Bits Bucket And Craigslist Finds For April 10, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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sqawk box was/is hilarious this morning
They are talking about how the housing crash will be great for ratings. and how the media doesnt go to the airport to report safe landings
“Time to Buy” is the theme all day for CNBC. The anchors are trying to be bullish but some of the guests are not cooperating.
Q: if you had a million bucks, would you invest in real estate? are we at a bottom?
A: you would have to be crazy. no.
WSJ wants all readers to reconsider shunning real estate…
“Why Investors Should Consider Real Estate
By Jeff D. Opdyke
Word Count: 1,248 | Companies Featured in This Article: REIT Index, Vornado Realty Trust, Boston Properties, Home Properties, Archstone-Smith, D.R. Horton, Toll Brothers, KB Home
With housing prices softening and subprime lenders tanking, investors have been running from anything that smells of real estate. But they may be bailing too quickly, as some parts of the sector are still doing well.
New money going into mutual funds that own real estate has plunged to just $2 million a week, on average, from nearly $400 million a week as recently as mid-February, according to AMG Data Services. Investors in droves are also selling off their shares in real-estate investment trusts, the publicly traded stocks of companies that own everything from apartment buildings to medical centers and …”
http://users1.wsj.com/lmda/do/checkLogin?mg=evo-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB117617076766164698.html%3Fmod%3Dhpp_us_at_glance_pj
Good catch! I wonder what the drop in total mutual fund flows this month will be?
Gotta ask again . . . BUY WITH WHAT? Nobody’s lending any money.
I can get a loan. You can get a loan. It’s just that we aren’t stupid enough to want a loan right now.
Are you getting flooded with the same solicitations I’m getting? I am not rich, but I have bank, and good credit and my house will be paid off soon. I expect that people like me (which is likely just about everyone on this board, including those who are pretending they’re rich in order to impress the rest of us) will be receiving lots of junk mail from the lenders.
I have opted out through the credit bureaus from receiving any solicitations, so no, I don’t get them. Don’t even want to hear it.
Those that could afford houses have them, so there is certainly no pent up demand, from those of reasoned financial grey matter…
Those that couldn’t afford houses have them.
For now.
Aside from piling more fraud on the monkey’s back, in the guise of ficticious buyers, there are no more legitimate buyers of houses.
Sorry.
Just to show how tight money is becoming: I have mostly stopped getting postcards from people who want to buy my mortgage notes. Not that they ever wanted to BUY them…they really wanted to steal them. E.g., if I had a 9% note from a borrower, these bozos would offer some amount that essentially would yield them 13% or 14%. I never sold a note, but sometimes asked for a quote out of curiosity.
“I can get a loan. You can get a loan. It’s just that we aren’t stupid enough to want a loan right now.”
New conundrum: Almost everyone who is smart enough to have protected their credit rating through the waning years of the bubble is also smart enough to avoid buying a house in the aftermath of the subprime implosion.
FYI
Senator Cox responded to my email on the subprime bailout!
Here’s what he said….
Thank you for your recent e-mail in response to my comments relating to recent increases in sub-prime mortgage defaults. It is unfortunate that consumers who choose sub-prime mortgages are often ill-equipped to fulfill the terms of the mortgage contract to which they initially agreed.
As you know, there are many who find it appropriate or perhaps convenient to blame various industries for unwise personal choices. It is, therefore, rewarding to know that there are many who still appreciate common sense and share the view that we should all expect to take responsibility for our actions and obligations.
Again, thank you for your supportive comments.
Sincerely,
DAVE COX
Senator, First District
There still seem to be quite a few folks taking out i-o loans here in CA. It’s making me really anxious. Now I’m worried it will never end, but I’m wrong, right?
I’m getting several notices a week from people wanting to save me from my 5 year ARM resetting last year. Of course, that loan was refinanced to fixed in 2003 at over a percent less than they are quoting to rescue me now…
I liked your Dave Cox letter: as long as he doesn’t have a for and also an against form response letter
Thanks for sharing that response, LILLL!!!
Amazing you could actually get a response that pertains to the subject of your e-mail.
I can’t believe they actually acknowledged the existance of a housing bubble.
I don’t know if you can call it ‘acknowlegdement’….most of the people asked if its ‘time to buy’ seem to be shouting ‘YESSSSSS’ in a knee-jerk, Tourette’s-like way.
RE: CNBC’s housing all-day jamboree - Just watched the section on Manhattan condos (yes, all the Wall St employees make it ‘different here’…) and the osbcene Mansions in the Hamptons for $20 million - peroxide blonde Realtor ™ crowing how she thinks ‘ this one will probably only be on the market for a couple of weeks’.
To quote Charlie Brown - “good grief”…
so mr LIErah, how much are you buying ?
25% are soft ?
every market not in plain sight of an oil derick is soft !
From the NYT:
Defaults Rise in Next Level of Mortgages
“Defaults Rise in Next Level of Mortgages”
“Some of the problems afflicting mortgages sold to borrowers with weak, or subprime, credit increasingly appear to be cropping up in loans made to homeowners who were thought to be less risky.
“The latest sign of possible further possible further deterioration in the credit market came yesterday as American Home Mortgage, a lender based in Melville, N.Y., said that it would earn less and pay out a smaller dividend because it was being asked to buy back and write down the value of certain loans.
“Those loans are known as Alternative A, or Alt-A, and were made to borrowers with decent credit. Shares in the company tumbled 15.2 percent, to close at $21.92.
“The announcement followed a disclosure last week by M&T Bank, a regional bank based in Buffalo, that it would write down Alt-A loans and no longer sell them because bids for the mortgages came in lower than it had expected.”
And the WSJ reports finance company stocks are trading at lower multiples due to mortgage meltdown fears.
Which came first, the exploding mortgages or the change in the federal bankruptcy laws that conisgned those with incomes above the state median to perpetual debt servitude?
don’t worry the next admin will have you chip in- or you can send in some $ now
folks should pay their bills
Mortgage Bondholders May Bear Subprime Loan Risk (Update3)
Bachus said he favors legislation similar to a law enacted in New Jersey in 2003 enabling homeowners whose loans are the result of predatory lending to gain compensation from lenders and investors who purchased the mortgages. The indemnity includes attorneys’ fees, the borrower’s total loan payments and the cost of terminating the borrower’s remaining liability.
It my be sooner than the next administration!
http://www.bloomberg.com/apps/news?pid=20601087&sid=aC2vvj3s9w9A&refer=home
This a link to article.
Thank you, kckid! Love to see the lenders bear the brunt of the losses. That’s where it all began, and it should end there as well.
I have no problem with the “tougher” bankruptcy laws. People who make “decent” money should have consequences for filing bankruptcy. If it puts them in the “poor house” for 10, 15 years for filing, I have absolutely no problem with that.
I know too many young people (35-under) who have filed bankruptcy once, some even twice, whose lifestyles today far exceed mine mainly because the old bankruptcy laws let them skate without enough consequences. Note: these were people whose bankruptcies were NOT brought on by medical bills, but just simply living beyond their means…
I’m not so sure about that. Laxer bankruptcy laws mean tighter lending standards, which would be a good thing.
There is plenty of blame on both side - borrower and lender - this time around. I don’t see why we should just get angry with one side.
I knew a guy who went BK over 23k in debt. His reason was he didn’t feel like doing what it would take to pay it back.
A girl I know has never owned a used car (she buys ‘em new). She earns about 35k per year, and has about 35k in credit card debt. She’s going BK too, ’cause the credit card companies have lots of money, and they price the risk into the interest rates. When I asked how she got 35k in cc debt, she said “You know, sometimes you just say I deserve this…”
I guess I’m the fool. I worked my way through my graduate degree, and when I got my masters it was bought and paid for, as well as having paid off my undergraduate school loans.
Paul
“The greenback enjoying only a brief bounce from the stronger than expected employment results, came under selling pressure once again on fears that the sub-prime mortgage problem was beginning to spread throughout other credit sectors of the US economy. The dollar sell-off was precipitated by 15% plunge in shares of American Home Mortgage after the REIT announced that its earnings would be heavily impacted by the losses in Alt-A mortgages which are a grade higher than sub-prime but are nevertheless beginning to experience the same type of problems as the lower end of the market.” dailyfx 4-10-07
The euro is 1.3422 this morn up almost 100 pts off the lows.
Check out the high-yielders, like AUD and NZD, too. 17-year high for the currency Down Under. We may have mocked those crappy Crocodile Dundee movies, but the Aussies are getting the last laugh! LOL
The Kiwi $ is oh so overvalued now…
Their housing bubble?
Up 300 to 400% in the past 6 years~
And the world went mad.
This is what makes it so scary. Its worldwide insanity (now we know where all the Asian liquidity has been going!). The whole world is going to crash all at once.
We watched “It’s a Mad, Mad World” a few weeks ago…
Seemingly, every comedian from 1940 to 1963 had a part.
Comedy is good medicine.
I have been touting AUD here for about 6 months. Correct, they have a housing bubble problem too. What they have that we DON’T have, is an ability to sell raw materials to China and India, if the latter economies continue to grow. But maybe it’s time for me to reduce AUD holdings. I don’t know. It’s pleasant to get near 6% nominal interest on AU govt bonds whose currency is also appreciating (in USD terms).
