Bits Bucket And Craigslist Finds For May 2, 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
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Interactive Heatmap Over/Under Valuation Housing
A Warning on Risk in Commercial Mortgages
Three Strikes And Out, PIMCO on UK CPInflation
http://immobilienblasen.blogspot.com/
jmf…
Looks like a raging wildfire of upsidedowness on the left coast~
Good find!
i´ve made a mistake. the data is not calculated on the ofheo data. they have an own methodology.
have updated the post
Especially the Central Valley. The mix of BK, foreclosures and cowdung is not gonna stink it up bad there.
“..is gonna…” (sorry)
Great news for GS! Looks like San Diego is only moderately overvalued (30%) according to the interactive chart. San Diego also is one of the best deals in California per National City.
Dame it. I knew I should be buying now.Hope I have not missed the boat. Got to call the first realtor listed in the phone book. They will return my phone call in case their not in won’t they?
I disagree with these maps. Houston appears as “undervalued”, but we’ve seen the same overbuilding here as elsewhere.
Houston strikes me as overheated and overhumidified.
Blah blah blah. This BS about Texas just bores me at this point. You know and I know what’s going to happen here.
I’m looking at “tremendously undervalued” Bell County and LMAO. Something ain’t right there…
“But it’s so close to Ft. Hood!”
There must be a jillion pawn shops surrounding ft. hood.
“Blah blah blah. This BS about Texas just bores me at this point. You know and I know what’s going to happen here.”
I’m watching the nuttiness going on in San Antonio/Bexar County. Newspaper articles here - for the past 3 days - are discussing the downside to the “boom” and development. Big infrastructure problems. (!)
I hope tightening up lending will give pause to the ugly irresponsible overbuilding since “Subprime” is just about everybody’s middle name here. But, TxChick, tell us again, what do you think is going to happen here in Texas?
Chicago is only “moderately” over priced. Relatively speaking they’re correct but based on the $254,600 median price and the 15.8% over valuation that means you’d pay $40,000+ more than you should. Who here would consider overpaying $40,000 “moderate”?
people who overpaid $100,000- $200,000.
Interactive Heatmap Over/Under Valuation Housing
Check out PDX area in that map, PNW folks. More than 35% overvalued.
The REIC monkeys, of course, still claim it’s different here.
It is different, its too expensive in PORTLAND
Boulder County, CO fairly valued? Maybe if the local job market was still at 1999 levels.
Also, I find it odd that Larimer County (Fort Collins) is fairly valued at 224K, while neighboring Weld County (Greeley) is overvalued at 180K. They are the same market for all practical purposes.
I think that the medians can be misleading. Greeley grew a lot these past 5 years, which means a lot of new construction. This can pull the median up even though there was little general appreciation (which is why Greeley FB’s can’t dump their homes). Similar story in Larimer County: bigger houses built near I-25 for people who commute to Denver, which pulled medians up, but again there has been little appreciation. Golf course view houses across the street from us have not appreciated in 5 years. Our neighborhood is relatively far from I-25 (15 minutes), in the foothills, which makes our property “less desireable” than all those commuter homes with beautiful views of the freeway (and the never ending drone that comes with it).
Also, Pueblo, which is about 30 minutes south of Colorado Springs, has a median that is 60% that of Springs’ median. I strongly suspect that:
1) The median house in Springs is much nicer than the median in Pueblo.
2) When similar houses are compared, Pueblo is probably not much cheaper
Whenever values start going up in odd relative ways like that it usually means some creatives are causing gentrification. The Gay and Lesbian Atlas from the Urban Institute indicates that Larimer County has a strong Gay and Lesbian presence, especially lesbians and couples, while Weld County has hardly any except down in the southwest corner closer to Larimer County.
The forces that drive the Great Sort are perceived very differently across social bounds. Specifically, any place that becomes a haven for outcasts and bohemians is likely to exhibit an inflated price that even local residents do not understand but respond to by moving away from.
How many gay people do you know in Weld County, Colorado? What about other nonconforists like radical poets or independent musicians?
Fort Collins is pretty much a white bread, upper middle class town. Outside of the Colo State campus I have not seen a strong G&L or Bohemian presence. The place is not like Boulder. I’ld say that Greeley is more diverse (In a Mexican sort of way).
I think a lot of the “size” shown on the map in the West is due to the size of our counties out here. Our counties are larger than most New England states. The problems are in the cities. With our 3 metro areas (Phoenix, Tucson and Flagstaff) and three cities in counties that take an hour to drive across, it looks like it is the whole state. AZ is still mostly HUGE tracks of empty desert.
When I leave PHX heading to SoCal, I drive 2 hours of empty desert before hitting the giant town of Quartzsite, which has about 500 perminant residents (5000 when the snow birds are down in their giant motorhomes for the winter).
Take home message of the interactive map:
The housing markets of the entire West Coast, Manhattan and coastal Florida are seriously overvalued.
They say that Sacramento is 41.5% overvalued. For the life of me I can’t think of a single to justify paying 41.5% over value for anything here!
CA Dept of Finance has it’s 2006 numbers out and they are so flawed. They project that Sacramento grew by 21,000 more then the Fed estimates. I’m trying to find a rational reason for this other then the standard margin of error.
**single reason
It’s not exactly the cover of Time magazine, but the cracks are forming:
http://tinyurl.com/2a4d69
(MSN Money Front Page)
Why rent? To get richer
A contrarian’s view: Houses don’t appreciate any faster than the level of inflation over the long term, so forget about buying a home and put your savings into stocks.
By SmartMoney
I have something un-American to confess: I rent an apartment despite having enough money to buy a house. I plan to keep renting for as long as I can. I’m not just holding out for better prices. Renting will make me richer. ….continued
The authors, like bubble buyers, are focusing on capital gains and neglecting the real benefit of homeownership — locked in housing costs, and the income return from living in the unit rent free.
