Bits Bucket And Craigslist Finds For April 2, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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german commercial real estate 2006 / or how the rolling bubble effects germany
http://immobilienblasen.blogspot.com/
jmf:
Excellent work, as always…
About The Daily Show and Colbert Report?
“Everything is changing. People are taking their comedians seriously and the politicians as a joke.”
Will Rogers
The Alt A lenders are getting hit hard today in the market. The banking sector as a whole is the weakest part of the market. Stocks down a lot include FHN, CRC, WM, BBX and MTB.
It will be interesting to see if the market as a whole can hold up when confidence in the finanacial sector is eroding.
Anything you buy today will be worth a lot more five years from now.”
THE SPIN STARTS HERE!
Angelo Mozilo, chief executive officer of Countrywide Financial, told CNBC’s “Squawk Box” that Washington shouldn’t take proven loan products off the market in an effort to resolve the sub-prime mortgage crisis.
He said adjustable-rate mortgages and loans made without a downpayment have been used for more than a generation with proven results.
“It’s very important that we put liquidity back in the system,” Mozilo said while co-hosting “Squawk Box.” “It’s important that that the Fed backs off on these guidelines and that people realize hybrids are very good loans.”
He said the Veterans Administration has used no downpayment loans since 1942 and the FHA since 1934.
Some have said the sub-prime lending crisis will turn millions of people out of their homes, creating the worst housing crisis since the 1930s.
“I don’t believe that,” Mozilo said. “If we conduct ourselves properly, if we’re rational as we go through this process and you don’t rush to judgment, we’ll be fine. It’s up to the lenders to do everything they can to keep these people in their homes.”
Mozilo said he believed the mortgage market should be allowed to “self correct” and noted, “Anything you buy today will be worth a lot more five years from now.”
Sounds like Mozilo is begging not to have his life line pulled from him.
“…that Washington shouldn’t take proven loan products off the market in an effort to resolve the sub-prime mortgage crisis.”
What about unproven loan products like 100 percent financed alt-A liar loans that have never been stress tested in a recession?
He said the Veterans Administration has used no downpayment loans since 1942 and the FHA since 1934
Either this guy doesn’t know how a VA loan works, or he’s intentionally trying to be misleading in the hopes that readers don’t understand how VA loans work.
OK, let’s see. A VA loan is originated by any bank or other lender and the VA simply guarantees a portion of the loan (sort of like PMI). That reduces risk to the bank; plus the VA has a fund to help make payments if a VA loan holder is in temporary financial distress. The bank can choose to require no down payment thanks to these factors.
Does this sound anything like what Countrywide and other lenders were offering to the general public? I didn’t think so. This guy is just another liar concerned about his pocketbook and nothing else.
When we first moved to SoCal Belmont Shores in Long Beach had higher comparable rents than Huntington Beach (comparing both near-beach areas). Now, it seems that Belmont is a few hundred dollars cheaper and a much better area. We going to move from a Huntington Beach rental to a better location and better place in Belmont Shores. I’ll trade much better restaurants/bars for surfing any day. I realize others wouldn’t. Plus every house doesn’t like the same million dollar stucco box in Belmont, however, the are making progress tearing down beautiful older houses for ugly three story stucco boxes.
That is interesting I hadn’t looked at the rent differentials yet.
I commute from downtown HB through Belmont Shore every weekday.
Are you looking east or west of 2nd in Belmont Shore?
The neighborhoods east of 2nd are amazingly nice for an LB zip code.
Also, denial runs deep in OC!
This is odd - 2nd Street runs east-west, not north-south.
I don’t think so, I turn left from PCH north onto 2nd and 2nd runs through Naples and Belmot Shore.
At the end of Belmont shore a left onto Ocean and I am almost at the office.
The truth is there does seem to be more demand in HB from renters, we’ve run into multiple people in HB looking at rentals. We didn’t run into anybody in Long Beach. Places near us in HB are rented in days.
We’re not looking at 1b/1b, but I do watch them to judge prices. They are clearly cheaper in Belmont than HB. If I was single and looking for a 1-1, I definitely go with Belmont.
Have you seen any relationship with 2/1 or 2/2’s with a garage for comparitive rents?
That’s the sticky point…2 car garages seem to be unheard of in Belmont. Even 3/2.5 and 4/3 big places might have a 1 car garage.
I don’t know if Ben would want to get into a rental thread. It seems there are idiosyncrasies to the markets that I wouldn’t mind discussing.
This weekend I finally got my hands on something with published prices. In our target town, the “metal box” apts as I like to call them are asking $400/mo more than my mortgage (for 3 bedrooms). That must be why they’re getting around $2k/mo for SFH rentals. My mortgage is under $1k/mo and that includes the dreaded NYS taxes.
That asset is declining in value but my cash and other funds are/will be taking it on the noggin’ too. Thinking about gold but I wouldn’t put my eggs in one basket anyway.
(Sigh) Feeling like a deer in the headlights….
Carrie Ann, that’s a great idea and would make an excellent weekend topic suggestion. Write it down so you don’t forget. I’m surprised someone hasn’t brought this up before as a topic. Sometimes during the week I think of ideas for topics and then on Fridays, when Ben asks for suggestions, I go brain dead and can’t recall my “brilliant” ideas of a few days before.
Owner-equivalent rents are the driver of the CPI, and the CPI is the driver of the FED policy (at least in public theory). Rental rates are primary to the housing market’s health, like P/Es are to the stock market, and is never out of place — especially in a bits and buckets thread.
“Rental rates are primary to the housing market’s health”
I am finding rentals rates in Vegas are a function of employment and location to jobs. The closer location to hospitals, universities, industrial parks, the strip and higher vacancy factor, which leads to higher rents. I am watching the employment figure as the next indicator of recession, so far its good. The suburbs and beyond are where the vacancies are bringing the rents down, not on well located, close in locations.
I wanted to thank GS, notagator, FutureVulture and Dublin212 who took the time to respond to a query on some safe places to stow away reserves while the dollar was falling (or where to find info).
It was on yesterday’s Bits Bucket thread. I saved the info on my harddrive and will be following up.
I especially appreciated the info on FutureVulture’s Bank Rating query. That results spoke volumes. I think I’ll do the same on M&T.
Yes, dublin’s info on everbank (including the amount of mortgages they hold) was news to me, and very nice to know. I must confess I’m mostly into precious metals myself (as opposed to foreign currencies), but I don’t like advising people to put all their eggs in the p.m. basket.
I was under the impression that you couldn’t crack a p.m. egg?
FED guides policy not by the CPI, but by the PCE price deflator
Basically, PCE prices and CPIs weigh prices different. The weight in the CPI relates to what consumers spend out of pocket. The weight in the PCE price index relates to what is spent for consumers. So for example, CPI and PCE price index will weigh health insurance prices differently. The CPI only captures what the consumer spends. The PCE price index captures both what the consumer spends and what employers spend to provide that insurance.
“Now, it seems that Belmont is a few hundred dollars cheaper and a much better area. We going to move from a Huntington Beach rental to a better location and better place in Belmont Shores.”
Problem with Belmont shore area, at least that part of it west of Livingston/2nd st centered around the old Belmont Pier, is that it is fairly close to the adjacent 90814/rose park district of Long Beach, one of the LB decaying crime-ridden apt zones. In fact the entire central LB area basically surrounding DWTN LB but also impinging on the upscale 90803(LB Marina District) is a gigantic slumzone. Criminal activity eminates out of these LB Hoodzones and makes it’s way to the more affluent shorefront sections of LB.
If you like more diversified eclectic urban environment then LB has it. Especially DWTN LB is indeed a superb urban harborwalk environment,along with pine ave and all those eateries. My only caveat is that nagging little problem of the urban riff-faff which spills out of the adjacent LB ghetto sections and disrupts things.
