“A Flip Side To Exuberance” In California
The Orange County Register reports from California. “Orange County’s 122-month streak of rising home prices is over. The decade-long run ended last month when the median price of an Orange County home fell to $620,000, a decline of $2,250 from the median in February 2006, DataQuick reported Monday.”
“‘It looks like it’s hitting its new low level, and it’s going to stay there awhile,’ real estate consultant Walter Hahn said. Hahn attributed the market’s sales slump and stagnating prices to the disappearance of speculators and marginal, first-time buyers using unconventional mortgages.”
“‘That’s gone. It’s just gone,’ he said of those buyers. ‘I’m not sure we’ll ever get up to those sales rates again.’”
“Overall sales were down as well: A total of 2,449 homes changed hands in February, down 16.4 percent from February 2006. It was the 17th consecutive month in which sales declined from the year before, a slump that began in October 2005, DataQuick figures show. The new-home category had the steepest decline in sales, down 36 percent.”
“Orange County had 12,558 homes for sale as of Thursday, according to (broker) Steven Thomas in Aliso Viejo. The inventory of homes for sale has risen steadily since late January, he reported.”
The Union Tribune. “DataQuick analyst Andrew LePage said the real estate market can be thought of as a big oil tanker that takes a long time to change course. ‘I think we’re in a turn and it’s not clear which way we’re coming out of it,’ LePage said.”
“LePage pointed to some sobering statistics. The number of default notices rose to 1,268 last month, up from 499 in February 2006, while foreclosure sales skyrocketed from 40 to 383 over the same period, landing just shy of the all-time record set in October 1996 of 389.”
“For both October 1996 and last month, foreclosures represented 13 percent of total sales. DataQuick’s monthly sales counts do not include foreclosure activity, LePage said.”
The North County Times. “For years now, North County residents have been wondering how high home prices could climb. Were we seeing a housing bubble? As the real estate market cools off, it’s becoming apparent that our sky-high housing prices are due in part to a credit bubble. And that bubble has started to pop.”
“Foreclosures in San Diego County nearly tripled in 2006, to 13,246, from 4,541 in 2005, according to RealtyTrac. In North County, the company reports, hundreds of properties are in default and heading to foreclosure. In Escondido, 385 properties are in default and 63 are set to be sold at auction. In Oceanside, the figures are 490 properties in default, with 72 going to auction.”
“What’s startling about many of these pending foreclosures is how many involve loans taken out within the last two years, during the subprime surge.”
“Apparently, the sky was the limit when it came to lending standards for loans small and large. Many of the loans in default were in the $400,000-$700,000 range. But one is for $1.7 million and another for $1.2 million. Before it began to tumble, the subprime market was enjoying a penthouse view.”
The LA Times. “In some parts of the state, including the Central Valley, the Inland Empire and San Diego, foreclosures have gone from rare to plentiful in a little more than a year. Real estate appraisers say home values are beginning to be affected.”
“George Hatch, a San Diego appraiser, said he surveyed a group of his colleagues last week. Almost all of them reported that they were running across distressed sales or foreclosures.”
“‘There is a flip side to exuberance, which is that every party has its hangover,’ said Hatch, a 22-year veteran of the business. ‘When your house loses $100,000 in value, that will make you sick all right.’”
“Ray and Ruby Hayes of Yorba Linda said the couple refinanced their home with a sub-prime lender in the spring to get cash to help them make ends meet. ‘We had bad credit but were told that in six months we could refinance and get a better loan with a lower interest,’ he said. But when they tried to refinance, Hayes said, the lender told them they were not eligible for better terms.”
“The Hayeses are now months behind in their payments. ‘Things just spiraled out of control,’ he said.”
“Not everyone is sold on downtown. Christina Yu and Christopher Camargo, renters in Long Beach, visited about a dozen condo and loft projects to learn firsthand what downtown has to offer and were not entirely impressed.”
“‘It wasn’t that long ago that the alleys were filled with derelicts and drug addicts,’ said Camargo. But ‘if I’m going to pay $700,000 for a place, I think it should have a view of the ocean, not someone else’s living room.’”
“The outlook seems hazy. Tighter lending standards and slower appreciation will keep many would-be buyers on the sidelines. Downtown broker Perabo says he’s worried because fewer first-time buyers will be able to qualify now.”
“‘The days of 100% financing are over,’ he said, adding that about 20% to 30% of the first-time buyers he meets with would be unable to buy without improving their credit standing and coming up with a down payment.”
The Desert Sun. “The disclosure by Irvine-based New Century Financial Corp that its bank lenders were pulling funding didn’t come as a shock to some mortgage lenders and bankers in the Coachella Valley.”
“‘The (adjustable-rate mortgage) program was never really designed as a mainstream program,’ said said Jim McPhail, a mortgage finance specialist in Palm Desert. ‘It has come around, and it’s now biting them in the butt.’”
“Home buyers initially may have been able to get more home through such ‘designer’ loan programs, but the long-term impact was pretty easy to predict, said Bill Powers, president of Pacific Western Bank. ‘Whenever you do those types of loans, somebody has to pay the piper some day,’ Powers said.”
“It’s becoming obvious that mortgage lenders will have to be more careful about sizing up loans that people can really qualify for, said Frank Montiforte, loan officer La Quinta. ‘I like that word ‘tightening up’ - it’s the right thing to do,’ Montiforte said.”
The Daily Bulletin. “The California Building Industry Association released a report Monday that showed sales of new homes were down significantly from last year, with California off 18.6 percent since last January and the Inland Empire off 22.3 percent.”
“‘A lot of builders have been very aggressive in offering incentives,’ said economist Jack Kyser. Kyser cited several examples in which houses and condominiums have slashed prices $50,000 or even $100,000 recently.”
“‘The market clearly is still looking for a bottom,’ he said. ‘I don’t think we’ve found it yet.’”
The Merced Sun Star. “John Pinto thought his days of playing Mr. Fix It were over when he sold his 27-year-old house and moved into a brand new subdivision. But months later he discovered what he says was the first of many problems in his new home.”
“Since then, Pinto said, every time he turns around the house needs another repair. Now Pinto is one of 59 homeowners suing developer Ranchwood Homes over what they claim is shoddy construction at the subdivision in Gustine.”
“‘I’m not a sue-happy guy,’ Pinto said. ‘I would like to see Ranchwood get their act together and start building some better quality homes. I would hope that they teach their workers better so that no one else ends up with a lemon. These guys are making good money; there’s no excuse for shoddy workmanship.’”
“The first problem he noticed after buying the 2,545 square-foot house for $420,000 was a crooked second-floor window sill. Then when he wanted to install a sliding door around his bathtub, the worker doing the job showed him that the floor sloped almost one inch from one end to the other.”
“‘The Egyptians built the pyramids over hundreds of acres and they were only off by about a quarter-inch, and these guys couldn’t put in a six-foot floor that’s not off an inch,’ Pinto said.”
“DataQuick analyst Andrew LePage said the real estate market can be thought of as a big oil tanker that takes a long time to change course. ‘I think we’re in a turn and it’s not clear which way we’re coming out of it,’ LePage said.”
The tanker is coming out of the fog…and its getting ready to hit an iceberg the size of Anartica.
another quote ripped from here.
Yep. I’m seeing lots of things that are almost word-for-word, right from this blog.
My favorite HBB quote has to be the one that was made in reference to the lovely realtor who posed with a flag around her shoulders. http://tinyurl.com/2kfwvk
It went a little something like this: “Buy a house from me or I’ll eat you.” Do y’all remember that one. That was funny. I wonder how she’s doing through all this…
But this ship has DL and LAY standing on the bow railing, bodies entwined, arms outstretched with the wind in their hair….. Celine Dion’s ‘My Heart Will Go On’ plays in the background…..
It has a happy ending this time though: Both sink into the abyss blowing whistles all the way down, along with all the other frozen FB’s.
David! Don’t ever let go!
Oh, I’m very clear on which way we’re coming out of it.
And the tax payers will foot the bill of a bailout and the irresponsible behaviour of the subprime kool aid…
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1×64z58hsB4&refer=home
Over my dead body (and more than a few on this blog, methinks).
“Orange County’s 122-month streak of rising home prices is over. The decade-long run ended last month when the median price of an Orange County home fell to $620,000, a decline of $2,250 from the median in February 2006, DataQuick reported Monday.
‘It looks like it’s hitting its new low level, and it’s going to stay there awhile,’ real estate consultant Walter Hahn said. Hahn attributed the market’s sales slump and stagnating prices to the disappearance of speculators and marginal, first-time buyers using unconventional mortgages.”
LMFAO! A $2250 drop in the median, and The OC has already hit a permantently low plateau, where it will stay indefinitely? Just wait until the subprime damage to the OC economy takes its toll; you ain’t seen nothin’ yet.
“”Among the winners in today’s market are buyers like Jeff and Lara Coons, who took five months to make a purchase and ended up buying a home that would have been too expensive for them when they first started looking.
“We bought it at a really good time,” Lara Coons, 35, said Monday about the $1.098 million home she and her husband now share with their two young daughters. “We were more in the driver’s seat.”
Somehow, I don’t think they will feel like they “won” in 3-5 years when they go looking for their missing fingers.
I know. Where do these people get the money to pay for those mortgages? $1.098 million home like it’s no big deal.
“home that would have been too expensive for them when they first started looking.”
So now they are only borrowing 9 times their stated income rather than 10.
They probably knew that the senate would bail them out.
“Senate Weighs Aid to 2.2 Million Subprime Borrowers”
U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.
“The impact of losing 2.2 million homes I suspect will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,” Dodd, a Democrat from Connecticut, told reporters in Washington after a speech to the National League of Cities. …”
Bloomberg13 March
http://tinyurl.com/3xyaaw
OH, so it’s a $164bil bail-out for the the sub-prime crowd.
Better get out your wheelbarrows to take your worthless dollars to the grocery store to buy a loaf of bread.
Bail out stupid people at the expense of responsible people. What next? Will we bail out the dotcom speculators too?
Everyone needs to email, fax, call mail Senator Dodd and let him know how we feel about our tax dollars going to these morons.
Senator Dodd needs to lose the ugly green tie — makes him look like he is running for leprachaun in chief!
And as far as FB bailouts are concerned, where is he planning to get the money? Just print some more? Because I think it has pretty much already been spent, thanks to the magic of home equity cashout financing. He definitely loses my vote if he offers any tax dollars to those who foolishly bought much more house than they could afford.
http://www.comedycentral.com/shows/the_daily_show/videos/most_recent/index.jhtml
I’m thoroughly disgusted with both parties, right now. I dunno who is worse. All I know is Dodd wants to give a hand job to a bunch of mouthbreathers who don’t deserve it, while men and women are getting their butts shot off in a hellhole in the Middle East and can’t get decent health care when they get back. Oh, they can legislate for the mouthbreathers, but not for the troops.
Ben,
You need to organize your blog readers, perhaps by posting the contact info for relevant House/Senate members, so everyone here can let Congress know how we feel about a bail out for the irresponsible and greedy FB’s and lenders.
Maybe you can start am online petition and we can spread the word through message boards and email. We have to nip this in the bud. I know Dodd has presidential aspirations. He might try to play the role of savior of the poor minority subprime borrowers who were “duped” into taking out $700K loans.
I wrote to my senator (Feinstein of California) and urged her to oppose anything remotely related to a bailout. Senators won’t take correspondence from other senators’ constituents; it’s a collegiality thing. Any Connecticut readers, for God’s sake e-mail their Doddering fool of a senator to hell and gone.
I’m willing to draft a letter to PA legislators. If any PA HBBers want to contact me with verbiage they’d like included, I’ve set up this acct:
hbblogger@gmail.com
I estimated at 2.6 trillion (2.2 million borrowers at an average mortgage of 220000, lowering the interest rate to an affordable payment avg reduction 4% with a negative coefficient of 2% (the number of new plan government refis that default)), but who cares a trillion here, a trillion there - someday we may be talking about real money.
A bail-out won’t work because the FB’s will still be upside-down as the housing prices plunge. The FB’s with 100% + financing don’t have anything to lose at this point, and a bail-out will mean another signature to the federal government, which isn’t in the FB’s best interest if they’re upside-down. Simply put folks, it’s game over!
Federal aid “would come at a cost,” said Douglas Duncan, chief economist at the Mortgage Bankers Association. “It has to be paid for and the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?”
Wow. I can’t believe I actually AGREE with something the MBAA said.
A trillion in Iraq, a trillion on FB’s, a trillion on bailing out hedge funds and banks. Big deal. It’s only money.
Everybody should write their representatives and senators to kill this proposal before it’s even considered. Here’s the letter I wrote to Senator Feinstein:
Dear Senator Feinstein,
This proposal is outrageous! This is asking taxpayers who took prudent financial steps to subsidize people who speculated on real estate. My wife and I make almost $200,000 a year with substantial savings. We continue to rent because buying a median priced house in the Los Angeles area will make it difficult for us to save money for retirement and tuition expenses for our two children. People who have no business buying these expensive houses used stated income and negative amortization loans to stretch their buying capacity. They should learn their lessons. That lesson is not to buy what you cannot afford. This is a lesson that is lost in America. People spend money like it grows on trees. If prudent savers are going to subsidize spenders who are in default on their mortgages, Americans will not learn from their mistakes. It is time that people are held accountable for their actions. On behalf of my family, I humbly and strongly urge you to oppose Senator Dodd’s proposal.
“wrote to my senator (Feinstein of California) and urged her to oppose anything remotely related to a bailout.”
I get so sick of all the political BS tripe, the stupid moronic cat-fights between the two parties over what is basically who gets the power and the spoils of politics that i have basically withdrawn from reading political blogs or watching the political BS nonsense spewed on the TV cable networks. The only issue i get really worked up over is illegal immigration, and i did e-mail to Diane Fienstein and BBoxer about the ammnesty to iilegals bill(I am against any amnesty).
