The Housing Bubble

global warming for dummies… /

http://immobilienblasen.blogspot.com/

have a nice easter weekend

From “The Daily Reckoning” at http://www.dailyreckoning.com

The easiest way to make money, often, is to steal it. But stealing money
only benefits the thief, while everyone else suffers. Groups of people are
generally better off when people work hard to create wealth…knowing that
they will be able to hold onto it, or exchange it for wealth in other
forms. Thievery interrupts the whole process. So, societies typically set
up barriers to discourage larceny - locks, taboos, prisons.

But yesterday, we read an article by Martin Hutchinson who explained what
happens when people try to find ways around the barriers. They pick locks,
of course. They figure out little angles. They lie. They cheat. And they
also pass laws that give them ‘entitlements’ to other peoples’ property.

America and the developed countries have been on a roll for the last 50
years or so. Their entrepreneurs, laborers, businessmen and investors have
been able to create wealth faster than the parasites could take it away
from them.

But standards are slipping everywhere. More and more people have come to
expect to get “something for nothing.” And when they get it, they don’t
want to give it up.

Thus, we find in today’s news from Houston something we’ve been waiting
for:

“Groups demand foreclosure moratorium.”

First!

Been a rough week of almost zero internet access . . . what’s happening?

This was posted at lemetropolecafe.com last Thursday night:

Dear Congressman Heath Shuler,

I was happy to vote for you and believe you to be both an honorable and conscientious man. I have empathy for you with regard to the enormity of the challenges that you face. I can somewhat relate because I served the public for thirty years as a law enforcement officer.

The purpose of my contact is the price fixing that occurs on a regular basis in the commodity market (COMEX) and stock market (NYSE). I have provided a detailed analysis of this market manipulation to both Senator Chris Dodd and Representative Barney Frank, but they do not acknowledge my correspondence. They both serve upon the respective banking committees which oversee the Federal Reserve, U.S. Treasury, and Securities and Exchange Commission, but don’t address matters relative to those chair positions, and restrict their correspondence to only their own district constituents. I don’t understand how they can chair committees with national ramifications and limit the scope of their responsibility to their own districts, but they do.

Accordingly, I need you as my district representative to inquire about the regular violation of the Sherman Anti-Trust Act which occurs chronically in the form of price fixing of both gold and silver bullion, and the shares of the companies which produce this bullion. This price fixing has been revealed by many credible analysts, some from the Gold Anti Trust Action Committee (GATA), which I have an affiliation. It is often done by leasing or swapping central bank gold, but more usually is done through futures contracts. The share manipulation is done through excessive shorting, often illegal, naked shorting. Moreover, there is a pletoria of admissions about this price fixing from past Federal Reserve Chairmen, members of the Bank of International Settlements, and officials at the International Monetary Fund. It seems the entire U.S. economic policy concerning the U.S. Dollar consists of the manipulation of the price of gold. This price fixing is discernible because it contradicts the premise of trading for profit, as it chases the bid price lower, selling more at each lower bid price.

Supposedly, this market intervention is done under the auspices of the Exchange Stabilization Fund and the Working Group on Financial Markets, but under the present Executive Branch leadership; it has transcended that authority and made a mockery of America’s premise for free and fair markets. Additionally, the daily intervention is carried out by bullion banks such as Goldman Sachs, Morgan Chase, etc., and the fact that the U.S. Treasury employs so many key personnel with ties to Goldman Sachs reeks of a conflict of interest. Goldman’s recent extraordinary profits suggests to many traders that there is privileged insider information being employed.

In that connection, there was recently an article in the NY Post by
John Crudele
(http://www.nypost.com/seven/04032007/business/
hank__why_are_you_ignoring_my_foia_requests__business_john_crudele.htm)
in which he rather sarcastically petitions Treasury Secretary Henry Paulson to respond to his Freedom of Information Act requests about official, government market intervention. Seemingly, the Treasury Secretary stonewalls these requests. He can be assured that there will be more such requests as there is a growing movement against this mockery.

These manipulations of purported free and fair markets have become blatant and those of us that trade or study such practices are realizing there is no semblance of fairness, because the markets are being centrally controlled by an official entity. To my thinking, that constitutes fascism!

