Bits Bucket And Craigslist Finds For April 29, 2007
Pleaswe 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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Foreclosures inching up, Numbers still low but bear watching
Pensacola NewsJournal:
http://www.pensacolanewsjournal.com/apps/pbcs.dll/article?AID=/20070429/BUSINESS/704290308/1003
This Eden is garden of trouble for condos:
http://www.palmbeachpost.com/search/content/business/epaper/2007/04/29/a1f_cloughcol_0429.html
The continuing saga of Ceebraid-Signal’s Boca Raton condo conversion from hell.
El Paso Texas getting hit now. Is there no escape ????
Where can an Investor put his money now??
http://www.elpasotimes.com/business/ci_5777165
FWIW, El Paso’s median is only 128K. Still high, when you consider what an armpit the place is.
It does leave a bit to be desired. Wonder if they are expecting the Boomers to show up there for retirement?
I suppose that if you aren’t a loaded retiree a 128K house might not seem so bad. Just make sure its as far from Ciudad Juarez (the border) as possible.
Juarez makes Tijuana look like San Diego.
I can’t imagine how depressing it must be for the poeple who live there.
In my reconnaissance mission yesterday to find the failed development that went Section 8, I saw quite a number of half finished homes in spotty developments. I was struck by how much of this OSB (strand board) or chipboard has been used in place of plywood. It was easy to see in the exposed eaves of the houses. Lord A’mighty! I can just imagine what will happen to that stuff after a couple of years of in the humidity and rains of Florida.
OSB is cheaper than plywood to make.A lot of plywood plants have actually closed down.With plywood you peel a log bacically on a large lathe and then glue together 4*8 pieces.I actually think osb can hold up fairly well.The glues they use are pretty amazeing.
What makes it better than the particle board glue? Particle board warps and expands when it gets wet. I assume that is what the original poster is refering to.
From what I have read and heard about OSB, it is much better than ordinary particle board or flake board. It is very hard and dense with waterproof glue. It seems to have a decent reputation. Whether or not it will hold up in humidity and Florida climates, I have no idea.
Actually, with the help of Teh Google, I have answered my own question. Apparently OSB swell is twice that of plywood. So better than particle board, but worse than plywood.
But the kicker is that, like particle board, and unlike plywood, OSB will not return to normal dimensions when it dries. So water damages it permanently. Plywood will swell, but swells evenly, and then returns to normal thickness. It is clearly the superior choice.
It is the superior choice @ a superior price….OSB is used mostly in area’s that are not exposed to moisture roof, sheer etc…
Everything is a bubble (and I feel fine):
http://biz.yahoo.com/ts/070427/10353243.html?.v=3
“Grantham concludes that every asset class is expensive today in comparison with historic norms”
Although the article doesn’t explain what metrics are considered, my own conclusion (same as Grantham’s) is that it’s very difficult to achieve passively a yield equalling or beating inflation. Rising stock prices are not impressing me if the cash yield on stocks is near nothing. We all know about negative cash flow on RE “investments”. US Treasury securities yielding 5% or less produce an after-tax yield that is arguably less than the inflation rate.
What are my choices? I can go on lending to trailer-park residents and charging 9%. But the opportunities arise only when they arise (which, so far, is frequently enough), and bubbling lot-values have forced me to turn down the majority of opportunities these past 12 months. LTV too high when I am using a quasi-historic “V”. Another choice I have would be the purchase of foreign-denominated bonds. This has worked out pretty well so far, but the USD will not perpetually be falling vs other currencies. Another choice (shudder) would be to take a straight job and have a paycheck. Maybe the asset bubble has to do with aging of populations in ALL developed countries: everyone is trying to “retire” and live on previously-accumulated assets. It won’t work. Instead, WE must work. Barf.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation” AG. We are out of luck
You can buy gold.
Hey az This article talks about the same issue.
http://www.safehaven.com/article-7428.htm
A good read. Thanks, waaahoo. I have always wondered who would provide the goods and services when a bubble generation was no longer able to provide them for itself.
So, this article tells me where NOT to put my money.
But, it gives no advice that I could see as to where I should put my money. I want to put money into my 401(k) to save taxes, but if it is just going into a market that will go pop, why bother. Cash will be eaten by inflation. Commodities such as gold are already over inflated. Land is (as this blog is dedicated to pointing out) way overpriced.
So, where do I put my money?
My opinion is a CEO of Walmart or Microsoft is going to work harder to protect a dollar invested in their stock than a bank is going to work to protect a dollar invested in a CD. I have 30 years to go before retirement, and I’m long stocks.
The article didn’t say gold was inflated. In fact gold is cheap; if you adjust it for inflation the previous high for gold is over $2000 an ounce. The article said (correctly) that all currencies are inflated and ripe to fall.
“My opinion is a CEO of Walmart or Microsoft is going to work harder to protect a dollar invested in their stock”
Okay, FWIW my impression is that CEOs will let whatever happen to stocks that makes them the most money. Which goes back to the value of the dollar.
“WE must work. Barf.”
You mean you actually have to contribute to society - instead of just making money off of it? Bummer.
There are two approached we can take to buying assets.
1) Buy assets that appreciate. The downside to this are bubbles!
2) Buy assets that generate income: a business, rental property (not overpriced McMansions), dividend yielding stocks, bonds. The downside: while they will generate income, they may depreciate (of course, they could also appreciate).
What to do? Good question. When I lived in Mexico City in the lates 70’s there was some pretty high inflation. People back then would park their money in income generating assets, in particular businesses and rental property. Some also bought gold coins (Centenarios).
Let’s see. By my reckoning, az_l lends *her own money* to people other lenders will not, so they can have a place of their own, thereby taking the risk personally. Unlike, as we have seen, people borrowing and lending money without any personal risk. She does not charge rates even close to what subprime resets are going to.
The money she lends she apparently earned and built up herself over time, no doubt paying taxes along the way. She started working as a secretary at 19. Went back to school to earn a PhD and no doubt dealt with an all-male “Good Old Boys Club” in the academic and science establishment. She has worked as a manager as well as at Caltech doing research. I have no doubt she put in many, many hours of uncompensated time.
I think she was talking about having to return to the 8-5 grind at 61.
Yeah, she gets my respect.
…the USD will not perpetually be falling vs other currencies.
True, but all currencies can fall against gold. In fact, that’s pretty much guaranteed, in the long run. I’m betting on it in the short/medium run as well. So far, so good.
…USD will not perpetually be falling vs other currencies.
You are correct. Once it reaches zero, it cannot fall any further.
azl, you’re thinking in the right direction with the foreign bonds. Check out Peter Schiff’s book “Shock Proof” for more on foreign investments.
