Bits Bucket And Craigslist Finds For April 13, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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heebner-the manager of the top-performing real-estate fund over the past decade / bloomberg video!
very interesting. also with comments on the carry trade, derivatives, hedge funds, etc.
dow “inflation adjusted” / chart
reverse mortgages / economist
http://immobilienblasen.blogspot.com/
have a nice weekend
$ index close to breaking the 82……
I like to buy art glass pieces from galleries in Amsterdam and Sweden. I ordered the pieces I’ve been eyeing for months this morning. It’s already bad enough, don’t want to see a break and cascade up in prices.
some of my best friends will travel the west coast in the next weeks.
looks like they can spend some extra $ without hurting their planned budget….
I wonder if the Europeans will ride to the rescue of this RE market here thinking that prices are bargains now.
Europeans will be cash-strapped after the demise of their own RE bubble. There is no one left to come to the rescue.
my in laws live in europe, huge bubble, huge denial… at least the USA is still a leader.. in bursting bubbles
Why would any reasonable investor from overseas buy in the US when the US customs policy is designed to deter entry? Travel to the US is down, there are no miracle buyers.
I was thinking about how we think of The Chinese…
When I was a young aladinsane, if I was hesitant about eating my food, I was always admonished by my parents to eat my food, as “there are people starving in China”…
And there was. The various great leaps backward, killed Chinese by the 10’s of millions, thanks to Mao and his cronies.
Once an impressionable seed is placed in a young fertile mind, it can’t help but grow into a misunderstanding, because what was once true, is now false.
Things Change.
they bought plenty in 2004-2005
PLENTY OF EURO’S IN NYC
they come in droves and spend like drunken sailors
Right, they are fully inculcated into the bubble mentality. They may feel that buying “depressed” US properties are a way to arbitrage the currencies. Makes sense to me. But I would think you’d only see this in places like NY, SF, Boston, maybe Miami, LA
As I said “reasonable investor”, spending money in NYC is fun, but buying residential RE as an investment is not reasonable. I doubt if foreign purchase of residential RE is larger than 0.1% over the last 12 years.
Why would any reasonable investor from overseas buy in the US when the US customs policy is designed to deter entry?
Europeans do this all the time with RE. Do you think all these EU youngsters ever visit the multiple properties they aquired in Rumania, Poland, Turkey, Albania or whatever? RE only goes up so they simply spend every euro they have (or maybe I should say every euro they can borrow, and that’s a lot) on real estate and watch their assets skyrocket. It has been like that in Europe for more than 15 years now and there is NO sign of any changes; politics is doing everything they can to keep the RE markets on fire. And compared to Old Europe, most of US real estate are bargains anyway.
latest news from the Netherlands: after a 7.5% wage increase over the next 1.5 years for construction workers, we now also have a minimum 10.5% wage increase for government workers for the next three years. And these government workers already have huge salaries. At the same time our government wants us to believe that inflation is a little above 1% yoy. Long term interest rates for Netherlands and Europe (Euro Bund) have now broken to the upside (higher rates) but there is still no sign of that when you look at interest rates on savings accounts or mortgage rates. It’s all one huge con game.
“Europeans will be cash-strapped after the demise of their own RE bubble. There is no one left to come to the rescue. “
excellent points, especially the last one. Too bad it will take many many years to get there; the EU housing bubble is still expanding and it is soo much diversified by now that it will take many years to collapse. My most optimistic view is that it is currently in the early days of a blow-off top. But I wouldn’t be surprised if the EU bubble continues another 5-10 years. Of course the euro (and the middle class) will be sacrificed for this, just like the FED is sacrificing the dollar and the BOJ is sacrificing the YEN to protect their own bubbles - while talking about inflation fighting and protecting the currency. These banksters are the same everywhere in the world
If the US housing bubble was not in the financial pages of every country’s newspapers, you might be right. In every news paper I read, the financial pages are littered with the “effects of the US housing crash on (insert country here)”. The US bubble started in 1994, the foreign bubble started in 2000. The escalator is still going up for the foreign economy, but in 1989 everybody thought Japan would bail out the US. It did not happen then and it is less likely to happen now. There are a lot better investment than US residential real estate.
in the financial pages maybe, in small print … none of the EU housing speculators reads those. In Netherlands the whole issue has been mentioned on the TV news just one time this year: US housing market is making a soft landing, some speculators get hurt - please move on, nothing to see here. On the normal news pages: no mentioning at all. The TV News and the newspapers are still cheering RE investment and the facts make it easy, prices are still going up almost everywhere.
And of course the foreign bubble didn’t start in 2000, that is plain wrong. The Dutch housing bubble was already in double digit territory by 1993 and has been there until at least 2000. Most of the other EU countries started bubbling a few years later, but by 2000 the bubble was already very mature and many markets had advanced further (by % appreciation) than the US market has.
Doesn’t Denmark have massive immigration?
There is such a thing as fundamentals in RE. Namely, primarily, demand driven sustainable factors such as increasing income and more people bidding for a limited supply of homes.
And there is such a thing as a buying frenzy driven by near-criminally lax lending standards.
The later is what I believe is mostly here in the US. Denmark, not so sure what is driving it. There seems little question that creditors are becoming very wealthy there as well, but it could be actual demand created by more people too.
Denmarkdk
Business News
4 April 2007
Bank: housing price fall stalling
“Expectations that the nation’s housing market was heading for a freefall have been changed - for the time being
Despite a slow real estate market and an increasing number of properties for sale, housing prices are likely to remain right where they are for now, according a report by the nation’s largest bank.
Just last month Danske Bank had predicted that housing prices were ready to plummet after experiencing phenomenal growth rates over the past several years. Yesterday it was re-evaluating that forecast.
‘Don’t count on a noticeable fall,’ said Steen Bocian, the bank’s lead economist. ‘The most likely scenario is that prices will hold at their current level.’
Housing prices rose 1.5 percent in the fourth quarter of 2006. The increase was lower than in recent years, but on par with growth rates from the past decade. As recently as 2002 prices grew at a slower rate for consecutive quarters.
The market, however, is sending mixed signals of whether buyers or sellers have the advantage.”
http://tinyurl.com/23u8ds
Any reasonably intelligent person…
the demand issue in Europe is mostly realtor nonsense; in many EU countries the population is starting to decline or will start to decline within 5-10 years - despite immigration. And because most immigrants don’t have the money (many are on welfare) they will only support the housing market as long as government is willing to provide them with huge amounts of taxpayer money to shuffle back into the market. Population numbers is the kind of fundamentals you can’t ignore, especially when you consider the usually better construction of European homes (lifetime used to be 50-100 years, probably 20-40 years now).
Sure there is demand: people are spending their home equity on additional properties and this is what drives the EU market. Many homes are empty and are not even available for sale - why bother if RE only goes up and the equity gains are many times bigger than the potential rental income? This demand has just one fundamental: easy money.
Sure there is real demand for (affordable) small starter homes in most of Europe; even more because the average household is getting smaller (despite big immigrant families). But this is not a demand that the market is interested in. Government does what they can to make these people buy bigger and more expensive homes than they want/need by providing all kinds of subsidies to keep price rising. In my area the cheapest ’starter homes’ are now 6.5x average national income (and because it is a low income area, probably 8x average local income and more than 10x the income of the starters that buy these homes). Without the easy money from government and ECB, a starter home would cost less than 2x average income - just like in 1990.