This proposed bailout for FB’ers may get me equally riled up, and i may actually e-mail my two esteemed Senators to vent my anger over any proposed bailout.
“It has to be paid for and the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?’’
And douchebag forgot about the ~30% renters who won’t be signing up for that crap as well.
Go to Dodd’s website and enter a CT address (for example: 185 Derby Ave, New Haven, CT 06511) or something quite similar) and tell Dodd what you think of his proposal. The site is at http://dodd.senate.gov/index.php?q=node/3128
Federal aid “would come at a cost,’’ said Douglas Duncan, chief economist at the Mortgage Bankers Association. “It has to be paid for and the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?’’
Wow. I can’t believe I actually AGREE with something the MBAA said.
———————–
Harm,
That’s because Doug Duncan is one of us (a bubble-sitter). Sold his house in 2005, I believe, and rented.
Dodd is running for president. Let him know how you feel:
http://www.chrisdodd.com/
WTF does she do at 35 that they have that kind of cash flow? Maybe 2 MDs making $200-300k each?
they might have one of those check-cashing joints in the ‘hood.
That was my first reaction. I’m 36, make about 2x median income and I’d have heartburn paying $250K.
Oh, and I don’t have 2 kids. I’ve got 0.
i don’t know where people get the money. I looked up the sale and they got 90% financing of $988,200. if they’re paying all the interest (6.5% which is probably not attainable) as well as some principle) not interest only or option ARM, they’re going to be paying about $7,344 per month for a 3,358sf house on a 7,628sf house in Yorba Linda.
sounds like a deal to me.
ws, you would be surprised. In the Westside, you would be paying that much for 1,500sf and consider yourself lucky if you get a little patch of green and granite counters. Yorba Linda really does sound like a deal once you’ve sniffed other markets that are much, much worse.
To paraphrase the former late Senator Senator Everett Dirksen:
A trillion here, a trillion there, pretty soon it adds up to real money.
Got 10% down?
Depending on how that million dollar house was financed, that driver’s seat may eventually feel more like an ejection seat.
Its a drivers seat, alright. It just happens to be in a vehicle going over a cliff.
should have noticed… no door handles. seatbelt also faulty… won’t release.
The chumps probably managed to negotiate a couple of k off the $1.1 million asking price and felt like they were champs.
Yes, and by their own admission, they really can’t afford the home. Like so many others in the OC, just fronting, but just average incomes and in debt up to their eyeballs, and sinking fast.
Chrisusc,
This sums it up. They cannot afford the home.
We’re seeing the start to a return to sane mortgages. Since we cannot afford a bail out, get the market back to a stable level. Don’t like that option? Awwwww…
Just two more sheeple to get fleeced. Look out below. The avalance has started. I’m in the ski-lodge at the top of the opposite hill looking down at the town below.
Got popcorn?
Neil
Neil, you weren’t by chance making any “loud noises” while up there were you?
What do you mean it isn’t the 4th of July?
“We were more in the driver’s seat.”
Should have checked more carefully…. car has no steering wheel.
can’t wait for the new season of the real housewives of orange county. if that is indicative of the oc then it is toasssssssssst
Put in a 911 call for Gary W!!! Is it still going UP this year. How do you define IT or IS ???? hehehehehehehehe
“you ain’t seen nothin’ yet.”
Thats what I don’t understand about people in this industry, they can’t connect the dots ! I don’t understand what data they use to forecast things, other than “up, up, up”. Its like they think house prices should grow unbounded. It doesn’t make any sense.
Thats what i said… a dinky $2K drop is nothing…
CA affordability is under 10%. We will see deep double digit
drops very easily …
I know, I know. So glad it is only a couple of months till I’ll be back in Maine. Maybe 08 i can buy in CA or NY, but then again, maybe it’s 09, 10, or 11.
“CA affordability is under 10%. We will see deep double digit
drops very easily …”
Ummm… 10% is generous.
We’ll get back to the traditional 40% to 60% affordability range. Its only a question of when.
Got popcorn?
Neil
“‘There is a flip side to exuberance, which is that every party has its hangover,’ said Hatch, a 22-year veteran of the business. ‘When your house loses $100,000 in value, that will make you sick all right.’”
Where are these people going to come up with the money to pay for their cruises, Escalades and latte’s?
Check out this site of a former employee blogging about what a shoddy company new century is.From sexual escapades with managers to being told just to hit the sales numbers:
http://www.quiggleme.com Thanks to jim, the best realtor in san diego.
You mean Conflict-of-Interest Jim at Bubbleinfo, the man who spins the housing situation to keep buyers buying and who censors even the most *modest* debate on his blog?
(My pale comments have been censored at least twice.)
Well I have had a good experience reading his blog.I think he trys to bring honesty and integrity to the real estate profession from what I have seen.
???
I have had nothing but good experiences at Jim’s blog. Have my comments been deleted? Yes. But only as part of a large purge when a topic had become… unmeaningfull.
Many of us can 2nd Arizonadude’s compliments of Jim. His is one of the best blogs out there. I’d rank his #5 in fact (above my own blog by a mile).
Got popcorn?
Neil
I have had nothing but good experiences at Jim’s blog. Have my comments been deleted? Yes. But only as part of a large purge when a topic had become… unmeaningfull.
I used to think that too.
Now it seems he systematically deletes comments that imply the housing decline is far from over. He pushes the “good properties will still sell” mantra. It’s subtle, but it’s absolutely there.
You’re right, John. But you also have to understand that he **is** a realtor, and the whole point of his blog is to get exposure as a realtor.
I know I’ve made posts which he doesn’t like, but try to respect the fact that it is his blog, and at least he is giving us a forum to discuss SD housing.
If we insist on being rude to him he will shut down…and who will benefit from that?
I will add to CA renter’s comments that Jim does provide good information. Also, if a Realtor ™ knows what they are doing, they will sell in *any* market. Its about getting the right “stagging” for the price. Yes, I did winch while writing that. But there is a skill in selling. Jim can move property.
If nothing else, I’m amused reading about a bearish Realtor.
At some point even the good properties will need to sell cheap. That time isn’t here yet and won’t be for a 12 to 24 months. Jim will probably be our best indication when that time does hit San Diego.
Until then,
Got popcorn?
Neil
“‘There is a flip side to exuberance, which is that every party has its hangover,’ said Hatch, a 22-year veteran of the business. ‘When your house loses $100,000 in value, that will make you sick all right.’”
So, maybe you shouldn’t drink all the liquor at the party and get all stupid.
Gee, like the “$100,000 in value” was real.
‘When your house loses $100,000 in value, that will make you sick all right.’
Particularly when you borrowed that $100,000 on a HELOC to throw the party.
“Particularly when you borrowed that $100,000 on a HELOC to throw the party.”
exactly! this is getting real good real fast!!!!
You think alot of those HELOCs ended up buying equities? Oh boy. It is hard to stop train.
Homes in my ex-neighboorhood are nearly at -100k or 33ish percent. It’s the lowend of NoVa but it is the most ugly region in Northern Virginia right now. Not so much a fantasy there, but a reality.
“George Hatch, a San Diego appraiser, said he surveyed a group of his colleagues last week. Almost all of them reported that they were running across distressed sales or foreclosures.”
Notice the “almost all” comment…
The ones who aren’t are the rubber stampers with their canned neighborhood analysis.
Everything’s average and values are stable.
It’s this crowd who’s doin’ all the appraisal work now.
The scams continues.
Agreed… its going to be a hard fight to get the scamters —appraisals and realtors out of business…
“There is a flip side to exuberance, which is that every party has its hangover,’ said Hatch, a 22-year veteran of the business. ‘When your house loses $100,000 in value, that will make you sick all right.’”
Hell, a $100k drop will be just the first dip in sunny California; homes there have a long way to go before they come close to 3x the median income.
isn’t the historical norm more like 5x median income for CA homes (in decent neighborhoods)?
Hell, I’ll take 5X income any day compared to what it is now. 3X would be a freakin’ miracle to me. Luckily, miracles sometimes do happen.
“Real estate consultant Walter Hahn said the $2,250 drop in median price amounts to virtually no change, saying that the housing market here has hit bottom or is very near it.”
Yea, right!
How many subprime mortgage lender employees helped drive up prices in the OC buying homes there?
How many of those employees used “affordability products” to drive up prices?
How many of those employees have or will become ex-employees?
CRASH!
PS: The last two houses I sold in 2005 in SGV were to mortgage lender employees.
I am getting real nervous today for some reason. Considering selling my mutual funds in a roth ira and just staying in cash for awhile.This whole mess is starting to have a very neagative feeling to it.
You are about 2 months late. Selling into trouble is precisely how most small investors respond–and they generally get burned badly. The better response is to BUY MORE STOCK when the situation looks absolutely horrible…
I see your wisdom john and agree with you but this housing mess is going to put a dagger in the economy.I would like to have some money left to rise from the ashes.
John,
In principle, your statement is correct. However, the market appears ready to take a large, short-term drop as the precursor to a medium-term bear market decline. I would not buy stocks right now. I am short the market right now, so I am putting my money where my mouth is.
Arizona : I don’t think you are 2 months late. Sentiment is negative at the moment and who knows the speed of how this is going to unravel. From 2000, I rode down the market like a frog in slowly boiling water.
Do whatever you trade will make you sleep at night and don’t forget that you can always sell a portion of it your funds to hedge your bets. It doesn’t have to be 100% one way or the other.
Money market funds are paying >4% so it is not as if you doing nothing with it.
btw: If you have a Roth IRA, you should be able to trade ETFs not just mutual funds. There are some juicy bear ETFs out there. If yours is a mutual fund only option, transfer your account to someone like E-trade.
In principle, your statement is correct. However, the market appears ready to take a large, short-term drop as the precursor to a medium-term bear market decline. I would not buy stocks right now. I am short the market right now, so I am putting my money where my mouth is.
I never said now was the time to buy stock, the markets don’t see the situation as horrible yet and they are still talking about “possible spillovers” from subprime into prime.
In fact, last fall in the bull market I purchased bonds (non mortgage) for my Roth IRA because I thought it was a phony bull market–and it was. The bonds are up well above a money market/online savings account. Depending on how bad situation plays out this summer I’ll buy either bonds or stocks for the Roth.
I think you’re wrong John. The market will correct at least another 10% and more if we have a hard recession. The amount of leverage in the market now is at levels comparable to the Great Depression. Margin calls will collapse the markets just like it collapsed New Century.
My portfolio:
Roth IRA:
SDD
401K:
CD’s
QID
Ameritrade:
90% short & puts on homebuilders/lenders
10% cash
Commodities are not safe either as people will be forced to unwind natural resources positions to pay for margin calls. There will be initial deflation as people flee to cash and pay up debts. This will be followed by sharp inflation as the Fed ramps up the printing presses to stop the deflation. People will be like a herd of sheep rushing from one perceived shelter to another, leaving many trampled and broken bodies behind.
I see. Yes, market sentiment has not turned negative yet.
Agree with Houston and Jerry. Relative to 3 weeks ago, the DOW looks like it’s lost a lot. It’s still in nosebleed territory, though.
It appears that reckoning day is here.
Basically, everyone’s waking up to the fact that the last 8 years was a sham.
Everyone must make their own calls.
The stock market has been relatively restrained since the dotcom bubble, and the current trend is pretty much as it has been since the late 70s (including the dotcom bump in the middle).
Yes, I do believe the market may fall another 10% or more this year. No, I don’t think we’re going to see a full scale stock meltdown, rather, stagnation is much more likely.
The NASDAQ, DOW & SP500 have tripled since 1995. Y2K was the blowoff top, especially for the NASDAQ
I see the stock crash of 2000-2002 to be the equivalent of Japan’s NIKKEI crash. The NiKKEI hit 38,916 in late 1989 and seveteen years later it is 16,778 after a decade of 0% BOJ free money rates.
Gold hit $850 in 1980. It took 26 years for it to reach $700 again.
Stocks & commodities, like RE, do not always go up. If the Fed lowers rates and flood the markets with liquidity again, that free money will likely end up in the emerging markets like India, Vietnam, Indonesia, Brazil and the rest.
I see a recession ahead. too much debt. Of course I also see inflation as the FED tries to print its way out of this just like last time when the Nasdaq cracked. It will be inflation in gasoline, food, taxes, medical services, rents, but not the price of a house.
Agree with Jerry.
For those of us who think this might be the beginning of a **major** liquidity contraction, there’s no telling where the bottom is. The credit markets have been on meth since 1982. Maybe we’ll just go back to 2000 levels, maybe 1982 — or worse. Maybe we will see the introduction of a new currency/hyperinflation/dollar crash (I believe this is very likely in the next five years). But that will likely come about as a result of initial deflation, IMHO.
We’re in cash (bonds, savings, MMA & will likely buy some foreign currencies) and puts — also putting my money where my mouth is.
Interesting times, indeed.
Personally, I am not moving any of my 401ks or IRAs out of equities into cash or bonds. My asset allocation in large companies, small companies and international funds is going to remain the same for the next 20 years or more! Outside retirement, I’m mostly into government securities and have a small position in PM bullion. That said, I’m not going to stop dollar cost averaging into stock equities. When the stock indices go down, that’s when dollar cost averaging trumps timing. You market timers can keep chirping like magpies but dollar cost averaging always wins in the long run. You just don’t have the patience that I have. That’s the deal. It’s all or nothing and that’s the American achilles heel. The middle approach is my approach. Financial advisors have always said that you need to be in equities for that pile of money you don’t expect to touch for another 20 years or more. You need to be in cash or government securities for emergencies or for buying things you want within 5 to 10 years.
Burn baby burn!!! WM crashing. ‘We don’t have any subprime exposure’. Ya, right! My PUTS are going through the roof. Oh thee of little faith. I should have bought more.Back the truck up. What’s going on with Wells? Same deal.
a-dude,
Even after todays debacle I would say you could still preserve gains by going to cash and sleep much better at night. Some of the funds sell at the end of each day so you may want to wait for a bounce back IF you feel there will be one. Personally I think there is still downside to this latest drop. Good luck.