Belmont Shores and adjacent Naples is wonderful. In-Laws have a very cool “beach house” on Claremont that is ground zero for all summer activties. Parking can be a bitch but most homes/rentals have at least single car alley garages…
But the complaints about loan practices go beyond Beazer.
The Department of Housing and Urban Development is taking more actions against home builders and their affiliated lenders, says Brian Sullivan, a spokesman for HUD.
“We are seeing increased consumer complaints about builders,” Sullivan says. “Including kickbacks and illegal referral fees, phantom incentives and other violations of our real estate laws.”
http://www.usatoday.com/money/economy/housing/2007-04-02-home-builders-usat_N.htm
O’boy, this could really open a can of worms.
Gotta love it
I doubt it, kickbacks and bribes go all the way to government. They don’t want to pull their own pants down. From the story:
Last year, the lending arm of Pulte Homes settled a case with the North Carolina Commissioner of Banks, which found that 53 of Pulte’s mortgage brokers were unlicensed. The $780,000 fine was reduced to $60,000 after Pulte Mortgage agreed to move operations to Charlotte, creating 230 jobs in the area.
yes, the FED and the big Wall Street firms knew what was happening long ago, and they silently counted their blessings.
M&T Bank ‘ MTB ‘ is down this morn due to failures of Alt-A, so the cancer is spreading it seems….
http://finance.yahoo.com/q?s=mtb&x=57&y=16
also the dollar keeping on it’s downward slope..now 82.5 as we speak…and the unwind is just starting.
I have some more details at my blog about this M&T news, which clearly shows that investor reluctance to buy subprime paper is spilling over into Alt-A …
Interesting news out from M&T Bank. The company just issued a first-quarter earnings warning, saying it would make about $1.50 per share to $1.60 per share (Reuters consensus was $1.86). What’s the problem? Have a look …
“Recent, well-publicized problems in the subprime residential mortgage lending market have had a negative effect on the rest of the residential mortgage marketplace, specifically with regard to alternative (”Alt-A”) residential mortgage loans that M&T actively originates for sale in the secondary market. Alt-A loans originated by M&T typically include some form of limited documentation requirements, as compared with more traditional residential mortgage loans. Unfavorable market conditions and lack of market liquidity impacted M&T’s willingness to sell Alt-A loans in the first quarter.
“At a recent auction of such loans fewer bids than normal were received and the pricing of those bids was lower than expected. In accordance with generally accepted accounting principles, loans held for sale must be recorded at the lower of cost or market value. As a result, the carrying value of M&T’s Alt- A portfolio that had been held for sale was reduced by $12 million in the first quarter of 2007, which M&T estimates will result in an after-tax reduction of net income of $7 million in the quarter, or $.07 per diluted share.
“Management of M&T believes that the value of the Alt-A residential mortgage loans it holds is greater than the amount implied by the few bidders presently active in the market. As a result, $883 million of Alt-A loans previously held for sale (including $808 million of first mortgage loans and $75 million of second mortgage loans) were transferred in March to M&T’s held- for-investment residential mortgage loan portfolio.”
That last part is particularly interesting. M&T is saying it’s taking its ball and going home because the mean old market bullies aren’t paying enough for its product. Maybe this is just a temporary liquidity crunch, and maybe M&T will ultimately fare better by pulling product now, holding on to it, then selling later when liquidity improves. But I have a sinking feeling this downturn in subprime and the Alt-A market is going to be with us for some time. What if bids keep falling as a result?
http://interestrateroundup.blogspot.com
Also, New Century Financial just filed for bankruptcy, per Bloomberg News …
This is one of the most fascinating aspects of the bubble, IMHO, the utter lack of ethical behavior towards others and the disregard for the law, as if it is all some sort of joke. Of course, this example is set at the very top of US govmint, so it doesn’t surprise me. I’m sure many people think, well, why should I follow the laws if the “decider” and others don’t have to?
So, what’s the solution for all the fraud? Amnesty? Seems to be the trend.
CAN I raise my Hand and ask a Stooooopid question?
How come we knew this years before anyone who gets PAID to know these things?????
—–the utter lack of ethical behavior towards others and the disregard for the law, as if it is all some sort of joke————–
“How come we knew this years before anyone who gets PAID to know these things?????”
That’s where the joke’s on us. Because it appears people were paid NOT to know these things.
“How come we knew this years before anyone who gets PAID to know these things?????”
A lot of those who get PAID to know these things also get paid to downplay it. The MSM, for example, doesn’t want to enrage their RE advertisers. The brokers, lenders, appraisers, etc. didn’t want to rock the boat and end the party.
There’s a built-in conflict of interest here between the espension of Truth and the making of a lot of easy money.
espension = despension
“Honesty is the best policy. If I lose mine honor, I lose myself.”
William Shakespeare
William Shakespeare?
Huuuh???
Be quiet… I’m watching American Idol!
Because of the multitude of editions, emendations, and variant spellings, it is not possible to perfectly search Shakespeare’s works. Still I do not remember ever having read “Honesty is the best policy,” in his works. When I search for “honesty is the” and “best policy” in one version I do not get anything close.
Brainy quote gives (at least) Benjamin Franklin, Mark Twain, and President Garfield credit for having said it.
But, in defense of aladinsane, Thinkexist.com misquotes Shakespeare as aladinsane misquotes him. Part of the Thinkexist/ aladinsane misquote is from Anthony and Cleopatra. MARK ANTONY says:
Gentle Octavia,
Let your best love draw to that point, which seeks
Best to preserve it: if I lose mine honour,
I lose myself: better I were not yours
Than yours so branchless. But, as you requested,
Yourself shall go between ’s: the mean time, lady,
I’ll raise the preparation of a war
Shall stain your brother: make your soonest haste;
So your desires are yours.
John
“No one can earn a million dollars honestly.”
William Jennings Bryan
Hoz,
How’d your fishing venture go?
>How come we knew this years before anyone who gets PAID to know these things?????
Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it”
“If you have integrity, nothing else matters. If you don’t have integrity, nothing else matters.”
Sen. Alan Simpson
Because the masses don’t do anything about it except complain at the dinnertable and computer desks.
Not meant as a jab to bloggers here who appear to be quite active.
I’m just as stuck as the regular guy, with this far too interesting ball and chain, in the guise of a computer.
I used to have to go actively search for interesting people, before this bigger, better orange cans & string device showed up.
But, in some ways, hanging out on the computer for 6 hours, is akin to hanging out in the public library for 6 hours.
A dozen years ago, if I’d told you that there would be Billions of people hanging out at the library for a 1/4 of their daily existance, you’da laughed.
Things Change.
“It is difficult to get a man to understand something when his salary depends upon his not understanding it. ”
Sinclair Lewis
So if one morphed Sinclair Lewis with Upton Sinclair?
What would you get?
reminds me of someone who was ’sure’ “War and Peace” was written by Tolkien
Serfs of the Rings?
From an old Shelly Berman bit:
But of course HE’S the kind of guy who’s read James Joyce, and YOU think that James Joyce wrote “Trees.” What’s worse is, you say so.
“James Joyce didn’t write ‘Trees.’ ‘Trees,’was written by Joyce Kilmer. ”
Then you ask “Who was she?” and remove all doubt.
My Bad. It was Upton Sinclair. I used a bad web source.
Still apropos.
“We are seeing increased consumer complaints about builders,” Sullivan says. “Including kickbacks and illegal referral fees, phantom incentives and other violations of our real estate laws.”
I would love, love, love to see these practices cleaned up and people PROSECUTED ! I mean, how was it possible to buy a house with 100% financing and get $50K cash back ? That deal is under water before it starts ! No wonder we had a housing mania ! There were thousands of those sorts of deals. Were do they start prosecuting them ?
And while we are at it, aren’t the trips and cars kickbacks too ?
http://www.kunstler.com/Grunt_wrecked_house.html
Interesting email from a friend.
Niskayuna is a suburb of Albany, New York.