Thanks for the link to a wealth of information. One line particularly frightening:
“For the first year since 1960, non-U.S. investors earned more dollars on their U.S. holdings in 2006 than U.S. residents earned on their overseas investments.”
–
And it is only going to get worse. Price must be paid for spending more than we produce. With manufacturing hollowed out we will have less and less to export. Before the end of the year the US will become #3 nation in exports after China and Germany.
Jas
thar she blows
http://news.yahoo.com/s/afp/20070413/bs_afp/forexeurope_070413111511
Stop paying attention to the currency market, and focus on those U.S. stock market headline indexes. Like real estate, the DJIA always goes up, at least over the long run.
I’ve been reading about how there’s now a Euro bubble. (Geez, what isn’t a bubble nowadays?) So I’m waiting till late summer, hoping that it will have deflated a bit, and then buy some Euro ETFs. Do you think my plan will work, Chick?
couple of good traders I know of went long the $$ this morning but that’s only short term. Yeah, use a chart and try to get in.
for those of us who have euros we can see other bubbles forming, because the euro is going down just like the US dollar, only at a little bit lower speed. My guess is the ECB will do something soon to stop the euro advance against the US dollar, because otherwise EU politicians will riot against the ECB (on behalf of big business). They have already threatened to take over control from the ECB for monetary issues if the euro breaks it all time high (and it is getting close now).
Here’s a link.
Article on housing in Ventura County. hopefully I did it right
http://venturacountystar.com/news/2007/apr/13/housing-market-continues-to-slide-across/
Heebner summary (recall Heebner is CGM fund, the guy who sold all of his homebuilder positions in June 2005).
He talked some about commercial (”SF, Boston, NYC very good”), which I don’t have below.
Residential today:
$1.0 trillion Alt-A
$1.5 trillion subprime
of total $10 trillion mortgage market
$1.0 trillion “in trouble” in 2007; so $7.5 trillion OK… will slow economy, no recession
“Biggest house price declines since Great Depression; 20% declines in ‘07 in some areas”
“MBS downgrades in the billions and billions”
- Future: huge inventory, creating largest SFH rental market in history; good homes to rent will be available
- “In CA, AZ, NV, FL, Northeast; houses have to decline a lot before buying becomes more attractive than renting”
“Residential mortgage losses will dwarf RTC losses in S&L crisis”
- Could easily be $1 trillion; Enron was $100 billion
Host: Who owns those?
Heebner: “No one wants to talk about it…”; answers: “the bulk of buying is by” hedgies, pensions, foreigners; some banks do, too, but he thinks not as much
Hedgies: buy pools yielding 8%, using Yen borrowing at 3% for leverage (10 to 1); “manager gets 20% of gain for fees, so for a year… you get rich until you get shut down. There’s an incentive to gamble recklessly with hedge funds.”
CGM fund (Heebner’s) owns Goldman, Morgan, Merrill (sold Mastercard)
- Host: “Why?”
- Heebner: “they’ve (brokers) invented securitization; know they are toxic and passed them on to others; little impact to them, really;
My post was truncated; here’s the rest:
Brokerage firms (Goldman, Morgan, Merrill): mortgages
Last try:
brokerage firms have sold off the risk; host asked if there is “litigation risk” (suing by pension and foreigners); Heebner: S&P and Moody’s rated this AAA (who may appear to have some of that “litigation risk”)
Heebner has certainly been one of the most successful mutual fund investors of all time. Some will certainly argue luck, but it’s hard to be lucky for 30+ years! I pay attenention to what he says and does.
Bill
The DJIA priced in gold serves nicely to support my conjecture that the stock market is being used as an instrument of monetary policy, to inflate away the U.S. debt.
GS: are you referring just to the cheerleading that we see from guys like Kudlow, or are you implying some illegal manipulation? How could that be accomplished?
jmf…
Enlightening us always~
Thanks!
http://www.reuters.com/article/reutersEdge/idUSN1159729020070411
Subprime mortgage market woes seen well contained
Wonder who’s doing the ’seeing’
http://www.southcoasttoday.com/apps/pbcs.dll/article?AID=/20070411/NEWS/704110353
And who is doing the “containing?”
That article is shallow. The only arguments they make are that subprime is only a small fraction of the mortgage market and that unemployment is low. They mention the current glut of homes, only to dismiss it. They ignore falling prices, the dearth of equity, and the sheer size of the loans relative to average incomes.
What I’m curious about is the exact prevalance of the various suicide features, both as a percentage of loans and as a percentage their dollar value. Teaser rates, Stated Income, option ARMs, 90% and above financing… THESE are the problems. At best, FICO scores measure how much a borrower WANTS to pay back their loan, but these loan features impair a borrowers ABILITY to pay back the loan.
Here’s a more interesting Reuters article:
Subprime mess, supply to sour spring housing market
“The flowers may be blooming this spring, but the U.S. housing market is wilting.”
“An unwieldy supply of homes for sale and significantly tighter underwriting standards from lenders, ignited by the rapid meltdown of the subprime mortgage market, will pave the way for the spring housing season to see the worst drop in sales and new construction since the early 1990s.”
http://www.reuters.com/article/reutersEdge/idUSN0243364220070412
I’ve been quietly investing, the past few months…
There is quite a glut of perfectly good foodstuffs, all over our country.
Decent to great products that just couldn’t make the cut, usually due to not being able to get shelf space in stores, as simple as that~
We accepted the absurdity of a “just in time” lifestyle, like it was manna from heaven, and what exactly is wrong with being prepared?
Yesterday, $600.00 bought me 5 full shopping carts full of food.
My urgency?
http://news.yahoo.com/s/ap/20070412/ap_on_bi_ge/farm_scene_2
Too bad about the fruit. New York’s apple crop was wiped out some years ago, after unseasonably warm weather caused the trees to blossom early, and a late frost wiped them out.
We can always just eat less grain-fed meat. It would probably be good for our health, too.
Dude, put down the shotgun and go have fun for a night.
I’ve had more fun in my life, than most…
There’s a time to dick around and a time to get down to business~
All things in moderation. You still have to have some fun once in a while. Or what’s the point of it all?
My lifestyle isn’t all that different from Chevy Chase’s character, in Caddyshack, except for the golf part…
Don’t you mean Bill Murray’s character?
This won’t help you to avoid higher prices for peaches and apples, but you can grow other smaller crops quite nicely, even if you don’t have outside garden space.
http://www.howtohydroponics.com
Some things you just can’t grow…
One of yesterday’s finds was: Paul Masson mocha caramel cream liqueur. A 750 ml bottle cost me $3.99 and our neighbors, who are Bailey’s fiends, told us that they thought it tasted as good, if not better than their standby.
Costcos? If so, I’m picking up some today!
No korporate raiders in on this gig…
I found it in a local supermarket that is the food equivilent of a 99 Cent store, the difference being that their prices go from a few cents to around $20.00.
Another buy was a few different varieties of balance bars that normally sell for a Dollar or so…
My price was 5 for a Dollar.
My guess is that most larger cities have stores like this.
Find yours~
Call me shallow, but I have been doing that with wine. Buying good quality age-worthty wines that are not bubble priced. I figure I get 90% of the quality of the very best for 10% of the price.
If I am careful I have enough to last me 20 years.
May the only thing in your life that you allows to be shallow at times, be a wine glass.
And it’s easily refilled~
Cheers…
I used to buy 2 Buck Chuck just for making sauces. One night I had a few sips, then a few more, and finally realized it was not a bad wine no matter the price.
