Lower Home Prices Are Healthy For The Economy
It’s Friday desk clearing time for this blogger. “Members of the Assembly challenged the mortgage industry Tuesday on the subprime lending problem. ‘These problems are systemic and fundamental,’ said Assemblyman Rory Lancman (of) Queens, pointing out that half of all subprime loans made around the country in recent years were written by lenders who are now bankrupt, which he said is proof of institutional issues.”
“Lancman also said the industry has perpetuated a myth that subprime mortgages have allowed people with low or moderate incomes to become homeowners. According to the Mortgage Bankers Association, only 45 percent of subprime loans are used to purchase a home and only 11 percent go to first-time buyers. The rest refinance existing mortgages or are made to real estate investors.”
“At least one member of the industry agreed with the critics. ‘The system is complex, and it was originally designed that way to protect consumers,’ said John Robbins, chairman of the MBA. ‘But just the opposite has happened. Now predatory lenders are able to hide under the paperwork.’”
“Much has been made of the very questionable lending that accompanied the rapid growth of subprime mortgages. But less attention has been paid to the gimmickry and manipulation that delivered the loans an industry craved.”
“‘There’s a huge amount of broker fraud out there,’ says Kerstin Arusha of the Fair Housing Law Project in San Jose, Cal. ‘When you look at the applications of many of these borrowers, I see it reported that they make $10,000 or $12,000 a month, sometimes $20,000 a month. They always have $100,000 in personal assets. You can see that these things are created by the broker.’”
“The Oregon Senate has passed Senate Bill 965 ‘prohibits certain lending activities in connection with high-cost home loans, and creates private cause for damages.’”
“We met a couple who bought a new home in March, 2006, with 0 percent financing and a payment of $1,100 per month. (We did not originate the loan). In May, they bought a $50,000 SUV. In August, she got a job, he quit his, they bought a $20,000 vehicle, she lost her job. So they took on $1,100 in vehicle payments, are in foreclosure on their home, but won’t give up their vehicles.”
“All the legislation in America cannot protect these two citizens from their own actions all the time.”
“A foreclosure on almost $7 million loaned for the construction of a Springdale subdivision represents more financial fallout from an overbuilt real estate market in Northwest Arkansas. The Terminella foreclosure is the second large subdivision foreclosure filed in eight months.”
“The outstanding principal now demanded by the bank is $6.89 million plus $92,000 owed in back interest and late charges, according to the filing. ‘Most likely the bank doesn’t feel that there is another option, which is unfortunate,’ said economist Jeff Collins.”
“Home buyers who camped out for more than a week are celebrating after buying ‘first-come, first-served’ flats in a £225m Devon city development.”
“‘If it hadn’t been for something like this I wouldn’t have got on the housing ladder, the odds are just stacked against you,’ Ryan McLean said.”
“The Terraces at River Heights condominium project sold out almost as fast as cold beer on a hot summer day. The price charged for the condos might seem high compared with what Regina residents were used to paying just a few years ago, conceded Muir Barber, president of Pinnacle Developments. But there is strong demand for housing in the city and housing prices have gone up, he noted.”
“‘It’s the new reality,’ he said.”
“Most young adults have heard this advice: ‘You ought to buy a house.’ Stop renting, the message goes.”
“‘There is a myth that people just assume buying a home is better than renting,’ said Kristy Lamb, a regional property manager for NP Dodge Management Co. in Omaha. ‘People don’t always consider that the first five years of (mortgage) payout are going into interest.’”
“Housing ‘screams out as the most important concern of every group,’ the Silicon Valley Leadership Group’s annual CEO Business Climate Survey said. A staggering 99 percent of respondents said housing costs are among the top three cost-of-living challenges, and 84 percent listed it among the top five business challenges.”
“Whenever the housing market takes a turn, how you feel depends on where you stand. There are buyer’s markets and seller’s markets; what’s good news for buyers is bad news for sellers, and vice-versa.”
“So a slow housing market is framed in hand-wringing headlines, like this one from Friday’s Boston Globe: ‘Housing slump may rival late ’80s.’”
“If you are struggling to buy a home, that sounds like good news, not bad. It’s also good news if you consider the long-term needs of the state economy.”
“Lower home prices ‘are healthy for the economy,’ said Alan Clayton-Matthews, the UMass professor who authored the study. ‘With housing prices in line with incomes, Massachusetts will once again be affordable for the state’s future labor force.’”
“On an episode of A&E’s popular reality series ‘Flip This House,’ Atlanta businessman Sam Leccima sits in front of a run-down house and calls buying and selling real estate his passion.”
“Now authorities and legal filings claim that Leccima’s true passion was a series of scams that included faking the home renovations shown on the cable TV show and claiming to have sold houses he never owned.”
“Dan Ward, an Atlanta-area youth minister, said he told state investigators that Leccima took about $100,000 from him to invest in real estate, but, as far as he knows, Leccima never developed anything with it. He hasn’t received his money back.”
“Sonya McGee, who says Leccima took $4,000 from her in an investment scheme, said appearing on the TV show made it easier for Leccima to find such investors: ‘As soon as that first episode aired, he got phone calls from people saying, ‘I love you. Where can I send you some money?’”
Another big week for building housing bubble consensus! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Ben,
I have to admit that I did not realize there would be such a severe lack of consensus and excess of denial this far into the game. Your cognizance of this fact, coupled with relentless efforts to shine a bright light on the reality of the underlying situation, are very admirable.
“… severe lack of consensus and excess of denial…”
******
In part, this is what extends housing downturns.
It also breeds knifecatchers. We need them, too, otherwise the whole business would lock up (this time, it may just do that in some locales, regardless).
And kudos to Ben, too!
I don’t think there is that much denial that the housing market is in bad shape - I think the disagreement is in how long the downturn will persist for (and the reasons for the downturn).
And what “recovery” means.