Renting if you plan to stay many years makes sense only if, as in the past half-decade, houses are over-priced relative to rents.
I still think the cost of homeownership that is most overlooked is the opportunity cost. Buying too young can be one of the dumbest things people do. I know so many people that pass up great opportunities because they have been unwilling to move, cross country or cross town. Many times they don’t want to sell their house. A young professional that is unwilling to relocate has discarded most of their opportunities. People willing to rent and be flexible get a lot further. I think it’s an overall mindset.
NYCityBoy -
That’s a big can ‘o worms you open with that comment. I’ll refrain from too lengthy a response and leave it at: “Opportunity occurs where you make it.” Personally, I’ve found that being able to stay in the area where I grew up surrounded by my extended family and friends has provided me with more reward than I could ever obtain by traveling about to the whims of the corporate world. I’ve never found financial gain as an end in itself to be very fulfilling.
That’s a big can ‘o worms you open with that comment.
———————————————————
Traveling around the country is expected in lots of jobs. Just try and get a high level job say at a radio or TV station…you can’t unless you worked in Podunk for 5 years then went to a top 50 city then a top 10, then NYC….
So NYC boy is right…….Would I have wound up working at Court TV all during the OJ trial with no experience? Not a chance.
A mobile workforce is very key to having an economy that most efficiently utilizes its resources. If Bill’s company is in the toilet and Bill could move to another city, earn more, and perform his job more efficiently… that house is an anchor that hurts not only Bill but his potential next employer by not having Bill available.
Now, on an individual level Bill may be happy anyway. But the aggregate of Bills nationwide hurts the economy in a big way, and that’s one of the major problems caused by the housing crash.
I thought that the Internet and virtual teams were going to allow high value employees to live anywhere they wanted to.
A tidbit: my employer is redefining its concept of the cubicle farm. 40% of our staff no longer has a cubicle to call home. They are now expected to work at home, and if they must come in to the office they can use a “hotel” cube for the day (assuming there is vacancy). I expect this trend to continue until virtually all of us work at home.
You really can live anywhere nowadays…
It’s the when push comes to shove part of actually doing it, that many don’t follow through on.
I agree that if you want to be well trained in a highly skilled and specialized profession, it means you are going to have to move around, otherwise you become “inbred” if you stick to one place. OTT, to each their own.
“my employer is redefining its concept of the cubicle farm. 40% of our staff no longer has a cubicle to call home. They are now expected to work at home,”
You may want to be a little more suspicious and cynical there… the more you can work at home, the more they can outsource that exact same job to India.
And as to the original renting vs. buying comments… good point there on the fixed housing costs if you buy… o/w buying houses that you DON’T live in seems like a mediocre investment unless there is a credit bubble on the horizon.
“You may want to be a little more suspicious and cynical there… the more you can work at home, the more they can outsource that exact same job to India.”
Old news. Like I said: “High value employees”. If you are low value, you job probably already left on the Banaglore express. Of course the danger isn’t over. As Indians become more skilled, more jobs will migrate over there.
As a former “successful” ass-kisser in the corporate world, I didn’t appreciate true success until I opened up my own business.
Most new business ventures fail, and those that succeed are usually in part at least due to luck - in the right place at the right time. I’ve been in both types - successful and unsuccessful. Generally only the successful ones post on discussion forums about how successful they are/were. It’s certainly not a choice that everyone has available to them, or that everone would even want, given the stress and financial uncertainty that go with it.
Traveling around the country is expected in lots of jobs. …..So NYC boy is right…….Would I have wound up working at Court TV all during the OJ trial with no experience
To aNYCdj - (I didn’t want to go here) I think you missed the point of my previous comment. I know it’s hard to think beyond fame and fortune, but believe it or not, “working at CourtTV during the OJ trial” is not that appealing to a lot of people; indeed, most of us are not impressed and many of us pity the folks who work for a big corporate machine and think they have achieved greatness.
As a former “successful” ass-kisser in the corporate world, I didn’t appreciate true success until I opened up my own business. Nobody’s asking for my autograph (boo-hoo), but I make a great living, have no one to answer to but myself, and I am always available to be with my wife and kids. I don’t intend to be argumentative, just trying to get you to understand the difference in perspective.
Mikey:
I think you’re opening up more worms than than was held in NYCboy’s original can.
yes, there is more to life than simply having a high powered job.
But when you buy a home AT A YOUNG AGE (as stipulated by NYCboy) you do limit your employment options to a certain geographical area.
It’s not just employment options though, it’s also social options.
Let us take 2 examples: renter and owner.
Renter 1 decides that job is uber important. She therefore rents near her dream job. Later, she is transferred to a different city, so she just breaks her lease and rents in the new place.
Buyer 1 decides that job is uber important. He buys a house near his dream job. Later, he is transferred to a different city, but will find it harder to just “pick up and move” as it is considerably more expensive to sell and rebuy compared to breaking and entering a new lease. Thus, Buyer 1 is LESS mobile than Renter 1, which does decrease employment options.
Renter 2 on the other hand, wants to be near family, and job isn’t important. She thus rents near her parents and especially her childhood friends. After a few years though, her old high school and college friends move away, and her parents decide to retire and sell the old big house in favor of a smaller more manageable place and this is across town. Now renter 1 simply breaks her lease, and decides to either follow her parents, or her friends.
Buyer 2 decides family is most important, and buys near his parents. A few years go by, and his parents move to Florida. He now must find a way to sell and rebuy in Florida to be nearer his parents, if he has enough equity (he’s only 24 after all!)
Clouseau -
Your (and NYCboy’s) premise is that a good job always reigns superior to one’s location. Most telling part of NYCboy’s original post is not that people CAN’T move but that they are UNWILLING to or don’t WANT to sell their house. And somehow this makes them “dumb” or renders them unable to “get a lot further.” No, it just makes them have different goals and definitions of happiness.