I have a chance to hear Grantham speak later in May. I was undecided, but now I gotta hear him.
pass, where would that be? (If not open to public, that’s Ok, still curious where)
It’s a breakfast here in Chicago. I doubt it’s open to the public; in fact I hope it’s not.
We spend a lot of time on this blog roasting the Boston Globe and their Goldilocks la-la land treatment of the real estate market, with a particular focus on Kim Blanton and her “sources”, such as 25 year old Global Insight “economists” predicting the resumption of home prices appreciation by the end of the year.
Today, the Globe is running a 3-page article titled “Brokers in Blogsville”, explaining how blogs are changing the real estate industry. On page two, we have confirmation that the Globe is watching us here:
Meanwhile, at the other end of the spectrum are sites such as thehousingbubbleblog.com, and Bostonbubble.com, which, as their names suggests, dedicate commentary and information to what its hosts and supporters believe are overpriced real estate markets, and the consequences of such high housing costs. Contributors routinely lampoon and otherwise pick apart the typically rosy utterances of real estate industry leaders, and the language on such sites is often blunt.
Unfortunately, the article was not written by Blanton herself, but I think we can take pride in knowing that the Globe knows we are here calling BS on their fairy tales.
Sorry, forgot the link. Here: http://tinyurl.com/2e4s3p
Contributors routinely lampoon and otherwise pick apart the typically rosy utterances of real estate industry leaders, and the language on such sites is often blunt.
I for one am unaccustomed to such kind words from the MSM.
Awesome. People have to get the truth from somewhere and the MSM sure isn’t giving it.
Some wag said “Knowledge is power, that’s why you don’t get any”.
That’s a good one.
That quip is a Tanta’ism from Calculated Risk.
It was the title of a truly memorable rant about big paid media and why bloggers are better.
“Awesome. People have to get the truth from somewhere and the MSM sure isn’t giving it.”
On the other hand… revealing specific blog sites which give contrary opinion is a back-door mechanism for the MSM to allow people to get to the truth. Call it a wink by an author whose hands are otherwise tied….
Information is Power, Which is Why You Don’t Get Any
Tanta rocks!
Also, the fraud that has accompanied this bubble has been so massive, I’m shocked, I tell you, shocked that there hasn’t been a bill introduced in Congress to legalize it. After all, that seems to be the answer for illegal immigration. Maybe the lenders, brokers and FBs could hold massive demonstrations throughout the streets of major cities in support of the fraud. Look at all it has done for the economy! Look at how much “stuff” we bought from China! “Buying a house is not a crime!”
Si se puede! Casas para todos!
“blut” is such a harsh word.
We prefer to think of ourselves as Crude, Lewd and Rude when it comes to getting Screwed by the REIC Gang.
Blunt Happens.
One man’s blunt is another man’s keen insight.
Rastafari double entendre alert!
GEEZ these Old fart are MORONS……get at least 1/2 Million+ today for your MOBILE HOME… or wait for the 1 Million that may evaporate into thin air by 2009….
========================================================
Sharks are circling the seaside town of Briny Breezes. No, not the fin-and-teeth kind. In recent weeks, Briny residents have been peppered with letters from Realtors, charities and opportunists wanting a piece of their coming riches. Will anyone bite?
It’s too soon to tell. It was only in January that residents voted to sell their tiny town to a Boca Raton developer for $510 million. The deal would make millionaires out of many of the residents. But the downside is residents won’t see any money for two years. The deal’s deadline is March 2009.
That creates opportunity for Michael Horton of the Horton Group in West Palm Beach. Horton recently sent Briny residents a letter offering them the chance to get their money now instead of waiting two years. In an interview, Horton said he’s working “on a few” deals to buy residents’ mobile homes and give them instant cash. Horton would assume the gamble of the Boca developer deal.
Horton said his offer fills a need. “Some people don’t want to wait a couple of years. They are getting into some health issues and need money right now,” he said.
Exactly how much money he’ll be dishing out is undetermined. But Horton assured everything is “aboveboard” with his Briny prospects, whom he didn’t name.
Mary Kimber, president of Briny’s resident-owned corporation, said it’s true some folks need money now. But she said two local banks have offered bridge loans to help residents get by. Kimber said she’s not worried residents might make the wrong deal: “The people here are pretty wise,” she said.
I would bet that anyone who doesn’t grab the Horton cash now (if in fact Horton is actually sincere about producing any) will be left with out a house and cash come 09.
LOL! I suggested that months ago. I’d say Horton is reading this blog! I’d like to know what he’s offering. I suggested a seller who wants money now rather than never offer a 25% discount.
I remember that, txchick, we had a little discussion about it. I said that the cash flow gang would be all over this like a cheap suit in the rain. I would have taken a decent cash flow deal, with a reasonable discount. But from what I know of those guys, 33% tends to be their threshold. Even so, I’d have taken a hit of 1/3 to walk away.
I’d have taken a hit of 1/3 to walk away.
Any SANE RATIONAL person would…….but we are dealing with Mobile home people and a Lottery ticket being waived at them
txchick57:
I remember that.
You should start your own website with call and put options b/c you seem to be psychic.
Hope your ears are better.
Hey FLA…
You went up to 69 drought impacts today, an increase of 3, from yesterday’s tally.
http://droughtreporter.unl.edu/map.jsp?&src=&daterange=month&c_ot=on&c_wa=on&year2=2007&year1=2007&c_ag=on&day2=29&scn=nv&day1=29&c_fi=on&c_en=on&month2=4&month1=3&c_so=on&Cmd=sv&st=Florida
2 read between the lines stories, from the blog:
“Alligators are being seen more frequently in southern Florida as they move in search of wetter habitat, stated an officer with the Florida Fish and Wildlife Conservation Commission. People need to be very careful around lakes and canals and supervise small children. Airboat operators also note that navigation in the Everglades is becoming increasingly difficult due to low water levels from drought. An airboat operator reported that he has to be careful to stop in sufficiently deep water so he doesn’t get stuck.”
“Palm Beach County has stopped issuing warnings and has become more aggressive about catching water restriction violators and fining them. Code enforcement officers have been working extended hours to include the nighttime and even monitor water usage information for individual addresses. Fines from citations issued by the city range from $25 to $150 for a first violation. Repeat violators may be fined $250, have to appear in court, or may lose their water service. Roughly 500 citations were issued in Boca Raton last week. Forty-eight citations have been issued in West Palm Beach since April 16.”
So cruel is your Mother (always bat’s last) Nature, that she’s decided to wreak havoc on one our wealthier haunts, perhaps a cautionary tale, audible only to those that listen to her very heartbeat?