I think some say “recovery” meaning prices back to the peak.. or at least current prices. if we adjust for inflation, i doubt there will ever be a “recovery” by this definition.
Some simply mean when sales pick back up. This is going to be quite a while, IMO.
Still others mean when prices finally stop dropping and start heading up again. I give it 2 years.
Still others mean when we finally return to a normal 3 months or so of houses on the market, prices in line with rents and affordability, and prices increasing by a steady rate of inflation. In short, a normal and stable market. ummmm… 5 years minimum!
No way. That ARM graph goes on for another 3 years. Couple that with financial carnage along with some potential negative stimulus by excesive debt levels (cause some high rates). Could be a lot longer.
Right at that point the wave of retirement age boomers begins to spike. We might also see a population drop off.
“We might also see a population drop off.”
Key demographic factors:
1) Number of people downsizing out of family-sized housing to empty-nester-sized housing versus households forming to start families.
2) The ability of new households to step on to the bottom rung of the property ladder (a bit of a big step at $500K a pop).
3) Migration in and out of the country, and also across state borders (the wild card!). It would help the market a lot if a lot of really rich and/or talented immigrants suddenly moved into the country.
I personally think the fed will let inflation inflate the obscene home prices away.
hell inflation (real inflation) is already eating away at it.
“I personally think the fed will let inflation inflate the obscene home prices away.”
Easier said than done, when there reportedly is a glut of 2m+ vacant homes across the U.S. landscape. That amounts to one extra (vacant) home for every 57 households, and my understanding is that many households already own two or more homes, and hence may not be that eager to buy more at the moment.
The Fed would need to basically keep home prices propped up on their permanently high plateau while creating sufficient wage inflation to enable households to catch up to prices. So far, not so good, as home prices are reportedly falling in many parts of the U.S. (according to the S&P Case / Shiller index).
I think its a mistake to think that big bankers have any desire to inflate away prices for relief of the masses.
They are probably beholden to the rich 2% of the population that has zero interest in that.
You can also consider the posibility of deflation is quite high. Basically buisnesses, consumers start rejecting debt.
If inflation looks to be runaway then you can have massive slowdowns in economic activity. Basically no one has a handle on how to write a contract because the terms will make no sense by completion of the contract.
The economy slows down and the desire for credit goes down. Basically throws you back in to a bartering system. And its is very UGLY on the way down.
simple example…
If you are a gas station do you really want to trade your valuable gas for $$$ that are dropping in value?
Poof. Instant shortages. Runaway prices.
For deflation… people & buisnesses just look and say ” I don’t need a loan I need income”
You start viewing credit as just more and more onerous. How the hell will I pay that back? We are real stinking close now.
“I personally think the fed will let inflation inflate the obscene home prices away.”
there is way to much down pressure on wages with out and in sourcing…
subprime gone…people can no longer get a loan that they could never pay back…
now there’s no one to buy at current prices….
sellers can maintain high prices, just no body can can get a loan to buy
Yep, to “inflate away” home price gains, the fed will have to inflate wages to the point that homes once again become affordable. Hard to do that, increases in money supply inflate assets rather than wages these days.
I don’t the Fed can inflate anything. They have lost the ability to control the money supply. They are in the same situation as the Central Bank of Japan was at the end of their bubble.
.
#@#$@!!!, I meant; I don’t THINK the Fed can inflate anything.
“…at the end of their
bubble.rope?“The FED can deflate the dollar which will cause inflation in many imported commodities like oil. That will increase the price of many items although probably not homes.
It will decrease the price of homes, because people will have less money for mortgage payments after spending for necessities like gas, heating/AC, food, etc. This is already happening.
Also anyone who thinks that the China, etc. will keep lending to the US at the current interest rates if they think the Fed is trying to trash the dollar is kidding himself.
I personally think the fed will let inflation inflate the obscene home prices away.
Sounds good, wake me up when the median household income in California reaches one-third of the median house price, which is nearly $600k.
“Lower home prices ‘are healthy for the economy,’ said Alan Clayton-Matthews, the UMass professor who authored the study. ‘With housing prices in line with incomes, Massachusetts will once again be affordable for the state’s future labor force.’”
WOW….WHAT A DISCLOSURE! Stop the presses!
Simply more brillance from those in upper academia.
Easily worth the the six-figure salary w/ bennies he’s pulling down.
Yeah but at least the guy had the balls to say it, which is more than you can say for a lot of the geniuses out there. That’s why tenure is good for the university system - so profs can tell it like it is without worrying about losing their jobs if they piss off the PTB. Anyone whose job depends on saying the “right” things is just a shill.
Cracked me up that that editorial on lower housing prices being good for the economy was based out of Dover—-which has got to be one of the most expensive towns to live in in MA.
I live in Montgomery County, MD. In Feb and March their was a small uptick in sales. In April and most of May it died. This week I have seen a decent uptick in sales. Anybody in DC area seeing same thing?
We’ll be seeing lots of little upticks all the way to the bottom…
Yes… over in Dow-land, they’re referred to as “dead-cat bounces…”
Yes… over in Dow-land, they’re referred to as “dead-cat bounces…”
The same is true of US dollar valuation (lots of little upticks). We have had over a month of apparent stabilization in USD, which is now turning down. My personal prediction is, there will be another substantial down leg in the neighborhood of 5% before the next period of stabilization/upticks. I’m completely unqualified to make this prediction since I have been playing foreign exchange less than a year. But what the 773H other game is safe?
The only problem with a continuing down move in the U.S. Dollar is that this (supported by fundamentals and demographics) is likely the beginning of an intergenerational decline in the standard of living that we have become accustomed to. It doesn’t look like that are any fundamentals of redemption for the Buck going forward. With this in mind, what is the fundamental value of any real estate or for that matter what is the fundamental value of dollar denominated retirement “assets” or dollar denominated investments going forward? Superimpose all of this over possible Peak Oil and Global Overpopulation and Environmental Degradation and pretty soon one could turn in to a real pessimist. I’m already there fwiw.
