Bits Bucket And Craigslist Finds For June 12, 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.
June 12, 2007
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This artcle has blasphemed! By saying the slump will run into ‘08, and that sub-prime loans were not a good thing, it can’t be so. Why the next thing you know Parris Hilton will claim she found GOD in jail!
http://www.signonsandiego.com/news/business/20070612-9999-1b12housing.html
God is back in jail? What was is this time? Parole violation or another heist?
Roidy
Negligent homicide in connection with Hurricane Katrina and the Indonesia tsunami, well known recent Acts of God. That guy (Guy?) just won’t control himself.
How can you tell negligence was involved?
http://mediamatters.org/items/200509130004
There was a motive, according to the corpus evangi
indulging in too much schadenfruede (sp?)
Speaking of religion, at what point did Nicolas P. Retsinas find Blog?
‘The implosion of the subprime mortgage market is likely to prolong the national housing slump, Harvard University researchers said yesterday in their annual report on the state of the nation’s housing.
“At a minimum it will slow any recovery,” said Nicolas P. Retsinas, director of Harvard’s Joint Center for Housing Studies, which issued the report. “Add to that the overbuilding and the inventory correction and you can see why it appears, particularly for the new-home market, that this slump will last well into 2008.”’
IMO, the new home market is in better shape - they are cutting prices and have less inventory. Unlike the existing home market, which grows and grows…..
Yes and maybe it is but at some point who is going to buy these new homes? If people can not sell their existing homes they will not be able to buy a new home. My bet is that new home starts falls to around 750k.
The problem with the logic is that the buyers of new homes have to be able to sell their old. Since they can’t, the new home builders are seeig their cancelation rates skyrocket again.
I agree, I’m not saying its in good shape. I’m just saying its in “better” shape than the existing home market, which disagrees with what Retsinas said. Which isn’t saying much.
Won’t be in good shape for long with all the cancellations. If you have no sales you can’t pay your construction loans. People don’t want to buy upside down and they’ll lose their deposit first. Every month the developers will have construction loan interest and pretty soon they won’t be able to meet those payments. I think it’s hitting a point where most buyers are afraid it’s not the bottom and they don’t want to jump in, no matter how great the incentives.
Only if you are comparing recently built resells in or near the same neighborhood as new. Most (good) areas where building can only occur if something is torn down are in better shape than those areas where they build and build. Oh, and remember, as soon as you buy that new house, like a new car, it is not new anymore!
When it becomes unprofitable to build more and the pipeline is just draining…and you can postitive cash flow the place on 30yr fixed THEN it is a good time to buy new.
“Paris Hilton will claim she found GOD in jail!”
Jon Stewart had a sendup on the Daily Show last night where he compared Paris to the Black Virgin…
http://campus.udayton.edu/mary/meditations/blackmdn.html
Well,well,well..The Plunge Protection Team is at it again. Can’t let those homebuilder stocks fall to their natural level. Gotta give them some support. Once again, at PRECISELY THE SAME TIME, ten of the large builder stocks reversed direction sharply. All of them were dropping rapidly until the PPT stopped the drop and pushed them sharply up. These are the ones I checked to see the same pattern, all at exactly 10:15am.
BZH
CTX
DHI
HOV
LEN
PHM
RYL
SPF
TOL
KBH
In spite of the PPT’s best efforts, however, several of the builder stocks went down again.
Are the builder’s stocks part of any meaningful index (any of Dow indices, SP500, etc.)? If not, why would the PPT care if they dropped?
The reason I ask I that I recall how Hewlett Packard’s stock collapsed during Carly Fiorina’s inept time at the helm. Even thought many billions of market cap evaporated, the PPT was nowhere to be found, and HP is a Dow stock.
The PPT will again be “nowhere to be found” when the builders finally settle down to fundamental value.
“If not, why would the PPT care if they dropped?”
The builder stocks rebounding off of support levels are an important signal that the subprime implosion is contained. If they were allowed to drop to fundamental equilibrium value, everyone would infer that subprime is not contained.
There is another broader motive for the PPT to keep the Greenspan put policy alive. A policy of ever-inflating asset prices kills many birds with one stone:
1) It bolsters confidence, as ever-increasing asset prices are generally interpreted by bovine species (bulls and sheeple) as a sign the economy is “doing well.”
2) It helps keep the markets from seizing up, as rising asset prices tend to make all trades look profitable for the participants on both sides of the trade.
3) It richly rewards Wall Street middle men who take a cut of every trade (even home purchases financed by subprime loans!).
4) It creates inflation which does not get reported as such in the CPI, thereby rewarding the top of the economic pyramid while making it harder for the other 99.5% of America to stay afloat.
5) It shrinks the real value of indebtedness, making it easier for us to maintain a pattern of expenditures in excess of incomes (negative hh savings rate, large trade deficit, etc).
Where is the downside?
The builder stocks rebounding off of support levels are an important signal that the subprime implosion is contained.
Not if sales keep dropping. The only thing a rising stock price means is that investors believe that earnings will be increasing in the future. No doubt there are fools who believe this.
more likely the hand of Allah
What evidence do you have that the PPT exists and why do you think they could do anything even if they wanted to?
That’s what I wonder.
Sheesh! You guys need to read back into the archives of this blog, or perhaps check out this summary and its references…
http://en.wikipedia.org/wiki/Plunge_Protection_Team
Paris Hilton already has claimed to have found God in jail. Or at least to have become more spiritual.
Did God perchance “know” Paris?
“Did God perchance “know” Paris?”
Maybe Ralph Reed, who talks with god, stopped by for a conjugal visit.
What is your favorite metric to identify a bottom to the crash? I’ve settled on watching housing starts and looking for it to drop below 900K.
I’d be interested to know what other watch in this regard.
Houses on the market. We’re at 11 months’ supply. If that falls back to 6 months or less, I’ll suspect we may be hitting bottom.
You will be able to recognize the bottom when nearly everyone knows that you shouldn’t buy real estate…that it only goes down.
Nah… we’re getting too close to that now. Everyone I know is selling, getting out of purchase contracts, or hunkering down waiting for the crash.
I think everyone knows it is a bad investment, but we’re no where near the bottom.
Everyone I know has a friend or relative who knows they lost money already on real estate. And I have two immediate relatives who currently own two houses, one of which they need to sell soon before they get eaten alive by holding costs in a falling market (gulp!). Too bad my family’s Plunge Protection Team (parents on both sides of the family) doesn’t have the legal right to print money…
Yeah Darrell, but the difference is that the people getting out of real estate now say “it’s only temporary” and “I’ll get back in in a year or two”. What Dawnal is saying is when people start saying “real estate is a dead investment tool. nobody will ever make money on real estate again”…THAT is the bottom. Kind of like what people said/felt about gold in 2001.
But they still remember the warm feeling when thier home value went up 50% in a year……When that’s gone the bottom is close.
Couple that with a recession (don’t buy until at least 12 months into it) and you have great indicators.
The bottom in Austin Tx 1985-92 bust was between 1990-91 and clearly over by 1992. The boom was fueled by a milder form of the speculation/toxic financing we see today. We saw 20%-50% declines in SFH…and up to 80% decline in subdivision lots.
1. Middle class suburban homes can be bought with 10% (if you can find it) or 20% down 30 year fixed money and rented out for good positive cash flow.
2. Foreclosure inventory has been dropping for over 1 year (need time to see this as the foreclosures come in waves).
3. Inventory on the market falls to something closer to normal which it will given #1 - because with #1 it truly is cheaper to buy than to rent.
4. The press becomes bored with the bust news…RTC page in classified or today online is shrinking and really the only real estate news. Or perhaps, a new builder starts up a business building energy efficient solar powered homes or something that is in demand and short supply. This may be evolve differently this time with the Internet and a much more media driven (herded?) population.