Most of my friends who have moved for their jobs are unhappy with their jobs. Many of them come from broken families anyway; perhaps the reason that moving was no big deal in the first place. Jobs suck.
Heard this last year from a Kiwi, in Enzed…
“If work is so good, how come they have to pay us to do it?”
“Your (and NYCboy’s) premise is that a good job always reigns superior to one’s location”
Mikey:
did you read my post? I specifically stated nothing about “job reigns supreme”, only that if you wish to buy then you are limiting your job OPTIONS by not being as mobile.
also, in my post, I put another whole example that has NOTHING TO DO WITH JOBS, but with a person wanting to stay near friends/families.
what does wanting to stay near friends and family have to do with “the premise is that a good job always reigns superior to one’s location”?????
You’re focusing on the “jobs” aspect of my post, when I am only speaking about opportunities.
Buying/selling a house is much more complicated and difficult than renting an apartment/house, and thus it decreases your OPTIONS, that is all.
I speak nothing if the option should be taken or not.
A renter has more MOBILITY of LOCATION when compared to an owner, and thus the renter has more OPTIONS available including job options, family options, entertainment options, and yes, even happiness options.
But just because the options are present, does not mean that the renter must take them.
Likewise, an owner has LESS options, but may very well be happy with the options s/he has.
Anyway, in my post you are CONFUSING options with happiness.
I have never said that a renter is HAPPIER, only that they have more OPTIONS.
at least for the next 5-10 years… if we ever get a time again when you can sell your house in just a few days for profit or at least without loss , then the renter/owner options are the same.
Clouseau -
No duh. Refusing to move limits one’s options in employment and perhaps his social circles. The point is that, as NYCBoy suggests, doing so is not “dumb” and it doesn’t prohibit one “from getting further in life,” unless one defines “getting further” as getting a good job (which I, obviously, don’t).
If you can get to easy street eight years faster by being mobile (able to take the high paying jobs and renting instead of owning), you are certainly better off. Better to have more money when young than to have it all when you are one year from the grave. I’m amazed how younger people (under age 45) have accepted the real estate dogma. I’m saddened for them because many of them have enslaved themselves to a house. It’s like “toss me an anchor, will ya?!”
I did the corporate upward mobile/geo mobile ride for 25 years. Fortunately for me those moves were heavily subsidized by the corporation. I only lost my ass because of poor RE savy and worse timing. Kids are launched. The Ex launched long before that.
Now I am not young and not upward interested. In the summer I live on my boat, in the winter in a rented farmhouse. When my savings curve intersects with the RE curve I will convert and plant a garden.
Mobility is a good thing when it serves. RE in German is something like “immobile” isn’t it? The main thing everybody here agrees on, the home isn’t an “investment”.
Immobilien, and perhaps not coincidentally, Germany is (shhh…) perhaps the flattest 1st world market. From what I gather, selling a house in my bit of rural Bavaria is usually a sign that something unfortunate has happened: the owner died and the kids don’t care enough about the house to keep it, there’s been a divorce (still more scandalous here than most of the rest of the Western world), or the occupants cannot afford to keep it.
unfortunately Germany is the exception to the rule in Europe and even this exception may be disappearing. Dutch investment funds are buying up loads of homes in Germany, promising that home prices will climb significantly because of new tax laws that are introduced this year. And of course, near the Dutch border German homeprices are anything but flat. In some villages people ‘retire early’ by buying some land for a new home (or better for a few new homes), and selling their existing home to a Dutchie.
“…locked in housing costs, and the income return from living in the unit rent free.”
Er, how does using a 100% I/O option ARM to purchase a home you cannot afford lock in the costs? Me confused.
Under circumstances where housing prices are supported by fundamentals, a 30-year fixed locks in housing costs (except for maybe insurance and state taxes)– versus renting which would tend to rise with inflation.
I know this.
But why is your point relevant in SF or SD, where almost nobody can afford to purchase with a 30-year fixed with everyone else using ARMS, and anyone who does locks in near-record-high-prices for 30 years in a falling-price environment?
Carrying Stucco’s point a little further — even if a 30-year fixed “locks in” housing costs, what would be the point of locking in costs that are 50%-200% greater than the cost of renting? If rents were themselves rapidly increasing, “locking in” would be important. Most of us here are betting that rents cannot increase at all, due to huge vacancy rates.
And low wages, respective to housing costs.
The poster of that comment wasn’t suggesting people do that today, but under better circumstances. Today “locking in” costs, or worse getting payments that will balloon a couple years down the road, is every way you slice it economically disastrous.
This may have been posted before, but the following link from a WSJ article of a few weeks ago makes similar arguments:
http://tinyurl.com/232zx3
Thanks for the post. I get a kick out of “throwing my money away” on rent because I only pay $964 per month on a 2 bedroom 2 bath luxury apartment (with full sized washer and dryer) in a nicer part of Phoenix where there are no run-down neighborhoods within three miles.
As long as the War on Savers is successfully prosecuted by making certain stock prices always go up, that sounds like a wise strategy (rent / gamble difference between home ownership costs and rent in the stock market…).
Hahaha…war on savers… lol. Makes me imagine a big banker holding me upside down by my ankles and trying to shake all the money out of my pockets.
Too bad your metaphor is so close to the truth.
Too true, GS!!
Feeling the “War on Savers” here at our home as well.
I’m a traveling software engineer consultant. I have been renting for 11 years now. Being able to move to another part of the country within a week has been the big reason my income has been in the 6 figures annually since 2000. In early 2002 I had to leave my former job in Phoenix but could not find another one. So I took a job in New Jersey. it was 3 days of driving - all I packed was a duffel bag, my suitcase, and my lap top computer in my truck. I still kept the Phoenix apartment since I got a good tax loophole for keeping a permanent address more than 50 miles away from my temporary address. Having a house weighs you down. Been there, done that. With my much greater freedom comes more money. Also, I know people in houses who were nice and happy until they got new next door neighbors “from hell.” I occasionally get that type where I rent, but I move when the conditions deteriorate and do not have to wait a year or two for a sale.