I wonder how many “few more sips” had to accumulate before you had that realization?
I read an article recently by someone in the trade who knows how wine is bought and sold in Cali. He said that much of the perceived “quality” is marketing, and that the reality is that producers regularly sell off wine. So the stuff that ends up in 2 buck chuck could easily have come from a respected producer off-loading some excess.
He concluded that anyone who spent more than $8 on a bottle was wasting money.
The same is true with top-quality Bordeaux. The better chateaux have second and even third wines. All come from the famous vinyard and get the same barrel treatment. But when they make the final selections, some of it that is judged to be marginally less in quality will be bottled as the second or third wine for 10% of the price of the first.
There is a tie in to RE mania. It’s always location, location in RE. In wine it’s also location location. Is Napa better than generic Cali? - not necessarily. But you sure pay through the nose for it.
So the stuff that ends up in 2 buck chuck could easily have come from a respected producer off-loading some excess.
*Did* come, and more than one.
Exactly, Polestar.
I lived in a teeny London apartment for a few years, yet it still had enough room for a few window boxes full of tomatoes, bell peppers and my favourite herbs. I even had a couple of growbags of potatoes, on my ‘can’t swing a cat’ balcony. I may not have been completly self-sufficient, but it certainly cut down my food costs.
Nice. I saw a deep freezer on sale at one of the appliance places in town, probably will stick one in the garage. You know things are getting scary when rational people think about stocking up on food vs. holding cash and the TV pretties are telling you there is little inflation. Real food - eggs, meats, produce, anything with nutritional value - are soaring in price at the grocery store, while the processed junk is “Buy 1 Get 1 Free” to bring in the shoppers…
Yesterday I got called a troll (that’s just plain nasty), today I will be called a tinfoil hat guy.
Kurt Vonnegut, R.I.P…
Your writing has kept a smile in my heart among the insanity of the past few years…
“Kurt Vonnegut, R.I.P…
Your writing has kept a smile in my heart among the insanity of the past few years…”
Wow, thanks for that. Po-tee-weet…
Carolina: I noticed that you were called a troll yesterday. Odd. Kind of a non sequitur.
Chalk it up to tax time. Emotions run high and people lose their minds and say ill-considered things.
I called her a troll, for good reason:
from Dictionary.com:
schadenfreude \SHOD-n-froy-duh\, noun:
A malicious satisfaction obtained from the misfortunes of others.
REMEMBER, THOU ART MORTAL, HBBers
I ain’t a “her”, eggbert
“remember thou art mortal,
remember thou art mortal,
remember thou art mortal,
Oh, blow it out your @ss.”
from History of the world Part I, Ceasers Scribe whispering in the ear of the general approaching the throne.
one of my favorite flix
I think, PDX, that most people on this blog have believed in a housing bubble for a long time, contrary to popular opinion. Can you blame us for taking satisfaction in finally being proven right? Besides, I think that a “troll” is an interloper whose contributions/ideas run counter to the blog’s.
I’m with ya. The italics part above is a quote from Carolina’s post yesterday, and I didn’t appreciate the pontification. Anyways this is all tangential. Let’s bury this one.
OK
PDX Renter, note the Samsung news. Is that sector ever going to get off the mat for real? I’m starting to wonder.
Yep, saw that. Samsung hurting means most other memory players must be comatose. NAND prices are WAY down and Samsung has minted more money in NAND than anyone else over the last 3 years. I think the downturn in this sector has just begun and it will be fugly by the end of this year (Fall is the highest revenue period). So, I don’t think in $$terms (revenue, earnings) anyone is going to escape a decline. AMD is getting killed and just cut back capex by $500M - means they expect a LOT of hurt and are battening down the hatches. I think serious overcapacity has been built up in chip fabs.
The general, wider retail downturn is going to get amplified 2-3x for semiconductor industry. I’m tempted to take a short position.
How long will five shopping carts of canned peaches last?
Totally OT investing question:
so we had our February “correction”, and now we are trending very slowly but surely positive over the last few weeks.
Do dead cat bounces usually take this long? I’m used to a leg down, a leg up (but not as high) then a leg further down.
not a leg down, then slowly drifting up.
is it possible that there really is just too much money out there and that it has to go somewhere, and RE is “out” for now?
I see little possibility for the equities markets to make much gains this year… but there does seem to be a slight possibility of gains due primarily to sky high money supply. Even with the significant headwinds of housing slowdown and MBS/lending difficulties.
Thoughts?
So far it’s a double top with a lower high. Suspect we’ll have a trend day one way or the other today. If it’s up, you may get a slightly higher high but I still think this sucker is running on fumes and have the puts to prove it
That’s what I’m thinking.
I’ve always been strong proponent of diversification (I’ve written about it 1,000x), but for the first time I’m seriously thinking of taking everything (100%) out of the market and leaving it only in gold, silver, Treasuries, Oil, and cash.
(yes, I realize oil may drop if we go into worldwide recession)
I just see this year as a see-saw at best, a rout at worst.
Investing is hard! why can’t it be super easy where I just lay back and collect a check for doing nothing! Sigh, I guess I’ll just buy that Carleton Sheets program, it looks pretty easy on his show!
Get some nat gas stocks too. Beautiful charts, 2 year bottom, just now beginning to break out.
txchick
Can you recommend any specific nat gas stock?
I only invest retirement money, but this blog influenced me to recently take my winnings out of stocks and into Treasuries. I wish I knew what txchick knows, but I don’t. I don’t want to live through another 2000, especially since I have a lot more to lose now than I did then.
Well I rebalanced my 401(k) before the Feb stumble, and again after the market regained most of its lost ground. Now I only have about 20% in the S&P fund and 25% in the international fund, the rest in treasury paper. I figure that it’s all nice and fine to think that the market’s going into the crapper, but I still have to have some money in there in case it DOESN’T.
One way or the other? Txchick, you are clairvoyant in your predictions.
All kidding aside, thanks for your comments. I can recognize the difference between those who know something and those who pretend to know something.
I meant that there are catalysts (inflation numbers) to push it in one direction or the other. I was betting down and a trend day down would be narsty. We’ll see.
I’m pretty much all short today as well.
Agree with you all. Still have diversified oil but have moved most to cash, PM and shorts. Going down today to open an account and invest international with foreign currency.
Housewife didn’t declare 400 million yen forex gains
“According to the sources, the woman invested assets she had inherited upon her mother’s death several years ago through forex margin and commodity futures trades.
Although she reported part of her investment profits, she concealed the gains from the forex trades by putting the money into accounts opened under her family members’ names and spent some of the funds, the sources added…Her husband said, “My wife began margin forex trades, hoping to add to our old-age savings.” He also said she did not report the investment gains because she knew little about tax procedures for such investment activity. “My wife feels contrite about what she has done,” he said.
My ex would have spent it, leaving me with the tax bill. “My wife feels contrite about what she has done”.
It is wonderful to deal with a nation of savers.
Friday, April 13, 2007
Japan Times
http://tinyurl.com/yw9622
I laughed at that one. My mom loved to save money behind my dad’s back. In rolled up socks in drawers at first, but when my dad found it and drank it, she secretly opened first a savings account, and then learned about CDs. Later he learned about it when the interest was large enough that the IRS asked for back-taxes. Good old mom. Her moment of victory arrived in 2002 when her CDs totalled more than the dregs of his high tech stock losses. Compound interest from household petty cash beat Dean Witter in the long run.
IMO the markets topped in February. Decelerating earnings, weakening economy, no Fed cuts… there’s nothing but bull’s hot air keeping them afloat now.