How to Lose $230K in Niskayuna Real Estate in 6 Months
In 2005, the house next door sat on the market for eight months because of the failure of the lazy blow-hard owner [a local TV newscaster] to do any maintenance for 6 years on a previously pristine property. Basically, the house was overpriced and under-maintained to put it mildly. Nevertheless, in Oct 2005 the house was, incredibly, bought for the full asking price of $315K with a no-money down “liar’s loan” by a young woman who seemed on the surface to be financially well off as judged by the $50,000 SUV that she was driving. Five days later, she put the house back on the market for $365K in an attempt to flip the house for a quick $50,000 profit.
When the house failed to sell immediately (our housing market coincidentally topped out in October 2005 when she bought), she temporarily rented the house over the winter of 2005-2006. The renters were a couple of young dudes with fancy cars and no apparent jobs or means of support, one of whom was her sometime boyfriend. You can make a good guess at their off-the-books occupations. She kicked them out in the early spring of 2006 when real estate agents complained about them making the house hard to sell because they were living on mattresses sprawled around the floors and were there all of the time.
A few months later in the late spring of 2006, the For-Sale sign disappeared from the lawn. Presumably, foreclosure proceedings by the bank making the loan for the house purchase had gone far enough that the “owner” could no longer legally sell the house. My guess is that she never made a single mortgage payment to the bank or tax payment to the town. She was the nominal owner for just 6 months and it would take at least 6 months of no payments before a successful foreclosure could be accomplished. At this point, she held a huge party at the house with an open swimming pool for all of her friends. Then she apparently just walked away and abandoned the house.
Fast forward to one year later and the house is now for sale for only $85K.
The rest of that story is interesting too… Ice flows coming out of the windows from the pipes bursting; Grand piano dying in the living room.
Whatta tale, hope it’s exaggerated.
If we can get these stories in the MSM, we won’t have to hear anymore sob stories about the victims of their own lies.
that’s the problem, the MSM has to verify everything, bloggers and webzines don’t
The MSM, like everyone else, has to please those who pay their bills. In the case of the MSM those who pay their bills are those who buy their ads. Thus there exists a built-in incentive to spin the information they dispense.
Much of what passes for news from the MSM is heavily-doctored spin. There are news stories that beg to be told but are not because somebody with influence’s foot would be heavily stomped on. Other stories are forced to be told because the word is already out to the public. These are the ones the spin doctors do their best work on.
Blogs offer an alternative to a biased MSM. A well run blog populated by and intellectually enforced by well read skeptical contributors offer an excellent alternative to today’s MSM.
What MSM would that be? Because the one I’m familiar with has underpaid newspaper reporters writing most of their stories on deadline with no time for “heavily-doctored spin”.
And blogs offer an alternative to MSM? I’d say yes, but it’s not apples to apples. Most blogs are very specialized, like this one and rely heavily on those “biased” MSM articles. Newspapers and the such are mostly general interest and can’t concentrate on 1 or 2 subjects exclusively like some would like.
What a waste. A family could have lived in that house had the flippers not come to town and jacked the prices. Now its not even worth firewood
owned in the form of derivative tranches by various disembodied legal entities.
Ha, nice turn of phrase
Disemboweled legal entities is more like it. But somewhere in those entities are people’s pensions and retirements. Interesting. This will affect govmint employees, bringing the chickens home to roost, right where all this went out of control in the first place. I hope every govmint employee who feels the pain, will realize that the “disembodied legal entity” they worked for had something to do with this situation. What goes around, comes around.
“derivative tranches”
New term for investors who got screwed by MBS: I was “tranched”.
Life in the Tranches…
That, in a nutshell is the reason that banks give consideration to short sales. Most short term vacancies don’t end as bad as this, but, turning into party/make out palace for the local teens is hardly uncommon.
Mortgage woes seen holding U.S. growth “below trend”
http://tinyurl.com/2×63tc
UCLA Anderson pumping furiously for a rate cut. MSM dutifully presents their case without mentioning who their corporate sponsors are.
Will Bernanke give the shills what they want?
What’s up with that! Try this URL instead:
http://tinyurl.com/2ax8t3
Sorry. TinyURL had a hiccup or something…
For the vast majority, when their adjustable rate kicks in, 75bps is not going to be the difference b/w making it and going under.
And what the heck is wrong with “below trend growth” for a while?
We’ve had “above trend growth” before and will in the future, too. [In the last few years, it's mostly been in the supply of money and in house prices, but I digress]
We can’t always be at the trend line or above.
I say: “Free money for everyone!!”
Doesn’t work anymore. It’s a broken down.
Instead, Do the Volcker!
Subprime woes to drag ‘07 market
“For a housing market that has already witnessed housing starts decline by 36 percent, this is not good news,” he wrote.
http://news.yahoo.com/s/ap/economic_forecast
Time to play the requiem for the spring selling season that never was.
Rest in peace.
Hey, Ben…
Has anyone gathered a list of those “just wait until Spring Selling Season” liars quoted in the MSM six months ago?
It would be great for a retrospective.
Odd, that story is using our friend Darren Shimasaki in the photo. Is he the new poster child of liar/victims?
“Darren Shimasaki plays with his son Kade, 3, outside their home in Yorba Linda, Calif., Saturday, March 31, 2007. Designer mortgage loans that don’t require borrowers to prove how much money they earn or make down payments are getting much of the blame for the wave of defaults racking the subprime mortgage industry. (AP Photo/Reed Saxon)”
St. Joseph sighting at Walmart:
http://louminatti.blogspot.com/2007/03/st-joseph-home-sales-kit.html
$2.93 is a small price to pay for peace of mind.
St. Joseph Home Sales Kit!!!!!!!!
Damn if I hadn’t seen it with my own eyes I’d never believed it.
Has the world gone crazy…….scheeeezzzz
Surely that post belongs on yesterday’s thread.
My last encounter with said saint would have been the children’s aspirin, bearing it’s name.
Strictly for kids, though.
http://www.medicinenet.com/aspirin_chewable-oral/article.htm
LOL, I love how St. Joseph looks like a deer in the headlights in that pic
Someone should come up with an “E-Z 2-step kit” for dropping the keys and walking away.
I was talking with my wife last night and she stated that more homes in our city will be going into foreclosure. I asked her how she knows this detail. She stated that her sister who works in the city government knows when houses are about to go into foreclosure. Her sister stated that a lot of newer homes in the better park of the city are going to foreclosure.
I check online listings of houses for sale, and there are 167 houses in Manassas Park. About 10% are asking for 3rd party approval or are in foreclosure or are owned by a bank.
In a three-week period - listings on foreclosure.com in VA have gone from 1,437 to 2,097. 338 of those are in Prince William County. Not sure what percentage of total VA population is in that county, but I would imagine the number of foreclosures is dispropotionately high.
State-wide - foreclosure increase rate in VA is about the same as CA and FL! That’s pretty shocking to me, to be honest, being that VA isn’t known for it’s flakiness and hype like CA and FL are. At least I never thought of it that way - guess I was wrong.
I’ll be honest - I bought a house here in VA last year (sold in CA). At the time I discussed with my wife that we might be best holding off, but in the end we decided to go ahead and buy; mainly since it’s such a royal pain to move and I like to do home project stuff. Certainly it’s no financial problem (we put about 60% down), but knowing what I know now - seeing the foreclosure rate in VA skyrocket like it’s doing, and knowing what that means for future price declines - I wish I had pushed more to rent for a while. 2-3 years from now that 60% could have been 100% cash for our house.
This time last year I predicted 20-30% price declines for northern VA, with possible range of 10-40%. Now I’m thinking 40% is more like an accurate predicition, with the possible range being 30-50% or so. It’s gonna hurt.
I am amazed still at the NO.VA market. Yesterday we looked at a house very close to Burke Lake on 5 acres. It has been on the market for a year and dropped 70,000 dollars. Four houses like it are for sale with 1 marked sold in the neighborhood.
