asking up to $4.5 million. My tenants are paying in a range of 1200-1700 for 1 bedroom apts - so they are going to be prospects for BH mansions? Gimme a break… can you smell the fear and desperation?
“I was giving a speech in Atlanta about two years ago. During the question and answer period, someone asked me something about interest-only loans. I said, they’re kind of dangerous and you have to be careful. Someone rose their hand and said, Did you know that in Atlanta, the percentage of interest-only loans in 2005 was 40 percent of the market? Atlanta didn’t even have a boom.”
“That’s when I knew we were in trouble.””
So this guy finally admits he knew the housing/mortgage market was a house of cards in 2005 but kept on pumping the bubble. Henry Blodget, Jack Grubman, Bernie Ebbers, Jeff Skilling, David Lereah…
What do you mean, “pumping the bubble.” That schmuck said there was no bubble. Maybe a little, “froth,” in a few local markets, but no bubble.
Josh
Read the Fortune article…
The blog David Lereah Watch made his mother cry.
That makes me cry with joy. F’em and his m-f-ing mom.
Bring back shame and bloggers keep up the good work.
Here is a hint for Liareah.
Don’t lie in the media and your mom won’t have to cry in shame for the disgrace that you bring upon her.
If she didn’t think it rang true, I think her reaction would have been anger, rather than tears.
He is full of ish. If he knew back in 2005 then why did he buy this investment condo in NoVA:
http://bp0.blogger.com/_SfxDExxUukY/RdvNKZNOQHI/AAAAAAAAAA8/ZdlwHVy5xmY/s1600-h/dlcondo.JPG
Brings a tear to my eye he is out 27k…
LMFAO!
Here is come “toxic” kleenex for your mom to cry into! F-her!
After having ruined peoples lives for at least 10 years, he feels for his momma having to cry. I say we put her son in jail with that guy in Missori.
You’ve been accused by the blog David Lereah Watch of being too bullish. What’s it like to have an online antagonist? At first I was kind of laughing. And now, it’s enough already. This is a 26-year old that could not afford a townhouse and blamed it on the boom. And then he said, Who’s talking about the boom and my name kept coming up. So I became Satan to him.
The worst was that my mother read one of those things, and she almost started crying. And I had to say, Mom, you have to have thick skin. I’m going to be in the public and make statements about real estate, and if someone doesn’t like what I’m saying, they have every right to say something opposing me.
Now should they go so far as to call me Satan? I don’t understand where that’s coming from. That’s just weird.
People speak and react harshly when they fear something. In this case, fear of exposure perhaps?
I read in the Wall Street Journal that Satan was suing for defamation of character. Comparing him to David Lereah crossed the line.
LMAO, Thanks
He’s obviously never been divorced. Amoung many things, I’ve been Satan, The Anti Christ, Offspring of Hitler and my all time favorite, Dick with Ears.
Of course there were the standards, lying SOB, M****R F***er, Cheating Bas***d, etc, ect.
Again, his Mom was probably crying because she bought Real Estate based on his advise and was wiped out.
Shes probably crying because she took his advice and bought Real Estate.
His next book should be “How I lied and made my Mommy cry and blamed it on some 20 something blogger who wanted to buy a town house”
What an asshole.
“That’s when I knew we were in trouble.”
That’s when we know you were lying.
It’s as if this guy doesn’t know his words, like no one else’s, have been catalogued through this whole mess.
He’s trying to re-write history with each “I knew it” proclamation so that 2 years from now it’ll look like he didn’t say what we all know he did.
Bring back the stockade. And someone hand me a tomato, damnit!
“his words, like no one else’s, have been catalogued”
And in books he wrote to profit off the boom his cheerleading helped to spawn, no less…
That new one is being released just in time to go straight to the remainder bins now that damn near everyone recognizes that real estate is not going up anymore and is unlikely to do so again for quite a long time.
The problem is, not everyone recognises this yet. I still know people who want to buy before they get “priced out forever” even though they will have to use an interest only loan.
“Bring back the stockade. And someone hand me a tomato, damnit!”
Tomato?!? Hell No!! “Can I have a large flat one Mum- err.. Dad?”
Anyone hear KQED Radio in San Francisico this morning with 3 different ecomomists/investment advisers ? The guy from businessweek insisted that housing was such a small part of the economy that the housing slowdown didn’t matter. Gary Fischer in SF said the Chinese investment market was too small to be of any consequence and all would be well if we just stopped our stupid panicking and looked long term. The host made a crack about the “Housing Bubble that never was” and to my surprise the 3rd economist nailed him “Are you saying we don’t have a housing bubble ?” The host hemmed and hawed “well, it’s been called other things too”. The economist replied “We’ve had many housing bubbles in the past but this one has been the biggest and longest so far” and went on to explain that just because the Chinese had lent us a lot of money for real estate didn’t make us smart and them dumb because sooner or later they will need to be payed back in full or the money will stop being lent. I thought well at least one economist understands ripple effects while the other two were just plain arrogant about how “Powerful” the U.S. economy is and how nothing short of a global crisis will affect us and even then everyone will rush to our market for “Safety”.
The third guy is Chris Thurmberg formerly of UCLA. He’s been talking about the bubble for quite a while. It’s actually interesting that some economist are still not worrying/talking about the housing bubble. Maybe they are just looking at the subprime and MBS different than everyone else
“Housing Bubble that never was”
I heard that too. I almost pulled over to call in and give that guy a piece of my mind. But then he later basically admitted that there was a bubble and all was well. But I was surprised to hear such a feel-good, be happy piece on NPR.