How about these poor bank robbers in Houston. They just hit their fourth bank, a Guaranty Bank. Maybe they got some money this time, since their first 3 banks were: Washington Mutual, Wells Fargo, and then another Wells Fargo. Well, Daaaa, if you hit these Subprime lenders, of course they won’t have any money - no wonder they hit a fourth time. This last bank looks pretty strong, so they should be satisfied now.
http://www.chron.com/disp/story.mpl/metropolitan/4767072.html
You know, if they just read this blog, they could have saved themselves a lot of trouble.
I was in a B of A branch in el lay, about 15 years ago, when a takeover bank robbery took place…
It felt like a dream sequence, in real time.
4 would be Willy Suttons, whose take was $800.00 and they got caught a mile down the Pomona freeway.
Scary Stuff, kids.
Count Floyd, out.
That’s about how I remember the one that occurred when I was in a BA branch in SoCal about 25 years ago, one robber. He got a box of cash and slipped on the way out, leaving most of it all over the floor.
Implosion, stop that. You’re making me giggle. Loudly. And that could worry my over-HELOCed neighbors.
Live in el lay or baghdad by the bay?
2.2 inches in the current average snowpack right now in the High Sierra.
http://www.nohrsc.nws.gov/nsa/index.html?region=Sierras&year=2007&month=5&day=1&units=e
It was 25.5 inches, this time last year.
similar story in the Netherlands: 3-4 weeks without any significant rain in my area (normally even 1 week without rain is quite unusual over here) and temperatures that you normally see in the south of Spain or Italy this time of year (but they currently have Dutch weather). 2007 will be another year that shatters many weather records. The realtors will love it for promoting their Florida-of-Europe vision.
And every property can be beach-front if you get that little boy in the clogs to pull his finger out of the dike.
Seneca Lake is 600 ft deep.
We should be OK.
I understand the snowpack is still pretty impressive in my old stomping grounds… Oswego county, NY.
Our last blizard was two weeks ago. I was up to Watertown this weekend and didn’t see any more drifts from 81 anyway.
I think the fish sanwiches at the Loop in Oswego are quite overrated.
Wifey is from Fulton, which I’m forced to go there every two years. 40% of that place in on the gov’t dole.
Wow. Last couple years July 4 was too early to hike around Tahoe.
Now I’m going to try to go there for Memorial Day.
Usually the hiking season starts between these two dates. Hope there won’t be a problem with forest fires… imagine all those Tahoe houses going up in flames.
A friend just walked the High Sierra Trail, about 75 miles across the heart of the Sierra Nevada…
I did it one time in early June in the early 90’s and that was wickedly early.
He started from Crescent Meadow on April 21st.
Shocking.
The last 100-200 years have been unusually wet in the South West, according to scientists (they can see draught periods by checking the thickness of the rings on old tree trunks). Imagine what anything more than 5 miles inland in Southern California will look like without irrigation.
The headline in the elevator this morning was that there is a heightened risk of wild fires in the west and southeast. I’m guessing many of those fires will be sped up by large quantities of gasoline poured on construction materials.
Will the Fire Dept’s VERY HIGHLY paid Bureaucrats understand this concept?
Cal-Fire emplyees already get paid very well…many of those union employees get paid extremely well in CA…
Cops
Nurses
Cal-Fire
PG&E
Most of the employees in the bottom 3 make six figures in this state.
Why don’t you try to get a job with the fire dept, if they are paid so highly?
if the fire department is listening, maybe this can improve the payroll report for next month?
Can a home owner set their home on fire and get a check from their insurance to get out of a high priced mortgage?
they could certainly try, but tangle around with arson, and your gonna be tossing Bubbas salad in the joint.
I wonder how many homeowners have kept their policy current with market value. If not, the insurance company can claim they’re under-insured and only pay 60-80% of what the mortgage is after a few cash-out refinancing deals.
They will do that anyway………
Can empty investment houses be insured? Maybe this will reduce the wildfire rates. (Unless an FB lives upwind…)
Here’s the latest graph of Maricopa County’s Trustee’s Sale Notices.
U.S. April ADP goods ex-manufacturing down 22,000, 5-yr low
U.S. April ADP services jobs up 106,000, goods down 42,000
U.S. April ADP employment report up 64,000, 4-year low
lets hope the government is hiring……
government hiring?
let’s hope not as it’s 100% transfer from taxpayers
in fact I’d like to see those numbers w gov truly stripped out ,including gov contractors
my take was “sarcasm”
Me like sarcasm.
it’s 100% transfer from taxpayers…
——————–
…to taxpayers, who spend money in private industry sectors who use tax money, who pay tax money, who spend tax money…
So much for the argument that job growth would keep the economy afloat.
It would if decent jobs were being created.
Hey! San Diego added over 6000 “Leisure/Hospitality” jobs between ‘06 and ‘07. Sounds much nicer than “Manufacturing” (*) or “Construction” (*), doesn’t it?
(*) That combined lost over 8000 jobs in the same period.
I am going to make a bold economist like prediction. Insert drum roll please. DL will resign from the NAR!
By economist-like, I take it to mean that you’re predicting something that has already happened….
he will be back in the proverbial ‘next six months’
So, ronin is calling bottom on DL? Hmm, maybe. I suspect NAR won’t have the same fortune though.
Pleeeeeze buy a house. Pretty, pretty, pretty please? Any price. Just buy. Just… Listen, I need a commission. C’mon, can you help a brutha out?
