April 5, 2007

Bits Bucket And Craigslist Finds For April 5, 2007

Please post off-topic ideas, links and Craigslist finds here.

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Comment by jmf
2007-04-05 04:39:32

China Raises Banks’ Reserves Sixth Time in 10 Months


Live now, pay later / payday lender


Comment by kahunabear
2007-04-05 08:15:25

Great Blog !

Comment by geeah
2007-04-05 04:43:17


Was “Buy Now or Be Priced Out Forever” actually used in ads, etc? Or was it simply the sentiment of things during the run-up? Remember, I was late to this party.

Comment by passthebubbly
2007-04-05 05:03:23

It’s being used in the NAR’s ad campaign RIGHT NOW. Not those exact words, but the same concept.

Comment by eastcoaster
2007-04-05 05:37:34

From the website pricedoutforever.com (can’t verify these quotes, but don’t doubt they were said):

“As prices begin to rise again buyers who do not act now could be making a costly mistake.” National Association of Realtors®

“As a first-time buyer, should I wait until prices go lower to buy a home? No. If you continue to wait, you may never be able to afford to get into the housing market.” National Association of Home Builders

Comment by Michael Fink
2007-04-05 05:53:27

Perhaps that is true, assuming a static supply of homes. However, as KB, Toll, Bezer, and all the rest showed us, the supply of homes is anything but static.

I have gone through this argument several times before, and I will save my breath, as I think everyone here understands it. However, as first time buyers are the only people who can actually make inventory “disappear” (as others just buy one and sell one), if first time buyers are priced out forever, inventory levels can do nothing buy remain flat (assuming no more homes are built) or rise.

Such an idiotic argument, but very effective on the sheeple.

Comment by chicagobubbleblog
2007-04-05 06:44:59

Investors can make inventory “disappear” too but obviously those people are making inventory “appear” right now.

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Comment by aladinsane
2007-04-05 07:04:11

Well, there’s always the Lancaster way…

“The housing development under construction was an abandoned construction project in Lancaster, CA that succumbed to the housing market bust of the early 1990s. The city allowed the film company to film when they agreed to demolish it when finished…”



Comment by patient renter
2007-04-05 12:16:19

Wow, I didn’t know that these stories of abandoned developments were serious.

Comment by thekk
2007-04-06 00:21:58

but remember, they aren’t making any more land….

that was another popular refrain

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Comment by Shame On Me, Manassas
2007-04-05 06:40:49

Maryland/Virginia suburbs. In 1979 I started looking for a new home. As the year progressed, prices crept upward, and interest rates rose. At the time, I thought I was about to miss my last chance to afford a home, and so did a lot of other people. In February 1980, I considered a house that was 30 percent above what I saw in 79. Interest rates had risen from 9.5 to 12. In the sales office was a sign, “If you think this is a bad time to buy a house, wait ’til next year”. I took the bait, and signed a contract on Saturday. The following Monday I get a call, “Go to the bank right away and apply for the loan. They are threatening to pull their commitment at 12%”. By the time I got there on Tuesday, the loan officer was ready to just reject me outright, they wanted out, and my contract would have fallen through. I could have just walked away with my deposit. Instead, I convinced them to proceed, and the loan closed in August. By then, the market was at a complete halt, rates where up to 14%. I sold the house 4 years later for 4% less, and paid a 6% commission. To this day, I will always remember that sign. I could have saved 600 per month in those 4 years, and bought a house for less.

Comment by patient renter
2007-04-05 12:17:53

Excellent post. All prospective home buyers should know this.

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Comment by solvingadream
2007-04-05 06:57:18

The comments by the NAR are standard “fear of loss” sales tactics that sales slicks use.

Comment by House Inspector Clouseau
2007-04-05 05:40:21

it wasn’t in ads, but it WAS in news articles (even worse).

In San Diego during 2002-2005, you would have newspaper reports with headlines that said “Home prices raise an average of $1,000 per day”.

Then in the article, they would quote the NAR who would say “People are realizing that San Diego is a world class city, and obviously everybody wants to live here. That is reflected in the pricing. Soon San Diego will be a place where only the rich can buy, and the rest will have to rent. Thus, now is the best time to buy before it’s too late”.

Even now they have an ad on the TV where a couple says “We’re really glad we bought this house now, because if we waited we wouldn’t have been able to get it!”

so the short answer is:
the NEWSPAPERS were spewing the “buy or be priced out forever” mantra.

ANd of course, there was David Lereah’s book where on the cover it shows a house taking off out of reach of a family.


Comment by aladinsane
2007-04-05 05:43:46

The death of the newspaper can’t be far away and soon enough.

It hurts me to say this, as we’ve been friends on a daily basis, for so long now.

Comment by flatffplan
2007-04-05 06:20:45

wow, his book price is rising - a new index

Comment by OB_Tom
2007-04-05 09:59:09

No, that book has a picture of a family about to step in under a falling house and get crushed.
(That’s what DL will say at the congressional hearing next year)

Comment by Jerry
2007-04-05 12:16:36

News articles in San Diego finnest city.. today San Diego developer “McMillin Company could not provide a list of which homes were sold through the lottery” Just another example of corrupt San Diego officials in bed with developer as developer gave choice homes to relatatives and friends as first picks. San Diego is no different than other places and after living there for 30 years[moved in 2005] had to leave. Not worth living in city where “cover up” is the norm. There are other places where the sun shines.

Comment by OB_Tom
2007-04-05 13:09:02

Just like the Sunroad office tower issue (*). The Mayor has stated that “he was not sufficiently aware of the Sunroad project” so he was unable to make any comments.

(*) The developers are drooling at the thought of closing Montgomery Field airport and develop it. If they let the tower stand, then there are two additional, higher towers in the pipeline. Soon it’ll be “too dangerous” to let planes take off over developed land.

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Comment by GetStucco
2007-04-05 06:37:48

I had a polite argument with two SoCal real estate investors yesterday evening, who were urging me to buy real estate now.

Arguement 1: “You have overthought this.”

Arguement 2: “You can never know the right time to buy.”

Arguement 3: “If you buy now and the market dips, you can ride out the cycle.”

Arguement 4: “No matter what the market does, if you start buying real estate now and renting it out, you will be a millionaire in thirty years.”

I gave up quickly, as I learned long ago that it is impossible to reason with facts and logic against adherents of the SoCal real estate religion.

Comment by REhobbyist
2007-04-05 06:58:22

Did they get anything at all that you said to them? Have they been reading the newspaper/watching tv lately? Even my husband, who could care less about things financial, has learned about the subprime mess - you can’t avoid it! Or maybe your acquaintances mistakenly think we have reached the bottom?

Comment by GetStucco
2007-04-05 07:05:28

Interestingly, yes. One of the guys acknowledged that subprime was a problem, but conjectured that a bailout would be offered in the form of the chance to refinance into a fixed rate loan. He assumed the taxpayer would be asked to foot the bill for this “workout.” Given the rising tide of foreclosures, it is hard to find evidence to support his belief.

The other argument he made (which I liked) is that when the market bottoms out, it can very quickly turn, before you realize it has bottomed. But I told him I would at least wait until everyone was saying “real estate is a terrible investment” before even thinking about buying.

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Comment by Army No. Va.
2007-04-05 08:19:32

It’s unlikely the RE market will “quickly turn” positive. It hasn’t in previous busts. The lowerst part of the bottom won’t last too long though (perhaps 1 year). That is, when you can get houses for 10-20% down and the monthly payment is 20-25% less than the rental income.

Comment by patient renter
2007-04-05 12:20:51

This is not true. As others have pointed out, real estate peaks tend to be sharp and pointy (on a graph), but the bottoms and nice and flat, allowing plenty of time to get in if you want. Look at the Shiller graph.

Comment by sf jack
2007-04-05 14:55:27


And it is several years away in the “earliest” of locations.

Comment by Army No Va
2007-04-05 20:03:22

The time you can get easy positive cash flow deals with 25% buffer is not that long at the bottom. Investors (strong hands that kept their powder dry) begin to wake up pretty quick and start to buy.

But the bottom where cash flow is only slightly positive (5%) will last quite a long time.

Comment by Hoz
2007-04-05 07:14:43

Where they urging you to buy real estate so that they could get out? LMAO

“The world is full of strange phenomena that cannot be explained by the laws of logic or science. Dennis Rodman is only one example.” Dave Barry

Comment by aladinsane
2007-04-05 07:39:19

I’m an acquaintence of d.r.’s forrmer agent…

He turned a sow’s ear into a silk purse and back again.

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Comment by zeropointzero
2007-04-05 07:36:45

Offer to go in for 2 % of their next little deal. The hundreds (instead of tens of thousands) of dollars you lose will be worth the entertainment value of watching them spin their losing proposition.

Comment by Housing Wizard
2007-04-05 08:39:27

IMO the REIC should not be giving investment advice .Realtors are suppose to show you houses you ask to see and show property within the qualifying range of a potential buyers real income . When did the REIC decide that they were there to give investment advice on future market trends ? In a excess inventory /declining market with alot of foreclosures coming down the pike it’s a risk to buy ,simple as that .
If the interest rate go up the prices will go down because it all goes back to affordability and supply and demand ,(if the lender really do qualify ).
The lenders were putting people into homes they couldn’t qualify for and that created a false inflated market that has to go down . Talk to people who bought in 2004-2006 and ask them if buying “now” was the right decision .

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Comment by Backstage
2007-04-05 10:05:45

When did the REIC decide that they were there to give investment advice on future market trends ?

The instant they found that it might help close the sale, regardless of the truth, reliability, or ethics of the advice.

If they found that wearing a Wonder Woman costume worked better at making them a buck than investment advice, on with the costume and off with the advice.

Comment by Matt_in_TX
2007-04-05 20:55:35

The invisible vehicle will be useful when the repo guys come.

Comment by arroyogrande
2007-04-05 09:12:36

“Arguement 1:Arguement 2:Arguement 3:Arguement 4:”

Those exact same arguments were used right before the end of the stock bubble. Argument 4 is even more insane than with stocks, as stocks don’t keep eating you every month with negative cash flow.

Comment by lunarpark
2007-04-05 09:53:07

A millionaire in thirty years? I can’t wait that long.

Comment by sf jack
2007-04-05 14:56:51

LOL - yes, very good point!

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Comment by PricedOutInUtah
2007-04-05 13:32:06

“Can you afford to wait to buy a home in Salt Lake City? Not with the current pace you can’t.”


If that guy’s blog isn’t a camouflaged advertising mechanism I don’t know what it is.

The “housing boom” is still alive and well in Utah. Very discouraging.

My wife and I took a Homebuying 101 class (community night class sort of thing) at a local school a couple months ago, and the realtor that taught the class continues to send her propaganda to my email inbox saying buy now! buy now! If I had known then what I know now I would not have taken that class.

Comment by seattle price drop
2007-04-05 14:12:00

Definitely beware the “Homebuyers Classes”. In Seattle, they were just thinly disguised pitches for getting first time homebuyers into WAY more house than they could afford.

Comment by ByeByeFL
2007-04-05 04:43:51

Foreclosure Location of the Day: Houston, TX (Harris County)


Comment by BrownBear
2007-04-05 04:51:50

What on earth is that 2.5 million dollar property doing in the middle of that lot!! There must be an interesting story there.