YUCK, who would want to pay to live in Regina. Wasn’t there some story about the City of Regina sending a sample of their water to a lab to be tested. They got a letter back saying; ” Congratulations, your mule is pregnant.”
Ha ha ha ha ha! First time I’ve seen Regina mentioned in this blog. I actually was born there and went to high school and college in that city. I’ve been back maybe 2 times since I left in my later 20’s. If you want to talk about a depressing, dead city - that’s Regina. That ’shopping center’ they say the condos are close to is a dinky little strip mall - what a joke!
It’s been while since I been to Saskatchewan too. The time I went through Regina we had come up from North Dakota. I was working for a Custom Combiner, we were looking for some wheat to cut. Didn’t find any jobs there, ended up finishing the season near Red Deer Alberta. There are fair number of people from Saskatchewan the go to collage at Montana State University.
And they probably consider Montana balmy.
ha ha that water joke. I heard it as someone stealing a sample of great draught beer from a bar, sending it out for analysis, and getting a letter saying, “Dear Sir, your camel has diabetes.”
Thanks Ben, have a good weekend!
“In May, they bought a $50,000 SUV. In August, she got a job, he quit his, they bought a $20,000 vehicle, she lost her job. So they took on $1,100 in vehicle payments, are in foreclosure on their home, but won’t give up their vehicles.”
Living in a material world…
Gotta have those big SUVs - God forbid someone might see you on the road and think you’re a loser, driving an old Toyota Celica.
Sigh. Second verse, same as the first…
Yeah, that one got me. My ex did something similar, 8 years ago when she left me. Also filed for BK just before the law changed.
Sigh…
Ben, nobody in America is doing more to illuminate the housing bubble than you. Thanks for the education. You are a hero. Have a nice weekend.
“Lancman also said the industry has perpetuated a myth that subprime mortgages have allowed people with low or moderate incomes to become homeowners. According to the Mortgage Bankers Association, only 45 percent of subprime loans are used to purchase a home and only 11 percent go to first-time buyers. The rest refinance existing mortgages or are made to real estate investors.”
It is true that no doc and 100% LTV subprime loans helped first time buyers purchase homes they cannot afford, though, agreed?
“We met a couple who bought a new home in March, 2006, with 0 percent financing and a payment of $1,100 per month. (We did not originate the loan). In May, they bought a $50,000 SUV. In August, she got a job, he quit his, they bought a $20,000 vehicle, she lost her job. So they took on $1,100 in vehicle payments, are in foreclosure on their home, but won’t give up their vehicles.”
As we say at the HBB you can live in your car but you can’t drive your house.
That SUV should be quite comfy
Luckily I have never been involved with the eviction process, but isn’t it easier to evict someone from a car than from a house?
You have to find the car and tow it.
in many states if the “owner” of the car is present and says don’t take it, they can’t (though I’m sure they do anyway)
imploder,
I worked with a friend repoing cars in Columbus,Oh, Just to make a little exta spending money. If the owner was anywhere around we didn’t touch the car. A repo was not worth getting hurt over. We would just catch em at a different time and get the car then. The banks we worked with also made it clear not to cause huge problems…I can only imagine how busy repo guys are now.
Chris
Debbi: Duke, let’s go do some crimes.
Duke: Yeah. Let’s go get sushi and not pay.
I have seen at least 5 high end cars leaving our apartment complex in the last year. BMW’s mostly. I guess that $1000 car payment gets a litle heavy after a while.
Leaving on flatbeds I meant to say!
What is the ‘American Dream’ if you don’t have a couple of new sweet rides to park in the driveway?
“In May, they bought a $50,000 SUV.”
I predict they will have a kid named Lincoln Navigator named after his place of conception.
LOL. That’s pretty clever, Back Alley.
son goes to father who is indian chief
“father, how did you name me”
“son, like your sister, Beautiful Golden Moon, I named you after the first thing I saw coming out of the teepee your birth…. but why do you ask, Two Dogs F#ckiing?”
“Lancman…”
*******
That is the “money” paragraph.
Let’s see… let us bailout the 89% who are second time homebuyers, refi kings and queens and, of course, our friends the speculators.
Not to mention the banks and hedgies.
Or, as GS points out, the many in the remaining 11% who shouldn’t be buying in the first place because they cannot afford to do so.
… So they took on $1,100 in vehicle payments, are in foreclosure on their home, but won’t give up their vehicles.”
So what’s the problem? At least you can’t drive a house.
hmm i wonder which will depreciate faster, their house or their SUV?
So what’s the problem? At least you can’t drive a house
You better talk to AZlender before you say that.
Actually I never make loans on objects that have motors. Trailers yes, if they are planted, and if I also have a noted on the land underneath.
“noted” meant “note”
“Dan Ward, an Atlanta-area youth minister, said he told state investigators that Leccima took about $100,000 from him to invest in real estate, but, as far as he knows, Leccima never developed anything with it. He hasn’t received his money back.”
Well, Mr. Youth Minister, now you’ve got a theme for next week’s Sunday School class: “Fools and their money are soon parted.”
Did you see the episode where Mr. Real Estate was at his cigar club acting like Mr. Bigshot? It was disgusting. I hope he rots in jail.
I saw one of these episodes with Leccima. I have to admit, his operation looked legit on TV. Sad to say, but in these times, you simply cannot trust anyone to tell you the truth.
THIS guy, LEGIT!?! Bahahaha:
http://samleccima.com/
Is that site real or satire? I love this one…
Intro - For all intents and purposes ladies and gentlemen, I should have been a failure
Awesome, you can send him comments and not include your correct email address!
gee, don’t know if that first picture of him is big enough…
also not a great character witness for the defense with chapters like:
Chapter 8. I CHEATED!!!!!!! - And so should YOU
“Chapter 8. I CHEATED!!!!!!! - And so should YOU”
Red flag? Perhaps?