5. Empty, forclosed homes seem normal around where you live. It’s not a novelty anymore. Actually, you become surprised to see fewer of them and more not coming on the market. Some areas will be much worse than others…yes there will be differences.
The other wildcard besides the new media impacts are what will energy prices do and what availability risk impacts we will see. If I knew the answer I could be very rich….but we know we are at risk on the energy front this time much more so than in the 80s and 90s. The energy market changes may signficantly alter real estate values and what’s “good” dramatically in the coming years.
Correct. Capitulation is the only way to find the bottom.
But how can that be measured? Forgive me, I’m an engineer so I need to have a metric.
Maybe when people stop whining that they are “giving their house away” and are just happy to get what they can? When you stop hearing about people taking their homes off the market to wait for “the bounce” next year.
Maybe when people stop whining that they are “giving their house away” and are just happy to get what they can? When you stop hearing about people taking their homes off the market to wait for “the bounce” next year.
Dude,
Capitulation is a psychological measure. When no one expects housing to go back up, when everyone tells you housing is a bad investment, when the last investor and NAR cheerleader throws in the towel…that’s the bottom.
Look for a stabilization or trend downward in underwear sales. That’s when we’ll know everyone’s already crapped themselves, a sure measurable sign of capitulation.
Dude -
Everyone knows that engineers are the absolute champions of poor investment decisions. Why don’t you buy a house now and then let the rest of us know when you sell it. That will be the only metric we need to know that we’ve finally hit bottom.
When the full cost of buying a house (PITI + maintenance + down payment interest) is cheaper than renting an equivalent house, we are at or near the bottom. It may be a long drawn out bottom, but at that point BUY. In fact, at that point you might want to think “gasp” about buying investment properties.
You stole my metric!! I was in the process applying for a patent!!
I’ve shifted from inventory and days on market to watching the foreclosure data.
I’m just the amateur in the corner but I’ve been most interested in liquidity, investment health. I don’t believe the pain has come to fruition in that area yet. If there is a reduction in liquidity (and say interest rates go to 12% ) that would take prices below what would we now consider affordable at 6-7% rates.
So maybe a certain amount of time after the savings rate goes positive again?
The problem here is that reliable data is not ready available.
I’d say the foreclosure data is one of the measurable parameters.
First of all it’s available on the forclosure.com listing.
Second, since any housing bubble is local we may analize different ratios for areas where it’s near the bottom and compare them to the areas we are interested in. A good example would be the ratio between the new forclosures (let’s say: added in the last 9 days) and the total number listed. When it’s low it means not to many new properties are foreclosed, but it’s hard to get rid of existing ones - a good indication we are near the bottom. Take Chicagoland for example. Compare this ratio with one for San Diego or even Sacramento. You can see that it’s many times lower in Chicago. I think it indicates that San Diego has to go a looooong way down.
There are some other indicators I try to watch: the ratio of foreclosures to preforeclosures - IMO it indicates how difficult it is to “short”-sell home; ratio of foreclosures to bunkruptcies - indicates if it is still possible to save home by filing bunkrupcy(note, these are valid in California only, because laws are different in different states.)
I would appreciate any information on what else may be somehow interpreted.
Affordability. Not so much as an objective thing, but a normative thing. I’ve got my house. I’d like to think that 15 to 20 years from now my kids could get theirs.
Such long-term thinking is a novelty. I’d guess 90% of Americans who have profited from this boom haven’t thought about the consequences for their children if this boom were to continue like it has….
I’d guess 90% of Americans who have profited from this boom haven’t thought about the consequences for their children if this boom were to continue like it has
Oh yha, they did. THey figured ONLY THEY were smart enough and would be worth $1,000,000,000.00 by the time their 3 year old made it to 21! Just off flipping 2 or 3 houses a year for the next 18 years!
The bottom won’t be reached until inventory gets back to a normal 3-4 month supply. Until then, it’s a buyer’s market. Remember that inventory is a two-sided equation. I’m seeing signs that houses being put on the market are leveling off. But inventory keeps rising because of slower sales and more foreclosures. I think national inventory will hit 11 months early in the fourth quarter, mainly due to slower sales.
You mean “fool’s market”.
Simple - when housing becomes boring again. When nobody really cares what the neighbor sold her house for. When nobody visits this blog because there is nothing to really talk about.
So when the California thread gets less than 10 replies, or there is no California thread, that’s the time to buy.
My sentiments exactly.
Nobody thinks about Tulips as investments anymore, do they?
But I can’t wait 400 years to buy!
When home sales are positive for 6 months in a row. Of course you may have missed the bottom with this approach, but I doubt the price will have gone up much from the bottom.
Still waiting to see the top in some markets (LA, SF for example).
But as for the bottom, if we look what happened last time in the 1990s, we should expect to see prices dropping for a while, followed by a flat period lasting several years. That flat period is the nominal bottom, and of course the longer you wait during that interval, the closer you will be to hitting the real (inflation-adjusted) bottom.
And it’s not as though prices take off like a rocket immediately after the bottom ends - so I’d think waiting until the first year when prices actually start to increase again would be just about optimal. When will this be? I have no crystal ball but if this thing plays out like the previous bubble in the 1990s, the best buying opportunity should be sometime around 2013. If we go into a deep recession, it could be more like 2016.
When I go to an open house and find the Realtor on the kitchen floor asleep.
That’s already happening here in South Florida. We went to an open house the other day. When the Realtor® came to the door, it was clear that he had been snoozing. The crease marks on the side of his face and puffy eyes gave it away. My smartass wife even said, “I’m sorry; did we wake you?” The Realtor® pretended not to hear her comment.
We have probably been to 50 open houses in the past month. During all those visits, we’ve yet to see another visitor beside ourselves. There are a lot of lonely Realtors® out there.
Another trend we have seen lately is owners who, although signed with a Realtor®, hold their own open houses — often every single weekend day, week after week. This past weekend, half of the open houses we went to were being held by their owners, not the Realtors®.
All these people still have hope…it’s when all these properties are being auctioned on the CH steps and then the 2nd wave comes some months or the following year…and open houses are few and far between because they are such as waste of time. THEN you are looking at a bottom.
I went to an open house this Sunday and also startled the agent. She was a nice lady and I felt compelled to fill out a ticket and enter her drawing. I noticed as I dropped it in the large plastic jar that it was the only ticket. I looked at her and she sheepishly said “your the only one today so you’ll probably win”. Sho nuff I netted a $20 Target gift card. Interesting thing is that this house has been on the market for almost a year and no reduction. This is typical in my area (Northern Cal) for both new and exhisting homes. Prices are much stickier than I ever imagined even though very little sells.
“Prices are much stickier than I ever imagined…”
Frenzied gamblers staying at the table way too long.
Household debt will ensure this thing unwinds painfully slow.
Calling any kind of bottom at this point is ridiculous - even in the age of 24/7 news. Still, declaring things over before they’ve even begun seems to be in vogue nowadays.
It’s interesting that there are so many different responses. Although it fun to try and guess at a bottom, on a personal level the bottom is of little importance to me. Instead, the classic rent versus buy calculation will determine when it is time for me to quit renting and once again buy a home.
At the end of our current townhouse lease, my wife and I plan on renting a 3 or 4 bedroom SFH with a pool in a nice neighborhood (exactly the type of home we plan on eventually buying). Right now, there are plenty of these types of homes available for under $2,000/month, about half of what owning one will cost even after considering the income tax advantage. We’ll just continue to rent until following formula hits equilibrium: PITI + HOA - Tax Advantage = 120% x (rent cost + renters insurance).