Comment by txchick57
2007-04-05 05:03:41

It’s in Humble, which would be similar to Queen Creek in Phoenix. Your chance of selling a $2M property out there would be next to zero so if you can’t pay for it, hello foreclosure.

Comment by ByeByeFL
2007-04-05 05:44:43

Here’s an example of what you get for a +1 million dollar house in Humble:


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Comment by Lou Minatti
2007-04-05 05:49:31

I guess I was wrong. There are rich people in Humble.

Comment by JP
2007-04-05 06:14:46

$2.5M in Humble. How ironic.

Comment by aladinsane
2007-04-05 06:18:27

Soon to be eating humble pie?

Too much irony too soon, in the a.m.

Comment by palmetto
2007-04-05 06:46:00

Be it ever so Humble, there’s no place like home.

Comment by zeropointzero
2007-04-05 07:38:35

And, conversely — be it ever so homely, there’s no place like Humble.

Comment by Mole Man
2007-04-05 07:32:27

It’s a Zen thing. There is no $2.5 million home in Humble, grasshopper.

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Comment by stuckinhouston
2007-04-05 08:47:06

It is a package of 16 homes on 2 streets, built by Meridian Homes, in 2003……….

Comment by Lou Minatti
2007-04-05 05:30:04

I can’t imagine any residential property in Humble being worth that much. The rich people in Houston do NOT live in Humble.

I suspect the listing is wrong and should be for a commercial property. That I could see, and it’s probably related to expansion for freight carriers at IAH.

Comment by sillysally
2007-04-05 07:52:31

Sweet some Houstonians. I have a question for ya’ll. My parents recently bought a house in Tanglewood for 1mil+, how do you think this area is going to hold up. Do you think that the reputation will save the neighborhood?

They didn’t do any funny loans and had a lot of cash from paying off their previous home, but I can’t see them living there for more than 5 years.

Comment by Michael Viking
2007-04-05 09:06:44

Is anybody here a member of foreclosure.com? Is it worth it? It seems like it would take a lot of effort combined with a special type of character to make money on foreclosures and preforeclosures. I’d appreciate any advice, stories, etc. on making money belonging to a site like this.

Comment by arlingtonva
2007-04-05 04:44:08

Q. What do the top 20 creditors of the now bankrupt New Century Financial and the top 20 campaing contributors to Senator Dodd have in common?

A. They are mostly the same people

New Century creditors:

Senator Dodd campaing contributors:

“The people paying the price for the regulators’ inaction are homeowners across our country struggling to maintain their piece of the American Dream,” Dodd said. “Homeownership is supposed to be a ticket to the middle class. Predatory lending reverses that trip.”

Yes as a Senator you should have regulated Goldman Sachs, Merril Lynch and your other homeboys, but now that it’s April of 2007 it’s a little bit too freakin late to hold hearings and act like you care!

Comment by James Bednar
2007-04-05 05:26:25

Great post.


Comment by jmf
2007-04-05 05:41:15


Comment by WT Economist
2007-04-05 05:47:12

Holy smokes. These guys have to know that there are lots of information vigilantes out there.

Comment by spike66
2007-04-05 06:24:52

“These guys have to know that there are lots of information vigilantes out there.”

I think not. People like Dodd and Hillary live in their own bubbles, surrounded by aides and advisors. They’ve probably heard of bloggers by now, but I am sure they assume it’s a small, marginalized crowd. It’s why these “leaders” are continually behind the curve.

Comment by GetStucco
2007-04-05 06:39:38

Er, Dodd has a blog…

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Comment by Hoz
2007-04-05 06:49:18

“Politicians are the same all over.
They promise to build bridges even when there are no rivers.”
– Nikita Khruschev

Comment by spike66
2007-04-05 07:11:39

“Er, Dodd has a blog…”

You mean one of his younger staffers mans a blog with Dodd’s name on it.

Comment by GetStucco
2007-04-05 07:20:30

Good point! Last year I was at a public presentation by two prominent UC Berkeley professors (Orville Schell, Dean of Journalism, and Micael Nacht, Dean of Public Policy). The median age of the crowd was maybe sixty, with very few under 35 in attendance. One of the latter raised the question of blogs in the Q&A session following the talks, and it seems that almost nobody in the audience ever read or posted to them, including the presenters…

Comment by aladinsane
2007-04-05 07:42:23

Intelligent word of mouth is what we are all about.

Comment by GetStucco
2007-04-05 06:24:45

Why doesn’t Senator Dodd forget about the public perceptions angle (which is likely to blow up in his face thanks to the point you raised) and just work out a bailout behind the scenes? Since he has his own blog, maybe it will dawn on him that blog commentary may doom hope for milking positive publicity out of bailout out his friends in the investment banking community…

Comment by dude
2007-04-05 06:44:13

I posted those links to his blog. We’ll see how long they stay up.

Comment by aladinsane
2007-04-05 06:49:00

information bites.

Comment by lavi d
2007-04-05 09:52:09

posted those links to his blog. We’ll see how long they stay up.

I took a snapshot of the page, just for the hell of it.

Comment by REhobbyist
2007-04-05 07:00:59

He’s pathetic. Does he really think that anybody will vote for him for president on any issue?, let alone this one.

Comment by hwy50ina49dodge
2007-04-05 07:32:00

“Kathleen Brown, who is also a Goldman Sachs executive, left late last Friday without any explanation”

Not even the: “ I need to spend more time with the family”?

Comment by But_Im_Not_Dead_Yet
2007-04-05 11:35:59

No, that’s not the reason. Her reason for leaving is: “I need to spend more time with my money.”

Comment by davidcee
2007-04-05 08:30:51

“Yes as a Senator you should have regulated Goldman Sachs, Merril “Lynch and your other homeboys, but now that it’s April of 2007 it’s a little bit too freakin late to hold hearings and act like you care!”"

Could it be that Pulte, KB Homes, Toll and all the other HB’s have given our “for sale” politicals and their Wall Street money managers really sweet “deals” on home purchases for themselves and their families. What a beautiful way to “buy” access. Kickbacks without a paper trail. Lets say you are the manager of a Mutual Fund or Pension or Crammer, and your daughter needs a nice house in a nice neighborhood. You meet Robert Toll at a party and he just happens to mention this in friendly converation.
Do you think Mr. Toll might relay this info to PR person to make sure they ‘please” Mr. Congressman, Mr. Mutual Fund and Crammer?
And how would you feel about Mr. Congressman when your daughter is beaming about the brand new house she could never afford before you went to that party.

Maybe Karl Marx was right!

Comment by PS
2007-04-05 08:57:08

Senator Dodd was in the minority and basically powerless from January 2003 - January 2007. Not that he would have done anything if he did have the power but I don’t think it’s fair to criticize him for not doing anything until now, this is his first opportunity to do something.

My main concern is that he is building up to a bait and switch. First he holds hearings on the poor FBs and builds up momentum that “something must be done”. Then he reluctantly comes to the conclusion that nothing can be done directly to help the FBs so we’ll have to help the banks(literally, his constituents) instead.

Comment by Backstage
2007-04-05 10:30:55

I’m no fan of this nitwit, but if you think that banks giving money to campaign of the Chairman of the Senate Committee on Banking is some kind of smoking gun, you need to take politics 101.

Comment by Big V
2007-04-05 10:40:35

Hey Arlington:

You should send this information to your local paper.

-Big V

Comment by GetStucco
2007-04-05 23:39:16

Here is a bailout suggestion for Senator Dodd: Create an information service (maybe even start a blog) to help foreclosed buyers locate attorneys starting class action suits against lenders who defrauded them. If the lenders are already out of business, the information service could help direct the class action attorneys to the hedge funds and investment banks that were the kingpins behind these deals. Dodd could collect his godfather protection fee from the class action attorneys instead of the banksters.

Comment by palmetto
2007-04-05 04:53:33

Open letter to Hank Paulson regarding Wall Street shenanigans. Wonder if he’ll ever answer?


Comment by GetStucco
2007-04-05 06:21:07

“Don’t get me wrong. I think rigging the financial markets is a good thing when the nation’s security is at risk.

If you want everyone to be aware that Treasury is on the ball and ready to come to Wall Street’s rescue, why not turn over the documents I’ve requested?”

Sadly, I believe Crudele’s second FOIA request is likely to be ignored. But perhaps I can at least take a stab at addressing the issue he raised. The whole premise of the current presidency since 9/11 is that we are a nation under attack from a global band of terrorists. Hence we are, indeed, at risk, and by Crudele’s own logic, the PPT should have cart blanche to manipulate the markets as it sees fit.

Comment by GetStucco
2007-04-05 06:32:25

Scary follow on thought on a CIC’s incentives to start a war: Face a security threat, and maximize presidential discretion…

Comment by palmetto
2007-04-05 06:42:53

A lot of this is scary, GS. I’m so angry right now I can’t even think straight, some days. Our tax dollars are being used to prop up Wall Street, not to mention corporations like Blackwater starting their own private military bases in places like Portrero, in San Diego Country.

Paulson is scum, IMHO.

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Comment by Mole Man
2007-04-05 07:53:58

That seems reactionary. While Paulson may be doing bad things possibly for sinister reasons as you seem to be asserting if I read your post correctly, to his credit he has being touring not just nationwide, but globally, talking about the seriousness of the financial trouble the US is in. His segments on a recent 60 minutes report were actually quite candid and as such rather scathing.

Comment by OB_Tom
2007-04-05 10:08:42

The really scary gossip on conservative blogs is the 3rd presidential term talk. You know, if there was a terrorist attack on Americal soil shortly before the election. We’d obviously need continuity and keep the chief commander in the White House for another 4 years, rigth?

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Comment by Backstage
2007-04-05 10:45:06

Just how does a president/administration with a ~33% approval and no control of congress change the Constitution in less than 2 years?

Coup? This administration is many things, but it is not anti- democracy. You think the military would back this administration in a coup? Even in the wake of an terrorist attack, that’s simply insane.

I think that sort of talk says more about conservative opinion about keeping political control after 2008 than about reality.

Comment by OB_Tom
2007-04-05 10:49:37

Roosevelt served 3 terms.
Are you sure there’s not a paragraph somewhere deep down in the Patriot Act the supreme court could use as the CYA? (I hope there isn’t).

Comment by Kathy
2007-04-05 13:56:44

Twenty-second Amendment to the Constitution:

Section 1. No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once. But this Article shall not apply to any person holding the office of President when this Article was proposed by Congress, and shall not prevent any person who may be holding the office of President, or acting as President, during the term within which this Article becomes operative from holding the office of President or acting as President during the remainder of such term.

Section 2. This Article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of three-fourths of the several States within seven years from the date of its submission to the States by the Congress.

I wouldn’t worry about it.

Comment by Matt_in_TX
2007-04-05 21:02:04

Hmm, doesn’t say anything about hanging out at the Whitehouse and partying for another 8 years.

Comment by BubbleViewer
2007-04-05 06:48:29

The strategy is well-known: Problem - reaction - solution.
The govt creates a problem (terrorism). The public reacts. The govt. offers a solution that invariably takes more of our rights away and lines the pockets of the very people who created the problem in the first place.

