Bits Bucket And Craigslist Finds For March 15, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
According to Business Week, “It’s different this time:”
The good news is that, although the subprime business has grown rapidly in recent years, it remains a small part of the overall mortgage market—14% of outstanding mortgage loans. And only some subprime loans are in trouble. About 13% were past due in the fourth quarter, the Mortgage Bankers Assn. said. So the most serious damage is confined to a fraction of a sliver of the overall mortgage market. Christopher L. Cagan, chief economist at Santa Ana (Calif.)-based First American CoreLogic (FAF), projects mortgage defaults of about $300 billion through 2010, just a flea on the nation’s $10 trillion housing elephant. And about two-thirds of the losses will be recovered when lenders repossess homes.
Resilient Economy?
Ordinarily, economists get alarmed when subprime does badly, assuming borrowers with weak finances can’t make their mortgage payments because the underlying economy is weak. It’s different this time because the main culprit is lax underwriting standards. The overall economy is doing reasonably well, creating 97,000 jobs in February, according to the Bureau of Labor Statistics. The unemployment rate is just 4.5%. Subprime’s woes aren’t an indicator of deeper-seated problems.
http://www.businessweek.com/investor/content/mar2007/pi20070315_447639.htm?chan=top+news_top+news+index_top+story
It’s different in NYC:
http://www.therealdeal.net/issues/MARCH_2007/1172686733.php
it is, because in 75% of the RE market here you can’t buy in if you have bad credit, no down payment, no money in the bank, etc. and unless you let the co-op boards investigate you and verify where all your income comes from, they won’t let you buy.
you can get all the liar loans you want, but you still have to show everything to the co-op board or else you won’t close.
NYC is emerging as one of the safe ports in a storm.
Sure. Ask the folks who worked in the WTC.
Amen, Quirk. Headline story on NYC shootout this AM.
PS- Still sore at me? I hope not, didn’t mean to diss you, I’m just hyper-partisan when it comes to the subject of taxation.
“Spring has started out reasonably well,” said Wendy Maitland, a senior vice president at the Corcoran Group. “I don’t think it’s a buyer’s market at all. There’s a lot of activity and the market is moving at a brisk pace.”
New York shook off a downturn that began in mid-2005 — and avoided the more severe slowdown seen in the rest of the country — for many reasons, among them a strong economy, limited speculative activity in the market, lower foreclosure rates, and its ongoing draw as a world financial and cultural capital. The weak dollar also pulled in many foreign buyers”.
I would say foreign buyers are discovering the U.S. and NY is one of the first places to benefit from the coming wave.
Isn’t that what they were saying about Miami about a year ago?
Didn’t they have co-op boards in 1978 when New York City went BK and had to have the Fed’s Bail them out? And all those Wall Street Bonus babies might have a hard time paying their mortgages working at Taco Bell with all the other rats.
EXACTLY. They also had co-op boards in the early 90’s when the RE market tanked and condo’s were being sold at auction.
There were even more co-ops in 1987, and prices fell by 50% over the next 7 years.
Actually, in Manhattan, most of the Alt-A loans went into the brownstones (where things are not so strict), and the condos that are going up (28,000 alone in 2007, and more in the pipeline.)
It’s going to be a bloodbath!
It’s different in New York City, that’s for sure. Your apartment is overpriced, your taxes are second-highest in the nation, and you have to pay a city tax on top of it. You can’t afford a car, or, if you can, there’s nowhere to park it. Green space is at a premium, and job-wise you’re either a top executive or a peon. Yep, it truly is different in New York City.
Incomes are huge.
For some. And a lot of that ends up in New Jersey, Brooklyn, Westchester, Long Island, Connecticut, etc. The average person here does not make that much more than they would in another large city.
Last night was another bad night for the Village. The shootings that took place were just doors away from our hangout at Bleecker and MacDougal. This is about 2 blocks from Washington Square Park. That is just horrible. Like all cities there is still danger here. There are a lot of weirdos.
I’ll bet that moron had a $500 rent controled apartment in the village…
And if that moron doesnt get the death penalty, just say 25 to life, as long as he pays the rent he keeps his cheap apartment or if he has kids they could take over the lease.
Being in jail could stop the landlord from quickly evicting him.
Thankfully that moron is dead!!!
shot too auxilary cops who have no guns!!
im sure al sharpton will say he was good boy
Who you be calling “boy”? Ya know what I sayin’?
Don’t look now Mark but your sheet is slipping. I am sure Abner Louima, and Amadou Diallo deserved it. Even if they did not who can tell the difference anyway. They all look the same
All I saw was a joke. How do you know Mark isn’t AA?
I think YOUR sheet is showing.
NYC is NOT just Manhattan. Here in Queens the average SFH has gone up over 200% since 2002. Though in the last year they have declined by 10% to 15%. They are still unaffordable (around 8x average income).
Median price is meaningless, it says nothing about comparable sale prices yoy. When lower income people are squeezed out, the wealthier buyers push up the median price.
As for Manhattan. If all the overbuilt condos are doing so well, why am I seeing “Now Renting” signs on recently completed buildings.
And just wait if the Stock Market really tanks.
The claim that there are no speculator flippers buying condos in NYC is laughable.
To say the least.
also
subprime itself wont take down NYC. It will be Wall Street alone that takes down NYC’s housing market. If Wall street markets sneeze, NYC housing gets a cold, if the markets and Wall Street gets sick w/ layoffs and cutbacks, NYC housing will be in the hospital.
Are you in NYC?
yup, Manhattan
Hows the weather?
Absolutely. It is beyond me why few people see it coming.
Watch the ball -and read all the way down, you will see they admit outer boro market is vulnerable. Again, they are using 4Q 2006 data here to spin a good market this year. NYC is the capital of spin, and has a lot more to lose in a downturn, so we can expect the spawn of David L. to be particularly active at this moment. I expect inventory is a lot higher than they want to describe here, and prices will dip further –1st Q 2007 data should be much more telling.
Also remember, if the subprime/alt A/ part of prime situation unfolds as badly asn the numbers indicate, even the very rich won’t be able to prop up the Manhattan apartment market.
One could argue that in places like the Northeast and California, the bubble was more damaging than the bust — because it priced out and pushed out young workers.
In the Midwest, there is an economic problem that is getting worse, which will pile on the damage from the suicide mortgages.
In the Sunbelt, you had overbuilding which will do the same.
Eventually this will hit financial profits. This won’t hurt the NY economy much, as finance doesn’t provide many jobs anymore, just massively paid ones. But it will create another fiscal crisis.
“One could argue that in places like the Northeast and California, the bubble was more damaging than the bust — because it priced out and pushed out young workers.”
Majorly agree with this. In Florida, there was a massive destabilization of people, either fleeing from the financial effects, or taking their profits prior to the bust.
“This won’t hurt the NY economy much, as finance doesn’t provide many jobs anymore, just massively paid ones.”
Heh! Wall Street is gonna get wacked hard, and with the bonus money drying up so will all of the jobs that thrived off the greed. You think they’ll be serving $1,000 pizzas 2 years from now?
It ain’t different in NY.
The Hamptons are hurtin big.
wes, if I’m reading between the lines correctly here…
wherever you happen to be (lemme guess, manhattan?), things are great
everywhere else is in trouble
that about right?
Thats the way it sounds to me too geekden. Even here on this bog.
The Hamptons = Second Homes = Trouble in paradise.
Manhattan and Westchester, Fairfield, etc = Primary Residences = Pretty Damn Safe
Dunno about Westchester. I’m there right now and by the looks of the data and the number of spec houses here, Westchester is facing the same debacle they did before this bubble……. a long 10 year drift downwards of lower prices and inflation eating into it. Harrison might get by unscathed as the schools are in top notch but northern westchester? They’re doomed.
It is different. But in a bad way.
for all the predictions of a cataclysm, this could just be a blip like 1998 and the LTCM crisis. stock market tanked 40% that year until it roared back in the last few months to finish in the green. bankers make stupid decisions every decade.
less than 10 years ago the same bankers gave over $2 trillion in loans to telecom and other companies and IPO’s raised another trillion $$$ or so. I haven’t read about an Application Service provider in years because they all went belly up years ago. Most of those telecoms went belly up as well and most of that $3 trillion was lost less than 10 years ago. most of the fiber optic they laid will probably stay dark for years to come. Most of the telecom gear bought in that time was auctioned off for maybe 20 cents on the dollar. Got so bad Cisco and other companies refused to support it and made you pay through the nose for support. And things are so good that no one remembers it.
the 1990’s were a great decade and housing prices stank for pretty much all of it. maybe the cheap housing let people have more money in their pocket for discretionary spending.
i think this thing will be a crisis like LTCM, i’m keeping my eye on the markets and will probably buy stock again later this year and in a few years this will be a distant memory replaced by a recession that usually takes place at the start of a decade. the misplacement of money in the system will play havoc for a little while and then go away.
it’s not like the money is lost or vanished. who ever sold the home has a nice chunk of money in the bank that they are holding on to. At some point they will spend it and once this imbalance of some people having too much money ends it will get better.
it’s not like the money is lost or vanished. who ever sold the home has a nice chunk of money in the bank that they are holding on to
Unless they’re like most people who sold and then REBOUGHT.