The Weekly Mortgage Applications Survey is out:
The Purchase Index is 427.3 (4 week MA is flat YoY)
The Refinance Index is 2015.8 (4 week MA is up 33% YoY)
release: http://www.mortgagebankers.org/NewsandMedia/PressCenter/53940.htm
charts: http://www.recharts.com/mba/mba.html
The problem with that survey is that it only covers about half the market:
“The survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. ”
So, a lot of the smaller brokerages that focused on Alt-A and sub-prime, that have gone bankrupt in the dozens, are not, and have not been included.
So, what is reported as “an increase in applications” could easily just be a change in ratio as poeple take their business to the larger institutions based on the non-existance of the smaller ones.
This is a complete NON-statistic. It is biased selection of a sample intended to predict the larger population.
Refi’s up? yep, as last-chancers run for lives.
Update on the 2005 HGTV Dream Home winner’s attempt at selling it.
http://tylerliving.blogspot.com/
does he get hit for the full price on a 1099 ?
as a “winner”
The “full price” was 2.5 mill. That is how they described it when they did the show. And I think that includes all the crap that it was decorated with. His taxes were probably based on the original number, but he was nuts not to put it on the market the minute he had clear title. That is one heck of a quarterly tax payment to make….
Ain’t that the truth. It is a nice place and there are worse places than Tyler in the world but for $4M or even $2M, I’ll take Santa Barbara or perhaps Aspen. Please.
Wow, yes he must pay tax on the winnings. And if he uses it as his personal residence, guess what….no deduction on the “loss” of selling it below the cost basis. Ouch. The smartest thing he could do is make it a rental property for a while. The blogger is correct, he should have just taken the money when he won.
I was thinking the same thing. You can’t get much in rent in Tyler, Texas either. I’m thinking about contacting the agent and offering about $1,800/month to rent it. Think they’ll reply? LOL
Taxes on the winnings, for tax year 2005, were $680k. He received a HELOC loan from a Dallas lender for $1M to pay taxes and monthly expenses…….
More to follow
So what’s it like to win a “5 million dollar house” and have it bankrupt you?
Forget the hurricanes…this summer is going to be about fires in florida…with all the smoke a lot of seniors are going to look to move.
http://www.ppar.com/public/stats_public.asp
April numbers are out for sales and listings in Colorado Springs. Pretty much unchanged from March. YOY inventory up 26%, sales down about 15%. Prices up slightly, though not keeping up with real inflation. Foreclosures (not shown here) declined slightly, from 325 in March to 302 in April. The impact of tighter credit hasn’t shown up yet, but should be more of a factor going forward. Long lines at the Kool-Aid table.
Yawn….
Anbody read about the Rent-a-Center lawsuit where customers are claiming that they were duped into paying exhorbitantly high interest rates for all of their TVs, computers, cell phones, etc…?
Interesting parallel to the subprime borrowers, I think. How many of these people are “vulnerable” and how many of them are just greedy or have unrealistic expectations about what they can afford on their government check? I envision these duped folks to be the same ones buying the lobster tails with their welfare cards. Maybe I’m being too harsh, but geeeez, where’s the line between vulnerability and irresponsibility?
I read a book called Coersion (Rushkoff I believe) some time ago. Maybe it was Credit Card Nation. It went into the rent-to-own industry, and why it’s successful. One big thing, they pointed out, is that the people at the stores are very friendly for the sale. If the lower class go into a normal store (conventionally), the employees identify that the lower class might not have as much money and treat the customers with less respect. But the rent-a-center and other rent to own places treat them golden (since they will make tons of money off of them) and therefore the people are generally happy to do business there.
I mean, I’m sure there is a large number of mortgage lenders that are personable, but sharks, and have set people up the bomb.
With rent-to-own, your paycheck’s blown.
–
CA Housing: Ratcliff of UCLA Anderson School is a RAT.
What are Ratcliff & company saying now? “Despite “storm clouds” of near-record foreclosure and default rates, weakness in the real estate market won’t be enough to trigger a recession locally [San Diego], at the state level or nationwide, a team of California economists say.”
But what was he saying last year? Here are my comments of last year:
July 27, 2006
Tortured Logic Of a UCLA Economist On CA Housing
One Mr. Ratcliff, a UCLA economist, appeared on the boob-tube to talk about California housing. He said, “The California home prices have never declined except when the economy was in a severe recession.”
OK.
Then he continued, “Since we are not forecasting a recession, the prices should level off and remain flat.”
When was the last time that an economist, who appears on the boob-tube, did forecast a recession ahead of time? This sort of logic is ridiculous because can’t home prices go down based on their own fundamentals of supply-and-demand?
Jas
–x-x-x-x-x-x-x-x-x-x-x-
So, last year he was claiming that the home prices wouldn’t go down unless there were to be a severe recession. Now that home prices are going down he is claiming that there would be no recession. He does acknowledge that no recession under these housing conditions is unprecedented but since he does not want to forecast a recession the unprecedented will happen.
Jas
“So, last year he was claiming that the home prices wouldn’t go down unless there were to be a severe recession.”
In light of the obvious decline in home prices with no severe recession in sight, I assume he never bothered to retract that flawed logic.
Didn’t the guy that predicted the last crash and was talking about the bubble 3 years ago, leave Anderson Forecast some 9 months ago? Seems to me they are hoping his credibility is rubbing off on them….
Owner lay dead while pair toured her home
(Published Tuesday, May 1, 2007 11:14:08 AM CST)
“I’ve smelled death. I know what death smells like,” she said. “I can’t believe my sinuses were that bad.”
LOL
So were the looky-loos impressed?
they know the seller is not motivated.
won’t have a ghost of a chance to sell it now….
will have to cut the property price to the bone….
Forgot the url: http://www.gazetteextra.com/oleary050107.asp
Heard this on NPR this morn. Spent breakfast rehearsing snarky comments to post on the HBB. And you guys and gals had the nerve to beat me to it. The very idea…
Sorry Slim but reality is funnier now than anything that can be conceived of in fiction…..