In closing, please champion the cause of us small investors, who are being cheated by official intervention of these markets. Represent these concerns to Congressman Barney Franks and Senator Chris Dodd, who should be providing oversight of such matters. I can provide much more factual information about the manipulation of both gold and silver, as well as to serve as a liaison to other industry experts, such as GATA. Market speculation is difficult enough on a fair and level playing field without predatory behavior from a cartel of bullion banks acting on behalf of the U.S. Treasury, which is exactly what is presently occurring.

Sincerely,

Richard D. Caccavale

Charts don’t lie:

http://tinypic.com/fullsize.php?pic=483dye8

West Houston real estate tour:

http://louminatti.blogspot.com/2007/04/west-houston-real-estate-tour-april.html

I hope everyone has a great Easter!

Boston Globe sees stagflation:
http://tinyurl.com/2t6qnu

Ben: will I see you at this

http://orangecounty.craigslist.org/com/307520797.html

Maybe if these wealthy cheapskates would part with a few extra dollars they could hire American workers. Well, looks like the costs of home ownership just went up in Wanabee World.

Visa denials hit hard in the Hamptons

Year after year, Dune Management depends on dozens of Dominican and Jamaican housekeeping and laundry workers to get through the summer season in the Hamptons. But this year, federal officials surprised the company when they denied temporary visas for the workers.

Tish Rehill, the owner of Gardeneering in Southampton, submitted a petition for 42 workers from Mexico. She was denied certification as a seasonal business, although landscaping is generally classified as such.

“It’s a nightmare this year,” Rehill said. “It’s like, ‘You’re denied. Try again next year. ‘”

http://tinyurl.com/239hab

Looks like the greedy of Sedona haven’t gotten the message yet. Incredible price

http://flagstaff.craigslist.org/rfs/306997863.html

I use to think the LendingTree advert was funny because of Stanley Johnson. Now, I have a new reason to lmao. Although Stanley is ‘in debt up to his eye balls,’ at the end of the advert, LendingTree’s call to action is a refi.

For all the Californicators investing in TX:
http://www.capitol.state.tx.us/tlodocs/80R/billtext/html/HB02207I.htm

[...] the person provides the purchaser and each lienholder a written disclosure statement in at least 12-point type that:
[...](4) indicates whether the lienholder has consented to the transfer of the property to the purchaser.

This is from an article on a family owned foreclosure business in San Diego,

“Weichelt explains it’s their job to get as much money for the lender as they can. The last time the foreclosures business boomed was in the mid-1990s, after the last real estate bust. Then, banks had to unload the properties at “50 cents on the dollar, fire sale” prices, Weichelt explains. Now, at least while foreclosures are still at relatively low rates, the lenders are hoping to get top dollar for the properties.”

http://tinyurl.com/39tcq5

So much for those in the REIC who say prices did not drop so much in the last downturn.

There is nothing wrong with your investment

Do not attempt to adjust the loan

We are controlling your submisssion

If we wish to make it harder

We will bring up the interest rates

If we wish to make it softer

We will tune it down a whisper

We can reduce the economy to a soft blur

Or take it down with crystal clarity

We control your horizontal sized lot

We control your vertical sized house

For the next couple of years

Sit quietly and we will control all that you see and hear

You are about to experience the awe and mystery

Which reaches from the interest rates to…

The Subprime Limits…

http://en.wikipedia.org/wiki/The_Outer_Limits

“Weichelt explains …prices, Weichelt explains.”

Other than the fact that whomever wrote this failed out of Community College J-School, that’s a pretty shocking number … If we see 50% drops in housing prices there are going to be people in their late 50s who bought a house during the heights of the bubble that might not break even until long after retirement … Assuming they can keep their house that long … It is certainly going to be ugly.

Hey guys, I’m looking to rent in Jersey City for this coming August. My job at NYC starts in Oct. I’m going to live in NJ to avoid the 3.5% city earnings tax and the higher NY State tax. (A lot of people who think the world ends at the edge of Manhattan waterfront think I’m completely out of my mind).