I looked it up. They paid 360K 10 years ago. They want 899K and they are going to strip the house. Almost nothing conveys. They have already bought their retirement house.
Sorry, no way am I going to fund their retirement. I told my wife that was 600K at best house. The land being the premimum.
Check the land records and see how badly they HELOC’d it. A lot of folks in Fairfax and the surrounding environs have mortgaged themselves to the hilt. If they’ve taken out the equity up to that point, you’ll be able to buy it from a REO department before too long. Heck, I might even get the foreclosure referral.
Look at a place over in Penderbrook (near intersection of 50 & 66 in Fairfax). Place bought/built 10 years ago for $280k, now want $750k. Neighboring houses recently sold for $650k. Unfortunately, these people bought at the top (5/2005) and paid $705k.
The stress of trying to sell that house will shorten their retirement. There’s no greed like old greed.
St. Joseph sighting at Walmart:
http://louminatti.blogspot.com/2007/03/st-joseph-home-sales-kit.html
$2.93 is a small price to pay for piece of mind.
Is anyone else having problems posting this morning?
I saw St. Paul at Walmart.
I saw Elvis at Whole Foods.
I saw Ben Shalom Bernanke at Kinko’s.
I saw Anna Nicole Smith at Kinky’s
But it’s not all Saints day yet
When did they make Elvis a saint?
Sorry cynicalgirl……Elvis wasn’t there when I posted……maybe he’s an apparition
Are you seeing the young or the plump version?
5th Vatican.
Dang it! I don’t know what happened. For some reason they original post didn’t show up. I hit refresh and it didn’t appear.
That happens to me all the time. There’s some problem with this blog software.
Meant to add - oftentimes I’ll post - it doesn’t show up - and when I attempt to repost it says duplicate post. Often the post shows up about 10-15 minutes later, like there’s some kind of delay.
and sometimes posts show up and then vanish into thin air.
Maybe it’s because you’re getting up too early. Tee-hee.
Excellent Financial Times article:
As America falters, policymakers must look ahead
“Three months ago I was able to write in this space that in economics “the main thing we have to fear is the lack of fear itself”. This is no longer true today. With clear evidence of a crisis in the subprime US housing sector, risks of its spread to other credit markets, sharp increases in market volatility, reminders of the fragility of global carry trades and signs of slowing economic growth, there is enough apprehension to go around.”
“Regardless of the merits of this position, the theory that this constitutes a reason to avoid easing monetary policy, come what may, hardly follows. If, as may prove the case, the dominant economic concern becomes a shortage of demand, it is incumbent on the Fed to provide stimulus so as to maintain conditions for growth and financial stability.”
Translation: Ben Bernanke should respike the punchbowl on the first hint of weakness in aggregate demand.
“Those in the rest of the world who have been insisting on the global imperative of increased US saving and a reduced US current account deficit should fear getting what they want too quickly. So also should those US observers who have insisted that foreign countries stop artificially holding their currencies down by purchasing dollar assets. While US current account adjustment is a medium-term imperative, an effort to bring it about rapidly in the face of an already declining economy could turn a soft landing into a hard one.”
Translation: If you end the War on Savers too quickly, you will consequently crash the world economy.
Worried they may be turning out too many electricians, leaders of Minnesota’s technical college system have ordered their schools to cap enrollments for electrician training - one of the system’s most popular skilled trades.
Officials with the Minnesota State Colleges and Universities system say it’s the first time MnSCU has capped a degree program. The decision came after talks with an electricians union, which argued the system is training too many electricians for the market, worsening unemployment.
Demand for electricians has slowed during the past year. But some observers worry MnSCU’s decision may trigger shortages when the state’s construction economy rebounds.
http://www.twincities.com/localnews/ci_5572730?nclick_check=1
They are a tad premature on this. When all these shoddy bubble houses start to fall apart, electricians and other trades (trained, American citizens who know what they are doing) will be in high demand. However, probably Minnesota doesn’t have as much of a problem with shoddy workmanship as other states. The last house I owned in Florida was built by a Minnesotan in the early 1970s. It was incredibly well constructed and he built it to be compatible with Florida’s environment and climate. When it comes to trades and other matters, Minnesotans know what they are doing. The rest of the US could learn a lot from Minnesota.
There is a shortage in NYC, where vocational education has collapsed. And this is one trade it seems the immigrants cannot fill. We rely on them for everything else that doesn’t require a college diploma.
Remember when the Trades were filled with middle class Union workers here in NYC? Now it’s untrained immigrants (many illegal).
Nice Globalization, right here at home.
Amen, Brothah, Testify!
This is another issue that will gather steam, as there are more construction related issues with bubble housing. I think condos will suffer most.
are you crazy? when is the last time you saw a waspy looking fellow here doing construction? only time i see it is with big irish and italian unionized guys working on big commercial projects. residential is all pig latin
Here in Colorado illegals do most of the work on residential construction. The main exceptions appear to be electrical, plumbing, HVAC and trim carpentry.
I think this a big reason that the fall in construction hasn’t shown up in the unemployment numbers. The workforce doesn;t show up in official surveys.
“The discipline of the written word punishes both stupidity and dishonesty.”
John Steinback
Did you recently buy a book of quotes ??
They are all over the internet…
Dip your spoon in and find some wisdom, from the past.
The wisdom of the ages is just as close to you, as it is to me.
The waves are breaking nicely this morning~
I expect to ride a few more sets before going off on a walk.
Right there on the very same QWERTY device (different in France, it takes a little getting used to) i’m using.
Engage the mind!
lol
I was laughing with canuck.
The MBS market has really fallen apart, though mostly in the sub prime area. Fed + 7.5%, which would be 12.75% by my math ! Now tell me what the mortgage rate will be when PRIME falls apart ? Fed + 5% ?
I’ve been saying for a while now that mortgage rates have to go to 10% because the risk is so high. I’ll say we hit 8% by fall.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKRGlm3vCAX8&refer=home
Here is a post on Countrywide’s rate sheet.
Certain loans are already over 10%.
oops link here.
http://www.oc-fliptrack.com/2007/04/more-puckery-goodness.html
Submitted for your approval…
Empty dwellings all across this fair land, nobody home
You’ve entered a strange and alien landscape
One full of loan options, all of which come complete with their own personal financial gag reflex
You’ll soon cross over, into The Foreclosure Zone…
MSM: the spring season a big deal.
http://www.msnbc.msn.com/id/17878684/
Unless the NAR can show either more sales or higher prices, the feeding frenzy will certainly escalate.
Blood in the water..
I’m curious to see how they downplay the pathetic Spring selling season once it’s all over. No doubt they’ll find some interesting way to do this..
Where have we seen this before?
Minnesota lenders — from Norwest and Green Tree to Metris — were pioneers in finding ways to cater to strapped borrowers, creating the lending template that others copied. And in a foreshadowing of the current situation, all of those lenders but Norwest (now Wells Fargo) eventually got themselves into serious financial trouble by bottom-feeding in the credit pool.
What strikes Campbell about today’s subprime mess is that some of it stems from the lack of cyclical nature of the business and the lack of enough experienced people who’ve seen past problems in the business and can appropriately price for risk.
“You think you can do no wrong,” Campbell said. “Things tighten up. Everything gets difficult. ‘We are not going to do it anymore.’ People retire. Then new people come in and think ‘These are great opportunities.’ ”
Metris Companies Inc. was another high-flying subprime lender in the late 1990s. The recession that followed the September 2001 terrorist attacks nearly bankrupted the company.
At the time, Metris Chief Executive Ron Zebeck insisted the company was a “healthy baby that’s being thrown out with the bath water.” He said: “I’ve got a stable, mature, seasoned customer … not much different than the average credit-card holder.”
Zebeck was eventually forced out, and the company was able to trim bad loans off its portfolio and return to profitability, but not before having a near-death experience. HSBC eventually purchased Metris for $1.5 billion in 2005.
