Bits Bucket And Craigslist Finds For May 29, 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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Well, driving north on 95 coming back from Holiday, HUGE SIGNS near Richmond, RYAN HOMES 50% Off, plus get every upgrade we offer!
-Lost
Try driving down Elk Grove Blvd. On one side of the street, every third existing homes is for sale. On the other, is another tract of McMansions being built with the rest of the lot covered in signs advertising every discount known to man. I wish that I had a camera.
We went down to check out a few houses that were listed as rentals. For $1250/month, we could get a 4/2 1550 sqft mini-McMansion built in 2003 that Zillow prices at over $400K. Also according to Zillow, it was bought in 05/05 for $399k. So in other words, they’re renting it out for probably half the cost of carrying it (unless they put a lot of cash down, in which case they have a horribly non-performing asset on their hands).
But anyway, nice neighborhood. It’s right by I-5 and Franklin, which would make for nice commutes for both my wife and me (her especially). I sent an email to the property manager asking if her client would accept a tenant with 4 cats (but great employment, rental, and credit history). We shall see…
They’d probably rent it to the 4 cats if they could.
I have seen the Dumbing down of America for a long time Just as a DJ doing High school dances. The Illiteracy is astounding. Ad yet we still give them Diplomas….shocking and WRONG!.
So its no wonder they can’t add and use a calculator or have some common sense, to at least Break Even on buying a house for rental purposes.
——in which case they have a horribly non-performing asset on their hands).
the next presidential “state of the union” address should be just three words:
deal…or no deal.
in addittion, my wife and i went to best buy this weekend. we were updating my wife’s info in their computer - she hyphenates.
when i said “hyphen” the guy reached down and hit the apostrophe. when i said no…hyphen, he hit the slash key. finally i just reached over and typed it myself.
oh well.
“the next presidential “state of the union” address should be just three words:
deal…or no deal.”
Isn’t that 4 words?
“in addittion”
when I said three, I really meant four.
three words.
no comment.
“in addition” LOL. Classic.
Western Kentucky University in Bowling Green, KY is a state run “open enrollment” public school, so they can not reject any applicants with a HS diploma. People who have graduated from WKU have told me that WKU was much easier than HS. Some of these graduates were in need of HS remedial schooling as freshmen at WKU, and some are still in need of HS remedial schooling as graduates of WKU.
Here is an example of what I am talking about:
2x + 3y = 17; 5y - 7x = -13
Should every college graduate, no matter what their major, be able to solve for x and y? I think so. (This is not even college level work, this is HS level.) But instead, we keep graduating people who can not think for themselves at all. We are creating an “educated” citizenry with a heavy dependence on the MSM, reality TV, and celebrities to perform their thinking for them.
Got 10% down?
Frankly I think college education is more about specialization than becoming a jack of all trades. Yes, it would be nice of everyone knew even the basics of mathematics, but the fact is that there is a lot of knowledge out there and people who specialize in touchy feely things like Art, History of Art, Music, English, Ethnic Studies etc etc can think critically, too.
Personally I’m was a pure math major who graduated summa cum laude, but I did a lot of thinking on what I expect from a college education–to learn how to question, find answers, and think critically.
Hmmm I love problems : )
2x + 3y = 17; 5y - 7x = -13
10x + 15y = 85
-(-21x + 15y = -39)
or
10x + 15y = 85
21x - 15y = 39
31x = 124 or x = 4
so 8 + 3y = 17
3y = 9 or y = 3
Frankly I think college education is more about specialization than becoming a jack of all trades.
Sounds like you are describing vocational ed. As Jaime Escalante asked one of his pupils in Garfield HS: What would you rather do, design cars or repair them?
most Universities are now nothing more than glorified and expensive vocational schools.
MB…
My point is it would be nice if everybody graduating from HS could perform basic math, and other basic skills like reading and writing. If they get into college without these basic skills then that is not an excuse for these “institutiuons of higher learning” to graduate them without these basic skills. (Even better, they shouldn’t even be getting into college.)
I am not asserting that everybody with a college degree should know how to solve for a system of linear differential equations with Laplace transforms, only that everybody with a college degree should have at the very least the basic skills that should have been learned in HS. This should apply to everybody including those students majoring in touchy feeling things like ethnic studies, urban studies, jazz studies, etc…
If SOME of these touchy feeling students do not have these basic skills but still want to pursue a career in gobmint (urban studies) or theater management (arts studies) then maybe they should get a “certificate” from something other than an institution of higher learning, and please do not call said certificate a Bachelor of Science degree.
Not too much to ask, IMO.
Got 10% down?
The most important things a college should teach a student is scientific curiosity, critical/logical thinking, the skill to ask the right questions and the skill to do research to get the answers to these questions; any attempt to substitute these qualities with concrete vocational-type training is a recipe for a failure in the modern world, where old professions are being wiped out and new created in the matter of mere years, not generations, as before.
That is why I came to this blog here two years ago - searching for the answers, as the housing prices did not make sense to me…
You have touched on a common problem. Colleges do produce too many ‘college educated idiots’ but it’s a problem more of HERD MENTALITY than the quality of education provided. I think my university presented me with great opportunities to learn and there were times I chose to drink instead of study, and that contributed to my lower than desired GPA but I’ve learned the folly of bad decisions.
However I have taken classes at local community colleges and I don’t think students there get the same experience as at a full university. The whole thing felt like a glorified high school. part of Florida’s solution to the college mess is to push more education onto community colleges and I don’t think this should be.
The real problem is that FSU, USF, and UCF are trying to outdo each other on research. As far as I’m concerned, there are three tiers in FL: UF & FSU at the top; USF & UCF right below, and the community colleges and UWF & UNF below. We need to push higher standards instead of increased education.
Who the hell would buy a 4br place with only 1550 sq/ft? That’s tiny.
Some one who doesn’t need a 3000 sq ft house?
I owned and recently sold a 4 br house in CA with 1460 sq. ft. It was great actually - the ultimate in no-frills living, but still very comfortable. It had no dust-collecting living room, and only 1 dining area (the horror) next to the kitchen.