Interesting findings though. I’m looking at a lot of CL’s listings and get a definite sense that many of the owner who tries to rent these properties are underwater FB’s trying to float. What do you guys think? (Notice all these listings are “by owner”)

http://newyork.craigslist.org/jsy/abo/306722973.html
http://newyork.craigslist.org/jsy/abo/306724703.html
http://newyork.craigslist.org/jsy/abo/306725915.html
http://newyork.craigslist.org/jsy/abo/306727585.html

http://newyork.craigslist.org/jsy/abo/307082131.html

Remarks by Governor Frederic S. Mishkin
At the Annual Macro Conference, Federal Reserve Bank of San Francisco, San Francisco, California
March 23, 2007
“However, the historical record suggests that permanently lowering inflation expectations may require keeping monetary policy tight for a substantial period, resulting in considerable output and employment losses for a time.

I think these considerations leave us with fairly wide bounds on what the costs might be of permanently shifting long-run inflation expectations that are already anchored. On the one hand, the historical record gives us little reason to think the costs would be as minimal as the simplest models with rational expectations might suggest. On the other hand, overly pessimistic estimates have proved to be wrong in the past.”

http://tinyurl.com/2zc3cl

Federal Reserve

All have a great weekend! Time to go fishing.

~ Housing update in Palm Beach County ~

My girlfriend’s home actually closed yesterday! I have to thank the fellow members of this blog for their sage advice on how to sell into a tanking market.

The property is a 1350 square foot townhouse. It was listed in October of last year for $289K, at the bottom end of the price range at the time (I suggested $269K, but the real estate agent thought he knew better). At the beginning of the year, the price was lowered to $279K, and then finally to $269K. Winter is the start of “season” in South Florida, and it was hoped that the price reduction would attract a starry-eyed snowbird. A couple from Illinois did submit an offer close to the asking price, but it was contingent on the sale of their home in Illinois.

Two months later, the Illinois couple still had not sold their home (do people actually buy homes in Illinois when they’re under a foot of snow?). While my girlfriend always thought the offer was dubious, she and I discussed the matter and decided that the offer was really a “wish” and not an offer at all. Consequently, my girlfriend opted to lower the price by another $20K and list the house as “by motivated seller”.

Within three days, my girlfriend received an offer close to the asking price by a qualified buyer with good credit and financing. Evidently this buyer had tried to purchase another house in the area, but the deal fell through because the buyer had not made mortgage payments for the last 6 months and could not afford to bring the cash required to close!

Both my girlfriend and I wanted to reduce the price more aggressively, but I think we gave too much credence to the real estate agent, who thought that a snowbird would walk through the house and buy it at any price. Nonetheless, our strategy was to always be the lowest-price home in the community, and we continually scoured the MLS to make sure the house was priced at the low end.

In mid-2005, other townhomes in this community were selling in the low $300K range. I would assert with confidence that prices have dropped at least 20% since then, but so few homes are selling that it is impossible to make a claim. There are more than a dozen homes on the market, and so far this year, only two have sold. Most sellers are still stuck in the mid-2005 mindset, oddly enough. We did see one house that was purchased for around $320K in 2005 listed at $235K, so I don’t think there is a lot of joy in mudville.

Anyway, three weeks later the house closed and my girlfriend is no longer anchored by the housing bust. She had a migraine yesterday, but as soon as the migraine subsides we are going to have one heck of a snoopie dance!

I noticed on the IRS web site that one can pay his/her taxes using a credit card. Out of curiousity I went to one of those sponsored sites, pay1040, which incidentally is a partner of HR Block (what a surprise). Why not get some air miles while paying taxes? Bad idea. The “convenience” fee is 2.49%!!! So, out of an amount of $5000, this would represent a charge of $124.50… Who in their right mind would do that? A FB is the ideal candidate since he/she has no savings. Thus a fee is paid to pay taxes, that end up on a CC balance on which interests and fees are very likely to be paid over the next months or years (don’t forget we are talking about a FB here). The CC balance would then end up on a heloc… Wash and rinse. What a scam.

I’m not in trouble here… the Newspaper told me so:

DEAR BOB: I bought my house in December 2005, financing 100 percent of the purchase with two mortgages. The house has been nothing but trouble. It was built in 1985. The so-called professional home inspector failed to point out that the water heater was original and that the attic air conditioner installed in 2003 was improperly installed, causing ceiling damage. What are my chances of unloading this house without losing my shirt? Property values in my area are holding steady. — Carey A.

DEAR CAREY: Your problems don’t sound too serious. I presume you have replaced the 20-year-old water heater and corrected the problem with the air conditioner.

It is virtually impossible to resell any house at a break-even price after only a year’s ownership without losing money after considering such costs as the realty sales commission and transfer expenses.