“Subprime was never really tested at the time with a recession,” Galgano said. “Now I guess we know.”
Gagano recalls one analyst in the late 1990s — so confident that Metris could handle a recession that she titled one of her reports “Bring It On.”I guess she got her answer,” he said with a laugh.
http://www.startribune.com/535/story/1091878.html
“Subprime was never really tested at the time with a recession,” Galgano said. “Now I guess we know.”
Interesting thought. True, when people are losing jobs, taking pay cuts, etc. subprime is truly a losing proposition. I can see where some subprime loans might have survived if the US hadn’t been outsourced and undercut within an inch of its life. Big Biz cut its own throat. I guess they didn’t stick that in their “models”.
I had a very long conversation with a relative over the weekend who is Alt-A, excellent credit, but with an 80/20 piggyback loan. The 20 loan has adjusting interest rate, 80 is fixed. They were very upset with me for even talking about the bubble, said I sounded gleeful at the prospect of so many people losing their homes. They tried desperately to assert that subprime credit wasn’t going to go away, it would just be repackaged somehow. Turns out, they thought they were subprime borrowers, until I explained the concept of Alt-A paper. That calmed them down a little. However, what I didn’t point out, because they actually know, is that if they lose their gig, there goes the house. Right now, they can pay for it. And so can others. But many of these people are just one job loss away from foreclosure.
It’s very hard for people to accept that “this problem is going to affect me”. I was talking to my sister this weekend. She lives in Southeast Wisconsin, just north of Chicago. She and her husband bought a nice 4/2 in May of 2005. We started talking about real estate and she said “I think we bought at the top” (probably not true, as prices have continued to go up in Wisconsin over the last two years). I knew they had quite a bit of equity in the house, from their prior house which they had fixed up and sold. She said they took out a 15-year fixed mortgage, since they’re in their early 50’s and don’t see themselves working more than 15 more years. I said “great, you shouldn’t be affected too much since you’ve got your finances under control. But expect to see housing prices go down anyway, because of all the irresponsible things your neighbors are doing”. She didn’t understand that, really had no clue about sub-prime, HELOC’s, mortgage fraud, flippers, etc. She said “well, shouldn’t housing prices just stay flat?” I said “no, expect them to go down steadily over the next 6-7 years at least. She wasn’t happy to hear that (and since I’m her younger brother, I think she was skeptical).
Bottom line for them though, is if they continue to manage their finances responsibly, and they can ride out the down-draft in prices, they really should NOT be affected. Only if something happens and they have to sell….
“Subprime was never really tested at the time with a recession,” Galgano said. “Now I guess we know.”
What is testing subprime at the moment? There is no recession, but nonetheless how many subprime lenders recently went out of business? What’s up with that — is there any historical precedent for the complete vaporization of a subsector of the lending industry against a backdrop of economic strength? Something is rotten in the state of Denmark.
Subprime lending rested on the paradigm of perpetual price appreciation. This was the lender’s only real security for repayment. Once prices started falling, as was inevitable, this paradigm evaporated.
Manufacturing index declines to 50.9 in March from 52.3 in February. Details soon.
Here’s your detail: that’s almost a 5% drop, in just one month.
Timber.
Don’t worry! Once it gets to zero, it can only go up…
Thought 50 was the meaningful value for that index?
This may be a double post but Mish has a must read post from Mike Morgan up today!
http://globaleconomicanalysis.blogspot.com/
Has anyone been to zillow lately to check out their “homes for sale?” It’s insane! Some of those people are listing their homes for far above the already inflated Z’estimate. Example: Powell, OH: Zestimate $143K, list $219K. And that doesn’t even include their ridiculous “Make me move” feature, which is sooo 2005.
They might as well hang out a flashing neon sign: “GREATER FOOL!! FLIPPER! HELOC!! UNDERWATER!!
Zillow is ridiculous, IMHO. At least for my part of Floriduh. I just looked up my former house, sold at the top of the market. On Zillow it is up to almost $50,000 beyond what we sold it for and houses in the area are not moving an inch. I know the buyers are also getting screwed on taxes, their insurer just hiked its rates 54% and they can’t even begin to cover the costs with rent, despite the fact they had a healthy down payment. They were probably thrilled to hear the place has appreciated in value, but if you can’t sell it, where’s the appreciation? And if you have to take money out of your pocket beyond rental income, how is than an investment?
Calgary house prices top $400K ! Land as far as the eye can see.
http://calsun.canoe.ca/News/Alberta/2007/04/02/3896315-sun.html
Maybe it’s the price of lumber. There aren’t many trees in Canada.
Hmmmm… most of the lumber in my house is proudly stamped “Made in Canada”,
fkurucz: he was kidding. ‘way more trees than people in Canada.
Well, to be fair, that’s CAD 400k. If it makes you feel any better, that’s only USD 345k
Yeah, give it a month or two…
Much of Canada is still going strong for housing esp. Alberta — the question is as all this unfolds, how long can Canada stay strong. The ties between the two economies are enormous and if the US economy continues on decline, Canada can’t be all that far behind.. can it?
Oil drives the Alberta economy, but the US is the main market for this oil and is a primary investor in oil exploration and extraction. Surely things can’t continue to be rosy and booming if they slow up in the US?
Maricopa County (Phoenix AZ) NTS
Jan 05 1297
Feb 05 940
Mar 05 1040
Apr 05 766
May 05 759
Jun 05 767
Jul 05 748
Aug 05 795
Sep 05 669
Oct 05 728
Nov 05 704
Dec 05 749
Jan 06 726
Feb 06 687
Mar 06 790
Apr 06 638
May 06 764
Jun 06 797
Jul 06 851
Aug 06 1019
Sep 06 1114
Oct 06 1238
Nov 06 1493
Dec 06 1407
Jan 07 1624
Feb 07 1577
Mar 07 1720
wow Fred that’s startling data!! Spring boom in listings is surely alive and well … how are sales?
Prices of lumber are tanking in Canada and huge lay offs in the industry as well:
http://www.canada.com/windsorstar/news/business/story.html?id=9512ae80-9e83-4178-b5d6-73083691d473&k=13992
This is one of the few times I don’t mind hearing about layoffs. How many of those trees are being made into Mcboxes that no one will live in and just get bulldozed eventually anyway? I would rather that the trees spend those 20 years enjoying life and sucking up carbon dioxide.
Forest products are the #1 industry in Canada’s RE bubbleland, British Columbia. But fear not, the 2010 Winter Olympics, jetsetters and rich retiring boomers from across Canada are going to save the market.
I last enjoyed an Olympics in 1976.
The Korporate Brobdinagians and politicians have turned it into an ugly athletic sideshow, not worthy of being watched, sadly.
Why not be the athlete, yourself?
The market is up this morning on the inflation report…It stated that
inflation is in check…Yep…That is the way I see it too!!…Nothing has gone up in price that I can see…Move along…
NEWS FLASH! From SacBee…… subprime will drag CA economy
http://www.sacbee.com/103/story/147805.html
“the impact of the housing market’s woes will become more pronounced this year, though not enough to cause a recession.”
The article calls the forecast gloomy, but I’d say it’s definately on the conservative side.
New Century files for bankruptcy.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXHDSbOcAChc&refer=home
What took them so long?
Absolutely incredible that a company that as of just 6 months ago:
- was making a profit (or at least claimed they were) of $1.12 per share
- announced a Q4 dividend of $1.90 per share
- had 7,200 employees
- had $25B total assets and $2B equity
…is now going bankrupt. That has to be about the most abrupt downfall ever of a medium-sized company.
Meant to post that as a response to tweedle-dee’s post above.
“…is now going bankrupt. That has to be about the most abrupt downfall ever of a medium-sized company.”
This is part of the new business model pioneered by Enron: Keep the appearance of perfect financial health until the very day you die of the financial version of a heart attack.
I expect a few major homebuilders to follow suit within the next three years…
Nah, Enron was faster and just as bogus.