Comment by GetStucco
2007-04-05 06:51:56

H. L. Mencken said it best:

“The whole aim of practical politics is to keep the populace alarmed and hence, clamorous to be led to safety - by menacing it with an endless series of hobgoblin, all of them imaginary.”

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Comment by Lou Minatti
2007-04-05 04:59:51

O Flipper, Where Art Thou?

I stole the photo from here, so thanks to whoever submitted it.

Comment by mrktMaven FL
2007-04-05 05:35:59

The chickens are coming next door to roost!

Comment by Matt_in_TX
2007-04-05 21:03:58

This is what will kill the housing bubble. Our house in the third world has chickens on 4 sides and a 5:30 AM fish seller in the street. I wouldn’t wish roosting chickens on any McMansion dweller.

Comment by wmbz
Comment by WT Economist
2007-04-05 05:14:55

Yup, the WSJ says inventories rose from February to March by an above average amount, with a particularly large increase in LA.

I guess it’s spring now, and we’ll see how it goes. Did we used up the knife catchers last year? If is the entire U.S. supply here in NYC?

Comment by Craven Moorehead
2007-04-05 05:32:30

According to Ziprealty, inventory in my Eastern Massachusetts town is presently about where it was in late April, early May of last year. Many of the same homes that were for sale last spring have reappeared with new MLS numbers and lower prices.

Comment by dude
2007-04-05 06:09:45

As of yesterday 93552 inventory is up 75%. 84604 is up 64%. Last year 71% and 43% respectively so there is still not just increase but acceleration in inventories.

Comment by GetStucco
2007-04-05 06:44:53

It seems as though San Diego hit a record low inventory about three years ago this time — somewhere in the neighborhood of 3000, I believe? (I am hoping someone is willing and able to check this!)

Current SD ziprealty.com inventory = 16,519, up from 15,000 as of February 28 (roughly 300 new homes on the market per week).

So roughly speaking, we are at over five times the inventory of the cyclical low, and steadily growing.

Comment by patient renter
2007-04-05 12:35:37

In the Sacramento area, inventory is almost exactly where it was 2 months later than this time last year. We’re well on track to easily shatter the records this year.

Comment by aladinsane
2007-04-05 05:03:34

Tales of The Bubble…

My mom volunteers for the el lay public library and we were talking yesterday~

It seems that many library locations have become a daytime holding tank for the new middle class homeless, as there really is no place for them to go.

Comment by Bill in Carolina
2007-04-05 05:56:11

“Middle class” implies they have at least some assets, which means they could find an apartment to rent. “Formerly middle class” might be a better term.

Comment by phillygal
2007-04-05 07:23:14

“The Homeowner Formerly Known as Middle-Class.”

Can’t wait for the CD.

Comment by Chrisusc
2007-04-05 17:52:38

That’s pretty funny.

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Comment by In Colorado
2007-04-05 08:11:42

Not only no assets, but no income either.

The thing that always amazes me about bubbles is how cunning, but otherwise unskilled, people jump on the bandwagon, earn a princes salary, save none of it, and then get broadsided when their bubble pops and they lose it all.

I knew a guy in San Diego who worked for a small builder in the late 80’s. When the housing bust hit in the early 90’s he was laid off (he was basically a foreman). He knew I was a software engineer and asked me what classes he could take at the local JC to become a software engineer. He thought that with a few months of training he could “change careers”. He wound up being a pool guy. Two years later he mailed his keys to the bank and left town with his family.

Comment by combotechie
2007-04-05 13:09:02

I’ve always been amazed by some of the nineteenth century gold mining ghost towns distributed about in the southwest. Many of them have courthouses annointed with expensive wood, marble, etc transported to the town in its heyday at great cost. One of them even built an opera house.

Money was literally dug out of the ground, lavishly and recklessly spent until the ore vein played out, then everybody left town, never to return.

My question has always been: “What were these people thinking?” It had to be obvious to these people that the ONLY reason the town existed was because of the ore vein, something GUARANTEED to become expended eventually. But still they behaved as if the easy money party would go on forever.

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Comment by BubbleViewer
2007-04-05 06:05:52

I recently read on article about that. I honestly believe that our current monetary system is destroying our communities. The housing bubble has to be put in context with the overall monetary system. This is not a “subprime” problem. Our entire society has cancer. The only way to cure it is to cut off the head of the beast and return to an honest monetary system. It’s about honest weights and measures, folks.

Comment by aladinsane
2007-04-05 06:16:29

Last week

I saw my first of those that had their lives foreclosed on, somewhere in a already hot (85 degrees in late March) boring Central California town…

I knew i’d finally see them, so it wasn’t a shock

It was how much they look like you and me

That was shocking

Comment by Hoz
2007-04-05 08:26:46

And they drank the same Johnnie Walker Blue.

But nevermore.

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Comment by palmetto
2007-04-05 06:18:48

Current monetary system AND the Housing Bubble. Yesterday I actually got lost in my area when I made a wrong turn on a road that was just recently opened. It led into a new stuccobox hell development, that backs up to a formerly nice subdivision of modest concrete block homes that has been turned into a barrio by former and present guest workers, where drug dealing is commonplace.

As I was driving through the maze of stuccobox hell (rows of houses crammed together on tiny lots, all looking the same) I was seized by a desire to roll down my window and start shouting “It’s the American Dream!”

Comment by Big V
2007-04-05 11:08:38

Don’t do it.

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Comment by GetStucco
2007-04-05 06:49:59

It is quite problematic when the monetary authority keeps talking about making a priority of controlling inflation, but then stands pat in the face of signals that core inflation is rising.

Comment by BubbleViewer
2007-04-05 07:18:40

Welcome to the Alice in Wonderland world of USA in 2007, where black is white, good is bad, and 2+2=5. The fed doesn’t want us to know what inflation is (an increase in the supply of money) because then we will know exactly who to blame! So they pretend inflation is a rise in prices (that is the symptom, not the cause) and get everybody blaming corporations, unions, whatever, anything except the only engine of inflation there is - the Fed itself!

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Comment by GetStucco
2007-04-05 07:26:22

Actually, inflation is defined as a general increase in the price (to either consumers or producers) of goods and services. How it makes sense to ignore a doubling of home prices in the CPI (which are roughly 30% of household expenditures) is the question…

Comment by auger-inn
2007-04-05 08:28:00

GS, I see where “wikpedia” is sharing your definition but I’m a bit surprised that you are buying into that.

In mainstream economics, the word “inflation” refers to a general rise in prices measured against a standard level of purchasing power. Previously the term was used to refer to an increase in the money supply, which is now referred to as expansionary monetary policy or monetary inflation.

It does say that “previously” the definition was an expansion in money supply but I guess economic law constantly needs revision so that we understand what the FED understands, or something like that. :)

Comment by kerk93
2007-04-05 08:54:31

The FED must say that. It is a lender’s best interest to state that. Even Greenspan said inflation is a monetary phenomenon. Even him in recent speak. Wikipedia is as good as those filling the definitions. A socialist filling the defintion of socialism and capitalism would certainly put a slanted view on the definitions of those two words.

Comment by OB_Tom
2007-04-05 10:20:57

The expansion of money is running at about 10-12% in the US. Pretty much the same as the inflation the guy on the street sees. You have to live in the Fed Ivory Tower to claim inflation is only 2-3%.

Comment by hwy50ina49dodge
2007-04-05 07:40:30

Good point…perhaps Ben Shalom Bernanke is facing an “Irrational conundrum” ;-)

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Comment by FED Up
2007-04-05 14:54:09

that is a little frothy :)

Comment by Rich
2007-04-05 11:44:31

1983 Websters definition of inflation…

“An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices: it may be caused by an increase in the volume of paper money issued or of gold mined, or a relative increase in expenditures as when the supply of goods fails to meet the demand.”

2000 Websters definition of inflation:

A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

Hedonic adjustment anyone– A night with a Geisha vs. a BJ by crack hore by the port. end result is the same (lack of sexual tension) so they must have the same value in the basket of goods.

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Comment by hwy50ina49dodge
2007-04-05 14:23:51

(lack of sexual tension) or “release of” sexual tension…

suffering from self-revealing bias…that stood out for some reason I cannot explain.

On the face of it…I think the Geisha might have a higher value…what the hell do I know?

Comment by Jas Jain
2007-04-05 08:51:39

Let us build more public libraries as fast as we can! This would be the lowest cost solution to the problem of crime during recession that would turn into depression.


Comment by Big V
2007-04-05 11:12:01

And pay for them with property taxes. Oh, wait, D’OH!

Comment by Big V
2007-04-05 11:02:57

Funny, Aladinsane, I never thought of you as someone who has a mom.

Comment by aladinsane
2007-04-05 11:26:11

My mom’s cool.

I grew up on Mad Magazine and The New Yorker.

Comment by hwy50ina49dodge
2007-04-05 14:26:34

Which came first?

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Comment by aladinsane
2007-04-05 16:31:37

Mad Magazine, around 1965.

One of my earlier memories of things.

Big Spy vs Spy fan…

Comment by cassiopeia
2007-04-05 11:18:12

aladinsane, why am I not surprised. I take my kids to the local library about once a week and hang out while they play. Lately, I’ve overheard cell phone conversations related to real estate containing sentences such as “then we’re going under” and “is there something you can do to help us?” several times. Looking at those people, you could not think they are anything other than solid middle class. It makes my hair stand on end when I see that, but it could be only anecdotal. The Westside is different, right?

Comment by In Colorado
2007-04-05 12:18:21

I thought kids were not allowed to play in Libraries. Also, our local library forbids cell phone usage inside the library.

Comment by cassiopeia
2007-04-05 16:51:36

My bad, I meant my kids hang out, read and play with the computers. In my library people use cell phones.

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Comment by aladinsane
2007-04-05 14:14:00


Think about your options?

There aren’t too many plan B’s.

Where else could you hang out all day?

Comment by cassiopeia
2007-04-05 16:53:39

Where else would you hang out all day?

You are right. At least our library has clean bathrooms.

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Comment by REhobbyist
2007-04-05 17:21:57

I stopped going to the library during the years we lived in San Francisco. Too many homeless people - lots of body odor. Maybe I ought to go back now.

Comment by Hoz
2007-04-05 17:10:47

“The most successful people are those who are good at Plan B.”
James Yorke, mathematician

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Comment by Chrisusc
2007-04-05 17:57:39

Or even have a Plan B.

Comment by krazy bill
2007-04-05 05:12:18

From the Arizona Republic newspaper:
“SALT RIVER RESERVATION: Mike Ramirez Jr. of Phoenix hit a $1,346,971 Wheel of Fortune MegaJackpot on a $1 machine at Casino Arizona. He said he will invest his winnings in real estate.”

Comment by palmetto
2007-04-05 05:20:35

Easy come, easy go.

Comment by palmetto
2007-04-05 05:21:56

Really, there must be an endless supply of GFs.

Comment by phillygal
2007-04-05 07:18:12

those nitwits are going to keep investing until the foreclosure tsunami puts a major hurt on house prices.


Comment by Lou Minatti
2007-04-05 05:32:19

That will buy what, a 3-bedroom tract house in SoCal? Or 2 of the same in Phoenix?