I figure the extra 20% will cover things like equity accumulation, inflation, and the old Realtor® cliché, “pride in ownership.” If rents don’t go up or purchase costs don’t come down, then my wife and I are perfectly happy to continue renting forever.
350K is the historical (100 year) mean for a house that rents for $2,000/mo. Prices will likely fall below trend for a little while anyway.
“What is your favorite metric to identify a bottom to the crash?”
1) Home prices at 100-120 times rent on comparable homes
2) Home prices at less than 3 times occupants’ incomes (6 times for coastal CA)
3) Would-be buyers are either too cautious or unqualified to buy
4) Foreclosure rate has stopped increasing at an exponential rate
5) A recent recession has led households to factor in the risk of job loss concurrent with a real estate bust (i.e., the risk they will need to sell a home when they are underwater and/or declare BK) into their real estate purchase decisions
Regarding #4: Someone here showed a graph from CA in the last cycle that showed prices hitting bottom 2 years (or so) after foreclosures peaked.
So that’s my personal favorite: 2 years after a peak in foreclosures.
I agree with your reasoning. The question is will this happen in 07-08 or 12-13? (See ARM reset chart)
“07-08″
No way.
You’re being sarcastic, right, GS? You think homes that are priced over 5x annual household income in California are a good value? Lots of houses in 1990s in Orange County under 250k.
I meant the foreclosure peak which would put out actual recovery to ‘09-10, or ‘14-15.
“You think homes that are priced over 5x annual household income in California are a good value?”
Not sure I would go that far. I was rather referring to the historical statistics that I am familiar with (CA home prices historically on the range of 6X-9X incomes, though it got higher than 9X this time). I guess it is every individual’s decision whether it is worth dealing with bad traffic, gangs and high housing prices in exchange for the pleasures of California living.
See page 50 of the report linked at the top of this web page for the evidence I am citing (”Is There A Bubble In The Housing Market?” Karl E. Case and Robert J. Shiller
Brookings Papers on Economic Activity, September 5, 2003):
http://www.wellesley.edu/Economics/case/Research1-1.html
California’s not a monolith. I’m sure there little beach towns where 6x is not unheard of. But in the SFV? I think I’d move somewhere else rather than live in “homeowner poverty” next door to some porn studio.
The 6X is an aggregate. But it may not be as far off from homogeneity as you suggest — note that incomes are also higher in desirable coastal areas, offsetting the higher home price levels.
Generally speaking, as any California realtor will readily point out, prices are higher here because “everyone wants to live here.” This increases demand for houses relative to in, say, Fargo ND. But there also tends to be perpetual supply-side pressure in the labor market, which pushes down the equilibrium wage. Hence the (steady-state) equilibrium home price / wage level is higher in California than in, say, Fargo ND.
In other words, GS, for those who come to LA to break into the entertainment industry, fame is rated higher than fortune.
2 years is not a fixed period. It depends on a lot of factors. It may be 1 year or 5 years as well.
IMO You need foreclosures not only to peak but to stop selling. At the real bottom it will be almost impossible to sell a foreclosed property.
“What is your favorite metric to identify a bottom to the crash?”
When th MSM runs stories about banking & real estate professionals finding the therapeutic benefits of serving FB’s and their family’s at the church & gov’t food lines, while commenting on the thread count of the free blankets they hand out…
Pulte Homes sold for $5.00 a share during the last real estate recission. Selling at $25.00 today. That crash in PHM is a very good indicator of a bottom
Of course, $1 is worth a lot less today than it was then, and the money supply continues to grow.
Great topic idea!
I’m mostly concerned about affordability and opportunity cost. To that end, I’m watching the ratio of median home price and median household income. I’m waiting for it to dip to 3.5:1. Right now for Elk Grove ($400k to $77k), it’s at about 5.3:1, so we’ve still 50% away from reaching any sort of floor.
The other thing that I’m watching is rental prices. Right now, a $300k house rents for about $1250. Assuming 100% financing (I ignore any reduction from downpayment on the mortgage to account for maintenance, insurance, taxes, etc), at 5.75% the monthly payment is about $1750. 40% too high.
But here’s the killer: rates are going up! At 6.25%, the monthly payment is $1850. So just within the past week, prices now need to fall 48% for the monthly cost of home ownership to equal its rental income potential.
I’m weary of putting too much emphasis on inventory levels because real estate agents seem to play games with listings… but obviously that can tell you a lot of good information, assuming the data is accurate. But I still think that the market fundamentals provide the best vantage point for assessing the viability of a market–and when there’s excess supply, you only need to be concerned with those affecting the demand curve: affordability and opportunity cost.
“At 6.25%, the monthly payment is $1850. So just within the past week, prices now need to fall 48% for the monthly cost of home ownership to equal its rental income potential.”
Rising interest rates in a high price, low interest rate environment will be a valuation killer. That is why I expect l-t T-bond rates to be capped, or at least “stabilized,” for the foreseeable future. It the market were allowed to fully price in the inflation risk premium, the housing price correction would quickly morph from a controlled burn into a crown fire.
http://prfamerica.org/positions/LosAlamosFire.html
I moved to Los Alamos the year after the Cerro Grande fire. If the housing correction resembles that fire, we’re in for a world of hurt. I think you could make some good comparisons there: fire suppression could easily be the equivalent of too low interest rates for too long. Specuvestors and Equity Locusts with No-Doc Option-Arms are the 75-miles an hour wind gusts that get the fire to spread great distances in a short span of time.
Artificially suppressed interest rates coupled with deregulation gone wild also provide ideal growing conditions for highly-flammable underbrush (e.g. hedge funds).
And you left the Hill when?
Try to get 6.25% - your right they are going up. Most lenders are now at 6.75 with 0 points.
True. We qualify for “Extra Credit” teacher program from Cal HFA. Basically it consists of a mortgage revenue bond for downpayment assistance (3% or $15k, whichever highest) and a below-market rate. So I’m always forgetting that the rate that we’re looking at is usually .50-.75 below the normal rate.
Problem is, we’ll possibly be above the maximum income requirement by the time the market stabilizes–although that’s obviously a nice problem to have.
Too bad that housing valuations go down when interest rates go up. Buy now and catch yourself a falling knife.
As long as I can remember it’s been that way. You save but it doesn’t get you anything more. Either the prices are up or rates are up.
But if you buy when rates are up and prices are down, you have the option to refinance into a lower rate later on. Not so in the other case.
Also, the latter case is good if you’ve saved (money for) a large downpayment. Not so in the other case, because the valuations are too high and you therefore assume a high investment risk. Kind of scary for a careful saver.
“Great topic idea!” Thanks!!
I stayed up all night to make sure it didn’t end up buried in the bucket o’ bits. Yaawwnn, nappy time.
Seriously though, there’s lots of food for thought in the responses thus far. It would seem to me that the more educated we are as bears the more likely it is we’ll make a good decision in the long run, whether that means buy next year or rent ’til we die.
In my ignorant opinion, I will not buy until it’s cheaper to buy than rent. That’ll be my bottom… wait, that didn’t come out right.
“What is your favorite metric to identify a bottom to the crash?”
When 20% down payments are required again.
Correct. Capitulation is the only way to find the bottom.
The bottom will be reached when Pulte and KB Homes file for BK.
They build entry level homes, and they can still find 1st time homebuyers for 1200 sq ft homes of 4000 sq ft lots. When they can’t sell anymore of these, the bottom is here
Correct. Capitulation is the only way to find the bottom.
The bottom will be reached when Pulte and KB Homes file for BK.
They build entry level homes, and they can still find 1st time homebuyers for 1200 sq ft homes of 4000 sq ft lots. When they can’t sell anymore of these, the bottom is here
Half listed… they don’t have the pics up, and haven’t gotten it in MLS. But we’re getting there.
http://tinyurl.com/2d4lrf
$141 per sq feet and not even 2 baths! Who would pay a quarter of a million for that?