Think of how the new distribution plan for water will work out…
Those countries with mountains, will be the recipients of the most freshwater, in the form of snowpack.
Aussie’s got Mount Kozzy (7,000 feet or so) and nothing else.
And they are in the middle of a horrible drought.
How do you guys invest in foreign bonds or money markets? What’s a straightforward way to do it?
for those thinking about buying Aussie or NZ dollars: just look at what happened to the Kiwi dollar over the last year; and that was just because of some minor signs of trouble ahead. If the carry trade stops, you might loose more in a few months than you get back in 5-10 years because of the higher interest rates. And check the Iceland krona for a taste of what is ahead for some currencies.
Fitch Ratings Lowers Hovnanian Enterprises Outlook to ‘Negative’ Citing Housing Market
NEW YORK (AP) — Fitch Ratings dropped Hovnanian Enterprises Inc.’s outlook to “Negative” from “Stable,” citing a more challenging market for homebuilders.
The ratings agency reaffirmed non-investment grade ratings for the company’s issuer default rating, $1.66 billion in senior unsecured debt and $1.5 billion unsecured bank credit facility. It also affirmed a speculative rating for $400 million in senior subordinated notes and a highly speculative rating for $135 million of Series A perpetual preferred stock.
“The housing sector is in the midst of a meaningful, multi-year downturn,” Fitch said in a statement.
http://biz.yahoo.com/ap/070409/hovanian_ratings.html?.v=1
“The housing sector is in the midst of a meaningful, multi-year downturn,” Where was Fitch last year, say April 2006, doing their due diligence on these over hyped HBs. Isn’t that what they are getting paid for? This whole Wall Street fabric is smoke and mirrors, and the fleecing of investors thru CNBC and their friends just continues.
In April 2006, the markets had a negative bias against the HB stocks which resulted in them running down to 52-week lows in July.
What I don’t get, is how did they rebound from those July lows when the fundamentals have been getting worse, not better? Most of them are on the down-swing again now, however there are a few gravity-defying acts out there.
Take NVR for example. It is up 75% from July lows right now, and showing few signs of going down. Mainly because of company share buy-backs which are being used to prop the stock price. Also, NVR being an Amex stock, probably doesn’t get the scrutiny the other HB’s do. Even though it has a $4 billion market cap…
Just curious - does the Alt A category include interest only and option ARM loans - or is the category mostly the low documentation loans? Is there such a creature as a prime Option ARM loan?
I know nothing little about this (all my lending is fixed-rate amortizing), but if you google “ARM reset schedule”, the chart from Credit Suisse breaks out option-ARMs as something separate from Alt-A. I do believe Alt-A can include IO-ARMs, and the resets (to amortizing) will peak in 2010-2011.
i guess if I were to nutshell it, Alt-A sums up anything that deviates from standard underwriting when it comes to A-credit borrowers. For example, you could have both A-paper and Alt-A Option ARM’s. The straight A-paper OpARM would follow all the standard underwriting guidelines (income documentation, reserves, LTV, ect.), whereas the Alt-A OpARM would overlook, or throw out, one of the qualifying factors normally used in approval process. To offset the risk now assumed by the lender/investor, the rate and/or fees are increased. So, you could have an A-paper borrower but for some reason one area of his/her credit spectrum is lacking. Alt-A picks up where A left them, that is, in the lurch. Instead of looking at it from type of loan program perspective, looks at it from the underwriting perspective, because you can have the same types of loan programs in each catagory. It’s just that one type fully documents all information provided for qualification and the other doesn’t. Alt-A can throw out just one of the factors used in the qualification process, or perhaps throw out all of them as is the case with the infamous No-Doc. But, to drive the point home, whether a a borrower is full-doc or no-doc doesn’t necessarily change the program type. You could have a 30yrfxd full-doc, or a 30yrfxd no-doc. In the end they’re both a 30yrfxd. It’s just that the latter will end up with a higher rate and/or fees to accomadate the risk assumed by the lender/investor.
I hope I didn’t confuse.
Great explanation, thanks!
Alt-A and subprime refer to the customer.
I/O and option ARM refer to the product.
A lender can make a risky loan to a safe customer, or a safe loan to a risky customer, or as the last few years have seen, they can make risky loans to risky customers.
“Alt-A loans are also vulnerable to the deterioration in formerly hot housing markets along the coasts and in the Southwest, because they were often used by investors who were buying properties with the intention of quickly reselling them at a profit.”
This is very relevant to resort communities. I have friends that live in Eagle Co - which is near Vail. All over the Eagle - Vail area, there are tons of “investment” groups whom have bought homes and are currently renting them out to local workers. The same is true for Crested Butte and Durango.
The investment groups are using Option ARM loans and making the minimum payment because there is no way the local rental rates can cover the traditional mortgage costs. The loans are marketed as “loans to maximize cash flow for property owners.” These investment groups are banking on rapid appreciation to cover the accumulated amortization and other losses. Of course, these investment groups are banking on a waive of well heeled baby boomers to come in a save the day. It’s going to be very interesting to see what happens to resort properties when the bottom falls out. Ski or Beach Condos may become very very very cheap.
Two whole days without a California thread. Please consider the pent-up (posting) demand …
Punishment for thread jacking!
Just an observation (I live a long way Southwest of CA).
Demand? What demand? Have you been paying attention?
Don’t worry, Ben will have a “special thread” for Calif and sub threads for every “county” in the state…the stories are going to read: “Attack of the real estate loans” or “How I lost my house, my wife, my real estate related job, and my Chinese Shih Tzu…all in the last 30 days”
I just posted this in the Florida thread, since I have not seen any CA threads for a while. Since you bring it up, and are starving for CA News, you will really enjoy this report from Sacramento. Max at SacRealStats does outstanding work. This is the latest on distressed properties coming on the Sacramento market. 17% of the listings are distressed, growing at a rate of 20%/month! No one knows how deep the distressed pool is, but keep in mind this is not just foreclosures. This is short sale, NODs, and foreclosures. I suggest the real action is just getting started. All the shorts and NODs will become foreclosures soon enough. The real hidden story is that the lenders can not process the foreclosures fast enough to get them back on the market. Countrywide has something like 170 REO’s listed for sale in Sacramento. But the rumor is they own another 170 which have not even been listed for sale yet. Now multiply that times the number of lenders foreclosing on houses. Inventory, inventory, inventory. Vacant, vacant, vacant.
Take a look at
http://sacrealstats.blogspot.com/2007/04/distressed-properties-update.html
Very interesting trend. And the builders keep piling on the new homes at lower sales points than 2006.
“There is science, logic, reason; there is thought verified by experience.
And then there is California.”
Edward Abbey
“and then there is California” priceless! So no comment on the SF Chronicle articel from the Sunday paper? Are they high?? I only say a ‘bounce’ in sales the last week in Jan and the first week in Feb. here’s the link to the article: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/08/REGMQP3Q4J1.DTL&hw=real+estate&sn=015&sc=550
’saw’ a bounce…should not rush when I post!
Just in case you need a California fix:
http://centralcoasthousingbubble.blogspot.com/
US move to file trade cases against China ‘not wise’
“”It’s not a sensible nor a rational move for the US government to file such a complaint,” Tian Lipu, commissioner of the State Intellectual Property Office of China, said.
If these complaints add up to the hesitant first steps toward an all-out trade war with China, everyone will lose, including American workers, whom the White House and lawmakers say they are trying to protect.”
also this morning
“China saw a drastic decline for its monthly trade surplus in March to report only about US$6.9 billion, just about 29 percent of that recorded for February, the General Administration of Customs said on Tuesday.”
from The NY Times editorial:
“A trade war would do more harm to American business than to China’s subsidies. What would happen to Boeing if the steel used in its jets became more expensive? The last thing a country with a record trade deficit can afford is to hurt its exporters.”
http://tinyurl.com/2sxxz4
This nation of idiots blaming China for our policies - and our policies are designed to protect our rich. There is nothing the US government can do to prevent the collapse of housing. However, they can certainly accelerate the decline.
All economic policy is based on agreements. Groups of people then decide to go along with those agreements. When the agreements don’t work out, change the agreements. We should never have done business with China in the first place.
We can create a whole, new economic system if the old one isn’t working out. Why not? It has been done down through the ages.
There is nothing the US government can do to prevent the collapse of housing. However, they can certainly accelerate the decline.
Sad but true.
My one concern is a Smoot-Hawley type of act…
Neil
Consider the intelligence level of the average coiffed Congresscritter.
Consider the idiocies they put into law on a regular basis, like the corn ethanol subsididy that is causing food prices to surge.
I think it’s reasonable to conclude that Congress is likely to at least vote on Smoot-Hawley II.
“Subsididy”, now touring P Diddy.
Tortilla prices have been rising so quickly in Mexico (the poor literally live off of tortillas and beans) that they were approaching levels of civil unrest.
Did you know that a state the size of Iowa, completely covered in corn, would only create enough gas to power America’s cars for 5 days.
per year, presumably?
Great. Just what we need, more corn fields as if we don’t have enough already. Egads already.
Great. Take a substance that we can live without (oil), and replace it with corn, which requires massive use of water. The coming water shortage will make the oil crises appear meaningless.