Is Chapter 11 coming soon?
How about “No one can serve God and mammon”.
How about “No one can serve God and mammaries.”
how the frell does a “youth minister” get his hands on 100,000 to “invest”?
HELOC, baby.
inheritance? that’s the way everyone I know got large sums of money.
“represents more financial fallout from an overbuilt real estate market in Northwest Arkansas.”
I traveled to Rogers, Arkansas in 2003. The amount of development was mind-blowing. I couldn’t believe the amount of earth movers and construction crews. I was told that Rogers was #2 behind Las Vegas for fastest growing areas in the country. The faith those people still had in Walmart of nearby Bentonville, AR to make them all rich was astounding. They thought the Rogers area was well on its way to being the next Florida. I guess they were right in some sense.
#1 fastest growing area: St. George, UT
Local economy ranks No.1
# Washington County rated fastest growing entrepreneurship by Inc.
By TIFFANY DE MASTERS
tdemasters@ thespectrum.com
ST. GEORGE - Growth in Washington County continues to be recognized on a national level. According to “Inc.” magazine, in May 2007 it was ranked No. 1 in entrepreneurship growth.
http://www.thespectrum.com/apps/pbcs.dll/article?AID=/20070601/BUSINESS/706010328
Don’t stories like this usally appear just right before things go to hell? I recall reading a simular story about Midland Texas just prior to the oil crash in the 1980’s.
St. George’s own personal hell will be the same as many in the SW - no water. And I might add that it’s HOT there. retirees galore from CA
More pertinently, there was this one…
http://www.time.com/time/covers/0,16641,20050613,00.html
To Time’s credit, this story was in the very same issue…
The (Surprising) Case for Renting
Monday, Jun. 06, 2005 By BARBARA KIVIAT
http://www.time.com/time/magazine/article/0,9171,1069090,00.html
We get those stories about Boise: best city for business, top ten place to live, best place for a career, top five for outdoor rec, yada yada yada…Boise is a great place, but today was nice and smoggy, traffic was gridlock, a 72 year old man was murdered- the place is not picture perfect. A decent house is out of reach unless you are an equity refugee from Cali, the job market is great- if you like to work retail or in call centers. In 10 years, Boise is going to be no different than Sacramento or Fresno.
We were in St George last fall, and the giveaway real estate guide was 2 inches thick…
WMT’s been tanking lately, too… Funny how people mistake an event for a long-term trend.
Question for Snaith: Do higher unemployment and stronger housing markets normally go hand in hand? I guess it is different in Florida.
—————————————————————————-
UCF Economic Forecast Calls for Better Housing Market, Rise in Unemployment
June 1, 2007
By Zenaida Gonzalez Kotala
For those with a house on the market, there’s good news: the worst is over. But a University of Central Florida economic forecast that released May 31, also delivered bad news: unemployment rates should rise.
“The biggest impact of the housing slowdown on the economy is over,” said Sean Snaith, director of UCF’s Institute for Economic Competitiveness, which will issue the quarterly U.S. Economic Forecast. “But unemployment rates are going to start going up through the rest of 2007 before stabilizing in 2008 at about 5 percent.”
http://news.ucf.edu/UCFnews/index?page=article&id=0024004102c4c1d99011146fc1c32005dfa&mode=news
Par for the course for Florida.
Zenaida Gonzalez Kotala
Hmm…I wonder if they imported her from Nigeria to lay down the truth?
These people would make Goebbels blush.
Effing unbelievable……….. Black is white, up is down, etc., etc.
wooo hooo- all my posts are being eaten by a virus from Casey’s blog (test)..
Casey claims his blog is closed, but can’t stop playing with it. The page now has one thing: “Sorry” in very faint lettering. Pathetic.
hmm I think he’s messing with it again
This is what I get at: http://iamfacingforeclosure.com/
and I quote:
From the Omaha World-Herald article:
“putting money into the stock market instead of into a house could provide superior returns”
Well, at least you won’t lose your house.
‘Flip This House’ star accused of fraud…..hehehehehehehe……hohohohoho….hahahahahaha
http://news.yahoo.com/s/ap/20070601/ap_en_tv/house_flipper_investigation
Intro to his book:
“Intro - For all intents and purposes ladies and gentlemen, I should have been a failure.”
From Ben’s link:
But Leccima doesn’t have a real estate license — it was revoked by the Georgia Real Estate Commission in 2005, with the panel ruling he “does not bear a good reputation for honesty, trustworthiness, integrity, and competence.”
How slimy do you have to be when the state Real Estate Commission says you’re too slimy for them?
I encourage everyone to write fraud@paypal.com and request that they close his account, so he can no longer sell stuff either…
This “Flip This House” scandal only reinforces my belief that almost 1/2 the country spends every waking hour trying to figure out how to screw the other 1/2.
And of course, never believe anything you see on TV.
I agree with your sentiment, but your numbers are off. I’d say 80% spend every waking hour trying to figure out how to screw the other 100%.
“I can hire one half the Working Class to kill the other half.”
-Jay Gould
St. George UT is a tiny little place. Fastest growing my A$$, at least then this is truly the mother of all bubbles. It used to be just a small retiree community for the winter for folks from the Salt Lake metro area (300 miles from SLC to SG). I am seeing some ridiculous stuff as I am visiting SLC right now. Not the same place as when I lived here (20 yrs ago).
please elaborate on the ridiculous stuff you’re seeing…
Lots of ‘Downers’ there, as in down wind from Atomic Bomb testing. Cancer galore. FBs have a ball
“‘If it hadn’t been for something like this I wouldn’t have got on the housing ladder,”
What a silly. Like stepping on to the down escalator trying to go up.
O/T,
What is a ’substitution of trustee and deed of release and reconveyance’, and what significance does it hold for someone who I suspect is a FB?