Not me!
$500 to replace the oversized master shower with a tub….. poof, 2 full baths.
Would I spend a quarter million for my house? No. But I hope to sell it for close to that.
“ASK US ABOUT OUR LOVE HOUSES”
This was at the bottom of your listing. You might want to re-think this with your agent.
Still has a ways to go.. This property should list for $209,000 MAX!
No, $150K max. Which is wht I plan to buy for a couple years from now… Which is why I’m selling.
As for the Love house thing… yeah… that is the realtor’s thing. I was a bit turned off when I saw the sign on the post.
So? Tell the agent to remove it from your listing, and/or go to an agency that doesn’t advertise houses of ill repute.
Jeez, you’d think they would listen to their customers, especially for the ridiculous percentage they get of the sale. I doubt most families are really looking for a “love house”
thanks for putting yourself out there and sharing your listing with us, Darrell. Keep us up to date on how it goes. I’d be interesting in hearing about the sales process from your perspective at this point in the market.
Fascinating article at http://www.cross-currents.net/charts.htm
“If there is a single salient truth about the U.S. stock market, it is that 2007 is a record setting year from almost every aspect. While there are a few rare exceptions that place either 1929 or 2000 in the spotlight instead, our overall impression is that the mania for stocks appears to be at least as emphatic now as it has ever been. We have repeatedly illustrated margin debt extremes and the historically low mutual fund cash-to-assets ratio as evidence, but the best picture of the continuing mania for stocks remains the sheer volume of trading. Not only is the volume of trading at a historic high, the velocity of transactions have exceeded the previous highs with such ease that one’s only choice is the assumption that a veritable mania is still in progress, and in fact, never really ended. Apparently, the collapse and bear market that endured from March 2000 to March 2003 was only a corrective phase to the greatest stock market mania of all time. ”
Pay particular attention to the charts.
The single greatest datum to me signalling trouble ahead is that Lenny Dykstra writes a column on thestreet.com and is apparently taken seriously on Wall Street, having brilliantly discovered that by buying deep-in-the-money calls you can get a lot of extra leverage. How an uneducated, party-mad former Philly infielder got here is beyond me - he’s the biggest joke on the Street since Jerry Rubin. It’s impossible to get serious about long-term investing until Dykstra is fished out of a gutter in the Bowery or South Philly.
Oh, Paul, you must go here
http://www.adamsoptions.blogspot.com
We have fun regularly there slicing and dicing Lenny’s plays. I’ve had an ongoing dialogue with another longtime friend who’s a RM writer just marveling at the stupidity of most of them.
Phillies OUTFIELDER! He played centerfield.
And now he’s gone off into left field.
paul, you made my morning!
Dykstra, with that big wad of chew spilling out of his mouth buying deep in the money calls…….f-ing classic
So long as Dykstra has the Fed’s liquidity blast at his backside, he will do great with those deep-in-the-money calls. (BTW, I think this guy getting into the financial journalism business will be viewed in retrospect as one of the many shoe-shine-boy moments of the 2007 stock market crash.)
Au contraire. He recommended a DITM call buy on Amgen the day before it blew up.
Cool!
Data point #2: GS sounding a little bit bullish!
Didn’t Txchick sya yesterday she was long?
Yes, and as always, I use stops which kicked in again. I don’t turn trades into investments.
Look up Lenny’s criminal record. You may find it interesting.
Every time they come close to getting it they have to add their bulls–t. “Buy now or be priced out forever by rising interest rates.” So now rising interest rates will be the cause to buy, not falling interest rates. I hate the MSM stooges. Anybody that pays attention to them deserves serious pain.
http://tinyurl.com/2qncxj
“‘Pop!’ Bubbles are great for America!
Recessions too! Even that $8 trillion market loss in 2000-2002!”
MarketWatch
http://tinyurl.com/2yo3kx
Great for insiders maybe. They get in first. make the most, then get out. The last in Joe Public gets left holding the bag and loses everything.
How long until Wall Street-ers realize that they need Joe Public to not be destitute to keep there economic machine going? These bubbles are transfering cash from the retirement plans of the public to the insiders, but they can’t last as the public runs out of cash to transfer. Then what are the insiders going to do?
Rule.
Not for long…they may rule…..a lot of John Q. Public that is destitute is also armed.
Yes, call out the National Guard….ooppps….they are not there….they are in Iraq.
Won’t be all that hard for the moneyed elite to buy the services of enough of the “also armed” destitute to control the rest.
I know that sounds tinfoilhat-ish, but there are scary historical precedents from every part of the World. Doesn’t have to be sudden. Just consider the gradual extension of the gated community. “Oath of Fealty”, by Niven and Pournelle, is quite a believable (and sympathetic) fictional treatment of the logical endpoint of this concept.
I agree with Crapburner. Mercenaries have no fealty, except to the $$, and even then they ultimately do a lousy job. Mercenaries are no match for a tight, fierce organized group of armed folks uniformly dedicated to an idea, even when the mercenaries outgun and outman that group.
Anyone heard of Blackwater… professional mercenary army for sale to the highest bidder. It also just happens that they recruit heavily from the U.S. Military. These guys are no joke.
Mercenaries are no match for a tight, fierce organized group of armed folks uniformly dedicated to an idea, even when the mercenaries outgun and outman that group.
You assume that the sheeple have what it takes to fight back.
Re Blackwater, they pay top dollar–courtesy of the US taxpayer–and they’ve been taking a lot of casualties, which are not reported as military casualties, since they are not officially military. That completely underreports the number of US “soldiers”–official and mercenary–killed and wounded.
Just another set of numbers from your gov’t that have been manipulated.
Mercenaries tend to do well against peasants and rioting laborers, and poorly against revolutionary armies.
Also, mercenaries have aquired a poor reputation because of the custom of impressing armies into service unwillingly. When Duke So-and-so sends his grunts to fight in another country for some esoteric royalty reason, you can imagine the grunts aren’t too gung ho about it.
When it comes down to it, the superrich can always flee somewhere friendlier (*cough* Dubai) and the government has tanks, planes, ICBMs … essentially it has YOU outmatched, even if you have illegal firearms.
Kalishnikovs may kill cops, but they aren’t going to take out the US Army when they come to put you down … sorry.
“the superrich can always flee somewhere friendlier”
You mean like a 30k acre ranch in Paraguay?
DC inventory just dropped like a rock, any ideas?
People pulling them off the market?
Actual sales?
Out right lies by the mls?
CNBC Dianna Olick (SP?) reported a few weeks ago that houses in the DC area were sellig big time. She had no idea why, except maybe, just maybe, us bubble belivers were wrong.
PHX inventory was jumping by 500-1000 a week. Hit 53,700 in the county a couple weeks ago. Now drifiting back down. 52,800 this morning.
My take? Calm before the storm. The media here has really shut down access to info. The local paper’s website no longer shows recent transactions. Info on May sales isn’t released yet. Zillow no longer shows sqft and other info. I’m not sure they are even getting all the recent transactions anymore, not to mention the effort to shut down Zillow eintirely for AZ.
First goes the truth.
“Zillow no longer shows sqft and other info”
This site used to show inventory levels, but 3 months ago stopped updating the graphs and 2 weeks ago stopped updating data:
http://virginiamls.com/
I live in a Rockville, MD which is a DC suburb and it is amazing. Houses in my neighborhood just off Montrose Road (North Farm) are getting three and four offers the first weekend they go on the market. The last house was under contract before the house even had an official open house and had five contracts. The final selling price was above the asking price by about 2%. I think in Maryland it all depends on where you live. Houses around $800,000 in areas with good schools and close to metro or DC will move quickly.