Oh, Palm Beach:
Belated congrats on being bestowed in June 2003 by the Robb report, as America’s “Best Place To Live”
http://en.wikipedia.org/wiki/Palm_Beach,_Florida
Wow, this as I drove past some flooded farm fields yesterday. It was a wet week up here. Yesterday was gorgeous though, and today is likely to be even better.
In a couple hours, I’m going for a bike ride along Lake Michigan.
Speaking of blogs and the MSM, Jon Lansner has a thread up on his Housing Blog at the OC Register detailing the criticism it has recently received from an industry group which gave him an award last year.
http://blogs.ocregister.com/lansner/archives/2007/04/oc_builders_say_y_1.html
Now those with long memories will recall that Mr Lansner had some significant interaction with this blog in March of last year (threads 248 and 277 in particular).
Maybe that affected his view, or maybe he just reports the facts as he sees them and the industry doesn’t like the facts at the moment.
“the industry doesn’t like the facts at the moment.”
“Facts” fell by the wayside in the US shortly after 9/11. We see this in the housing bubble, but denial runs deep in many areas. It’s no wonder that book “The Secret” is so popular, think happy thoughts and all will be well. I’m not against positive thinking, but in order to improve things, you have to be able to see situations for what they are. If a person gets injured, then you need to administer first aid, get them to a doctor, stablize them, etc. THEN you can think happy thoughts about their recovery. You don’t just watch the patient bleed and proclaim that they are getting better.
“quotes sources with views far removed”
Like this is a bad thing?
Or maybe they’d prefer all stories to come from the a/p?
Even in the Housing RACKET..All Bleeding is control
able…EVENTUALLY.
We have PLENTY of time for coffeebreak and then ANOTHER round of Golf Gang Dr. FenceSitter.
It was never about helping others. I-am-facing-foreclosure was a cry for help from others. No one helped, however. Authorities foreclosed on the last specu-flop and the kid is facing eviction….
Wow, poor Casey. He should start another blog now. I-am-facing-eviction.com. That will help all the other specuvestors. He can also start I-am-facing-REALITY.com. These lessons can be so harsh and there are going to be so many. I think about all the FB’s in these new subdivisions still buying with $50,000 cash back. They are so happy moving in and feel so rich. In 24 months, their new houses will be worth $100,000 less, their option arm payments will go from $1800 to $3600. The builders 2 years of bond payments expire, adding $350/mon. They are two payments behind on the property taxes, since sub prime loans have no impounds. The IRS wants taxes on the $50,000 kick backs, plus penalties, plus interest, plus the recapture on the interest deduction on the $50,000 above the true purchase price.
A little straw here, a little straw there, pretty soon the camel is over burdened. That is why you don’t buy what you can not afford.
“I-am-facing-eviction.com.”
How about ‘I-am-moving-back-in-with-Mom.com?’
And a few more items:
1) Lose job, no reserves = NUKE.
2) Have a new addition to the family, forces wife to be @ home
3) Car bites the dust, need new one
4) 99% maxed out CC hit 100%, bank say no more
5) Underestimated the old withholding for uncle Sam = big bill & no cash
6) Kid | wife | you get sick, don’t have medical due to Mcjob
7) The big bonus & raise you were counting on disappear just when the ARM resets
No INcome, Job or Assets = NINJA
Casey IS NOT a “KID”.
Kids are in the US are NOT allowed to ENTER Legal Contracts as a Minor. He IS AN ADULT.
He’s a Greedy Young man that THOUGHT he was Smart enough to GAME the Frigging Financial/REIC System FLIPPING Houses.
Period
Casey is a criminal that along with his realtors and sellers help he got cash-back and cheated the lenders and the tax payers .
When are they going to arrest this punk .
Do you really think in the course of my living many years now that I did not run into get rich quick schemes that were shady . I turned down shady deals my whole life and every person has to make those choices in life and pay the price for bad choices .
OK, how about ‘I-am-moving-into-Bubba’s-cell.com?’
don’t-drop-the-soap-in-the-shower.com
I-am-Bubba’s-Beyatch.com
Somehow my email address has been circulated to the “Mortgage Broker Community” - I keep getting mortgage offers from all over the place.
From Orlando, the Grand Reserve development is offering 4 years of no mortgage payments, property taxes, or HOA fees. The mortgage payment portion is claimed to be backed by Bank of America.
A local Chicago mortgage broker is happy to announce the return of the 100% financing! 580+ with some documentation.
Yea get this great rate just send us a small fee to get started!
Will Chinese CB tightening lead to curtailed purchases of U.S. debt?
———————————————————————————
China Raises Banks’ Reserve Ratio
By Rick Carew and J.R. Wu
Word Count: 922
BEIJING — China’s central bank Sunday took another measure to soak up strong capital inflows into its red-hot economy, ratcheting up banks’ reserve requirements for the seventh time in the past year.
The move, which takes effect May 15, will bring the ratio up 0.5 percentage point to 11% for most banks and comes on the heels of an acceleration of economic growth to 11.1% in the first quarter.
Economists widely expected a tightening move ahead of the upcoming May holiday and are now looking for the People’s Bank of China to deploy more tightening measures, such as an interest …
http://online.wsj.com/article/SB117783255254786134.html?mod=home_whats_news_us
What realtors don’t get: It is not about who looks at the house and when they look (when first listed or later on). It is about whether the seller is willing to price at current market value, where some buyer currently looking is willing and able to pay the purchase price.
HOUSING SCENE
LEW SICHELMAN
No decent offers? Here’s why, and what to do about it
April 29, 2007
WASHINGTON – Your house has been for sale for almost 90 days, but nothing has happened. Now your listing agreement is about to expire. You have some tough decisions to make.
While you can always take the house off the market and wait for better times, that’s not really a viable option for most people. In fact, if you decide you’re no longer interested in moving, chances are you weren’t a serious seller in the first place. You were probably just testing the waters.
However, if you sincerely would like to sell but don’t really have to, taking down the “for sale” sign for a few months may be just the ticket, especially if your house has been on the market for an extended period.
…
More often than not, price is the culprit. Because buyers tend to shop at the very top of their price range, an overpriced house is often “invisible” to those it will appeal to most. In other words, potential buyers will never see it, says Knox, who presides over David Knox Productions, which produces training videos for real estate agents, and who is a frequent lecturer at state, local and national trade gatherings.
The importance of pricing a house correctly cannot be understated (SIC; didn’t he mean “overstated?”), the sales trainer emphasizes, because the initial marketing period for a new listing is the most critical.