I’m with you AZ. Spreading my cash around several different institutions today so if one goes bust all my eggs are not in one basket.
If you are going to panic, panic first!
If you have several years of cash and government securities outside retirement like me, you would not give a rat’s a$$ about changing your 401k/IRA strategy. Unless you are in your late 50s. For someone who intends to work another 20 years, it’s very dumb to shift assets within their tax deferred plans.
That is the biggest croc of sh@t I have heard lately.I wonder how many incentives and cash back schemes are baked into that number? They are pulling out every trick in the book to make it look like prices are not falling. Get out there on the streets and tell me prices are not falling dramtically in a lot of areas.
Agreed. The game is over, now the lean times are turning to depseration and the r.e. people are just trying to eat - so they will lie at any cost in order to close one more deal and stay solvent just a little longer…
Just wait until all those OCs residents read on morning paper that the OC had it’s first drop in prices. Now we all know that the OC prices have dropped quite a bit already with incentives and paybacks, but now there will be a price reduction right there on the front page. Momentum is a Bit$h when it stops going your way! Now momentum has stopped on the way up, and no where to go but down, and with less qualified buyers.
Ouch
Yeah, they will read that Orange County prices have dropped, but their EGO will tell them its someone else’s house, that their house and their neighborhood is different. You could prove to them beyond a reasonable doubt that there is a downward trend, and until the sheriff shows up with an evections notice, will they finally take some action. We are different!!
“Yeah, they will read that Orange County prices have dropped, but their EGO will tell them its someone else’s house, that their house and their neighborhood is different.”
That is so true.
SO Try for the SF Bay Area too. Real Estate Only Goes Up here .. Peloisi actually passed a law that Single Family houses in choice areas of SF, Oakland, Berkeley, Marin, and Orinda MUST, repeat, MUST go up at least 8% a year.
LOL
Denial still the order of the day in OC. People here still wanting 4x 1997 prices, with GFs still paying the price, although in ever smaller numbers. Lots of collusion amongst realtors as well. They are committed to keeping prices up here, at least in coastal OC. Good luck to them..
Downtown Huntington Beach median price is off 20% YOY.
A LOT of row (shotgun) house speculation in this zip code.
The area of HB around the civic center certainly has a ton of new townhome tracts going up. They certainly give that part of HB a stacked/cramped condo/twhmome look. Still, i see positives in South HB such as plenty of open parks, wide streets with ample bikelanes, and that long stretch of beach with the bikepath. If prices really get much lower south HB would be one of the more desirable spots for getting an abode.
Except for flooding exposure to the Santa Ana river and the Superfund toxic waste site with a cancer cluster next to Edison High School (Magnolia and Atlanta).
I prefer to be up on the bluff of Huntington Beach.
I go to Aera energy on 20101 golden west almost daily to pick up lab samples. Large energy/oil field right along the HB coast. Next to them are some million $ HB mansion/estates.
Also go to AES, that large energy facilty off newland near magnolia with the smokestacks. 99 %of HB residents probably are not too concerned with the large energy facilities and fields located right along the HB coastline, but they sure care about keeping Dog Beach open for running their mutts.
Well consider the fact it doest take much to keep prices inflated by realtors.
Sales volumne is down, even with dried out financing, all realtors need is a “one pastsy” in thinking there are multiple bidders.
Some buyer who is well off with lots of cash is tricked into overbidding.
They keep telling the smoe he needs to up his bid because there are other bids ( i call them “Phantom Bids”, because I know many are fake bids from nonexistant buyers). Common ploy with realtors. Buyer not knowing any better inflates the prices and thus the market is on a permanent plateu.
More New Century news…
New Century could cost landlord $6.5 million
Maguire Properties of Los Angeles today outlined its financial exposure to embattled subprime lender New Century Financial, which leases 267,000 square feet from Maguire in Irvine and is scheduled to occupy an additional 190,000 square feet at an office tower under construction in the city. In the event New Century stops paying its rent, Maguire could be out of pocket say $6.5 million, assuming it takes a year to find another tenant. Maguire downplayed the risk of having to find another tenant for the tower it’s building.
Maguire said, “Should New Century not take occupancy at our new 3161 Michelson property, we believe an opportunity exists to lease all of their space, which includes the top four floors of the 20-story office tower, at significantly higher rates than are payable by New Century. Their space includes the most desirable floors in what is quickly becoming the trophy office tower in Irvine, with outstanding views of the surrounding areas. Their lease also gives New Century building exterior signage opportunities which are extraordinarily valuable given the building’s highly visible location at the 405 (San Diego) Freeway and Jamboree Road.”
the ripple effect over and over and over……
the dominos are starting to fall…
Yes, and watching it unfold in plus or minus real-time is truly amazing. It reminds me of watching the first gulf war on CNN. I also keep thinking that there must be some sort of “internet effect” or multiplier.
Got grubs?
“Yes, and watching it unfold in plus or minus real-time is truly amazing”
I told you guys and gals that this would be the learning event of a lifetime, and to take notes to educate your kids and grandkids…and to sit back, grab some popcorn, and watch the show.
Does anyone remember the thread on this blog that ran, I believe, in fall/winter of 2005/2006 where everyone was making predictions on how this would play out?
Probably one of the most informative threads I’ve ever read.
Crap, I meant to ask if anyone has bookmarked that page or remembers the date it ran? I’ve been trying to find it while keeping up with all the new stuff.
If so, could you please post. Thanks.
Can you imagine the post that Ben will post when this fully gets played out that links to his own blog and what has been chronicled here?
I might need to take a vacation after that one.
The following was part of a thread from April 2006 about sueing various portions of the RE industry after the meltdown.
This was my prediction back then, dunno if it will happen or not.
~~~~~~
Comment by Rainman18
2006-04-27 19:22:27
I would agree as well, sue for what? This time. But I am convinced that there will be oversight on this madness after this debacle is combed over by sub-committees. No longer will you be able to show up with a pulse, a so-so FICA score and stated income and walk out with a half a million dollar 100% loan. The days of mandatory down payments, proof of income and good credit will return. To protect idiots from themselves and to redirect the ticking time bomb products the lending industry has propagated to the masses back to where they were originally created for.
Your desire and willingness to ensnare yourself in a deadly loan even with full knowledge of it’s character and for whatever reason will not be enough to procure it as in NASD Rule 2310 (the unsuitability clause). Your quota and your willingness to get someone into that loan they are not qualified for will not be allowed either.
The brokers, home buyers, realtors, banks, appraisers, home builders and government have been left to their own devices and they have gravitated to the lowest common denominator of greed, a quick buck and short sided “what’s in it for me NOW” impulses and practices. But when there’s mania and money to be made, which side of the velvet rope do you want to be on?
Everybody is to blame.
Mom can tell you until she’s blue in the face not to run with scissors, but until there’s blood on the carpet, it’s sure seems harmless enough. But when Dad gets home…
Comment by Rainman18
2006-04-27 19:41:07
Comment by bottomfisherman
2006-04-27 20:24:00
In some smoky backroom in the capital, plans are being hatched for a gvt RE bailout…
Comment by Rainman18
2006-04-27 20:33:02
Maybe, maybe not. Irregardless, regulation and oversight will be hatched with or without a bailout…
Sleepless. i saved the one from new years. it starts out:257 Comments »
Comment by Ben Jones
2006-12-30 09:44:20
To start off, here are a few from recent topics threads. Note: these are not my predictions!
‘1 Stagflation
2 Home prices median declines 10%
3 Fed holds
4 Dollar down
5 El Nino normalizes leading to more active hurricane season..therefore Gulf oil facilities hit.
6 Chinese oil demand drives oil to $90 late 2007
7 Uranium breaks $100 gold $700
8 US equties rise on high profits due to outsourcing and M&A driven by easy credit (read Chinese money)
9 US income ratio worsens.’
‘1) recession
2) home prices down 20%
3) FED easing mid year
4) dollar down 10%-20% against EURO
5) Stock market down 20%’
‘1) Soft Landing
2) Home Prices down 20%
3) Fed easing mid year
4) Dollar flat, Oil up
5) US Equities up 20%’
‘Fed easing = up market’
‘Prediction: China will blockade or Invade Taiwan, The US and other countries will threaten or start a war, China dumps hundreds of billions in Bonds crashing the market 40-50%.’
‘1) Yield curve curve inversion reversed, long bond at 7%
2) Housing debacle deepens as desperate traders cling to 2005 pricing.’
‘I predict a major crackdown on blogsters attempting to torpedo housing values. Violence escalating against anyone remotely anti-housing market. Labeling you a communist or somehow unAmerican if you don’t own a house.’
I ‘When all is said and done, however, homeowners will get a repreive from the gov’t in some sort of ‘chump change,’ payable by taxpayers of course. S&L scandal all over again.’
‘1. 2M homes in forclosure
2. Home sales down 20%
3. median prices down 6%
4. SD, Sacramento, Phoenix, SW & SE Florida prices down 15%
5. GDP 2007 in at 0.2%
6. La Palma Volcano erupts in Canary Islands–30m Tsunami strikes East Coast— prices then down 60%, GDP -9.4%’
Thanks Agitated! That looks like the one.
“I also keep thinking that there must be some sort of “internet effect” or multiplier.”
Data moves so much faster these days ! I first became interested in investing back in 1991. There was no Internet available to me and there certainly wasn’t any business reporting on it either. Things moved really slow. Things are much faster now.
“we believe an opportunity exists to lease all of their space, which includes the top four floors of the 20-story office tower, at significantly higher rates than are payable by New Century.”
Of course they will be able to lease the space out at a higher rent, than they would have with New Century…
sarcasm off
LMAO, yes there will be major ripples throughout the OC.
chris: my thoughts exactly. Who does this landlord think they’re fooling? A re-tenanting of that size would make news just about anywhere, and to believe it will happen in Irvine, at this point in the game, is absolutely laughable.
Yea, that’s going to be painful. He wishes that it’ll only take a year try 2 and that’s not including the TI work they are going to have to do. That’s easily a 20 million dollar loss.They aren’t that liquid you’ll be reading about them going belly up shortly.
Uh, are there outstanding views in Irvine? Besides looking at Irvine which really isn’t that outstanding.
LOL
if i’m not mistaken, that tower under construction by Maguire Properties is located adjacent to our favorite high rise condo project at 3131/3141 Michaelson. wonder how many executives of New(ly) defunct(Century) live there?? maybe maybe we’ll have a 3rd nearly empty building???
Those residential towers are empty already. Many bleeding flippers there. I really pity the people who bought there only to have that monstrous office building go up and block whatever view they had.
This is So Like Enron…
Big parties! Big Plans, Big HQ…. Big Splat!
Ha ha ha ….Funny
“The first problem he noticed after buying the 2,545 square-foot house for $420,000 was a crooked second-floor window sill. Then when he wanted to install a sliding door around his bathtub, the worker doing the job showed him that the floor sloped almost one inch from one end to the other.”
“‘The Egyptians built the pyramids over hundreds of acres and they were only off by about a quarter-inch, and these guys couldn’t put in a six-foot floor that’s not off an inch,’ Pinto said.”
“I would hope that they teach their workers better so that no one else ends up with a lemon. These guys are making good money; there’s no excuse for shoddy workmanship.’”
BWAHAHAHAHA! Paging spike66! This is just the tip of the iceberg. A home built by “guestworkers”. Oh yeah, Mr. Pinto, the builder made a mint, but the “guestworkers” got paid squat, so they took a squat. Mr. Pinto might also want to have his house inspected for Chagas. Or not. Just live there and wonder why the heart disease and neurological problems developed.
He paid $420,000.00 for a deathtrap, IHMO.
holy crap I didn’t see your comments before I posted below.
Mr. Pinto thinks his house was built by Williamson Trade School graduates…NOT! Hasn’t he ever driven by one of those day labor corners where they wait to get picked up? You know, where se habla solamente español?
How can a man get through his life without (apparently) having the slightest resemblance of a clue to what is going on out there?
philly, the true culprits of this whole housing fiasco are the Mr. Pintos of the world. Without their participation, this could not have happened and the realtors and mortgage brokers would be pulling their puds. Not to mention a lot of these people wholeheartedly approve of massive immigration, legal and otherwise. Or ignore it. So they get what they deserve. Unfortunately, we have to live with them.
“Without their participation, this could not have happened and the realtors and mortgage brokers would be pulling their puds.”
That is exactly what I said to my buddy when I saw that article. The shoddy workmanship is no surprise. The fact that someone would pay $400K+ to live in Gustine is what blows my mind. I think you’d have to pay me a million just to live there for one year.
No different than the illicit drug trade. If there are no end buyers, there is nobody producing/distributing/selling. Come to think of it, this whole RE thing has been like a big drug addiction.
Got 10% down?
Mr. Pinto… what an appropriate name. The bubble just rear-ended his gas tank.
ha ha, love it. Wonder how many here are old enough to recall
Would have been better if Ford had simply recalled sooner than later.
Got 10% down?
I had a Pinto in the mid-70s. Total POS. As I recall it was a couple of bolts puncturing the gas tank when hit from behind. The other part that I recall was that Ford took an ass-pounding because they had done some cost-benefit calculations. Hey, it was 30+ years ago when I was a senior in college.
Why would they spend time and money to train a bunch of illiterate illgegal aliens who could be in a different state or country tomorrow? They just wanted to make a fast buck with the cheapest materials and labor available. Buyer beware
Palmetto,
I’m just sitting here, in disbelief,yet again. Guy pays 420k for a house built by unskilled, illegal labor and he thinks his problem is a crooked window sill and a inch slope to his bathroom floor? And he’s been living there, how long, a couple of weeks? Mr Pinto, I believe the good times are just beginning for you.
I find it amazing that buyers can believe that the workmanship delivered by unskilled illegals is “just the same” as that done by experienced union tradesmen. But they must, or they wouldn’t buy this junk. I give him a year, and he’ll find out what this house is really gonna cost him–trying to fix shoddy and incompetent work is a money pit. And he’ll never be able to unload the place–in a year or two even the clueless Mr. Pintos will know that illegal labor has built nothing but oversized shacks.