If he wants to pee his money away, he could just mail it to me. I can think of better uses for that million.

Comment by combotechie
2007-04-05 06:11:30

My bet is the casino folks will lure him back into the casino and will get their jackpot back. And then some.

Comment by palmetto
2007-04-05 06:23:06

Good call, combotechie.

Comment by grubner
2007-04-05 06:34:10

They’ll sell him a couple of time shares.

Comment by moqui
2007-04-05 06:34:58

Yup, The Res will likely comp him the Grand Waifukami suite to show Mike what a skilled and astute gambler he really is.

Comment by audet
2007-04-05 10:10:10

And if all he did was put that 1.3 million into short term treasuries, he’d have about 60,000 a year. Most people could live comfortably on that. And yet he’s going to stick into the RE sinkhole at the top. Priceless.

Comment by Matt_in_TX
2007-04-05 21:13:19

Hey, I thought that the casino was going to pay my taxes. After all, they withheld 20%?

Comment by Big V
2007-04-05 11:15:03

This just points up what has been said on this blog in so many ways: “If you lend it, they will spend it.” In this case, the guy is getting the money from a casino instead of the bank, but it’s the same idea. People with no clue spending whatever money they can get on whatever asset they most recently heard good things about.

Comment by WT Economist
2007-04-05 05:52:01

Interesting article here. I’m researching Memphis today, and an article in the local paper says Buffalo-based M&T has had trouble selling its Alt-A loans into the secondary market.

The result hit the stock price of a Memphis-based bank, First Horizon, among others, that also makes Alt-A loans on fears it may be hurt.


Comment by Graspeer
2007-04-05 10:18:28

So the previous line, that the trouble is only in the sub-prime is already falling apart. I wonder when they will admit that the problem is not in the type of loan, but in the fact that RE was overpriced and incomes at all levels except the very top did not keep up

Comment by aladinsane
2007-04-05 05:56:39

Today’s Word:


One of the meanings:

Psychology. The spread of a behavior pattern, attitude, or emotion from person to person or group to group through suggestion, propaganda, rumor, or imitation.

The bad sister, of the housing bubble.

Comment by GetStucco
2007-04-05 06:25:52

The housing bubble was driven by contagion, and so is the housing bust (the “bad sister”)…

Comment by aladinsane
2007-04-05 06:29:48

Funny how the goings on were never called a contagion, until most recently…

And you are 100% correct.

The word swings both ways.

Comment by hwy50ina49dodge
2007-04-05 07:50:42

Once upon a time…I was at the El Toro Airshow with my small kids…ages 8-11…we were about 75 yards from the middle of the runway checking out the parked helicopters…when behind us was 1950’s jet doing a loop…belly-flopped onto the runway in a huge, huge explosion…the heat released was unbelievable…when I turned around to get the kids and walk away…what did I see? A gigantic wave of people running TO the explosion. “Psychology”

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Comment by aladinsane
2007-04-05 07:58:34

I didn’t go the the 1st World Series game in 1988, when Gibson hit “that” home run, (if only it had been the 7th game…) but a buddy and I had some $50 Ueker seats for the 2nd game.

In the parking lot, grown men were pleading with me to sell my ticket and I as like to find what temporary market conditions are, I let them tell me how much they’d pay for my seat, way down the 1st base line, about as high up as you can go? I got offered as much as $600.

There were oh so many people that wanted to catch last night’s heroics.

Past performance is not neccesarily an indicator of future performance.

w/o resorting to google. I know the dodgers won the 2nd game, as I was there. But I can’t tell you a damned thing about it.

I remember the 1st game, like it was yesterday.

Comment by aladinsane
2007-04-05 06:05:17

“An object in possession seldom retains the same charm that it had in pursuit.”

Pliny the Elder

Comment by renterbychoice
2007-04-05 14:04:07

I used to sit around a read quote books a lot. i like this one

Comment by Chrisusc
2007-04-05 18:01:28

Excellent quote. I’ll have to remember that and apply it in my life with some thought and discipline.

Comment by Matt_in_TX
2007-04-05 21:22:32

Alternate tie-in to the housing bubble: he died of hot air during the explosive housing bust of Pompeii

Comment by aNYCdj
2007-04-05 06:15:59

just walked back from the food store and I see Snowflakes in New York City……..How’s that for being off topic

Comment by Curt
2007-04-05 06:36:15

Not completely off topic. If sales tank, the NAR will blame it on the “blizzard.”

Comment by aladinsane
2007-04-05 06:47:13

Wonder why they never got into the left turn driving game?


Comment by samk
2007-04-05 07:05:59

85 on Tuesday. 29 today. :(

Comment by packman
2007-04-05 06:18:24

Observation in northern VA - Loudoun County - listed inventory is *not* leaping this spring like it did last year; it’s a relatively slow rise, at least from early indications. It looks like the current values are about the same as last year - still very high but down a lot after the meteoric summer values (about 4,600 during the summer, about 3,000 right now and also at this time last year). At the current rates of change this summer’s inventory numbers will be somewhat lower than last summer’s inventory peak.

What is rising rapidly however is foreclosure listings. Since just October (when I first started keeping track) listings have gone from 149 to now 319 - more than double in just under 6 months. Foreclosures as a percentage of total listings has gone from 3.9% to now 10.8% *.

* Note is that about 30% of those numbers include bankruptcies and FSBO’s. I’m not sure what the difference is between a bankruptcy listing vs. a foreclosure listing. Key point is that the rate of change is great, and realtor-listed numbers are an increasingly-smaller percentage of total homes on the market.

Comment by GetStucco
2007-04-05 06:30:09

We are in the “hanging on” phase of the cycle correction, when those who don’t have to sell try to wait out the bust, and those who are relatively more desperate are either selling into weakness or waiting until they get foreclosed because they are too far underwater for selling to make sense.

It pretty much happens this way in every real estate bust, though I believe the relatively larger number of crazy loans made this time will mean the number of fire sales (and resulting price declines) will be larger this time than in previous busts. The fact that prices have fallen on a national level so early in the correction (and are predicted to fall further) should offer a clue.

Comment by packman
2007-04-05 06:51:45

Makes sense.

I wouldn’t want to own stock in (or work for) a moving company right now. One aspect of continued price declines is that fewer and fewer people will have positive equity and thus be willing to sell and move their stuff. Those that do sell will be so strapped for cash they’ll want to move themselves rather than hire someone. That being the case - maybe Ryder is a good deal right now!

Comment by Hoz
2007-04-05 08:40:13

Not having any real interest in the US stock market, maybe one should look for a publicly traded “Self Storage Unit” company. Do not know if there are any, but this industry should soar.

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Comment by oxide
2007-04-05 08:59:00

The self-storage industry is doing pretty well. There’s a type of storage known as Portable On Demand Storage, or PODS. They wheel a 8×8x10″ box to your driveway, you fill it, they take it to their storage place (or move it). The POD people were doing very well at the Washington Home and Garden Show last month.

Comment by arroyogrande
2007-04-05 09:49:33

People will be living in the PODs. A growth industry.

Comment by But_Im_Not_Dead_Yet
2007-04-05 11:53:16

I used to work for a large paper company, that had its own trucking subsidiary. The trucking subsidiary was really top-notch, and kept their equipment in really good condition. They would replace “old” trailers before they became a headache, and were showing the usual wear and tear.

One day I asked our traffic manager what they did with the old trailers they were getting rid of. He told me they sold them in lots, to a broker, who transported them down to Mexico. In Mexico they would take the wheels off, and turn them into housing….

Comment by hwy50ina49dodge
2007-04-05 14:37:00

Hey, But_Im_Not_Dead_Yet
Thanks for sharing the “wealth” … tales like get tagged with:

“it gets better everyday” ;-)

Comment by glorgau
2007-04-05 15:58:39

PODS are great. I used two the last time I moved. It is also nice that they can be kept in storage for a nominal fee while sorting out where you’re staying at your destination. It was about 4 months in my case.
It is such a good concept that a number of companies now perform the service.

Comment by WT Economist
2007-04-05 06:30:31

(Realtor-listed numbers are an increasingly-smaller percentage of total homes on the market. )

Does this mean Realtor reported sales prices will be a smaller share of actual sales? That will affect the NAR median.

Comment by rvdoc
2007-04-05 06:35:27

My guess is there will be a lot more FSBO and “Assist to Sell” type of listings that don’t show up on the MLS. Many have simply run out of equity to finance the Realtors Lexus payments at a 6% commission rate.

Heck I’ll bet some of the Realtors (also known as RE investor maximus) are going FSBO. LOL

Comment by packman
2007-04-05 06:46:44

Yeah I would imagine that too, and brought up the same point about a week ago actually. Unfortunately there isn’t any easy way to get FSBO stats based on their nature.

Though I doubt many realtors will go FSBO - I would imagine most get a sweet deal with near-zero commissions on their own homes. Kind of like how doctors will often treat each other for free.

Comment by DC in LBV
2007-04-05 08:03:52

I have been surprised by the number of FSBOs popping up. The talk has been as the market slows down more people would turn to realtors but driving through town the other day I saw a dozen new houses for sale,and most of them were FSBO.

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Comment by redhead68
2007-04-05 08:12:57

They can’t afford the fee.

Comment by Big V
2007-04-05 11:33:34

The newest house for sale on my street is FSBO too. There was another FSBO, but they took it off the market after about 6 months of no-go. I have a feeling that they were “waiting” for all the other houses in the hood to sell before they put their house back on the market. I wonder how long it will take them to capitulate? Without an RE agent to push them into a sale, they may be more stubborn. Oh well, just brings the price down even more if they wait longer.

Comment by But_Im_Not_Dead_Yet
2007-04-05 11:55:09

My next door neighbor is a Realtor. Going through a divorce, and getting rid of the house. Yes, she’s doing a “FSBO”….

Comment by hwy50ina49dodge
2007-04-05 14:32:54

Have you got you’re borrowed tools back already?

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Comment by jim A
2007-04-05 06:37:58

Would the difference be whether a bank or trustee was doing the sale? ISTM that if you declare bankrupcy BEFORE your non-owner occupied property got to foreclosure, the trustee would be in charge of selling the property and divvying up any assets. Does the bank still get absoloute first crack at any proceeds in this case, or they in with the rest of the creditors demanding their money.

Comment by Peter T
2007-04-05 12:15:08

The mortgage holder gets first dips on the proceeds from the sale of the item that secured the mortgage. If it wouldn’t be so, the mortgage rates would be in the range of 12%, like for consumer credits.

Comment by ronin
2007-04-05 06:31:35

I’ve noticed this before… seems like just about every city or county or state is listed as ‘leading the nation in foreclosures.” How can it be? Is this a mark of pride?

Comment by GetStucco
2007-04-05 06:45:38

“mark of pride?”


Comment by packman
2007-04-05 07:07:35

My bet is they’re all comparing current data locally with recent data (last month or last quarter) nationally. Foreclosures are rising so fast everywhere that almost any such comparison will make it look like you’re leading the nation!