“Buyers typically descend upon a new listing during the first two or three weeks it is on the market. After that, activity usually tapers off,” he explains. “So if the house is priced too high to begin with, you will miss the bulk of potential buyers. Even if you lower the price later, you will have missed a lot of good buyers.”
http://www.signonsandiego.com/uniontrib/20070429/news_1h29sichel.html
(OOPS — the above post of Sichelman’s article was supposed to be a stand-alone; here is the one that properly belongs here as a “reply”):
DEAN CALBREATH
Foreign investors a blessing and a bane
April 29, 2007
Time for a pop quiz.
Question 1: What was China’s biggest export to the United States last year?
A) Computers.
B) Televisions.
C) Toys.
D) Cash.
E) Chow Yun-Fat.
That might be a trick question for fans of Chinese martial-arts movies, because Chow is such a fine actor – and sword fighter. But the real answer is cash. Cold, hard cash.
China exported $105 billion of cash to the United States last year, mostly by buying Treasury bills, mortgage-backed securities and corporate debt.
In comparison, China exported $49 billion in computers, accessories and semiconductors to the United States; $47 billion in textiles and footwear; $30 billion in TV, radio, recording and telecom equipment; $26 billion in clothes and shoes; and $22 billion in toys, games and sports equipment.
http://www.signonsandiego.com/uniontrib/20070429/news_lz1b29foreign.html
A reassessment
Sagging market begins to affect property taxes
By Roger Showley
STAFF WRITER
April 29, 2007
SEAN M. HAFFEY / Union-Tribune
Acqua Vista, a downtown condo tower, is one of several developments where assessor valuations on lower-floor units may be reduced.
The downturn in San Diego County home prices is beginning to show up in a surge of requests to reduce assessed valuations that determine property tax bills.
San Diego County Assessor Gregory Smith, who also serves as county clerk and recorder, said about 900 homeowners since January have requested reassessments based on falling prices in their neighborhoods.
By the mid-May reassessment application deadline, he expects as many 2,500 requests with 1,800 reductions likely to be granted, more than 26 times as many as last year.
“But this is nothing like the ’90s,” he said. “We were deluged.”
…
“There is a very limited area” of decline today, focused primarily on recently purchased condominiums and condo conversions. “It’s limited in scope because values haven’t dropped that much.”
– GREGORY SMITH, county assessor
http://www.signonsandiego.com/uniontrib/20070429/news_lz1h29reasses.html
The above was the lead article on the front page of the Sunday SD Union Tribune Home section. Exact opposite, on the back page of the Home section, appears the following ad (beginning in large bold letters). I have to wonder whether Gregory Smith takes the SD Union Tribune, as the fine print in this ad doesn’t mesh well with his assertion that SD values have not dropped by much, or that the damage is limited to the condo & conversion market.
——————————————————————————
LENDER FORECLOSED
PUBLIC HOME AUCTION
300+ HOMES IN SAN DIEGO, IMPERIAL, LOS ANGELES, VENTURA, ORANGE, RIVERSIDE AND SAN BERNARDINO COUNTIES MUST BE SOLD
Here are some of the properties available at the San Diego Auction!
SAN DIEGO COUNTY
(The list is too long to reproduce, so I only note a few SFR prices below; the prices shown are “PREVIOUSLY VALUED TO” and “STARTING BID,” plus my calculation of the percentage the starting bid is below previous value stated in the ad. The four examples below are all for North County zip codes, but eyeballing the rest of the list suggests it is not different elsewhere.)
12524 Glenoak Road, Poway 92064 5/2 1729 sqft $540,000 $299,999 -44.6%
16564 Gettysburg Drive, San Diego 92127 3/2.5 1690 sqft $658,000 $339,000 -48.4%
11119 Morning Creek Drive South, San Diego 92128 4/3 1868 sqft $690,000 $349,000 -49.4%
12129 Via San Loreno, San Diego 92128 3/2.5 1748 sqft $665,000 $349,000 -47.5%
This is very believable, but I am still wondering why Case-Shiller index shows San Diego down only 5% or so. Maybe it’s just a time-lag thing. Case-Shiller maybe will show the frequent instances of much larger declines as time goes forward. (?)
“This is very believable, but I am still wondering why Case-Shiller index shows San Diego down only 5% or so.”
The Case-Shiller methodology only reflects the market value of homes that have already sold twice, which tends to make it hard to reflect current market value of the many, many San Diego investor-purchased homes built from 2000-2007 which currently languish on the market.
This Lender foreclosed Public auction is possibly the same one that i have been seeing running on TV stations non-stop. They advertise starting bids as low as $99,999.
Looks like the latest RE Craze/scam/con will be foreclosured properties and auctions looking for the last few moronic buyers/bidders to dupe.
it’s all about keeping that commission cash-flow coming in.
it’s all about keeping that commission cash-flow coming in.
—-Its a RACE TO THE BOTTOM…….I’ll bet when this is all over there will be Very Few commissioned sales people of all types.
And employers will be forced to pay them a stated pay each week. Its the only way to try and hold up any standards of integrity.
Regarding the house on Morning Creek Drive. If I’m not mistaken, the house had a renovation done over a couple of months after it went into foreclosure — the usual suspects: wood flooring, new lighting fixtures, etc. The sellers have added a lot of the inflated value upgrades that you typically see flippers do. They have sunk a good chunk of money into fixing up a house that hadn’t been trashed. It will be interesting to see how this ‘auction’ goes and what their actual reserve price is with all the money that has been sunk into it.
I’ll pay more attention to REO auctions when the lenders just want the property gone without resorting to hiring someone to add in inflated upgrades to boost the price. Just the house please, hold the granite.
“Just the house please, hold the granite.”
LOL! ‘Would you like new lighting fixtures with your alligator?’
P.S. For a little perspective on those Starting Bid prices, ziprealty.com’s current San Diego inventory lists 11,338 SFRs, of which 335 (under 3%) are listed at prices below $350,000. And those would be fixer-uppers in gang territory.
After seeing in yesterdays blog that people’s insurance costs in Florida have gone from $1000 to $5000. I wonder how many would be home buyers will pull out of the deal when they find this out?
Sister’s neighbor’s place is up for sale. Can one of you folks with access run the address, Napa, CA MLS #20706737, for mortgages and taxes? Thanks!
I can not get the MLS info, but if the address is 3160 Valley Green Lane, in Napa, it is a condo. It was purchased in 1991 for $173,000. The current assessment is $223,858 (which means nothing). Taxes run $2674 or 1.19%. Use the percentage times the new selling price to get what the taxes will be after a sale. I don’t know the current mortgage. It was purchased using a World Savings loan for $138,400 in 1991. Note this was a 20% down payment, which was the norm in those days and will be the norm in 2008.