AMEN, Brothah! Testify!
Seriously, though, much of this illegal labor situation is created by some of our so-called friends and neighbors. They’re just about to find out how expensive illegal labor really is. I say, good on ‘em, cobber!
Best not to buy anything built or extensively rennovated during the peak bubble years (2002-2006). Quality (such as it was) took a complete nosedive in the scramble to slap together as many cheaply built stucco boxes as fast as possible.
“Best not to buy anything built or extensively rennovated during the peak bubble years (2002-2006).”
Exactly what I’ve been saying, but of course I’m preaching to the choir here. Wait until the defective workmanship problems surface en masse. Another tsunami. Thousands of FBs, stuck in glorified sh*tboxes, devaluing and deteriorating. That ought to be a moment.
Quality (such as it was) took a complete nosedive in the scramble to slap together as many cheaply built stucco boxes as fast as possible.
It was not only quality that went down the drains. Don’t forget “aesthetics” “balance” “harmony” “evironmental responsibility”, taste (what was left of it), etc.etc…
Maybe no one will notice the lawsuit or the newspaper story when he tries to sell it.
it makes me sad at how stupid this construction is. i work on civil engr. plans all day long and we have to make our work right and spend lots of time double and triple checking and doing all this crap. and then bam, as-built because no one can build it right. then the builder decides to use his own design where we have to redesign everything. except this time there is no backup method for flooding. ugh and if a builder can’t level off windows and floors correctly i would assume that building will be falling apart in the next moderate sized earthquake.
if the house is bad what about the ground underneath, hopefully its not a fill area. scariness. but the general rule is dont buy houses built during housing booms.
and yes i am sick to my stomach knowing how much effort is put in by most engineering firms to make this stuff work and then this BS.
and about using workers with experience, there was an article about building car parts in the US and in China. the US totally destroyed china in the quality of work which ended up being cheaper to make.
They build oversized shacks in America, undersized shacks in their country of origin.
Is it still true that you get what you pay for?
Got 10% down?
The following was posted at my blog by an unhappy Lender:
WaLender said…
Before you initiate a Witch-Hunt for the Brokers and Sub-Prime lenders of the world lets take a trip down memory lane.
Are you forgetting that 20 years ago you couldn’t obtain a mortgage without a 30% down-payment and 720+ credit score? How many people today would own their homes if not for lenders who pushed the limits and expanded the criteria so that American dream could become a reality? Whether you agree or not, that includes the ‘below-average’ Joe.
And, while I admit there are a number of sleaze-ball lenders out there, there are far greater numbers of legitimate lenders who stand ready to help those whose dream of homeownership, despite a somewhat jaded past, still burns bright.
Let me also remind you there are overwhelming numbers of so-called “A” borrowers out there who are defaulting on their mortgages on a daily basis. No one is damning their lenders for giving them a chance.
I’m a Broker and proud of it. I’ll continue to stand up to the mud-slingers because I believe that everyone deserves the chance to own their own home. If they meet the investor’s guidelines then more power to them and congratulations. Maybe you should be turning your words to the investors who are looking to make a buck…and by the way, where is your money invested?
Tue Mar 13, 02:25:00 PM PDT
http://bakersfieldbubble.blogspot.com/2007/03/lend-next-to-go-down.html
Boo Hoo! What a cry-baby!
“Are you forgetting that 20 years ago you couldn’t obtain a mortgage without a 30% down-payment and 720+ credit score…..”
I bought my first home a little over 20 years ago, with 10% down and below 720 credit score. Don’t really need to read anymore from ‘WaLender’ when you start off with misinformation.
LLPOF.
Same here. Bought in 1979, 10% down, and I’m sure our credit score was below 720.
BayQT~
I have never heard of any lender requiring 30% down for a SFH purchase in the past 30 years. Maybe this was the requirement sometime in the 19th Century? Or early 20th Century?
Anyway, this guy is crying because HE believes double digit increases should be sustainable forever. He wants to live in a world where he is originating loans ten years from now for a 3/2 SFH with a median of about $4,000,0000 to retail store clerks. And ten years after that at a median of $16,000,000.
I say he can take his childish rants and stuff ‘em where the sun doesn’t shine.
Got 10% down?
The lenders are bitter because of the proposed regulations. See, if the borrowerr actually has to qualify based on his/her ability to pay off the loan…no more serial refinancers who keep backing up the money truck every time their loan resets.
Selfish, greedy ba$tards!!!
‘Let me also remind you there are overwhelming numbers of so-called “A” borrowers out there who are defaulting on their mortgages on a daily basis. No one is damning their lenders for giving them a chance.’
I beg to differ. Lenders who convinced “A” borrowers to use suicide loans which will destroy their future financial health are damnworthy.
I read that around 20% of subprime borrowers would have actually qualified for prime, but weren’t told that little bit of ‘unnecessary’ info by their trustworthy mortgage brokers.
Of course it is the users who are ultimately accountable in the end, but you have to lay some of the blame on the pushers.
As I read this post, I kept getting this visual of a 5-year old throwing a temper tantrum.
This guy is probably not very happy because his income is gone, and now he is being vilified by the press: hahahahahahahah.
“..because I believe that everyone deserves the chance to own their own home.”
Yes, if we convert to communism, comrad!
Alos, the broker is wrong about needing 30% down 20 years ago. You could buy a house with a 30 yr fixed with 5% down. Usually an impound account was required to pay taxes, insurance and PMI.
He says: “Are you forgetting that 20 years ago you couldn’t obtain a mortgage without a 30% down-payment and 720+ credit score? ”
Actually, the more I think about it…. 30% down is probably a good idea.
Actually, the more I think about it…. 30% down is probably a good idea.
———————–
Imagine how much **truly affordable** housing would be available if we had to put 30% down.
“I’m a Broker and proud of it. I’ll continue to stand up to the mud-slingers because I believe that everyone deserves the chance to own their own home.”
Yeah, everyone deserves a “chance”, just like I might have a chance at being the next American Idol. Doesn’t mean it can or shoud happen. “Chance” isn’t entitlement. Gotta prove your chops to get a “chance”…like, uh, I dunno, legitimate proof you can afford a house.
Dollars to donuts, Mr. Proud Broker saw his share of grocery store cashiers get a “chance” at a 500K house.
If he cares so much about helping people get into homes, then why did they push balloon products and liar loans? Why did they put in prepayment penalties? All these clowns care about is how fat their commission checks are. They don’t care about these people and for him to say otherwise is ludicrous.
I disagree with that.
Me too. Not a realtor or MB, but not everyone in the RE biz is a predator. You just never really hear about the good ones, the morons get the press…
Ok… but many only cared about the commissions. How’s that?
Hopefully, the good ones will survive while the crooks and phonies get weeded out.
“How many people today would own their homes if not for lenders who pushed the limits and expanded the criteria so that American dream could become a reality?”
The American Dream: Renting from the bank using most of your budget until the bank takes it away from you? No, wait, that’s not it.
That post is so beautiful. It evokes sounds of violins playing dreamily, images of puppies playing and wafts from mom’s home made apple pies in the oven.
It bring tears to my eyes. The dream of home ownership is still burning bright. He’s a broker and he’s proud of it. Everyone deserved the chance to own their own home. God bless ‘em all.
————–
Yeh, my arse.
And of course you can all guess my beef with WaLender. He’s a broker (he says so), not a lender. Real lenders (me) make a buck by lending real money (instead of spending it), not by shuffling paper and collecting fees. WaLender is probably the guy who sends me 14 postcards every month asking if he can’t please pretty please buy my 9% notes because of course he knows I’d rather have cash (NOT), even if the cash offer deeply discounts the value of my notes.
“If they meet the investor’s guidelines then more power to them and congratulations.”
The investor’s guidelines are about to change dramatically.
“Not everyone is sold on downtown. Christina Yu and Christopher Camargo, renters in Long Beach, visited about a dozen condo and loft projects to learn firsthand what downtown has to offer and were not entirely impressed.”
I had an e-mail exchange with this LA Times writer a couple of weeks ago because most of her articles seem to have a bullish bent to them (although she does present stats from both sides of the argument). For example, the headline for the article that this quote comes from is titled “Upside in LA Housing Market.”
She defended her position by saying something like “there is a growing school of thought that says LA will weather the downturn better than most places because it’s not dependent on the RE economy as much.” Pleeeezzz. She also took credit for helping put your blog on the map Ben, saying she reads here occasionally. She needs to read a little closer. LA will tank more than most IMHO.
She and the LA Times did help this blog. It was the first big article on this blog and housing bubble blogging I can remember.
Annette Haddad by any chance? She’s a pathetic cheerleader — no doubt owns property in the area. I’ve emailed her as well and gotten a bland response.
The latimes is sleazy. In todays article, desperate to end on an upbeat note, they shift the ground from a discussion of the housing market and subprime lending to the economy as a whole:
“Christopher Cagan, director of research and analytics at First American Real Estate Solutions, anticipated the rise in sub-prime defaults more than a year ago but forecast that the turmoil would be contained.
Monday, he stood by his prediction.
Some lenders are contracting, others are failing. Wall Street is tightening up. And unfortunately some people — those who bought at the peak and put nothing down — will lose their houses,” he said. “This is part of the business cycle. It will not break the economy.”"
Cagan is not an economist, but a mathematician/statistician. Judging from his comments, I don’t believe he understands endogenous feedback very well.
“endogenous feedback”
last time imploder ask for some of this, date ended….
Oh well……….if you don’t ask…….you know the rest……bwhahahaha
Are you sure you didn’t ask for “exogenous feedback” by mistake?
Yes, Ms. Haddad. Long time readers may remember that in late May 2005 this blog disappeared, when it was on blogspot (google). The article was about to run and the Times/AH got ahold of Google and managed to have it restored. Of course by then I had already started thehousingbubble2, but I really appreciated it at the time.
I had some interesting conversations with AH, so maybe I should ask her to do a Q&A with you guys, like Jon Lansner did?
Good God, Ben…I’ve been following you for better than 2 years?! Time flies when you’re having one hell of a good time.
I remember the LA Times article.
I didn’t know that they helped you out with google. That was kinda cool.
I do remember the spike is aggressive trolls just after the article ran.
Many posters don’t understand the media business.
It is WAY more important to provoke a reaction than to be factually correct.
The article was about to run and the Times/AH got ahold of Google and managed to have it restored. Of course by then I had already started thehousingbubble2, but I really appreciated it at the time.
——————–
I didn’t know that. Very cool of her.
So, did you ever find out why the site kept crashing at the time (2 or more in a short period of time, no?)… Conspiracy theories abound…
The site wasn’t crashing, it was deleted. All of my blogs were (3). No, I never got an answer from Google. When they were restored, two days of posts/comments were missing from the original HBB.
Hmm…
the world’s smartest realtor had a job with blogspot/google?
The L.A Times may not be the greatest paper, but they did put this article on the front page, on the upper part of the front page where you can read the article’s headline in the vending machine.
This piece jumped out at me as I passed the newsstand this morning. The Times is showing some balls by putting something like this in a place where everyone can see it.
There’s no hiding the subprime/housing meltdown now. The 2% stockmarket drop that happened today is the lead story at FOX, CNN, ABC, MSNBC and CBS, and all of them are attributing the drop to the subprime blowout and are connecting the dots between subprime lending and collapsing home values.
The NAR can talk all they want, they’re pissing on a house fire.
“The NAR can talk all they want, they’re pissing on a house fire.”
LOL! What an image! Made my afternoon!
YES, gotta love the poets on this blog!
I can’t believe that the LA Times had the “Home Prices Wory Rises as Mortgage Woes Grow” story on the front page…I would have expected it to be burried in the business section. What’s the world coming to?
arroyogrande, today 3/13/07 was the turning point. Now it’s “offical” news. Expect coverage to get more serious every single week starting today.
Exactly. The have the courage to report it now that it’s conventional wisdom.
arroyo, thanks for motivating me to log off now and go see if there are still any copies of today’s LA Times available. I will LOVE reading this front page headline and the story.
The Times may have helped, but they’re otherwise totally clueless.
They have a front row seat to what may be one of the biggest economic and human interest stories of the modern era, and all they can do is parrot the NAR. Doesn’t matter if it’s their real estate, business or even Op-Ed section, it’s all goldilocks all the time.
There’s a depression coming, and they’ll be the last to know.
Am in the middle of work so i cannot rebut A Hassads LA times article about LADWTN line by line at this time but Give her credit for being a first rate propagandist for the LA DWTN Developers while appearing balanced in her views about the total LA/SCal RE Market. BTW Grand AVe has not even broken a single pavement on the project.
I am completely pessimistic about LA DTWN, which will also go down along with entire LA Area RE market when the subprime spigot gets shut down. More analysis to come later.
I don’t see much balance on her part.
Here are a few of her recent articles:
Optimism is rising on housing market
Home prices remain steady
Southland home prices set new record
link to the la la times socal home prices page:
http://www.latimes.com/business/la-homeprices-sg,1,4959013.storygallery?coll=la-utilities-business
I agree, the downtown loft article was feckless cheerleading. It turned my stomach. Downtown lofts aren’t gonna sell until they are about 50% off.
Notice the sub title of the piece:
“Condo sales downtown, where prices start in the mid-$300,000 range, are still relatively strong.”
Talk about working hard to find a positive spin.
300k ain’t typical pricing.
Great quote from someone in the article about the majority of condos (price wise) downtown:
“If I’m going to pay $700,000 for a place, I think it should have a view of the ocean, not someone else’s living room.”
And since she (the writer) works downtown at the Times, it wouldn’t surprise me if she her self bought the downtown kool-aide and condo.
“Upside in L.A. housing market
Condo sales downtown, where prices start in the mid-$300,000 range, are still relatively strong.