The house sold for $675 BTW - just to give an idea of how outrageous things got there.
Walt526,
Do not rent here! I live in this area — bordered by Elk Grove Blvd and Bilby Road, Franklin Blvd and Bruceville Road. Depending on where you rent, a large number of the houses on the block may be rentals. I’m renting, and it’s a nightmare. People play their music loud late at night on the weekends, they party in their garages at night, and there are always homes for sale with unkempt lawns. My neighbors barbecue on their front lawn. That’s not even taking into account the former pot houses in the neighborhood. I’ve even come across used condoms in the gutter when I’ve walked my dog. If you venture further in, the weed-filled shrubbery areas near the walkways should give you some indication of the low esteem in which the builders and the investors hold this neighborhood. And trust me, many of these homes are owned by speculators from the Bay Area. The only joy I get is in knowing that their punishment for unnecessarily driving up prices is that they’re getting their buns burned now.
We, too, were in love with the prospect of renting a nearly new house, thinking that new neighborhood = good neighborhood. WRONG! Try driving down Spring Flower Drive near Keema Park and take a look at the cinderblock fence that someone is erecting in the middle of their lawn. It looks really bad, and I feel sorry for the poor sap down the street who is trying to sell his house. Unfortunately, a lot of this creative “landscape architecture” is common here. I think lots of the people who own here and actually live in their homes are first-time buyers who have no idea that how they live in and maintain their homes (or don’t) affects their neighbors.
IMHO, you’d be better off renting in Carmichael, Fair Oaks, Arden Park, East Sacramento, or Roseville, if you can stand the commute. If you can put up with the noise, unkempt lawns, and “creative” landscape architecture, have at it. But I would encourage you to drive deep into the neighborhood and take a good long look before you lease here.
50% off of options/upgrades, I think is the Ryan special. I’d be surprised indeed if they were advertising 50% off of prices.
You are probably right, Arwen. However, I wouldn’t be surprised if the advertising was meant to mislead. If so, that would backfire, in my book. If I were led to believe prices were 50% off, and stopped by to look and got the old bait and switch, I’d probably melt down on the spot, just on general prinicples.
No wonder “anger management” is so big these days. There’s so much lying to be pissed off about.
palmetto -
Like my blowing up in a motel in Amarillo about a month ago, because the advance advertising on the Hwy said “$27.95 and up” and it turned out the cheapest rooms were $29.95 plus tax, and the clerk kept pointing out that the billboards said “and up.” Sure, they might have said “10 cents and up,” if the “and” has no meaning.
az, the extent of blatant disinformation in US society is mind-boggling. Well, what goes around, comes around. I hope the folks who do this sort of thing get a good dose of bad medicine from their local pharmacy, courtesy of China or one of their beloved pharmaceutical companies.
I kindas hate it when you pull into a place that advertises oil changes for $22.95 but then they charge you $1.00 extra because they added 3 ounces of water to your windshield wiper fluid reservoir.
You are right Palmetto, plenty of stuff to get angry about.
Got 10% down?
The last time I went to a Jiffy Lube the bill was over $50. This was for the regular service, air filter, plus topping off the coolant. I was shocked, to say the least, and haven’t bee back (just doing it myself).
Bill
ALWAYS ALWAYS ALWAYS buy your own air filters. This is probably the easiest thing to replace under the hood of your car, and the markup for the part at Jiffy Lube type places is probably 200-300%. Usually the air filter is held in a chamber secured by a single wingnut, or maybe a couple of latches. Easy easy easy. Even my little sister should be able to do this, and she knows absolutely nothing about cars.
I usually do my own car repair, but lately have stopped because the $10 premium to have Jiffy Lube deal with it is fine by me. Last time I was there the guy mentioned I needed a new Cabin Air Filter (which I knew was about 6 months past due anyway), so I asked how much it would be, installed. Guy responded off the cuff, “$19.99″, to which I said sure. The reason? I knew he was wrong as the part would cost me $31.00 at NAPA plus the 10 minutes of hassle trying to get it in. The manager was ticked, as was the kid, but I held firm on my guns. Two of us can play this game. Goes to show - a little info that the other side doesn’t know you have goes a long way in any transaction.
BillF…
Nest time make sure you ask for their “basic service”, which is just the basic oil change and inspection of other items. When I take mine in I always say “basic service” about three times. (They usually ask me about three times, there must be lots of profit margin in this.)
When they tell me I need an air filter I always tell ‘em I have one at home. Then I go home and rotate my air filter (from side to side, not top side down), because most of the crud accumulates on one edge of the rectangular air filter while the other edge of the air filter remains clean.
I would never get an oil change at a place that also replaces CVJ / transaxles. The reason is that it is sooooo easy to slice your CV joint’s protective rubber cover with a razor blade. (This is very common in the auto trade.) This will eventually destroy your CV joints, A VERY EXPENSIVE REPAIR!
I would do my own oil changes but a quart of oil is almost $3 so when I factor in the cost of the oil filter as well I am only paying about a $7 premium for having them do it.
I dont’ care if it’s cheaper to take my car somewhere, I will do all the basic services myself. Taking the car into the local Ford dealer for oil changes about produced an ass-whipping each time for the service manager when he would say I was voiding the warranty by not having the 12,000; 15,000; 24000;30000 mile checkups done. Then they overfilled the oil and said “oh no big deal” and I had to clarify that it was MY car and if I said to put 3-qts in instead of 5, they would do it (and make me sign a release waiver). Plus the 10 minutes it takes to change the oil I check the hoses and belts and clean under the car.
I generally do my own changes. Buy the 5-qt jugs of Valvoline for around ten bucks, plus a filter. Total cost with tax is less than $15. Never have to wait in line either.
I hadn’t been to a quick-lube place in years. Wasn’t able to change at home because I’d just moved, so stopped at Jiffy Lube.