The problem with your logic here is that so many people sold their old home, bought a new (usually more expensive) home, and thus have a higher balance.
Or they sold and then used the profits to but toys. (or just got a HELOC, hence mortgage equity withdrawal was off the charts)
Very few people sold and sat it out. A few did, but not many.
either way the cash isn’t lost or vanishing because someone still has it. the receivables might vanish but the people who ended up with the cash whether it’s in the bank from a home sale or selling some expensive toy or vacation or whatever whoever ended up with the cash still has it.
what happens when they lose their equity? will they spend more on toys? vacations?
What happens when that cash is just leveraged into a loan for a toy. The little cash around is basically supporting a HUGE debt load for most. Once faith in repaying debt disappears, that cash will look quite small in relation to the loan calls.
the 1990’s were a great decade and housing prices stank for pretty much all of it.
I hear this a lot. Folks say that housing shot up because it had been so undervalued for so long - that it had to increase to get back to where it should be. I disagree with this argument. Granted, perhaps homes were slightly undervalued for a time. But what’s really so wrong with that? What a crime that responsible people should be able to afford a house with a downpayment and fixed rate mortgage. (And if homes were so undervalued, why wasn’t the homeownership rate higher than ~64% then?)
Anyway, there’s no justification to go from slightly undervalued to first-time buyers being completely priced out. I’m a firm believer in the 3x income rule (at least in my area - maybe not in places like CA or NY). And right now, the homes I firmly believe I should be able to afford are about 4.5x my income. Too high for a conservative like myself.
not saying there is no bubble in a lot of parts of the US, but a decline in home prices isn’t the end of the world. the 1990’s proved it.
It’s the end of the world on a person by person and family by family basis via foreclosure and perhaps bankruptcy.
oil patch went down in 80’s and midwest stpped appreciating in 80’s too
this itme it’s all up , all down
but we will get through it
A blip? You need a head check.
When the largest single creator of jobs in the 21st Century is construction and real-estate related companies, AND
credit has been the loosest in all human history, AND
wages in the broad economy have not kept up with inflation, AND
the personal savings rate is the lowest since the ’30s, AND
global liquidity is based primarily on us exporting MBS’s to unwitting nations like China and Japan, AND
high-flying real estate stocks have lost up to 90% of their worth in about a year, AND
many people gravitated toward those high-flying real estate stocks in their 401(k)’s, AND
we’re about to have the greatest number of people leave critical workforces than we’ve ever had in American history, AND
health insurance costs push even middle-class families to the brink of living paycheck-to-paycheck, AND
even those who think they are wealthy aren’t because all their wealth is balanced by immense debt,
how can you tell me this is a blip? The money IS lost. It DID vanish. It never EXISTED.
Thank you, you said what a lot of us know to be true. Most of the people out there are wishful thinkers and will come up with any idea or believe any idea to escape the trueth.
All good points, Quirk. But I’m not as certain that boomers will be retiring on time. First, they cannot sell their second and third homes, so their source of retirement money is not there. Second, they still have to pay mortgages on their homes and pay for the SUVs and other toys. Third, they have little savings, as you pointed out. All that means they have to wake up and smell the coffee and continue working 5 to 10 years more than they planned on.
If I’m right, it won’t mean real estate will make a comeback, but it could mean the stock market won’t necessarily take a plunge back down below 10,000. Also wages will not increase substantially since the older experienced boomers will still be in the work force at the jobs they are highly skilled at.
Time will tell.
I believe a VERY high % of government parasites are boomers. At the Fed/state/city/county levels inlcluding teachers and park rangers.
Hopefully retiring boomers will thin the parasites out a little, they are starting to kill the host with that big deficit/ruinous wars. Dont forget federal goverment is largest employer by # in the country/world. How did that happen in a capitalist country?
“Dont forget federal goverment is largest employer by # in the country/world. How did that happen in a capitalist country?”
Probably because growth companies like Enron that pay top wages are short lived.
and all this happened in the 1990’s as well
if you add up all the trillions of $$$ lost on bad loans to telecom, emerging markets, etc it will dwarf subprime and alt-s
we’ve also had stocks crushed in the 1990s and the early part of this decade. happens all the time
Hey, Quirk, may I add to your list the fact that we have 21 more months of the biggest Moron on the planet running the show from Washington, DC. If he rams amnesity thru for the 12 to 20 million illegals, game over.
I anticipate the populace will be playing the blame game along with everybody else and there’s one easy group of our citizens to single out, in terms of who to blame…
Without the wacky evangelical vote, ’ssshrubery (my name for our feckless leader, with apologies to Monty Python) doesn’t get elected dogcatcher.
So many christians, not enough lions…
Ouch. That was harsh…
Aladinsane, Unfortunately I agree, there is an easy target and IMHO not the correct one. This would have happened if the communist, fascists, Perotists, libertarians, democrats, Naderists, etc had been in power. It is not political, it is the result of quick short term fixes orchestrated by the Federal Reserve.
They are merely the most visable target and if I were an adherent to the faith, i’d get rid of identifying labels, specifically from the backside of cars:
That fish? replace it with a Darwin fish. That’ll keep em’ guessing.
That “In case of rapture…” license plate frame?
Why single yourself out as amongst the looniest, of a weird mob? get rid of it.
“This would have happened if the communist, fascists, Perotists, libertarians, democrats, Naderists, etc had been in power. It is not political, it is the result of quick short term fixes orchestrated by the Federal Reserve.”
Don’t include “Libertarians.” Read their party platform next time before you imply that Libertarians would use government to distort the economy.
The librarians are the 1st ones they’ll come after…
(Sorry, the ghost of Gilda Radner just channeled herself, vis a vis Roseanne Roseannadana, through my keyboard)
So many christians, not enough lions…
How politically correct of you, a-insane.
“it’s not like the money is lost or vanished. who ever sold the home has a nice chunk of money in the bank that they are holding on to”
Huh? You obviously are not in SoCal, where the money was all spent on exotic vacations, SUVs, lattes and garages full of cheap junk made in China.
yup, Californians don’t believe in stashing away money, not even for their kids college. Of all the people I know who sold with huge profits, ALL spent a lot of money right away, whether in a trip to Europe or a bigger house. I’ve been to birthday parties for seven year olds at the Four Seasons, I swear.
I’ve said it before. When the market goes down, it doesn’t mean it vanished as claimed on TV (X billion wiped out on 27 Fed 07…more like, someone made out like a bandit betting it would drop while someone lost thinking it would rise).
Someone sold, and moved the money somewhere else. Maybe it showed up in a savings account. Maybe it pushed up the price of gold. Maybe it went into a CD. Maybe it bought a house. The point is that money doesn’t just vanish unless there is a default. Folks can understand that deflation is a contraction in the money supply, but can’t quite understand that means someone’s savings they thought they had in a bank gets wiped out when the person the money was loaned to can’t pay it back.
The stock market is not a zero sum game or when Enron went under there would have been just as much profit as was lost. The commodities act like a zero sum game, in that for each buyer there is a seller, but unless you are privy to the other side of the commodity trade (e.g. a farmer hedging 3000 acres of corn to lock in profit) then there is insufficient evidence to assert zero sum.
Kerk93, you are incorrect. If 10 people own 1 share of $100 stock, there is, in your thinking, $1000 somewhere. What happens when 1 of those people sells for $50 and the market price for EVERYONE now is $50? I see $500 dollars of total money in your scenario. Where did the other $500 go?
maybe my memory’s bad, but I don’t remember the stock market pulling back 40% in 1998.
“Subprime’s woes aren’t an indicator of deeper-seated problems.”
This is the real money quote, IMO.
“It’s different this time because the main culprit is lax underwriting standards. The overall economy is doing reasonably well”
Maybe the overall economy was doing well because of lax underwriting standards. Helping the economy, one McMansion at a time.
The health of the “real” economy is reflected in the magnitude of the twin deficits. And it ain’t good…
deficits don’t matter. Reagan proved that. whoever wins the election wins the spoils.
Think of all the thumb in the air estimates that went into this prediction. 10 Trillion market, 14% subprime (and only 13% pastdue) = 300 billion losses, only 1/3rd of which aren’t recovered.