By Annette Haddad, Times Staff Writer
March 13, 2007 ”
http://www.latimes.com/business/la-fi-homes13mar13,1,922025.story?coll=la-headlines-business
I will now go ahead and demolish this LA TIMES RE Shill!
I put selected quotes from that article followed by my comments.
“L.A. appears to be one of the few bright spots”
Total BS. LA DWTN is ringed by third-world immigrant sewer districts such as Rampart,chinatown, warehouse distrct,pico union.
“Sales of units in the seven ZIP Codes that comprise downtown nearly doubled from a year ago to 148 closed transactions in the three-month period that ended in February”
The seven dtwn LA zips are so small and insignificant that they do not even show up on dataquick. 148 closed transactions. Fact: LADwtn has added 4,000+new units in 2004-2006 and is adding another 2-3,000 just in 2007. Sales are not booming in dtwn LA. 93 new units alone came to market with the opening of VeroDWTNLA complex. Estimated 1000-2000+ units have/are being added just along 800-1100 block grand ave in the south park district(near staples ctr)in 2005-2007, not including LALIVE, which as of late 2006 was still a hole in the ground. 148 sales in three months is S*IT!
“With some new units starting as low as the mid-$300,000s, downtown is attracting middle-class salaried workers like Helphand and House, as well as suburban homeowners rich with equity looking for a weekend getaway or a first home for their college-age children”
Total BS: suburban LA equity-rich homeowners have already brought up second properties out of state or in vacation spots within CA. They will not buy second homes in seedy LADWTN. This may be the biggest load of crap coming out of this article .
“The Grand Avenue project — a major retail, housing and entertainment development that some hope will rival New York’s Times Square — won city approval”
This has not even broken ground yet, and is at least 3-5 years away from even partial completion.
“L.A. Live, another entertainment site in development”
not even broken ground.
“trendy Arts District that abuts the concrete channel of the Los Angeles River”
Only trendy beatnicks and living-at-the-edge bohemian artists live in this seedy district, which is a very seedy decrepit area adjacent to the abominable old warehouse district which borders the LA River.
A HADDAD does not know LA DWTN sorry to say. Or she is simply being disingenious or has ties to the LADWTN REIC.
“it’s becoming apparent that our sky-high housing prices are due in part to a credit bubble. And that bubble has started to pop.”
OH! So there was a credit bubble…now I get it…*smacking forehead*
Gary Watson where are you on OC home price now?
Gary’s getting shitfaced in some Mission Viejo dive bar mumbling to himself, “I used to predict real estate (slurp).. tough racket”
gary watts is sitting in that bar with leslie applteton young
the cat got out of that damn bag!
It’s in the Bag!
oh wait,
he’s a bagholder.
That’s in the bag!
what gary doesn’t tell anyone is that he sold at least two of his own proerties last year (2006) and this year has at least one listing of a family member’s property.
Good find do you have any links?
That would be tremendous. OC Renter can you check those transactions out?
Spoke w/ someone in Greenpoint wholesale — loans are being killed, some in the pipeline. Don’t know what the LTV cutoff is, but FICO 600 seems to be their new floor. Brokers have been calling all day to try and push their loans through.
Man, between working in a building w/ them and a Countrywide BC office, elevators are so much fun right now for this housing bear!
They’re not so cocky anymore are they…
No more 100% loans to Denny’s waitresses who ‘earn’ $8K per month!
can’t wait until the repo guys start flooding that parking lot
is there a bus stop close by?
Well, it still looks like a luxury car lot now, but I figure that’ll change in the next few months with fewer loans being made. I’d be willing to lay odds thatI have one of the few paid off cars in that lot.
Closest bus stop I can think of is about a mile away and they’d have to come uphill to get to work. That elevator will be pretty ripe this summer…
webcam please!!!
Oh man, if I could bug the elevators and the smoking congregation area, could you imagine the amusement we’d get out of the conversations?
“Don’t know what the LTV cutoff is”
Anyone predicting 80% required LTV again? I used to think not, but the investors are driving this, and I sense them stampeding away from sub-prime (and maybe even alt-a and prime).
If only those pesky investors would grow some balls again! Yes, they’re blaming the investors who got spooked by a few bad subprime loans. How dare people be expected to bring money to the table!
Additional funny from the same guy: “You know, I’ve been in this business two years,” said like two years was a really long time, “and I’ve seen lots of ‘I bought three months ago and I’d like to refi and pull out $25K’, but I haven’t really seen anyone who is almost paid off and wants to pull money out, you know?”
“and I’ve seen lots of ‘I bought three months ago and I’d like to refi and pull out $25K’, but I haven’t really seen anyone who is almost paid off and wants to pull money out, you know?”
That just about sums the whole thing up right there.
“Anyone predicting 80% required LTV again?”
That would basically leave just the bloggers here as loan candidates. Each would recieve 40,000 calls per day from mortgage brokers.
Damn have to change my numbers again!
don’t think they’ll go to 80% again (hasn’t been there for probably 40 years). should go back to PMI over 80%ltv with at least 5% down, qualifying at full interest rather than start rate, no liar loans over 75% or maybe 80% ltv,etc.
Sure, lower downs have been available for decades, but not at or near prime rates. Risk will be priced based on LTV, and anything less than 20% down will be penalized heavily.
David Lereah said that February was slow because of the cold weather. My prediction is he will blame the slowdown in March on Lesbian Necrophiliacs.
Just a hunch.
Why would he blame women with a blod clotting problem?
hemophiliac not necro. LOL
Sorry. I went to public skool.
LOL! Me two!
you were kidding right?
lmao
I went to New York public school and yes, I was kidding.
lol…best post today.
What do I win??
two hours at the Plaza with Maria Bartorini, and a caramel sundae - with a cherry on top!
O that sounds sooo good.
ok so I’ve been blogging all day… I need a break… Ben, can we install a chat program? Flashchat works well : )
I’d like to see a more comprehensive search function…
You win a lunch with DL of the NAR. They didn’t get any bids on eb#y.
Got 10% down?
I had surgery yesterday… these percocets are good.. speaking of which.. I think I need another… now where did I put my pez dispenser….
Watch out for those percocets. In my experience, they tend to build up in your body or something. Next thing you know, you stop breathing when you fall asleep. Not kidding, unfortunately.
Oh Im not taking that many. In fact I havent taken any since last night. Going to try and see if I don’t have too much pain today. It was nothing major though.
“‘The Egyptians built the pyramids over hundreds of acres and they were only off by about a quarter-inch, and these guys couldn’t put in a six-foot floor that’s not off an inch,’ Pinto said.”
That’s what you get when you hire illegal aliens to do the work at less than 1/3 of the cost of a journeyman. These builders are the @ssholes of the earth. Do you think they passed the savings on to the buyers? Hell no, it went right into their greedy pockets. These pigheaded b@stards deserve to get sued until they are penniless. Not only for the shoddy construction, but for their illegal practice of hiring undocumented workers. Why this is allowed to continue today is beyond me. And this braindead government insinuates that illegals only do the jobs that legal citizens don’t want. I find that offensive. The American people are getting ripped off everywhere they turn. This country needs a serious reality check. I have a feeling it’s coming.
Excuse me, but there are PLENTY of Americans who’d do the jobs that illegals do. But, for some reason, they’re not even being advertised to us.
According to John McCain, Americans aren’t willing to pick lettuce for $50/hour!
Ha!
I know plenty that would do them as well.
americans want those pesky things like benefits and safe working conditions. one thing il say for most manhattan large developers is it is a union job with good pay, the outer borough’s or suburbs it is just like everywhere else
7-11 parking lot’s are the shape up halls
Didn’t aliens build the pyramids?
Sing it, brothah! Testify!
the ghetto revival alive and kicking on the HBBB….yo..yo..yo
But didn’t they use slaves to build the pyramids?
nope proven wrong. it was a civic duty and they got paid well and got good food beer etc…
Well, think of it as a social experiment. FBs can get to know how the third world lives. Because these homes were constructed just like the guest workers would have built them back in the old country. Except no one in the old country pays that kind of money.
Maybe in the next housing bubble they will build with the real McCoy? They will hire Egyptians?
Got 10% down?
It would be just politics if on top of that veterans didn’t get screwed after getting back home wounded from Iraq too.
Good to know you spilled your guts and brain and blood for a place where others just crash the border to get through and don’t need to fight for.
I think the Soviet Union provided better health care to those who fought in Afghanistan in the 80s. And the house work was less shoddy and done by russians for russians…
I’ve got an excuse for shoddy crafsmanship - it’s called GREED numbskull!!!
“But ‘if I’m going to pay $700,000 for a place, I think it should have a view of the ocean, not someone else’s living room.’”
For $700,000 in Long Beach you should have a view of the ocean and a back yard.
Yes, looking out her front window is a beautiful Oil island, looking out her back window is a gang member doing art work on “the wall” …
money well obligated …to be mailed to the bank every month.
Uh, for $700,000 in Long Beach, you should own a majority of the city…
By the way, isn’t that the place where the nice Caucasian upper middle class girls were beat to within an inch of their deaths by some roaming black female gangbangers. Yeah, that’s where I want to live for $700,000. The stupidity of people in L.A. amazes me, and is only exceeded by the idiots that would pay $1mil to live in POS tract home in Yorba Linda, where white trash and illegals have already started taking over.
LMAO
And by the way, just so no liberal feel-gooders start haranging me, my mother grew up in South Central L.A. and my wife’s greatgrandparents were Caucasian sharecroppers, so I dont think I am better than anybody who may be poor financially. But to think that I could be walking down the street with my white wife and white daughter and someone could just attack us for no reason other than the fact that they didn’t learn to read/write/arithmetic and dont have a job and are jealous… Well anyhow, I cant see paying $700,000 for a home in that city, or $700,000 for anything, office building, etc. Not worth my or my family’s lives. I have said it before, L.A. is dangerous and the OC Norte is going that way as well.
“By the way, isn’t that the place where the nice Caucasian upper middle class girls were beat to within an inch of their deaths by some roaming black female gangbangers”
It was on halloween night and the beating took place in an upscale part of long beach called Bixby Nolls. 3 teenage white girls along with a throng of black teenagers were visiting a haunted house display. One male black youth made suggestive sexual references to the white teenagers, some trashtalking took place, and then the 30 or so black teen youths jumped on the 3 white female teenagers, beating them badly to the ground, punching and kicking them them, and a black male slammed one of the girls with his skateboard. It was that girl’s face which was beaten so badly her eye socket was disjarred, and her face/skull was fractured 13 times.
The subsequent trial and sentences were a joke, nothing more than probation and house arrest for 10 of the perpetrators. That badly beaten-almost-to-death girl will be disfigured for life, while the 10 perpetrators got away virtually scott free.
Long Beach is so heavily minority and PC’ed, especially around the DWTN court where the trial took place, that there was no chance of fair justice for those poor beaten girls. IT was in fact almost an OJ-type aquittal.
Do not even think about buying a condo nor even a house in Long Beach,at any price, especially DWTN, where roving minority gang-thugs prey upon residents almost on a daily basis. LB has some really nasty decrepit slimezone areas surrounding the dwtn area, where the local thugs filter into dwtn to wreak havoc. When the economy/RE goes into the toilet, then it will get even worse all over the LA slimezones and adjacent communities.
“‘The days of 100% financing are over,’ he said, adding that about 20% to 30% of the first-time buyers he meets with would be unable to buy without improving their credit standing and coming up with a down payment.”
20% to 30%???? WTF is this guy smoking? I haven’t met a first-time buyer with money in his pocket for at least 5 years, maybe more. Eliminating 100% financing is tantamount to eliminating the first-time buyer altogether. During this whole bubble madness, the only folks with downpayments were the “trading up” crowd with a wad of cash from the former sale of their previous home. I’m sorry, this dude has grossly understated. Had he said something like 80% of firstime buyers don’t have a downpayment, I would have left him alone.
i will be a 1st time buyer (someday) well anyway i have cash
actually enough for a 20% down or more for what i am looking to spend as well as pretty damn good credit and no debt.
but i will be damned to put my hard saved cash down only to see it evaporate, therefore i rent
Like I said, in the last 5 years I’ve seen few savers. Savers will come back in force once this all plays out.
Me, too. Don’t have 20% of a house in Anaheim yet, but we will soon enough! As our savings go up, the prices come down! It’s a beautiful thing to watch.
and i can’t tell you how many buyers said they would not buy if they had to put their own cash into the deal. think about it. a 100% LTV loan is the best insurance a buyer can get. none of their own money in the deal. if they default, they don’t lose anything (and can left payment free for several months) and within a year or two can do it again because lenders haven’t cared that much about defaults.
“The outlook seems hazy. Tighter lending standards and slower appreciation will keep many would-be buyers on the sidelines. Downtown broker Perabo says he’s worried because fewer first-time buyers will be able to qualify now.”
But look at the mindset!
How many first-time homebuyers could afford houses if the price was in line with reality?
H&R Block (HRB) delaying filing quarterly earnings report! Oh-oh…
http://biz.yahoo.com/rb/070313/hrblock.html?.v=1
Yeah, this is interesting. I wished I could just short option 1.
Down 10% in the AH.
It’s a $10 stock w/o the credit bubble, just going back to 2000 on the chart. But that doesn’t account for extraordinary true growth since then, nor on the other hand the financial duress they may get caught up in trying to fix this little problem. There’s something about $29million but that’s sorta nebulous at this point and cannot be the extent of it. HRB is a company which actually creates value by providing a service, albeit expensive to use and to run and which, every year, loses clients to tax software.
I was looking at shorting this earlier today but didn’t pull the trigger as there were lots of ‘options’ today and HRBs 4% move down wasn’t as convincing as some of the others.
It’s a $10 stock w/o the credit bubble, just going back to 2000 on the chart. But that doesn’t account for extraordinary true growth since then, nor on the other hand the financial duress they may get caught up in trying to fix this little problem. There’s something about $29million but that’s sorta nebulous at this point and cannot be the extent of it. HRB is a company which actually creates value by providing a service, albeit expensive to use and to run and which, every year, loses clients to tax software.