Maybe they should undertake a new realty company on that property now.
They are still pouring the Kool Aid in Sacramento:
http://sacramento.craigslist.org/rfs/322665804.html
Lease option where you put up $8,000 non-refundable….then…
“….If next year the home appraises for $510,000 (I have appraisers who will work with me) Then you get a 90% loan for $455,000 and I will carry a note of 10% for free. For those with less than perfect credit.”
A similar sized home down the street is listed for $360,000 today and no one is offering to buy it. About 200 homes out of 2,000 are in NOD and NOTs are happening at 20/mon.
Idiots. This is an “owner-agent” and he says in the same add he can work with investors to get them short sales and foreclosures. It is still a suckers game in Clownifornia.
“Flexible terms: If next year the home appraises for $510,000 (I have appraisers who will work with me) Then you get a 90% loan for $455,000 and I will carry a note of 10% for free. For those with less than perfect credit. ”
That was the funniest part of the ad. Bubba don’t get out much…
This is a HBB News Alert.
Having just returned on a cross country flight from Washington D.C. to Sacramento CA, this HBB correspondent has made a startling discovery: We are NOT running out of land. I repeat: We are NOT running out of land.
This is Adopt-a-landlord reporting for HBB News.
But damn you gotta wonder what all those circles are in Eastern Nevada???
LOL!
Let me quatrain you…
Never before have so many
Paid so dearly for what wasn’t plenty
The endgame is near
Haven’t we made that perfectly clear?
Is the San Diego economy in a newsless recession?
Yesterday we heard in the SD Union Tribune headline story that the end of the San Diego housing slump is close at hand. That doesn’t resonate with this report (by the same writer!), which was relegated to the lower-right corner of p. 1 in the Business Section. I am wondering which of the statistics sighted here supports the prospect for a near-term end to the housing slump?
———————————————————————————
Index finds economy in county ailing
Institute’s new gauge tracks five indicators
By Dean Calbreath
STAFF WRITER
May 2, 2007
A think tank founded by health care entrepreneur and former mayoral candidate Steven Francis launched a new barometer yesterday for measuring the county’s economic health.
And the economy isn’t looking too swift, according to Francis’ San Diego Institute for Policy Research, which opened in January.
Four out of five indicators of economic activity in San Diego County declined sharply over the past several months, according to a report compiled by Kelly Cunningham, a former economist for the San Diego Regional Chamber of Commerce who now works at Francis’ institute.
Based on data from February and March, Cunningham listed several warning signs about the health of the local economy:
- In February, the labor force declined by 5,300 jobs – the first net decrease for that month since 1993, the low point of San Diego’s post-Cold War recession. The hiring numbers strongly rebounded in March, bringing the total for the two months back above the historical average.
- Residential construction in February was 54 percent lower than in February 2006. Between 2004 and 2006, the total valuation of home building in the county plunged by 36 percent.
- Consumer confidence, based on a random sample of 500 San Diego residents, declined 9.2 percent between January and March. “The overall index reveals consumers on the whole are more positive of future expectations, but there is a noticeable decline, especially as to local consumers’ confidence for future expectations,” Cunningham said.
- New business licenses dropped 27 percent between February 2006 and February 2007. Overall, the number of new business licenses has fallen to its lowest level since March 2002.
http://www.signonsandiego.com/uniontrib/20070502/news_1b2sdecon.html
I hope the folks who liberated their home equity to buy Hummers and Escalades are enjoying the record high gasoline prices…
——————————————————————————
Record gasoline prices in county
Shortages in U.S. could push cost up
By Craig D. Rose
STAFF WRITER
May 2, 2007
EARNIE GRAFTON / Union-Tribune
The price of a gallon of regular gasoline topped $3.50 yesterday at the Chevron station in San Diego’s Hotel Circle.
San Diego County’s gasoline prices have edged past the all-time highs set last spring, amid signals that fuel prices have nowhere to go but up.
The Utility Consumers’ Action Network said yesterday the average area price for regular gasoline stood at $3.44 per gallon, or 9 cents more than one week ago and 1 cent more than the record set May 11, 2006.
The San Diego consumer watchdog group noted that this year’s record came despite a drop in oil prices of about $8 per barrel over the past year. That means that the cost of oil in a gallon of gasoline has fallen nearly 20 cents but pump prices have still risen.
http://www.signonsandiego.com/uniontrib/20070502/news_1n2gasoline.html
I wonder how the monkeys who are buying this stock market right now are going to feel in about 6 months. This really reminds me now of March 2000, August 2000. But I’m short and very irritated.
Good thing stock prices always go up. Here is the next paragraph from the gloomy article on SD economic indicators after the last one posted above:
“The one bright note in the institute’s report came from the San Diego stock index, which went up 5.9 percent from January to the end of February. But the index remains 1.1 percent lower than in February 2006.”
It’s a good thing that the housing bubble has taken all the funny money away from the gamblers/FBs/nincompoopia of the world. If they were throwing their money into this market too, the Dow would probably be 15,000.
I’m short too (about 5′9″). I’m also stupidly leaving my retirement funds in the market; can’t bring myself to divert it elsewhere for fear of missing out on the ride. I gotta get out, I gotta get out, I gotta get oooooouuuuuuuutttttt!
When I read junk like this, I start to feel better. Thanks.
Hey txchick -
I’m (obviously) market-ignorant. I know there are lots ‘o people taking a part of their paycheck every week and putting it into the market via a 401K, many not knowing that there is risk associated with it (if they even know that they’re in stocks). Is part of what we’re seeing in the market a result of all that constant influx of money, and what is the ultimate conclusion?
TxChic:
I just sold the final long stock position in my portfolio yesterday. Also shorted some DJ yesterday at 57.50.
You are among friends.