A deed of trust includes the name of the trustee (usually the title company that issues the title insurance). It is the trustee, on behalf of the beneficiary (i.e., the lender), who can foreclose on the trustor (i.e., the borrower). The trustee also “reconveys” the deed of trust when it has the loan has been paid off (basically, this is like marking “paid in full” on and returning the original of a promissory note to the borrower after it has been paid off). Rather than paying the trustee listed in the deed of trust (the title company) to issue a reconveyance, the beneficiary can appoint a substitute trustee. In this case, the beneficiary appoints themself to be the new trustee, and then in that capacity it reconveys the deed of trust to the trustor (the borrower). The upshot of all of this is that the deed of trust is gone (so it is no longer a lien on the property).
As to the significance for the suspected FB? Well, reconveyance means that their property is longer subject to the lien from that particular deed of trust. However, that does not mean that they did not simply get a refi (the refi would pay off the old loan, and thus the deed of trust would need to be reconveyed). So, it’s hard to know what significance it holds without knowing what other liens are on the property.
Sorry for the long-winded answer, but some these documents have names that aren’t exactly intuitive, and I think it helps to understand some of the terms.
A substitution of trustee would often occur just before foreclosure proceedings are undertaken, since the beneficiary of the Trust deed can appoint just about any Trustee to do the actual Trustee’s sale (foreclosure auction).
A deed of release and reconveyance is a great thing for an owner: it is a document which (if duly signed by the beneficiary) says that the mortgage has been paid off in full.
Never saw these two items on one piece of paper.
Keyboard Alert! Don’t say you weren’t warned!
http://www.myebid.com/cgi-bin/auction/view?cmd=view&listingID=4046
Item Description:
“iamfacingforeclosure.com is now for sale, the Feds are getting too close and I am fleeing back to Uzbekistan, it was fun why it lasted. Thanks everyone!”
OMFG, this has got to be a farse. How did you find that?
casey’s spelling wears off on a person, eh? Fleeing, eh, not just returning…hmmm…I smell more adventure in the making here…and maybe a new website…
it says listing is closed. wahtsupwiththat?? I was thinking about buying it…LOL
It doesn’t look closed to me. But can it be legitimate (if that word has any meaning when dealing with this dirtbag)?
Sweet™
Do they have Jamba Juice is Uzbekistan?
“‘There is a myth that people just assume buying a home is better than renting,’ said Kristy Lamb, a regional property manager for NP Dodge Management Co. in Omaha.”
1. Renting is almost the new black.
2. I’m pulling up stakes, moving to Omaha, and asking Kristy to marry me. (then again maybe I should request a picture first?)
Kristy Van Winkle? — Wake up and smell the coffee, honey…
—————————————————————————-
The (Surprising) Case for Renting
Monday, Jun. 06, 2005 By BARBARA KIVIAT
http://www.time.com/time/magazine/article/0,9171,1069090,00.html
Are you trying to douse my dream of finding financially astute female companionship?
More than the five on this blog exist?
Ah, there’s more than that.
But most of us are married.
More than the five on this blog exist?
So first quarter growth was not 0.6%, it was 0.15%.
We was fooled again, by the MSM. Goldilocks may be down for the count.
“Yesterday we learned that in Q1 2007, the economy expanded at the near zero growth pace of 0.15%. That’s practically flatlined. This was the worst reading since a 0.2% increase in Q4 of 2002.
What’s that, you ask? In the media, GDP was reported at 0.6% you say? Um, no — that’s the annualized rate — take Q1 GDP and go mulitple it 4X and THAT’s how you get to a still pitiful 0.6%.
The sunshine crowd bamboozled the press on this big time. ”
http://bigpicture.typepad.com/
Paid $9.40 for a six-pack of Mike’s Hard Lemonade this weekend.
Fookin’ $10 bucks for a rack of malt.
We’re in the shitter.
It is standard procedure to annualize GDP growth figures. But with a 1Q growth of 0.15%, one has to seriously question whether the confidence interval for GDP growth (which takes into account the margin of statistical error) does not include a large range below 0%.
Question GS…………….
Which revision of Govt figures can be relied on?
From The Daily Reckoning…
“…you put your money into stocks - hoping that the stocks will go up faster than your currency goes down. The result? A speculative, asset-price boom - even while the whole country is falling apart…
But even as asset prices go up, the real economy slows down.
Today’s news tells us that the GDP is barely growing at all. And the Fed says housing will be a drag for longer than expected…”
Stucco, while you’re in your math mode, I have a question. Last night you posted a differential equation
dF/dt = gF(1-F/K).
After awhile I found a solution that works at t=0:
exp(gt) = [(K-Fo)/Fo] times [F/(K-F)].
By Fo I mean the initial value of F.
I can see how F never becomes bigger than K,
but what I don’t see is, how F ever drops down again.
That is essential a form of the logistic equation. It has a horizontal asymptote at K. So it is increasing but bounded as it approaches infinity.
I didn’t give you the full model — just the part (logistic model) that explains what happens on the way to maximum saturation with foreclosed owners in the absence of prey (prospective buyers with cold feet).
At that point, some bottom fishers (could be you or I if we live that long) who either have bank or credit start nibbling, at around the time that the rest of the world is saying “real estate is a terrible investment,” and a negative term (stock sink) appears in the growth function.
Maybe it would be worth trying to explain this using a variant on the Lotka-Volterra model (”predator-prey”), where the predators (would-be buyers) for some reason lose their appetite over the time the prey (seller) population grows towards K; once K is reached, any prey left standing have a feast on the inventory plateau.
The interesting thing about human populations is that they can easily morph from predator (e.g., flippers) into prey (panic sellers).
http://en.wikipedia.org/wiki/Lotka-Volterra_equation
One needs to realize that with such an “official” GDP growth rate, that at the same time the M3 money supply has been growing at over 10% annualized. (in fact over 13% from my readings). Thus the question is perhaps twofold……….. Where is the other part of the money supply increase going?? and secondly ……….. what would have happened if the money supply was growing at a much lesser rate?? Just a bit more food for thought…….