I also live in Rockville Maryland, in a nice neighborhood within walking distance of the new downtown. I have a different perception of the market here - we have neighbors (more than one) who have had “For Sale” signs on their lawns (now including the “Price Reduced” placard) since we moved in nine months ago. It does depend on where you live, but also on having a reasonable asking price, which do seem to be trending downward here. I also get unsolicted brochures for new housing developments in my mailbox every few days, all highlighting buyer incentives.
In contrast, I’ve been scoping out the Vienna/Oakton area, and there are plenty of houses that have been on the market 60-90 days.
Nothing is moving in Clarendon, and I mean nothing. Homes are sitting for months without any action.
I’m sure VA is getting hit harder than MD because NoVA was always the “cheaper” alternative (I put it in quotes b/c MD seemed like a better value, though WFC is nice).
However, Michael sounds like he’s trolling. I lived in Rockville. It’s not different there. If anything, it’s more of the same … bombed out downtown due in part to stupid urban renewal projects that backfired, then a downtown mixed use development, then the market goes ka-thunk.
King’s Farm area makes me sick. That place used to be a dairy farm, but the owner didn’t seek the services of a reputable attorney and so ended up giving the farm to the IRS instead of to his son. There’s something like one road in and one road out, so the unimagineably bad traffic in Rockville became even worse. I’m not kidding about unimagineable … my mind can’t contain how bad it was ***even when the development was new and only at 30% occupancy***.
Enjoying the periodic flooding?
DcBob,
Maybe there’s a rush to get a house and enroll the kids in the DC school system:
“Tests show that in reading and math, the District’s public school students score at the bottom among 11 major city school systems, even when poor children are compared only with other poor children.”
http://www.washingtonpost.com/wp-dyn/content/article/2007/06/09/AR2007060901415.html
Most people are under the impression that market crashes happen suddenly in one or two years. In fact, there is usually a slow decent with many localized troughs and peaks. Look at Dell stock between 2000 and 2004. Lots of peaks and valleys but a definate trendline down.
Exactly, Roger. The trend is our friend.
Yes, it is puzzling. A couple things come to mind.
1. Virginia MLS is not being kept current as of June 1. Why?
2. Houses are selling - at least through Feb & March. My impression was it was a lot of military transfer related sales.
3. The area. Some areas are dead. I think certain areas - the older money areas are still selling.
I think your point number 3 is a very good one. The one thing that amazed me about this area over the last few years is that a house in the worst location would fetch the same price as one in a better location. Example, house on busy street would get 600k and the house around the corner off the busy street would sell for 600k also. This is no longer the case. I think, assuming the 10% (at least) haircut that just happened, many homes in good locations have been selling. The lemons are still for sale.
I am also wondering if a house goes into foreclosure whether or not it is pulled off the mls?
I’ve this, too. In my little neighborhood of old houses in Arlington, the nice refurbished ones are selling (albeit not super-quickly), but the crap just sits there week after week with the grass getting longer. Desperation is when the grass on an unsold house reaches a foot tall. In our neighborhood, the county finally had to cut the grass on one vacant house and post a bill on the door, which is funny since I don’t think the owner even lives in this country.
In Ohio I don’t think grass grows taller than a foot. House next to my parents has been vacant two years. Finally posted the foreclosure on the door and sent people with sickles to hack the grass. It was still only 1 foot tall after two years.
“Out right lies by the mls?”
I would guess a sharp break in inventory is either due to lies or negligence in the MLS stats. I saw something similar in SD MLS stats recently — don’t recall the exact numbers, but there was a sudden drop from maybe 18,900 down to 18,600 or so, followed by a sudden increase to 19,000+ a couple of days later (currently-listed used SFRs+condos).
I would not put much confidence in day-to-day variation in inventory figures, any more than I would put high confidence in month-to-month or quarter-to-quarter variation in official govt stats (GDP, unemployment rate, CPI, etc). Even those in charge of preparing such official stats realize there is an intrinsically large confidence bound on one month’s figure — the signal is in the trend. Only financial journalists make hay over the noisy innovations in economic time series.
One word: “BRAC” - Base Realignment And Closure.
That’s bringing people to DC. But, we’re still completely in a bubble mentality. So, people are seeing BRAC and thinking, “It’s different here, buy now or be priced out forever.”
Employment in DC/NOVA is also high, with all the government contracting/lobbying, and support jobs.
I’m thinking though, this is a bit of a dead-cat bounce. Recall the stock market (the market mentality is similar from one market to the other in a bubble). Once prices dip at all, people think, “It’s never going to be this low again, I’ve gotta get in now.”
Well, in June 2002, the stock market was where it was in late 1997. Incomprehensible during 1997, 1998, 1999, 2000, 2001, and even 2002. Until it happened.
Bob: Typical listing is 90 days. House doesn’t sell, listing expires and is yanked from MLS.
Houses in my ‘hood that are competitively priced (10-15% below 2005 peak) are moving. Anything even slightly higher than that sits. In fact, neighbor has a clean, renovated century row house for sale - priced about 7% below the peak comparable price fetched in summer ‘05. Lots of lookers, no offers at all, six weeks on the market. It will sit and sit and sit…..
Try using http://www.melissadata.com, under lookups -> real estate sales by zip.
I know that housingtracker.net is off for my region (Hampton Roads / Norfolk / Virginia Beach / etc) becuase it uses realtor.com, and realtor.com doesn’t have access to the local mls…. however a good number of people list on there as well. But the numbers are actually higher for the region.
It looks like a computer glitch by on housingtracker.net. There is no way that inventory decreases by 21% in one week
The realtors say inventory increased 0.9% for SFH. It’s condo listings that are down.
http://www.gcaar.com/statistics/default.htm
Maybe they became repartments.
I noticed this week that two condo developments in Gainesville are “now leasing” and the sales signs are gone.
Either a vulture bulk-bought units at a discount, or they have completely capitulated. I know that some places which got in earlier had sold some units and were renting for the “owners” (loaners), but these particular places don’t show any sign of being anything other than corporate management.
The kicker is that both places were actually built AS rentals but tried to become condos last year. As a result, I know one of them basically passed up a year of rental revenue.
OOPS.
From Ben (the keeper of housingtracker.net):
For those interested in the Serin affair but don’t want to wade through the muck, Casey hightailed it to Australia.
What happened to our quarantine laws against importation of noxious flora/fauna.
His publisher has posted a message over at iamfacingforclosure.com Sounds like they’re going to milk this thing for as much as they can. Who would buy a book written by such a loser?
So, are they trying to avoid the U.S.’s law that you can’t profit from a crime that would make it super easy for the govt. to take any profits his book might generate?
Sounds about right. But no mention of Australia from the publisher. Maybe their playing dumb.
Sorry, they’re not their.
He’s the Paris Hilton of the bubble. Let’s not feed the beast.
On what possible basis was he granted a visa? Or did he arrive as a temporary tourist with the intention of “overstaying” his legal six month maximum?
Still sounds funny to me. Australia has an extradiction treaty with the US…I know he’s a dope, but why not head for Brazil?
I doubt if he had the cash for a plane ticket. Just more of his BS to keep people interested…
How screwed up is China?
http://www.reuters.com/article/environmentNews/idUSPEK14476720070612?feedType=RSS&rpc=22
Will the red chips implode before the air in China is completely unbreathable?
China is really screwed up, big time. My sis deals with clients involved in international manufacturing and she told me a year ago that the mood on the ground in China amongst the people is ugly, because the land, water, etc. in certain areas has been so fouled it is difficult to grown anything.