After enron gamed California to the tune of $30 Billion or so…
Why go on living, as a company?
It’d be like hitting the powerball for $300 Million and pumping your winnings into next week’s draw.
They went out of business on purpose.
One thing the KB’s and Lennar’s have going for them is that they actually have very few employees. Most of the work was done by subs, who won’ get any gigs. The builders will layoff excess employees and go into hibernation mode, except for those dumb enough to buy excess land (for future developments) on credit.
The mega builders pulled up their stakes in northern Colorado about 2 years ago. They closed offices and laid off local employees. There are Lennar neighborhods with empty lots and no sales office (I suppose that if you really wanted a house there the Denver office could oblige you).
–
Don’t forget that mid last year it had a $55 a share offer from Morgan Stanley (or was it JPM?)
Jas
There is nary a mention of subprime in today’s WSJ, except for this extended essay, buried in the heart of section C…
————————————————————————————-
Denouement of Subprime Story Yet to Be Written
By Justin Lahart
Word Count: 886 | Companies Featured in This Article: Freddie Mac, H&R Block, New Century Financial, Accredited Home Lenders Holding, Fremont General, Beazer Homes, Lennar
There’s nothing like financial turmoil to get Wall Streeters talking like experts. But all the talk in the world won’t be enough to figure out how the trouble in subprime mortgages will end.
Subprime made a sudden leap into investors’ lexicon early this year when it became obvious that many mortgage lenders, banks, brokers and investors had badly underestimated the risks of loans to the least-creditworthy borrowers. In late February, news that mortgage lender Freddie Mac was tightening standards on such loans contributed to the steepest percentage-point decline in four years for the Dow Jones Industrial Average.
The Dow’s second-worst …
Southstar DONE:
http://www.bakersfieldbubble.blogspot.com/
http://www.economist.com/finance/displaystory.cfm?story_id=8929289
Anybody here in law school or got kids in law school . . . tell them to take all the bankruptcy and corporate finance/securities cases they can. High paying job will be there when they get out.
classes, not cases. Alzheimer’s strikes again . . .
TxChick — It is not Alzheimer’s until you don’t notice your typos anymore
“Right now I’m having amnesia and deja vu at the same time”
Steven Wright
LOL. I forget whether I read this blog for the info or the laughs.
Don’t entirely disagree. Problem is if they are finishing up their first year, well they’ve still got about 2.5 years to go. That puts them at not being able to practice (6 mos. after graduation for bar results) until 2010. My sense is at that point we will be at the end of the clean up stage, heading for a slow down in 2011-12 where fee applications are about the only remaining work to be done. Anyone want to bet we will see a new RTC? Frankly Txchick57, I’m glad to be sitting this one out. You?
Sort of but I’m reading dockets on Pacer every day now and reading pleadings. I’d love to work on some of these cases if the hours weren’t so awful.
Yep and the deadlines suck. Now I only have two deadlines. End of fall semester. End of spring semester. Just get the grades in on time…….
Besides, fee applications can be fun! Or I used to think so, especially when you go for those fee enhancements
Watched the tut-tutting on the news about one of the Anna Nicole Smith case lawyers $620,000 120 page bill tonight.
Legal accounting may stay a hot market for some time
Not my field, but I was thinking the same thing. What’s “hot” today in many fields with a substantial time lag to get involved, fades by the time someone is able to participate.
I think that there will be a follow-on recession and there will be plenty of corporate bankruptcies, maybe some arising out of this LBO bacchanalia that is happening now and there will be work for 10 years to come.
I’ll try one more time with this. Mish’s blog, Mike Morgan. Must read!
http://globaleconomicanalysis.blogspot.com/
Bungee jumping, anyone?
http://www.marketwatch.com/tools/marketsummary/
Like the IMF, the economists argue that if left untouched the imbalances could unravel in a disorderly way forced by financial markets that could trigger a global recession.
“The solution, they say, will require an adjustment in exchange rates, including a 10 percent to 20 percent depreciation in the U.S. dollar, a 30 percent increase in the Chinese yuan, a 25 percent to 30 percent rise in the Japanese yen, and a rise in the euro to $1.45 to $1.50 from about $1.30.”
“We view the current stalemate regarding policy actions as dangerous, as financial market participants are likely to change their minds at some stage about the sustainability of imbalances,” the report said.
Pressure grows to act on global trade imbalances:
http://www.reuters.com/article/reutersEdge/idUSN3034828620070401?src=040207_0809_INVESTING_comment_n_analysis&pageNumber=3
The first steps toward hyperinflation begin innocently enough…
Dollar Tarred by Tariffs But Will NFP Be Its Savior?
“The impact of tariffs on glossy paper imports is small…but the reaction in both the stock and currency markets today reflects the belief that this announcement could set a precedent towards more sanctions in the future. China may decide to retaliate by diversifying some of their big war chest of foreign exchange reserves away from the US dollar. The biggest beneficiaries would be currencies such as the Japanese Yen, Euro and British pound. “China has already started paying for Iranian crude in euros. If this move leads the Chinese authorities to curtail their stockpiling of FX reserves in dollars the change can have a monumental impact on the euro which would quickly become the dominant reserve currency….
However Friday also some positive economic news out of Japan. Overall household spending improved markedly rising 1.3% vs. 0.6% forecast. This was the single best reading in 16 months and the first time that this release showed two consecutive months of positive gains since the summer of 2005. For yen bulls this small piece of good news may the first indication that Japanese consumers are finally ready to increase spending. The Japanese economic recovery has been highly unbalanced, with the vast majority of the recent growth in the GDP benefiting corporations rather than consumers. If Household spending continues to trend positively for the next few months, BOJ will have considerably more leeway in tightening monetary policy and that in turn should prove bullish to the yen.”
Daily FX
April 2
http://tinyurl.com/362rc2
Mortgage crisis to hit holders of risky derivatives
Most hedge funds made money, but some lost; Asian investors fingered
By Alistair Barr, MarketWatch
Last Update: 10:00 AM ET Apr 2, 2007
SAN FRANCISCO (MarketWatch) — The shakeout in the subprime-mortgage business is inexorably worming its way through the credit markets that fueled the sector’s rapid growth.
As delinquencies and foreclosures rise, losses will likely hit some of the riskiest parts, or tranches, of subprime mortgage-backed securities, or MBS, experts say. Then collateralized debt obligations, which invested in some of the lowest-rated subprime MBS tranches, will feel the pain.
But who holds these securities?
Hedge funds have become big credit-market players in recent years, and many firms trade the riskiest bits of subprime MBS and CDOs.
But while some funds, such as Saye Capital’s Tranquility fund and others managed by Cheyne Capital and Cambridge Place Investment Management, have suffered, most hedge funds made a lot of money in February betting that the subprime crisis would hit, according to several investors who didn’t want to be identified.
A credit fund run by Paulson & Co. was up almost 67% in February, while other hedge funds run by Harbinger Capital Partners, MKP Capital Management and Bear Stearns also generated gains from the trend, investors said.
So who ultimately holds the risk?
http://www.marketwatch.com/news/story/whos-winning-lose-subprime-shakeout/story.aspx?guid=%7B20967453%2DD958%2D4D99%2DB40B%2D59C0E80FC036%7D
We will know when the music stops, I guess…
Interesting research from 1800’s to present shows real estate consistently lags bonds and stock market as an investment. http://finance.yahoo.com/retirement/article/102526/Will_You_Live_Off_Your_House? Wonder what the data will show in the next five years compared to the last twenty?
I think the term “lag” is misused in that article. Lag normally indicates a similar rate, just behind time-wise (e.g. lagging indicator). In this case she’s using lag to mean a lower rate.
In general I would question that data anyhow. Nearly a 7% long-term gain in stocks, inflation-adjusted? I doubt that highly.
One thing people usually don’t account for when looking at stock returns is the lost value in failed companies. Even the DJI does this - stronger companies are swapped into the index as weaker companies are culled out - this causes the index to not correctly indicate true long-term stock performance. To do that correctly you have to factor in companies that have failed.