I’ve been in a cash position for a while now. Yeah it makes me antsy to see gains right now, but I know the chick is right and I’d rather preserve what I made and miss out on a few crumbs than lose 30% or more of the whole enchilada in a single day. Remember Oct. 19th 1987 (http://en.wikipedia.org/wiki/Black_Monday_(1987))
Chick, any thoughts on QID as a shorting vehicle for those of us who do not have your experience?
“But I’m short and very irritated.”
Sorry, but stocks are good in an inflationary market. IF, and that is a big IF, you use the fundamental of P/E, in the long term, corporate earnings should rise at the rate of inflation. Much better to put your money into stocks than locking them into bonds or some other place where it is unlikely to meet inflation.
So, the market is going to go up until we raise interest rates and/or get inflation under control.
Based on the amount of “private equity” sucking companies out of the market, and the number of companies using equity to buy back their own stock, it seems most don’t expect us to raise rates or get inflation under control…..
Gee, thanks for the education. I’ve only been doing this for 25 years. I’ve seen it all and heard this BS before. New paradigms, eyeballs, it’s different this time, now the private equity bubble. It’s all good, isn’t it.
“Much better to put your money into stocks than locking them into bonds or some other place where it is unlikely to meet inflation.”
What do you think of TIPS right now Txchick?
TIPS returns are driven by the CPI. There are issues, some of which have been discussed on this board, with how CPI is calculated. If you believe CPI is reflective of true inflation then TIPS are a good deal.
“Sorry, but stocks are good in an inflationary market.”
Like the one between 1966 and 1982, for instance?
“If you believe CPI is reflective of true inflation …”
Hard to believe that when home prices in much of the country have doubled and the CPI has barely begun to reflect this…
But I’m short and very irritated.
Ditto.
Nothing is cheap, including currencies and gold. How’s that for a wonderful investing environment?
When “everything” is expensive, cash is cheap, unless your friendly neighborhood central banker has no qualms about levying inflation taxes.
I will be buying some mor eputs soon. I ask all you longs to buy more stocks so I can get the puts cheaper. Thanks.
When “everything” is expensive, cash is cheap, unless your friendly neighborhood central banker has no qualms about levying inflation taxes.
Yeah — there’s always some “unless”. (Plus, there are many types of cash, as you know.)
Most people don’t realize that it’s possible for values of EVERYTHING to go down, including all forms of cash. The reason is that debt (in excess) is this magical thing that makes the total perceived wealth in the world greater — and when debt disappears, the total perceived wealth in the world declines. It’s theoretically possible — and even likely, due to politics — for EVERYONE to share in this decline, although of course some will suffer more than others. The extreme example would be a total halt of all economic activity. That ain’t gonna happen of course, but it’s a useful example for thinking about what a large decline in economic activity would be like.
(Yeah, I know, there are always shorts and put options. But aside from timing risks, you can still pay a price. You’ll be a target for tax increases, for example. You may do better than everyone else, but that doesn’t mean your lifestyle won’t take a hit. There’s a reason old-timers like Richard Russell say that the goal of investing in a secular bear market is just to come out of it whole.)
“There’s a reason old-timers like Richard Russell say that the goal of investing in a secular bear market is just to come out of it whole.”
I like the quote, and agree with your post. After so much of the national wealth has been sucked into debt-financed building of oversized houses and manufacturing of gas guzzling cars, we all will get to share the real economic pain of the inevitable hangover (except for the super-rich who profited at every turn).
i wnet to buy me an ezkalaide and da salzman sed it was good on gaz. i think he liared too meez
Good thing that layoff plans are no concern when the stock market is hitting new records on a near-daily basis…
—————————————————————————–
ECONOMIC REPORT
Layoff plans jump 44% to 70,672, Challenger says
By Rex Nutting, MarketWatch
Last Update: 7:52 AM ET May 2, 2007
WASHINGTON (MarketWatch) — Job reduction announcements by major U.S. corporations soared by 44% to 70,672 in April after falling to an eight-month low in March, according to a monthly report released Wednesday by outplacement firm Challenger Gray & Christmas.
Layoff plans were up 18% compared with April 2006. It’s the first time since September that layoffs rose on a year-over-year comparison.
The job cuts in April were led by Citigroup, which announced plans to eliminate 17,000 positions. See archived story. With 33,789 reductions in April, the financial sector has now announced plans to cut 50,221 jobs so far this year, overtaking the auto industry as the top job reducer.
The declining housing market led to 6,000 lost jobs in the financial sector in April, the firm said.
“Coming on the heels of a lower-than-expected [gross domestic product] reading in the first quarter, the April job-cut surge is likely to further increase concerns about the strength of the economy and the job market,” said John Challenger, CEO of the outplacement firm, in a statement.
http://www.marketwatch.com/news/story/layoff-plans-jump-44-70672/story.aspx?guid=%7BB487107E%2D3539%2D4D4F%2D8B15%2D5162722BF0CC%7D
“My one steadfast prejudice is against being wrong”
Jesse Livermore
Looks like the sale of Option One is in trouble:
Merrill Lynch scraps Option One’s $1.5 billion credit line
http://blogs.ocregister.com/mortgage/archives/2007/05/merrill_lynch_scraps_option_on.html
I live in los angeles, and was thinking of buying a rental duplex in Austin Texas(I used to live there and have family there FWIW), something modest with 20% down that’ll cashflow $100 or $150 a month after expenses(including insurance, management fee, taxes, mortgage) and figuring both sides empty 1 month a year.
I haven’t found any blogs other than realator/shills for that part of the country. I just see things going up, but I know Houston and Dallas are getting hosed.
Is Austin really different? I doubt it, but then again the runup there wasn’t as much, maybe there won’t be a downturn and just a leveling of prices? They’re still building homes like mad out there, my friend is having one built now (lots of free upgrades and granite, natch)
I don’t know if this has already been talked about, but Las Vegas is slated to have the tallest building in the western hemisphere…I guess they are still trying for that “America’s Next Great City”:
http://www.vegastodayandtomorrow.com/las_vegas_tower.htm
and
http://tinyurl.com/37o28g
They should just paint a bulls eye on it.