I was looking at shorting this earlier today but didn’t pull the trigger as there were lots of ‘options’ today and HRBs 4% move down wasn’t as convincing as some of the others.
^ above not
for extraordinary true growth
but instead
for true growth… extraordinary financial duress
I dunno if there’s been organic growth in the tax preparation business since 2000
I also dunno why what I just wrote double posted
Mr. Pinto, disgruntled new homeowner says:
“I would hope that they teach their workers better so that no one else ends up with a lemon.”
Teach them…teach them?????
OMG Mr. Pinto do you have any idea about who has been constructing houses in the throes of the RE boom? Here’s a clue -
yo no sé
And you should see those guys work. Fast and SLOPPY.
“And you should see those guys work. Fast and SLOPPY.”
That’s what SHE said.
Get er’ done!
hey Slim, as long as the walls are level and the floors aren’t out of plumb, it’s all good!
“Eliminating 100% financing is tantamount to eliminating the first-time buyer altogether. ”
Exactly, and some are not doing loans for anything over 90% LTV. I dont know many first time buyers who can come up with 10% down.
Of course, the smart ones who started reading this blog and have never owned a home have been saving cash for their down.
BTW, watch how you are treated by the agent/broker/lender when your ready to buy and you have 20% down. They roll out the red carpet for you.
I guess there will be no more first-time buyers for a while, then, while everyone tries to remember how to save money again…
i learned to save in my teens, forgot to save in my twenties
and have been saving like madman in my 30’s (almost 6 years)
feeling good now for not jumping off a cliff. the wife even said to me yesterday with all the crap on the news. wow honey you really were not crazy..
thanks to all the bubbleheads for getting me in the know
Just be sure you have adequate diversification, in case the Fed’s War on Savers proves successful.
stucco the diversification is getting hard in this market
hopefully inflation will not make my savings worht half or worse.
Median price for SFR in OC is $620K. So, how many first time buyers have $62K saved for the down payment, plus extra for closing costs, reserves, etc.? That’s a pretty sizeable amount of cash, and very few first time buyers will have anywhere close to that amount.
Realistically, at today’s prices, if you need 20% down plus closing costs and move-in costs, you are looking at $150,000+. There might be 2 or 3 first-time buyers in OC with that kind of money, but not many more.
But isn’t everyone in the OC millionaires?
I think as prices went up many buyers just gave up saving for a down and switched to the 100% (80/20) loans. Then as prices climbed even higher the buyers went into the 100% ARMs, then as prices went higher they went into 100% ARM I/O and finally as the peak approached, they went into 100% ARM NEG AM loans.
It was almost impossible to keep you down payment saving growing at the same rate as prices so people gave up because the lenders offered them an entry point that did not require it.
The catch was that they were paying too much and should have kept saving and renting until prices come back down. But very few voices of reason were singing that song.
For the younger married couples starting out it will be the bank of mom and dad. For others they will have to save to purchase maybe in their 30’s?
By the time things shake out and I’m ready to buy it will be all cash.
And I won’t need a broker,agent or lender to take a cut. Just a RE lawyer–and I’ll pay him/her in cash too.
I’m re-posting what Hoz posted previously for easy reference:
They probably knew that the senate would bail them out.
“Senate Weighs Aid to 2.2 Million Subprime Borrowers”
U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.
“The impact of losing 2.2 million homes I suspect will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,’’ Dodd, a Democrat from Connecticut, told reporters in Washington after a speech to the National League of Cities. …”
Bloomberg13 March
http://tinyurl.com/3xyaaw
Who will save us from this madness? Where are the conservatives??!!
I will vote for any politician who has the guts to stand up to this nonsense.
Me, too.
I guess they want California in the 2008 elections.
They want the stupid and irresponsible vote, which seems to be the biggest voting bloc in this country.
“They want the stupid and irresponsible vote, which seems to be the biggest voting bloc in this country”
They want the hispanic vote! For it will be Hispanic immigrants who will be the biggest foreclosore losers, and for sure the hispanic victim activists/lobbyists such as Mecha and LA Raza will parade the supposed ‘victims’ before city hall/congress to get our Gov’t to bail out the ‘victims’ from their own stupidity.
try these guys
no free stuff - ever
http://www.lp.org
the conservative” have spent us dry
put the dems will organise FB’s into a voting victim pool
That’s lame. Dodd is trying to buy votes for his presidential campaign.
I just emailed Dodd the Dud and gave it to him in all caps. Tomorrow he’ll be getting a phone call. Talk about adding insult to injury - after sitting out of all this madness the past five years, now I’ll have to PAY for it too??
“Talk about adding insult to injury - after sitting out of all this madness the past five years, now I’ll have to PAY for it too??”
I hear ‘ya loud and clear! I’ll be damned if I have to live in the cold northern climate, and pay for a bail-out of the sunny coastal populations.
I am switching my assets to gold and euros… and I already work using a foreign entity. Glad I am not paying taxes for this mickey mouse statehood
I already sent letters to Boxer and Feinstein about this.
http://www.senate.gov/general/contact_information/senators_cfm.cfm?State=CA
“‘It looks like it’s hitting its new low level, and it’s going to stay there awhile,’ real estate consultant Walter Hahn said”
I know this has been already commented on above, but wow…. talk about the B.S. COMMENT OF THE YEAR!!!!! How are we already at the low? How can someone lie so easily for a buck? Doesn’t anyone have any fear anymore?
(Yawn…) BTW, what means “patchy?”
————————————————————————————
Markets slide as subprime woes escalate
By Michael Mackenzie and Saskia Scholtes in New York
Published: March 13 2007 18:56 | Last updated: March 13 2007 19:50
A steep sell-off swept through global stock markets on Tuesday as investor confidence was hit by the escalating woes of the US subprime mortgage market and weak US retail sales data.
Stocks began the day on a bearish note but selling pressure intensified after the Mortgage Bankers Association said that the rate of late payments and defaults on US home loans hit 4.95 per cent in the fourth quarter, up from 4.67 per cent for the prior quarter.
The problems were particularly severe among subprime borrowers - people with patchy credit histories. Delinquencies for subprime adjustable rate mortgages rose to 14.4 per cent, up from the third quarter’s 13.2 per cent.
Accredited Home Loan Lending, a subprime mortgage specialist, said it was seeking fresh capital and waivers on its lending covenants, while the New York Stock Exchange said it planned to delist shares in New Century Financial. GMAC, a financial services group 49 per cent owned by General Motors, said subprime lending woes contributed to a $651m fourth-quarter loss at its home lending arm.
Sentiment across markets was driven by fears that subprime problems will slow consumer spending and hamper economic growth, leading investors to sell risky assets and seek the safe haven of government bonds.
http://www.ft.com/cms/s/b0547428-d191-11db-b921-000b5df10621.html
Thought this was ironic.
Massachusetts said Tuesday it subpoenaed documents from two securities firms on issues over their quality of research on subprime lenders.
http://money.cnn.com/2007/03/13/news/companies/subprime_massachusetts.reut/index.htm?postversion=2007031318
No problems… the big WS investment banks (and their international counterparts) are above the law…
“Secretary of the Commonwealth William Galvin said in a statement that the securities division of his office subpoenaed UBS AG (Charts) of Switzerland’s UBS Securities LLC and Bear Stearns Cos. Inc. (Charts) concerning research analysis of subprime lenders, including New Century Financial Corp (Charts).”
I just don’t understand this. Why is it impossible to save a downpayment. When I was a first time buyer in 1971, the average price of a 3 bedroom ranch, was 30k. 10% down, 7% interest 30yr term. A good salary then was 14k. So, 2xincome for a house. If all these high incomes…two income families are out there, whats changed. Get a life, learn how to work hard and save for a home..
It took me five years to save the down…Today its instant gratification at any cost…no sweat, no effort..just FEED ME…
“Why is it impossible to save a downpayment.”
It takes a while if homes are priced at 10X median income. Of course, if everyone had been required to bring a downpayment all along, prices could never have gotten this crazy…
Exactly. Let’s say you make $100K (well above the median in OC) and want to buy a median SFR in OC, you need to save $62K (median price is $620K), or 62% of your pre-tax income. Quite a bit harder than when Terry had to save $3K out of a $14K income (approximately 21% of his pre-tax income). It took Terry five years to save his down payment, and that was to save for a down payment that was basically 1/3 (in percentage terms of pre-tax income) of what today’s buyer would need to save. And that median priced SFR in OC would only get you a 1,500 sq. ft. stucco box built in the 1950s on a 5,000 sq. ft. lot in a not so nice neighborhood.
I agree that prices would not have bubbled if lending standards had remained sane (including the requirement of down payments). I also agree with Terry’s displeasure with the instant gratification that people have today. It’s a me, me, me, now, now, now attitude that didn’t exist (at least it wasn’t common) when I was growing up, but is all too prevalent now.
Let’s run the math on this. 620K house, 10% down, 6% fixed — roughly $3500/month all expenses + tax deductions. Assume you had this virtual mortgage and saved the difference between rent at $1500. So for 10% down, that’s 31 months if you pretended you had the mortgage and didn’t get a cent on interest. For 20% down, 70 months. Assuming you put the money into CDs at about 3.5% interest and the timeframe drops to roughly 26 months for 10% down, 59 months for 20% down.
So the point again is — if Terry saved up for 5 years to build up a downpayment back then, what’s stopping anybody from saving up that for 2.2/4.9 years even at today’s prices? Huh? You can’t save that much money? Uhh … how did you expect to pay the mortgage then because the savings numbers I posted above came from the difference between owning and renting.
We bought our first house in 1991 for $150,000. Took us 2 years to save $40k (20% down pymt + clsoing costs and a slight cushion). We drove and old Ford tempo and an older Honda Civic while ours friends bought 300Zx’s and BMWs. We lived at home with our parents for free while our friends rented apartsments for $1,000 month. When we got married we drove a few hours to the local beach. Most of our friends went to Hawaii or Europe for two weeks. They couldn’t beleive when we bought and did not have PMI.
Fast forward 12 years. We move to our 2nd house - 4 bed 2.5 bath in one of the nicest neighborhoods in the Philly suburbs. We sold our original house before buying the second house (btw we only owed $30k on the mortgage and sold for $270k). We bought our 2nd house for $426k and put 50% down. With my wife staying home with the 2 kids for the last 7 years. Again all our dual income friends couldn’t understand how we could afford it. BTW we owe less than they do on ther considerabley samller houses.
I also contribute 15% of my salary tot my 401(k) and get a 6% match from my employer.
And how long would it have taken you to save the DPayment if the house was 140K??? Because that’s the situation we are in now in SoCal.
JWM — There will be convergence. As future first-time buyers save up for a downpayment, prices will come down to a lower level, easing their burden. Markets eventually adjust back to sanity if the government keeps its nose out of the way.
Tell that to Dodd…
What the . . . ? Do you mean if the downpayment was 140K? I haven’t seen a house going for 140K around here since, uh, forever.
terry my friend times have changed in case you haven’t noticed
for the worse
Not only was it foolish for lenders to give these low down loans to sub-prime borrowers ,but also what about qualifying people on 1% teaser rates that only last for 3 to 6 months ? Stupid stupid stupid .
With time I believe lenders will go back to insurance on loans above 80% LTV and at some point they might make 3 to 5 % down payment loans if the borrower is qualified .Sub prime is history and those lenders will go back to very high down payment requirements on that junk .
Terry, I think you are swayed by the bad apples who exhibit this attitude but there are plenty of thirtysomethings just on this blog (err, like me) who have been socking away money as much as possible to afford a place the past few years, only to see it escalate out of reach thanks to the irrational speculation of Baby Boomers.
SURPRISE!
——————————————————————————-
Home builders will feel subprime’s pain
Tighter lending standards expected to hit sales, exacerbate inventory glut
By John Spence, MarketWatch
Last Update: 2:54 PM ET Mar 13, 2007
BOSTON (MarketWatch) — Although it’s difficult to gauge home builders’ direct exposure to the imploding market for subprime loans, none are likely to be immune to the ripple effects resulting from tighter mortgage lending standards whether they sell to first-time buyers or the high-end luxury market.
“The headwinds from deteriorating credit will impact supply and pricing conditions, as well as incremental demand” in the housing market, wrote Credit Suisse analyst Ivy Zelman in a research note this week.
“With delinquency and foreclosure rates continuing to rise, we believe this will result in more supply hitting the market throughout the year,” she added.
http://www.marketwatch.com/news/story/home-builders-feel-spillover-effects/story.aspx?guid=%7B965D3FD4%2D5B9C%2D4A28%2D8479%2DCC4CC7B0F6B1%7D
Real estate consultant Walter Hahn said the $2,250 drop in median price amounts to virtually no change, saying that the housing market here has hit bottom or is very near it.
—————————————————————————–
This Walter Hahn is an idiot! He’s in the same league as Gary “It’s In the Bag” Watts in coming up with completely assinine predictions….and of course, the reporter doing the interview never calls this clown on his previous no bubble in OC pronouncements!
His last prediction at Lansner’s blog was 10% appreciation for the foreseeable future until the next recession.
The best comment on that blog’s thread was he is a few variables shy of an econometric model.
Sorry for the O/T, but the bits bucket is rather full…
I’m getting really upset about all the talk of bailouts and the lies that are being told about how the first-time homebuyers (or any homebuyer) will suffer if the govt regulates the mortgage lenders.
I’d like to propose a letter-writing campaign. I think we need to flood the regulators, politicians, newspapers and CEOs of lenders, banks & financial institutions with letters from responsible people who have been hurt by the credit bubble and how the implosion will end up HELPING responsible, law-abiding Americans who are looking for an affordable place to live — and get us back to being a productive country rather than one where we sell houses to each other at ever-increasing prices. Here are some points I think we need to cover:
1. How loose lending standards are the sole creator of our “affordable housing crisis”. This needs to be pounded into their moronic brains — too much credit causes cost inflation; it does NOT make anything “more affordable”. It simply creates more DEBT.