Comment by SubKommander Dred
2007-04-05 07:26:11

Charlottesville, Virginia
5 April 2007

I think the answer to your question is not the rates of foreclosure has become a mark of civic pride for the lumpenproletariat, but rather that things are starting to get so bad all around the country, in very diverse geographical areas, that the sheer amount of distressed properties and ‘homeowners” going belly up is reaching truly shocking proportions. After all, it would seem that many of our fellow citizens bought into the fairy tale that “real estate always goes up” and everyone should “buy now or be priced out forever.” One week it’s Colorado, another it’s Massachussetts, the next it’s Florida. That fact of the matter is, ALL of these markets are seeing foreclosure rates previously unimagined by the MSM (but not much of a surprise to you and the rest of us who have been frequent habitues of this blog). I fear this housing Ponzi scheme that constitutes the bulk of our economy, like all Ponzi schemes, is going to end badly for a good many folks…folks who were absolutely certain that their house was not only a castle, but the key to riches beyond the dreams of avarice. After all, the conventional wisdom of “If I need cash, why I can just take out a HELOC” was the widely accepted norm for so long. This is what happens to an entitled and relatively short sighted majority of our population believed, particularly if they believe they DESERVE that Vegas vacation, a custom Harley and a 10 mpg SUV.
One anectode I would like to share. As it so happens, I work in a local hospital, and was taking care of someone who had come in for treatment recently for a serious medical ailment. While he was recovering from his therapy, I was engaged in a rather substantial conversation with a colleague regarding the mortgage/real estate meltdown that is currently sweeping the nation, and specifically mentioned that interest rates are more than likely going to have to rise to compensate for this ecomonic Russian Roulette our society has insisted on playing. Of course, the patient (an older gentleman being treated for a potentially life threatening ailment) overheard my our conversation, and asked me further why I thought this would happen. So, as I explained in excrutiating detail just how cheap money had become, Alan Greenspan’s and Ben Bernanke’s overheating printing presses and the general inability of anyone of modest means to afford a home without getting into some kind of highly radioactive mortgage, I could see he was becoming even more uncomfortable, breaking out into cold sweat and turning pale as a ghost. Thinking he was suffering some kind of side effect of the treatment he had just had, I interupted my explanation and asked him if he was in pain, to which he replied he had recently taken out a substantial HELOC on the place he and his wife had owned and lived in for a number of years on terms that were “not real good” (his words, not mine) and was a good bit freaked out at their ability to repay it.
I abruptly changed the subject to this years prospects to win the world series (”How about those Red Sox, eh?) thinking the last thing I needed to do was save his life from Cancer only to have him go into cardiac arrest from the stress of his messed up finances. Multiply his financial ineptitude by several million, and I think the enormity of the problem becomes apparent.
Moral of this story;
Don’t talk about basic housing economics with critically ill people. Your are more than likely to kill them than enlighten them.

Your most humble servant,
SubKommander Dred

Comment by aladinsane
2007-04-05 07:46:42

old: heloc
new: Hell-oc

Comment by In Colorado
2007-04-05 08:19:36

Actually, in Colorado prices have been pretty flat these past few years. You can still buy a brand new home in most of Colorado for less than 200K. Our foreclosure problem is being driven by people who couldn’t afford those relatively cheap homes, many of which were financed with liar loans.

Comment by Scott
2007-04-05 08:37:42

As another c’villian, I have to say: we are grossly over-inflated ourselves and it’s easy to imagine that people here will be underwater shortly, particularly if they have HELOCs.

Comment by zeropointzero
2007-04-05 06:43:15

Was at home yesterday - got a call from someone from Kentucky offering me “great opportunities on oil and natural gas leases in Kansas and Oklahoma” — I didn’t have the time or energy to listen to his spiel …. but it’s so unnerving getting a call that you 99% know is an absolute fraud or scam. I’m probably on some list provided by the ubiuitous “sales genie” - and I’m in a pretty high-dollar zip-code. I guess it could be worse - I supposedly opted out of sales calls on the national “do not call” list.

Comment by palmetto
2007-04-05 06:51:08

If people thought scams were bad during the bubble, they ain’t seen NUTHIN’ yet! As the bust unwinds and the economy really goes into the crapper, scams will proliferate like mad. Economic downturns are when scammers REALLY shine, feeding off desperation and false hopes.

Comment by combotechie
2007-04-05 08:42:38

Don’t be surprised to see the rampant return of pyramid schemes and pyramid parties such as they had in the late Seventies.

Comment by Graspeer
2007-04-05 10:28:39

I got a good scam call a couple of days ago, they said I had “won” an all expense paid 6 day vacation in Mexico, all I had to do was pay the hotel “tax” of $49.99 per person, per day, plus I would have to pay to get to Mexico

Comment by cassiopeia
2007-04-05 11:32:22

I got one saying I had won millions and millions in an Internet lottery.

Comment by But_Im_Not_Dead_Yet
2007-04-05 12:04:34

As the dot-com bubble imploded, I read an article from Silicon Valley that talked about the desperation of people who were caught up in the melt-down: losing a job, getting a divorce, losing their stock portfolios, and very often having a vehicle repossessed in the process.

One of the interesting anecdotes of the car repossessors was that they very often found a batch of recent lottery tickets in the vehicles when they repossessed them. It was as if that became the signature act of desperation: go down to the convenience store and try to score one more hit on the gravy train….

Comment by sf jack
2007-04-05 15:15:23

And the housing bubble’s equivalent is probably a printed listing of Google job postings.

Or a tattered business plan of some Web 2.0 POS startup.

Comment by Chrisusc
2007-04-05 18:08:51

That’s funny.

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Comment by MGNYC
2007-04-05 06:55:31

i am waiting for the easter sunday open house

Comment by Russ Winter
Comment by GetStucco
2007-04-05 07:33:01

“Lastly, I have pinpointed March as when the recession started, but this is simply the warm up. Perhaps the data dispensers will pick it up two months on down the road with revisions or catch ups. Rasmussen consumer confidence polls picked up a big initial drop. April 4th showed 111.9.”

I’m guessing the plan is to suppress any evidence of a recession by whatever means is necessary (including making the stock market always go up) right on through the 2008 election season. Why would this not be the plan, and if it is the plan, what stands in the way?

Comment by hwy50ina49dodge
2007-04-05 08:08:41

“It’s amazing what a broken timing belt can do to the smoothness of a big powerful engine”

Comment by packman
2007-04-05 08:18:36

IIRC, something similar (though opposite in direction) happened in the 1992 election - economic data that showed we were coming out of the recession which normally would have come out at the beginning of November was not released until after election day. I don’t know the details though - just something I remember hearing.

Comment by REhobbyist
2007-04-05 13:37:38

I don’t know, GS and Packman. Bush the first was running a close race, and it would have been to his advantage to show that the recession was ended. And now we have divided government, so the Democratic congress would like to expose a new recession so they can gain seats. Both the president and the congress have access to the data.

On the other hand, I think that these politicians are so busy grubbing for money that they don’t take time to look at data.

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Comment by mg
Comment by GetStucco
2007-04-05 07:12:33

“JAGOW: And then you think that after the prices start to fall, the Fed may step in and cut interest rates?

FARRELL: That’s what I think is going to happen. I mean, look, despite all their talking about inflation, they well know come spring or after the spring and when they look at that home-buying season and look at what’s happening to prices, the Fed’s gonna cut.”

Farrell wrote a nice book about deflation, which explains the reasoning behind his belief (which I share). One interpretation of the housing bubble is that it is a direct consequence of the extremes to which the Greenspan Fed was willing to go in order to avoid deflation.

I agree with Farrell’s prediction for a 20% home price decline (in fact, I believe we are already there in my hood, though nothing much is selling to provide evidence). The only question, IMO, is how much the nominal prices go down, given the Fed’s likely efforts to try to respike the broken punch bowl.


Comment by Hoz
2007-04-05 08:07:07

GS, If a 20% drop is all that is going to occur then this would be the shortest RE decline in US history. Giving an arguable start date for the decline of June 20, 2005 (WSJs article on ” If you want to buy my house, you have to feed the squirrels.”). The average decline is 47 months, The longest to date is 51 months, the shortest is 41 months. As this recession progresses, the declines in prices will become more severe.

The problem that Farrell, economists and US forecasters have is the inability to fathom what is happening in Asia. The US with a population of 300MM is not comparable to Asia’s 3B. In the past when the US slowed the world quaked, now the US is slowing and the world economy is growing at double digits.

China is growing at 10.5%, , India is 10%, etc. Now the Euro nations are starting to grow Germany, contrary to Mish’s conjecture, is growing at 3.9%, The UK is growing enough that they are worried about inflation, France (the lagard) is growing at 1.8%.

We can predict all the deflation we would like, but as long as the rest of the world is willing to pay $3/lb of copper, $32/lb of cobalt, $4/ bu of corn; the US will have to pay the same. But the problem is that the US is a service economy and makes little of value to the rest of the world. As the economy goes into further decline and interest rates US get cut, there will be further collapse of the dollar. The result is that the world will pay $5/bu of corn etc. and they will pay because they have $8T to spend and all we have are grains and raw materials.

Comment by tj & the bear
2007-04-05 22:56:52

given the Fed’s likely efforts to try to respike the broken punch bowl.

The bowl’s not only empty, it’s shattered.

Comment by WT Economist
2007-04-05 07:48:34

He miscalculated.

He said that in 2003 prices were reasonable based on fundamentals, like low interest rates. Interest rates are higher now, so this implies more than a 20% decline, unless interest rates are cut, which get you back to 20%.

Not only that, but overbuilding might drive prices far lower than 2003 in non-bubble areas.

Comment by auger-inn
2007-04-05 08:41:44

97′ prices or BUST! Oh, wait, that IS a BUST! :)

Comment by Big V
2007-04-05 11:51:24

The fact is that in 2003, most people were buying into variable-rate loans. So if the low interest rates were part of the “affordability” equation, then 2003 pricing wasn’t as affordable as he thinks it was.

Comment by Big V
2007-04-05 12:01:43

Oops, what I meant to say was “variable teaser-rate loans”.

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Comment by ChrisO
2007-04-05 08:35:15

Home prices have already fallen more than 20% in quite a few places. Perhaps the overall nationwide average will be 20%, since some places never got so crazy to begin with. But the biggest bubble markets–I’m guessing 40%.

Comment by rv doc
2007-04-05 11:32:21

Gee they only dropped 90% in most of Japan - in fact in many areas they are still dropping. Inflation adjusted - its literally pennies on the dollar. Did I mention they aren’t making any more land in Japan either?

I think the best case scenario is likely 50% in the least inflated areas and maybe 90% is some of the worst. WE have a huge inventory glut of vacant homes already and many more on the way via both insane builders and foreclosures. We will have a severely impaired lending ability. Everyone who by any reasonable standards wants and can afford a home already has one.

I think 10 million plus vacant homes by 2010 is doable. Then how much are they worth? Many homes vacated during the Depression stayed that way for 20+ years until in most cases they were torn down. A home not lived in deteriorates pretty quickly.

Comment by Bubblewatcher
2007-04-05 12:06:36

A rollback to 2003 prices would mean about a 50% drop in 90046 (West Hollywood). As they say, all real estate is local. 20% sounds reasonable for a nationwide average, but not for “fetish” neighborhoods like WeHo, Venice or Santa Monica. Or Brooklyn Heights, for that matter.