I was watching the Bernanke testimony before Congress on CSPAN last night. When one of the Congresswoman from, I believe, Ohio questioned him on whether there would be an implosion from subprime, he responded that the effects would be limited to subprime borrowers and would not affect the economy as a whole. Later, this Congresswoman, or another person, pressed Bernanke and insisted that there were many people who had “A” credit loans, but who had overstretched and would be in trouble as well - due to a slowing economy. Bernanke didn’t have anything to say to that, other than some b.s. party line which really didn’t address the issue/question.
I heard the same b.s. on CNBC on that Fast Money show on Tuesday night. The MSM and the shills are going to keep the game going until there is no one left to fleece, apparently.
“The shills are going to keep the game going until thereno one left to fleece”
Indeed, that is the game plan.
John Uptick
It was different story on tonight’s Fast Money show though. They got Herb Greenberg on the show on the Street Fight segment and he basically told thing how they are. The US consumer has floated the US economy for years and now the house ATM is empty. And whats really driving the stock market down is that people are slowly coming to that realization. The game is over. There ain’t going to be no more boom until the hang over from this party is over.
At one point the panelists all agreed. And the commodities guy said that if Herb was right, the whole market was going down. That was said right on national TV !
What dial setting is KQED?
88.5 FM in my area
actually it did make them dumb… they bought a lot of those MBS securities expecting a great return on a low risk investment at a time of low treasury yeilds… Then they diversified out of treasuries from 03-06 into higher yeilding MBS that made em even smarter. (chart 14 below)http://www.uscc.gov/hearings/2006hearings/written_testimonies/06_08_22_23wrts/06_08_22_23_setser_brad.pdf
I just listened to the podcast of this program (KQED’s Forum). Much of the discussion was centered on the stock market, China, and the broader economy. Chris Thornberg brought up the housing bubble several times, and one noteworthy remark he made was regarding Alan Greenspan:
“When you think about what’s going to happen this year, and the state of the housing markets, well, Alan Greenspan is completely to blame for that. In many ways, he was also to blame for what happened in the late ’90s - that big run-up in the stock market - and doing nothing about that. I would argue that, legends aside, his record is extremely dubious when you take a close look at it.”
Once again, Mr. Thornburg appears to be the only “name” person regularly quoted by the MSM who’s been paying any attention at all.
Thankfully, at least we have him.
You can find a 1 hr presentation by Thornburg on Google Video Utube…
Christopher Thornberg, senior economist at UCLA’s Anderson School of Management, offers his perspective on whether the recent cooling trend.
He hits several good points.
http://video.google.com/videoplay?docid=-2640239019877885520&q=housing+bubble+Thornburg&hl=en
Sorry if this was posted…
New Century cuts 300 jobs, including 124 in OC, but other lender to add 250 jobs locally
New Century Financial Corp. of Irvine said today it cut 300 jobs, or about 4 percent of its workforce, including 124 positions in Orange County.
The layoffs are effective immediately, said a spokeswoman for the real estate investment trust.
In today’s tough lending environment, the company is looking for any way to cut costs and increase productivity, she said.
“Regrettably, layoffs are one such alternative,” she said.
The company, which makes loans to people with past credit problems, has not yet set a date for when it will release its fourth-quarter earnings, she said. It previously delayed the report and said it needed to set aside more money for bad loans.
In sharp contrast, another lender, EMC Mortgage Corp. of Texas, said it’s opening an Irvine office and looking to hire 250 workers. EMC is owned by investment bank Bear Stearns, which recently acquired Encore Credit, the main unit of ECC Capital in Irvine.
Any pool on how many EMC actually hires?
I say 50 and then a “strategic decision to refocus on core operations.”
Got popcorn?
Neil
From JL’s blog.
O.C. home price index falls in 4th quarter, 1st loss in a decade
The federal home-price index shows that Orange County home values fell 0.28 percent in the fourth quarter from the previous quarter – the first such drop since 1996.
Local prices were still up 5.53 percent in the year ended in December, the Office of Federal Housing Enterprise Oversight says. The index’s home values come from researchers looking at sales trends as well as valuations contained within mortgage refinancing. To see how other price indexes value O.C. homes, CLICK HERE.
O.C.’s fourth-quarter year-to-year gain pales, compared with the 20 percent gain seen at the end of 2005. It’s the slowest rate of annual appreciation since the end of 1997.
Five California communities ended up in the bottom 13 of 282 major U.S. markets for fourth-quarter annualized price change. Santa Barbara was second from the bottom, with a 4.2 percent loss. San Luis Obispo ranked 276, down 2.6 percent. Sacramento was 274th, down 2.4 percent. Yuba City was 271st, off 2.2 percent; Santa Rosa was at 270, down 2 percent.
Nationwide, the federal office found: “The rate of home price appreciation in the U.S. remained steady in the fourth quarter of 2006, extending a general trend of deceleration begun earlier in the year. Home prices, based on repeat sales and refinancings, were 1.1 percent higher in the fourth quarter than they were in the third quarter of 2006. This is slightly above the revised growth estimate of 1.0 percent from the second to the third quarter. Prices in the fourth quarter of 2006 were 5.9 percent higher than they were in the same quarter in 2005.”
“O.C. home price index falls in 4th quarter, 1st loss in a decade”
How can The OC’s vaunted high-living lifestyle survive without massive home equity gains to fuel consumption spending?
How can The OC’s vaunted high-living lifestyle survive without massive home equity gains to fuel consumption spending?
It won’t. We have a coworker about to quit because “he’s tired of the grind” and his OC house is now worth $1.5M. I had to chuckle.
I cannot wait to see what pops up in the used car lots in OC over the next 18 months…
Got popcorn?
Neil
No popcorn, but I have a lot of cash and could use a new(ish) car.