Bill
More weekend driving stories: Monday I drove down the western side of Penobscot Bay. Just north of Searsport I started counting “For Sale” signs — that is, any that obviously pertained to real estate and not to a tractor or something. I stayed mostly on US1, except [for those who know] I took George Street through Bayside, and then, after Camden ME, I hung a right on Route 90 to cut off Rockland. About that time, I reached 100 in my count, and I quit counting. That was 100 in 31 miles. It doesn’t sound like a whole lot, but consider that this is not a high-density area. Some of the 100 offerings were “190 waterview acres,” “90+ acres,” “37 acres,” “Lots [plural] 1+ acres,” “Multi-Family,” “13 acres commercial,” and quite a few mentioning some single-digit number of acres. Hmm, if they’re not making any more waterview land, I’d better hurry and buy those 190 waterview acres. NOT. The SFH’s for sale there are mostly waterview, some number with “price reduced,” and a surprising number with “owner financing.” The mere look of it would give any buyer pause. There is plenty for rent, and I haven’t even mentioned the dozens of motels, inns, etc., 90% of which had the “Vacancy” sign hanging out on Memorial Day. Not quite in the same stretch, but up by the new Bucksport bridge, I was especially surprised to see “For Rent $850 Rent-Controlled.” Rent controlled? In the middle of practically nowhere? No wonder nobody is buying anything.
Az_lender,
thank you for the update. I’ve been watching Friendship, St. George Peninsula area…where I rent a farm. A lot of the same houses have been sitting for nearly a year…some price reductions, but not major. I expect gas prices to hurt some summer rentals…curious to see what happens in Sept.to asking prices.
We have family members who have long rented a place next to Pemaquid Point Lighthouse. They took a few years off due to medical concerns. When they returned their weekly rental cost for the same house had tripled.
Maybe it will soon be back to the old price.
Richmond is on the MSM groovy growth lists
maybe it was a fast food sign
It is actually… 50% off of all upgrades — no limit. Big Difference
hope the pig foreclosure guy gets at least 5 years
w/o water
Smartest comments of the week: Ray Dalio of Bridgewater Associates, who manages about $160 billion in assets for clients including central banks and foreign governments, quoted in Barron’s / Hussman
“Hedge funds and private-equity firms today are like the dot-coms in 2000: Ask for money and you’ll get it. They bid up the prices of everything. The amount of money flowing is almost out of control, and it’s making everything overvalued. A client of mine said it’s like there are 11,000 planes in the sky and only 100 good pilots — an accident is bound to happen. Just like the dot-com bust, the winners and losers will be sorted out but the technological advances won’t stop. There is a greater differentiation of managers now than ever before. ”
Is that game really about brains or is it about connections? I did not realize that the head of the Blackstone Group was George Bush’s old Yale roommate. Now China is pumping $3 billion into Blackstone. Like that’s a coincidence?
This game could play a lot longer. China plans to put in a total of nearly $300 billion of their reserves into hedge funds in the coming years. There will be a lot more planes in the sky with no radar, no wheels, a bad rudder and rookies at the controls.
“China plans to put in a total of nearly $300 billion of their reserves into hedge funds in the coming years.”
Good on ‘em, cobber. Hope China gets the screwing it so richly deserves.
A couple of interesting sidelines from this switch from bonds to equities.
First off, interest rates may take off without artificial propping up of bond prices by foreign central bankers.
Second, at the present rate of accumulation ($1B+ a day) China could end up owning a big chunk of US industry. Microsoft is less than a year’s worth of china borrowing, Intel Oracle or Google six month’s worth, and Ford+GM could be bought in a single month should China lean that way. Doing it through hedgies is a good way to hide the foreign ownership.
All in all, looks like selling off rooms of the house to pay for the vacations and jetskis..
[sorry for the repost if it got stuck in the queue]
Saw that about Schwartzman and Bush…also noted that by buying into Blackstone, private equity, China can buy without stirring up public opinion. Article noted that they learned from the aborted Unocal buy…now they fly under the radar with Blackstone. So presumably, do the Saudis et. al. who want to buy sensitive American assets. No public scrutiny involved.
I understand the concept of using another actor, but I don’t see how $300bn of investment can fly under anybody’s radar.
There are a number of interesting implications.
For one, instead of lending money to the government for foreign adventures (T bonds) they are buying chunks of US equity.
Implication one is that interest rates could take off, without china bidding up bond prices.
Impliciation two is that it puts more US companies in chinese hands. At the current rate of accumulation (about $1B a day) China could buy microsoft in under a year, intel or google or chevron in six months, and ford+gm together in under a month.
–
Chinese are smart, I mean the technocrats that run, or advise, the Chinese govt. For $300B they can buy the US govt. by paying off, directly and indirectly, the powerful people and corporate interests in the US.
In the free market system everything is for sale, including the govt. No?
Jas
Maybe they’re buying a pass to take back Taiwan…
NO sm landlord not a pass…but an Armed takeover of taiwan
What would We do if they invaded taiwan? NOTHING because they could crash our stock and bond markets very easily by selling say even $100 Billion in one day.
I think what happens to israel is not important anymore, but our guvmint is keeping us focused over there whens its over here (taiwan) that is the Most deadly problem to the world
“Hedge funds and private-equity firms today are like the dot-coms in 2000: Ask for money and you’ll get it.”
Great analogy. Hope they implode just like the dot.bombs.
The guy has a great point - it’s very strongly speculated that a lot of the reason the price of crude is so high is because of a futures buying binge from hedge funds. Most production companies can produce a barrel at around $30. They make a nice profit at $40 a barrel. It’s really hard to see why crude is so high except for a bubble like mentality in the futures market.
Same for the stock index futures. Look at individual stocks, a lot of them aren’t even at 2003 prices yet.
Thanks for pointing this out. I’m not the sharpest tool in the shed when it comes to the machinations of Wall Street, hedge funds and the futures market. No wonder my blood pressure is pumped.
I have no problem with people making money. But when they do it at the expense of folks who are just trying to make a living, get back and forth to work, put food on the table, etc., I see RED. These hedge fund managers are effing with us.
I’d spit in their mother’s faces.
So would I. But don’t worry, they’re out pissing away money on 20M houses and 73M paintings. Just greater fools with more money which will go bye bye at some point.
“Just greater fools with more money which will go bye bye at some point.”