LOL, that’s what my wife said too.
Turns out the bubble really is causing a glut of rentals, and in most places rents aren’t going up that much:
http://www.bloomberg.com/apps/news?pid=20601109&sid=asLI7aWzN8Jc&refer=home
For people hoping rent increases are the way housing costs will eventually pencil out, keep holding your breath.
Kind of sad when you catch Anderson Forecast painting a rosy picture:
http://www.voiceofsandiego.org/articles/2007/05/02/toscano/917mismedian050207.txt
“As if on cue, the Anderson Forecast has offered up an example of how the median price routinely gets interpreted incorrectly. According to Kelly Bennett’s article here at voiceofsandiego.org, Ryan Ratcliff, the Anderson Forecast’s go-to guy San Diego, claimed that “prices have stayed relatively stable for about six months.” The Union-Tribune’s take on the same topic echoed a similar sentiment from Ratcliff:
He added that despite the gloomy statistics, the foreclosures have so far had no impact on local prices. In fact, San Diego’s median sales price has stabilized over the past three quarters, even as foreclosures rose.”
Rich Toscano then shows that the Case-Shiller housing index has declined consistently in the past 3 quarters….
The next bubble
That’s it…
We’ve fallen to the level of a dumb beast.
‘ Thanks to growing demand, the business has turned cutthroat. There’s a frenzy of talent poaching. Spinners battle one another for plum assignments and the promise of wage hikes. Some of the more prominent compete for bragging rights by posting videos on YouTube and Google Video, complete with trash talking. One YouTube comment reads, “i don’t know if you stole my tricks or i just do them better.” ‘
Who says our GDP sucks? We can create industries in the tertiary roles of the mundane.
Many of you know all this, but to some it will be a good tutorial on money, fiat currency and credit,
http://tinyurl.com/2he4up
Big mortgage firms won’t back subprime principles
Wed May 2, 2007 4:53PM EDT
By Patrick Rucker
WASHINGTON (Reuters) - The two largest mortgage lenders in the United States have declined to endorse a set of principles that would help troubled subprime borrowers avoid foreclosure, a lawmaker who proposed the principles said on Wednesday.
Representatives from Countrywide Financial Corp. (CFC.N: Quote, Profile, Research and Wells Fargo & Co. (WFC.N: Quote, Profile, Research both attended a mid-April ’subprime summit’ organized by the chairman of the Senate Banking Committee, but those companies did not endorse the seven principles, which were formalized after that meeting.
On Wednesday, Sen. Chris Dodd, the chairman, congratulated the eleven companies, trade and consumer groups who endorsed his principles. Dodd’s statement did not mention Countrywide, Wells Fargo or EMC Mortgage Corp. which also had a representative at Dodd’s meeting.
http://www.reuters.com/article/governmentFilingsNews/idUSN0237313920070502
Subprime kingpins start to feel the heat…
=============================================================
Homeowners aim at Wall St to combat woes
Mon Apr 30, 2007 1:59PM EDT
By Walden Siew
NEW YORK (Reuters) - Wall Street and a growing army of lawyers are girding for more homeowners like Rodney and Sylvia Gibbons, as the real life consequences of the subprime mortgage crisis become evident in America.
The Gibbons, among eight New Yorkers fighting to keep their homes through the U.S. legal system, live on the first floor of a three-story rowhouse on Halsey Street in Brooklyn.
Boarded up buildings offer the first signs of impact of the subprime mortgage meltdown on the neighborhood, but other signs came earlier.
There was Rodney Gibbons’ heart attack in 2002, when he and his wife Sylvia first tried to close on the house. Later came death threats to Sylvia from a tenant who wasn’t paying her rent. Just down the street, another sign, in red block letters: “We Buy Homes.”
The homeowners are suing Credit Suisse Group and J.P. Morgan Chase & Co. as well as sellers, lenders, appraisers, and other parties involved in the sale of homes financed with subprime mortgages that are often made to people with inadequate credit histories.
“The role of the investment banks in this process cannot be overstated,” said Richard Neiman, New York’s acting banking superintendent. “They are facilitators and earned fees at multiple stages in the process.”
http://www.reuters.com/article/bondsNews/idUSN2532684020070430
“There was Rodney Gibbons’ heart attack in 2002, when he and his wife Sylvia first tried to close on the house. Later came death threats to Sylvia from a tenant who wasn’t paying her rent. Just down the street, another sign, in red block letters: “We Buy Homes.””
Location; location; location. Hello?
I am trying to interpret the fully-inverted Treasury yield curve. Normally, I would guess it is signalling recession within the next six months, but I know this time is different…
Current yields:
6 mo = 5.01
5 yr = 4.55 (46 bps below 6 mo)
30 yr = 4.81 (19 bps below 6 mo)
http://www.bloomberg.com/markets/rates/index.html
Typo: 30 yr = 4.82
Politician: someone who borrows $20, then pays you back $10 and declares you’re even, since you both lost $10.
While at first I thought it was a joke, sure enough, it was right there at the bottom part of the post. Ladies & Gents….purchase this POS townhouse at the bargain price of $459,000 (I’m assuming the $4.6 million price is a typo, but since this is SoCal, you never know) and you will get……..drumroll please… a FREE TOASTER!!! Now I’ve seen it all.
http://losangeles.craigslist.org/sfv/rfs/323354303.html
Worked with those free can of beans last year:
http://thehousingbubbleblog.com/?p=1474
(look for the first optionedunarmed entry)
Speaking of which, mention of Ben’s blog on Kiwi newspaper site:
http://www.nzherald.co.nz/section/12/story.cfm?c_id=12&objectid=10436528
scroll to bottom to see the plug for HBB.