See you in the OC…
“Calif communities … in the bottom … of 282 major US markets for 4th-quarter annualized price change. Santa Barbara was second from the bottom, with a 4.2 % loss. San Luis Obispo ranked 276, down 2.6%.”
Phew. And to think I was worried because SLO seemed to be holding up too well. (Wanting to buy in Morro Bay or Cayucos some time.) Given this downward start, and the subprime mess, I can be optimistic that by this time next year something will be affordable. ???
“That’s when I knew we were in trouble.”
You have got to be kidding me. This guy is such a freaking f-tard. According to his last book, home prices were supposed to rise for the next decade. You have no idea how happy I was to see him admit that San Jose is going to take an a$$ pounding.
LOL! San Jose ? I get a chuckly when I think of places selling for $1,000 per sq ft. around here.
Its going to look ugly! SJ biggest MSA with Toxic Loans…
Here’s another one:
SoCal new-home market seen in short-lived, severe disruption
Thoughts from the O.C. builder consultants at Real Estate Economics contained in their recent review of the SoCal new-home market …
• During the past 12 months, the average base price for new homes has increased by only 1.3%, and the average price per square foot has increased by 2.8%.
• Average price and price per square foot have actually fallen since 3rd quarter 2006, reflecting the impacts of the current market disruption. Much of the recent change is attributed to price depreciation as builders have increasingly been forced to offer concessions or reduce pricing to a level more fully supported by the regional economy.
• Concessions have increased dramatically during the past several quarters … Advertised incentives have almost tripled since 4th quarter 2005. Advertised concessions averaged 1.37% of base price during 4th quarter 2006 as an increasing number of builders began to implement programs needed to move inventory.
• The economic foundation that supports new home prices remains very strong in Southern California, but the unrealistic run-up in pricing (largely caused by speculative buyers during 2005 and the first part of 2006) is now in the process of settling down toward regional economic support.
• The rate of monthly sales has fallen by 24.2% since 4th quarter 2005, while the average sales per development has fallen to 30.9%.
• The overall level of inventory of new homes has increased by 47.2% during the past 12 months, while the total months of inventory (which accounts for slower sales rates) increased by 94.1% … While total inventory has not ballooned out of control during the past few quarters, slower sales per development have caused a dramatic increase in the months of new home inventory.
• Though the market disruption has been severe, we feel it will be fairly short-lived. Stabilization will be evident by mid-year 2007, producing ‘normalized’ market conditions that won’t approach the frenzy experienced during 2005, but will mark improvement from 2006.
“SoCal new-home market seen in short-lived, severe disruption”
********
How many “severe” anythings are short-lived?
LOL!
And…
“The economic foundation that supports new home prices remains very strong in Southern California, but the unrealistic run-up in pricing (largely caused by speculative buyers during 2005 and the first part of 2006) is now in the process of settling down toward regional economic support.”
I’m not an OC expert, but does not “regional economic support” include the lending companies now going out of business?
LOL!
“economic foundation that supports new home prices remains very strong ”
Median household prices are 10x median household income - is that a “foundation” that supports homebuying?
And….
“Though the market disruption has been severe, we feel it will be fairly short-lived. Stabilization will be evident by mid-year 2007, producing ‘normalized’ market conditions that won’t approach the frenzy experienced during 2005, but will mark improvement from 2006.”
Translation:
“We are unbelievably freaked-out right now. This market is in shambles and if somebody doesn’t step in and enable the buying of anything we are completely hosed. If somebody believes our bullshit and starts buying the crap we build, 2007 will be better than 2006 and we’ll survive to fight another day!”
During the past 12 months, the average base price for new homes has increased by only 1.3%, and the average price per square foot has increased by 2.8%.
What’s neat is that these numbers don’t even keep up inflation, so real prices are in fact falling.
1.3%, ha! I have a checking account that pays more than that, and it’s FDIC insured to boot.
Can’t imagine what the Mello-Roos taxes will be for those new property owners in the Great Park area…
Great Park to cost $1.1 billion
http://tinyurl.com/ynnmmd
The Santa Maria Times is such a rag. You will notice that the article is concerned with the drop in government revenue and gives not a wit about the fact that the private sector is taking it right in the nads.
Neither the Santa Maria Times nor the Santa Barbara News-Press have said word one about the skyrocketing increase in Notice of Defaults or the hugh drop in property values that have occurred in the last 6 months. If it wasn’t for this blog site and other internet sources of information I wouldn’t have a clue as to what’s happening.
Same here in the Ventura County Star….Regarding trustee Sales
“‘The bottom line,’ added County Executive Officer Michael Brown, ‘is that the period when house prices were going up, and (revenues from) property taxes were increasing’ as much as 11 percent annually are over.”
“‘Probably the big message today,’ he told the five-member Board of Supervisors, ‘is that we’re going to struggle to keep the current level of services.’”
Why did you keep upping salaries and not bank the funds for the future? You don’t have to decrease the level of county services you just need to lower the wages and bene’s paid to the county and city workers!
Not to mention building Taj Majal city/county offices. I honestly believe, that with rare exception, people working in government are incredibly clueless. Either that or they are just morons. I’m hoping it is the first of the two, but how could they be so short sighted to budget based on revenues from the biggest housing bubble EVER! I wonder if one person ever raised their hand and asked if revenues might actually decline once everything imploded? This is just the tip of the iceberg. I wish one of the government hacks would stand up and tell me how they plan to fund all the lavish retirement packages they give out. Lifetime health and people making more in retirement than when working. Jesus, I can sympathize with txchick, this is all getting so frustrating.
How they plan to fund: tax increases, tax increases, tax increases. Of course it can’t be property tax. So it’ll be something else.