2. Loose lending standards encourage speculation, which forces real (but uninformed) buyers to gamble with toxic loans and take on debt they have no hopes of paying off.
3. Buyers who have something to lose were forced to compete with morons with other people’s money and (temporary) artificially low monthly payments. They had nothing to lose.
4. The credit bubble caused neighborhoods to become unstable, as the velocity of sales increased to record(?) highs, and folks were moving to cash-out, speculate or move to more expensive homes.
5. We do not want to bailout anyone who took a gamble on housing appreciation. I never heard of any bailout programs for those of us who speculated on falling prices and rented during the credit bubble (were they going to give — not lend — us money to make up for the appreciation we missed out on while we waited?). Are they going to set a precedent and start bailing out those of us who trade stocks, options, commodities, currencies, etc.? Investors/specuvestors take risks. Deal with it. The best lessons are those learned first-hand.
6. Lenders and specuvestors need to feel the full effects of their actions. Only then will they learn to be more cautious and, hopefully, we can avoid disasters like this in the future.
7. Write about your own personal difficulties experienced during the housing bubble: delayed & lost opportunities for getting married & having children; divorce stories because one spouse wanted to nest while the other wanted to avoid financial ruin; being attacked by family, friends, neighbors, etc. for deciding to rent instead of buy — and the relationships which were ruined; lost opportunities to take care of dying parents (or other friends/family members) because we were stuck in inappropriate housing due to the housing bubble, etc…
Anything else you can think of?
I’d like to see different letter written by some of the posters here, as there are some very talented people, and we could get ideas for our own letters. Preferably, we would not all write the same thing, but personalize our writings while hitting on the same topics.
We need to show the PTB that the credit/housing bubble was devastating in so many ways. We cannot allow them to attempt a bailout. We NEED the market to return to sane conditions, so people can go about being productive (including those of us who spend waaay too many hours, every day, reading bubble blogs — for years). Let’s get back to work and back to our families already.
Maybe we could have a thread for this on the weekend, or???
It just makes me sick listening to all the shills cry about govt regulations — as if making loans which can actually be paid off is a bad thing!
The Mortgage Brokers Ass is as sleazy as the NAR
I see this has been discussed above, in response to Hoz’s post. I hadn’t even read the Bloomberg article re: Dodd, yet. I don’t normally curse, but f**k those m****er fu**ers!!!!!!@!!!!!!!!!!!@! God, I’m pi$$ed!!!!
Sorry for the vent!
http://www.cnbc.com/id/17598988
Paulson says the economy is fine ! Dodd says its needs a bail out ! These guys need to get on the same page. Of course Larry Kudlow still believes in Goldilocks.
Larry Kudlow also believes in Snow White
Snow White … yea he did lots of
Columbian Nose Candy
in his day. Freely admitted to it!
This just in: Goldilocks found dead in Japan… more details to follow..
Down 3%. Tomorrow should be a wild ride.
If the yen carry trade blows up now things could get interesting………
LOL
Get the writing campaing to stop any bailout going!!! I will write till my fingers hurt. You made excellent points.
Goverment should not be by idiots for idiots. People made free choices to buy homes they could not afford even in their dreams. They should be left to deal with the consequences! Any bail out will be a direct atack on those of us who want to buy a house but are waiting for prices to get real. Politicians should remember that any bailout will HURT and punish hard working americans who saw the madness for what it was.
fiat money is the problem, not necessarily loose lending standards… the bubble just shifted from internet stocks to real property and it will continue to happen so long as the government controls a fiat currency.
adding regulation will only make it worse unless you intend on regulating the federal reserve system and Congress
I’ll have to disagree with you on loose lending standards not being the problem. While it may be easier to have loose lending standards under a fiat money system, this housing bubble was most definitely created by EZ credit.
Yes, I believe in regulation…not so much to protect morons from themselves, but to protect the rest of us. Read Hoz’s post about how Sen. Dodd wants a bailout program for the FBs.
In a system where one person (or institution) can unilaterally affect the lives of many, we need regulation. Mind you, regulation is very different from “affordable housing” programs, tax incentives, bailouts, etc. I DO believe in regulations — especially where basic necessities are concerned (air, water, food, housing, infrastructure, money, healthcare, etc.).
Let the capitalists run amok in businesses which provide “wants” not “needs”.
Agree with you 100% on your post Ca. renter .
“thought of as a big oil tanker that takes a long time to change course.”
Pure BS. Think of it as being 70% underwater in a storm headed aground!
LOL! until it hits an iceberg… stopped dead in the water with major structural demage…. keeling over.
Can we discuss some smart options for those of us that have sizable cash waiting? I have 400k in cds but i’m hearing about all the cool things that you ‘investor types’ are doing as bears (’shorting’ things?) but I don’t have a clue what you’re doing. Can you point me to some good websites/books that I can check out? I’m really worried that my money will simply be gobbled up by the Fed bailing people out so I need to do something with it other than investing in stocks. Thanks so much for any advice you can give!
Haha CD’s look pretty good to me right now…..
You might look into diversifying into other currencies and perhaps some precious metals. Check out everbank.com, for example. Also prudentbear.com for info.
If you have saved $400K then you don’t need any investment advice.
Does anyone on here have AIM, Yahoo, or Microsoft Messenger? What are the handles.
I’m ummm MrHousingBubble on AIM if anyone wants to find me LOL.
Bloomberg sums it all up in a great article:
“U.S. Stocks Tumble, Led By Financials as Mortgage Slump Worsens”
http://tinyurl.com/ytom2a
Of course there is going to be a bailout….who do you think the real powers that be care more about A) The average sensible joe saver or B) Their banking CEO pals at the country club? In the process if they knock out some scrub competition (NEW, AH etc) then so much the better.
As a card-carrying member/resident of South OC, I feel more than sub-prime qualified to speak on this topic.
First, housing is only going to start a verrrrrrrrrrrrrrrrrrrrrrrrrry loooooooooooooooong slide down. Bottom line…no one left who can afford these prices and no more junk loans to those who can’t but still want an overpriced PoS.
Second, as for the pyramid comment, I made that last week. I said that in a rant about how it seems everything nowadays is crap that is part of the planned obsolence paradigm.
Third, this economy is toast. reading the blog, yes, in real time, really makes me wonder. I know we all have to do what we have to do, but this could unravel a lot faster than we think. Remember the Internet speeds up infor soooooo much faster. All it will take for collapse is a run on the banks. With the Internet, I will not hesitate to leave work and go down to the bank and withdraw everything, if I see that that is what millions of others are doing. If this happens, bye-bye economy. Living proof that fractional-reserve banking does not work!
Fourth, with all the comments about political parties and illegals, etc., I have had it with the gov’t. With the exception of about 5 congressmen and senators, combined, the whole group is worthless than a 10-lb. bag of cow turd. These people have no care for this country. As far As I am concerned, they can rot in H3LL for selling this country and its workers down the tubes.
Fifth, debt-game almost over. With subprime gone, no more refi and no more HELOCs. Goodbye debt-driven, consumer economy.
SIxth, should the fed lower rates, bye-bye foreign investors. No one is going to believe us anymore if BB lowers rates. If rates go higher, bye-bye everyone with massive debt.
Sorry for the rant, but I am just pissed off about this whole mess. Congress is about as useful as a pimple on the a33 of a pig. Big corporations don’t care about anything but the bank account getting bigger. J6P doesn’t care about anything other than his vacation and next home improvement.
I am just so frustrated by this whole thing. I worry for the future of this country only because I have family. If I was alone, not so bad. But I worry about the kids and their kids.
We have really left a mess this time.
OC - I happen to agree with you about most of an excellent rant. One of the things that I do not agree with is “J6P doesn’t care about anything other than his vacation and next home improvement.” I respect most of the J6Ps in my area and (fortunately ) those are the only ones I know.
” Big corporations don’t care about anything but the bank account getting bigger. J6P doesn’t care about anything other than his vacation and next home improvement.”
You are completely right; most corporations would sell this country if it raised their stock price. Most long ago lost all care for the USA.
With the exception noted by Hoz, (I’m pretty middle class myself, guess that makes me a JP6), I don’t think you’re ranting, OCDan,
I think you’re stating the facts.
Actually a lot of us bitter OC renters have been priced out for such a long time, more of us than you may suspect actually DO have 10% down—waiting for the right price, and highly aware of the advantages of renting…
Your day is coming soon. We bought our first house in OC in 1993. The same scenario is about to repeat itself.
Count me in that group. We have 10%, however we won’t even consider buying until the savings curve (going up) and the price curve (going down) meet somewhere in the middle at a 20% down payment. We’ll see what we actually do in the end, but that line always shuts up people who are asking me “so, when are you going to buy?”
A limited bailout might not be that large of a problem. I’d only reccomend it be offered to people that can show they refinancied in to the an option arm with a large early penalty clause for refinance; and can show they have income to cover a conventional loan. So a release from the penalty clauses.
Anything else is supporting speculators and will only increase the bubble, inflation and malinvestment.
The others that are just way overpaid with no hope of recovery. They have to let the property go.
All other choices will have horrid consequences.
“All other choices will have horrid consequences.”
Can you elaborate on what these horrid consequences might be? Hyperinlfation? Depression?
“All other choices will have horrid consequences.”
For whom? Let the markets work.
Hyperinflation. You get on the road to currency collapse and the econmy is reduced to bartering for services.
other price supports will “third worldize” the country. Basically a policy of debt forgiveness (and credit tightening) would artificially keep prices supported and everyone else would be priced out. That is the situation in a lot of the world.
Inflation in any form is also dangerous. Particularly to anybody with grey hair reading the blog. They are headed in to fixed income portions of their life and would not like their pensions devalued (further) by inflation.
So printing more money for a bailout we can’t afford will result in less inflation?
Don’t see how you can bail out the masses. That would mean taking sides like poor, minority, middle class, rich, state vs. state, city vs. city, etc and it would open up a political hornet’s nest. Sorry folks, any bail out will be financial institutions and it will probably be the larger companies absorbing the subprime loans at pennies on the dollar. New companies may be formed to absorb the REO properties in some area to lease out as low income properties within cities where low income workers are needed.
I agree. The big banks will be “persuaded” to buy out the subprime loans at pennies on the dollar, but not show the bad loans on their own books; instead, special subprime subsidiaries will be created to hide the rot. Business not quite as usual, but it’s been done this way before.
I think there will be a half-hearted inflationary bailout, but it will fail. It would take simply too much money required to make much difference. I would see Congress being very uneasy with anything more than that.
If there IS an attempt to really bail this thing out (i.e. 100’s of billions rather than 10 or 20), treasuries and the dollar would tank.
A concerted effort to hyperinflate would destroy the U.S. as an economic power. Historically many countries with major economic status ended up taking the deflationary medicine to preserve their institutions. For all the power of Goldman Sachs et al, they will not want to be in a banana republic, and will instead hunker down.
Not only that, credit spreads will split wider than Paris Hilton’s legs, as nobody will want to buy the debt. And foreign appetite for Treasuries will weaken, pushing up bond yields anyway.
“‘The Egyptians built the pyramids over hundreds of acres and they were only off by about a quarter-inch, and these guys couldn’t put in a six-foot floor that’s not off an inch,’ Pinto said.”
Oh-oh. Now they’re gonna start flipping pyramids.
Too bad they’re not tetrahedrons; whichever way you flip a tetrahedron it still looks the same.
I had to go to Wikipedia to look that up…
This is OT, but I’ve been watching the Virginia realtor’s site for a while now, waiting patiently for their monthly update. For some reason, they have been very late with updates lately. For instance, right now the most recent month for which they have full typical comparisons is Dec 2006. However, in kicking around, I found that the “Detailed Housing Statistics” dropdown has some interesting negative numbers, sorted by county, around DC. For those who are interested, go to:
http://www.varealtor.com/Newsroom/HomeSales.asp
click on the big dropdown in the middle of the page and go do the Jan 2007 info
This is a YTD comparison page so it’s got some crazy numbers for cities thad had no sales in Jan 2007, but some of the other numbers might be interesting for people who live in and around DC.
FWIW
Doc
Use this site instead:
http://www.mris.com/reports/stats/
Nice! CNN has moved that Scary Math article to its top spot as of 5:50PM PST.
http://www.cnn.com
What, no washed up teen idols in rehab this week?
Front Page News folks.
http://www.cnn.com/
And Drudge.
Wow.
http://drudgereport.com/
Anybody getting a little bit, uh, nervous here?
Am not nervous. I get excited about all the opportunities we are about to get.
Yep, and its now front page on the Drudge Report as well….Matt has been pretty slow to report this stuff….look out now!
CNN and the rest of the media finally reporting on things that we knew would happen a couple of years ago. But, at least they are reporting on it now so I give them credit for that.
Speaking of a couple of years ago….it was CNN I believe that was running articles on how to purchase second and third homes.
The business news channels are just as bad. How many here trust them when they always interview CEOs of companies or idiots like David Liar?
There was a time when bears had more equal time on these channels.
“There was a time when bears had more equal time on these channels.”
Bears never get equal time ! Barry Ritholtz is a regular panel member on Larry Kudlows show. You know the one, “The greatest story never told”, Goldilocks rules, America the great, that one ?
He regularly gets cut off, put down and made fun of for his bearish views. He who laughs last wins.
http://bigpicture.typepad.com/
Japanese stocks are getting killed!
Yen is rallying, 115.82. carry trade getting slammed.
from Bloomberg
`This is perfect for dollar bears,” said Clifford Bennett, chief currency strategist at FxMax, a Sydney-based currency forecasting company. “I see a continuation of the economic slowdown, so the Fed will become biased to cutting rates.”