Assumes loans were 80% or 100% loan-to-value at the outset? What was the fraud estimate? What was the effect of near future housing price declines on future defaults? Subprime is only 14% of market? How about the percentage of the “toxic loan” most recent market? Is there a reasonable estimate of the acceleration in failures in subprime as the crash plays out? (Or is the mantra, “Well, we have seen the worst and it’s over, whew!”?) Is prime assumed to be automatically insulated? Or have high LTV higher in recent years from buying/selling activity and HELOC markedly increased the risks in prime also? Is there an increase in defaults estimated in “prime” sector for the effect of (currently) subprime driven housing price drops? Is there…
My concern is that it seems like any estimate you make publicly (or probably privately) HAS to be with rosy/naive assumptions. Because of the extreme leverage, any realistic (or God forbid pessimistic) assumptions CAN’T be added because they would cause the analysis to fall off a cliff into the “crackpot” zone where the report is heavily reworked/edited, marginalized or buried.
“…although the subprime business has grown rapidly in recent years, it remains a small part of the overall mortgage market—14% of outstanding mortgage loans.”
If 14% is a small amount how about the writer gives me 14% of his paycheck every week.
“Christopher L. Cagan, chief economist at Santa Ana (Calif.)-based First American CoreLogic (FAF), projects mortgage defaults of about $300 billion through 2010, just a flea on the nation’s $10 trillion housing elephant. And about two-thirds of the losses will be recovered when lenders repossess homes.”
Cagan practices economics w/o a license. His training is in math stat, not econ.
According to Fair Isaac the delinquency rates for the various spreads in FICO scores are as follows:
800+ 1%
750-799 2%
700-749 5%
650-699 14%
600-649 31%
550-599 51%
500-549 70%
What scores are the cut off for prime and subprime? Or is it the kind of loan?
I heard the Prime to Alt-A cutoff was 760. I do not know what the cutoff is between Alt-A and Sub-Prime.
Oops, lost the last half of my post …
Based on the percentages used by Fair Isaac to assess risk it is my opinion that Mr. Cagan is off on his estimate by a large margin. Because lending standards over the last 5 - 7 years had been so liberal the number of borrowers with lower FICO scores who were approved for loans was much higher. Also, the number of borrowers who opted for non-traditional loans was higher and IMHO they went that route because they could not afford a 30 yr fixed. Put these together and the picture looks a lot darker than many who have a stake are saying. This is gettin fugly.
IndyMac just released an “update” downplaying their subprime exposure and explaining their Alt-A exposure at length.
Here’s the link to the BusinessWire press release
http://tinyurl.com/ysu2xr
In early 2000, it was Microstrategy. In 2002, it was Cisco and Intel. Draw your own conclusions.
OK the wrote only 3% sub prime of $90 billion written last year is what?
IndyMac’s total Book Vaule is $2.1 Billion……….hmmmm
and margins are …………wafer thin
Woot, flatff, a monty python reference!
Difference is that this time things are *imploding*
Ah yes, “Implosion”. The term that refers to a fundamentally contained event. This is all just a Las Vegas resort style RE “Implosion”. Set up the cameras, have your party, dodge the dust, then go back to gambling afterward.
Nothing To See Here, Move Along.
BS. A lot of my subprime deadbeat clients have indy mac mortgages. They have taken a lot of hits in the recent months. They’re lying through their teeth. People can say whatever they want but that doesn’t make it true. IndyMac is simply rearranging the chairs on the titanic (the ship is not sinking folks, everthing is OK).
“They’re lying through their teeth.”
Naw,………. that would be unethical and deceptive too.
From the financial centre of the world:
UK has its own bad debt crisis just waiting to emerge
“…we have our own potential sub-prime problem fermenting nicely…
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/03/15/ccom15.xml
same story in the Netherlands. Looking at the biggest banks, ING is heavily involved in US RE, ABNAMRO is heavily invested in commercial EU RE (they just sold their US holdings two weeks ago, probably good luck …) and Dutch Rabobank is the biggest player in the extremely overvalued Dutch housing market. Dutch pension fund ABP (one of the biggest in the world) is a major player in the US mortgage market (Fannie & Freddie stuff etc.).
On top of that, Dutch citizens are big speculators in other EU RE markets and even outside the EU (also just like the UK).
The Dutch went from nearly the biggest savers in the world, just 20 years ago, to record debtors - just a bit behind the US and UK. All thanks to our neocon government that is convinced that following the US is the sure road to paradise (it probably is for the politicians, banksters and business managers …). Heavy losses in the US will get the ball rolling in Europe as well, but we are not there …yet.
Prime candidate for the presidential elections in France, Nicolas Sarkozy, is continuously saying: “Look at the US, look at UK and Ireland, their system is working great. All people should have access to privat property. People should take out more credit to show their faith in the future!”
But then he also said:
“France has to much debt(2500 billion euros). We have to reduce that, because a nation with to much debt is not a free nation.”
Could this be a contradiction…or am I all wrong?
I think this is similar to the strategy in Netherlands: the Dutch government has reduced government debt over the last years, but they did this mostly by shifting the debt to private citizens (stimulated with all kinds of tax incentives, especially for homeowners of course). The lower gov. debt expenses (helped by the lowest rates in four centuries) has been translated into huge tax cuts for big companies - Dutch corporate taxes are now nearly the lowest in Europe.
Big business is happy of course, profits are booming. Most of the public is happy as well because their homes appreciated at double-digit rates for more than 10 years. Nobody cares about the huge private debt buildup. It’s all about monthly payments and government statisticians assure us frequently that everything is perfect, because the value of all the Dutch homes is higher than the outstanding debt. But when this whole credit bubble comes crashing down there will be hell to pay, and big business certainly is not going back to the higher taxes of 10 years ago. It’s an easy bet who is going to pay for all the mess that follows. I guess that kind of serfdom is what Nicolas Sarkozy is after.
you don´t know jack / wall street edition
and
Kass: Four to Blame for the Subprime Mess
http://immobilienblasen.blogspot.com/
Good morning campers! The phrase that ticks me off the most about the whole bubble is “If you don’t buy now, you will be priced out forever” I thought it way by David “the lier” Lereah, but I could not find any evidence to nail him on this one. Could someone enlighten me?
Dunno what they want people to buy with no. No cash for nobody.
“And where would one find this “saved money”?”
Steve Martin - SNL skit
“First, get a million dollars.”
Steve Martin on SNL ca. 1977
“i’m gonna buy you a diamond so big it’ll make you puke!”
“I DONT WANNA PUKE!”
Illinois Bob:
do an amazon search for David’s book and look at the front cover. You’ll see the “buy now or be priced out forever” mantra. The book: “Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)”
On a side note, That tricksy little David has a NEW real estate book! It looks great. It’s coming out April 3. (no, I’m not kidding)
“All Real Estate Is Local: What You Need to Know to Profit in Real Estate - in a Buyer’s and a Seller’s Market (Hardcover”
Yes, it has a picture of a dead end street on the cover. I don’t think that was intentional, but it sure is fitting.
And it’s a dead-end street in a McMansion neighborhood.
don’t they have feng-shui consultants for book covers?
The overall economy is doing reasonably well, creating 97,000 jobs in February, according to the Bureau of Labor Statistics. The unemployment rate is just 4.5%. Subprime’s woes aren’t an indicator of deeper-seated problems.
40% of those jobs were government jobs.
40%, is that accurate? Sounds scary. If it is true, how does that number compare to decades past?
It has to be true………I still cant get ANY responses to sending resumes anymore …. NONE
I sent 30 in the last 3 weeks with return reciepts, and only 3 answered back……. all of them were for NON PAYING jobs!
The Horrible communication skills of companies today is staggering.
dj, my sis is in corporate recruiting in the NY area. She would agree with you on the communication skills, she sees it all the time. BTW, as strange as this may sound, you have to send the resumes three times to the same folks. It’s an old maxim in the marketing/advertising biz. These are called “impressions”, or “hits”, as we know it. No self-respecting media buyer in an advertising agency would ever run an ad or a commercial just one time. The minimum is 3 in order to get a response. Same goes for mailings. You are “marketing” yourself, so the third time is a charm. Three times, same people. A week or two between mailings. Or more, if you prefer. It takes people a while to wake up. On the third try, the person who wasn’t interested before and “circular filed” your resume, now needs to replace someone who suddenly left or was fired and wishes they hadn’t “circular filed” you. Lo and behold, here comes your resume again. It really does work that way.
Also, dj, through your current gig, you have excellent access to all sorts of people, especially at weddings. No harm in putting out some cards to your current clientele touting your “day job” skills”. Think about promoting yourself for freelance work, which can often turn into full time if you are competent.
You never know when “Uncle John” at his niece “Susie Q’s” wedding might pick up a card and think “Hmm, I need someone to do this work, because Joe Blow just quit”.
You have to promote, promote, promote yourself until you are blue in the face and just when it seems you’ll have to give up, Presto! There’s the offer.
dj,
I too am looking for a job. A couple of weeks ago, I had a phone interview with someone in HR at a company I was interested in. Then, about a week later, I got a call back from that same person to let me know they had found someone else, I didn’t get the job.