I suspect the local governments will also follow the lead of their constituents: they will default on their debt service obligations, much like the deadbeat OC.
air tax… levied on all people to paid in full every months for the consumption of air in a localle. They could disguise it as a green initiative to combat smog and pollution controls.
I suspect that some of the promises will also be broken with health care being the first to go. It’s the not first time the government has simply not sent the money that it’s promised.
You left out #3. Our overlords know what they are doing but are selfish and evil oppressors. I don’t know how one can work in the government toe the line and not be evil.
Jdd,
Amen Brother! The guys behind the scenes and at the top are certainly evil. The rest are just neutered dumbasses who know that they really don’t need to provide any services to keep the money flowing.
FB’s, GF’s, Bitter Renters will all get pissed eventually, and then the gooberment employees will be sucking air.
cannot wait
“Not to mention building Taj Majal city/county offices.”
The City of Corona was in the process of constructing a lavish new City hall/civic center back in early 2006.
Moreno valley put up a completely new Gov’t office complex, and the nearby Riverside county waste management facility is state of the art brand new.
LAUSD lust moved their headquarters into a newly constructed Hi-rise right off the 110 west of DWTN LA.
The most impressive brand-new state of the art bldgs in Santa Ana are the City Jail and the Ronald Reagon federal bldg.
I know there has been construction of a massive facility in DWtrn LA which I believe is the new site for the LAPD.
The local, county, state, and Feds will keep on spending lavishly on new construction because of the generosity of the Cal Voters who keep voting for all those state bonds. If Local revenues do fall due to shrinking economy the Gov’t will indeed put the squeeze on taxpayers by any means. Look for increased traffic ticketing to boost needed revenues.
“I was giving a speech in Atlanta about two years ago. During the question and answer period, someone asked me something about interest-only loans. I said, they’re kind of dangerous and you have to be careful. Someone rose their hand and said, Did you know that in Atlanta, the percentage of interest-only loans in 2005 was 40 percent of the market? Atlanta didn’t even have a boom.”
Two years ago was early 2005. How did someone raise their hand to inform Mr. Lereah that 40% of the Atlanta market in 2005 was interest only? What? based on Jan/Feb?
I think he meant sometime in 2005 he was giving that speech. I don’t think he intended that as 24 months ago.
Some people’s time perception is not so sharp. Those same people probably aren’t very sharp in other areas too.
BTW, does anyone know what the foreclosure stats look like in Atlanta? Just curious. It just seemed like alot of the hurricane refugees went there and I wonder how many were sucked into the toxic loan siren song.
This is 1987 all over again.
http://news.yahoo.com/s/ap/20070301/ap_on_bi_ge/securities_fraud
Like I said above, bring back the stockade. It’s time to publicly humiliate these people.
March ‘em out there and let ‘em face a little street justice.
Forget the popcorn, who’s got the tomatoes?!?!
Can’t forget the popcorn until Neil assures us he has no stock in ConAgra
rotfl.
No ConAgra stock.
Much a buncha!
Got popcorn?
Neil
does moosemunch count?
Hey….OUCH!!!
“Forget the popcorn, who’s got the tomatoes?!?!”
Forget the tomatoes. Who’s got the brass door knobs?
We can break up a bunch of granite countertops. I hear those make great projectiles.
I’ve got a potato gun. All you need to do is put the granite frags in front of the potato, and a piece of oil soaked steel wool behind it and Presto! Flaming granite countertops!
“The SEC said the scheme involved unlawful trading ahead of upgrades and downgrades by UBS research analysts and corporate acquisition announcements involving Morgan Stanley’s investment banking clients.
It said the ringleaders of the UBS part of the scheme went to great lengths to hide their illegal conduct with tactics including a clandestine meeting at Manhattan’s famed Oyster Bar and eventually the use of disposable cell phones, secret codes and cash kickbacks before the scheme unraveled.”
Excellent! Cloak and dagger meets Wall Street. I expect one of this guy’s students to write a book about the story soon…
http://www.samuelfreedman.com/
You remember all the times I would rag on Hedgefundanalyst about how easy it was for people like him to master the world when they have information available to them that the rest of us don’t. He would make snide little remarks back like maybe I couldn’t cut it in NY. I never tried to. But this is what I’m talking about. These people who are making huge dollars do it by stealing, lying, cheating, operating on squawk box info, insider info, etc. And they’re held up to the rest of us mullets as what we can’t match.
I’m ready for a rubber room. The top must be here because I’m about to check shave my own head and check into Promises for a month myself.
Relax. The world will keep spinning, the markets will correct but will come back again, it will all be OK…
we don’t want them to come back, stucco. we want the crash that we are all due. A little sanity is all we ask.
The Fed hasn’t moved yet. There are still many, many levers for Bernanke and company to pull, and they will most assuredly pull them. The helicopters may not be airborne, but you can darn well bet they are very well maintained.
it is going to happen, tx. And you are the proof of WHY it is going to happen. Because da boyz like hedgefundANALyst have actually cooked their own gooses. They’ve forgotten the first law of being good parasites, which is: NEVER kill the host. Well, they’re killing the host (us). Secondly, since the money is only as good as the confidence in it, the money is worthless because no one with half a brain has any confidence in the money or the system, as evidenced by your frustration. And by the way, it’s OUR money, because it is OUR confidence that makes it valuable. When we and others withdraw our confidence, it ain’t squat.
So when these rat turds are revealed for what they are, there it goes, up in smoke. Karma’s a bitch. It always works. Can you say 9/11?
We’re trying to play their game. The only way to make them lose is to withdraw.
We walked past the New York Stock Exchange tonight. I wanted to walk over and leave a turd on the front steps. They have all those flags blowing and the statue of Washington across the way. Beware people that wrap themselves in flags and holy books. I think Washington is crying tonight.