Why sell? This current “buyer’s market” in most cities is not a good time to sell unless you have a highly motivating reason, such as an out-of-town job transfer. Make the best of your zero-down mortgage financing and wait to sell until you have built up equity by paying down the mortgage balances.

Even in the best of real estate times, it takes three to five years of home ownership to at least break even when selling. That’s why home buyers should not purchase unless they plan to stay at least five years.

Foreclosure State of the Weekend: Florida

http://www.foreclosure.com/state/fl.html

HOLY SH*T - Tax liens, Preforeclosures, Foreclosures…OUCH
And the insurance premiums. Who wants out now??

PHX inventory @ 58,189 this morning. Any bets on 60K by May 1?

Inventory over the last two months in 10536 (Katonah, NY) in Westchester County. Not sure what to make of it yet. I’m still waiting for the buildup to occur.

87 2/5/07
92 2/12/07
97 2/21/07
91 2/27/07
84 3/6/07
87 3/12/07
91 3/21/07
92 3/29/07
87 4/7/07

Daily Reckoning Part II

“Groups demand foreclosure moratorium.”

The groups are the usual suspects - world improvers representing the poor
struggling masses. What these masses tried to do in the last few years was
to buy houses without bothering to save up the money for them. Naturally,
the lenders took advantage of them (no one is easier to swindle than a
swindler), by extending them credit on terms that did them no favor. And
pretty soon, everyone was in on it. The borrower asks for his “liar’s
loan” by telling a fib about how much he owned. The appraiser gently
inflated the value of the place so the deal could be made. The lender
saddled the borrower with a mortgage that was sure to bring him back in a
year or two, so the mortgage company could make another fat fee
refinancing the loan. And then, there was the whole structure of Wall
Street, packaging the loans up in tidy derivatives and pronouncing them
creditworthy for pension funds.

And all of these people were quoting their prices, and toting their
figures, in a currency whose standards have been on a steep downhill slide
for the last 32 years. The U.S. dollar, in 2007, is worth only about 20
cents…compared to the dollar of 1971. And lately, there is reason to
think the incline will become even steeper. The U.S. government’s official
debt is increasing at a record rate of $80 million every hour.
Dollar-based credits and obligations are piling up outside of the United
States (as measured by the trade deficit) at the rate of $2 billion every
day. And all over the world, “Dark Pools” of liquidity threaten to turn
the dollar’s descent into a giant water slide.

One fraud leads to another. Gradually, slowly, unwittingly we get so deep
into them that we can’t see out. And in this swamp of mendacity, the truth
seems out of place, like an honest man in a Senate race.

We find, for example, that “Sub-prime trickles down to area businesses,”
according to the Orange County Register. Well, what did you expect, dear
reader? Standards are falling everywhere…and nobody’s money is safe:

I have a friend that’s done pretty well in real estate for the past 20 years and he’s planning on selling his New England home and buying in Austin, TX where he says there’s a housing boom. He gave me a google maps tour of where he has been looking and told me about the economic growth there. He’s an engineer that can work anywhere he wants to and he has a big salary and is single.

For those down in the area, are things really booming in Austin to generate higher housing prices even as prices deflate in cities that are only an hour away?

Here is a local news report video regarding the suspect North Texas fires and doomed Ceder Hills (?) projects there were discusssed here yesterday.

Not sure if already posted
http://www.wfaa.com/video/wfaageneral-index.html?nvid=133491&shu=1

From Bankrate:

10 highest priced U.S. housing markets in 2006

Surprise, surprise, five of the top ten are in California.

Yikes!

Excellent analysis of American Home Mortgage’s ALT-A earnings warning late Friday. The nerve of them releasing on a day the market is closed. I hope the MSM picks this up. The ALT-A slide has begun in earnest.

http://market-ticker.denninger.net/

Hilarious - economics PhD gy taken to the cleaners by Nigerian scammers: sdcia thread

Hilarious - economics PhD guy taken to the cleaners by Nigerian scammers: sdcia thread

This may be too late in the day to get responses, but does anyone have thoughts on where to keep money for the next couple of years? It goes without saying on this blog that real estate is out (although I don’t intend to sell my home …) , stocks could be at risk if the economy has broader troubles, bonds no good for either defaults or rising rates, so does that just leave cash? Any other good ideas?