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Comment by ChrisO
2007-04-05 12:36:04

A 90% drop would be far worse than even the Great Depression, and I simply don’t buy that kind of doomsday scenario. Some neighborhoods could certainly see 50% drops, though.

Bubblewatcher, you and I basically agree, except that I think that the percentage drop in the newer exurban “McMansionvilles” will be as much or greater than in trendy urbanized neighborhoods.

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Comment by rv doc
2007-04-05 13:19:46

Yes - worse than the great depression. It will take a while for that to gel in your mind, but gel it will. Do you suppose the average Joe in early 1929 foresaw what 1933 would look like? 25%+ unemployment.

We haven’t even begun into what is going to morph into a very serious unemployment problem here in the US. Service economies are like a Ponzi scheme. You mow my lawn and I’ll wash your car and we’ll pretend to pay each other. The bullcrap about our intellectual services and value will prove to be as accurate as counting eyeballs and visits during the dot.bomb era. The only way an economy can really function is by turning lower value raw materials into higher value finished goods with real work. Unfortunately in the US we have auctioned that function off to the lowest labor bid. Thank you corporate American and the kind folks in Washington DC.

Why worse now? One word - debt. We have blown the top off of the debt charts by any metric in any category in every country. That basically means we have purchased tomorrows economy today with borrowed money, so tomorrow we will not be able top purchase goods because we already have them and secondly all of the income has to be devoted to servicing the debt already incurred. There is absolutely no way it can ever be repaid.

Comment by tj & the bear
2007-04-05 23:04:35

There’s a reason some of us refer to what’s coming as the “Greater Depression”. By numerous measures conditions are far worse than they were in the late 20’s.

Comment by GetStucco
2007-04-05 23:59:31

“By numerous measures…”

Such as a negative national savings rate for 23 straight months while the economy has apparently not even entered a downturn. The last time we had so many consecutive months of negative household savings was during the Great Depression (1930s).

Comment by REhobbyist
2007-04-05 13:45:21

I was thinking like ChrisO. Farrell says that prices will drop another 20% over last year’s 10% drop. So 2005’s one million dollar house will now be $720K. But I wouldn’t mind 40%.

Comment by Chrisusc
2007-04-05 18:24:41

I have to side with Rvdoc on this one. Question: what is the difference between a $1mil home and a $750K home - answer, nothing. In both cases, 99% of the population cant afford either one. So prices will drop at least 50% in all areas, and they will overshoot the mean. This is due to the phony service economy we are now in. Sometime within the next 24 months, when most people’s meager savings run out, then consumer spending will be non-existent withn the exception of staples like milk, eggs, cheerios and top ramen. This is why places like Circuit City are laying off people, they know that their days are numbered as a retailer. They will probably not exist come 5 years from now. Think about it, over your lifetime, you will see retailers come and go, generally with the economic lifecyles. There was Home Depot or Lowes when I was a kid, but there were mom and pop stores, and there was Bulder’s Emporium, where did they go? Unemployment will reach epic numbers within 2 years and it will get ugly.

Right now, I know of three college-educated people who cant find jobs. I know of at least 50 acquaintances that are only 6 months away from insolvency and/or foreclosure, due to job instability or impending job loss (r.e., construction, retail, business-to-business sales, etc.)

Crime will spike and there will be lots of divorces and broken families, more than even right now at 50% rate.

And again, going back to the original argument, when no one has a job, then houses will sell for whatever a qualified buyer can afford.

Qualified buyer = can get a loan, has a down payment, has a stable job.

There will be few of these mythical buyers in the coming years.

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Comment by txchick57
2007-04-05 07:21:05

Mish is a “professor” on Minyanville now. Amusing to me since I was the one who showed it to him several years ago.

Comment by Jas Jain
2007-04-05 09:00:41


To be popular, one must behave in a manner that is liked by large number of people. At least, Mish is better than more popular charlatans in the economic commentary business.


Comment by patient renter
2007-04-05 12:47:02

Agreed, so I see no harm in him joining the club.

Comment by FutureVulture
2007-04-05 16:01:23

Amusing to me, too. I remember when he was just another guy posting on Motley Fool. He was basically an angry guy who posted a lot of links to other people’s work. Same as now, from what I can tell. (Which is not to say he’s wrong, of course.)

Comment by DAVID
2007-04-05 07:21:54

Home builder stock price bounces back today. What is going on?

Comment by NYCJoe
2007-04-05 08:08:21

Maybe it’s an NYC thing. We’re having a, hopefully, last-gasp “surge” here. Absolutely nauseating. Can’t even read local blogs without feeling like wretching.

Comment by BubbleWatcher
2007-04-05 08:13:37

People are snapping bargains.

Comment by NYCJoe
2007-04-05 08:25:50

Absolutely. Bargain 1200 per sq ft. for Manhattan views at Brooklyn Bridge Park … but a mere 650 per sq. ft. if you don’t mind the BQE in your face. 3-beds starting at 1.8M. Wow.

Comment by ChrisO
2007-04-05 08:33:15

I think it’s always unwise to read too much into daily swings in stock prices. The overall trend is rather obvious, I’d say.

Comment by Rickoshay100
2007-04-05 09:01:34

Ryland came out with a negative report on earnings… the HB’s usually rise on negative news.

Comment by Daisy in AZ
2007-04-05 07:42:01

FWIW, I’ve been noticing in the last week or so that cyberhomes.com is showing much more reasonable estimates than Zillow — sometimes differing as much as 300K. Here’s one that I stumbled on this morning:

The house is a new listing for 420K.
Cyberhomes estimates it’s worth at 358K. http://tinyurl.com/3yplyy
Zillow ‘zestimates’ a loony 676K. http://tinyurl.com/25rvqp

According to the listing the house needs work (and it’s on a dirt road off in the toolies), so I’m guessing 358K is still a little high, but 676K is just plain nuts.

Comment by trishy-la
2007-04-05 10:26:15

Cyberhomes is a joke! It has my house valued 50% higher than zillow, which is already over estimated for the market by at least 20%. And I thought zillow was inaccurate.


Comment by Ghostwriter
2007-04-05 07:48:48

Did anyone catch the roller coaster on youtube? http://www.youtube.com/watch?v=kUldGc06S3U Check out as the years roll by in the bottom right hand corner. Looks like 07 is a long way down.

Comment by aladinsane
2007-04-05 08:02:40

This weekend @ the aladinsane ranch…

We’re gonna party like it’s 1999

Comment by Hoz
2007-04-05 09:47:41

I’ll bring the Brats!

Comment by tj & the bear
2007-04-05 23:07:39

Hoz, are those kids or food?

Comment by lainvestorgirl
2007-04-05 08:35:31

Price Change - Decrease $928,000 2 Beds 1.00 Baths

MLS Number
2430 pier ave,santa monica, CA 90405
Area: Santa Monica
Attn: Motivated Seller - Bring All Offers. Desirable Sunset Park area of Santa Monica. This 2BR/1BA home is situated on a large flat 7,000 sf lot. LR w/fireplace & remodeled kitchen w/granite counter tops, SS appliances & bay window. Refinished red oak hardwood floors, Pella windows, copper plumbing. Large backyard w/spa, stereo and pop-up speakers & avocado tree. Add a 2nd story and you would have views of the Getty, Hollywood, the mountains & ocean. Near Clover Park.


Property Type: Residential-Single Family
Equipment:Antenna,Dishwasher,Garbage Disposal

Comment by arroyogrande
2007-04-05 09:58:18

Sale history (from Zillow):

10/01/1998: $369,000
03/30/2006: $925,000

Maybe a flip gone bad?

(Also, notice the 1998 price, just 8 years ago)

Comment by the_voz
2007-04-05 11:15:23


any jacka$$ willing to drop that kinda cash on HUGE 7000 ft lot needs surgery re-attach the brain stem. I gotta tell ya even at 369K, its BS

Comment by Big V
2007-04-05 12:00:26

369 would be a very reasonable price for that location today. I’m not sure about 1998, but I think stuff was going for relatively cheap back then.

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Comment by REhobbyist
2007-04-05 13:51:58

lainvestorgirl: That’s ridiculous. Is that typical?

Comment by lainvestorgirl
2007-04-05 17:26:57

Uh, that’s actually a pretty good deal, relatively speaking of course.

Comment by Liz & Smudge
2007-04-05 08:36:50

There is NO BUBBLE bursting here on Long Island! I just had a realtor send me all the information of listings in my target area and their listing price and sold prices. All of these during the last 6 months. Not only is the list price and sold price almost the same, in some cases people still bid over list!

W-T-F?????? This is driving me crazy! I am going to live in a shed in the woods with my cat and push a shopping cart around town.

Comment by JP
2007-04-05 08:43:37

I wouldn’t give credit the comparison of list price to sold price. It is absolutely in the best interest of a broker to convince you that he can accurately price your house to sell. (Those mailings are trolling for both buyers and sellers.) Choosing any convenient number for the after-the-fact list price is easily done.

The thing to check are the traditional measures: price/sqft, median, similar house comparison, etc.

Comment by NYCJoe
2007-04-05 09:27:07

Or Brooklyn! Bidding wars, the horror! I cashed out and paid off my shack in the Catskills, but a 6-hour round-trip commute doesn’t sound like too much fun. Especially with $4 a gallon gas in the pipeline.

I’m doing my best to try and monkey-wrench this with comments in the local blogs, but looks like we need more like-minded “bitter” renters to turn this madness around.

66 Orange Street, Apt. 2E
Prewar three-bedroom, two-bath duplex co-op, 1,600 square feet, with wood-burning brick fireplace, open dining area, updated windowed eat-in kitchen, high ceilings, French doors and Juliet balcony on lower level; building features roof deck, laundry and storage. Maintenance $1,485.12, 49 percent tax-deductible. Asking price $1,350,000, on market 19 weeks.

Comment by aNYCdj
2007-04-05 10:32:47

WELL its ONE quick subway stop (2-3)to Wall street so they can work 16 hour days….to pay for their “Investment”

Comment by Big V
2007-04-05 12:05:30

Which war is it pre?

Comment by arroyogrande
2007-04-05 10:01:27

“here on Long Island”

I believe that the correct pronunciation is “Lon Guyland”.

Comment by NYchk
2007-04-05 13:25:56

There is NO BUBBLE bursting here on Long Island!… in some cases people still bid over list!

From conversations with people on Long Island, homeowners are nervous, and rightly so.

A friend’s house finally got sold on Long Island recently. It took 9 months and the price was only slightly over 2003 purchase price, barely enough to break even.

Comment by hwy50ina49dodge
2007-04-05 08:50:54

Bugs Bunny: eh, got carrots?

Save money. The worst part of stagflation is that it makes it harder and harder to save any money. But do what you can. The more cash you have to call upon in an emergency, the less desperate or destitute you’ll have to be if those 2,480 bloggers turn out to be right

Saving for stagflation

“The word “stagflation” was mentioned some 2,480 times in recent blog postings, according to online monitor Technorati.com”


Comment by Hoz
2007-04-05 09:34:48

“Pay raises have been blah for several years running. If you’re looking for inflation signs, you need look no further than February’s 1.3 percent gain in producer prices and 0.4 percent rise in consumer prices. But you can look at the accelerating price of manufacturing supplies reported by companies across many industries in the Institute for Supply Management. Or just check what you’re paying for health care, college tuition, gasoline or that monthly mortgage.”