Here’s a URL that works right:
I’m seeing lots of real estate agents saying “Rates are going up, so buy now.”
First, I disagree rates will go up… for qualified buyers. With so many sub-prime and Alt-A lenders finally shutting off the tap in the face of massive fraud and losses, the amount of money available to the VERY FEW qualified buyers will go up. As WaMu recently said, they are now focused on quality over quantity. The lenders are going to be fighting over the few qualified borrowers, and will be dropping rates to them. As evidence, prime rates have dropped .04% in te last two weks since the sub-prime bubble popped.
Second, does it make sense to buy before rates go up? Sure, if your goal is to buy at the top and them find yourself upside down on a house.
Housing prices are adjusting toward the affordability level. If rates go up, affordability level falls further, meaning the price of the house you just bought is going down more.
I bought a house back in ‘93 when interest rates had fallen from 8% to 6.75% in the prior year, housing prices were up, and all indications were that interest rates would continue to fall and house prices would climb.
I was wrong. Over the next year, rates went back up to 9, and house prices dipped. If I’d held out a year, I could have saved half-a-year’s income off the purchase price. It wasn’t until ‘98 that interest rates came back to where I bought, and that brought the price of the house back up to what I paid.
So, if you are buying a house to live in for the rest of your life, and can qualify for a good rate 30 year fixed, and are willing to be locked into the house, upside-down on the loan, for a decade or more, just to break even….
Then by all means, buy before interest rates are up.
If you want flexibility… wait until after interest rates go up and prices crash. Your payments will be the same since the price of the house is down. Then, when/if interest rates do drop, you can refi to cut your payments, or sell for a massive profit.
In short, buy when interest rates are at the top and prices are at the bottom. NOT the exact opposite.
‘I’m seeing lots of real estate agents saying “Rates are going up, so buy now.”’
To which I say, ‘Rates are going up at the same time lending standards are choking the buyer stream to a trickle, so buy now and catch a falling knife.’
It all depends on what you are getting into. I am hoping to take possession on a new house (2006) later this week. The details - 2014 sq.ft, 3/2.5, 2 car garage, and a 12,000 sq ft lot for just $175,000. With a 6.125% 30 year fixed.
WAman: sounds like a very good situation! I gather you are in the state of Washington, Seattle maybe ??? In the burbs ???
Don’t know where WAman is Illinois. But at that price I would be absolutely shocked if he is West of the Cascades. Sounds like Eastern WA. (For the rest of this year anyway!)
In short, buy when interest rates are at the top and prices are at the bottom. NOT the exact opposite.
sure, if you have lots of cash or a secure well-paid job and good credit. But it could take many years before prices start bottoming. For those who only look at monthly payments (the majority) it probably doesn’t matter much, prices will adjust to actual rates and lending standards. And for those with no cash or credit records at all, it’s probably the best time to buy despite record prices, because it is difficult to see how lending could get even more loose than it is now. In the mean time, the realtors keep chanting the ‘buy before rates go up’ in my country (NL) too, although mortgage rates have barely moved over the last 2 years.
What I find funny about the sales pitch “buy now, rates are going up ” ,is that the same RE agent will turn around and tell the borrower that they can only afford to purchase with a adjustable loan . It really doesn’t matter what rates the adjustable starts at because what matters is what the loan will adjust to long term . Are you paying 2% over a index or are you paying 3 or 4% over a index to determine you rate .
During the mania people didn’t know how to even shop for a adjustable and determine what the effective rate was based on .People had such short term thinking that they didn’t even question what spread or margin will determine my effective interest rate .
If a adjustable loan is based on 4 % margin over some changing index that will cost you more than a 2 or 3% margin .
It’s clear that borrowers were only looking at stupid things like what the teaser rate was or simply if they could get away with lying with certain lenders to get loans they didn’t deserve so they could gamble .
I just noticed ZipRealty added Denver. This has to have been within the last week or two.
Oh all you folks in Seattle waiting for the price drop well I no longer think it is going to happen. Two reasons Boeing and Microsoft - both companies are doing great and could possibly ride out the impending storm.
Somehow… I don’t see the BOD’s at both companies preparing to start giving out annual raises at double digit percentage increases, to everyone, for year-after-year into the forseeable future, in order to have local median incomes “catch up” to local median home prices.
But… maybe that’s just me.
ALL of the Dow companies are doing great and will ride out the impending storm (and then there’s WaMu…). The housing downturn isn’t preceded by economic recession as in past cycles. It’s caused by the tightening of credit and price of homes relative to income. 47% of 2006 mortgages were ARMs in Seattle, inventory up, sales down.
It’s the same pattern everywhere, different cities at different stages. Seattle has a higher concentration of Alt A instead of subprime, so I expect they’ll manage to wriggle around more vigorously in the mortgage vice.
All it will take to get the Great American Layoff machine into high gear are a few consecutive quarters of missing analysts expectations. Sure, the Dow companies will still be very profitable, but that will be very small consolation to the thousands of laid off workers,
ALL of the Dow companies are doing great and will ride out the impending storm (and then there’s WaMu…).
If you mean they’ll survive then yes. Their stock will drop like a rock, but they will survive.
You have it backwards.
Housing downturns precedes recessions more often than the other way around.
The way you have it is unusual.
“precede”
“I no longer think it is going to happen.”
Right — it’s different in Seattle. And don’t forget Starbucks — homedebtors will be drinking ever more $10/lb coffee despite the giant sucking sound of negative equity draining out of their housing ATM machine.
Yeah, sometimes I feel that way too about the bay area. Sometimes I just want to give in, get me a nice option ARM, cancel my DSL, and sit back with the remote control to the flatscreen in one hand and my glass of Kool Aid in the other.
It’s like a few good years now for several crappy decades down the road– versus crappy years for now waiting for the implosion, with better decades to comes if I’m right about it. These are like my prime years, so oh well.
Well, if Boeing and Microsoft employed 500 thousand people, I might agree with you WAman. Problem is, the vast majority of people who live in Seattle do not work for either of those companies. Another problem: most of the people who DO work for those companies cannot afford to buy a house in Seattle right now.