Pretty simple actually.
Money supply growth - inflation for “goods purchased” = inflation in assets.
That is why we are seeing inflation in financial assets (ie stocks, commodities, gold, etc.)
This morning’s employment numbers have just been debunked…
http://www.rgemonitor.com/blog/roubini/197796
Does anyone have an update on that Jeff guy on the investment forum? I don’t remember the name or the url for the site.
Thanks!
BayQT~
Taco Bell Jeff on SDCIA.com has gone missing.
The First Burrito is the Hardest
Yeah, he posted about how bad things were getting and people were giving advice, and bickering, but then he went MIA and they locked the thread a few days ago. You can find it here: http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1854186&trail=30
BAHHAHAHAHAHA!
Thanks, txchick. Looks like that burrito got him right in the keister. (Pardon the pun.) As someone said on the sdcia board, I doubt that he’ll be back any time soon. Unlike Casey, he may be too embarrassed or possibly too busy trying to turn his life upright than to waste his time undoing the bragging.
Hopefully, he’s learning a very valuable lesson.
BayQT~
http://foreclosureavoiderssavedme.blogspot.com/2007/04/rise-and-fall-of-jeff-from-sdcia.html
Here’s more on the Taco Bell Jeff saga. It would take a heart of stone to read about his unraveling without laughing.
No loot for the youts…
“Dan Ward, an Atlanta-area youth minister, said he told state investigators that Leccima took about $100,000 from him to invest in real estate, but, as far as he knows, Leccima never developed anything with it. He hasn’t received his money back.”
Reading this blog it is clear that there is a lot of negativity about the housing bubble. The prevalent mood seems to be that our hugely inflated housing prices have created an immoral, awful situation. In other words, the housing bubble is BAD. Bad for struggling homeowners, bad for the economy, just plain bad.
I’ve been thinking that that this is not necessarily true. For instance, I personally made a lot of money out of the housing bubble (buying in the 90’s, selling in 2005). I know a lot of other people made plenty of money too. So in fact, the housing bubble has been a very positive thing for me, and I can honestly say it has altered the course of my life. I will rent for a few years, and then pay cash for a home when the prices collapse (which they will, no doubts about that). After that, I will pay a lot more towards my retirement, and far earlier than I would have been able to otherwise. So from my point of view, this housing bubble has been very positive, and my retirement years should be a lot more pleasurable than they would have otherwise been.
Is the housing bubble bad for the economy? I’m not sure… the pat answer is yet, but I don’t really understand what the Economy means. Sure, people will lose their jobs, stock prices will decrease. Is that bad? Depends on where you’re standing, I guess. From a humanitarian perspective it will be bad (hungry children, out of work men hanging about al la the Great Depression). But the rhetoric seems to veer into humanitarian causes only when it suits the national mood. For instance, Dell lays off thousands and it is applauded. A little inconsistent I would say.
Blah blah blah. Keep that up and you’ll have your own stable of haterz before long.
LOL… nice like the world needs another.
Welcome Selfish Boy
> Is the housing bubble bad for the economy?
Are casinos good for the economy? Some people even win money there, and more people are employed there. In total, the costs of casinos are a high price for the thrill of maybe winning.
YLG -
If you made a ton of money, who did you make it from? Bingo, somebody who bought all the hype, ingested the hysteria, and may have committed financial suicide.
But who cares, as long as you got yours…
My buddy is a Real Estate addict. He won’t ever tell me that I should not buy a house if it’s not going to be rented out. He just cannot come out and say it. He claims to be renting out his condo in Miami and land in the midwest. I’ll accept that. He has another house being built outside the U.S. When I send him articles like today on Motley Fool that stocks are a better investment than Real Estate, he says they are wrong. Real Estate is religion to him. He says his uncle made it big in Real Estate so that’s where he is investing. He says “location, location, location.” But that is all bunk. No one has the knowledge to find the best location. It depends on luck if you are at the peak of the bubble. The fact is, individual stocks held for the long term have a better return than a home of your own. And it’s common sense to realize that if we all decided to become landlords, we’d be like operators of Chinese Laundries - doing each other’s laundry. There is a glut of rentals and it’s going to get worse. I read where the wealthiest people have a small percentage of their net worth in real estate - no more than 20%.
I bet that YLG would be far wealthier if he invested in common stocks at the bottom of 1987’s crash and held on, instead of buy real estate in the 1990s, selling in 2005. Real Estate owners forget about maintenance costs and opportunity costs - you lose quality time while shopping at Home Depot to do some repair when the apartment maintenance guy can do both the shopping and repairing.
My buddy tells me I am spending too much on rent. He rents a one bedroom and I rent a two bedroom. Well in terms of square feet, I pay less per square foot than if I was paying mortgage and maintenance. Some people who are slaves to their properties really cannot stand it when renters enjoy their freedom by not owning much.
Another common friend said a man at age 45 should be owning a home - he knows I’m 48. He’s also envious. I have a net worth of $843,000 and I exclude the equity I have in my time share, since that is real estate. If I cannot stand my neighbors, I can move very fast. My apartment is owned by a large corporation and my lease transfers easily. They own apartments all over the U.S. I have more freedom than my friends and could live several years on my government securities without a job if I have to.
I guess I bragged too much to my friends!
“…he knows I’m 48.”
Bill — I am your age. We have owned two homes, and I am neither happier nor sadder about my home ownership status now that I am a renter. There are those times I feel pangs of “house envy,” but then I think about how I don’t have to take care of the yard or the cracks in the driveway or the rec club membership or the HOA dues or the insurance or the interest rate on the mortgage note or the property taxes or the risk of falling home prices, and I feel much better immediately.