Lets see ” health care, college tuition, gasoline or that monthly mortgage”, aren’t these excluded from the CPI?
“Money still talks these days! Trouble is, you have to increase the volume alot!”
Alfred E Neumann

Comment by Big V
2007-04-05 12:08:00

But they will be giving out no more H1B Visas for 2008, so I think we will start seeing some wage increases this year.

Comment by In Colorado
2007-04-05 12:31:19

My wife has estimated that she spends about 30% more when she does her monthly stocking up at Sams Club (just food and household items) vs. 5 years ago. Too bad we haven’t been getting 6% raises, huh?

Comment by David
2007-04-05 09:07:08

David Lereah’s new books is available for purchase:


Comment by NYCJoe
2007-04-05 09:19:04

This from brownstoner, a Brooklyn blog. What does this say to folks here?

Without a whole lot of fanfare, One Brooklyn Bridge Park opened for business yesterday. There’s no pricing info on Stribling or the development’s Homepage, but one prospective buyer dropped us a note with this report from inside the sales office: There are 445 apartments in the complex, ranging from $650 a foot on the BQE side to $1,200 a foot for Manhattan views; three bedrooms start at $1.8 million. There’s one model apartment to look at (a two-bedroom) and none of the most prime units are available for sale yet. One interior design detail of note: The Sub Zero built-ins are wood covered to blend in with the cabinets. It’s easy to be skeptical about this project given the proximity to the BQE and the fact that there’s going to be another couple years of construction, but we bet that time will show that this is a place people want to live, especially when the park is done. What do you think?

Comment by aNYCdj
2007-04-05 10:47:46

What are the MORONS thinking???????

Its at least 10 blocks to the closest subway and at Court St and walking on Joralemon at night is not what i would want from a million dollar apartment.

Maybe if they offered FREE 24 hour shuttle bus or a newly created free ferry to the seaport…….and then I’ll be You have to pay EXTRA to park your car.

Comment by ChrisO
2007-04-05 11:09:43

I’m not a NYer, but the first time I drove up there and took a gander at Brooklyn while driving the BQE was a real eye-opener. “Million-dollar apartments” was NOT the first thought that came to mind.

And it’s insane how close the BQE sits to some of those buildings. Just what I want: a prime view of some of the worst traffic known to mankind.

Comment by Jon
2007-04-05 09:37:34

Txchick, I’m curious: how did you structure your index puts for the next leg down?

Comment by aladinsane
2007-04-05 09:38:30

I obsess about Giant Sequoia Trees…

The largest oldest living thing.

It’s not uncommon for me to hang out next to a 1,500 year old, reading out loud, of our follies, past and present, to a captive audience…

To give you an idea of size (photos do the goliaths no justice, too big) of a larger specimen, it might take 35 people, with arms stretched out and linked together, to complete the circle around the Brobdinagian.

There’s a section of a fallen 2700 year old Sequoia, with dates and events deliniated, via the growth rings of the tree and my wife and I were looking at it, awhile back, and we both know that prolonged droughts chased out The Anasazi and others from the Southwest, around 1100 to 1200 a.d., and that section of the tree rings was as tight as one could imagine.

In contrast, the past 500 years growth rings were individually much bigger and defined. Lots of water.

Historic Evidence.

And The Anasazi?

What did they contribute to global warming that made their hell happen?

Sequoias give me hope. When you hang out next to a 2,000 year old and ask them all they know, they only divulge their gifts for longevity and being.

To put it in perspective:

A Giant Sequoia Tree’s life compared to the average human lifetime span

is equal to

An average human’s lifetime span versus the lifespan of a goldfish

Comment by Brad
2007-04-05 11:19:29

You could make a lot of new houses out of one giant sequoia. There’s plenty of central valley farmland near the National Park that could be put to higher use.

Comment by But_Im_Not_Dead_Yet
2007-04-05 12:15:10

Ouch! ouch! Ouch! ouch!…. NOT what he wanted to hear….

Comment by aladinsane
2007-04-05 13:22:03

No biggie.

He’d swallow the goldfish live, as well.

I know the type.

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Comment by REhobbyist
2007-04-05 13:57:48

LOL! Don’t give the developers any ideas!

Comment by hwy50ina49dodge
2007-04-05 11:24:13


Quit rubbing it in… I’m jealous that you get to hop over the back fence like John Muir. ;-)

The largest oldest living thing. (I guess you qualified it by saying: “largest”)

As bugs would say: eh, I don’t think so…

The Ancient Bristlecone Pine Forest, located in the White Mountains of California, is home to the oldest known living trees on earth, the Great Basin Bristlecone Pine Pinus longaeva. The oldest tree, nicknamed “Methuselah”, is more than 4,750 years old, and is not marked to ensure added protection from vandals. The grove lies in the Inyo National Forest, between 3,000-3,300 m (10,000-11,000 feet) above sea level.

Being that a lot of trees are used in housing there’s this:

An even more un-Western Taoist notion is the usefulness of uselessness. Chuang Tze frequently illustrates this idea with a giant and rather twisted tree. A woodcutter, speaking to his apprentice, says: “That tree has no potential whatsoever. It’s useless: you can’t make anything with it. How do you think it’s lived so long?”3 Precisely because of its uselessness, the tree has been able to live a long life and contemplate the Tao, as contrasted with useful trees, which are used up before they can reach that level. When a man bemoans the uselessness of another giant tree, Chuang Tze advises him:

“Now you’ve got this huge tree, and you agonize over how useless it is. Why not plant it in a village where there’s nothing at all, a land where emptiness stretches away forever? Then you could be no one, drifting lazily beside it, roam boundless and free as you doze in its shade. It won’t die young from the ax. Nothing will harm it. If you have no use, you have no grief.”4

This uselessness is an aspect of withdrawing from the conventional world of trivialities to embrace the true nature of the world with spontaneity. These great trees represent an important aspect of the Taoist sage: useless to the physical world, they are free to pursue their spiritual growth in the Tao—which is infinitely more valuable.

This sort of uselessness is antithetical to the West; the only useless things we find to be at all valuable are various arts, and we still value art more if it can also be useful. The notion that to pursue the truly valuable and fulfilling life we need to be (or at least it helps to be) useless sounds pretty crazy to us. If America were to adopt this sort of value for uselessness, it would certainly do wonders for our collective blood pressure and stress level, and it would certainly be more civilized lifestyle. A quote from Lin Yutang that I have always resonated with addresses this: “If you can spend a perfectly useless afternoon in a perfectly useless manner, you have learned how to live.” I assume he is referring to this sort of Taoist uselessness. In American life, I believe such a virtue of uselessness would translate into a greater aesthetic appreciation and a more Continental pace—both things I would consider improvements.


Now aladinsane, put that in your pipe and go smoke it…on your next hop over the backyard fence. ;-)

Comment by aladinsane
2007-04-05 13:36:45


I knew of course that Ancient Bristlecone Pines are older and they’re way cool. I’d recommend a trip to California’s White Mountains, to anybody.

What makes Sequoias so special to me, is that on the surface, they look like a pantywaist, compared to other trees that grow nearby.

You can with just solid pressure, and no more, push your thumb, an inch into it’s bark, it’s that soft.

But largely fireproof.

The brads of the world can go see the devastation wrought by the harvesters of just a century ago, as Giant Sequoia stumps are just as hardy as downed Sequoia Trunks. The wood doesn’t decay and might stay on the ground for hundreds of years.

Take a trip to the Converse Basin, near Grant Grove and see what used to be there, now populated by an army of massive small Sequoia stumps.

Looks like a cemetary, to me.

How would you like your pet goldfish, to do you in?


Comment by REhobbyist
2007-04-05 14:02:28

Aladin, Brad was just kidding.

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Comment by REhobbyist
2007-04-05 14:01:07

I’ve never been to Inyo, but I’ve added it to my list now.

Comment by cassiopeia
2007-04-05 11:49:00

Aladinsane, the sequoias and the earth survived, but the Anasazi didn’t. Earth will always find its own balance and find a way to get rid of what’s bothering her, like the Maya, or ourselves. That is the thing that people don’t understand and it drives me nuts. We are the ultimate parasytes.

Comment by aladinsane
2007-04-05 14:10:01


Actually, the Anasazi exist today, in the guise of Hopi & Navajo Indians, their direct lineage…

The smart ones, survived.

Comment by cassiopeia
2007-04-05 16:55:20

The Maya still exist too, even speaking their language. But their civilization was gone even before the arrival of the Europeans.

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Comment by aladinsane
2007-04-05 17:35:18

True enough…

We really are a hodgepodge. ha

Comment by arroyogrande
2007-04-05 09:42:10

Update on inventory…still 2 steps forward, 1 step back. However, inventory compared to last year is telling (I’m so glad I kept those numbers):

Area, Inventory now, 1 yr ago, % change in inventory year over year
Altadena, CA: 163, 126, 29%
Arroyo Grande, CA: 223, 186, 20%
Pismo Beach, CA: 352, 302, 17%
Apple Valley, CA: 1552, 884, 75%
Joshua Tree, CA: 347, 190, 83%

From this I gather that the high desert is at 70% to 80% greater inventory than the same time last year…Pasadena area (Altadena specifically) has 30% greater inventory than same time last year, and central coast (Arroyo Grande specifically) has 20% greater inventory than the same time last year.

The inventory surge here last year didn’t happen until mid-May, so I’ll be looking for it again around that time this year.

Comment by Charbroiled
2007-04-05 10:15:59

Fires, foreclosures, taxes plague neighborhood– The word “subprime” is what financial people use to describe loans made to customers with less than ideal credit. Lake Ridge is where Wall Street words meet real life….

Comment by OB_Tom
2007-04-05 10:45:34

“Darrell Mosely, who lives across the street, says the house at 419 was not the first to burn. He points to one farther down the block that’s burned twice (That one, according to Fire Marshal Jordan, was caused by faulty wiring).”

Wouldn’t it be ironic if the crappy workmanship on new homes comes to the resque of the FBs? Soon there will be Blogs with instructions on how to do it, like “in KB homes, turn on the toaster, the light and the microwave and run for cover”.

Comment by ChrisO
2007-04-05 11:02:29

Wiring can be especially faulty when it has gasoline poured all over it. :)

Comment by Rich
2007-04-05 12:24:22

Burned out homes here in nor cal during the mid 90’s were common. Ill bet that in 92-95 we had three times the fires than the other 7 years of the decade combined.

Comment by Big V
2007-04-05 10:17:22

Hi All:

This post from Mnot’s Weblog:

lost_everything_by_owning said…
We set out on a mission looking for a house in Feb’05. We were looking for 3 months then,every weekend we went to see 4-5 open houses;sometimes we went on weekdays. It started to get really stressful/tiring after a month or so. There were multiple offers everywhere we went. We finally liked a condo which was listed for 460K. We overbid 40K(even before it came on market) of asking price because out agent told us to do so if we liked the place. Bening a novice in this,we heeded his advice.Our loan didn’t get approved for 500K and so we negotiated for 487.5 K. We brought our condo in Jun’05 paying 27.5K above asking price.