Good comments on Mish’s latest blog . This excerpt in particular caught my eye:
‘ I’ll wrap up this rather uninspiring Bulletin this evening with a proposition for the pondering: What makes this period Unique and especially dangerous is that the current Mania is in sophisticated private Credit instruments, most having little or no transparency and issued outside the traditional purview of central bankers and financial regulators. Unprecedented gains in financial wealth come not predominantly from stock or asset prices shooting openly (and “vertically”) to the moon. Instead, the Mania Unique to this extraordinary phase of “Financial Arbitrage Capitalism” involves the enormous (and highly concentrated) accumulation of “small” spread profits on tens of Trillions of “dollars” of highly leveraged “structured” Credit instruments (expanding insidiously and “horizontally”). Pricing isn’t a critical issue and they don’t even need to trade, as gains are accumulated with the receipt of “payment in kind” spread profits through the issuance of only more debt instruments. ‘
That is from Doug Noland of Prudent Bear. I do not think they sourced him on Mish http://www.prudentbear.com/articles/show/2003
No, was not sourced, but had quote marks flagging it. It is always something as the saying goes. In this case, Noland is pointing out it is of global proportion. Is a soft landing probable for every asset pretzel?
DC question - The Greater Capital Area Association of Realtor’s market report shows an average home price of $675,736. A rank and file US Senator’s salary is $165,200. Isn’t the rule something like 3X gross salary with 20% down. Assuming salary alone and no other income source could a US Senator afford a home in DC without exotic financing?? You guys are much better at this than I. thanks..
2- 3 X income and 20% down used to be the norm. So under the old rules, no, a Senator could not afford the home unless they had a huge DP laying around- or a banker buddy willing to cut them some slack.
[His last words]
Kurtz: The horror. The horror.
my god, I didn’t know one person could speak so much truth.
“”It’s about giving transparency to a very illiquid market,” said Kevin Bambrough, a market strategist at Sprott Asset Management.
And Nymex has “correctly identified that the nuclear power industry is undergoing a renaissance with tremendous growth ahead, as the world struggles to deal with strong emerging market and Asian growth, while facing the reality of peak oil and an energy-constrained world,” he said.
Sprott predicts that “the combination of high energy prices, pollution and global warming will compel the world to attempt to build as many nuclear reactors as possible going forward,” said Bambrough.
“You can say what you want about nuclear power but you’re if worried about global warming, one of the ways to deal with that is nuclear power,” said Phil Flynn, a senior analyst at Alaron Trading.
“Since we are moving off the age of oil and into a nuclear era, it’s about time we had some liquidity in the uranium market and some visibility into pricing in outer months,” said Bambrough.”
http://www.marketwatch.com/News/Story/uraniums-set-make-waves-futures/story.aspx?guid=%7B04534340%2D989E%2D43ED%2DB93D%2D1CEC856F39BF%7D&dist=TNMostRead
I still think the majority of the energy crises is too much $, just like the last one in the ’70’s. They of course thought we would run out of oil & nuclear power was the answer. Then came Volcker, and a lot of white elephants
I miss seeing those long run-ups in inventory that Phucktheflippers used to post. Does he still post here?
Helocery dickory dock
The house ran out the loan clock
The clock struck everyone,
The house value ran down!
Helocery dickory dock
—House bought for $238K in December 2005. Now FSBO on Craigslist for $219K. Sorry, buddy, but an 8% price cut is not going to do it. BTW, original owner bought from builder for $149K in May 2004.
“$219000 Reduced - Beautiful 4bd/2ba - 4 Sale by owner
14833 West Larkspur Drive
Surprise, AZ 85379
Beautiful Home For Sale
Beautiful, 1538 sq feet, Single Level home, 3 Beds+Den, 2 Bath. Great floor plan with lots of tile, nice kitchen with white on white Whirlpool Refrigerator, Range, Hood Microwave & Dishwasher, ceiling fans in Bedrooms, 9 ft ceilings. Split Master Bedroom, southern exposure, walk in closet, large shower, double sinks. Quiet neighborhood close to park and greenbelts.”
http://phoenix.craigslist.org/rfs/317343986.html
I would love to hear what thoughts and emotions this craigslist posting elicit in you? Read to the end — the best part.
I am stunned.
——
http://sfbay.craigslist.org/nby/rfs/319987923.html
“PLEASE READ / VERY IMPORTANT: Since many people are new to REAL ESTATE SHORT SALE transactions and the way SHORT SALES are handled in terms of how fees are charged, a clarification needs to be made because it seems like very few –even very savvy real estate investors- ARE NOT UNDERSTANDING WHO PAYS the fees of the whole transaction: The Bank does NOT because they are the first ones losing as well as the seller who loses even more: Both are “shortening” their expectations. That means in easy terms “LOSING MONEY”. Sellers benefit is to avoid Bankruptcy and Foreclosure. Bank’s benefit is to avoid Federal Reserve’s as well as shareholder’s punishment.
As a SHORT SALE, this transaction involves selling a property very below market value because since the SELLER is relinquishing/giving up not only his equity profit, but also losing since he –SELLER- will be 1099’d -that means taking a next year HIT by the lender –obviously from the IRS- who won’t pay taxes for the loss in the upcoming year for the difference between the price sold -which is below market value- and it’s appraised value -which is normally at market value-.
Therefore, THE BUYER is who must PAY ALL THE CLOSING COST FEES. BUYER IS THE ONLY ONE PROFITING from this transaction because he buys way below market value and normally takes an ENORMOUS monetary profit from the property transaction. The BANK & SELLER are the only losers here. Therefore, Do not expect losers to pay for BUYERS to profit. Would you??? Besides, how can a DEFAULTING HOMEOWNER/SLLER afford broker fees when they can’t even afford a monthly mortgage payment? Banks never paid closing costs so they are totally out of the picture. Short sale sellers are short selling because they are in a “CRITICAL POSITION”.
SUMMARY: BUYERS PAY FOR ALL CLOSING COSTS including SELLER’S REAL ESTATE BROKER and BUYER’S REAL ESTATE BROKER which can be up to 3% each party according to LENDER’S SHORT SALE GUIDELINES and common real estate practices. Other fees also may apply like past due taxes, inspection fees and multiple liens depending on every specific situation. I am not an Attorney, CPA or licensed escrow officer, etc… Please seek the advice of any of these professionals for any questions you may have.
FINAL APPRECIATION: YOU’LL STILL MAKE TONS & TONS OF MONEY EVEN IF YOU PAID EVERYBODY WHAT THEY”RE OWED. PRE-FORECLOSURE or SHORT SALES, as they are also called, have always been extremely profitable. “
Ha ha. I’m surprised they didn’t capitalize “Market Value”. How come these idiots are selling so far below Market Value anyway?
Reposting — I think my post got flagged earlier by the spam system.
This is a remarkable listing for a short sale on craigslist. Read to the end for the best parts. I would enjoy hearing what other readers think.