IMO those hedgies are going to lose their asses in the coming meltdown. They really believe! They’re like those damned dot-commers and their “new economy” BS.
True story: one of my siblings is good friends (well, not so much these days) with a fellow who works for a hedge fund. At heart, he’s not a bad person. He used to be a very talented architect producing some good stuff and he was very funny and well-liked. Then he made a career switch to the world of hedge-funds, because he was frustrated. He hated being looked down upon for not being wealthy, although he was well-off. Anyway, as the years go by, he becomes more arrogant and more miserable as a person and morphs into the kind of alchoholic that blacks out and wakes up to find he’s pissed his pants and is bruised all over and can’t remember what happened. He just got a million dollar bonus and recently sold a spec home. He hates his wife (a nice lady), his kids and he calls people up to brag about his money (mostly to put them down). In other words, he’s a completely miserable but arrogant asshat.
My prediction? He’s probably gonna get behind the wheel of a car during a blackout and kill some poor schmoe who was on the wrong road at the wrong time. And then the family of that poor schmoe will own his miserable ass. I can smell it coming.
“They’ve forgotten the first law of being good parasites, which is: NEVER kill the host. Well, they’re killing the host (us).”
Exactly! The hedge funds killed their hosts. But no matter — most of them were just take-the-money-and-run players using hyperbolic risk-hyperbolic return strategies to get Grandpa Goldbags to open his money bags for them to invest as they saw fit. When they blow up, they will nonetheless continue eating…
Sometimes I think this country is either loaded with morons, liars or lying morons.
And then there are the 2% remaining. The decent folk.
Someone just sent me that same article. Amazing. So many crooked and moronic deals being done now. It could make 1987 look like a day in Disneyland. Someone please correct me or elaborate, for I wasn’t even driving in 1987!
Funny story:
I was working in an unnamed place where signals get uplinked to satellites back in 1987. I still remember the day when my co-workers called me over to watch the real-time feed of the market meltdown that year. We all stood there stunned, wondering if the world was ending. Changed my perceptions big time. The after-effects were even more interesting in that seeming nothing happened. Ignore the man behind the curtain.
We now return you to your regular Lereah-bashing.
What’s funny is that this morning I was having the conversation with a friend who used to work at Merrill Lynch, and we commented that it ‘felt like 2000 all over again’. Specifically, post March 10, referring to the fact people don’t know how the likely slide in the market is going to play out (probably in a ratcheting motion).
(shouted) Dead portfolio walking!!!
“Adibi has forecasted that the weak residential market will do away with 13,500 jobs in California. But he’s more concerned about the resale market. Builders can choose to pull back and build fewer homes, but a market flooded with homeowners holding onto properties that are losing value would be worse for the economy, he said.”
Very curious. Why would taking a little longer for homeowners to sell existing homes pose any special economic problems, unless people were doing stupid things like making multiple highly-leveraged speculative investment purchases, with subprime loans used as a funding source?
i think this signals that DL knows this shit is really about to hit the fan…before all of the inventory, sales and pricing figures get disastrous this spring, he can sell his book of “research” and say - “told you so, i knew the market was going to tank.” now he will switch from trying ever pathetically to call the bottom. he HAS capitulated that there were bubbles, but they were local - so keep buying overpriced crapholes in TX, UT, WA, etc cuz those markets are ok
“now is a great time to pay a realtor’s commission!”
ps- sorry if there are multiple posts.
Geez, I’m starting to freak out now. With DL’s admissions, the UBS scandal, subprime melt downs, Bob Toll, and a maniacal Fed, the internet’s real time capability makes watching the train wreck almost unbearable. And yet, like a bloody accident scene, we all have to look. Why aren’t more people tuned in??? Honestly, I’m pretty pesimistic by nature, and even I’m getting nervous about how bad it will be.
Speaking of Debt and Liquidity………….
Never in the history of mankind have so many owed so much to so many.
The sun will still shine again after all this plays out, but it will be a different world from the one we know today.
Stay cool, and plan for the future.
I’m going down town to Giuseppi’s, have some adult beverages,rub up some title insurance girls, and figure out why the Cubs will win the world series this year. Can’t be better than that.
Pismo, your pretty entertaining.
Good advice. Don’t take on new debt. Spend less than you make. Keep a rainy day fund. And make sure you have at least a few boxes of ammo and c-rations on hand.
Absolutely . . . keep your powder dry. The ones to benefit in the long run will have liquidity, clean credit and jobs.
Hear. Hear.
“Why aren’t more people tuned in???”
Because they don’t want to be. They don’t like bad news so they just choose not to believe in it and certainly don’t want to hear it. For all of CNBC’s cheerleading and soft reporting there are still complaints that they are not positive enough and we need yet another FOX news business show to counter the “negativity” on CNBC. I’m sure it will be “Fair and Balanced” (no smiley)
“and yet, like a bloody accident scene, we all have to look. Why aren’t more people tuned in??? Honestly, I’m pretty pesimistic by nature, and even I’m getting nervous about how bad it will be.”
MY assessment is that people are very creative and crafty. They can be just as creative about getting themselves into debt as they can be at making money.
There are very few homes that are selling in my area, but of the few that have, it seems like the people that bought them barely go anywhere. They just go to work and come home. That’s it. I know of one family a few blocks down that have a big “for rent” sign. They are renting the downstairs.
Basically, people are still way too high on the idea that a house is soooo precious that it is surely worth severe personal and lifestyle sacrifice. There are many who are pitching everything they make into the mortgage. The only thing that pisses me off is that even though the selling levels have slowed down, they few that buy give sellers the hope that they can keep that 700k price for maybe just one month longer.