My half acre of asparagus always comes back after a frost.
I’m thinking my yard is going to be toast. My tulips were mostly out, my bushes blooming. Then BAM! cold and we even got snow (about 2 inches or so on Wednesday thru Thursday and 1 inch stuck)
Now everything looks dead dead dead.
the last time this happened, none of my tulips made it, some of my bushes were stunned for most of the year, and my yard never looked quite right. The lawn grew ok though.
sigh… darn weather!
The unfortunate problems of an early spring. Minneapolis tulips use to bloom in May. They should be OK as long as the temp did not get to 18F.
I MISS DON IMUS………..
I’m listening to Deidre and Charles, and its Not the same without the I-man
We are so screwed in America when we can’t demand equal treatment and demand Al Sharpton go to Duke University and apoligize to the Duke Students for his screwup and rush to judgement.
Is a Housing Bailout of Minoroties next?
although I’ve never heard of Don Imus before, his comment although coarse didn’t seem worthy of a firing. Just a scapegoat for other bigger issues.
In the end though, if you’re paid by corporate advertising, you have to be careful of what you say.
Al Sharpton is a different matter, he is paid to be controversial about racial issues. apples and oranges.
Same with Howard Stern. If Howard stern said “nappy little hos” he would be fine. It’s his thing. And more importantly he’s not beholden to corporate advertising.
Imus will be fine, he’ll be picked up by Sirius or XM and make millions. Don’t cry for him, Argentina… the truth is he’ll never leave you.
The Low Life Duke rape accuser really is “A nappy headed ho”
And I lost all respect for Obama, I mean a mixed race guy running for President, and He chose a real RACIST to support,
He could have brokered a deal to get Al Shapton to aploigize to the duke students BUT NO………..he WUSSIED OUT and chose to support Black racism. Shame on HIM.
What’s a “ho”?
Ebonics for “whore”, but seems to be evolving in common usage among the hip-hop set.
ROTFL. Ebonics!
It’s a garden tool that will be used by the FB’s on the lenders as they come to foreclose on the promised land…
“Al Sharpton is a different matter, he is paid to be controversial about racial issues.”
So who’s paying him?
i have two words for al sharpton as all long time nyc residents already know tawana brawley
http://eightiesclub.tripod.com/id315.htm
AL SHARPTONS HATE CAMPAIGN IN AMERICA:
http://www.whitecivilrights.com/hate-campaign-by-sharpton-costs-imus-cbs-radio-show_784.html
Don Imus played around with a snake, and the snake finally bit him.
Well spoken.
Imus is entertainment.
Dont like it, dont listen.
The next ting you know The Daily Show is gonna be the #1 news program in the country.
Al Sharpton needs to get a real job.
Let the back-peddling begin. Imus comes back with a bigger contract.
Got news for you - recent polls show that the majority of the population (who watch that kind of stuff) already think that ‘The Daily Show’ and ‘The Colbert Report’ are the number one news shows…
I know I was being ironical
Well, they’ve got better news content than most of the serious stuff out there — just presented differently.
How is Sharpton anything other than a pariah in 2007? If CBS radio execs really wanted Imus to tone down his politically incorrect humor, such as his producer’s Cardinal Egan bit, then they should have admonished/suspended/fired him a long time ago. But they were too busy counting their millions of dollars in revenue. And MSNBC’s ratings are permanently in the tank, but the Imus simulcast at least helped them out in that department as its #1 rated timeslot. I have no need for MSNBC anymore, so I deleted the channel from my satellite menu.
It was a classic feeding frenzy. Most of these top media guys like David Gregory salivated about appearing on Imus, and they are the real scumbags for distancing themselves from him now. For me, McCain’s stock rose this week because loyalty is important. At the very least, disloyalty and hypocrisy make you a weasel.
If Slimus is entertainment nowadays, thank god I don’t wartch TV.
If Slimus is entertainment nowadays, thank god I don’t warch TV.
I don’t understand why people thought Imus was a shock jock. I thought he was boring.
The Daily show IS the number one news show in the nation..
From the LATimes:
Democratic politicians lose a soapbox with Imus
His show gave many of them a way to reach a national audience of white males — a crucial voting bloc.
“This is a real bind for Democrats,” said Dan Gerstein, an advisor to one of Imus’ favorite regulars, Sen. Joe Lieberman (I-Conn.). “Talk radio has become primarily the province of the right, and the blogosphere is largely the province of the left. If Imus loses his microphone, there aren’t many other venues like it around.”
The LA Times calls Lieberman an independent? I know he ran as an I, but is that supposed to be some slap in the face? Not up to the LA Times’ idea of what a Democrat should be?
He’s certainly not a dem when it comes to foreign policy, and that’s why he ended up with an “I” in the first place.
Short, Sweet and to the Point:
http://wallstreetexaminer.com/blogs/winter/?p=650
When you get right down to it, subprime and alt-a account for the lion’s share of the loans out there…
And we’re running out of subprimes.
Next tranche sir, may I have another?
If a recession hits in full bloom, with job losses, lots of prime borrowers will suddenly become subprime.
Russ,
Time for me to put in a plug for your blog. You’ve got some good stuff on there, and I always enjoy checking it out. If I wasn’t living off unemployment checks the last 2+ months, I’d send you a donation (living hand-to-mouth right now, waiting for my 2006 refund check to come in).
I’m supposed to have a new gig, starting end of next week. I’ll be going from 0 hrs/week, to 65+ hours/week, for the next 3-4 months. I’m going to miss yours and Ben’s blogs greatly, as I doubt I’ll have time for either. These have become daily reading material for me, while I wait for my work assignments to appear out of the misty fog….
Now I understand the foreclosure cycle.
http://louminatti.blogspot.com/2007/04/real-estate-foreclosure-cycle.html
Bwhahahahaha………..gotta save that one
Fantastic graphic, Lou! Thanks!
Hilarious!
There is an argument that there is no housing bubble from By Carl Steidtmann, chief economist and director, Consumer Business, Deloitte Research.
http://www.deloitte.com/dtt/article/0,1002,sid%253D15288%2526cid%253D152742,00.html
I kept looking for the link to the argument that there is no global warming.
His point — new home prices haven’t gone up that much, compared with the NASDAQ. The reality — in bubble market existing home prices have exploded relative to income; in flat America markets you have had excess supply.
His point — bubbles are a monetary phenomenon, and the FED hasn’t created one. The response — we have had a credit bubble, in part due to FED policy circa 2003, in part due to the carry trade, excess saving in China, the unwillingness of businesses to invest, and other things.
His point — in a real bubble, everyone rushes for the excess and there is a mad collapse. The response — perhaps housing doesn’t work that way, it goes down more slowly. It still goes down.
Been following a few auctioneers around Mass. The people with the highest bid are the lenders. From what I’ve seen, lenders have had the winning bids in 94% of the auctions.
Assuming the banks get a realtor and put these on the market, will the banks drop the price before the homeowner who’s trying to sell?
Thanks. Which part of Mass? Is this within the 95 loop or outside it, or outside 495?
It’s all over.
I use Banker and Tradesman and some auctioneers websites to gather what’s happening. About 4 months ago, it was about 85% of auctioned houses went to banks.
I’ve definitely seen lenders putting foreclosed properties on the market for less than the dollar amount of the mortgage (not taking into account extra costs associated with foreclosure process). I have bought properties this way in the past as well.