From your lips to God’s ears. Give a hedgie a wedgie today.
So who is going to have the last laugh?
Hate to say this because I agree with everyone’s sentiments concerning hedge funds, etc, BUT these guys never lose. They work on the principal of “There’s a sucker born every minute.” It gets worse. If any of these hedge funds blow up, the minions of the hedge fund honchos (politicians and Washington hacks at the Fed and the SEC) will come to their rescue. Sure, a few perps might get 5 or 10 years in jail - maybe. However, they will probably end up doing 1/3 of their time in Camp Fed, then come out and live on the money they stashed in some off shore low tax island. You only get one guess as to who ends up paying the price.
I met a hedge fund manager and his far-too-attractive-for-him-wife last year in on business in Switzerland. He was an American cigar-chomping blow-hard and she was a lovely northern European.
A colleague of mine promptly schtupped his wife.
There is some justice!
You’re never too unattractive if you have enough money. Sick. And women wonder why they’re not taken seriously.
The guy has a great point - it’s very strongly speculated that a lot of the reason the price of crude is so high is because of a futures buying binge from hedge funds.
Could it…maybe…just maybe that the reason oil is priced high is that it could be peaking? Read Matthew Simmons’ “Twilight in the Desert.”
I would say the the current crude prices are affected more by supply and demand that speculative futures prices. Of course supply can be manipulated.
Except that China has announced the discovery of a large oil field in that country, and there’s supposed to be another big field discovered last year in the Gulf of Mexico (but down very deep).
As long as new fields are being discovered, I don’t think we’ve peaked yet. Even if the extraction costs from the new fields are higher than they are for oil fields currently in production.
disinformation…as described above….the gulf case has proven to be much more difficult if even possible to expoit. the largest possible number was put on it for hype effect…then nothing to followup.
peak or not yet peak, if the dollar goes, so goes your cost of commute and even ability to drive as much. at some point, the asians are going to wake up and realize that taking computer bits that represent green paper with dead US presidents on it for oil is a stupid business decision.
I believe the hedge fund model is based on the greater fool theory: assets will be sold back into the public markets (perhaps to the public sector if they get their way on Social Security) at even more inflated prices, with the consequences deferred further down the road. The lack of disclosure for private companies could allow a host of sins to be disguised.
Beware the IPO.
Since almost nobody in CA can afford to buy an unaffordable, depreciating-value home on fixed-rate mortgage terms, perhaps the rising l-t Treasury yields will leave our housing market unscathed?
——————————————————————————-
Treasury Yields Could Throw a Curve
By Michael Hudson
Word Count: 929
After being a nonissue for most of this year, Treasury-bond yields have begun to rise, driven by the strong global economy, worry that China is losing its appetite for U.S. government debt and a concern that rising food and energy prices could boost inflation expectations among consumers.
While the rise in yields remains modest, if the trend continues it would hurt borrowers in general and, in particular, homeowners looking to refinance their adjustable-rate mortgages, potentially adding another negative to the housing market. The yield on the benchmark 10-year Treasury note rose to 4.86% last week.
http://online.wsj.com/article/SB118039127525316459.html?mod=home_whats_news_us
“…China is losing its appetite for U.S. government debt.”
i read an article somewhere last week where someone reckoned that the 3.5 billion dollar investment by china in the blackstone group would come to be known as the exact moment that the “debt bubble” was pricked.
i thought it was an interesting notion.
When the 10-year is at 6%, I’ll consider it a fair return to invest in.
Your NUTS!!! The gov is expanding the money supply faster than 10%/year!! How can you possibly think a 6% bond is a deal? I remember old timers talking of rolling their maturing bonds into new 17% ones and being quite happy about it. If the gov keeps expanding the money supply as it is now anything less than 12-14% is insane!!
Here is an article which represents one of my favorite recurring housing bubble themes: The superior financial savvy of the younger generation.
Sorry to burst their bubbles, but all I see here are a bunch of GFs who think they are saving for retirement when they are actually buying a depreciating value asset with high carrying costs on the downhill side of mania peak price levels. Gag me with a spoon.
———————————————————————————–
Buying a Retirement Home
Decades Before You Retire
Younger Families Are Investing
Nest Eggs in Second Houses;
‘The Rationale Is Emotional’
By JEFF D. OPDYKE
Retirement-home sales are growing — among buyers still decades away from retiring.
From New York’s Catskill Mountains to Oregon’s rocky coast, younger couples who might otherwise be focused on building a nest egg instead are buying a lakefront house or country cabin that they hope to one day use in retirement.
For these younger buyers, this isn’t an extension of the real-estate investment bug that bit a few years ago and is now fading as home prices flag in many markets. And they’re not throwing financial caution to the wind just because they want a second home.
[Daniel Merkle and his wife, Sandra Bauman, take in the view of Sleepy Hollow Lake behind their house.]
Instead, they’re crunching the numbers and making hard decisions about their personal finances. In some cases, they’re receiving an inheritance or a stock grant and are choosing to invest in their future real-estate needs rather than the stock market. In other cases, they’re altering their expectations about how long they’ll work and the kind of returns they’ll earn on their nest egg in order to pursue an emotional investment.
No one knows how many younger buyers are out snapping up their retirement homes. But real-estate agents and financial planners around the country say they’re increasingly assisting younger buyers spending $100,000 to $500,000 for a house to call home in retirement. Partially at play is a cultural shift planners say they see among younger savers who aren’t content to just accumulate assets to use in retirement. Instead, this younger generation wants to put some of its nest egg to work today as an investment in family.
http://online.wsj.com/article/SB118040360044016749.html?mod=home_personal_journal_left
“No one knows how many younger buyers are out snapping up their retirement homes. But real-estate agents and financial planners around the country say they’re increasingly assisting younger buyers spending $100,000 to $500,000 for a house to call home in retirement.”
Quotes like this are completely WORTHLESS, there is no reason to print it if not to spin some type of story. Why not include some direct quotes from real people…maybe because they don’t exist.