Real Estate isn’t the best investment perhaps, but it’s not *that* much worse than stocks, in the really long term, especially when you don’t account for maintenance costs (which she doesn’t).
This is more of a topic suggestion, I guess:
How long until HOAs, COAs and other entities start reconsidering their “no rental” policies or other commercial restrictions? If you want to sell, and all of your neighbors want to sell, the best way to sell is to abolish the restrictions and covenants which make the property less desireable. If you have enough sellers in a particular neighborhood, it should be simple for them to ram a vote through to end restrictive convenants.
If I can think of this, others can, too. The quickest ones will fare the best, price-wise.
My friend in Florida is the president of his condo complex’s HOA. He can’t get a quorum of his members to even open an envelope from the HOA. Maybe if it starts to affect their ability to sell, they will focus but it ain’t happening now.
As more and more people move out, doesn’t that move the remaining folks closer and closer to a quorum?
We keep hearing stories about largely unoccupied subdivisions…
Technically, I suppose since ownership doesn’t transfer or it goes back to the bank, the banks become voters. If some enterprising soul can convince them to furnish proxies, it could work…
–
Eat Your Heart Out, Californicators!
Forbes Magazine’s Top 10 Best Places to Live and Work
10. Indianapolis, IN
Fayetteville, AR
Durham, NC
Nashville, TN
Phoenix, AZ
Knoxville, TN
Boise, ID
Houston, TX
Raleigh, NC
1. Albuquerque, NM
Jas
I always file those “top 10 places to…” in the “different strokes” circular file.
Houston #2? Indianapolis #10?
Uuhhh…
no
I accidently brought drip and dry clothing to Houston…
Seldom dry.
Tangent alert:
Why do you suppose there were relatively few people located in the Southwest, traditionally, until 30 years ago?
Air Conditioning.
Things Change
And Change Back
Two states that did not fair so well in the rankings are California and Florida. Despite having a combined 38 metro areas as defined by the OMB, neither state has an area in the top quartile.
The highest-ranking metro in these sunshine-filled states is the Santa Ana-Anaheim-Irvine area in California, which placed 58th thanks to low crime and a very educated labor force.
The problem is runaway business costs. Business costs in every metro area in Florida are higher than the national average. In California, the situation is even worse. Of the 25 most expensive places to locate a business in the U.S., 20 are in California, thanks to high taxes and worker’s compensation costs. (No one in the Golden State is getting a break on labor or office space costs either.)
Not that I don’t like picking on California and Florida, but Forbes leaves me scratching my head a lot with their lists. Their criteria and ranking of that criteria is not well explained, but from what I can tell they do a lot of things like ranking percentage increases without accounting for absolute values. For example, if the number of jobs in Des Moines increased by 15% and the number of jobs in NYC increased by 5%, Des Moines would be ranked higher even though the actual number of new jobs in NYC is an order of magnitude larger than Des Moines. It also doesn’t appear that they consider whether the new jobs were low paying or high paying.
In the “How Ironic is THAT?” category:
Maytag hires former real estate agent as new Maytag Repairman:
http://news.yahoo.com/s/ap/20070402/ap_en_tv/maytag_repairman
career advancement
America:
This is what your heroes used to look like…
(a local boy did well)
http://en.wikipedia.org/wiki/Bob_Mathias
I don’t know if this is old news, but I just noticed that Housing Tracker has got a new entry:
http://www.housingtracker.net/affordability/
where you can see affordability, rent ratio etc back to 1997.
Mortgage/Rent in Oakland and San Francisco is at 1.9 - and I suppose a local realtor will try, once again, to tell me that’s sustainable.
Nice thread on BO brokers complaining about DEAD MARKET
http://forum.brokeroutpost.com/loans/forum/2/110094.htm
I was wondering out loud to my appraiser friend “Why do brokers exist at all? If they make 16k per deal why wouldn’t the bank want that”?
He ‘jokingly’ said ‘its the fraud premium. Its worth 16k to have a broker commit loan fraud and take the liability’.
Scary but true. Now that the wink-wink stated crap wont sell brokers will be unneeded and back to simply preying on suckers. (versus preying on suckers and committing massive fraud also).
Hello All:
Today I decided that I want to take the rest of my 401K out of the stock market, but I don’t know what to do with the money. The intermediate-term bond fund that is available to me is PIMCO, which invests primarily in debt securities. From the conversations I’ve read on this blog, I gather that such a fund would be extremely vulnerable over the next few years. So what do you guys think, should I go entirely with the money market fund? Am I way overreacting?
The other bond fund available is a government one, but it has been doing poorly and I don’t know why. Is it because China wants to sell its holdings?
Any advice/input would be greatly appreciated.
Thanks,
Big V
Russ Winter and…
The Save the Sheeple ‘bah, bah, bailout’ Movement:
http://wallstreetexaminer.com/blogs/winter/?p=575
this CNBC guy is an absolute clown. they can’t think outside of the box. you can’t get them to have some imagination. they are just permenantly bullish on US assets. why wouldn’t they be, the markets have gone up for nearly their entire lives. the 2000 crash and subsequent “recovery” has just emboldened them.
http://www.europac.net/Schiff-CNBC-3-30-07_lg.asp
Despite the unjustafiably high compensation paid out by Wall Street, the Hamptons real estate market continue to die. Rentals are up because nobody wants to buy and owners are running for the exits. The under $3,000,000 tier is in the most trouble. A lot of wannabee investors are screwed.
Slump in New Houses
Town building permits were at a 16-year low
By Aurrice Duke
Morgan McGivern
There are a number of houses under construction, but 2006 saw the lowest number of permits issued for new houses in 16 years, according to the East Hampton Town Building Department.
(03/29/2007) The rhythmic whirl of power tools appears to have quieted some on the South Fork. Recent building department statistics reveal sluggish times for the building industry, as new housing starts declined in a trend that is being felt across much of the country.
The East Hampton Town Building Department issued 153 permits for new houses in 2006, compared to 225 in 2005. In Southampton Town, 253 permits for new houses were issued in 2006, compared to 371 in 2005. The numbers represent a drastic drop-off from the late 1980s, when over 500 permits were issued some years.
The 2006 figure for East Hampton was the lowest in 16 years, according to town records. The last time the number reached such a low was in 1963, when 152 permits were issued.
In Southampton Town, whose records are not as accessible as East Hampton’s, the number of permits for new houses was 348 in 2004, 343 in 2003, and 489 in 2002. The number was 11 in February of this year and 10 in January, in contrast to 20 and 23 for the same months in 2006.
For East Hampton Town the number of new house permits was 250 in 2004, 178 in 2003, and 204 in 2002. The total number of permits issued by year, which includes additions and renovations as well as new houses, was 1,412 in 2006, 1,781 in 2005, 1,705 in 2004, 1,580 in 2003, and 1,564 in 2002.
The decrease in new house construction reflects the limited supply of land, Donald T. Sharkey, East Hampton Town’s chief building inspector, said recently. “People are now upgrading rather than building new.”
The housing trend coincides with the rate of population growth over the years, according to the Long Island Power Authority’s annual Long Island population survey. The latest survey was released last week, on March 21.
The study estimated East Hampton Town’s population at 21,399 as of Jan. 1, 2006, which was only .62 percent above that of 2005, which was 21,268. The population figure for Southampton Town was 58,876 as of Jan. 1, 2006, a modest, .53-percent increase over that of 2005, which was 58,564.
Typically, the population in both towns has grown more markedly. Between 2004 and 2005, for example, the population went up 1.54 percent in East Hampton, from 20,945, and 1.57 percent in Southampton Town, from 20,945.
In East Hampton, the population was 20,275 in 2002, a 1.76-percent increase above the previous year’s; in 2003 it was 20,611, representing a 1.66-percent increase, and in 2004 it was 20,945, or 1.62 percent more than in 2003.