I assume that anything with a decent amount of equity or upside will get snatched up by the interesting characters at the foreclosure auctions.
I’m in Chicago, but assume it’s similar nationally.
From the NYT ($):
Recession Pessimism
“A poll from The Los Angeles Times and Bloomberg reports that most Americans think a recession is at least somewhat likely over the next year…. [O]ne more question caught my eye. The pollsters gave respondents a choice of three groups to blame for the subprime mortgage crisis: borrowers, lenders, and government regulators. The high-income respondents were far more likely to blame the lenders, while the lower income respondents were more likely to blame the government.”
http://venturacountystar.com/news/2007/apr/13/housing-market-continues-to-slide-across/
They are still building houses like crazy near me, north of Cincinnati. Even though home building is reportedly slowing, new house are steadily going up, steadily selling, and people are steadily moving in. Even the empty lots have “sold” signs on them, as do most houses under construction.
Is Cincinnati bucking the national trend?
No, but your chili is very good
Everything happens ten years later in Cincinnati, so maybe it is a good time to buy there.
Cincinnati does seem to be counter-cyclical to the rest of the country from time to time.
The WestChester/Mason area has gone totally apeshit this decade, and eventually my bet is its going to be one of the best examples nationwide of how not to build up an area. I have relatives down there and have seen the changes; the schools (Lakota) will end up like Columbine, trust me. Where is everyone coming from? Probably the inner burbs. Just a guess.
Article in the V.C. Star about the decline in Housing market.
Thanks Ben Jones, you rock; thanks also to others who freely share their insights.
I address these comments to a few who use their bias rather than reason and insist on making nasty comments based on those age old perceptions. In particular comments made yesterday by SKB and a few others re minorities and the housing crisis…a look at the map of the US showing communities most affected highlights that minorities are not the majority in lots of those communities, ex. CO,WA; are minorities likely to be disportionately affected? Sure. Consider also that lots of immigrants, who happen to be minorities got caught in the “buy now” trap. The fact is also that ironically, non-minorities may benefit more from any proposed bail-out due to factors like access & control of capital. Remember Enron and S&L…minorities were not involved.
The racists remarks and characterizations of minorities who appear of TV using those ill-advised remarks that Don Imus made, shows how bias can cause folks to be irrational and arrive at flawed conclusions.
Agree.
“If I can send the flower of the German nation into the hell of war without the smallest pity for the shedding of precious German blood, then surely I have the right to remove millions of an inferior race that breeds like vermin”
Adolf Hitler
Works both ways. Watch the WaMu commercial with the fat cat white old men (so yesterday, dude!) and the clever, oh-so-smart young black guy. Advertising (and consequently TV shows…which are nothing but vehicles for the commericals) DOES pander to racist stereotypes, and there is pandering to the minority’s belief that all white people are rich,fat, stupid, red-neck racists…
doesn’t feel too good to be on the other side does it? for decades, hollywood and television depicted people of color as slow witted, dangerous criminals (see: http://en.wikipedia.org/wiki/Birth_of_a_nation ). It has nothing to do with pandering to minorities, it has to do with pandering to your core audience.
how do you know what “side” I’m on…or what color my skin is? All I see is advertising pandering to all levels of stupidity and racism….whether black, white, brown, whatever. Hollywood panders to the lowest common denominator…period.
how do you know what “side” I’m on…or what color my skin is?
fair enough..
“All I see is advertising pandering to all levels of stupidity and racism….whether black…”
You just confirmed my point, thanks
How does a 91 year-old silent movie support your assertion that “for decades, hollywood and television depicted people of color as slow witted, dangerous criminals”? Television wasn’t even widespread until the 50’s. What relevance does BoaN have to television at all?
If you’re going to try to support an argument like that you need better evidence than that.
I have never understood the concept of insulting potential customers.
“lots of immigrants, who happen to be minorities got caught in the “buy now” trap.”
I love this little flaw in your reasoning. So, how did this work? Lenders, heavily armed, hunted down immigrants and forced them at gunpoint to buy real estate. Poor little immigrants, legal and not, they were just “trapped’ by the re industry.
This may be an appropriate time for me to post a rant on this (somewhat-related) off-topic:
In recent years I have increasingly noticed the portrayal of men, and particularly white males as bumbling idiots in commercials. And, I guess we deserve it, because we don’t protest when it happens (for example, the feminist uproar over the two bikini-clad blondes fighting in the fountain during the Miller Lite commercial a couple years back). Actually, if you examined even THAT commercial, it was a dig at the male psyche / male fantasy, but that’s another point.
Recent examples would include: Burger King (i think) Sponge-Bob, no-pants. Or the Staples commercial with the woman supervisor who announces Staples is going to solve all their problems. I could go on and on…
Don’t get me wrong, I have a sense of humor and I do find some of these commercials to be funny. But am I the only one who notices the pervasiveness of these types of commercials (or is somewhat sensitive to this)?
Is the reason for this phenomenon that white men are the only racial-gender “class” that is NOT sensitive, and therefore not likely to complain? IOW, are white males the only group who actually have a collective sense of humor and can stand being poked fun of?
Just wonderin’…
My husband has complains about these types of ads too, always making out the husband/dad is useless and the Mom/wife fixes the problem.
I noticed this too. I think it was worse a few years ago for some reason (or I just watch that much less television today). And yeah, it pisses me off too. Why did advertisers suddenly decide they needed to stroke women’s egos and belittle men?
Those types of ads are annoying and stupid. I am getting really tired of seeing men getting hit by women, sometimes with a fist, sometimes with a weapon, and it being “humorous.” It’s not funny when men hit women and it’s not funny when women hit men. (With exceptions on both.) And the expectation is that men can’t hit back because they were raised not to hit girls. Grrrr.
Lots of problems with television and any type of stereotyping. I do find it amusing some of the racism on the blog, because so far everyone I know going into foreclosure is educated, middle income, and white. I think there is plenty of blame to go around. The only true common characteristic of an FB is that they are human. (Watch, now someone will find an article about a dog that bought a house. Hey, why not? They used to be dependents until the IRS insisted upon a Social Security number!)
So I went over to Virginia Beach to pay for the inspection on my play truck (which was actually featured in O’Reilly’s Make Magazine). Glad to see it passed with flying colors. But while I was headed there I noticed not one but two competing open houses on the same street… on a Friday? Is this normal? They were advertised out at the main road (Virginia Beach Boulevard) so I don’t beleive they were just for realtors. I had a vision of realtors sitting in a dead house, silently weeping, hoping for just one more GF. But I could be wrong.
http://www.suntimes.com/classifieds/homes/homelife/338959,HOF-News-right13.article
“Well, we won’t be bailing out the homeowner, because we blame them,” says John R. Logan, a professor of Sociology at Brown University, who with Harvey L. Molotch, co-authored the book, Urban Fortunes: The Political Economy of Place, due out in a new edition this summer.
Great to see this discussion in a local newspaper. Thanx for the link.
Too much news from China
“Jim Hemerling of Boston Consulting Group divided the sourcing of components and products from China into three stages: Wave 1.0, China for low cost; Wave 2.0, China participates in innovation; Wave 3.0, China as global center for procurement.
Wave One sourcing from China took off when manufacturers demonstrated they could produce quality products for less money, more often than not using the buyers’ own designs, said the article.
Gradually, many Chinese suppliers moved far beyond being arm’s length suppliers, in a wide range of industries, from consumer electronics and IT equipment to automotive manufacturing.