They want to put their nest egg to work today, because investing in equities (or anything else) would NOT put their nest egg to work? I’m confused. Usually WSJ have a modicum of logic I can follow, but I can’t rationalize my way around that one.
LMAO, the couple that bought the home across the street from me came down from SF to visit it this weekend (and one day off, 4 days) and have worked their asses of the entire time. They bought it a little over 2 years ago and spend 1-2 weekends a month maintaining it. It is supposed to be their retirement home.
They live and work in the Bay Area and bought a “reitrement home” in Stockton, LMAO. They paid $360k for it and would be lucky to get $280k for it today. I estimate they spend around $3,000/mo to carry the place not including the money and time they spend keeping it up. It amazes the wife and I. I would enjoy their plight much more if they were asses, but they are a really nice older asian couple that just thought they were making a good decision. They were by no means the typical greedy flipper pigs, but none the less will get slaughtered along with them all. Now they own 2 homes with loans that that total much more than they are worth and will prolly not retire anywhere near the time frame they had in mind. Rather than the shreud investment they had planed (buy the retirement home now or be priced out forever) they are literally losing thousands and thousands every month and are now “priced in forever”!
Like anyone in their 20s and 30s has ANY idea where they want to retire. What is cool today will not be cool in the future. Remember everyone wanting to retire in Florida? Looks now like the hot retirement areas are North Carolina/Tennesee and when those areas get overpopulated like Florida then it will probably shift somewhere else again (Arizona?).
Might be a good bet to buy in Detriot. Yeah, I’d like to retire there.
The carry trade looks easy, folks, but it is only appropriate for professional traders with deep pockets of wealth. DO NOT ATTEMPT AT HOME.
——————————————————————————-
Homeowners Abroad Take Currency Gamble in Loans
By Craig Karmin and Joellen Perry
Word Count: 1,786 | Companies Featured in This Article: Suzuki Motor, Erste Holding
BUDAPEST — Tamas Bencze got a rude surprise when he ripped open his mortgage statement last summer. In just two months, the payment on his three-bedroom home here had jumped 10%.
“My wife looked at our mortgage and asked me, ‘What’s happening?’” he says.
Mr. Bencze got burned playing a risky game: He had taken out a mortgage in a foreign currency, lured by lower interest rates abroad. Everything was fine until exchange rates suddenly shifted, causing his monthly payment to rise.
http://online.wsj.com/article/SB118040375753116750.html?mod=todays_us_nonsub_page_one
Does anyone know if foreign-currency based mortgages are available here in the U.S. yet?
dang! Now that’s a loan I didn’t know existed.
This has the ability to be a BIG issue around Orlando with all of the Brit owned vacation homes.
Except the dollar is in the tank and the pound is about $2. Until rates rise (and with a looming recession I doubt it) I don’t think we’re going anywhere fast…. it will just be stagflation gradually eating into everyone’s disposable income.
if Brits bought the homes with GBP denominated mortgages, then the value of their “investment” freefalls versus the borrowed cost. If they bought in dollars, then the freefall in the dollar vs their (presumed) income in GBP will save them from any possible interest rate increases.
Per Bloomberg, no recovery in new homes until 2011
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKQoeHb1MraI&refer=home.
Per WSJ, baby boomers investing in retirement homes rather than stocks. Not a good plan. Second homes in the country are fine in combination with small city apartments; a large share of the citizens of places like Stockholm and Prague have or rent them. But why do you need to mow TWO lawns and pay TWO loans?
“But why do you need to mow TWO lawns and pay TWO loans?”
Bragging rights. It’s sick, I know, but that’s how bad it has become.
Here’s how sick it is. My wife tells me that among the women in her book club, we are the only ones without a housekeeper, a service which is on my inconceivable list.
Does your wife want a housekeeper? She should tell her book club members that not having a housekeeper provides a double savings: you don’t have to pay a housekeeper and you don’t need to pay for a health club membership (aerobics classes, spa, whatever) to keep the lard off.
I got my wife a new push mower for Mothers Day.
GOT MY WIFE A CLEANING GIRL THIS WEEK END AND SHE SAID SHE COULD DO A BETTER JOB.
well we will see and i am glad i did it because i knew it would be a one shot deal
Our motto: I do 40%, she does 40%, and 20% we live without.
Really the issue is the kids. They have to learn to take care of themselves, not continue to be serviced by others, others they may not be able to afford down the line.
That and the opportunity cost. I’ll be we have more money saved for college and donated to charity than any of those with similar incomes and housekeeping services.
I’ve had people in to clean my house. In every case, I’ve decided that I could do a better job. Hence, no more cleaning ladies or gentlemen. I’ll do the cleaning myself, TYVM.
I’ll bet if your wife talks to each of the book ladies on the sly she could talk one or two of them into cleaning your house for some pocket money.
Book club ladies are not HELOC immune.
It is also about gambling. We are all gamblers now. These people are gambling that “real estate always goes up, in the long run,” in which case it will make sense (in retrospect) to have bought a retirement home now, while they are still “affordable,” rather than waiting thirty years and getting priced out of the retirement home market forever. Given that building is occurring much more quickly than population growth, and that there are something like 2m vacant homes at the moment, I am betting they will lose this gamble.
What doesn’t make any sense is how these “savvy” young people are supposed to afford the vacation home when they already can’t afford the day to day home?
Its just nutty that the industry and their media puppets are now plugging this. I suppose that I am in the “target” demographic for this. I we ate nothing but top ramen, bought our clothes at goodwill had no health care, no cars, and no vacations that maybe we could swing a 2nd house. Sounds like a winner to me.
–
Have you noticed the exponential growth in Gambling casinos led by US corporations? Even Japan wants to liberalize its gambling laws to attract tourists.
Jas
Absolutely. Gambling, which yesteryear was a vice and a crime, has recently been elevated to the status of a respectable industry. Unfortuntately, it produces nothing of productive value to society, unless you count the “broken window fallacy” downstream employment impact on addiction counseling and criminal justice services.
Looks like ole Mr Potter did in fact take over the Bailey Savings and Loan. Pottersville here we come! (It’s a wonderful life)
WT, do you have the link to that WSJ article? Please?