In Southampton Town, the population figures were 56,254 for 2002, representing a 1.35-percent rise, 56,991 for 2003, a 1.31-percent rise, and 57,659 for 2004, a 1.17-percent rise.
Aside from a decrease in population growth, other factors that could account for a slowdown in new construction include the economy and possibly the rising costs of some raw materials, such as copper and cement. Typically, warmer temperatures will bring upticks in the building industry.
“I’m taking a hit, especially in the pocketbook,” said Richard Gherardi of Sand Dollar Development Corporation of Springs, referring to increasing materials costs.
Construction cost increases slowed markedly in the second half of 2006. But that relief is likely to be short-lived and may have ended already, according to Kenneth Simonson, chief economist for the Associated General Contractors of America in a press release. Mr. Simonson predicted that, by the end of 2007, the cost of construction materials could rise again at a 6 to 8-percent rate, with wages rising at a 5-percent rate.
He pointed to greater volatility in the prices of petroleum, concrete, and metals, which implies that highway and other heavy construction are more likely to experience large price jumps than the residential construction industry. However, he warned, “even building construction is at risk of much higher materials cost increases than the general rate of inflation.”
“Cement has risen steadily and, while oil prices have dropped, I’m still getting charged fuel surcharges,” Mr. Gherardi said. “Some vendors are taking advantage.”
However, on eastern Long Island, the lack of available land continues to wield influence.
“It’s not like we are in Las Vegas, where we can build out and out,” Mr. Sharkey said.
Nationwide, builders started 1.4 million new houses in January 2007 — a nearly 38-percent decrease from last year’s 2.3 million for the same month.
http://www.easthamptonstar.com/DNN/Default.aspx?tabid=1682
From Business Week:
Say goodbye to Nantucket and the Hamptons. Say hello to the next new big luxury markets of Minnesota, Maine and Virginia.
http://tinyurl.com/ytuhof
April 2, 2007, 12:00AM EST text size: TT
The New Geography of Luxury Real Estate
Goodbye, New York; hello, Minnesota? During the last real estate boom, high-end home markets turned up in unexpected places
by Maya Roney
If you could spend a few million on a modest Manhattan condo and a cozy (read: tiny) Hamptons shack, or put the same amount toward a penthouse in Minneapolis and a lakeside mansion in nearby Wayzata, Minn., which would you choose?
People continue to sacrifice size and quality for location and salary. That’s why states such as New York and California still have the hottest markets for luxury homes. And the top addresses on Fifth Avenue and in Bel-Air just keep on rising in value despite the spreading malaise at the lower end of the housing food chain. But that doesn’t mean that luxury real estate isn’t continuing to appreciate in other areas as well.
“The hot luxury markets are moving around, based on where the lifestyle is wonderful and the economic fundamentals are solid,” says Laurie Moore-Moore, president of the Dallas-based Institute for Luxury Home Marketing. “Today, we’re looking at a whole different group.”
Click here to see a roundup of America’s emerging luxury real estate markets. http://images.businessweek.com/ss/07/04/0402_luxury_emerging/index_01.htm
I wish they’d stop building million dollar stone faced houses along my commute in the backwoods of Southlake, TX. Squeezing past the construction trucks in the morning is getting harder.
This is the remnants of the housing boom in action though. All the older houses are hundreds of feet back in the trees. These new ones are 30 ft from the road.
I know this might get buried in all the comments, but if anyone can post some info and guidance on Reno, I’d appreciate it. Schools….areas to avoid…areas to consider…basic stuff. I’ve got a friend who’s moving there due to job transfer and is pretty worried about the housing market. They don’t trust, with good cause, relitters……
Thanks in advance
General advice: Rent! That’s nearly always good for the first year to figure things out. For the current Reno market, it should be good for many years. You can tell your friend that their is no danger of getting priced out by renting in the beginning, rather the opposite: getting priced in by waiting. (My exposure to Reno is not direct though, only through friends with family there.)
Nice graphics (MAPPING THE PROBLEMS IN SUBPRIME):
http://www.financialsense.com/fsu/editorials/iacono/2007/0402.html
Here’s a copy of the e-mail I sent to my state senators:
Dear Senator Feinstein:
Please do not support the efforts to bail out mortgage debtors with my paycheck. As a responsible citizen, I do not feel it is right for you to ask me to pay for other peoples’ houses, even while I am struggling to save money for my own. Such action would only cause the cost of housing to remain artificially high, thereby prolonging the years that many hardworking families have to waste renting subpar accommodations while saving every last dime they earn to rack up a down payment.
I appreciate the goal of helping people to access home ownership, but the proposed debt bailout would only reward people who acted irresponsibly, while punishing people who worked hard and diligently managed their finances by not buying houses that they could not afford.
The housing market has begun a process of correction. This is necessary to keep housing affordable in the long run. Let the market correct so it can achieve stability again, and so that people will be able to save and afford the house of their dreams over time. That really is the true American Dream.
Sincerely,
Your Name
San Jose, CA
Nice letter. Good for you, Big V!!!
Possible way of government bail-out
How could the government organize a bail-out of lenders without much ado? By using an existing federal authority and relaxing their rules. In his column “Mortgage woes? Where to turn”, the REIC writer Kenneth Harney writes (with my commentary in parentheses):
There is a mortgage source that is actually expanding its business nationwide for credit-impaired and first-time home purchasers. That source is the golden oldie of the mortgage arena — the Federal Housing Administration (FHA), which recently has seen a doubling of customers refinancing out of private, subprime loans into its insured mortgage programs. (When private funds dry out, the government better pours money it doesn’t have into the housing market to keep it going.)
Bipartisan legislation to raise the loan ceiling (of FHA loans) to the full Fannie Mae-Freddie Mac limit — currently $417,000 — is expected to be introduced on Capitol Hill shortly, and appears to have support for passage this year. (Those limits are certainly raised to keep housing affordable ;-))
Down payments (for FHA loans) generally are 3 percent, although the forthcoming congressional legislation is expected to lower that threshold. (3% wasn’t low enough?)
FHA developed a reputation for bureaucratic red tape, slow processing and excessive rules on mandatory fix-ups of properties prior to sale. (The FHA seems to have insisted on healthy underwriting standards, but congress could change that, of course.) The FHA also did not forge ties with the fast-growing mortgage brokerage industry, which now originates nearly two-thirds of all new home loans. (An industry who grew fast by mispricing risk - FHA better bail those out now. Congress owes them - lots of campaign money.)
FHA is cutting out the red tape, speeding up processing and is eager to expand its business to credit-worthy borrowers who are willing to put a little of their money into home purchases. (The FHA should behave like an easy money lender, with government assuming the losses and private lenders keeping their gains.) It’s worth a look.
http://www.startribune.com/417/story/1087758.html
(Indeed, worth a look for bailing out lenders - government enables easier refinancing loans; lenders get rid of their toxic waste; many borrowers default later anyhow, of course, because they could never afford the house; government assumes losses - does that sound like a plan?)
> Down payments (for FHA loans) generally are 3 percent, although the forthcoming congressional legislation is expected to lower that threshold.
This made me angry - reducing downpayments is bad public policy: People buy houses who haven’t shown a capability to put money aside on a regular basis. People who have no equity in their houses are walking away more easily, leading to neighbourhood blight. People cannot move to a better job, because a declining market put them underwater unexpectedly.
I’d rather see “GI” loan assistance. I’m for assistance for someone who’s already paid our bills.
VA loans are a different story. Service members have a low salary and, therefore, lower savings, but they are a preselected bunch. I would not like to see VA loans available for everyone.
http://put.elpasoco.com/NR/rdonlyres/3BE6A35A-85BE-441F-9D01-EB8DCED68F2F/0/ptstatistics.htm
Colorado Springs foreclosures hitting 17-year highs - up 45% YOY. (Scroll down to see escalating monthly carnage.)