Everyone talks about the 30% declines in sales every single month in CA. We who wait know the price reductions will come. But the waiting game is frustrating. How long we will have to wait is the real question.
“Basically, people are still way too high on the idea that a house is soooo precious that it is surely worth severe personal and lifestyle sacrifice. There are many who are pitching everything they make into the mortgage.”
Good point. I can still remember friends of my Mother “freaking out” here in Calif. during the last downturn in the 90’s. They had NO money for any fun at all…mortgage was like a dinosaur eating all of their monthly $$. I’d never seen a more unhappy couple. I told myself right then and there–I’d never let myself get into that situation. So after grad school, I got a great job–then this bubble hit. Decided to wait and watch, but everyone around me (with minimal exception) thought I was nuts for NOT buying. I found this website and found logic, facts and sanity. I downsized all of my possessions, paid of all debts and continued to save like a madman since then–but still treated myself to a few affordable perks here and there within my, get this…”budget.”
So now I have to wait to buy? So F**ckin’ what. Realizing the HELL I avoided by not buying gives me the patience ofJob to wait this thing out.
It’s going to take one hell of a freakin’ deal to make me pull the trigger and buy…in other words, after crunching the numbers, that home better not cost more to buy than equivalent rent, because–in all truthfulness–I really enjoy the feeling of having that savings gives me…even if it is earning a measely 5%. Right now, I could pack, move and relocate in a jif if needed. Bottom line…even with all of the possible fallout due to the negatives in the credit bubble we watch and track here, Right now, I feel more economically secure than any other time in my life. I shudder to think how creepy I’d feel right now had I bought…pouring my hard earn into a rapidly depreciating, overpriced home.
Rant off. DOC
My husband and I were commenting about the same thing just the other day, Doc.
Feels good to be a renter with no debt and cash in the bank (thought it should be under the mattress or in a Swiss bank account!).
The flexibility is unbeatable. Economy tanks, war breaks out, better job elsewhere…we just move. No loss to us.
Jetson boy, I’m also beginning to get weird vibes from some people who live near us. Today I was at the library with my kids and a woman was talking into a cell-phone saying “yes, but if we do that we go under” and “does that mean you don’t want us to go under?”. I know it could be nothing, but it seemed one of those lines in movies that they put in to make you uneasy and expect something bigger. Spooky. I was also talking to a neighbor who works at a bank in LA that does lots of business for merchants. He said those people are making a lot less money than a couple of years ago.
Yep, they don’t like bad news. And it ain’t just the masses who don’t like it. Have you ever said to your boss (or his boss), in effect, “Ummm sir, pardon my compulsive truthfulness, but your pet project has no chance of succeeding?” I survived, but got no thanks for my sage advice after his project did fail, other than funding for my own alternative project, which succeeded.
Re CNBC’s cheerleading, I find it alternately ludicrous and offensive, but I must say it has some academic justification. If you believe that “the free market” is always rational and efficient, then how can it ever be stupidly overvalued? But anyone who has looked at the charts and still believes in efficient markets deserves what she gets.
It’s not a free market. It is maniputlated and controlled by the government, just like the housing market. We haven’t had real markets in this country for about 100 years.
“Analysts saw his words and calm body language as an apparent signal that the Fed would be ready to provide cash or other support in case Tuesday’s plunge escalated into a meltdown that threatened the global financial system. That would continue a practice under Bernanke’s predecessor, Alan Greenspan.
Under Greenspan, the Fed had provided financial support to ease the effect of several crises, including the 1987 stock market crash, the 1997 Asian financial crisis and the 1998 collapse of hedge fund Long-Term Capital Management.
The 1987 market crash, which greeted Greenspan two months into his term and drained the stock market of about one-fifth of its value in a single day, was widely thought at the time to be a precursor of recession. But the former Fed chairman, beginning to establish his reputation for working miracles, avoided what seemed to be inevitable by guaranteeing to temporarily pump enough money into the economy to keep it from collapsing.”
http://tinyurl.com/2oat7x
Memo to Jerry.
The Fed is not part of the government. CAR, NAR, FAR, MAR are not part of the government. CNBC, WSJ, LAT, NYT, are not part of the government.
The problem is the parts of the government that should have shut all this crap off at the source were bought and paid for by the bad actors…
CFC’s CEO becoming Ambassador to the Netherlands anybody.
The problem wasn’t too much government, the problem is the Republican party shut down the government so all their pals could shove their hands into the till, neck deep.
And guess who is going to pay for it? yup you and me.
Remember every regulation was enacted because somebody Effed somebody else over bad enough that a critical mass of people said darn that aint right there oughta be a law.
De-regulation is the bending over of the American people.
De-regulation is the bending over of the American people.
—————————-
Couldn’t agree more!
“And yet, like a bloody accident scene, we all have to look.”
And after passing the accident scene we slow down, put on our seat belts, kiss our loved ones, and swear we’ll be safe. Then, tomorrow, we’ll have forgotten about it.
There’s almost too much news for people to keep up with, it seems. Throw in two cups (pun intended) of Anna Nicole and a teaspoon of Britney and you’ve got one distracted populace.
For those of us who feel compelled to watch our backs through this, we are captivated by the news. For the masses, eh…..
The thing that frustrates me is that the “Anna Nicole Breaking News” types of stories eclipse what I really want to hear.
I’m not distracted by runaway brides, and nasa stalkers, but they are put in front of me like blinders. I can’t avoid them.
Passing an accident scene, some people put the hammer down instead! “What’s a behind me, isa not importante!”
Tuned in? They are tuned in! Did you see the piece they had on the Anna Nicole Smith funeral today? It was all over.
Sad state of affairs in the USA!