Just like subprime bailouts, the replacement of oil extraction with ethanol production simply postpones the bad that few experience into a worse situation that all experience.
Bingo.
And few people realize parts of the US Midwest are drawing down underground water to unsustainable levels. Oklahoma, Kansas, will be running out of irrigatable water in the next 10-15 years.
Does anyone remember reading about the “Dust Bowl”? That was caused by poor agricultural practices, but affected the same geographic area in the 1930’s (Great Depression).
I think Iowa is already covered in corn
Actually it’s much more stupid than that. Corn production depends heavily on fertilizers, and for fertilizers production they use a lot of natural gas. The only things that make it physible today is that we import fertilizers from Russia and they have much lower “internal” natural gas prices. But this is changing quickly. By 2010 they supposed to charge about the same as international market prices. The funny thing is: our vise-president is fully aware of the situation, through his energy consultants. So it’s all just pop-speak no more than that.
Michael, you nailed it. I read somewhere that it all comes down to the amount of energy input you need to produce the corn vs. the amount of energy output you get from it, whether to power a car, or a human body, or cattle. If you think about it that way, it doesn’t even make sense to “corn feed” your cattle, because you are not only feeding the animal something it has not evolved to eat (the beasts have four stomachs for crissakes), you are using up scarce oil and gas to produce your beef, which is incredibly stupid. Long story short, we are again assigning resources in a bad way, because growing corn for fuel takes much more energy input than the output you get. It’s as simple as that, but no one is paying attention.
Cass, Corn fed beef tastes better! Otherwise you are right on!
Interesting letter to the Editor in last week’s ‘New Scientist’, where a reader pointed out that good old fashioned hemp produces more ethanol than, well, just about anything else.
Also take into account its fast growing time, it ability to grow just about anywhere, and the myriad (besides the obvious) other uses such as textiles and jute and oil, to name but a few…
Industrial hemp only has a fraction of the THC component of marijuana, which could easily be destroyed in processing.
Now, if only the govt could get over itself on the stupid ‘just say NO!’ propaganda…
…and, if it was good enough for George Washington (major hemp producer and President of the United States, we might have a winner….
Here Here!! Industrial Hemp IS the plant of the future…and the past
poltical suicide, its too easy to hate pot-heads… and too expensive for the “Man” to give back the ill gotten gains in the drug war.
I’m disagree with you. Grass fed beef tastes better.
Hoz, Pharmer John.
I also think that grass fed beef tastes better, and it is healthier. The thing is, corn fed is more tender, which is not the same as more tasty. That’s why many people think it’s better, but it’s not, IMHO.
Just a difference in taste buds - raccoon tastes incredible in the fall, but for some reason when it comes out of the deep freeze its yuckee.
“We have seen pictures [of mars] where there there are canals, we believe, and water. If there is water, that means there is oxygen. If oxygen, that means we can breathe.”
Dan Quayle
One of our brilliant electees.
That would actually make sense if he meant that we wouldn’t need to carry our own oxygen if we wanted to setup a Mars base someday.
Why was the trade deficit down so much in March? That’s either good or bad….depending….bad because it could mean the economy is slowing rapidly (less imports)…good because people probablythink it means good news….and less pressure on the dollar?
What steel? Steel is way too heavy for planes. Planes are made of aluminum or other lighter metals.
This article is a lecture by a reporter without a clue. Dean Baker has a pretty good takedown of this article.
I read the “steel” comment and thought the same thing. But if it was Aluminum it would be a rant against India, If it was Cobalt it would be against Australia and if it was the “rare earth metals” against Russia and China.
The rest of the Bakers comments are arguable. But IMHO a trade war between the US and China is suicide.
It’d be David against Goliath…
David’s got no sling or stone, this go round~
The 787 is going to be made mostly of composite materials.
Boeing would stand to be the biggest winner in the game of hyperinflation, as they sell our most valuable non food or war item, in terms of desire, by the world.
I’ve flown on Boeing and Airbus planes extensively and i’d be hard pressed to tell the difference, both are of a high standard.
Boeing has been eating Airbus’s lunch lately, riding the ever declining Dollar to ever higher profits~
The flipside to having your currency devalued, is it makes you a stronger exporter.
I can think of no other product we make here, that has just one competitor (soon to be 2, China is ramping up their production) and is highly thought of, by the world @ large…
I’m biased (who isn’t?)
Care to give any examples of products we make, that the world wants?
Well, last month I could have said: At home dialysis machine’s…but now the USA company that makes them… is moving production to Mexico. ;-(
I know people who work for airlines at varous levels. They invariably tell me that Boeing planes are of much higher quality than their Airbus counterparts. One even told me that he thought Airbus jets are junk and he refuses to be a crew member on an Airbus jet.
Boeing is concerned with making money (For the short or long term, depending on the weather in Chicago.) Airbus is concerned with full employment and “beating Boeing”. They sold a lot of airplanes at low prices a few of years ago when they “won”. Yippee, they “win”.
In the late 1960’s and 70’s there was a chance to go into supersonic transports. The US and Boeing looked at it hard and decided it wouldn’t pay. Europe did it anyway. Yippee - they win.
In new technology, a big decision recently seemingly was to invest in development of a new plane stressing efficiency, or for a larger plane. Boeing looked at it hard and decided not to go big. Airbus decided to go big. Was it the right decision, or perhaps the only way at the time to “beat Boeing” and ensure employment. Well, It looks like they are going to win in the coming huge plane marketplace (whenever the plane arrives.) Yippee!
They win… nothing. The Concorde was a net loser, and the A380 is threatening Airbus’ very existence.
JSF, F-16, F-18….military hardware… I would also say that we do export some Catepillar and John Deere products (although some are made overseas too.).
No durable war goods allowed.
Give me more examples.
“You are in the courtroom of world opinion. You have denied they exist, and I want to know if I understood you correctly. I am prepared to wait for my answer until hell freezes over. And I am also prepared to present the evidence in this room!”
Adlai E. Stevenson, Jr.
The US actually does export quite a bit. Chemicals, auto parts, medical equipment, medicines, heavy machinery, auto parts, aircraft, cookware, turbines, drilling equipment, rubber products &c.
Yeah, things are screwed up, but saying that Boeing is the only company that exports anything from the US is a bit of a distortion.
I suppose the problem is that the US doesn’t make any of the novelty goods which US consumers are so fond of, so the impression is that no one works in manufacturing anymore
So go ahead and give me specifics…
I can take it.
You have had specifics. Silversurfer gave you a long list and Deere and Cat both do extensive manufacturing in the states. Additionally you can add: most x-ray and medical imaging systems, seeds, most EMS companies (all the large ones) have multiple manufacturing facilities in the US, a lot of Brunswick’s manufacturing (across all their product lines) is done in the US. In short, there is still a lot of manufacturing done in the US. Just because you haven’t heard about it, doesn’t mean it doesn’t exist.
I’d guess the lion’s share of it all is not made here…
I’m after made in the USA items, like the Chaco sandals i’m wearing. It says they are made in Colorado, USA, on the label.
Made here, sold here.
China is expected to purchase between 1,600 and 2,900 planes over the next 20 years. Boeing anticipates 1,200 -2,000 orders. A year ago that was a given, now not so sure. China is making a concerted effort to develop jumbo jets and expects to be selling these planes by 2020.
China announced last month its short range plane that will be available to the public in 2009.
The new plane will sell for about $5M less than the Bombardier.
It also appears that Honda is going to get into the small aircraft business…Bye Bye Cessna….
Tort lawsuits brought down the small American planemaker…
I learned to fly on the Chevy Nova of the airways, a 1978 Cessna 172, some years ago~
You can no longer sue airframe makers after the aircraft is 17 (or maybe it is 18) years old. This law has been on the books for a while.
Don’t bet on the Chinese (or Honda) yet……..I think that they will both find out that the US aircraft manufacturers are going to be a lot tougher competition than the Big 3 in Detroit…..if for no other reason, that their labor costs aren’t dictated by the UAW.
Speaking of steel……has anyone else on this board had a problem in their business with getting quality steel, because the world is being overrun by the substandard stuff coming out of China? Have some direct knowledge of long lead times for aircraft landing gear components, because none of the stuff coming out of China is suitable.
Just yesterday got some new tires. Went through the tire display area to see where they were made. Saw lots from Korea, China, Thailand. Goodyear Eagles and Michelins were made in USA. Bought a nice set of Michelins. All Americans should seek out quality US products now or this country is done.
Isn’t Michelin Tire a French company?
Yes, Michelin is French. Goodyear makes a lot of tires in Canada, Mexico, and Europe. It should actually be fairly difficult to find American-made Goodyears for a while - they had a very long strike at all their US factories and Goodyear spent all their “professional workers manning the factory lines” efforts building tires for the US military. They didn’t want to fall behind and get their factory repossessed by the DoD.
I was talking to an engineer at the Hummer plant in Indiana. They were cranking out Hummers and putting on any old tires they could find while they stored them for the military to come get them. There just weren’t enough mil-spec tires to be had. Everything was being sent directly to Iraq.
When I was a kid, the supermarket checker was a thing of genius…
He or she knew the prices of everything and their memorization skills combined with quickness, earned them a good wage, which they still enjoy for the time being~
To present day:
They serve the same role, as a checker @ wally world.