I almost fell out of my chair. This was the first time in “DECADES” that someone had actually called me to let me know I wasn’t getting the job. Usually, you don’t even get a reject letter, let alone the personal touch of a phone call.
It actually made my day, in a weird kind of way. Restored my faith in humanity a little bit….
dj - send it to me, i’m not kidding. Ben can provide you my email acct.
dd
It’s different this time:
There appears, at least, to be a renewed optimism from foreign firms in the American economy. In 2000 and 2001, reinvested earnings actually fell and equity capital accounted for as much as 84% of total foreign investment, according to OFII’s analysis. The organization has indicated specific factors that could have had an adverse impact on foreign investment during those years, but several events created economic uncertainty at the time, including the contentious presidential election, the burst of the dot-com bubble and, obviously, Sept. 11.
http://tinyurl.com/yqfr3g
97k job creation is not at all considered “reasonably well”. 150k/month is a break even number just to keep up with attrition, retirements and downsizing.
I gotta love the smoke blown up the collective a$$ of America. And people continue to believe the lies of these elected charlatans.
Yes, back in 2002-3 there was a lot being said about the need to create at least 150k new jobs a month just to hold our own. Now all of a sudden were supposed to accept 97k as being a decent showing? And with a bigger population to boot?
They just keep lowering the bar on every facet of this economy just to keep it sputtering along. Maybe its so all the frogs won’t jump out of the pot before they’re boiled to death?
“They just keep lowering the bar on every facet of this economy just to keep it sputtering along. ”
Exactly. But thats what happens when we lower our expectations from our leaders. We are govern by a morally bankrupt group of insiders who outsource their dirty deeds. When those dirty deeds blow up, they point to you and me and with a surprised look on their faces.
“They just keep lowering the bar on every facet of this economy just to keep it sputtering along…”
Now that’s the money quote.
Business Week Sept. 25, 2006
“What’s Really Propping Up The Economy
Since 2001, the health-care industry has added 1.7 million jobs. The rest of the private sector? None”
This is the ‘growth’ industry in the US - caring for sick people. It is also a symptom of a sick economy.
This hits home with me today, my father was sick for4 years and we did all we can to make him comfortable at home. We took turns helping mom, and i guess this is why its hard for me to get a real job today. That big no real day job gap.
The ones looking at the resume are so damn clueless to this problem, elder care in America, and the predjudice of having a man work partime to spend with his father so they could save the house. Yes he passed away last July, and the house is still paid for no Heloc or reverse mortgage.
Its illegal to ask a woman why she had a baby instead of working, but a man helping his sick parents thats just so “sissy”.
“…but a man helping his sick parents thats just so “sissy”. ”
No, man. You’re a pioneer in the new era of moral recovery!
Thanks John, I needed that moral boost today.
Kinda fits my personality of always being ahead of the curve, I just wish i had the seed money to invest in what i see as the next thing. Man i could have been rich many times over the years…
Next project being NYC oly Zydeco Rock and Blues DJ…
CJ Chenier i recorded in NYC
http://www.youtube.com/watch?v=DGqnU69p0BM
Rosie Ledet:
http://www.youtube.com/watch?v=Tpc248uMfXM
The Catholic Girls: Great over 40 rock girls had 2 hits on MTV back in ‘82
http://www.youtube.com/watch?v=WzyhfA3zScY
dj, my posts aren’t showing up yet for some reason, I hope they do. I also want to say, don’t be surprised if, while you are promoting yourself for a day job, you all of a sudden find that your dj gig starts picking up. In a financial downturn, the entertainment field can do very well.
“but a man helping his sick parents thats just so “sissy”.
That kind of moral characteristic and integrity isn’t the type the elected charlatans want to discuss. They want thievery, usury, misdirection, lying, bilking and general misconduct to be referred to as honesty and integrity.
Elder care is a HUGE issue, I sympathize with your plight dj, my dad had a stroke in 1979 and we wrestled with those issues until his passing in 2001. It ain’t fun, as you already know. Adding to health issues there is also a business aspect to elder care - as it now has become a part time job for me to protect my mom from all the vultures at the bank, shady contractors, and other rip off artists who target widows. This society is obsessed with beauty and youth - and it’s in for a very rude awakening unless cryogenices is perfected soon.
My heart goes out to you, you have done the right thing. We too lost a loved one this year (mom). It is not easy keeping your elderly parents going, but you look back at all the thinks they have done for you. To me it is a small sacrifice of your time & energy to give them a little more time on this planet.
Thanks Everybody:
but now if we could get Human Resources to UPGRADE their personnel, from the standard Paris Hilton Airhead chicky poo types, to back to when they used to be lots of ADULTS in HR….
We could solve this problem, by having intelligent people reading the resumes and having the same caring attiude shown here to me.
This really is “THE MORON GENERATION”
So agreed … the good people in HR burn out and go to other fields (my gf’s aunt went from HR to teaching home-bound students), while the incompetants and morons (of any age) stay. That’s how you end up giving jobs to liars, ie, HR demands a programmer with 10 years of Java experience … in 1998.
I got blackballed by an HR person for using Opera on my work computer in 2000 instead of IE. There were viruses and trojans all over the network, thanks to Outlook and IE, but my free, secure browser was the problem. Right…
Dodged a bullet, though–it turns out that the job I got bumped from I wouldn’t have liked anyway. Phew.
but now if we could get Human Resources to UPGRADE their personnel, from the standard Paris Hilton Airhead chicky poo types, to back to when they used to be lots of ADULTS in HR….
Wow. My sentiments exactly. HR departments in most companies I have worked for / with have become a dumping grounds for good-looking (young) women who aren’t going to take a lot of (any?) risk — basically glorified clerical workers masquerading in management jobs.
I think a lot of this has to do with Affirmative Action - depending on the industry you are interviewing in. For the most part, men just don’t go into HR anymore, it’s become a women’s field…
I’m responsible for 2 older people — my mom age 87, and my aunt age 84. Neither of them lives with me, one lives with a caretaker and one in assisted care. They are both doing very well and are happy in their living situations and there aren’t any problems right now. So I am very grateful. But the things that I do for them (manage finances, doctor/dental visits, trips to Walmart) take up at least 1 full day a week, much of it during work hours. I have some help from 1 of my 6 siblings, the others do nothing. I can’t imagine what it would be like if either my mom’s or my aunt’s health was unstable, or they had to live with me. I don’t mind this responsibility and I feel lucky they are both still alive and enjoying life, but I can see how caring for elderly relatives could easily spiral into a huge amount of work. Yet this work somehow seems to fall on only some of us…my siblings and cousins have no qualms about ignoring their mothers in their very old age and letting me do it all. They never even come to visit them.
At the very least, family members should visit them because this will alert the staff to provide good care.
Also, I have heard many people tell me how the responsible siblings are the ones who do the things that need to be done for their elderly parents, so you are not alone in that regard.
We took turns helping mom, and i guess this is why its hard for me to get a real job today. That big no real day job gap.
dj, you did the right thing. Your parents should be proud of you. I know exactly how hard it is. My mom was sick for many years before she died, and even with a big family it is very hard to take care of someone who needs help all the time. The only ones who can really relate are the ones who have been there, done that. The fact that employers don’t see that as an asset in terms of the kind of human being they could be hiring just speaks volumes about the sorry state of our values. Hang in there, man. The good karma will come back to you.
As more and more people can’t afford insurance, who do you think is going to pay the salaries for all these new health care jobs? They aren’t going to make it on the $25 a month people pay on their old medical bills with a balance that’s $10000, $25000 or $100,000.
There’s a little discussed factor at work here and it has to do with demographics. The ones requiring care now are the parents of the boomers. As brutal as this sounds, the reality is those folks are going to heaven before the boomers will require the same level of care. It creates a “gap” that is probably about 10+ years wide created by the depression of the 1930s when the birth rate plunged in the US. (who could afford kids?)
The gap I’m referring to already showed up in high end RV resorts as the boomer’s parents began to get too old to pilot 40 foot behemoths about and the boomers aren’t quite retired sufficiently to fully utilize the capacity.
“The ones requiring care now are the parents of the boomers.”
With the number of overweight & obese people now in the country, you would think that the boomers would be requiring care earlier in life. I have seen projections that the life expectance in the country could decrease as a result.
Some of the CHILDREN of the late boomers are going straight out of HS into disability subsistence because of obesity. It is that bad in KY.
Yeah, and there was a +118K plug figure in for additional jobs created that the gov’t doesn’t know about. Without the plug, you have negative job creation.
The other item overlooked was that 350,000 unemployed people were no longer considered unemployed. This artificially raised the numbers employed and lowered the employment rate. Yes it was negative growth.