Greetings GetStucco! Freedom is so good, isn’t it? Instead of paying interest and maintenance and insurance on a house this year, I went to Hawaii. and have just been delivered (and I paid for it already) a sofa and chair set, very good quallity leather. My money market interest and T-bill interest paid for the furniture.
“Is the housing bubble bad for the economy? I’m not sure”
The Housing bubble has effectively destroyed the last remaining open farm/citrus groves/pastoral open spaces in the Inland empire and replaced them with endless housing and shopping developments, and left ugly pitted scars and uprooted ranchettes. This is seen by some as ‘economic booming growth’ with the construction gangs and contractors busily throwing up thousands of new tracts all over the IE, without any regard for the environment or the effect upon population/traffic densities.
As for its effect upon LA, all this booming housing development has resulted in entire working/middle class formerly stable older neighborhoods becoming unsightly mismash eyesores as owners/specu=investors/flippers have literally plunked down 5000 sq ft MCMonsters on 6000 sq ft lots, have done cheap quick-fixes of older sfh’s to flip them to a gullible first-time immigrant family for $100,000-$300,000 profit, Have done illegal unpermitted additions, created unmatched unsightly two-story ‘wings/apts behind SFH’s’, have degraded formerly charming older neighborhhods with cheaply-built stamped condos and townhomes, ect.
When LA Foreclosures reach 10,000 and all these cheap fixed up units, as well as older established homes become empty abandoned foreclosed trashy dumps, then LA’s inner hoods, bad as they were, become nightmarish bombed out fajulla districts inhabited by ganstas, crackhouses, the homeless, impoverished illegals,and lots of stray starved dogs.
The Housing bubble specu-fever destroys the IE rural environment and older established LA neighborhoods wherever it has been allowed to spread unchecked.
Ultimately, a real recession coupled with a credit crunch will be good for America. It’s bad for the economy short-term because the majority of this country has been living off of asset appreciation and debt instead of income, and that has engendered a sense of entitlement. If you made, what, like $500k? Consider that most who have made profit instead of debt doubled down into more real-estate.
The Humanitarian aspect, people here seem enfortuned by announcements of lay-offs, plummeting GDP, foreclosures etc because that will make the process a shorter duration more emphatic shock… contrasted with Japan, where the ability of the government to discourage banks from writing off bad loans caused the misery to drag on for a decade longer than necessary.
And then there’s the widespread impression here that we’re being lied to, and that the prevalent wisdom here is scoffed at when it contradicts a more popular soundbite. Buy now or be priced out forever, Real estate always goes up. Sales down, median up. Subprime is contained. Chance of a recession is small. Construction employment is up. The recovery is beginning. Prices will be flat. 1.3% oh wait, 0.6%. Layoffs and more layoffs of high-paying jobs, replaced by low-paying jobs.
Do you see? It’s not just a high-stakes “I told you so”… follow that with “Yet you continue to lie and I will continue to tell you so, as long as it takes.”
I dunno, history repeats itself. If you lost a lot in the tech bubble, you’ll lose it again now. If you learned from the misery of others then, you’ll probably do just fine.
And how could I forget the Fraud?! That is the real enemy here… all those ’stated’ deals. Oh sure, I’m smart enough to make 200k but I’ll give up a point to not have to document it. Those people exist, but they are 1% not 20% (not counting subprime…)
Now, the Feds won’t touch this fraudiness, but it will come out in the downpour of civil cases about to come. All those pointing fingers. I picture the appraiser cornered like a cat, those claws rip in a fury with the right amount of pride and naught for a National Association of…
Mr YLG, if you are a lawyer then you will make more in the next decade than any real-estate investor could dream. Fraud bless america.
Ultimately, a real recession coupled with a credit crunch will be good for America.
Agreed, and moreover, people who bought what they couldn’t afford, and those who committed fraud in order to qualify for loans, NEED to be suffer and be punished, because otherwise there is no deterrent to more of the same in the future. This housing bust will unwind for years to come, and I for one welcome its cleansing, purifying embrace.
YLG:
the housing bubble isn’t “bad” for the reasons you elucidate.
From an economy standpoint, the fact that you made some money on RE is meaningless, because the money you made came from another American. Thus, it was a ZERO SUM gain to the economy. Your gain was his/her loss. That’s not what benefits the economy.
What benefits the economy is if a good is produced that expands the economy. so as example making a shirt and selling it in France. There, we are producing something, and the money is flowing INTO our country. This is expansive and “good” for the economy.
In the same way, when we go into debt to buy cheap crap from China, we are expanding THEIR economy (good for them) while shrinking the capital that we have here for domestic production.
The housing bubble is thus BAD for the economy because it shifts needed resources (money, lumbar, precious metals, etc) that COULD be used for PRODUCTIVE purposes into a NONPRODUCTIVE asset, thereby impoverishing our nation. It also raises the basic cost of living, making our labor even more uncompetitive with the rest of the world who has cheaper COL.
How happy will you be with your paltry gains in RE over a mere 7 years, if by misallocating resources we go into a severe depression and YOU become unemployed? This is the problem. Your status as a RE elitist is supported by our ability as a nation to PRODUCE goods that others in our nation and beyond want and need.
the housing bubble has misallocated those resources to RE… an area where there was a SHORT TERM want, but not really a need (hence, almost 2 million extra mcmansions are laying around).
your understanding of what is really going on is unfortunagely a bit naive/ignorant…
it is like the child wooed by a candy cane into the stranger’s car. sure, candy is good? Right?
If they lie on the news, what would make anyone think that reality shows would be anything but a bunch of lies.
Sure alot of people got ahead in life pursuant the real estate boom from 2000-2006, including real estate people , lenders agents ,title companies ,escrow companies ,construction workers ,builders ,investors , flippers ,some homeowners and on and on ,but at what cost to America . Now we have a RE market that got so out of whack to the point that housing is not affordable anymore for your average workers .Countless homeowners will go into foreclosure and will be set back for years and thousands will lose savings that could of gone to a better use . The vacant houses and excess builder investory that resulted from the boom will be a big waste of resources that could of been put to a better use .