They started to innovate and collaborate with their customers on component and product design, marking the transition to sourcing 2.0, the article said.
That was evidenced by China’s skyrocketing investment in R&D. China was the world’s second biggest investor in R&D after the US in 2006, estimated the Organization for Economic Cooperation and Development,according to the author. …
The article went on to claim that sourcing wave 3.0 is underway, citing the IBM announcement that it is moving its global procurement headquarters to Shenzhen as the most visible sign.
“Today’s China is the center of an economic maelstrom that grows larger and more powerful (and increasingly complex) every day,” the author said. …”
Hoz…
Glad you got a chance to read about Albania~
I remembered the events, but not the detail. Thanks for an incredible post.
[Upon walking out of an elevator]
Chance the Gardener: That was a very small room.
Many believe that Citigroup cut its work force in the US because of financial problems. Not true
Citigroup as well as other financial institutions are moving service sector jobs over seas. I know of a major New York firm about to trim its US offices and expand in China.
Financial jobs are no more secure than manufacturing jobs.
“The eastward drift of Western companies came to the fore last week when Citigroup announced plans to cut or reassign at least 26,000 jobs, or 8 percent of its global head count. It will move some jobs to cheaper American cities, and many to India, where the bank already has 22,000 employees in India. Although Citigroup began outsourcing to the country with low-end work like bill collection, it now has about 600 Indians engaged in high-value jobs like analyzing U.S. stocks. Meanwhile, India has become its fastest-growing international market in revenue terms, according to the bank’s chairman, Charles Prince….
Alan Blinder, a former vice chairman of the U.S. Federal Reserve Board and former economic adviser to President Bill Clinton, recently described outsourcing as a “third Industrial Revolution” that, by his estimate, threatens the jobs of 28 million to 42 million workers in the United States alone….”
International Herald Tribune
http://tinyurl.com/2dmthy
All very depressing if you live here. but I am sure those in Europe etc. won’t give a sh*t if we go down the crapper.
What I really wonder is will we just fade away, or whether the military machine will be used to go out kicking.
about that last question: I think the view from around the world is that they are already doing that while the empire is slowly rotting away. Not the right way to find some sympathy from the rest of the world.
Age-old problem. What you need and can’t produce, you can either trade for or take by force. We’ve have bigger and better guns than the rest of the world. Violence is the easy path in the short term, but it always ends in destruction. No one ever accused Americans of being able to see the big picture, though.
While we’re on the subject of guns, here’s a Bubblicious Defense Sector Stock, if anyone’s interested:
http://finance.yahoo.com/q?s=FRPT
The fundamentals of the industry do not support the stock price, but it just keeps going up anyway. I have it on my watch list, but do not hold a position. Probably good for a short sometime between July and December of this year….
Why do you think they are trying to get a North Amercian Union set up so quickly. It won’t be called that at first (of course). The initial name will be the “Security and Prosperity Partnership of North America”. Mexico will become our “China”, and produce all our consumer goods.
We’ll use our guns to bully the world until they rot and rust away, just as the USSR did.
After that, we’ll collapse in a heap.
Sorta OT, I can’t stand to even watch ESPN anymore as virtually every other commercial on that station is a recruiting vehicle for the Armed Forces. They certainly know their target demographic.
The United States historically steered clear of “foreign entanglements”, until after the end of WWII, when we inherited the title of “World’s Policeman, mostly by accident.
I think what we are more likely to see is a reversion back to our historical norm, as the American people are getting tired of paying the price, in treasure and blood, of defending the interests of other countries, and multinational (or should I say Amoral-National) Corporations
Not all financial jobs can be offshored. Back office jobs and low-end customers yes. But just try to give your $50mln private client or $2bn endowment an 800 number to call Banaglore about his portfolio and see what happens.
Of course they will keep the silver tongued salesmen in the US. But they have already offshored a lot of the analyst work to India.
We can’t all be salesmen.
The 50M “private client” is already offshored. She may have inherited the moneys originally, but she is not stupid.
I once interviewed with GS about their “wealth management” group. Nearly gagged.
You or them? The feeling was probably mutual.
It’s simply time for the U.S. to fade into the background while the parts of the world that have been neglected begin to take center stage. This is the end result of too much government intervention in the marketplace (Medicare, SS, excessive regulation of business, and oppressive taxation) and the seemingly endless array of military aggression waged by the U.S. since Vietnam which has cost this nation trillions in materials, labor, and capital investment. In other words, the welfare/warfare state.
The U.S. is no longer a beacon of free enterprise. The Asian markets are far freer than ours. Even North Korea has burgeoning capitalist and black market ventures which are meeting the needs of the marketplace. Not to mention the already well-known ones like South Korea, India, China, Taiwan, etc. While many of these nations have oppressive governments, they are all moving in the right direction. The U.S., futilely attempting to retain its hold, is moving in the wrong direction, and has been for decades. The last decade has simply accelerated its demise.
If you call Bank of New York Shareholder Services, you’re talking to an abused peon in a crappy outsourcing call centre in Halifax, Canada. Same applies to GE Shareowner Services.
A San Diego real estate bull has good news and bad news:
The bad news — a 26.3 percent dive in YOY sales made March the 34th straight month of declining sales figures.
The silver lining — an uptick in the median sales price (”cost gains in all categories”) indicates that unaffordability is on the rise again.
———————————————————————————-
March home sales down, but prices go up
All categories show cost gains
By Roger Showley
STAFF WRITER
April 13, 2007
March home sales turned in their biggest year-over-year decline since 1995, but the region’s median sale price rebounded to $490,000 in a possible sign that San Diego County’s housing slump is easing.
A 26.3 percent dive in sales volume made March the 34th straight month of year-over-year sales declines, according to figures released yesterday by DataQuick Information Systems. It was the biggest March downturn since a 31.3 percent pullback in 1995.
But while sales slowed, all housing categories showed price gains. Resale houses rose $20,000 from February to $560,000, the same as a year ago. Resale condominiums were up $7,000 to $385,000, and new homes and condo conversions were up $10,000 to $420,000.
The overall median price of $490,000 was up $10,000 from February, but still 4.9 percent below the median a year earlier.
On balance, the March figures painted an optimistic picture in the mind of longtime DataQuick analyst John Karevoll. And not just here. The statewide median price of homes set a record of $484,000 for the month.
“Most of San Diego’s declines, if not all, are behind us,” with the rest of the state likely to mimic the county’s trendsetting pace, Karevoll said.
Taking into account seasonal differences, overall prices have dropped about 5 percent since their peak in 2005, and have remained basically flat for the past six months, he said.
“There is a chance sales counts in San Diego could start to tick up a bit during the summer and into the fall,” even more than they usually do at this time of the year, Karevoll said.
http://www.signonsandiego.com/uniontrib/20070413/news_1b13sales.html
GS: depressing analysis, but do you agree with Karevoll’s prediction of increasing sales later this year?
“…prediction of increasing sales later this year?”
He is the expert, so I will leave the predicting to him.
But I do note that it is hard to imagine how San Diego sales could pick up without either a spontaneous resurrection of subprime lenders from the dead, or major price declines to bring pricing in line with household incomes. And he seems to be arguing that prices are going to resume their stratospheric rise about the time that sales pick up. So I guess his argument sounds very wishful to me.
we will see … if he is right it would mimic what happened in Europe five years ago. I still think there is a BIG chance that things will turn out like that. Bernanke will choose to save the housing/stocks bubble and gladly sacrifice the dollar.