Negative employment growth, weak retail spending so far this year, oil still high, corporate profit growth may only be 2% - 3% this quarter, and housing is still slumping (TOL said spring was a bust so far). Hmmmm…wonder how far away the recession is - probably in one now!
Could it really get this bad?
http://biz.yahoo.com/seekingalpha/070313/29355_id.html?.v=1
Although I’ve been a bear on housing for some time now, and a true bubble believer, I didn’t really bargain for a depression. But now I’m wondering if, in thinking that it won’t get that bad, maybe I’m in denial as much as all the bubble happy talkers were.
The author makes a good point about Katrina as a model for how the govmint would respond to such an event.
Sounds like another guy trying to sell gold or his services…
There is so much debt that won’t be repaid, on all levels, public and private, I think Katrina is just a foretaste of what’s coming. At least I hope so, otherwise we’ll just get more of a police state.
“Before this period is over, it will be remembered for many years in history.”
Absolutely agree. I am not a conspiracies follower. I happen to believe that the economy in the US is going down a path to assured destruction. A reasonable individual would only need to look at the percent of the working population employed by governments (Federal, State and Local), the percent employed by Not for Profit institutions (school, hospitals, charities etc) and the percent employed by for profit companies to realize that the economic well being of the country has been over the edge for 25 years. Now we are tipping and the downward momentum is accelerating. It is not possible for 1/3 of the population to support the other 2/3 of the population. IMHO the only reason the economy has not collapsed is because of foreign faith that the US will change its economic parameters. Once foreign entities recognize the US is not a safe place for long term investments…
I’ve been tracking a few metros since January via Zip Realty, just to get a feel for what’s going on, picking up on a few areas not otherwise covered by OCRenter’s excellent site. Most have been going up, some significantly, but Miami/Ft. Lauderdale unexpectedly turned down in the last few weeks. Or so I thought:
MIAMI/FTL
01/21/07 103,131
01/27/07 104,442
02/03/07 106,008
02/10/07 107,150
02/17/07 108,591
02/24/07 109,638
03/03/07 106,916
03/09/07 104,095
03/14/07 110,798
It would appear that Zip probably had a database problem of some sort. In any event, all is now well with my inventory world.
I see the same thing in Orlando. Is the drop due to most closings happen at the end of a month???
Don’t worry, there are plenty of condos/homes in Miami for everyone.
Just wait until all those condos start to come online.
I’ve heard this explained simply that MLS listings expire at the end of the month, so you can expect inventory dropoffs such as that.
Wow! Now here’s a real doom-and-gloomer.
http://www.prudentbear.com/articles/show/1525
Yeah, I posted a similar article. dba above has a different take. Much as I am a bear, I don’t want a depression. That would really suck. All of us who have cash socked away would see that literally go “poof” and so much for being prudent.
All of us who have cash socked away would see that literally go “poof” and so much for being prudent.
palmetto, I’m really afraid of that too, but I don’t want my to let my Latin American fatalism get to me. Where are all the sunny, optimistic Americans who are not mouthpieces of the bankers or the REIC when you need them?
After leaving that site it feels like the depression is here, now. They have to tone it down a bit, way too negative.
So who is Chris Laird? Why should we listen to him? Does he want to short the market? Is he loaded up with April S&P 500 puts?
I am not saying he is wrong, but sometimes being a bit skeptical is the right thing to do.
He might be alittle conservative in his thinking.
I have seen some of the articles written by Chris Laird before. He writes for a newsletter called “The Prudent Squirrel”. I have found his writing, and his thought processes, to be very simplistic. He just repeats the same assertions over and over, without providing any support.
I’m not saying he’s wrong, with what he’s written. His assertions may be correct. He needs to do a better job of backing them up. I don’t read his stuff anymore…
Inflation for Feb. PPI +1.3% Core .+04%
Is that out? I can’t find it.
The consensus estimates were 0.6 and 0.2
If it came in where you say it did, the market will get crushed today. Correction, it will get CRUSHED. The biggest fear is a credit crisis AND inflation.
Look out today.
March 15 (Bloomberg) — Prices paid to U.S. producers rose more than forecast in February, boosted by higher costs for energy, cigarettes and toys.
The 1.3 percent gain followed a 0.6 percent decline in January, the Labor Department said today in Washington. So-called core prices that exclude fuel and food rose 0.4 percent, double the increase in January and more than forecast.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2uObM3OvIpc&refer=home
Yes it is out from the WSJ
U.S. wholesale prices jumped 1.3% in February on big increases in food and energy. Core PPI rose 0.4%, suggesting underlying inflationary pressures persist. Full article coming soon.
The U.K. and France invested most heavily (16% each), but a bigger story surrounds the increase in French and Dutch FDI. From 2005 to 2006, France increased its investment in the U.S. from $4.4 billion to $29.7 billion. The Netherlands investments rose from $7.1 to $27 billion. Interestingly, Mexico’s FDI in the U.S. soared by 510% in 2006, while Canada’s investments here actually declined by 70%, according to OFII. (forbes.com)
The Labor Department’s Producer Price Index for February jumped by 1.3 percent, above the market estimate of 0.5 percent, amid a big increase in energy prices and the largest rise in food costs in more than three years. Even excluding food and energy prices, the core PPI rose 0.4 percent, double what analysts were predicting — dampening investors’ hopes for a interest rate cut by the summer.
————————————————————————–
Ben will inflate the housing bubble away….. or try too……
NYCityBoy here is a pattern that I have noticed about the CPI:
When the actual CPI remains fairly steady from one month to the next, the CPI gets very small, if any, corrections months later. It tends to be fairly accurate.
When the CPI is CHANGING, it tends to be an understated lagging indicator (relative to the change, be it postitive or negative), and is almost always revised months later.
Same thing applies to GDP.
For example, when the economy is doing well and getting better, the GDP % increase will be understated, and months later will be revised upwards. “The GDP two quarters ago grew much higher than previously reported” would be a typical headline.
Purely anecdotal on my part from watching these gov stats.
Here are some more details I put together at my blog …
Meanwhile, the Producer Price Index came in much hotter than expected. The overall PPI surged 1.3% in February, more than twice the 0.5% change expected. More importantly, “core” PPI climbed 0.4%, twice the 0.2% rise that was expected. There was a large rise in tobacco prices (+4.1%) that’s a bit out of the ordinary. But even measures of intermediate and crude goods prices look bad. Core intermediate goods prices were up 0.2%, the biggest monthly gain since August 2006. And core crude goods prices jumped 2.7%, the biggest monthly rise since May 2006.
The bottom line: IF inflation stats keep coming in hot, the Fed is going to have a tough time justifying a rate cut to “save” the housing/mortgage markets. PPI is less important than CPI (due out tomorrow) in the grand scheme of things, but this can’t be encouraging.
Maybe the fed will sit this one out while Congress, Governors, and State Houses lead the charge…
and raw goods up 2.7 %
wowowowowow
stagFLATION
1. war w/o treasure
2. more regualtarians on the way
3. great society spenders- GOP included
Even Japan’s MOF (with nudgings from Paulson) won’t rescue the market today. I’m short all over the market map. Yipeeeeeeee!!!
I guess excess spending on the better off has the same overall effect as excess spending on the needy. Except that it’s harder to reduce.
The market always sweats on the monthly CPI number.
After that PPI shocker the markets are going to be REALLY sweating on tomorrow’s February CPI announcement.
The number is way off by a couple of standard deviations again which market players are known to spin as the usual PPI volatility and nothing to worry about. I’ll see if that spin sticks again. Can you say stagflation.
As in the 1970s, our debts and oil dependence are forcing us to bid for scarce resources with a depreciating currency. The good news — parts of the world are getting richer and more productive. The bad news — the Chinese, Indians and Southeast Asians can’t create fossil fuels. They can only compete for a limited supply.
“getting richer and more productive” = outbidding us for scarce resources, especially energy
Economic growth in chindia is a total loser for the american worker, no matter how many cheap plasma tv’s you can buy.
This is just unreal.
There is a post on Townhall.com that explains that we can all solve the mortgage problem by getting ARMs and interest-only mortgages. Is this a spoof or is it serious?
“The advantage of an interest only loan is that when ever you pay down principal the interest only payment is lowered because the interest you pay is on the remaining balance. Start with an interest only loan of $250,000 @ 6% and pay off $21,000 in the first year. At the beginning of the year the interest only payment would be $1250 a month and at the end it would have dropped to $1145 a month.(6% of $229,000 paid monthly).”
He neglects to mention in this particular passage that you would also have to add the principal payment ($21,000/12 = $1,750 per mo) to your payment to end up with the reduced interest only payment.
Other than that if you read the whole article what he is really advocating is a 15 year fixed. Which would be wonderful if it weren’t for the little problem of the sky high prices relative to incomes in most markets means the vast majority can’t even really afford the interest alone without special teaser payments which is how the prices got so out of whack to begin with and are resulting in the implosion debacle we are witnessing.
i get all my information on everything in the world from Ben’s blog and Townhall.com. That Ann Coulter is one funny dude!