You’d think, with all the money China is supposed to be sitting on, they could put it into mitigation and innovation. But no. Life, apparently, is expendable. One thing I do give China props for, however, is the fact that they execute those involved in financial hi-jinks. For example, they would have executed Liareah if he’d worked for the Chinese equivalent of the NAR. That would have a sobering effect on the market here in the US.
China is spending ~$165B/yr on infrastructure (effectively 500B in the US/yr). GDP growth is running at 10.8% - China estimates that it will cost China 1-3% in GDP growth to repair environmental damage. So by China’s calculation that is another $100B or so/yr. China is adding an additional cost to repair of 16%/ yr so ~260B/yr is what China is spending or will have to spend on environmental restoration improvement by the year 2010.
Pollution is the smell of people making money.
The most recent figures from the Chinese government that I could find put the cost of pollution at 10% of GDP, not 1-3%.
Do you have a better source than this?
“China’s pollution problems cost the country more than US$200 billion a year, a top official said Monday as he called for better legal protection for grass roots groups so they can help the government clean up the environment.
Zhu Guangyao, deputy chief of the State Environmental Protection Agency, estimated that damage to China’s environment is costing the government roughly 10 percent of the country’s gross domestic product. China’s GDP for 2005 was US$2.26 trillion.
Despite government efforts, China’s environmental picture is not improving, but worsening, he said, and “allows for no optimism.”
http://www.chinadaily.com.cn/china/2006-06/05/content_609005.htm
They are screwed up big time, troubles solved here 70+ years ago are yet to be addressed there.
A family member is vacationing in China for a few weeks. She will be losing weigh! Doctor’s advice is not to eat ANY fruits or dairy products. They are still a 3rd world nation with little if any control over the food products. And they THINK they can export the stuff here? The pet food scandal will look like tiny potatoes!
“And they THINK they can export the stuff here? The pet food scandal will look like tiny potatoes!”
They already are huge exporters of food or “food products”–wheat, rice or soy gluten–used already in US breads, cookies, even twinkies. Vitamins, apple juice, seafood, soy products…the list is huge. FDA admits it checks less than 1% for safety. Google Chinese food exports…I avoid anything where country of origin and where it’s processed is not clearly indicated.
This could be a golden opportunity for grocery chains like whole foods and wild oats: food guaranteed to have no chinese components.
And ban Chinese food, @ Chinese restaurants…?
In colorado,
sorry, that game is already been played. Annheuser Busch among other corporate giants has pressured the FDa to lower the rating for “organic’ so their “Wild Hops” beer, can call itself organic. However, it is produced with pesticides and other contaminants. Google ‘organic” to see how the gov’t is making sure that Chinese imports flood our food shelves.
I’m not talking about the “organic” label, I’m talking about a “Chinese free” label. It doesn’t have to be organic.
People might not care where their DVD player was made, but many do care about what they stuff into their maw.
Sorry Colorado,
The trashing of the “organic” standards is the sort of the last bar. Everything from vitamins, apple juice, etc. that I mentioned is already processed or produced in China, and the big multinationals have long been sourcing food “components” from China. Just pick up a loaf of bread and see “wheat gluten”–where do you think it comes from?
I agree with Colorado.
“Chinese free” food is a big subject around the house these days. We are making a move away from processed foods in order to minimize the risk of non-disclosed Chinese components.
Chinese-free could actually be doable, if public pressure outweighs the big boys and their profit margins.
However, defining “organic” is impossible anyway, so it’s no wonder the scientists at the FDA have been trying to avoid it for years. They were finally pushed to it by the consumer, but because it’s an ill-defined concept with no scientific basis, it’s trivial for corporations to abuse the label.
I don’t dispute that there are some organic food purchasers and growers who have a definite idea of what is, and what isn’t, organic farming.
However, from a scientific point of view, there is no way to define organic farming. Organic is a cultural/religious term refering to the “vital substance” of food crops. Since science does not recognize this vital substance, but rather recognizes Nitrogen, Potassium, etc (grin), science really has nowhere to go with organic.
Almost all organic farming methods are contained within “conventional” farming methods, except the really stupid ones which allow dangerous molds to grow, etc.
Europe has been quite successful with their embargo of GMO foods (due to consumer fears). GMO is easy to define (until the stock starts cross-breeding, heh heh). Organic is not. You are never going to get scientists to define organic for you. You’re better off making like the Jews and creating a sort of kosher kabal for organic foods–random inspections, and the like–of course you’d have to pay for this, maybe with tithes at the first church of Rodale.
“You are never going to get scientists to define organic for you.”
Standards for organic food were established by the USDA in 2000. These were recently trashed by the current admin. under pressure from corporate power brokers, like Annhueser-Busch.
” Dec. 20, 2000 - Agriculture Secretary Dan Glickman today announced the final national standards for the production, handling, and processing of organically grown agricultural products.
“This is the strongest and most comprehensive organic standard in the world,” said Glickman. For consumers who want to buy organic foods, the standards ensure that they can be confident in knowing what they are buying. For farmers, these standards create clear guidelines on how to take advantage of the exploding demand for organic products. And for the organic industry, these standards provide an important marketing tool to help boost exports since trading partners will now deal with only one national standard rather than multiple state and private standards. I have said all along that we would create national organic standards that farmers, consumers and the organic industry will embrace, and I think we have done just that.”
Essentially, the new organic standard offers a national definition for the term “organic.” It details the methods, practices and substances that can be used in producing and handling organic crops and livestock, as well as processed products. It establishes clear organic labeling criteria, and specifically prohibits the use of genetic engineering methods, ionizing radiation, and sewage sludge for fertilization.
All agricultural products labeled organic must originate from farms or handling operations certified by a state or private agency accredited by USDA.”
http://www.usda.gov/news/releases/2000/12/0425.htm
CFC pulls another one out of their…hat before options expiration.
Countrywide May mortgage fundings rise 15%
By Steve Gelsi
NEW YORK (MarketWatch) — Countrywide Financial Corp. (CFC ) on Monday said May mortgage fundings rose 15% over the year-ago period to $44 billion. On a consolidated basis, Countrywide funded $2.3 billion in pay-option loans during the month as compared to $6.6 billion in May, 2006. “Countrywide generated robust residential mortgage production results for the month of May,” said David Sambol, President and Chief Operating Officer.
Huh?
When it comes to real estate, the questions on everyone’s lips are: How low is low, and when’s the perfect time to buy back in?
That moment has passed in Seattle and Charlotte–both metros hit bottom in the first quarter of 2006 and have since posted price gains of 12.3% and 6.3%, respectively, according to National Association of Realtors (NAR) data.
Ripe for investment? Philadelphia and New Orleans. Based on housing inventory and local economic conditions, both should hit price troughs by year’s end and bounce back with moderate gains around 4% in 2008.
Tampa is a perfect candidate for a V-shaped recovery, according to research from Moody’s Economy.com, an economic analysis, forecasting and credit risk firm. The local economy remains strong, and subprime lending is relatively low.
Like Tampa, Phoenix is similarly afflicted by high investor share (26.1%) and it has a vacancy rate over 3%. Good affordability rates and a surging job market suggest that once Phoenix bottoms out, price growth will be strong.
Yea dream on - 33% of mortgages in Seattle from 2004-2006 were subprime. I know of several folks who said there was no way they could buy a house in Seattle without a negative amortization loan. Now the median price is nearing 450K - soon no one will be able to buy no matter what mortgage program there is. And the inventory in Seattle is growing.
“Tampa is a perfect candidate for a V-shaped recovery”
It’s more a like a candidate for a B-shaped recovery. B as in Bomb. Because the building and developing just goes on and on and on. In SouthShore Tampa Bay, ANOTHER tomato field was just sold for development.
http://cnewspubs.com/realestate/modules/news/article.php?storyid=382
I wanna know WTF these people are smoking.