When we lose the checker union, it will be amongst the last pieces of the labor puzzle to unravel, before our very eyes.
Can you think of many other union jobs you come in ccontact with, weekly?
Things Change.
I use Walmart checkers (no union).
Albertsons decided to compete by raising prices and laying off checkers and forcing us to use self-checkout. (Then hiring back more workers to watch over us and help us cursing at the self-checkout machines.) Now Albertson’s is competing in my area by closing the 4 stores within 10 or more miles of my house.
“Care to give examples of products we make, that the world wants?”
I’d go with Pharmaceuticals for starters. Next would be food (exports of wheat and corn, but corn exports are being pinched by ethanol).
Another strong export item: military technology. Also, believe it or not, waste products such as waste paper bales that get used as raw materials. We have relatively “clean” waste paper streams here in the US and a lot of it gets shipped over to China, Korea, Japan to be used to make paper products.
With your environmental slant on things, I thought you’d appreciate hearing that….
Maybe current pharmaceuticals, but because of our country’s policies regarding stem cell research most new work is occurring in the ROK, Vietnam, Thailand, and Myanmar.
In 20 years, royalties will be paid to the companies operating there. The current global leaders in SouthEast Asia are Pfizer and GlaxoSmithKline, however there are hundreds of Asian Pharmaceutical Cos. working there with revenues from $100/yr to $1B/yr. The market is enormous and the US is not in it.
Now I am upset.
“In a small study, a treatment that included stem cell transplantation induced prolonged insulin independence in patients with newly diagnosed type 1, or insulin-dependent, diabetes.
In a statement, lead author Dr. Julio C. Voltarelli, from the Regional Blood Center in Ribeiro Preto, Brazil, called the results “very encouraging.”
Brilliant research leading to new and exciting treatments and licensed because of our extremist political policies to another country.
http://tinyurl.com/34avy3
Yahoo headline news
We are doomed.
How about vibrating dildos?
“There are a number of mechanical devices which increase sexual arousal, particularly in women.
Chief among these is the Mercedes-Benz 380SL convertible” PJ O’Rourke
Sorry made in Germany.
All that stuff is made in China.
Scrap metal
We sold a rather extensive amount of scrap metal to Japan, during the 1930’s…
Beginning to sound familiar?
“Care to give examples of products we make, that the world wants?”
Excellent question, I can only come up with the likes of music, TV Programming, and Movies….. I think the rest of the world still loves to consume the USA bullshit flash-in-the-pan crap that we are sooooooo good at turning out.
Everything you mentioned is oh so easily ripped off, by anybody…
Besides, in case you weren’t looking, hollywood ran out of ideas the past decade and have remade every 60’s & 70’s tv series into a movie.
Bankrupt of any fresh ideas~
My far eastern same age immigrant wife’s musical tastes are about 15 years “behind” mine. (This week she’s on a late 1970’s kick. egad. There’s a reason I don’t remember high school.)
Maybe these retread movies are designed for the worldwide DVD market.
Care to give any examples of products we make, that the world wants?
I work as an American machinist making parts for all kinds of things that get sent abroad. One high-dollar example would be GE power generating turbines.
Maybe our belligerence towards China in this matter explains the all-time high in the AUD and NZD currencies. Some materials that China may still have been buying from US, they will now buy from nearer neighbors.
I’ve been to Australia and New Zealand perhaps a dozen times and my fellow citizens make a huge mistake thinking the 2 countries are similar, because they are 2 inches (over 1,000 miles of open water) apart on the map.
Australia: 85% barren wasteland, with tons of mineral wealth
New Zealand: Ireland smashed into Costa Rica and Switzerland, with amazing results. Green everywhere, with rain forests and glacier ladden mountains, full of snow and ice.
Now you know.
there is something they have in common: both are commodity producers. Oz for hard commodities (metals, coal etc.) and NZ for soft commodities (agricultural products). Both have an excellent position as exporters to relatively nearby China and SE Asia, with products that are in short supply there. I think both have a bright future because of that, but there might be some huge bumps in the road when the carry trade unwinds.
Agreed.
There is one other slight difference between the 2 countries~
The vast majority of early settlers to Australia came as convicts and not one New Zealander ever came under a similar dark cloud to the land of long white cloud~
“Maybe our “recent” belligerence towards China
Didn’t Paulson just make like x3 trips over there? Wall Street’s arm twisting must not have gone over to well…maybe their Yakty Yak “got lost in translation”
Nope, the AUD and NZD are the beneficiaries of the carry trade (both institutional and via individual investors in Japan and US).
The IMF long the strong arm of the US and lending moneys under US terms to third world and emerging economies has lost its clout.
China is willing to lend money to Africa, South America, Asian buddies etc. without any political considerations. The IMF is cash rich without any borrowers. China needs the raw imports, China is creating future markets.
China is setting up as many free trade agreements as it possibly can.
“Both the countries (ROK & China) are keen on free trade agreements (FTAs) but want to jointly study the possibility of setting up a Sino-South Korean free-trade zone before deciding when to launch their FTA negotiations.
China has FTAs with more than two dozen economies, while the ROK just inked its first with the United States. It is trying to hold talks with India, Canada and Japan in the hope of signing FTAs.
Experts from China and the ROK have agreed that an FTA would promote bilateral trade and investment further, boost their economies and create more jobs.”
(and why China doesn’t give a hoot about what the US does to violate previous trade agreements and China will continue to act like China)
“Nation faces grim job situation,24 million job seekers ”
(China needs 15M jobs per yr just to get ahead, this year is on track for ~9M jobs - break even. Last year there were riots for jobs in every major city, this year might just be worse. China does anything it can to create jobs and the US is picking a trade war that can bring both countries down. China will have 5M college graduates this year looking for jobs).
“Ripple effects just starting to show”, by Heather Haddon, Herald News (NorthJersey.com), April 10, 2007.
http://tinyurl.com/32dcmx
“It will be like Hurricane Katrina hit the entire country.”
Wow!!
That’s some quote.
If the quote came from some group other than The center for Responsible Lending, I would agree. CRL is a parasite.
“CRL is a parasite.”
Amen, Brothah Hoz. Testify!
Good point Hoz.
Where do I sign up for my FEMA trailer?
I have the docs here at my crib, but you’ll need to send me a cashier’s check for $5000 as a security deposit. LMAO
the NJ bubble site has LOWBALL some decent areas w bids of 20-30% off list accepted
Is someone who had a low credit score and who put zero down and maybe made a couple of monthly payments that were at or below equivalent rent payments really hurt financially by foreclosure? Or are these tales of woe caused by the pervasive “entitlement mentality” we now have in this country?
The myth of the risky sub-prime borrower:
http://www.alternet.org/story/50322/
Bill, this gets to me too. There is this sympathy play for folks who bought within the past couple years with nothing down, no skin in the game, who are now losing their homes. But these people are really just ending up back where they started… but with a worse credit rating, which is appropriate. In normal times they would not have been homeowners yet… They would either be renting and not saving, or renting and saving up for future responsible homeownership.
I’m not in favor of bailouts for anyone, but I’m especially opposed to bailouts for people who never had any skin in the game.
I sat through NPR Tuesday night on the drive home listening to a lady explain the subprime problems including how people will “usually” pay their mortgage by skimping on food somehow even when they get into trouble. So not much to worry about.
I think she might want to update that statistic during this cycle.
We’ve heard about the NAR’s “truisms”. There seem to be a lot of similar out-moded out-lived out-gambled out-frauded “truisms” in the economics field that may be behind the “subprime is contained” mantra.
dr horton / no spring bounce / orders down 37%
Those who piled into commercial property risk a shock
Current recovery great for profits, poor by most other measures
http://immobilienblasen.blogspot.com/
I consider my commercial reit shorts investment shorts.
I’m with you
DHI posted dismal quarterly results this morning.
I mean, REALLY dismal:
“D.R. Horton 2Q Orders Fall 37 Percent”
http://biz.yahoo.com/ap/070410/d_r_horton_orders.html?.v=1
the realtors in orlando are going to europe to drum up business in the below article and msnbc has a couple good articles on fraud
http://www.orlandosentinel.com/classified/realestate/orl-europe1007apr10,0,1731847.story?coll=orl-realestate-headlines
clever idea, because the housing market in Europe is still crazy as ever. No sign af all that the flood of easy money is ending. And there is a huge appetite in Europe for foreign properties, especially with young buyers.
Attenetion Ladies and Gentleman:
In order to Dumb down America even more we present Nude Women Wrestling!!! Forget American Idol, or the Reality shows, or even Paris Hilton, those are too high brow for you Mr & Mrs Air head America.
http://www.nwwl.com/
Now show nude male wrestling (in shape, please ;)) and maybe I’ll turn on the TV.
Hmmm …..txchic, a new high profit business opportunity for you?
A lot more interesting then just buying Puts on homebuilders…right?
… and lots of unemployed “buff” construction guys needing a new way to earn cash….
now some of them we might want to see.
Right. No mortgage bankers or loan officers please
What about that handsome dude from WaMu?
Common Chic;….Didn’t you enjoy the “Full Monty” ??
careful, the out of realtors/appraisers etc might get ideas, and I don’t think I have ever seen one I want to see naked…
There’s always Borat.