Talk about indulgent: http://www.kansascity.com/mld/kansascity/news/nation/16907348.htm
I’m up here in the south suburban Boston area and in the last week the for sale signs are popping up fast and furious.
Funny - inventory is shrinking in Portland, ME, about 100 miles north. Probably related to some extent.
The World’s Buying America
http://www.forbes.com/home/businessinthebeltway/2007/03/14/foreign-direct-investment-biz-wash-cx_bw_0315foreign.html
The mantra used to be “Buy American”. Now it is “Buy America!”
–
If we CONSUME more than we produce what else should we expect?
Jas
Are subprime and/or exotic loans written with PMI? Or is the supposed risk premium implicit in higher rates (or potential higher rates down the road)? Are PMI providers as potentially at risk as lenders in the near future? Are any folks who got conventional mortgages who hoped appreciation would get them to 80% equity (and allow them to escape PMI) finding themselves disappointed to not be able to get there as easily as in recent years?
Jusy curious - I never hear anything about PMI in these discussions.
No. They avoid the PMI using the 20 pct piggy-back mortgage.
Posted yesterday but for those who missed it here is a brief summary of how the subprime loan process works:
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/13/AR2007031301733.html?referrer=emailarticle
Good read:
http://finance.yahoo.com/real-estate/article/102603/why-your-home-is-not-the-investment-you-think-it-is
Amen brother - this is a great article. For all the bubbly talk about how wonderful housing is - there is another side to it. I just paid over $900 to have a hot water heater installed. Not only did I get a hot water heater but the gas and water intake valves were replaced. Also, the plumber charged me extra because he came out on a Sunday.
The point is - next to kids, houses are giant money suckers. I have never had anyone form Charles Schwab call me and ask for an extra $400. But several times a year, I am dumping money into my place. Real Estate Agents / Mortgage Brokers never mention the cost of ownership - on the buy / sell prices. It would be nice if this was at least mentioned to young first time buyers!!!!
“My home is my largest asset.”
I have posted on this before and it still upsets me that MSM and as a result many on this blog and in the financial news regard houses as “assets”. Houses have never been, are not now and cannot become assets. Houses have been, are and always will be liabilities. ’nuff said.
Last week, I had an electrician come out to Chez Slim. And, since I know a thing or two about this kind of work, I was an electrician’s helper for a day. Saved a lot of money that way.
So, here’s the Slim Tip of the day: Invest in yourself. Learn practical skills that you can use around the house.
Learn practical skills that you can use around the house.
Slim, please don’t rub it in. I’m well on my way to learning basic finance 101 on this blog, but I can’t replace a broken pipe to save my life. One thing at a time.
That was in the WSJ a few days ago. The point is that it doesn’t make sense to buy more house than you need for investment purposes, because housing is an expense not an investment. You could have read the same article in the early 1990s.
More to heat, more to cool, more to clean, more to maintain, more to replace pieces of as they wear out, more to insure, more to increase your share of local government costs via property taxes.
And you are doing this — why? To show off? Because your life has no other value? Because you have nothing better to do with your time. No, because houses are an investment, and the bigger the house the bigger the investment. That’s what the article debunks.
Philly ‘burbs here. The prices are truly nuts out here, but I see a low end (250K-400K) and a high end (800K - 2mil+) and little in between, and it’s the low end that seems to be getting lower. High end is staying high. Haven’t heard much here about Bush’s tax cuts, but it sure seems logical that this could explain why it seems that so many people out here seem to suddenly have so much freakin’ money. I also know people in the service sector (consulting, law, etc..) who are making boatloads of cash - could it be that wages are stagnant only in the lower middle-class? Is there any data on the high-end RE market versus the low-end market?
Manhattan really is different. Folks here seem to dismiss that cavalierly. However, what is being missed is the broader and more pertinent questions, “How is NYC different, and how- if at all- does that difference matter?” heh.
All real estate is local… to a point. All local eddies is the current of the national RE market can nonetheless be whacked by larger non-local trends.
NYC likely will get nailed by what goes on with the fiasco that is the national RE market. To that degree, NYC is NOT different.
But, NYC tends to be the first market to jump and the last market to fall. Just an opinion. And to that degree, a quantitative, if not qualitative difference is seen from the other markets. That it seems to jump further per sq foot and “perhaps” won’t drop uite as far as other markets might be a difference.
Too, NYC has elements of supply and demand that are different from other regions of the country.
I live in the UWS. I’m a physician. Not starving. Not bragging either, promise. Just analyzing. I’m advanced in my niche and pull around 200k. Wanting to hang in the UWS, but having arrived after the bubble jumped (nice 1 BR apts have gone up from around $200k to 700k during last 10 years or so), i rent for $2300 a month (not a bad rate, some in my building pay $2600) for a nice 700 sq foot 1BR. Hell of a lot better than putting down $140k and paying what $5000+ per month in mortgage/interest/tax, to buy same place for 700k.
But i see numerous apartments- 1BR and 2 BR apts chopped into 2-4 person places. One sees numerous young professionals, 20-30somethings earning $40-80k per year, doubling and tripling up in order to keep down their rents. I recognize i don’t follow all markets, but i don’t know too many places in which folks so want to live in a market (whether for jobs or for socializing reasons, idunno) that they will cram four people in an 1100 square foot pad, whilst each of them in other parts of town could have house or larger personal apartment for similar outlay.
And, as was noted, most purchases here, even at the lofty $1000+ per sq. foot that seems to be the going rate, are NOT done with liar loans,zero down and maybe not with zero am or neg-am. Even if bank would do it, condo and co-op boards have standards. I do not joke when i say the paperwork i filled out for my building in order to RENT, even though the owner of my 1BR had already happily accepted me as tenant, was MORE difficult to fill out than was my paperwork to get hospital privileges to work at my hospital in NY.
Interestingly, IMHO, rents have not jumped much the last 5 years, but rents were so hefty to begin with that living here still costs arm and leg. Of course, that purchasing cost has flown up so much in face of stable-ish rents indicates a “NOT-DIFFERENT-HERE” rent-buy disequilibrium heralding future price drops.
If the economy takes a real whack, and it might for reasons well outlined at this blog, no doubt NYC will drop some. The coming credit crunch will whack demand. A recession will harm job and salary opportunities here.
But, demand to live here is staggering, not because “the snowbird retirees are rich and we hope they’ll all move here in ten years to prop up our vacation desert”. Demand is high across the age and wealth board. And, again, the properties bought here were not bought on BS terms that will so trash other regions. Why NYC will drop is simply by being caught up in the larger currents of disaster heading for the USA RE market. Manhattan really is different… but probably won’t be different enough
-Evil DOc
I just moved from a WEA 2br2Ba w/ terrace and river view in the 60’s. I was paying $3300 for about $950sf. They rented my place within 2 days, at $4600/month. Insanity. Plus the river view is going bye bye as a new condo is going up to block the view.
Agree, people who say “New York is not different” are mistaken. It’s almost like saying “Earth is just another planet.” I don’t mean to say NY won’t continue to see potentially severe real estate cycles, but it will do so in its own way and on its own schedule.
Homes here continue to sell well and increase in price, and nobody seems to care what’s happening in other towns (New Yorkers are incredibly provincial in a way; they know less about life in the rest of their country than any other citizens). However, things are ludicrously expensive here; even for the legions of $400k middle-managment people that make up the “middle class” in this city, homes are unaffordable unless you build a lot of future appreciation into your model.
What happens to Wall St. over the next year or two will have vastly more effect than what happens to subprime loans, interest rates, new development, etc. And we very well could be in for a bad spell in the finance world. Or maybe not…
(NYC tends to be the first market to jump and the last market to fall. Just an opinion.)
It wasn’t that way 20 years ago. After the 1987 stock market crash, everyone assumed NYC would go the way of Cleveland, and sold out. Many ended up paying far more to get back in. Now that NYc survived 9/11, when people and companies didn’t flee, it is assumed to be bulletproof.
I do think Manhattan and places close to it have experienced a permanent structural increase in price relative to now-aging suburbs. But that is already over-priced in, along with everything else good about this place, by 30% to 40% or so. New York will remain expensive. But it’s a long way down to expensive.
The one wildcard in NYC real estate is if it suffers another major terrorist attack or series of attacks. Especially if it’s a dirty bomb, or worse.
—The one wildcard in NYC real estate is if it suffers another major terrorist attack—-
Of course, but wild cards are really off the table for economic analysis in a blog like this. If California had a big enough earth quake that LA and San Francisco, truly fell into the sea, no doubt that would hit property values too
-Evil Doc
I very much look forward to a 30-40% drop
evil
Will it drop?-Yes, Will it come back?-Yes…Real question is how long ,and how long can you maintain? There are those that bought low, or have lots of money, but a majority that can’t continue to make payments for years especially if the economy, and financials drop significantly.