I’ve been saying the same thing about boomers making the mistake thinking Real Estate is a better investment than stocks. No one would believe me since I’m a nobody. But they would believe the Wall Street Journal.
Subscribers only. We get the hard copy at home.
Hubby met a 50-year-old guy with a newborn this weekend. He said he owned 14 houses. He sold some in 2005 (Northern VA) and just couldn’t resist buying more at the same time.
Ah, a house collector! I know one like that. But with no newborn. Investment guru Jim Rogers did the same (firsttime father at 50) and recommends it.
Let’s see if Jim Rogers says the same thing when he is 65 and his child is a teenager…
I know when I’m 65, my kids will be in their early thirties and I will look forward to spending time with my grandkids. Mr. Rogers has little hope of ever seeing grandkids. To each his own I guess…
High price inflation apparently triggers a severe form of the hording instinct in some individuals.
Was roadtrippin’ through California’s Central Valley, my wife and I, looking for excess in all the wrong places, new houses, that is…
We backroaded it through fresno and clovis (would you be called a “clovi” if you lived there?) and noticed a new trend amongst builders of the last resort.
6 to 10 foot brick walls around the perimiter hide the fact that a builder is never going to finish the 33 pack of houses that either barely got started, or are partially done.
We must have seen a few dozen developments, in this fashion, with every builder we like to take apart here, on a daily basis… represented.
Anybody else notice this in your neck of the woods?
Quality of construction, per NY Magazine:
http://nymag.com/realestate/realestatecolumn/32373/
Theory: NY is an antibusiness place with all kinds of regulations.
Reality: Nothing is enforced. Architects and builders merely self-certify that their project meets building and zoning code. The penalty for being caught lying? There is none.
Second collapse at a new suburban Chicago condo building in two weeks…
http://www.suburbanchicagonews.com/napervillesun/news/403320,6_1_NA27_POOL_S1.article
A friend of mine lives in that building! I just asked him what was going on and he said:
“This is ridiculous because part of our association fee is for pool maintenance, and we’ll be lucky to use the pool at all this summer. [His GF] was home at the time, and they held everyone out of the building and had a structural engineer assess what was going on. She overheard someone mention that they encountered some cracks when filling the pool, but thought little of it and just caulked it instead. Ridiculous.”
This is ridiculous because part of our association fee is for pool maintenance, and we’ll be lucky to use the pool at all this summer.
Last summer I looked at a condo in my area’s nicest development. The recreation center had just burned down, rendering the pool area unusable. The realtor who was showing me the property was a resident of that community. I asked him if he were going to be reimbursed the amt. of his HOA that was allocated to the pool and recreation area. He said, “No”, and acted surprised that I would even ask that question.
Why pay for a service that’s unavailable? Another reason HOAs sukk.
PG,
I have a friend that goes to open houses at condo developments for sh!ts & giggles. He was telling me that one one he went to recently he noted to the sales person that the building didn’t have a gym or pool. She said they decided against it to keep the HOA’s low. What were the HOA’s you ask? $450/month.
Two weeks ago a parking garage in Evanston partially collapsed. Also a brand new building. A commentor on my blog questioned why I would post it. If people can’t understand that the hurried nature in which these buildings were thrown up, to take full advantage of the bubble, didn’t play a part in these incidents then I can’t help them.
A small rant. I am so tired of reading articles that refer to $400,000 to $600,000 houses as affordable middle class homes.
Amen!
A pro RE site had a post two weeks ago that was pushing a $480,000 home as something a city worker (Chicago) could afford.
After people pointed out that it would take an income of around $150,000 to (safely) afford that home the authors next post was for a more reasonable $240,000 home. Although he didn’t really give into the point by saying, “these folks get steady raises, often have double-income households and tend to invest for the long haul”.
Double income households? Fine, then they only need to make $75,000 each as opposed to one of them making $150,000. I’m sure a Chicago cop with his public school teacher wife can bring in $150,000 in salary.
How stupid can people be?
I’m sure a Chicago cop with his public school teacher wife can bring in $150,000 in salary.
They might not be that far off. Of course, this just goes to show that pay has gotten much better at city hall. Even here in podunky Loveland, CO that theoretical couple could pull down about 100K, and even more if the cop is a sergeant.
Of course, a cop/teacher duo is not representative of the median household. Perhaps a more realistic typical couple would be a non-union delivery van driver/cashier couple that pulls in 60K.
and waht if that couple has kids? or student loans or wants to eat??
what a bunch of horsesh##
that is way i rent
I’m sure a Chicago cop with his public school teacher wife can bring in $150,000 in salary.
I assume you’re being sarcastic
correct
I read an article that a high school teacher fully tenured can make in excess of $100,000 in the suburbs in Chicago.
“I read an article that a high school teacher fully tenured can make in excess of $100,000 in the suburbs in Chicago.”
Yes, in Naperville or Glenview perhaps. Those are very high end subrurbs however and you can only make that after many many years of teaching in those districts. My brother is tenured in Naperville but is well short of six figures.
A CPS teacher is not going to make that and that was the point of the authors post. He was speaking about people working for the city of Chicago. The house he listed was a 4bed/3.5bath. The average 4/3.5 in Naperville would probably list between $800,000 - $1,000,000. So that $100,000 salary wouldn’t cut the mustard unless your spouse was bringing in $150,000 too.
I have a relative who is a Chicago suburb teacher (tenured) and makes $93,000 a year. So they are definately well paid, and from what she says, quite underpaid.
I don’t know what cops get paid in Chicago, but in Loveland a patrol offcer averages 60K and sergeants are paid almost 90K. Plus they get juicy pensions and retire in their 50’s.
“…here in podunky Loveland, CO that theoretical couple could pull down about 100K…”
Here is Chicago that couple might pull down $105,000…SERIOUSLY! $60K for the cop and $45K for the teacher and that’s is only after 5+ years under their belt each.
*sniffs the air*
…I smell something, smells vaguely like inflation
You answered your own question…
We’re back to this crap again. I took this from a trading blog. People expecting to make 225K a year “trading” the stock market using 50K of their money. These are the kind of fools who were washed out in 2000. $937 per day sitting in front of their home PC. Good luck with that. That’s a good day for me and I’ve been doing this over 20 years.