I am stunned.
—
http://sfbay.craigslist.org/nby/rfs/319987923.html
A small quote…
“Therefore, THE BUYER is who must PAY ALL THE CLOSING COST FEES. BUYER IS THE ONLY ONE PROFITING from this transaction because he buys way below market value and normally takes an ENORMOUS monetary profit from the property transaction. The BANK & SELLER are the only losers here. Therefore, Do not expect losers to pay for BUYERS to profit. Would you??? Besides, how can a DEFAULTING HOMEOWNER/SLLER afford broker fees when they can’t even afford a monthly mortgage payment? Banks never paid closing costs so they are totally out of the picture. Short sale sellers are short selling because they are in a “CRITICAL POSITION”.”
Methinks, like any other contract, it will be negotiable. The “losers” problems are not my problems.
A couple of random observations:
- All of sudden, gold is starting to become something to buy. Okay, we’ve know this for a while as we watch the dollar slide down into new levels of worthlessness, but in the past weeks on TV I’ve seen two gold-related things that caught my eye: one was a commerical advertising a place that would buy your “extra and unwanted gold” such as jewelary and such. Yeah, “extra and unwanted gold” - no doubt they’ll wait for gold to climb and then flip it for a nice profit. Another was an informercial about some group selling 1/10 ounce Golden Eagles for rock-bottom prices. Now, they may have been cheats, but the point is that gold has been “discovered” to the level that it is now on TV. I suspect that most of the people involved see it as a get-rich-quick scheme - another bubble of sorts - while they don’t understand the value of gold vs. hyperinflation.
- I fully appreciate the frustration about this market, in that I was ready to buy in 2003, just as the lunacy was really getting into full force around here in Maryland. It’ll probably be a couple more years before I can get anything reasonable, so that’s a lot of lost time. Makes you want to buy a McMansion and wait for the “gubermint” to bail you out! Haha…
On the plus side, houses are not selling, prices are all out of whack for similar houses based upon how HELOC’d and clueless the seller is, and at least nobody is telling me about how “real estate always goes up!” and “now is a good time to buy or you’ll be priced out forever!” anymore.
Still, it is sickening to watch the madness, such as needing 2 people with professional level incomes 3+ times the median for the area just to buy a house. And people still seem to think this is normal?!
- Litmus test for my area is watching Glen Burnie, an old, blue collar town that was once know for girlie-bars and corrupt government years before I moved here. It’s better now, but it is, at best, a forgotten place. Median income = about $50,000. Minimum starting selling price for a house in the area = about $200,000 for a POS condo, and rapidly moving up from there. Yeah, there’s no problem here! Move along folks!
I was thinking the other day…
With so many landlords going into foreclosure, how is a tenant supposed to figure out who to rent from? I don’t like moving a lot. It’s expensive to move. I prefer to rent from someone who isn’t going to be losing the house next week or next month.
Are we approaching a time when tenants will be able to charge landlords $35 for a credit check to make sure the landlord is someone they want to rent from?
It’s food for thought… With vacancy rates going up, landlords are going to be fighting for good tenants.
Ask the landlord how long they have owned the place. If they bought it at least seven years ago, your odds are much better that they won’t be losing it anytime soon.
If you are fortunate enough to be looking for a rental in an area where vacancy rates are rising, you should be able to find a stable landlord - at least you will have some choices. However, many areas have low and falling vacancy rates (like my area). In areas like that, even the weakest landlords are probably able to charge enough to cover costs, so your risk is low.
Obviously you don’t want to rent a place in a recently developed tract that is half empty.
Exactly SM.
The place I rented in 2005 after I sold my house was recently bought by my landlord. I had a week to find a place and no chance to do any research on her.
Come to find out she bought four other houses thinking she would flip. Then the bubble happened. She wanted to raise my rent by 250 in 11/2006. The raise was bad, but knowing that she was a FF was worse.
I moved. I’m currently paying 70 more a month and my landlord has owned this place since 1994 and has 400k worth of equity in the place based on county records.
Research is the key and SM called it.
Buying seven years ago might not help. A lot of people extracted equity and are now in super debt over a home they should be close to owning outright.
Check the county records and you can see the kinds of loans they took out in a lot of states.
I like your idea of charging landlords for a credit check Claudia. (!)
Can’t you see it now?
“I’d like to be your tenant but I have this small application that you need to fill out — oh yeah — the credit check will be $35. I’m interviewing a lot of landlords this weekend but if you’re the one I select, I’ll let you know.”
For the last few years, tenants have had to amuse themselves by trying to get landlords to come down on rent. It would be fun to have something different to do.
What the heck is this?
http://sacramento.craigslist.org/car/321082597.html
Girls in bikinis with spinner signs work much better.
McMansions look much more classy with a vintage Bentley in the driveway.
Either that, or they’ve got a crew of jackers ready to take ‘possession’ of it, as soon as you’ve posted your address and make/model of car…
Go on, call me cynical….
Fingerpointing time…
================================================================
ANALYSIS
Nobody kept an eye on subprime lending
The subprime mortgage market is in disarray, and many players, including the federal government, failed to regulate this critical area of home finance.
BY KEVIN G. HALL
khall@mcclatchydc.com
WASHINGTON –
Anyone looking to point a finger of blame for the meltdown in the subprime mortgage market may need more than two hands. It took the action, and the inaction, of many players to produce today’s mess, which threatens to slow the U.S. economy further.
”Everyone has a share in the blame — lenders, borrowers, regulators, investors. There were a lot of mistakes, and everyone made them,” said Mark Zandi, the chief economist for Moody’s Economy.com, a consultancy in West Chester, Pa.
The federal government arguably failed most of all. It shirked its responsibility to regulate this critical area of home finance — much as it had during the savings-and-loan crisis of the 1980s. At least nine federal agencies oversee some portion of the mortgage market, and over the past three years nearly all of them issued warnings about risky loan terms.
But not one of them — or Congress — moved to regulate nonbank lenders and mortgage brokers. Both fall through the cracks of direct federal regulation. Together, they originate more than half of all ‘’subprime” loans to borrowers with weak credit histories, according to the Federal Reserve. They also account for 80 percent of the adjustable-rate, subprime mortgages that are the heart of today’s problems.
http://www.miamiherald.com/103/story/89546.html
Another rule of thumb for when to buy a home:
Don’t buy until liar loans are a fading bad memory. The elimination of the fraud premium will bring about lower home prices — it’s in the bag.