So I went over to craigslist to see what was shaking in the Sarasota area . . .and found this “investor special” - note that the guy has TWO units in the same complex, both for sale with $20k each at closing.
Prestigious Lakewood ranch condo for sale I will give you 20K cash back at closing to use anyway you like. I have 2 units both have lake views one on the 1st floor and 1 on the 2nd floor. 1st floor is 245K and the 2nd floor is 250K If you want both then you get 40K back at closing….Since I do not live in the area it is difficult to manage from afar that is why I am selling.
There are renters currently in both units at 1050 a month. Rent can be increased with the right person managing the property. Theresa 813-500-3376 813-789-0951
Condo/Townhome/Coop Property
Year Built: 2001
2 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Approximately 1277 sq. ft.
Heating features: Central
Central air conditioning
Interior features: Breakfast bar, Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Microwave, Pantry, Range and oven, Refrigerator
Exterior features: Public sewer srvc, Public water supply, Waterfront property, Waterview
Community clubhouse(s)
Community exercise area(s)
Community recreation facilities
Community swimming pool(s)
View
Waterview
Waterfront property
Lot is 0.00 sq. ft.
Elementary School: Willis
Middle School: Braden River Middle
http://sarasota.craigslist.org/rfs/294116706.html
Note that each one is rented out for $1050 a month, 50% less than rent should be on a $245K unit. . .but, wait, maybe the rent is correct and the unit is only worth $100K?!
Surfing thru craigslist is a hoot. . .
–
I used to own a toenhome in So. FL in 1980s. It was worth $85-90K (I sold at $89K). I used to get $950 in rent. Yes, it was on an artificial lake. Rents haven’t gone up much in many areas.
Jas
http://bubbletracking.blogspot.com/
Sharon Lewis went to the Los Angeles Times and cried herself a river. She was a poor innocent homeowner trapped by the subprime implosion. Faced with a pending rate hike and an increasing mortgage and the possible loss of her home, she positioned herself as the perfect victim Senator Dodd want to rescue.
Then we learn that Sharon didn’t just buy one home back in June 2005. No, she actually bought three homes.
Then we find out Sharon sold two of the homes to a guy named Darryl in the summer of 2006. Somehow Darryl then added Sharon back on to the title on one of the homes.
Now we find out Sharon and Darryl are actually a married couple. So basically, Sharon sold her homes to her husband at a profit, a profit they both kept.
We now also know the transactions from seller/wife Sharon to buyer/husband Darryl were non-MLS FSBO sales.
And…
Sharon is a Realtor® and she was the Realtor® of record on the fraudulent sales.
But the public still think Sharon Lewis is a poor homeowner that needs a federal bailout because of LA Times’ irresponsible reporting.
Thank you, Los Angeles Times. I feel like I have to laugh to keep from bawling.
Please help us Senator Dodd
Sharon should be the poster child for any bailout. Any attempt to bail out the true victims will merely rescue a boatload of people like this, and the true victims might not be helped in the end anyway.
Well, for Pete’s sake!
kckid, I sent your post on to the LA Weekly, which generally has fun poking fun of the Times. Hope you don’t mind.
OM F******* H**. I love that blog. I hope the reporter who interviewed Poor-me Sharon has his nuts crushed by an editor. I hope that editor’s nuts get crushed by a higher editor.
http://biz.yahoo.com/ap/070315/opec_meeting.html?.v=21
“But despite apparent satisfaction with present price levels, al-Hamli expressed concern about the weak U.S. dollar, noteing that was “having a significant effect on the purchasing power of oil-producing developing countries in many parts of the world.”
Gee ya think Ali.
These guys are good:
March 15 (Bloomberg) — Bear Stearns Cos., the biggest U.S. underwriter of mortgage bonds, said first-quarter profit rose 8 percent as higher revenue from trading derivatives and debt of troubled companies overcame a slowing market for home loans.
Net income climbed to $554 million, or $3.82 a share, in the three months ended Feb. 28, from $514 million, or $3.54, a year earlier, the New York-based company said today in a statement. Earnings exceeded the average estimate of 12 analysts surveyed by Bloomberg by 4 cents a share, the smallest margin in at least six quarters.
http://www.bloomberg.com/apps/news?pid=20601087&sid=at_QPq0hTf7I&refer=home
Didn’t the price of these derivatives increase rather substantially in the past few months?
It’s not like they’ve had to pay out all that much yet, did they? (I really don’t know the answer to that.)
So, they raise prices, but keep costs relatively contained (for now), sounds like they’re doing quite well…for now.
Merrill Lynch Report via Reuters notes the following
…However, if the inflation-fighting Federal Reserve were to keep rates unchanged to contain price growth — instead of cutting by 1 percentage point in the second half of 2007 as Merrill expects — then this would put the probability of an outright recession in the second half at “very close to 100 percent.”
Hmm,
Option 1. Cut rates, dollars come washing ashore in droves. Inflation soars
Option 2. Raise / Hold rates steady, housing collapses, economy goes into recession.
I’m not one hoping for a recession but it sure seems like the options to avoid one are becoming more and more slight each day.
Here’s the link to the story:
http://tinyurl.com/yqr85l
Even with “Option 1″ - the housing economy is still in big trouble.
Just for fun–a lying RE “investor” gets exposed by Judge Judy
Lying Raging RE Investor Part 1
Lying Raging RE Investor Part 2
Bonus: his mother is a big fat liar too
Classic…I love Judge Judy…bunch of Newport dolts…maybe the r/e “investor” was pissed because he’s upside-down on all his properties…lol
http://www.onpointradio.org/shows/2007/03/20070315_a_main.asp
Here’s a link to the NPR program on sub-prime mortgage scandal that someone mentioned earlier.
“Tsunami of foreclosures may wash over Central Valley”
http://bakersfieldbubble.blogspot.com
Tsunami is right. One trillion loans set to reset for 2007. This will drag on for a minimum of 5 years analogous to the 1991-1998 correction.
-Dimitris
http://countrywide-foreclosures.blogspot.com
For what it’s worth…
I keep in contact with a bunch of coin dealers in the el lay area and can freely pick their brains, in asking them what the public is doing, in terms of buying and selling physical precious metals and it has been a one way street for gold, few sellers and lots of buyers.
I need to complete the last part of my alchemist trick (turning electronic blips on my computer screen, into gold) and I like to buy @ wholesale, and i’ve been waiting for 3 days now to cover and i’m cool with any standard flag bearer (ae cml kr, et al) and have been unable to find any physical. This in a megalopolis of around 15 million people.
We have a lot of faux wealth, but oh so little of the real deal.
What’s wrong with bullionvault? I’m looking at buying with them. I already bought into gold and silver pool accounts with Kitco. They’ve been around since the 70’s and no bad press on the internet plus the owner goes around in person to conventions and stuff so I figure they’re on the up and up…
I don’t want to hold physical because I’m afraid of theft. I’m feeling nervous about my gold ring, actually–I hope would be thieves assume it’s 14K.
I like to buy @ wholesale and need to wait until somebody in the city of angels lets loose with a considerable pile of it, on my coin dealer friends and then i’ll swoop in and buy it for what they’d blow it off at, to an end line bigger bullion firm. Big savings compared to anything a mere mortal could do. On the basis of $646 gold, I could expect to pick up 1 oz krs or cmls for a Dollar over spot, when some physical shows up.
It hasn’t happened yet.
Why anybody would allow an unneccesary layer (that just happens to have possession of your precious metal, while you have a piece of paper) to their precious metal holdings, is just beyond me.
Get a safe deposit box. A $20 a year one will hold around $250k in physical gold, with the greatest of ease.
“All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.” – President F.D. Roosevelt, 1933
A fantasy quote, without credibility. And besides, gold has been legal for any citizen of our country to own in any flavor your heart desires, since Jan 1, 1975…
A $20 safe deposit better hold more than a standard bar (400 troy oz). Or is that safe deposit box inflation? LOL
Not a big silver fan. A commoners metal. not rare.
To put $250k in a safe deposit box would require 19,230 Troy Ounces or about 1300 pounds.
Contrast that with Gold’s 26+ pounds, to do the same job.
ACtually Silver is much rarer than gold.We have been running a 30m/ yr deficit for several years. I think last I heard 300m can buy all the physical in the world. Comex has been moving any physical, just options ( read that as those holding on tightly!) As said above why hold paper if protection,and Ins. is why you’re buying. If the proverbial SHTF maybe you will get your holdings, but when?, or if. Just like the FDIC you may be paid back but in what? ..
Yeah, aladinsane, funny to hear you say that about silver.