Please, bring back the bear market.
*************************************************************************
Tom asks: My goal is to achieve $225,000 of trading gains before taxes and commissions per year. On that basis, working
backwards I calculate that I need to earn $4,685/week or $937/day to achieve the $225K goal. Given that I want to work with 25% of my total capital of $200K, that would give me a maximum $50,000 in a position size. Assuming I put 100% of the $50K to work each day, I would need to find a trade every day that would net me $937/$50,000 = 1.875% return. Are finding these kind of trades on a consistent basis feasible? How difficult is it? Does my rationale and “working backwards” to get to this result make any sense? Am I forgetting something?
and I’d bet a nickel the 200K in “capital” is heloc money.
A Nickel now has around 9 Cents worth of Copper, (they are 75% Copper) in “precious” metal content…
I’d like to see a little low end Gresham’s Law go into effect on this one.
LOL. Which site is this from?
When it’s back on Yahoo, it’s time to short the farm…
“Am I forgetting something?”
Yes, you are forgetting that idiots like you washed out in 2001/2002 after having lost years of salary in the market plunge. You’re also forgetting that the same idiots raided 401k’s to put money on McMansions which will wash out in the next couple years. With your backwards logic, you should plan to lose your entire $50k, which if I could buy a contract option on it, I would put $50k on your losing the entire 50k within a year.
My father in law, who day traded away his house in 1999-2000 is now back in the market actively day-trading with a new “system”. Some people never learn.
Something mildly interesting I noticed and maybe it’s just a local phenom (south Florida) but I have been hearing more and more ads for stuff that reference install our product to make it easier to SELL your home. A TV ad for residential standby generators states that if two similar homes are for sale and yours has the stand by generator, “which home do you think sells first?” Another on the radio was for some type of hurricane window protection but they made the same point: install our product and you’ll be able sell your home more easily. Minor point I know, but before, I thought the pitch was buy our stuff increase your home’s value.
very interesting ooSDQT - I’ve always been of the opinion that advertising is a bellwether for what’s really going on…
…no mention of selling here in SoCal, but almost every other ad on TV over here is for refinancing existing loans into ‘30 year fixed’ using no-docs and with a FICO of less than 600…
So, I’d hazard a guess that the Kubler-Ross stage here is still ‘denial’, rather than ‘acceptance’ or even ‘bargaining’- judging by the ads.
Google maps has a new feature of “Street View” where you can see how it looks as you drive down the street (they seem to have driven down the street and taken a lot of pictures). Right now they have data for NYC and SF Bay area.
I was clicking around on street views of Palo Alto, CA and it was hilarious to see the For Sale signs on the various streets. I can’t wait for the South Florida imagery to be added to this Google Maps feature!
You can also get an sense of the dense swarm of homes for sale by going on redfin.com and zooming in on a neighborhood near you.
central bankers continue waging war against gold investors…
That’s why I don’t buy gold. Don’t fight the Fed.
Ha! I thought all the retirees were moving to Florida! I think that Texas is the only place I haven’t heard this bs. How funny.
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-retire_29bus.ART.State.Edition1.36daf8c.html
Mine cut the grass with an old push mower on Memorial Day
What are the best indicators for tracking foreclosure activity?
What entity (county, state, other private organization) publish such indicators? Are there good reports available? Or do these need to be compiled manually for given areas?
Thanks in advance.
Heard this loan ad on the radio:
“House prices may be going down. Be smart and extract your equity before it is too late.”
Was the ad offering “forgiveable” loans to aid in the extraction process?
great idea if there is high wage inflation.
Can someone please direct me to the provision in the U.S. constitution that says all U.S. citizens have a basic right to be a homeowner? Because that seems to be the underlying premise behind much of the dire warnings I read about the terrible effect of any restriction in the “right” for anyone who wants a home loan to get one.
————————————————————————————-
Credit Crunch May Follow Mortgage Crisis, Warns Study
Predicts 20% reduction in subprime lending levels would deny 1.1 million Americans Mortgage Credit
WASHINGTON, May 29 /PRNewswire-USNewswire/ — New mortgage laws that restrict access to certain loans would be an overreaction to the current foreclosure situation and deprive hundreds of thousands of Americans the opportunity to own their own homes, according to a study released today by the American Financial Services Association (AFSA).
The study, conducted by the Center for Statistical Research (CSR),
finds that more restrictive mortgage regulation would deny credit not only to those who would actually experience a foreclosure, but also to the whole class of borrowers in a particular risk category — the vast majority of whom would otherwise use the credit successfully.
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/05-29-2007/0004596889&EDATE=
Damned if you do, damned if you don’t…
—————————————————————————
Second subprime mortgage lender, NovaStar, faulted on Indian policy Posted: May 29, 2007
by: Mark Fogarty / Today correspondent
WASHINGTON - A second subprime mortgage lender has been faulted for its policies towards American Indians. But while the first one acknowledged its lending policies to Native people were part of actions that resulted in a huge settlement to borrowers for allegedly abusive lending, this one has been accused of the opposite: not lending to Indians on their reservations.
The National Community Reinvestment Coalition of Washington has sued NovaStar Financial Inc. of Baltimore and its NovaStar Mortgage unit for allegedly redlining American Indian reservations for loans. The suit was filed in the U.S. District Court for the District of Columbia.
NovaStar has responded that the suit, which also alleges discrimination against blacks, Latinos and persons with disabilities has no merit and will be contested.
http://www.indiancountry.com/content.cfm?id=1096415102
Subprime loan crisis is hitting Vallejo hard
Report predicts nearly 1 in 4 will end in foreclosure
Carolyn Said, Chronicle Staff Writer
Tuesday, May 29, 2007
Vallejo is the Bay Area’s version of ground zero for the subprime loan crisis.
A significant number of residents of the largely blue-collar city of 120,000 have taken out subprime loans — expensive mortgages issued to people with poor credit.