The fallout from this correction will make America weak and the stress and family problems that will come out of this downturn will have long reaching effect ,(such as more car accidents and people just going off the deep end ).The fraud aspect alone regarding the RE boom will be costly to society .The tax-payer bailouts will affect us all along with the possible far-reaching job loss .The investor loss will be huge in the final analysis and it could be someones pension fund or a Bank one has their savings in .
Yea ,sure , some people will be winners ,but this housing bust might just bring on a greater depression than the Great Depression of 1929. Even if you have alot of money in the bank because you were smart enough to sell at the right time ,it won’t be fun seeing your fellow man/women /children suffering .The housing boom was nothing but a fake hyped up market from about 2002 onward and America didn’t need some phony run-up that will create more losers than winners . The housing boom threw America down the wrong tract and now we have to face what the real problems in America are .The real estate run-up was nothing but a nonproductive scheme in the final analysis .
As Palmetto says, “Testify!”.
At least those of us who did not get suckered in by the real estate hysteria had a chance to save. I had $5000 in cash in 2000 and maybe $1500 in savings bonds. Over the last 7 years I kept buying government securities, as well as precious metals and stocks. But I was biased toward securities outside my tax deferred plans. I am prepared. I hope you were. There are not really that many victims and future victims from this bubble compared to the greedy ones. I shed no tears. My sisters are all renters and I am very glad for that.
I really loved America when real estate was cheap . It was a great concept that your average working Joe/Jane could get a piece of the America pie to call their own .It wasn’t that buying a home was a better investment than other possible choices ,but it was a concept of having roots and perhaps forced savings for retirement by having a paid off home to help with retirement .
I really loved America when jobs were provided for Americans that provided the opportunity to get ahead in life ,not by a scheme but by long term hard work .
I really loved America when health care was cheap .
I really loved America when you could go to school and feel safe and not be afraid to send your children to school .
I really loved America when people knew the difference between right and wrong unlike today when any antisocial behavior somehow is justified.
I was lucky to experience America during some great years ,but now I have so many fears for America .
I’m really not meaning to boast, and selling at the top was blind luck. My larger point is that markets are always a big poker game, with many players, changing rules, cheating etc. That applies to the stock market as well as the housing market. As long as we accept that we are gambling, what is there to complain about? It is the job of people like Moody’s, Fidelity etc to haze things over so that we forget we are gambling. But then stocks fall 50% in 2000, and our eyes open. But they seem to close again over time. Yes, I probably could have made more money investing in stocks at the right time. But when is the right time? That is a gamble, and I don’t gamble if I can help it. I put my energy into earning money, and then saving it in the safest ways available (without the big returns).
I don’t buy into the buy “piece of America” stuff. That mixes in a kind of emotional patriotism into the act of purchasing a house. I’m trying to think along clean lines - was/is the housing bubble a negative on a national scale? I’m not sure it was. What is our criteria for judging? Percentage of population who lost, compared to those who gained? What if 51% lost, but 49% gained. Does that make it a negative for the nation. A zero sum game is just that - nothing lost, nothing gained by Americans as a whole (probably more gained, since gullible foreigners did a lot of the investing).
the bubble will cause “more car accidents” ? I’m not sure that is a valid point. There may or may not be more car accidents as a result of the housing bubble.
“it won’t be fun seeing your fellow man/women /children suffering” - fair enough, but truthfully there are millions of Americans suffering already. Minimum wage living is no joke, and poverty and hunger are already rife in America. Will poverty increase? We don’t know. Some people will get richer, some poorer, and some will see no change. Some people will be stuck in a little condo for the next 30 years, and regret they spend $500K on it.
“But who cares, as long as you got yours…” a knee-jerk emotional comment. Either the conversation is about global issues and the economy or it is about caring for your fellow man. It can’t be about both at the same time. Ironically, that is the same tone of argument the sub-prime sharks keep bringing up “we were just trying to bring the joy of home ownership to the impoverished masses.”
that was really boring to read
I didn’t even bother. Who cares.
The problem, IMO, is that the US is not producing anything any more. As a nation, we bought into the notion that if Everyone went to college, then Everyone would have an upper-middle class life. Well, you can’t have a whole country where Everyone has an above-average socio-economic status! In fact, the consequence has been that the US working class, formerly sort of the WORLD’s upper class, has been replaced by a bunch of gambling addicts, and I do mean all of us.
It’s just that this winner/loser stuff is just to creepy . America was great because of a strong middle class for many years and that’s slipping away I’m afraid .
Look, when you get a reasonable return on a investment over time that’s a better idea than a quick fake run-up where you have to few big winners and many more big losers .This real estate run-up was based on hype and myths and easy money that is debt .To much debt is bad and financial stress is really hard on a family . The whole concept of this housing boom was to sell to a greater fool by purchasing a home you didn’t really want or couldn’t afford long term.The whole idea was to make the house work for you, to give you tax free income by not doing anything .The sharks were not bringing home ownership to the sheep but rather they were bringing a investment scheme provided by easy money that the sheep had no ability to really pay for if real estate didn’t continue to go up. That is simply stupid lending and alot of people got rich on it but it put America in a bad spot in which a major correction is certain .
The fact that millions of people are suffering already is no cause to have a bubble that creates more suffering .There is such a thing as a balanced market and that sort of market is better overall for a greater number of people for long term stability .
YLG- you happened to be a winner in the real estate game so you see everything as a positive ,but the entire society you live in must be stable and be on a good growth trend .
Good post. It’s a warm fuzzy feeling to get a humble 3% to 6% on my savings bonds, municipal bond fund, and treasury bills and notes over the last 7 years, live in a 1000 square foot apartment and to have paid off my Toyota economy car within two and a half years.
I’m also disturbed by the “I want it now” mentality.