The dollar, trading at $1.3191 per euro from $1.3197, will weaken to $1.3650 and 112 yen within a month, Bennett forecast. ..”
http://tinyurl.com/yttoen
If the FED cuts rates, then the dollar falls further. This doesn’t exactly make it attractive.
excellent Bloomberg article summarizing today’s market outcomes:
http://tinyurl.com/ytom2a
Check it out, a $119K house in Miami:
http://tinyurl.com/3cyqpl
(must be logged in to ziprealty)
Some of those photos are of a commercial building. Is this a commercial bldg w/a house behind???
Check it out, a house in Miami for $119K. At least I think that’s a house back there.
http://tinyurl.com/3cyqpl
(must be logged in to Zip)
Alt A mortgage losses accelerating and could get worse.
http://www.marketwatch.com/news/story/alt-mortgage-losses-accelerate-threatening-mbs/story.aspx?guid=%7B7AE4DCF2%2D44BF%2D457B%2D8595%2D4440243EEA1D%7D&siteid=yhoo&dist=yhoo
This “alarming” deterioration could have dire consequences for some investors in the BBB- rated parts of mortgage-backed securities (MBS) that contain these types of loans, but the market hasn’t priced these risks in yet, Liu warned.
Losses “could potentially wipe out most of the credit support on BBB- rated bonds backed by Alt-A hybrids,” Liu wrote. “And yet we have not seen any spread movements that suggest investors are taking this into consideration.”
Liu’s study, which used LoanPerformance data from the end of January, is based on the housing market remaining relatively flat over the next few years.
“If house prices fall over the next few years, everything in this scenario will be much worst,” he said in an interview
“Real estate consultant Walter Hahn said the $2,250 drop in median price amounts to virtually no change, saying that the housing market here has hit bottom or is very near it.”
He’s calling a bottom or “near it” and yet goes on to then say the meltdown of subprime/easy credit - will affect everything
There is very little chance this is the bottom
Nikkei watch on again, down -496 (-2.9%) Yen up almost 1% vs the dollar.
I was going to say. The Nikkei is down over 500 points. It hit 600 at one point.
Also the CEO for CFC is going to jail dumping all his shares while still saying things are/were good.
Yeah I can’t believe it. Hopefully some Bank of America execs will join them for that pumping CFC to 44 with that buyout talk, just before all this news came out. Unbelievable.
Why? The stock was sold to willing buyers. Those who bought what CFC execs were was selling deserve to lose their money.
Why? The stock was sold to willing buyers. Those who bought what CFC execs were selling deserve to lose their money.
“Also the CEO for CFC is going to jail dumping all his shares while still saying things are/were good.”
Just like Enron…
I wonder what else is going to get uncovered when they start digging around ?
This is *way* more entertaining than the NCAA tournament!
Among other reasons, the housing collapse has already started.
Wild guess best case scenario for major bubble regions would be a 20 to 40% hit over the next few years off peak 2006 prices with a 5 to 8 yr recovery - and that assumes subprime problems don’t spillover significantly into general collateralized debt obligations market - otherwise there would be a huge spike in interest rates, creating a much worse situation
In New England with many properties now coming on to the Spring market - many are listed as if it were still the top of the bubble in 2005/early 06 - with most prices within 2 to 5% of peak. Apar from extremely deep pocket buyers or town-specific/must have buyers I cannot fathom what type of buyers, particularly on properties near a million dollars- would be buying near peak values
made $700 on my shorts today.
Just more paper money.
Anadigics ANAD keeps going up, why? is it going to be bought like Freescale?
Housing bust spreading to the midwest quickly:
http://madisonhousingbubble.blogspot.com/
The guys and gals at Broker’s Outpost found this little gem (they got a kick out of it too):
http://www.keyrealtyinvestmentgroup.com/index.html
“Key Realty Investment Group, Inc has developed a dynamic and innovative approach to real estate investing, that allows our investors to use their good credit instead of money.
You will never be asked to pay any kind of fee for participating in any of our investment opportunities. All you need is good credit (700+) and an annual income of $60,000 or more. For the use of your good credit, Key Realty Investment Group, will pay you $50,000. Yes it does sound too good to be true but it is true.”
“Key Realty Investment Group, Inc buys wholesale properties all over the country at bargain prices. In order to do this we leverage your excellent credit to secure a mortgage loan. For loaning us your credit, we pay you $50,000 within 10 days of escrow closing. From start to finish the entire process generally take 30 days or less.
You are not responsible for mortgage payments, we are. You are not responsible for taxes, we are. You are not responsible for repairs or upkeep, we are. Your only responsibility is to figure out how to spend the $50,000 we will pay you for allowing us the use your excellent credit.
You never have to worry about your good credit will be jeopardized. The mortgage loan remains in your name for only a short time before it is transferred to the company. For every property that Key Realty Investment Group purchases, we open an escrow account (which we can’t touch) with sufficient funds to pay the mortgage, property taxes, and all other costs for a period of two years.
Your have nothing to lose and $50,000 to gain. So if you are serious about earning $50,000 for signing a few loan documents please complete the questionnaire. We will review your information and if you are a good candidate, someone will contact you soon.”
Lots of questions here…how about: If the propery will be in my name for “only a short time”, why open up an escrow account with 2 years worth of payments?
I’d like to believe that htis is a joke site…
NIKKIE plunges 3 % WED morning..Bloodbath guaranteed on NYSE tomorrow !!
Hey, 2.98% as I look at it.
Ok, time to go comment to my own blog entry. A coworker who has been right in the past predicted a jump… hmmm…
Got popcorn?
Neil
my blog:
http://recomments.blogspot.com/
I’m comfortable with his prediction… It seems that any decline greater than 1% seems to set off alarm bells for investors and sets the stage for bigger declines soon. Significant volatility feeds on itself and the market creaks and pops like an iceberg when it starts to change direction… look out below!
All of this news getting high MSM coverage made me think of that old song by The Jacksons:
“Can you feel it, can you feel it, can you feel it!”
I know I’m probably posting to myself right now, so I’ll add another one:
Bachman-Turner Overdrive: “You Ain’t Seen Nothing Yet”
Oh, well, at least Japanese savers (in Yen) will be able to soon afford to buy US real estate at fire sale prices…
——————————————————————————
ASIA MARKETS
Asian markets hit in global equity sell-off
MarketWatch
Last Update: 12:43 AM ET Mar 14, 2007
HONG KONG (MarketWatch) — Stocks slumped throughout the Asia-Pacific region in afternoon trade Wednesday, with Japan’s benchmark Nikkei 225 down 3% in the wake of a sharp sell-off on Wall Street and a strengthening of the yen against major currencies.
The Nikkei 225 index fell 484.39 points, or 3%, to 16,695.85 in mid-afternoon trading. The index had ended the morning session down more than 500 points. The broader Topix index of all first-section issues on the Tokyo Stock Exchange was 2.8% lower at 1,678.88.
Big losses on Wall Street for all the major U.S. indexes, along with growing uncertainty about the U.S. economy — particularly in the housing sector and in the subprime lending market, weighed on stock markets throughout the region.
Hong Kong’s Hang Seng Index fell 2.6% to 18,829.36 in late morning trading. The Hang Seng China Enterprises Index, a gauge which tracks Hong Kong-listed shares of mainland companies, was down 3.4% to 8,952.97.
“We are seeing a domino effect, the consolidation looks like it might continue for a while until the problems in the U.S. are resolved,” said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong. Tang said he was concerned problems in the U.S. subprime mortgage market could be the catalyst for wider credit contraction, resulting in slowing growth in the world’s largest economy and Asia’s most important export market.
“The market will remain quite volatile in the short term, we are not expecting any major rally or comeback because of these overhangs.”
http://www.marketwatch.com/news/story/stocks-tumble-across-region-fears/story.aspx?guid=%7B9C48C5A3%2D32FC%2D4033%2DA3E4%2DFFF0378A33DC%7D
It’s (almost) all the weather’s fault…
———————————————————————————
US retail sales feel the chill
By Daniel Pimlott in New York and Eoin Callan in Washington
Published: March 13 2007 14:06 | Last updated: March 13 2007 14:06
US retail sales rose more slowly than expected last month as a combination of cold weather and a weak housing market kept consumers out of the shops.
Government figures showed sales rose by 0.1 per cent last month to $371bn compared to forecasts of a 0.3 per cent increase following flat demand the previous month. Excluding sales of automobiles, sales fell 0.1 per cent against expectations of 0.3 per cent growth. Sales figures for January and December were also revised down.
http://www.ft.com/cms/s/c6eca11c-d162-11db-b921-000b5df10621.html
Foreclosures may hit 1.5 million in U.S. housing bust.
From the article……..
Remarks: Remember this?: “Bubble? What bubble? There’s no housing-market bubble.” That was the refrain of nearly every major news organization across the country. They treated predictions with ridicule when they took note at all. TNS’s attention to the looming crisis dates back to our very first week of publication in January 2004. Yet you can count on the investment-focused corporate media to soft-peddle the real impact of this crisis while they’re counting the money they’ve raked in off advertisers pushing high-risk loans for houses that wouldn’t retain their equity. It’s upsetting enough that lenders drove this train toward catastrophe, but it’s enraging that media companies cheered them on the whole time. –BD
http://newstandardnews.net:80/content/ion/index.cfm/bulletin/6569
The constant ongoing battle between Greed vs Fear - the human condition, which is precisely what we saw with the tech stocks circa 1998 to 2003
Greed so far has won out - however fear will soon take over with some of these sellers, particularly sellers actually sitting on large amounts of equity the one’s who actually have discretion in their final selling price, and some of these sellers are going to dump these properties this spring at 10 to 15% discounts over their (usually illusory) asking prices
However, I still cannot figure what kind of a buyer, (assuming they are credit worthy and income qualified to begin with) will then be happy to say “oh geez I got finally 10 to 15% off the peak 2006 peak price -what a bargain, nothing to worry about now”
Even these upcoming ‘bargain” buyers have got to be scared in this environment
Not that the “there is no bubble” explanation strangely depended upon reconverting the issue to the NATIONAL bubble and then saying “there is no NATIONAL bubble… because certain areas still have not experienced major price increases”
Apparently it was not considered alarming that by 2004 due to an obvious easy money/credit bubble - a huge bubble was clearly occuring in New England, mid-atlantic states/DC/Florida, Phoenix, nearly the entire west coast - and probably 8 to 10 other regions - however since Omaha and North Dakota and other such areas were tame - this would somehow refute the bubble argument
Yet the press instead of getting the story - just stood by writing their usual puff pieces acting as cheerleaders
Cash is King!
Think about it. The last 6 or 7 years the dollar was total crap. The only play was assets. Real estate. Precious Metals. Commodities. Collectibles. Bonds. Even Stocks.
The reason for this is pretty simple. Money was plentiful. It was cheap. So it chased too few goods. Sure there have been ups and downs, but the pattern is unmistakable.
So where does that leave us today?
Liquidity is drying up fast. Cheap dollars are not to be found. So naturally without cheap money all of the above assets are going to tumble. So where is the best place to put your cash?
Why not in cash? The purchasing power of plain old cash is growing very quickly today. It is working very hard! Why risk it on an investment that could fall when you already have the winner here?
Of course, by cash I mean money markets, CD’s, saving accounts, etc.
I think cash is king.
I’d think about some foreign currencies as well (cash). No one knows what will happen to the dollar if this goes as badly as some of the bears have predicted.
Any recommendations?
I’ve been looking at Everbank’s Commodity Index CD - Aus, NZ, Can, and South Africa among a few others.
Not sure, as I think everything is tied together.
We live in So Cal, so will likely buy some pesos (yes, I actually wrote that) in case of emergency, also considering Canadian dollars, Euros, Russian rubles(???), Yen(???)…not really sure, but looking into it…
Be careful investing in foreign commodities or currencies.
It seems so easy. you look and say “wow, the New Zealand dollar and South African rand return a lot!”
But you must understand there is a reason for this. they too have their issues with fiat. they too have issues with sky high inflation, thus the high interest rates.
Thus, you need to understand currency markets AND the economy of the currency in which you invest in order to understand investing in these products.
I almost invested in the NZ dollar on Everbank a while back when someone gave me the advice I’m giving you… then the NZ dollar fell a lot vs the US dollar wiping out the 7% yearly interest I was getting.
You have only PERCEIVED diversification with many of those currencies.
Here’s an article from today:
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10428804&ref=rss
“The New Zealand dollar took another beating today after equity markets sold off heavily on concerns about liquidity in the US mortgage market.
Dealers said investors were running from risk and the kiwi was looking very shaky.”
Thank you, HIC. You are exactly right, which is why we have not yet bought FCs. I’ve been watching different markets around the globe, trying to find one that looks safe, and they all have their issues, no doubt about it.
For me, it’s not about return, but the tinfoil hat conspiracy theorist in me that fears hyperinflation/dollar crash. I’m looking for some kind of medium we can use to buy food, etc. in case of emergency. A bit like gold, but easier to use. That’s why I’m considering pesos — Mexico is close and there are many Mexicans here who would likely begin using pesos in the event the dollar crashes (at least that’s my theory). We would use the pesos to buy goods & services…NOT for “investment” purposes.
Thank you for your valuable input!
Thanks HIC and CA,
I, like CA, am looking at it as similar to purchasing gold. Not really as an investment, but a diversification of tinfoil assets.
Comment by Mr Vincent
2007-03-13 16:49:31
“Eliminating 100% financing is tantamount to eliminating the first-time buyer altogether. ”…
BTW, watch how you are treated by the agent/broker/lender when your ready to buy and you have 20% down. They roll out the red carpet for you.
Yes, and then they pester the living hell out of you to forget about the house you’re trying to buy and get a waaaay bigger and therefore waaaaay better house. I don’t think any mortgage broker presently breathing air has anything at all in mind besides getting the biggest commission they can out of you. They are like hideous tentacled evil leeches wrapped up in Wonder Bread.
I am eating a ham sandwich while I enjoy reading this blog, is why I thought of Wonder Bread.
European stocks in sea of red, track global slide.
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070314:MTFH43417_2007-03-14_08-11-53_L14269207&type=comktNews&rpc=44