The day we signed our offer,we got the paperwork about our monthly payment - principal,Interest,PMI,HOA and what not. I knew something was really wrong with the picture. We did our math that day - even considering all the TAX BENEFITS the house owning would give…..we were ending up paying a hefty $3100 per month on this house. We had to be frugal in our spending. We realized that day that buying a house in bay area was the STUPIDEST mistake we made in our life.

Things to look out for: if you discuss with friends or family, everyone will get excited about you trying to buy a house. Don’t think emotionally; think practically.

Footnote: Today our condo value is 55K less than what we paid. That’s every $$ we invested in this piece of crap.

Wednesday, April 4 2007 at 9:58 AM +10:00

Comment by the_voz
2007-04-05 11:22:35


Stupidity is meaningless in the face of Foreclosure

Comment by jh in ohio
2007-04-05 10:19:55

Had an interesting talk with my landlord yesterday. We’re supposed to be getting new windows (”promised” over a year ago). Landlord said they can’t afford it right now, because:
- they have 3 houses for sale right now (been on the market since last fall)
- they are letting a tenant not pay her rent (for a year now) because she was in a car accident and can’t work. They expect to get paid when she gets her “settlement”.
I did some research on the county auditor’s site and only found 5 properties that they own. That means they are getting income on 1 property out of 5!
Any advice to us as renters if our house goes into foreclosure? I’m beginning to think that’s a strong possibility in the future.

Comment by ChrisO
2007-04-05 11:00:40

In most states, renters have limited rights in a foreclosure. I think most likely you’d be given a 30-day eviction notice by the bank at some point.

Comment by aNYCdj
2007-04-05 11:10:05

The Biggest problem is getting back your deposit..which can be THOUSANDS of dollars

The bank doesnt get it when they foreclose, the landlord still has it, and if he files BK, the tenat is SOL.

So its best just not to pay rent, hold it in escrow and let a judge decide how much the landlord gets. In court you can ask the judge to deduct your security deposit from what you owe the LL.

Or you might get lucky and not pay rent for a couple of months and use up all your secruity deposit and then wind up owing the LL money and the landlord wont sue you.

He still can sue you after Foreclosure, but then when the bank finds out he has a judgment against you…well the bank files on the old LL……..not worth it

Comment by Patch Tuesday
2007-04-05 10:34:46

The Baltimore Housing Blog has clearly been hacked. You might want to remove the link, at least until Nikki possibly regains control of it to avoid giving the hacker what they want - traffic and fame…


Comment by REhobbyist
2007-04-05 14:07:51

Tee hee - the Japanese are invading!

Comment by Big V
2007-04-05 10:43:18

I posted this the other day, but I don’t think anyone read it because of the late hour. I encourage you all to send similar letters to your 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.


Big V (I mean, I put in my real name really)
San Jose, CA

Comment by patient renter
2007-04-05 12:58:16

Very very nice. Couldn’t have said it better myself. I’ll probably be sending one of these soon.

Comment by Schnooks
2007-04-05 10:47:46

wanna build in Arlington Hts, IL?

check out craigslist ad: http://chicago.craigslist.org/nwc/rfs/305574566.html
Here is the deal, I have the property (9,680 sq ft), the builder and the property drawings which are already approved by the village of Arlington Hts. All you would need to do is apply for permits and you could be on your way to a custom home with 200k of potential built in equity already.

I am selling the Property and the drawings for $360K, construction cost is around $400K. I have the official cost break down as well from my builder. After construction you have a home that will appraise at 1 million, if not more, and you didn’t pay over $800K for it. I will have an appraisal of the finished value of the house done for you if we have a deal.

Email me if you want more details on the property or have questions!

Comment by the_voz
2007-04-05 11:29:19

sweet, where do I sign the papers I’m not gonna read, in order to maintain my “victim” status after I default?

Comment by Big V
2007-04-05 12:47:03

I flagged it as prohibited, since the guy is promising to get an appraisal for a certain amount, which is illegal.

Comment by lurker
2007-04-05 18:36:08

For those who don’t know, Arlington Heights is probably an hour commute to Chicago (although it’s residents will always claim 40 minutes). It’s a nice, middle class area, but it is not the North Shore or another snobby Chicago suburb. According to ziprealty, there are over 800 homes for sale out there (many spec homes).

Comment by sf bubbler
2007-04-05 11:32:56

Read yesterday about how prices come down more slowly after a bubble than they’ve gone up during the madness. Does anyone have any thoughts on how that trend might be affected by Web 2.0?

There’s so much more information available to the average buyer now, and it gets disseminated so much more quickly. Plus there’s mashups galore out there –zip maps, crime stats, coffee shops per capita, commute times, API scores, greenspace…this has GOT to have some effect on the marketplace. What do you think it will be?

Comment by Hoz
2007-04-05 16:12:53

The cheap and easy flow of information will not influence the majority of sellers or buyers. It will be sticky on the way down. In stock market collapses, there is liquidity. One may not like losing 25 - 50% of the previous days price, but there is little emotional attachment. For most individual stock traders the margin is 50%. In houses the margin can be 100%. Houses are an emotional issue. We have discussed the “its different here” syndrome and no matter how much information is placed into the specuvestors, flippers and FBs possession, these owners have the lack of ability to assimilate the information and turn it into knowledge. This inability to assimilate and use the information is called cognitive dissonance.

Houses are not liquid, they are not “tradable”; houses will not be sold because of “the market will always come back” phenomena, most recently seen in buyers of New Century (including those buying an opening position today).

It has taken 6 yrs for the stock market to get back to the highs of 1999 (not adjusting for inflation). It will take twice as long after the bottom for houses to reach 2005 highs. IMHO The bottom may not occur for 10 -15 years.

Comment by Chip
2007-04-05 21:39:55

“IMHO The bottom may not occur for 10 -15 years.”

Whoa. If that were the case, then for sure I would have a house built. I doubt that the cost of land and building would have such a long, continuous decline without outright deflation through the entire economy — I can’t imagine BB not “printing to the rescue.”

Comment by tj & the bear
2007-04-05 23:14:03

Start building.

(Comments wont nest below this level)
Comment by LaLawyer
2007-04-05 11:42:58

File away under sweet justice:

California Association of Realtors are losing their health insurance. Due to the increasing numbers of Realtors and the deal the CAR struck with Blue Cross that CAR had to enroll 75% of it’s members into the plan, coupled with declining revenues, CAR members are losing their healthcare. If this results in members leaving the business and actually having to become producing members of society . . . well, flipping burgers is productive, right?


Comment by In Colorado
2007-04-05 12:36:23

Buy this burger now, or you will be priced out forever!!

Comment by anon
2007-04-05 15:19:35

They aren’t making any more cows.

Comment by REhobbyist
2007-04-05 14:16:08

I feel bad that so many of these association groups are losing their group coverage. Apparently those in good health can find better insurance for less money, so the remaining group members tend to be sicker and older. Blue Shield doesn’t want to provide the expensive health care needed by the remaining members, so they agree only to cover the group if 75% of the members enroll. Apparently the realtors left are fewer than this. We can laugh about this, but we are heading for a breaking point. The rest of us end up paying for the uninsured’s medical expenses through our premiums, taxes, and medical bills. Currently only 62% of workers receive employer-provided health insurance in this country, down from 70% ten years ago. When we reach 50%, the voters will scream loudly for national health insurance.

Comment by hllnwlz
2007-04-05 12:40:11

In the OC Register, more “it’s different here” news.


This is the email I sent to the reporter:

Interesting, but what about the people who rolled their 200K in equity into a $900K home, borrowing $700K + closing costs on the $65K average income in OC? They’re not subprime, but they’re definitely overextended. What about the people who’ve HELOCed all those dinners out and the new cars and the expensive vacations and the Saturday shopping trips to The Shops at MV and Fashion Island, thinking that OC real estate only goes up? Judging by my neighbors in Mission Viejo, and friends in CDM, there are plenty of people doing just that.

When might the Register look into that story?

Thanks for the reporting, Mr. Galvin.

Comment by Big V
2007-04-05 12:51:43

Good response, hllnwiz, but the tinyurl didn’t work for me.

Comment by hllnwlz
2007-04-05 13:16:36

I’ll try it again, not-so-tiny, and tiny versions. Then again, this article is so annoying, you may not want to read it.



Comment by REhobbyist
2007-04-05 14:24:53

The article was annoying, but the comments weren’t. Even the least literate replies indicated that people finally get what’s going down. Only a few Koolaid drinkers left.

Comment by talon
2007-04-05 14:54:42

Looks like Farallon Capital might have jumped the gun on that loan to LEND.


Comment by Hoz
2007-04-05 15:13:45

Great catch.
That Farallon “doubled up” to protect its prior position now looks like suicide. If my math is correct 50% of nothing is nothing.

Comment by Matt_in_TX
2007-04-05 21:41:17

…carry the nothing

Comment by lavi d
2007-04-05 16:39:35

Check out the Ironic Bears

Comment by Portland Mainer
2007-04-05 16:49:05

Inventory just rose about 11% versus a month ago on single family homes in the Portland, Maine area (Portland zips 04101, 04102 & 04103), Famouth, Cumberland and North Yarmouth).

352 9/6/2005
394 9/19/2005
400 9/29/2005
425 11/3/2005
406 12/5/2005
352 1/3/2006
344 2/2/2006
345 3/3/2006
351 4/4/2006
409 6/4/2006
477 7/22/2006
467 9/9/2006
437 11/5/2006
355 12/15/2006
311 12/30/2006
269 2/2/2007
289 3/2/2007
321 4/5/2007

Comment by GetStucco
2007-04-05 23:46:56

San Diego inventory is up 10.7% in just over one month (since Feb 28) — from 15,000 to 16,600. I am wondering if this inventory correction will get so fast that even the RE bulls will have to start referring to it as a “crash?”

Comment by GetStucco
2007-04-05 23:49:31

Hypothetical (and possibly soon empirical) question: Is it likely that the pace of foreclosures may soon exceed the pace of sales? I just noticed “The Springs” was running at a 2.5 sales / 1 foreclosure pace as of late; is there a precedent for this to cross over past the 1 / 1 ratio?

Comment by GetStucco
2007-04-06 00:05:46

Number one subprime spin slogan: Subprime is contained
Fed’s Fisher says subprime damage mostly contained

Federal Reserve Bank of Dallas President Richard Fisher said damage from the U.S. subprime mortgage market is mostly contained and central bankers are trying to “tread very carefully” in response.

“Regulatory agencies are working hard to avoid causing an overreaction with credit standards that would needlessly cause too much of a slowdown in housing or the overall economy,” Fisher said in a speech Wednesday in Texas to the Austin Mortgage Bankers Association.

While the housing industry probably will hold down growth, consumer spending continues to sustain the economy, he said. The central bank’s job isn’t to bail out particular industries, Fisher added. He said he’s “very happy” with the Fed’s stance of leaving interest rates unchanged while keeping inflation as its main concern.

“The damage from the subprime market has been largely contained,” Fisher said. “Fortunately, the financial system and the economy are strong enough to weather this storm.”


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