BTW, I set foot for the very first time in a Wal-Mart Super Center. I’m embarrassed to admit it, but I had to pick up an international moneygram payment. I went with a friend and we got separated and he had to call me on my cell phone to locate me.
“The differences between a V-shaped market (recovery) and a U-shaped one has to do with barriers to growth. High vacancy rates and high investor share can hurt a market, but if the local economy remains strong and housing stock affordable it’s only a matter of how long it takes to absorb the excess inventory.”
This guy claims that Philadelphia is “ripe for investment”. But his own condition of affordable housing stock sticks a fork in his own case.
There are currently three end units for sale in my TH community. That’s unheard of. They usually sell quickly, so you may see one on the market for a couple weeks or so and then POOF it’s gone. Three lingering on the market during peak selling season is a bad sign. I say the omens portend a U shape recovery, or maybe even an “L”.
You’re probably right (L instead of V or U), but I’m enjoying the current action which looks like a backslash.
Yea there is a new very big Walmart where I live. Was in there last week and I asked an associate how many miles to the pharmacy - she did’nt miss a beat - go right after that clothes rack, pharmacy is about a mile and on the left.
Maybe they’re eating tomacco.
Best. Episode. Ever.
I think a B shaped recovery is B as in “bubble burst”.
“Ripe for investment? Philadelphia and New Orleans. Based on housing inventory and local economic conditions, both should hit price troughs by year’s end and bounce back with moderate gains around 4% in 2008.”
what is he smoking????
How is it even possible to predict when inventory will burn off (and, therefore, a recovery will begin) when inventory is still growing, which it is doing in almost every (if not every) major city in Florida?
Tampa’s median home price has dropped about $40k since the peak. The notion that it will turn around next year and start to grow 10% a year is wishful thinking at best.
Small update on the Galveston real estate mania:
http://louminatti.blogspot.com/2007/06/galveston-housing-mania-vs-next.html
I don’t think the project will ever get off the ground. Or off the sand bar. They are too late in the cycle.
That is beyond insane. Who would insure it.
Nobody needs insurance so long as the conundrum (aka liquidity hurricane) flattens risk premiums on all assets close to zero. No risk premium = no need to insure, right?
RealtyTrac to revise formula…
http://www.nj.com/business/ledger/index.ssf?/base/business-6/1181623554270570.xml&coll=1
When RealtyTrac releases data on home foreclosures each month, media outlets across the country rush to print and broadcast the news.
But following complaints from a number of housing experts the Irvine, Calif.-based firm double- and triple-counts properties as they move through various stages of the foreclosure process, RealtyTrac said it plans to change the way it crunches the widely followed data.
Fire up the ENIGMA, we gotta new code.
That was a first laugh for me in awhile!
Beazer just sent out a mass e-mail to those on their mailing list in the presumably bulletproof triangle area of NC. While lower end homes (under 300K) will likely stand the test of the housing bubble considering there really is a great deal of influx, the upper end homes of Cary priced at 700K and 800K-1M homes in Hillsborough are really going to get a major reality check in the coming months.
Paul Kasriel on housing:
http://www.safehaven.com/article-7747.htm
Look at Chart 5, total deposits divided by total debt. It shows starkly that the culture of this country changed in the early 1980s.
“It shows starkly that the culture of this country changed in the early 1980s.”
‘Greed is good.’ Thank you Ronald Raygun, Ivan Boesky and Michael Milkin, for changing our country’s value system.
Ask not what you can do for your country, but what you can to enrich yourself.
Call our era…
“The Guilted Cage”
GS, your names list is a little short (C. Keating instantly comes to mind)…good topic…A HBB fake 500 Forbes listing showing all the “professionals” who took the money and ran… and the actual “hard time” they paid for their crime over the last 25 years.
Of course, the Tin-foil-Hat crowd will lament that… the invisible criminals have left the party before the indictments arrived.
You’re wrong on your accusations. Especially whacky considering virtually no-on under 30 even knows who Boesky and Milkin are and yet you credit them with changing the value system. Try fiat currency. Reserve currency = no conspicuous consumption. FIAT currency = unabounded Govt spending and ever growing liquidity. Here’s a better attempt at the blame game. 1) FDR eliminating most of the reserve standard 2) Nixon eliminating standard for foreign debt 3) Greenspan recognizing the path paved by 1 and 2 and turning the spigots on 4) humanities natural predisposition to greed and consumption.
Right on, wtlf555!
WT Econ:
But, I wonder what is meant (in Chart 5) by “household deposits.” If it doesn’t count securities purchases, you could just be looking at a picture where people who had previously had a lot of money in banks began to have a lot of it in stock funds, bond funds, etc etc. I’m not making an argument, just asking a question, related to recent concurrences here that the “negative savings rate” can be a bit misleading.
Per Bloomberg, the bubble is alive in Canada, and it isn’t a good thing: http://www.bloomberg.com/apps/news?pid=20601109&sid=aVV8yILfplPw&refer=home.
It’s hard to think of another category of good or service that people celebrate when it rises in cost relative to income, even if they do not benefit directly (ie. they already own a house and just live there). Over on Brownstoner, during a thread on housing prices, some wondered why I, as a homeowner, would root for prices to come down. Why not?
We could have another 10 arenas and still fill those facilities,” Bjornson said.
OK, if there is such high demand for hockey rinks, whay aren’t entrepreneurs building them in Alberta? Or is this a case of an “entitlement” society that expects the taxpayer to foot the bill? There is no shortage of indoor soccer fields and ice rinks in my neckof the woods, but you have to pay to play.
Bloomberg Radio in the morning was giving a story on how to get rid of the excess inventory of unsold homes….sell them to illegals that are here was their studied analysis.
The story concluded then and there. Did not say what the lettuce picker was going to get the 500K to buy a Craptacular Mansion….
…maybe five families to a box……
Maybe that is why Jorge Arbusto, The Swimmer and McKainiac has this compassionate longing to get as many illegals here?
“sell them to illegals that are here was their studied analysis.”
When I see all the building still taking place around here, this is exactly what comes to mind. Believe it or not, many illegals probably actually have downpayment money saved. I guess that’s the real job Americans won’t do, save for a downpayment, LMAO!
“the real job Americans won’t do, save for a downpayment”
Easier to do without paying taxes, getting cash under the table and pairing that undeclared income with government handouts, and special programs.
Bet you could do pretty well playing that game too.
TESTIFY, spike, that’s exactly how it is done.
I guess it’s time for me to defend illegal aliens again. They DO pay taxes: If an employer will pay a legal wage with actual taxes withheld at, say, $10 an hour, and the illegal will take $9 cash under the table, that’s a defacto tax. Theoretically the employer will pay more taxes on his higher profit, but lets get real, he’s probably a crook, too. Illegal aliens work hard, they bust their asses off, but that’s not the point. They lower the quality of life in places where they settle en masse, like Southern California, they crowd the schools, roads, public parks, hospitals, etc. Hey, if the government wants to spend a gajillion dollars building more infrastructure, including hiring enough teachers to get class sizes down to, like, 8 students a class so these multigenerational illiterates can actually learn to READ, in ENGLISH, then go for it, give amnesty to all of them.
Why do you insist on defending people who are here to depress wages, increase crime, swamp our schools, use our hospitals without paying?
They are just committing the crimes Americans won’t commit.
Colorado,
Illegals posting on this blog, what else.
People ought, in principle, have the right to vote with their feet. Why are we defending corporate greed?