Ugh,
That entire movie was disgusting, not funny. No socially redeeming values anywhere…
http://www.transmogrifier.org/ch/comics/93/07/20.gif
bluto,
Thanks…Monet on a postage stamp, 39 cents…cheap art.
Growth Prospects in U.S. Dim on Subprime Crisis, Economists Say
” Subprime borrowers’ inability to make mortgage payments has sparked concern that lenders will tighten credit standards, reducing the number of homebuyers who qualify for a loan. Home sales last year dropped 9.7 percent, the most since 1982, from a record in 2005. Residential construction in the fourth quarter declined the most since 1991.
Business investment is also falling. Corporate spending on new equipment dropped at an annual pace of 4.8 percent in the fourth quarter, the most in four years. Recent figures on sales of durable goods suggest spending decreased again last quarter, economists said. …
“Since the risks to both economic growth and inflation are up, it makes the Fed even more uncertain,” Lehman’s Harris said. “The Fed is a deer in the headlights right now. They don’t know which problem to address.” In contrast to the survey median, Harris forecasts central bankers will be paralyzed to act until the middle of 2008….”
Bloomberg
april 10
http://tinyurl.com/23n2d9
also, under Subprime Uncertainty … “No one’s sure of the scope of the problems,” said Harris, whose first-quarter forecast matched the survey median. “We don’t have a lot of history to draw from in estimating the impact. It’s difficult to quantify.”
The “deer in the headlights” quote appeared three weeks ago in connection with the Fed’s last meeting. I’m surprised more people haven’t recognized that Bernanke’s paralyzed.
“No rate change expected from Fed this week”, By Barbara Hagenbaugh, USA TODAY, March 19, 2007.
http://tinyurl.com/3ydpvb
Great catch ! I thought I had seen that before, Bernanke’s comments at the IMF today might set the tone for the next 3 months.
Hey, I wouldn’t know what to do if I were him. Short term rates are, if anything, high relative to official inflation, yet long-term rates are low. And if he cuts rates, long term rates may rise.
The scary scenario is that more drastic measures may be required, in either direction, to the Fed to have any effect. And during the run-up, the Fed couldn’t jawbone the mortgage industry because banks weren’t making the loans.
Ah Argentina,
“Unstable inflation and seignorage revenues in Latin America : How many times can the government fool people?”
“…A government maximizes inflationary revenues by adopting temporary unstable monetary policies because people tend to revise their expectations (slower) faster in periods of (dec-) accelerating inflation as the cost of collecting information (rises) falls compared with other welfare losses. When the rate of inflation is relatively high, a restrictive monetary policy is implemented so people can reconstitute monetary balances. When the inflation rate is low, an expansive monetary policy isadopted to confiscate existing real balances. Governments may appear for some time to succeed in fooling people, by adopting temporary reforms and restoring confidence, but their reputation is damaged when they repeatedly do so. Utlimately, private agents react so quickly and with such sophistication that even small fiscal gaps produce precipitous declines in money demand….”
World Bank April 1994 (caution pdf)
http://tinyurl.com/yw928x
Thanks Hoz, my mind needs constant reminders of the near past…like Denny Crane…Mad cow disease.
IMHO, it’s interesting how much attention people give the overnight rate. The fed raised the rate like crazy and the 10yr and 30yr have been pretty stable.
The fed produces great information and statistics which deserve attention, but their control of the overnight rate appears to have little effect on the long end of the curve.
They’re concerned about raising interest rates and hurting housing, but should they be? It seems like it’s out of their control.
Here’s some more detail on the Horton announcement — what I find interesting is the price decline, which nets out to about 6% YOY. From my blog …
Several weeks ago, D.R. Horton CEO Donald Tomnitz grabbed some headlines by saying “2007 is going to suck, all 12 months of the calendar year.” And based on the numbers his company just released, Horton is having no problem keeping that promise. In the fiscal second quarter …
* Orders plunged 37% to 9,983 units worth $2.6 billion, compared with 15,771 units worth $4.4 billion in the same period of 2006. There was no solace to be found in the regional breakdown, either. Orders dropped in 6 out of 6 areas of operation.
* If you divide the dollar volume of orders by the unit volume for Q2 2006, you get an average price of $276,659. Do the same for Q2 2007 and you get $260,372. That’s good for a 5.9% drop.
* Cancellation rates remain in the ozone — at 32% in the period that ended March 31.
* Chairman of the Board Donald Horton didn’t deliver much in the way of positive commentary either. His remarks: “Market conditions for new home sales continue to be challenging in most of our markets as inventory levels of both new and existing homes remain high. Our cancellation rate is essentially unchanged from the prior quarter, but it remains above our historical range as we continue to see an increase in the use of sales incentives in many of our markets. We continue to sell more homes than any other builder, even though the spring selling season has not gotten off to its usual strong start.”
http://tinyurl.com/3bfu7z
Horton is the perfect earnings report for Crazy Crammer to recommend as a “Strong Buy” turn around candidate. Really, how much worse could it get? MUCH WORSE!
actually cramer is bearish on dr horton’s prospects at this point in time. he was down on a couple of other HBs as well (Lennar and someone else) but was more bullish on centex - i believe.
Who is John Galt?
Maybe we are John Galt, or Ben Jones is John Galt, and this is Galt’s Gulch. But hmm, perhaps I am flattering us excessively.
We are the unstopable force, a power unleashed…
Thanks to the information age.
The cream always rises to the top…
the ultimate prime mover
Also from Bloomberg, a bipartisan agreement in Congress on an private solution — make mortgage bond holders swallow the toxic waste. For all the criticism of Fannie, Freddie, and rules and regulations, those conforming mortgage rules did seem to prevent people from harming themselves. As people went around it, we’ve seen the equivalent of a hot money third world boom and bust right here in our own country.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5kKweryyaCc&refer=home
What bondholders? You’d need to put a “predator surcharge” on GSE agency debt like you have a “piracy surcharge” on blank audio tapes. The things are just sold too widely.
“we’ve seen the equivalent of a hot money third world boom and bust right here in our own country.”
Exactly, WT!!!!! Testify! This appears to be part and parcel of the “third worldization” of the US. Combined with illegal immigration, exhaustion of our military, destruction of the rule of law (except as it protects the wealthy fraudsters), elmination of the middle class, etc.
AT least thats a start in the right direction. Can’t imagine trying to figure out whos on the hook with all the derivatives and slicing and dicing of mortgage loans these days.
Glad I do not lend in New Jersey. AZ law is lender-friendly, as my first (and last) PHX lawyer told me 14 years ago. I can’t see that a defrauded borrower should be entitled to any compensation greater than an escape from the remaining indebtedness.
A pocket size glimpse of our future?
http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm
“Throughout the year, the government was a passive spectator to the unfolding crisis.”
Damn that sounds familiar.
I finished reading this complete post
from Mar 2000 IMF
“The closest analogy to such schemes is the asset bubble, whose economic impact is due to changes in perceived wealth. As a bubble expands, people believe themselves to be better off than they actually are, and their demand for goods and money increases, leading to a deterioration in a country’s external current account as well as increased output or accelerated inflation or both. If the bubble attracts foreign investors, capital inflows might be sufficient to fund the current account deficit. After the bubble bursts, perceived wealth falls dramatically. Demand for goods and money, as well as output and inflation rates, can be expected to decrease, while the current account balance is likely to improve.”
So the pyramid scheme unravels, the federal reserve knew of its consequences in 1994, the IMF does a beautiful job of analysis (afterwards) and 10 years after the collapse the economy is still struggling.
Lets make that: “Throughout the past 7 years, the government has been a passive spectator to the unfolding crisis”.
A big no doubt about it early a.m. move this morning, in all things that glitter…
Aladdin Sane, Just out of curiosity, why did you call me an “agent provocateur”?
In world war 2…
The term came about to describe those working from within, that acquired information about those that would do them harm.
Not, unlike that excellent bit of info you snagged off the internet, about the South Korean real estate market yesterday.
Perhaps I should have called you a fifth columnist, which swings both ways, not unlike our current dilemna in distinguishing the difference between a terrrorist and a freedom fighter?
http://en.wikipedia.org/wiki/Fifth_column
Ok, but from Wiki “agents provocateurs, French language, “inciting agent”) is a person who secretly disrupts a group’s activities from within the group. Agents provocateurs typically represent the interests of another group, or are agents directly assigned to provoke unrest, violence, debate, or argument by or within a group while acting as a member of the group. “
Imagine World War 2, but with the internet.
We are all Australian Coastwatchers hiding away, somewhere on a forgotten isle in the South Pacific, reporting from the front lines, about hostile activities, overhead.
“..In all things that glitter…”
“To shipbrokers, coal was black gold.”
Roald Dahl
The only coast line I’ll watch is Lake Superior. If its winter snowmobile across, summer sail across.
College freshmen of the future may have to bone up on spending, saving and debt before setting foot in a college classroom if the Minnesota Senate gets its way.
“I think everybody has an idea of what personal finance is — until they take a class,” said 20-year-old Amy Nesbitt, another student in Normandale’s personal finance class. “They don’t have a clue.”