———————————————————————————-
Subprime `Liar Loans’ Fuel Bust With $1 Billion Fraud (Update1)
By Bob Ivry
April 25 (Bloomberg) — Cheating on mortgage applications is so widespread and so seldom punished that it’s fueling an increase in foreclosures that will prolong the housing slump, said Robert W. Russell, counsel to the director of the Office of Thrift Supervision, which oversees savings and loans.
Borrowers and brokers commit fraud when they exaggerate the applicant’s income, qualifying the borrower for a home he otherwise couldn’t afford. Such fraud robbed lenders of an estimated $1 billion last year, according to data collected by the Washington- based Mortgage Bankers Association and the Federal Bureau of Investigation.
“Misstatements about employment and income are being made every day,” Russell said. “The brokers are just putting down on paper what the underwriters would require. There are borrowers providing false information as well.”
Loans that require little or no documentation of income soared to $276 billion, or 46 percent, of all subprime mortgages last year from $30 billion in 2001, according to estimates from New York- based analysts at Credit Suisse Group. Homebuyers with those loans defaulted at a 12.6 percent rate in February, compared with 1.5 percent of fully documented prime mortgages, said San Francisco- based First American LoanPerformance, a mortgage consulting group.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aonxuz3OYwLg&refer=home
Economic pace slowest in four years
By Patrice Hill
THE WASHINGTON TIMES
April 28, 2007
A Spanish style home is seen offered with a reduced price yesterday in Altadena, Calif. A Spanish style home is seen offered with a reduced price yesterday in Altadena, Calif. (AP)
Economic growth creeped along in the first quarter, posting an 1.3 percent annual rate — the slowest in four years — as the housing slump increased its drag on the rest of the economy, the Commerce Department reported yesterday.
Consumers managed to maintain their composure and keep the economy afloat even as a 17 percent drop in residential investment slashed the growth rate for the fourth straight quarter by one percentage point or more.
Buoyed by solid growth in jobs and income, consumer confidence has held up in the face of falling home sales and prices, though it has shown signs recently of crumbling a bit in response to the housing drop and rising gasoline prices.
“Housing remains a severe weight on growth,” said Augustine Faucher, economist with Moody’s Economy.com. Other sectors of the economy are struggling to offset the drag from housing, with little success last quarter.
http://washingtontimes.com/business/20070427-100738-8122r.htm
THE OUTLOOK
Latin America Feels Pain
Of U.S. Housing Slump
By JOEL MILLMAN
April 23, 2007; Page A2
OAXACA, Mexico — The slowing U.S. housing market already has taken a bite out of the U.S. economy. Now, the fallout is spreading to Latin America.
That’s because home construction is the principal gateway industry for immigrants entering the U.S. labor market. Those immigrants contribute the lion’s share of the estimated $50 billion in cash sent annually from the U.S. to family members and others in countries south of the border. That tide of cash appears to be ebbing.
Monthly remittances from the U.S. to Mexico have dropped every month since their peak of $2.6 billion in May 2006 — shortly before new-home construction in the U.S. plunged. In February 2007, the latest month for which data are available, remittances to Mexico had slowed to $1.7 billion.
…
Trouble in the U.S. housing market could also affect other industries staffed by immigrant labor. The carpet industry, for instance, is dominated by various nationalities at different points in the chain: Many Mexican workers are employed in factories that make rugs, Central Americans dominate the carpet-installation business and Brazilians have carved out a niche in rug cleaning.
Little wonder, then, that remittances from the U.S. are dropping off almost everywhere in Latin America. Brazil received $330 million in remittances from the U.S. in February compared with about $446 million per month on average a year ago. Monthly remittances to Guatemala, which peaked last May at $361 million, dropped to $271 million in February.
The slowing housing market also weighs on remittances in other ways. U.S. homeowners are likely to compensate for rising mortgage payments by cutting back on services that employ large numbers of immigrants, such as housecleaning, landscaping and laundry. Homeowners may also cut out frills such as visits to restaurants and beauty salons, big employers of immigrants.
As Gordon Hanson, a labor economist at the University of California at San Diego puts it: “Among nonessential expenditures that higher mortgage payments might eliminate, getting the nails done might be at the top of the list.“
http://online.wsj.com/article_email/SB117728927909778544-lMyQjAxMDE3NzI3NTIyODU5Wj.html
This is going to give Mexican rulers some serious headaches. Mexico’s Oligarchy has been using the US as an escape valve for years. Instead of promoting policies that create high paying jobs, the oligarchs have been keeping all the loot for themselves. News item: Carlos Slim Helu, a Mexican telecom oligarch, recently passed Warren Buffet to become the 2nd richest man in the world, and is closing in on Bill Gates. Unlike Gates, none of Slims employees got rich off of generous stock options.
But what American politicos lacked the will power to fix, the market will. I am sure that the Mexican power establishment is suddenly sweating heavily. With dropping remittances and reduced job prospects for Mexican emmigrants, they can no longer rely on exporting their troubles to the US, and are already facing unrest with an underpaid, underemployed and especially hungry citizenry. This could be the opportunity the neo-socialist PRD party needs to grab an absolute congressional super-majority (66%) in next year’s elections, completely marginalizing President Calderon (PAN party), which unfortunately coould eventually lead to a Hugo Chavez like Mexican President in the future.
Toll’s optimism about NY and CT is unfounded. They are currently riding high because they are the home base of the subprime lending kingpins who profited from the destruction of the housing market on Main Street through subprime lending. They will eventually reap the fruit of the bitter harvest they have sown, but it will take a period of time for the consequences of their past actions to bite them in the back of the neck.
Housing
Going down
Apr 26th 2007 | LOS ANGELES
From The Economist print edition
But despite weak house prices, Americans are still spending
“BOSTON is still in the pits…in Florida it’s like death takes a holiday…Las Vegas is now terrible…Michigan may be a situation where it doesn’t come back.”
Robert Toll, chief executive of Toll Brothers, one of America’s biggest builder of luxury homes, has a droll style. But his comments at this week’s Milken Institute Global Conference, a gathering of 3,000 financiers and businesspeople in Beverly Hills, left little doubt about his view of the state of the housing market. True, there were one or two bright spots—the New York market was “phenomenal”; Connecticut had “got a lot better”; Texas was “good”—but Mr Toll’s overall tour was pretty bleak.
A fresh crop of national statistics support him. On April 24th the National Association of Realtors reported that the sales of existing homes fell by 8.4% in March, the fastest decline in 18 years. Government figures a day later suggested that sales of newly-built homes rose 2.6% in March, after plunging in both of the previous two months. March’s rebound was smaller than analysts had expected and sales of new homes are nearly a quarter below their level a year ago.
http://economist.com/world/na/displaystory.cfm?story_id=9090220