I’m a heck of a lot more afraid of being ripped off by someone selling me electronic chits than I am of some two bit thief being able to find coins secreted about the house in places they won’t look for valuables
ECC mortgage company gets a brief reprieve
ECC Capital is getting thrown out of the big house, but the landlord will give it a couple of days to make arrangements to move to a modest hut across the tracks.
In less fanciful terms, the Irvine-based mortgage company announced Tuesday that the New York Stock Exchange planned to delist its shares today because their price is too low. But today ECC got an extension. It can keep trading on the Big Board until Monday, while it makes other arrangements.
ECC, which last year was one of the first local victims of the turbulent mortgage market, said it “expects but cannot guarantee that its common stock will be quoted on the OTC Bulletin Board following NYSE suspension.”
Nice catfight about Apex in MA suspension at BO:
http://tinyurl.com/343k4m
That’s brilliant. Since the Feds aren’t stepping up to the plate to regulate lending practices, the states do it. Too little too late, I am afraid.
How come in Kalifornia I never heard of a lender getting booted?
CA is soooo subprime lender friendly. And yet they [pretend] to be bleeding hearts here. No wonder flyover thinks we are dicks in CA - because WE ARE DICKS IN CA. Hell just calling them flyer is rude. hehe.
These people bought in ‘02…they should have plenty of equity to fall back on…probably HELOC’d it away
Q&A | SUB-PRIME LENDING
Borrowers don’t lack options, experts say
http://tinyurl.com/3d2y9s
Here’s a link to Jim Cramer exposing inside activity in his hedge fund:
http://www.youtube.com/watch?v=708wDFX28lc
Notes from the trenches:
Was at a major shipping-trucking comany yesterday dropping off a pallet of stuff and spoke to the shipping-forklift guy. He said business has been slow.
Later in the day, spoke to the local UPS guy and he was glad we had stuff to ship. He said not that many people are shipping stuff. (His route is a small industral complex route).
At the gym a guy who installs fences said his phone has not rang in two weeks. Blamed it on tax season.
This is all in the SoCal area.
NO ithink its because UPS has joined the American scam and STIFFING ITS CUSTOMERS big time
with its new Dimensional pricing scheme……..they wanted to bill me for 62 lbs for a 25 lb items becuase the box was slightly oversized….18×18x24..istead of the usual $5.00 extra……people are now going to have to get it weighed and get some actual estimates first BEFORE SELLING anything on Ebay………..
Dimensional pricing is not new and in fact UPS is late to the game. They switched because shippers were gaming them by putting all their “fluff” freight on UPS and their dense freight with someone else at a lower rate. (Plenty of “optimization” software available in the market.) This filled UPS’s trucks and aircraft with weights far below what they could carry, a money losing proposition. They decided to nip it in the bud before it got worse and fall in line with industry standards. There is only so much volume on an aircraft/truck and only so much weight they can move within that volume.
We’ve been negotiating with a builder in eastern WA state, and in the process gotten some valuable info. Our “model” is a 3/2 2,000 sq ft home that was listed since last summer at $283,000; completed in Nov, 2006; then listed price was raised to $307,500 in January and still doesn’t have a firm offer (builder claims someone is “interested”). The justification for the price increase: rising building costs and upgrades (granite countertops and slightly larger deck). The funny thing is that EVERY builder in town raised the prices on standing inventory by the same % amount at the same time. (And now NOTHING is selling.)
We’ve been discussing building this home on a different lot, and customizing a bit for our needs (e.g. no granite). In addition to starting at the $283,000 price and working down, we want to deduct financing costs from the price as we are financing construction ourselves.
Builder let slip that he only has to finance $220k as that is the actual building cost. So basically, this guy is crying about increased building costs while budgeting for 40% gross profit.
Interesting this is that if you look at PITI for a 30 year fixed with 10% down, the price should be $240k to match rent income potential ($1500/mo MAX)… or 10% gross builder margin. We’re offering $270k on a $307k listed home and that is still quite a bit over the intrinsic value.
The other thing we’ve learned in this process: builders really think they are hot $hit, and are making million$ because they are brighter than everyone else. Gonna be a lot of fun seeing what happens as that wave they are riding crashes on the rocky shore ahead.
GS, hold on for a few more months! You should be able to buy from the bank for less.
Yep, I think we will wait a little longer. WHat is 6 months after waiting 4 years for this stupid bubble to pop. We are staying in graduate student family housing (cheap, nice, quiet, and 5 min walk from work) and were recently told we can stay there as long as we want. It used to be policy that new faculty/staff could only stay in these apts for 6 months, but there has been so much building in town that the university now has trouble keeping the units occupied.
Where in Eastern WA?
Pullman. But it is different here!
The local rationalization of double-digit residential appreciation is the growth of a power engineering company in town. THe trouble is that this company has about 100-150 engineers total, most paid very middle class wages. THe rest of the 1000 employees are line workers (non union and low paid) and clerical staff. This is still small potatoes relative to the university employment, and folks at WSU (faculty and staff) on the whole don’t make a great deal of money. Lots have been flying onto the MLS, houses are being built as fast as possible, rentals are absolutely exploding. But there really isn’t any significant income or population growth to justify this craziness. Rents have actually been dropping due to rising vacancies. And as I keep telling myself, the return on a housing investment is the “dividend” or rent. No point in buying a home at $2000/mo and renting it back to myself at $1200/mo.
Does anyone know where I can get the median house prices in South Carolina from 2000ish-present? Also, the national data would be helpful.
Like many of you, I spend too much time on here and it’s good to get perspective on things, but lately I feel like I get around 628% of the daily recommended doseage…
So, i’m outta here for the day. I’ll be seeking counsel with a 1,000 year old Giant Sequoia Tree in the Homer’s Nose Grove, if you are looking for me.
Neat!
Is that gigantic tree the one that’s telling you it’s cool to hate Christians?
I despise them and everything they’ve done to this great country.
Getting to a more important topic, my date went well, and we’ve been seeing each other for quite a few years now and there’s a few sticky issues I fear we’ll never overcome:
I’ll never know if my favorite 1,000 year old is a he or a she.
It’s the ultimate May to December romance. I’m only 45.
I always have to go over to it’s place.
haha this quote is from BO:
“There was a story in the La Times about a couple that could not come up first,last and deposit for an apartment, but they were able to get into a house with no money down and now they are being foreclosed on. They filed Bk and now it could be another year before they are evicted. ”
Real Estate is now Bizarro World:
1. If you are too poor to rent, you instead BUY!
2. If you make gains in RE its tax free, but losses are taxed(short sale/fc)!
3. Mortgage Interest/Prop tax is a Write off/ College Tuition is NOT!
Does anyone know of a company called The Milli Group? They are nation-wide but have a strong presence in California - any info would be appreciated. They tell people that having equaity in the house is a loosing proposition, and instead they encourage them to get all the equaity out and invested with, you guessed it, The Milli Group?
Anybody catch the NAR ad during the first round of the NCAA tournament on CBS? It’s the biggest bunch of bullshit ever compressed into a 30 sec ad. Some choice lines:
“If you have a family, it’s always a good time to buy!”
“It didn’t make sense to us to waste money on rent when we could buy for the same price.”
I would actually like to see someone sue NAR to produce an example of something you can buy for the same price that you can rent. Of course they can’t–but they can run an equally expensive ad apologizing for their false advertising.
One of my favorite housing-related web sites is thehousingbubble.com, which I discovered late last year. Gary Carmell, Red County Online
Game Over
http://www.redcounty.com/tabid/146/articleType/ArticleView/articleId/50/Game-Over.aspx
Great stuff in here:
“EXOTIC LENDING
According to the Federal Reserve, total outstanding home loans increased from $5.1 trillion in 2000 to $9.8 trillion in 2006. This explosive growth has been fueled over the last six years by an exotic array of repayment and interest rate options that have been created to assure every living and breathing individual could buy a home, whether or not they were financially and emotionally prepared.
You don’t have a down payment? No problem. We’ll either arrange for 100% financing or get a foundation to gift you a down payment. Don’t worry about the fees they are making on the transaction or that their foundation is endowed with money gifted to it by homebuilders.
You have credit card debt you need to pay off? No problem, we’ll lend you 125% of the value of your home and consolidate all your debt.
You’re worried that you may not have enough income to qualify for the loan? No sweat, we’ll fill out a “stated income” loan where the lender doesn’t verify your income and instead just takes your word for it. You do make $95,000 per year, right?
From 1970 – 1981, the U.S. homeownership rate was between 64.3% and 66.0%. From 1982 – 1994, it ranged from 63.5% to 64.4%. Since 1995, however it has gone from 64.2% to 69.2%, an enormous increase in market share for owner-occupied housing.”
This has to be one the funniest things I have ever seen Check out who is listed as a member on the STOP MORTGAGE FRAUD home page!!!!!!! Ha Ha Ha Haaaaaaaaa
http://www.stopmortgagefraud.com/spanish/endorse.htm