““Builders in Riverside and San Bernardino counties had 45,485 permits to build single-family homes in 2005. By the end of 2006, there were 33,508 according to the U.S. Census Bureau. Comparing January 2006 to last month, U.S. Census data showed a 37 percent drop in permits.”
Something funny is going on in the Inland Empire. My brother is a loan broker in Irvine and he made a ton of suicide loans to folks in the the Inland Empire that were crazy (Illegals, No Doc, etc.)
The cave in that will happen out there must be covered up?
“‘All Real Estate is Local,’ due out in April, Fortune’s Ellen Florian Kratz talked with Lereah about where the market is headed.”
This is a hoax, right?
I feel the urge to go to Barnes & Noble and place stickers inside the font cover pointing them to this site. The overwhelming tide of B.S. must be beat back and DL shouldn’t earn one more dime off publishing half baked baloney.
No, these are strange times indeed:
“S&P Upgrades Countrywide Financial to Sell”
http://tinyurl.com/yo2s6b
From what does one upgrade to a sell?
Was the previous recommemdation “Burn stock certificates”?
Nope, it’s available for pre-order at Amazon, on sale April 3rd. I suggest as soon as we can, we pepper the Amazon review for it with as many negative reviews as possible. For now, we can at least ‘tag’ it with memorable phrases like “real estate hack”…
GS, you and I will probably alway disagree on this.
IMHO, Phinancing and Pfraud may be global, but real estate is still local.
Can you tell I’m a Doug Casey fan?
Wonder what in the world these new “products” will be (story from CNN on Freddie Mac limiting subprime exposure). God, I hate the word “product” that is used all the time in lending now. It is not a damn product-it is debt.
Freddie Mac will invest only in mortgages that assume a borrower can make the highest possible mortgage payments and will introduce new products to help troubled mortgage borrowers, Syron said.
The company will limit the use of low-documentation mortgages to “help ensure that future borrowers have the income necessary to afford their homes,” the company said in a statement.
Freddie is “developing new, more consumer-friendly subprime products that we will be taking into our portfolio… [and] hopefully rescue some of these people,” he said.
PSST!…hey buddy..can you help me move some product?
As a former banker, I hate the term “product” too. It conjures up images of toxic mortgages flying off the shelves, consumed immediately, never to be seen again.
Maybe the 50 year mortgage? We can make your payments affordable, it’s just that the house will never be paid off while you’re still alive, and you won’t be able to move any time in the next 10+ years…
WTF is with DL?
He must have a problem with compulsive lying.
I have zero respect for NAR, but I still can’t believe that they haven’t ousted him.
“And I had to say, Mom, you have to have thick skin.
I know it will never happen, but I’d like to see him incarcerated in a place, where he would get the opportunity to further develop his thick skin. This is a family website, but I think you all know where I’d like to see the skin developed.
I bet his mother is a heinous twat. Yes, I used that word.
What’s wrong with using “heinous”?
She may not be a heinous twat, but something truly heinous did come out of her twat.
–Shannon
Lereah states “that’s when I knew we were in trouble.” ??????? This is based upon knowledge in 2005!!!!? ???
That’s was his thinking in response to the audience member attending his Atlanta speech indicating “did you know in Atlanta 40% of the loans originated were I/O????
Unbelievable. Wow. And people in the industry can’t understand why they are loathed.
“And people in the industry can’t understand why they are loathed.”
Hopefully one of the good things that happens once the dust clears is the end of the RE “profession”.
One can only hope…..
Add Fortune to the list of publications that officially have lost credibility.
“Q: What about the problems in the subprime market?
A: I was giving a speech in Atlanta about two years ago. During the question and answer period, someone asked me something about interest-only loans. I said, they’re kind of dangerous and you have to be careful. Someone rose their hand and said, Did you know that in Atlanta, the percentage of interest-only loans in 2005 was 40 percent of the market? Atlanta didn’t even have a boom. That’s when I knew we were in trouble.”
That was big of him to issue a warning about subprime a couple of years back when he saw what a problem lay in store. (He did issue a warning, right?)
The warning went like this “It’s a great time to buy.”
I had to re-read the Fortune piece.
Lereah goes on to disagree with Robert Schiller’s stance regarding market psychology: “He thinks psychology will play a major role here, and my view is no.”
What!!!!?????? The REIC has continually indicated that much of the slowdown WAS IN FACT CAUSED BY market psychology and those darn blogs and MSM outlets! I could swear Lereah has been quoted talking about market psychology. Help me out here!
Utter nonsense.
Leareh is an idiot. He is paid to lie!
Why would someone get paid alot of money as an economist when we here already knew what would happen as early as three years ago? Hence he is being paid not as an economist, but is being paid to lie.
Therefore, anything he says, weather it be for or against real estate matters not.
DL isn’t an idiot. He’s an excellent employee, doing exactly what he is paid to do. Since everything he says is bullshit, and he hasn’t been fired, we can conclude that he is paid for bullshit.
How can I become a multi-million-dollar-a-year “Chief Economist” for a national trade group without ever getting a degree in economics?
Sounds like a pretty good gig to me. Maybe DL is smarter than us.
–Shannon
Pyschology is what I do, darl’in
Forbes 400 member gets smacked down:
http://bakersfieldbubble.blogspot.com/
Warren Buffett’s take on the real estate market (from the annual report to shareholders released today):
The slowdown in residential real estate activity stems in part from the weakened lending practices of recent years. The “optional” contracts and “teaser” rates that have been popular have allowed borrowers to make payments in the early years of their mortgages that fall far short of covering normal interest costs. Naturally, there are few defaults when virtually nothing is required of a borrower. As a cynic has said, “A rolling loan gathers no loss.” But payments not made add to principal, and borrowers who can’t afford normal monthly payments early on are hit later with above-normal monthly obligations. This is the Scarlett O’Hara scenario: “I’ll think about that tomorrow.” For many home owners, “tomorrow” has now arrived. Consequently there is a huge overhang of offerings in several of HomeServices’ markets.