Dille said that his plan goes hand in hand with another higher-education proposal that would clamp down on the marketing of credit cards at colleges and universities.
http://www.startribune.com/587/story/1110278.html
Why don’t they first start with the fundamentals:
What is money? (medium of exchange, store of value, unit of measure)
What is a dollar? (A silver coin with 371.25 grains of fine silver)
What does the constitution say about money (No state shall make any thing other than gold and silver a legal tender).
What do the great religious texts say about debt-based money? (Bible and Koran warn strongly against it)
What is the Federal Reserve? (Hint: It’s not federal, and there are no reserves)
I strongly doubt any of those questions will be addressed by the plan to “educate” people about money.
Yes BubbleViewer,
Something from H.G. Wells:
History is a race between education and catastrophe.
None of those will be addressed, because it’s a personal finance class, not an economics class, nor a philosophy of money systems class.
They’re gonna focus on making budgets, paying bills, and most importantly - how to figure out what you can afford to spend.
Frankly, they need to round up most of these kids’ parents, and make them take it, too. The amount of education debt families accrue nowdays is staggering. Parents don’t bother to save for their children’s college education on the assumption that there will be financial aid available, and then loudly complain when there isn’t - or when there isn’t enough. And, of course, public education isn’t good enough anymore, so they have to borrow money to send Snotleigh and Bratley to an expensive private school. Add in the kids’ running up credit card debt in both their names and that of their parents, and we’ve created a highly-educated debtor class well before they’re gainfully employed and looking to buy a home.
‘Twould be wise if they would include a section on Financial Fraud (scams, in their many mutations). I have watched Brian Williams’ exposes on identity theft, and Nigerian money-laundering scams the last couple of weeks, and wonder to myself at the numbers of people who seem to make more than a subsistence living from running these scams.
The underlying message from these frauds seems to be: “if something seems to be too good to be true, it probably is.”
He’s been doing these on Dateline NBC, 7pm Central on Tuesdays for the last couple of weeks. Not sure if he’ll be doing another one tonight….
As an aside, my girlfriends younger brother is now choosing between colleges that have accepted him here in Southern California. UCLA tuition and expenses is expected to cost 24k this year. The parents probably make around 110k combined, (engineer and teacher). UCLA offered $0 financial aid including $0 for federally subsidized student loans. They said the parent contribution should be 18k and the student contribution should be $6k. Over 4 years, that will be 100k basically of debt.
He was also accepted to LMU where my girlfriend and I attended (and met), and for which the cost of tuition and expenses has risen from 24k/yr in 2001 to over 42k/year. The starting salary for the same job I have today has risen MAYBE 7k from 41 to 48k. Holy crap the future is getting bombed on.
Can someone please give me some GOOD news???
And, since the tuition is not tax deductable you can times those numbers by two in what you need to earn to pay for it after tax….Just a mere $336 K on top of anything and everthing else that you need to pay for…No problemo…..
Wisconsin gives free tuition to returning Wisconsin vets at any state supported school. Illinois and Minnesota may do this also. With the GI bill ~$48K and free tuition college becomes affordable for these residents. So tell him to move to Wisconsin for 6 months and enlist for 4 years then get the degree. That is the best news I have on this snowy Tuesday.
College freshmen of the future…
should read HIGH SCHOOL SENIORS.
College freshmen of the future…
should read HIGH SCHOOL SENIORS.
Here is a somewhat ironice funny read. David Bach who wrote the book Automatic Millionaire convinced people to get into homes. That it was a guaranteed way to becoming a Millionaire. He never priced in the fact that home prices “COULD” drop.
Now this story by him on Yahoo talks about 6 steps you can take to save your house.
http://finance.yahoo.com/expert/article/millionaire/28733
He’s a slime.
He was on the agenda to present here in San Francisco as part of the Real Estate Expo with Donald Trump and all those other idiots. My sister in law tries to get us to go to these things is why I noticed that he was on the agenda. Part of me wants to attend one of these to see what type of people are attracted to this bunch of nonsense.
I remember reading one of David Bach’s online articles about all the apparent advantages in owning vs renting. He uses all kinds of incredibly bad assumptions and models in framing his arguments. Anyone with half a brain knows his models / assumptions are fundamentally flawed but the sheeple continue to suck it up. I guess they are paying the piper now.
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/09/AR2007040901463.html?hpid%3Dtopnews&sub=AR
By the time the scam unraveled, the credit of those participants had been ruined, hundreds of upscale properties had fallen into foreclosure and real estate prices had plummeted in some of this city’s most exclusive neighborhoods. Hill is about to go to federal prison.
I saw that article this morning. I had to really shake my head at the college students who would sell their very identity for $10,000. I wonder if 529 plans will cover that?
Not to belittle the scumminess of Hill though. That guy and his cronies should be locked up and forced to work until all debts can be paid. At $14.5 million for him personally, I figure that’ll be quite some time at minimum wage (like several lifetimes).
March Sales, Northern VA
Fairfax County 2007, 2006
Total Sold Dollar Volume: $667,550,650; $743,198,826 -10.18%
Median Sold Price: $456,000; $477,000 -4.40%
Total Units Sold: 1,261, 1,386 -9.02%
Loudoun County 2007, 2006
Total Sold Dollar Volume: $225,748,881; $300,020,320 -24.76%
Median Sold Price: $447,450; $503,500 -11.13%
Total Units Sold: 440, 552 -20.29%
Prince William County 2007, 2006
Total Sold Dollar Volume: $170,783,920; $305,187,841 -44.04%
Median Sold Price: $389,450; $395,000 -1.41%
Total Units Sold: 418, 699 -40.20%
That is some serious pain.
Hey Ben, your blog just went XXX-rated. Those numbers have to be considered the worst (best??) kind of bear-porn.
(They’re enough to turn bulls into steers. ;))
I see on your blog that Arlington held up a little better:
Arlington County 2007, 2006
Total Sold Dollar Volume: $143,291,295; $139,391,599 2.80%
Median Sold Price: $469,900; $470,000 -0.02%
Total Units Sold: 263, 248 6.05%
Any Alexandria stats?
Alexandria City 2007, 2006
Total Sold Dollar Volume: $97,715,939; $100,961,184 -3.21%
Average Sold Price: $525,355; $490,103 7.19%
Median Sold Price: $479,500; $445,000 7.75%
Total Units Sold: 186, 206 -9.71%
Thanks much! I think Alexandria and Arlington are in slightly better shape because of the lack of new SFR inventory (there’s not much space for SFR “developments” in these spots any more) - although condo and small townhouse developments still get built.
Things are definitely stepping back in the close-in suburbs, and condos are way overbuilt, but at least there aren’t ghost subdivisions to contend with.
I don’t have the data with me at the moment (it’s on my computer at home), but I’ve been tracking Arlington, Fairfax, and Loudoun, and in February all were ~12% off from the peak. Fairfax and Arlington showed a slight uptick in March. So, YOY, Loudoun looks worse. However, if you compare to the peak, all of the areas, from inside the beltway to the exurbs, have fallen by roughly the same amount.
If you want a real scare, got to realestate.yahoo.com/Foreclosures and take a look at Alexandria.
More Nova stats:
http://www.nvar.com/market/pressrelease/prgnvmar07.html
Keep in mind it was really bad year-over-year last year as well.
Last year - inventory up, sales down:
http://www.nvar.com/market/pressrelease/prgnvmar06.html
How long can this last before prices take a serious hit?
I wonder how many are still using 100% financing among the 1261 solf in fairfax county.
Thanks for posting the N. Virginia numbers. I’ve got a friend who will find them most helpful.
Mortgages move to the top on the MSNBC business page again.
http://www.msnbc.msn.com/id/17929461/
Go to minute 02:50. Margaret Brennan quoting figures from Property Shark, says that in Miami, for the quarter, there are 127 foreclosures per 1,000 households. That would be 12.7% of households in foreclosure. Can’t understand why a figure that high doesn’t get even “louder” Holy Crap coverage.
It makes no sense. Probably means per 100,000 households. (anyone else help with this info?)
http://www.emediawire.com/releases/2007/4/emw517469.htm
Miami Home Sales in First Quarter of 2007 Continue on Downward Trend…
That stat works out to about 2.6 of 1000 households.
http://www.bradenton.com/mld/bradenton/news/nation/16897123.htm
Home foreclosures in South Florida on the rise (3/13/07)
Now that South Fla # might be more in sync with the Miami #, comparing only the subprime segment of households. Although I take it many would be surprised if the Miami # fails to be at least a little more dramatically worse than the state average.
From Marketwatch today:
No surprise
Commentary: End of housing bubble should have been obvious to everyone
http://tinyurl.com/2adhgq
I found myself parking my car yesterday right in front of one of those $300K + condos that they are *still* building in downtown Denver. That’s when this hit me: How the hell are people expected to buy these things? Really? The builders have to know that most of these units aren’t ever going to get sold. Not when every other day there’s still some headline in one of the local papers about some poor sap having their house foreclosed.
Who the hell in Denver can afford to pay 300K for a condo? Who are they marketing this crap to? It’s not like Denver’s a mecca for high paying financial jobs or anything. I’m one of those techies who is still lucky enough to have a good paying job (and about half a year’s salary, tucked away in various reserves). As far as I’m concerned, if I wanted to buy a place, I should be able to afford a modest house by now, not some apartment.