I recently hedged my bets in favor of the “all-talk-no-action” Bernanke Fed by adding some international diversification to my meager savings portfolio.
ECONOMIC REPORT
Energy, foods drive PPI up by 1% in March
A 1% increase in one month translates into 12.7% producer price inflation per year. One has to conclude that Wall Street does not put much credence in Bernanke’s cheap talk on keeping inflation under control, as gold prices and long-term Treasury yields are surging today.
http://www.marketwatch.com/news/story/energy-foods-drive-ppi-up/story.aspx?guid=%7B21E5B1E8%2D050D%2D4DFF%2D97D0%2DFAEDC1B11FDC%7D
I think the CPI/PPI numbers in Europe are similar; PPI is also up strongly over the last months, but nobody cares. Incomes have lagged for many years but they are now catching up strongly, although mostly for people who already have relatively high incomes to start with.
ECB/Eurostat says inflation is low and that’s all the market wants to know; EU stock markets are still making new highs (5-year highs or so) every week. They used to worry a bit about a strong euro, but now that the euro is close to its all-time high nobody seems to care anymore. Guess they know that the ECB will come to the rescue as soon as there is the slightest hissing sound from the RE, stocks or bond markets.
Record federal spending in March
Fed views inflation as biggest risk
Two major headlines yesterday: Is there a correlation or is this just imagination?
“The U.S. federal government spent more money in March than in any other month ever, the Treasury Department reported Wednesday.”
and
“The Federal Reserve views inflation as the biggest risk to the US economy in spite of the increasingly uncertain outlook for growth, according to the latest minutes of the Open Market Committee.”
P.S.: didn’t the FED also spend a record amount on Open Market Operations in the last months? Why worry about inflation if you know what the source is …
I’m sure Bernanke will keep ‘worrying about inflation’ while significantly lowering rates later this year.
I don’t think Bernanke can lower the rates anymore or the dollar goes down the crapper. If that happens sub-prime & the housing bubble will be the least of our problems. How do you think we finance our trade deficit? What if foreigners quit accepting $$ for oil? There’re some truely nasty consequences if we let the dollar slide any further. I think he will raise rates to counteract such a development. The housing bubble is a small price to pay considering what’s at stake.
This is the last straw these guys can cling to. The median price will go up for a while when the starter homes don’t get sold (think sub-prime). But then there are no new GFs to enter the Ponzi scheme.
I’m quite confident mr. Karevoll will eat humble pie in 3-4 months. I saved the business section of the UT so I can send him a copy in 1/2 a year.
BTW: did anyone study the picture of the condo-conversion? What a dump.
I caught this in todays paper. I guess the hope is that articles like this will get a few fence sitters of the wall and into the loan office. Prices on comparable homes are way down in SD across the board, by as little as 5% and as much as 30% on some condo’s. There may have been a small recent surge of idiots trying to get in under the tighter credit standards, but to say San Diego’s losses are behind us based on flawed median data, which is more than likely saying we lost most entry level buyers, leaving only high end sales. If we got to the point where only homes in Rancho Santa Fe sold at a median of $5 million, that would be the median. Everyone knows that there is a small number of folks in the top 1% arean who have seen huge gains over the last 7 years, while the rest of us are lucky to see any kind of raise at all.
“If we got to the point where only homes in Rancho Santa Fe sold at a median of $5 million, that would be the median.”
According to ziprealty.com, the median SFR list price in Rancho Santa Fe is currently a mere $3.8m.
Oh I’ll take 2 then.. Thanks for the tip
Judging from a recent news story which reported five Rancho Santa Fe homes in foreclosure this year, I am guessing some investors previously decided to take two, or at least to buy a second home in RSF, on the theory that if real estate always goes up, then expensive real estate always goes up a lot more.
I suggest this “uptick” in prices is the result of the last gasp in sub prime sales. Same thing happened in areas of Sacramento. Builders put deals under contract at 100% LTV 80/20 plans with 10% cash rebates to the buyers (soon to be FB’s). There is no “trend” in all this as sub prime will continue declining. The market will die on its own as liquidity vanishes with the New Century.
Thanks GS. Now, if y’all will excuse me, I need to head home and slit my wrists.
Friday the 13th hits Wall Street
http://www.marketwatch.com/tools/marketsummary/
Is it the Michigan consumer confidence numbers that are driving the selloff on the headline stock market indexes today?
Well let’s put it this way. I’d rather be short than long on Friday the 13th, especially when it’s right before April 15th.
Shouldn’t a ton of last minute IRA money be flowing in today?
I think we see this more in early January than near April 15.
People who are prudent enough to fund their IRAs in the first place probably aren’t going to wait until April 15th of the FOLLOWING year.
Anyway, back when I was eligible for an IRA, I would mail a check and had to account for the lag due to the mailing/ receiving/ recording process.
Now if there were some sort of government program where you could buy a flatscreen teevee with pretax dollars, you wouldn’t be able to get into Best Buy for several days.
check out the QID + SDS
I’ve already thrown in the towel for today, looking for volatility maybe next week.
IMHO as long as the Japanese Yen is weak and the Euro is strong there is no reason to be short any stock anywhere. The “carry trade” is profitable and will continue to be profitable until Japan raises its rates another point. The correlation with the US S & P 500 and the Japanese Yen is 0.87. This is going to correct and it will be vicious, but when is another question.
That theory doesn’t work out too well if you applied it to homebuilder stocks. Take a look at PHM. Maybe there is no reason to be short on an INDEX, but individual stocks always have reasons to be short.
A lot of people on this blog were short the homebuilders stock last July - right before these same homebuilders stocks rallied 36%. You are correct however in that there are stocks that fall in up markets and there are stocks that rise in down markets.
The classic example is IBM, pulled out of the DJIA in the ’30s because it was going up to fast. If IBM had stayed in the Dow for the last 70 years, the index would be over 30,000.
From today’s LATimes:
Home prices rise despite housing woes
The median in Southern California climbs 4.6% in March from a year earlier. Sales tumble.
As Ben pointed out yesterday, the median is becoming almost meaningless.
The idea here is to con some poor shmuks sitting on the fence to head down to the loan office to be prepared for their foreclosure in 2 - 3 years.
Would someone be able to repost what Ben said about that? I read that article in the LA Times yesterday, and was pretty surprised. 4.6% is substantial gain when you consider it’s passing over the HALF MILLION mark. What’s going on?
Assuming the subprime collapse effectively knocked out the lower end of the income distribution from being able to buy anything in California, a rising median could simply be evidence that only wealthy households are still able to buy.
Again, a great deal of the Feb & Mar deals squeeked in under the sub prime wire. Last chance to buy a house with 100% LTV 80/20 and still get a 10% rebate from the builder. Of course, the builder just adds 10% to the price of the house. I saw 5 of these on one block in Sacramento in March. Paid $670,000 and got $50,000 grand back. The builder advertised at $620,000 6 months ago. Funny thing is last week, GMAC took one back for foreclosure and listed it at $560,000.
Keep you heads bubble sitters. This is a dead cat sub slime bounce. We are headed lower…much lower. There are so many vacant houses in CA, it will take the FB’s 2 years to find enough renters. Buyers are even harder to find now that financing is tightening.
And, judging by the massive amount of $1mill+ houses on the L.A ZipRealty list, you’re spot on, GS.
I agree, GS. The rich are still buying, but from looking at what sells and what not in my area, I would venture that they are moving only really nice homes and ugly but new McMansions. Everything else is either sitting or being pulled from the market.