In 2005, almost one-quarter of mortgages in the Vallejo-Fairfield metropolitan area were subprime loans, according to the Center for Responsible Lending’s analysis of Home Mortgage Disclosure Act data.
Vallejo home prices fell 8.5 percent from November to March, according to DataQuick Information Services. For people who bought in recent months without putting any money down, that means they may owe more on their mortgage than the house is worth.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/29/BUGCGQ1S9V1.DTL
Lenders weren’t prepared for home-price declines
Published Tue, 29 May 2007 12:00:00 GMT
Part 2 of 5: Upheaval in the subprime market
Jack Guttentag
Inman News
(This is Part 2 of a five-part series. See Part 1.)
In the first article in this series, I pointed to the ending of house-price appreciation as the immediate cause of turmoil in the subprime market. The rise in delinquencies, defaults and foreclosures has been concentrated among appreciation-dependent mortgages — those that work for borrowers only if their properties appreciate. A large proportion but not all of such mortgages are subprime.
While it is understandable why borrowers became caught up in the belief that house prices always rise, lenders are supposed to know better. Why was the mortgage lending industry willing to make loans that were workable for the borrowers only if their properties appreciated?
http://www.upstatehouse.com/rss-display.php?id=inmannews63337
I have asked myself this question a million times. In past lending for years Lenders would lend money based on the “now”. In other words ,a borrower had to qualify now for the payments and the property had to be based on solid comps and current rental ratios ,not on property going up in value .Crazy lending .
Subprime upheaval ripples outward
NEW YORK
Federal Reserve Chairman Ben Bernanke has repeatedly said this year’s mortgage fallout is likely to remain “contained,” but there is plentiful evidence the credit problems plaguing home lenders have hurt companies across a much broader range of the economy.
The mounting defaults in the mortgage industry have created ripples throughout the economy, helping to prolong the housing slump, squelch consumer spending and weaken credit quality.
http://www.businessweek.com/ap/financialnews/D8P6UQ100.htm
what i don’t get in the whole declining market thing is that here in philly, folks just don’t seem to buy it. i’m seeing shoebox houses in s.philly going for 150K! three years ago they cost 50K. anyone else got a read on what’s up in philly?
PAUL B. FARRELL
China loves Blackstone’s ‘American Dream’
And Buffett warns about ’selling off the farm’ to feed our addictions
By Paul B. Farrell, MarketWatch
Last Update: 6:30 PM ET May 28, 2007
ARROYO GRANDE, Calif. (MarketWatch) — Remember America’s so-called “ownership society?” Oh, you forgot that political rhetoric? Well, China didn’t. It’s cashing in on the “American Dream.” Why? The country is tired of lending us megabucks to fund our mega trade deficits to indulge in our mega out-of-control addiction to their “stuff.”
…
I’ve been following America’s sellout since my days at Morgan Stanley in the 1970s helping Mitsubishi, Japan’s largest trading company, buy U.S. properties. Back then we were a strong nation. But today, the S&P 500’s produced zero returns in seven years, our saving’s rate is below zero, the dollar’s imploding, household debt is exploding and we’re the world’s biggest “debtor nation.”
Debt wasn’t enough for the Japanese back then. Nor the Chinese today. They’re just being prudent businessmen. Which is good news; “owners” are less likely to be enemies.
So the sellout continues, even accelerating. Signs are everywhere: Toyota is America’s No. 1 auto company, jobs outsourced to India, failed immigration policies with Mexico, Halliburton and other companies relocating in the Middle East and other foreign domiciles. To paraphrase Pogo: “We got a big problem, and it is us.”
http://www.marketwatch.com/news/story/chinas-new-ownership-society—/story.aspx?guid=%7B4A3ECBE2%2DE799%2D4DAE%2D9FF2%2DCF591A394698%7D
To my recollection, a long-bond crash in the spring of 1987 was the prelude to a stock market crash in October. Of course, it is different now, as there was no Plunge Protection Team yet in the falll of 1987.
IRWIN KELLNER
Be careful what you wish for
Positive yield curve could mean higher rates and smaller profits
By Dr. Irwin Kellner, MarketWatch
Last Update: 12:10 PM ET May 29, 2007
…
The good news is that a positively sloped yield curve, besides helping bankers, benefits savers, who can expect to receive a greater return on their money. The bad news is that, at least in its initial stages, this development will hurt others.
Borrowers, of course, will pay more — this certainly will not help the beleaguered housing market. And by raising the hurdle rate, business spending on capital goods will fall and along with it, productivity.
As higher rates impact corporate profits and provide increased competition for investors’ funds, the stock market could come under pressure. Selling may well intensify, once the markets realize that this environment is not one in which the Fed cuts interest rates.
Indeed, with inflation well above the Fed’s so-called “comfort zone” and heading higher, don’t be surprised if a rate hike is in our future. After all, rising, not falling, rates are the primary message of a positively sloped yield curve.
http://www.marketwatch.com/news/story/positive-yield-curve-could-mean/story.aspx?guid=%7B3A067C2D%2D4C43%2D448C%2DA4B8%2D63ED90546C06%7D
Stucco, you’re on fire today.
On jury duty in downtown San Diego today. Overheard two women at lunch talking about how one of them will either be foreclosed on or have to do a short sale. She seemed rather indifferent (for show?), saying something to the effect of “being able to live rent free for a few months.”
I love that We Rent!
From a link on Prudent Bear this evening: “The real problem, according to food manufacturers and supermarket executives, is the runup in fuel prices and the cost of grain, which has soared as an ever-growing amount of corn is diverted to make ethanol to mix with gasoline.”
So who, exactly, is buying all this MPG-killing ethanol? One poster recently said that it is in the gas “I” buy. Not true here in Florida. And I wouldn’t buy it if I could, unless the price more than offset the reduction in miles-per-gallon. This just smells like an Enron-type snooker to me. Think about when it was “discovered” that California all of a sudden didn’t have enough electricity-generation capacity. I believe that we are being screwed once again by the same sort of people, this time in the guise of corn needed for ethanol to power the undefined additional number of undefined vehicles in the undefined states. POE — P*ss On Ethanol.