And has anybody ever noticed those payday loan commercials that they have on daytime TV? The actors in those have lines like, “Well our house burned down and we needed the money….” or “We needed extra cash to buy a car…” C’mon people. Isn’t that what savings accounts are for? I guess people are really too strapped to put money aside in savings.
I seriously wonder how the middle class in this country is supposed to get ahead. What with the ridiculous price of housing and a “nice” car costing upwards of $25K and meals out costing $15 per person plus…. Maybe we (the middle class) are just expected to be in debt until we die, or something.
I play a game with myself on eating out costs. It has to be $20 for two people out the door or no go. That of course restricts you to third world cuisine, which I like better anyway. Ever been to an Ethiopian place? The food is fabulous and we usually spend about $17 for two people.
other “tricks” for dining out on the cheap:
a) drink tap water
b) share an entree
c) no appetizers or dessert
d) leave the wife at home
“Ever been to an Ethiopian place?”
Actually, I’m to visualize an Ethiopian in a Stetson hat.
Haven’t had Ethopian food for a while, but there’s a place down the street I keep on meaning to try.
There are a number of Vietnamese places in Denver where you can eat well for about $8 a person, including tip.
Ethiopian is good, but Thai is my favorite. Vietnamese is also high on the list, especially the pho.
I second the recommendation of Vietnamese. Recently ate in Phila for about $9/person grand total, and the food was good.
Eating out is pretty cheap in Texas. I was horrified when I found out waitresses there only get paid a little over 2 bucks an hour! I felt bad I had only been leaving 15% sometimes 20% tips.
I like to go to IHop in the middle of the night and leave the waitress a $100 or $500 tip on a $15 meal. I do it once a month, sometimes twice if the waitress is an older lady or someone you know has to work in an awful job like that.
Well yea, if you like to eat Texas style anyway. Just get a good cardiologist! Check this out…
http://www.youtube.com/watch?v=ZfbTO0GlONU
I hear you. Denver still hasn’t recovered from the last recession.
Also, it seems like there is a pay loan shark in every strip mall these days. I have even seen strip malls with TWO pay day loan places (with a dollar store thrown in to boot!).
Yeah, the economy is “sizzling”.
What with the ridiculous price of housing and a “nice” car costing upwards of $25K
New cars are a ridiculous waste of money. Buy used and pay cash. We bought a ‘98 Subaru for $4k. Runs great. Has a few nicks and dents in it, but who cares? At least I don’t have to worry when the kids get their bikes in and out of the garage. On top of that, the registration fees are a fraction of what you’d pay for a new ride.
I have to laugh whenever I see one of my neighbors pulling into their driveway with the latest pimped-out SUV. (I can’t tell you how many new trucks showed up after the series of once-a-century blizzards hit Colorado in December/January.) Who are they kidding? And, every time the price of gasoline rises (it’s now $2.75 for 87), I just shake my head at their short-sightedness. If they’d just stock their pantries properly, they wouldn’t have to worry about a freakin’ blizzard leaving them housebound for a few days.
Rant off.
My Buick Lacrosse did just fine during the Colorado Blizzards, even though the neighborhood didn’t get plowed (we all just drove over the snow until it was packed down.
But I know what you mean. It seems like every other neighbor has a 10 mpg SUV or monster truck. I remember last summer when I saw an acquaintance filling up his Suburban. I asked him how much it cost to fill it up. Abput $100, he replied. Wow, I replied. He game me a “no biggie” look (Ah, the power of credit cards!)
I seriously doubt that any of my neighbors ever stop to consider how much money they waste buying new cars. Financing a $30k car over five years is just dumb. I know I did it once. After I factored in the interest and realized how much money I had overpaid, buying a new car lost its appeal. Fortunately, I married someone who feels the same way and doesn’t care what he drives.
Hey, Either of you have any intel on the Durango area? Just wondering how bad the wheels will fall off in that area?
Durango is a tourist destination, so its hard to say.
There are certainly no quality jobs out that way, but the VERY rich do like to buy out that way, which probably means that its likely full of mansions, and if you are a working stiff you probably commute from Cortez.
One thing against Durango is that it is less accessible than the I70 corridor resorts (Vail, etc.). Of course if you are very rich you’ll just fly your private jet out there.
My husband’s Jetta was a little tank once you put the Blizzaks on them. Did just fine up the hills and extreme version driveways south of Syracuse after a storm.
Being a diesel it was cheaper in gas (for those particular years) registration, and insurance.
I prefer to buy a new car and keep it a very long time…Last one I had for 15 years….
That works, too. The $30k car referenced above is eight years old and still going strong. I love that car, and I’ll probably drive it until the wheels fall off.
Two cars, 18 years old (bought used) and a 15 year old pick-up.(also used) All run great, but my SO takes good care of them. Total cap cost, $4500. It’s great to have someone who knows how to fix stuff.
On a recent trip to Tahoe noticed that Subarus were *everywhere*.
It’s deja vu all over again…
Antelope Valley struggles with memories of ’90s housing crash
Signs of a downturn return, but today’s job base may limit the pain.
“People are panicking”…
http://www.latimes.com/business/la-fi-bust10apr10,0,6527055.story?coll=la-home-headlines
From the NYT’s Retirement section:
Cutting Costs While Appearing Savvy =
“It’s also important to think both big and small.
“Consider, for example, where you live. This can make a huge difference in how much you will need to live on in retirement. If you reside in an expensive, high-tax area, you can lower your expenses a lot by moving to a less expensive place. If you want to stay put or you already live in a cheaper area, you may want to move to a smaller house or increase your income with a reverse mortgage, which can allow you to tap the equity in your home to create an income stream.
“Two Web sites, BestPlaces.net and RetirementLiving.com, can be helpful in sorting this out. Best Places compares housing and living costs among different towns and cities in America; Retirement Living looks at state taxes. AARP’s Web site (aarp.org) is a good source of information on reverse mortgages.
“If you decide to move to a cheaper area, your house can become a virtual money machine because of the astonishing differences in housing prices nationwide. Home prices around the country are mostly down, although they have rebounded in some places, including Manhattan. If you’re willing to move, however, it’s the relative difference in values that is more important.
“Consider someone who lives in San Francisco and plans to retire to Tucson, a popular retirement city. For ease of calculations, let’s assume a pre-retirement income of $100,000. Let’s also assume that the retiree will move from a median-priced home in the San Francisco area that is paid for to a median-priced home in Tucson.”
Throwing Cold Water on Spring Selling Season
http://wallstreetexaminer.com/blogs/winter/?p=637
What do you think about bailout via GNMA? Sickening.
They’re talking about the housing market right now:
http://www.wamu.org/programs/dr/
You can listen to the streaming broadcast. Sorry for not posting earlier, I was in my car. But they’ll have the recording up later.
Market correction, this time for real
http://www.itulip.com/forums/showthread.php?t=1187
Nice post chick….
Foreclosure.com national count just went up from 167k to 176k in just a day or so - anyone know why?
I have been reading here for over a year about the bail out, and lately about all of the people being portrayed as victims. I hasn’t really fazed me until this morning. I go on Exporer and the MSN homepage has a headline, “Mortgage Woes Tip of the Iceberg.” I click on it, with a bit of joy, our little story is going mainstream, and the subheading is, “Fraud, Abusive Lending Crushes Dream for Millions of Families.” I seriously have to barf. Give me a break. Abuse? OMG
This is what passes for “Business News” in my neck of the woods:
http://www.coloradoan.com/apps/pbcs.dll/article?AID=/20070410/BUSINESS/704100303
It would be nice to see an article about HP, IBM or Agilent being on a hiring spree. Actually they are, in Bangalore!
Downturn stirs memories of the ’90s housing crash (LAT)
http://tinyurl.com/2tygaq
Want fries with that?
New Century holds job fair for ex-workers (OCR)
http://tinyurl.com/39cawz
Those guys could not qualify to wash my car.
“The real sad part is we built a team,” said Measures, a Temecula resident who has worked in the mortgage industry for 30 years. “It got to be like a family and now it’s gone.”
Wasn’t this the company the Quiggly poster was saying that a regional manager was involved in…give sex get promoted HR program?
“It got to be like a family and now it’s gone.”
Yeah…. The Gambino Family, maybe.
I think they mean they are setting up an actual FAIR in order that the ex employees have a job. You know, Carnies! (no offense to any real carnies that may be following along here)
He blinded me, with science.
“A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”
Max Planck
“Every generation of humans believed it had all the answers it needed, except for a few mysteries they assumed would be solved at any moment. And they all believed their ancestors were simplistic and deluded. What are the odds that you are the first generation of humans who will understand reality ?”
Scott Adams (Dilbert)
Ex-chump engineer doing well presumably.
Two newsletters hint region’s housing recovery a ways off (OCR)
Two newsletters have gloomy outlooks for housing — the 70% Solution investment newsletter from the city of Orange and Kiplinger California Letter …
• 70% Solution: “Just as low rates and easy credit pushed up home prices, which reduced defaults, which boosted bank profits, which enabled them to reduce reserves for loan losses which encouraged even easier credit, which pushed up home prices, which reduced defaults etc., etc. etc.; the cycle has now reversed. It took years for the bubble to inflate and it will be years before housing fully deflates and recovers.”