The median price means that 50% of houses are priced higher, 50% lower than that price — that’s it. So if an area one month shows 5 houses selling at a million each, then the median house price for that month is $1,000,000. But the next month maybe 5 condos sell for $300K each, so the median for that month is $300K. This is very simplistic, but it’s meant to show that the median price rising or falling doesn’t necessarily mean that the price on any given house is rising or falling. The median more often reflects what *segment* of the house market — upper end, middle, lower end — is moving.
Right now the lower end of the market is drying up, thanks to the subprime collapse. So it makes sense that the median price in CA markets will be higher right now.
Right, but the article I read in the San Diego Union this morning chearly implied that this was evidence of rising prices, not a rising median distribution of sales.
Nailed it, lalaland - for fun, I did a simple frequency count of my ‘my save’ search on ZipRealty (Westside L.A and adjoining areas) yesterday -
# of houses over $10 million - 61
# of houses under $500K - 27
rough median Asking Price - $1.75 million
lower quartile Asking Price - $750K
No wonder the median is such a sucky measurement to use.
I would recommend that lainvestorgirl not read that article. It might put her in a bad mood.
I heard on CNBC yesterday that the trend in leasing new automobiles is increasing compared to previous years.
This compares to: “In 2006, about 24 percent of homeowners used a home equity line of credit to purchase a vehicle, according to Synergistics Research Corp. About 8 percent took out a second mortgage specifically to buy a vehicle, says William H. McCracken, chief executive of Synergistics.”
Does this tell us that those who feel that they need a new (insert status vehicle here) are out of HELOC money and are forced to lease?
From Marketwatch:
Make Landlords Love You
Now that a lot of FBs will need to find rentals, they need advice on sweet-talking landlords. Maybe I’ll make them promise to feed my squirrels
sm_landlord, are your rentals houses or apartments or both? Rent controlled? Just curious.
Rent-controlled apartments. People’s Republic of Santa Monica.
Could this be an out of work realtor or mortgage broker?
http://www.msnbc.msn.com/id/18090863/
“Her panic melted his heart . . .”
Nah, couldn’t have been a realtor of mortgage broker.
Someone posted here a link to Senator Dodd’s e mail a while back. I wrote him to vehemently complain about his bailout proposal. Subsequently, I get e mails from his campaign-now I’m on his e mail list. This morning I replied to him, “Take me off of your mailing list you idiots. This housing bailout is the stupidest thing since Iraq. Idiots. Unbelievable. This is a trillion dollar problem. A Ponzi scheme. Don’t you people know anything. Let it crash and burn and let the bond investors, investment banks, and idiot borrowers suffer. You should be worried about saving planet earth you morons.
Thanks. No more e mails!”
The same thing happened to me. For the benefit of the whatever low-level intern handles the mail, I wrote a polite, concise letter stating my opposition to any subprime bailout. The auto-reply promised a response, which I’m still waiting on three weeks later. In the meantime I’m getting spammed with sappy Dodd campaign communiques and pitches for financial support. I answer the latter by telling his drones to hit up the FBs for funds, since Dodd hasn’t done anything for me. What a tool.
Senator Dodd,
After reading in numerous articles about your assertion that subprime mortgage borrowers need to be bailed out, I fee compelled to express my dissension. I believe that this action will do more harm to the middle class of this country than any other group of people. The actual effect will be to stall foreclosure on a group of people who are ill-prepared to pay their mortgage obligations and who will most likely lose their homes anyways (look for statistics on re-foreclosure rates). Meanwhile, middle class folks such as myself who have good credit and money saved for a downpayment prudently wait to purchase a home until they are are equipped to assume the responsibility. That means I rent (even though I am 30 years old) and I believe to rent a home is not the cardinal sin you senators make it out to be. Shouldn’t people who have signed a contract to buy something be expected to fulfill their contractural obligation, especially when entering that contract under no duress stronger than their own greed? Why should those of us who have done our best to stay out of financial trouble be expected to help them meet their obligations? If people are unable to meet their mortgage obligation, they should be put back in a rental home situation until they can get their financial house in order. I am in favor of the government providing rental subsidies so that people do not end up in the streets. But, I don’t see that it as a God-given right to “own” a home. I could go on to argue the moral and fundamental need for personal responsibility. But, as a practical matter, I will point out that any mortgage bailout will only act as a temporary bandage and be a poor investment of much overspent funds. Instead, we must have better regulation and oversight of the government sponsored entities of Fannie Mae and Freddie Mac. Otherwise, we should let the chips fall as they will. Any bailout will only have the end effect of helping mortgage institutions and Wall Street investors (where do you think that mortgage check signed by Uncle Sam will end up?). Those subprime mortgage holders who have very little invested in their homes (if they had equity, they could sell their homes rather than face foreclosure) will just end up back where they started, in a rental home. When the government steps in to help people avoid personal responsibility, irrational exuberance is encouraged. By the way, many people lost much of their retirement savings in the 2000 Nasdaq crash due to being duped by unscrupulous mortage brokers, er I mean stock brokers. Where is their bailout? Don’t people have as much a fundamental need for retirement security as they do for a deed to a home? And can you see the connection between the subprime crash and the Nasdaq crash - the connection is poor oversight by the Fed and then action when it is too late.
Please be a bad politician and a good senator. Admit you were wrong and respect the middle class. Don’t pander for votes. Stand up for those who play by the rules.
Sincerely,
xxx
Renter and Saver
Ah, dude…good letter, but next time remember to leave some white space. Block text is tedious. Keep in mind that the iPod-generation intern-weenies reading the Senator’s mail have an attention span the length of a flash bulb. Short & to the point is all they can process.
Ah yes, paragraphs. I was writing it how I would be speaking it given the chance… in an impassioned rant without pause or breath. I will follow your advice for future letters, maybe cut down the material.
Hey, at least you wrote. Good on you. And it was a good letter, if one actually reads it. I wish every renter or responsible homeowner would give Dodd & his ilk a loud and clear message: NO BAILOUT!
Someone in another thread posted this address:
http://www.msnbc.msn.com/id/17832512/
Where people are encouraged to tell their stories of foreclosure woe.
I contributed this:
“I want to make sure that it is well known that most of the people who may lose their homes are either ignorant and/or greedy.
They had to sign paperwork to get where they are. If they signed paperwork they didn’t read or didn’t understand they DESERVE NO SYMPATHY.
Quite a few of the people who will be foreclosed on were engaged in real-estate FRAUD.
I hope the media does a good job of pointing these things out. The real danger is that vote-hungry politicians will engineer some sort of bail-out, which will only serve to reward IGNORANCE and FRAUD with tax money.
Thank you for your attention.
In the attached photo, four of the homes on this street are/were owned by THE SAME PERSON.”
I attached this photo.
I also replied to the MSNBC thread. Here’s what I wrote: “The vast majority of people with mortgage problems currently A) bought or refinanced a home they couldn’t actually afford, and/or B) already had a history of not paying their bills on time which lowered their credit scores. Otherwise they wouldn’t have had to take out a questionable subprime mortgage in the first place.
Many committed fraud by overstating their income to get into houses they couldn’t afford and many gambled away their house by using a HELOC to pay off their credit card bills which they ran up by buying things they couldn’t afford.
Portraying these people as victims in the media doesn’t help them begin to take back financial responsibility for their own lives. The real victims are those of us who are financially responsible who can not afford a home that has become overpriced due to rampant speculation and may have to pay higher taxes to bail these people out again and again.”