Now we find out “who has been swimming naked.”
It will be a brutal 18+ months, but the main event is about to start.
Got popcorn?
Neil
I agree, Neil. The main event is about to start. I think its hilarious how the media can keep talking the US stock market back up from crashing and every night the Nikkei keeps selling off ! The Japanese know whats up. They know a crashing real estate market when they see one !
They also know about a crashing stock market. Let us not forget that the Nikkei dropped from over 38,000 to under 8,000. It took 13 years to bottom out. How many Japanese are soiling their kimonos right now?
At least they are smart enough to be scared. Here people are too stupid. We are different. This is America. That sort of stuff doesn’t happen here, because we have faith in Helicopter Ben.
Only thing is that Ben can’t use the Helicopter without creating inflation and excess liquidity is what started this whole mess !
I suspect when this is all said and done that the IMF is going to come to more conclusions just like they did after the 1929 bust. One of those conclusions will be that interest rates have to be kept in the 10-15% range to keep people fearful of speculating ! This business of yen carry trade and free money is totally ridiculous.
yesterday at college this woman behind me was talking to another girl how her and her hubby bought a house in tampa fl and are moving down there after her semester. She is a whale btw. She was flaunting it and I was chukkling of her stupidity. She kept saying it was a good move because Tampa is a large city with good job prospects I think her hubby was a Re Agent… lol (the irony is the class is called “fundamentals of investment management” I swear people sit in school and pass and then forget every single thing, basically she should know real return on present value…)
(I live in Brooklyn, NYC btw
A fat, stupid, loud-mouth b-tch in Brooklyn? No way!
lol
The Wall Street Journal online added a story about Countrywide. The key facts are from an SEC filing. Here’s the first paragraph:
Countrywide Late Payments Rise
By JAMES R. HAGERTY
March 2, 2007
Countrywide Financial Corp., the largest U.S. home mortgage lender, reported sharp increases in late payments, including loans by borrowers with relatively strong credit records.
In a Securities and Exchange Commission filing, the Calabasas, Calif., lender said payments were at least 30 days late on 2.9% of prime home-equity loans serviced by the company, up from 1.6% a year earlier and 0.8% at the end of 2004. Countrywide said payments were late on 19% of subprime mortgage loans, up from 15.2% at the end of 2005 and 11.3% at the end of 2004. Subprime loans are for borrowers with weak credit records. A loan servicer collects payments.
………………………….
This mortgage debacle is starting to snowball, and the MSM interest is picking up. It has, at times, been hard to keep the faith that there was a bubble. It turns out that all those people who bought (well at least 2.9% of them and likely more) really couldn’t afford the houses they purchased. I’m sure that Lereah will try to spin this as some perverse sign that we have hit bottom, but it is pretty scary.
The drop to the bottom will be as terrifying as the ride to the top was wonderous. How scary is that?
Hmmm, people pay to ride the roller coaster.
From tonight’s WSJ re Countrywide:
“The Mortgage Bankers Association, a trade group in Washington, opposes the idea of forcing lenders to determine whether the borrower can afford the potential cost of the loan after two or three years. “We think you’re going to knock a lot of borrowers out of the market,” said Steve O’Connor, senior vice president, public policy, at the association.”
Well DUUUUUHHH. That’s the objective. No wonder you made VP.
No, no, wait..he’s SVP of public policy, which means he’s a spinmeister politician who’s supposed to create hyper-reality.
We are afraid of knocking borrowers out of the market. Well no F’n kidding!!! What the hell does he think is the point of qualifying someone for a loan? This crap is getting more stupid and frustrating to read every day.
DL is just another Little Danny Quayle. I do miss ol’ Dan. Not near as many laffs as there used to be in politics.
Roid
Update II - Ivanhoe Mortgage (Central Pacific Mortgage) :
http://bakersfieldbubble.blogspot.com/
A veteran Sacramento loan broker and past president of the California Association of Mortgage Brokers says the failure of Central Pacific Mortgage is just the “tip of the iceberg” in the mortgage industry.
“It’s like a freight train coming at us full bore,” said Michael McGee of Winchester-McGee Financial. “The type of risk that’s been involved in the industry is far beyond anything I’ve ever seen.”
News10 attempted to contact Central Pacific Mortgage CEO John Courson, who founded the company in 1977.
Calls to the Folsom headquarters are answered with a recorded announcement. A phone number listed for his home in Rancho Murieta is disconnected.
Courson serves on the board of directors for the Mortgage Bankers Association and was appointed by Governor Schwarzenegger to the board of the California Housing Finance Agency
Thanks for the update crispy
Nothing to worry about. It’s all good
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_berry&sid=agqIiF_6TgDo
First we had “Goldilocks”…..now we have “Alice in wonderland”
Anybody that believes that load of crap is a fool.
Ahhhh………….why bother……..let it happen
Cal has a long ways to go and the country in general has a long ways to go. People are entitled to a home and that lenders have to do everything possiable to make it happen who wote those set of rules? I don’t feel sorry for anyone or any company that pulled a fast one on such a important industry as housing. The federal gov’t is scared to death to launch a full scale investgation into this scandl.
They sure made Enron walk the line, but now with this fraud upon the public by Builders, agents,lenders and investors the powers to be just want to wash their hands of it and say it will all go away when the stats get better, like we can now rest easy that they will tell us the truth and nothing but what a joke and sad commentary of what this country has become “i got mind and you should get yours no matter how dirty the game is played and no matter who or what it hurts?”