• Kiplinger: “Statewide, figure on a 5% drop in home prices for 2007 and a 10% decline again in home sales. Improvements next year aren’t likely to start until buyers realize that there’s no fire sale going on in housing and sellers recognize that the big gains their neighbors saw are history.”
“The Fed’s inflationary policies hurt older people the most. Older people generally rely on fixed incomes from pensions and Social Security, along with their savings. Inflation destroys the buying power of their fixed incomes, while low interest rates reduce any income from savings. So while Fed policies encourage younger people to overborrow because interest rates are so low, they also punish thrifty older people who saved for retirement.”
-Congressman Ron Paul
http://www.house.gov/paul/tst/tst2007/tst040907.htm
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”
Alan Greenspan
Just one more incredibly thin after dinner quote from the man:
“The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.”
How ’bout
“The Fact that our economical models at The Fed, the best in the world, have been wrong for fourteen straight quarters, does not mean they will not be right in the fifteenth quarter”
Anybody catch the Home Depot commercial running on CNBC this morning? A woman, who RENTS AN APARTMENT, is shown shopping at HD’s garden center for plants to put in the common area of the building “to make our shared home nicer.” Guess they see the writing on the wall—in any case, it’s very telling.
Ha! Here’s a job for unemployed mortgage officers:
http://dallas.craigslist.org/acc/309328588.html
Searching Craigslist for “desperate” on the key words for real estate:
1. 42 references for Las Vegas
2. 35 for Phoenix
3. 9 for Orange County
4. 3 for San Diego
5. 3 for San Fran Bay Area
6. 2 for Sacramento
7. 1 for Seattle
other cities?
Woodbridge seems to be the ground zero for foreclosures in NoVA:
http://washingtondc.craigslist.org/search/rfs?query=foreclosure&minAsk=min&maxAsk=max
I have tracked that and other keywords since July ‘06. “Desperate” hit 10 on 8/14/06 and 9/12/06. It’s been pretty low since New Year.
I think the sum of “Reduced”, “Motivated”, “Short sale” and “Foreclosure” ads gives a better indication of the desparation. We’re getting close to July ‘ 06 levels. This indicator peaked on 08/22/06 at about 1.5x where we are now. I’m pretty sure we’re going to break that record in a month or two.
Oh, I forgot: this is for San Diego.
CNBC is hilarious today. Erin Burnett pimping RE. They had an article on about how high end real estate will be untouched by the sub prime because sub prime financing isn’t needed by the people that buy high end houses ! How funny ! Did anyone do any research before they pimped that piece ?
CNBC = Cheerleading Newscasters Broadcasting Crap
Here’s an idea worth looking into. Government “backed” loans may not be as thoroughly backed as some think. When I got my VA loan the government guarantee only amounted to $36,000 (the house cost $102k). It’s not inconceivable that with a big drop in property prices as well as eviction and foreclosure costs that even Freddie and Fannie investers could lose principal.
What happaned to paladin and his site?
Yep, I saw that Home Depot commercial about “buying nice stuff for your apartment” over the weekend. It definitely caught my eye as being a clear sign that even they know which way the wind is blowing. Many “hosed owners” are going to be back to “throwing away their money on rent.” or maybe Home Depot is hoping that the modest percentage of us who still rent since we chose not to “get stupid” in the housing game will please, please spend some money so they don’t see any more red ink. Good luck with that!
The worst place I’ve seen for continued real estate bulls is the Wall Street Journal’s real estate bubble messageboard. That place is a joke. They’ve got idiots over there still claiming that real estate only goes up, some claiming that “buying a house makes you rich,” others claiming that “all renters are poor and have rap sheets,” and even a select few nitwits that now are trying to pretend the bubble never happened by saying “banks would never lend you more money than you can pay back!” I visit there from time to time to watch the monkeys, but it is amazing how willfully ignorant some people will remain.
How about the potential renters-from-FB’s-doing-their-own-maintenance market.
Was looking at houses on zillow in Gold Country, and came across this sales history. LIke watching a video in reverse.
Sale History & Tax Info Sale History
03/14/2007: $220,000
11/20/2006: $355,500
09/08/2005: $425,000
IMF warns subprime woes may spread, dollar falls
By Herbert Lash
Reuters
Tuesday, April 10, 2007; 9:40 PM
NEW YORK (Reuters) - Fallout in the U.S. subprime mortgage market could spread to related markets, the International Monetary Fund warned on Tuesday, as nagging worries about housing helped weaken the dollar.
Shares of real estate investment trust American Home Mortgage Investment Corp. (AHM.N) tumbled for a second day on Tuesday after the REIT slashed its profit forecast last week.
The company’s shares fell on investor concern that problems in subprime mortgages may be spreading to higher-quality housing loans, a view the IMF also gave credence to.
The IMF said in its semi-annual Global Financial Stability Report that a decline in the subprime market was more rapid than expected at this point in the overall housing downturn.
Looser underwriting standards may have gone beyond the subprime sector into portions of “Alt-A” mortgages, the next-riskiest area, the IMF said. In addition, there could be losses in other consumer credit markets, including credit card and subprime auto loan asset-backed securities, it said.
“Financial supervisors need to identify the potential for spillovers from the cooling of the housing market and continue ensuring that mortgage underwriting standards are maintained,” the IMF said.
Cough! Hack!! Gag!!! The IMF warning can be safely ignored, as we have been repeatedly reassured that subprime is contained.
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/10/AR2007041000954.html
at the same time, the Dutch AEX stockmarket index set a new 5-year high on rumours about a large takeover bid for a Dutch real estate investment fund (mostly commercial RE). If successful, this would be the largest takeover ever in Dutch history. Stock market value of the fund surged more than 10% in a day. In Europe people still can’t get enough of real estate, that’s for sure.
‘Subprime’ restructuring tough
Posted 1h 11m ago
By Sue Kirchhoff, USA TODAY
WASHINGTON — As lawmakers and regulators try to help strapped homeowners with “subprime” mortgages stave off foreclosure, they face an unexpected hurdle: Wall Street.
Millions of subprime loans, which are higher-priced loans to borrowers with impaired credit, aren’t held by the initial lenders. Instead, most U.S. mortgages are now put into trusts, repackaged as bonds and sold to market investors.
That can make it more difficult for borrowers to restructure their loans.
In many cases, trust rules bar servicing firms that administer the mortgages from modifying them, according to the Mortgage Bankers Association. In others, servicers can follow standard industry practice, which the group says can spell legal trouble if market investors protest.
http://www.usatoday.com/money/economy/housing/2007-04-10-subprime-usat_N.htm
Real Estate Intelligence
Subprime Sharks Circling
Peter Slatin, Forbes/Slatin Real Estate Report 04.10.07, 1:00 PM ET
Real estate bigwig Sam Zell is buying Tribune, and Blackstone Group is going public after taking everything else private. Those two signals alone are enough to give pause to investors trying to figure out a direction for the economy. Throw in the rising tide of bad housing news, with all its attendant concerns, and it seems that the stew that is brewing is not going to be particularly palatable.
Looking at just one piece of the housing decline–the sonic booms from the subprime market–can be instructive. Certainly, they portend a fair amount of pain for some investors, not to mention financial institutions. The still-gathering storm means that we have begun a major test of the resilience of our financial markets, as well as of our economic curiosity and ingenuity.
Despite the wishful thinking that paints subprime problems as an encapsulated set of difficulties taking place within neat boundaries, the only thing that this mess might have in common with cold capsules is its time-release nature. The extent of the problem will continue to reveal itself through tranches of individual foreclosures and corporate bankruptcies or disappearances– New Century Financial’s (other-otc: NEWC - news - people ) being the loudest to date. The unfolding problem will also provide time for those who understand the complex financial tides of the residential mortgage markets to step into the mix.
http://www.forbes.com/finance/2007/04/10/subprime-blackstone-zell-pf-guru-in_ps_0410realestateintelligence_inl.html
Private (?) financial newsletter. I usually like it, but this guest report made me hot.
Basically, the guy said that the Fed has to lower rates by 1% later in the year or housing prices will drop by 20%. (What if they drop by 1% and STILL get the -20% ? What then?)
1% might save some ARM reset foreclosures, maybe. It might add some demand (only under the old-new-paradigm though, where price doesn’t matter, just the monthly payment. Why do I think this guy is from CA?) Will people still step up to buy an overpriced product just because the interest rate drops a sixth to a fifth (and less than that percentage for bad credit?) We’ll just go back to the unsustainable increases of the last few years I guess.
And how does one percent less save the idiot class? The IO’s that have to soon pay principal, those who are underwater because of zero down who decide to walk? They need to “save us” from the first drop, that torpedoes refinancing and turns off the money machine. Once zero down loan buyers are underwater, how does 1% do anything. I don’t see how the magic wand works until the perception crashes / paradigm shifts are over. OK, I guess creating money out of thin air can hold up prices. I don’t see a gain of 1% for 20% though. I am not an economist, so I guess “I won’t try this at home” anymore.
All we hear is about the coming tsumami wave into the economy due to potential price drops. I agree with the high water analogy, but the last few years have been the tidal wave. Water going down is a GOOD thing. It just floods a few folks who rush onto the beach at the wrong time.
Last post!