Illegals would not be here if companies did not give them jobs. And they would not have jobs if all industries–including agriculture–had to pay a living wage, and if OSHA rules were enforced and all workers had the right to unionize. This little game of having the INS deport your workers when they complain is what made “illegal” labor so appealing in the first place. If it weren’t illegal, it wouldn’t offer any advantage!
As for public services, blame the hospitals if they can’t make revenue, since they were able to pay their bills before medical insurance/medicare/medicaid. They had a different “business model” back then, one that actually worked. Actually it’s the whole industry that’s broken, so let’s not leave anyone out. Private insurers, the AMA, and medical equipment manufacturers all deserve a nice heaping of blame here.
Contrary to popular belief, food stamps and other food aid form a very small percentage of government outlays and will not be bankrupting us now or ever. No less a conservative than Herbert Hoover was a huge fan of feeding children–to ward off Bolshevism, natch.
Social security just might bankrupt us, but good luck collecting without proper papers.
One of the many reasons…continuing wage repression, an army of cheap, biddable labor, a chance to further gut OSHA regs., devaluing US citizenship while eroding Constitutional protections by flooding us with folks used to no legal protections, destabilizing neighborhoods and entrenched voting blocks.. I do this this housing debacle and the credit game are closely intertwined with a larger game plan.
“this housing debacle and the credit game are closely intertwined with a larger game plan.”
Exactly. Collapse the US like the Soviet Union was collapsed.
A pun I have heard regarding the destabilization via mass illegal immigration: The government has chosen to dissolve the people and elect a new people to take their placec
“sell them to illegals”
Too late, that’s who’s been buying the last two years. Add anyone with a TIN to the list of those who can get a mortgage.
Subprime lending is alive and well in the corporate finance world. One thing is for certain: When conservative and backward-looking WSJ writers are openly conjecturing about “when the credit cycle might turn,” a credit crunch is in the bag. I guess we can all hope and pray that “the market” keeps a lid on long-term T-bond yields?
For Troubled Firms, A Flood of Big Loans
By Bernard Wysocki Jr.
Word Count: 2,085 | Companies Featured in This Article: Bally Total Fitness, J.P. Morgan Chase
Bally Total Fitness Holding Corp., a Chicago health-club operator, is deep in debt and has periodically been considered a candidate for bankruptcy.
That didn’t prevent Bally from borrowing $284 million last October. A unit of J.P. Morgan Chase & Co. arranged the loan, with investment banks and a hedge fund participating.
“I’ll never forget being in a board meeting and saying to our investment bankers: ‘How on God’s earth was this so easy?’ says Steven Rogers, a finance professor at Northwestern University who was then a Bally director. “They said: ‘There’s a lot of money out there.’ ”
…
How and when the credit cycle might turn isn’t known. But nearly all economists believe that interest rates will eventually rise for loans on risky assets. Lenders will become more cautious and the result will be tighter credit, possibly even a so-called credit crunch. Some interest rates have risen lately, with yields on long-term Treasurys moving above 5%.
http://online.wsj.com/article/SB118161526044432160-search.html?KEYWORDS=rescue+finance&COLLECTION=wsjie/6month
Speaking of so-called credit crunches, the 30yr T-bond yield has breached the psychologically-important 5.25% level (gulp!)…
http://tinyurl.com/3b4zsz
Finance professor … director of a near-bankrupt company … hmmmmm …
My youthful suspicions begin to pan out …
“She and other brokers report that a domino effect is building: Each buyer puts down an offer contingent on the sale of his or her own home.”
http://www.jsonline.com/story/index.aspx?id=617753
Does anyone know of a site where I can get historical data on the national median home price? Going back 25+ years.
http://www.ofheo.gov
How accurate are thos OFHEO 3’s though? Are those #’s based on their skewed formula that they used to try and say that home prices are up 4.3% just a few days ago?
check out the Schiller graph:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Here’s another chart I like, don’t know if anyone’s posted before…
http://www.smugmug.com/photos/136440158-O.png
That’s a mortgage reset chart not a median home price chart.
It became our new favorite sometime in March, displacing Shiller. We’re always happy to see it though.
Maybe there is no 5.25% PPT cap on the 30yr T-bond yield after all? Sadly, another one of my tinfoil hat hypotheses seems to be falling to the wayside.
http://www.marketwatch.com/tools/marketsummary/
What’s up with the headline stock market indexes today? I thought the river of money that was flowing into housing the past several years had been diverted into making sure the stock market always goes up? There appears to be some kind of temporary malfunction in the locks that control those money flows…
20 dma on the indices is now resistance, was support.
This is nice. Note the comments about mark to market, my rationale for wanting to have some long dated puts in the brokers.
http://www.minyanville.com/articles/Credit-Default-Swaps-Volatility-Hoofy/index/a/13090
Worth a thought. There’s certainly a lot of wiggle room in marking-to-market, no matter what FASB rules are, and it stands to reason that the less liquid and the more derivativized the securities, the greater leeway. Also, no tax incentive to mark low, since losses can’t be used to offset until taken.
Can somebody explain or perhaps provide a link on the relationship between t-bills and mortgage rates? I’m trying to understand the relationship but all the sites I find just tell me that mortgages respond to the ten year t-bill.
All interest rates are related, and break down into two components: time to maturity and risk of default. Set U.S. Treasury securities as base risk premium and set up yield curve (yield plotted vs. time) for Treasuries. Every other security - government agency securities, investment-grade corporate bonds, “junk” bonds, prime mortgages, sub-prime mortgages, etc. - have their own yield curve, which should be related to but higher than Treasuries for same expiration (although I have seen high-rated corporate bonds actually trade “through” Treasuries when supply gets tight).
Adjustable-rate mortgages are going to tend to trade as a spread off of short-dated (e.g., one-year) Treasuries. Fixed-rate mortgages should trade more or less as a spread off equivalent-dated Treasuries.
Currently. 30-year Treasury 5.3%; 30-year mortgage for qualified buyers approx. 6.9%.
BTW, Treasury securities under one-year: “bills”; 1-10 years: “notes”; longer than 10 years: “bonds”. All the same issuer - U.S. Treasury.
http://calculatedrisk.blogspot.com/2007/06/mortgage-rates-30-year-fixed-vs-ten.html
When a bank decides whether or not to offer a mortgage, they’re looking at their return on a safer investment, such as a 10 year T-Bill. If a T-Bill is only yielding 4%, then they’re enjoying sufficient return by offering you a mortgage rate of 5%. But if rates jump to 5%, then they need to make at least 6% in order to justify the higher risk of default from a single borrower as compared to the US government.
so what you are saying is that in any given year, mortage holders in aggregate are 1% more likely to default than the US Government?
Calculated Risk happens to have a plot up today of the close relationship between 10 year treasuries and 30 year fixed mortgage rates. Adjustable loans are generally expressly based on a shorter commercial rate such as LIBOR.
“…close relationship between 10 year treasuries and 30 year fixed mortgage rates.”
Correlation = 100%, approximately. Good thing almost nobody in California can afford to buy a home w/ a 30-year fixed, or we might be in trouble…
thanks
Speaking of 100% correlation, it is mighty hard to diversify across U.S. stocks when the DJIA, S&P 500 and NASDAQ move in lockstep like the Blue Angels…
Keep an eye on TOL and RYL as they should be testing major support levels today/tommorrow of 27 and 41 respectively.
Are these upside or downside support levels? (Because I recall recently reading that the builders would be in recovery mode by year-end 2007…)
Support (impediment to going down) not resistance (impediment to going up).
TOL went down to 27 even and bounced off. I thought with the big move in TNX it would break through. Those HBs are tough!
Housing a burden for many
In Maine, nearly one out of every eight households — either owners or renters — is “severely burdened” with more than half of pretax income going toward mortgage payments or rent, the “State of the Nation’s Housing 2007″ report found.
In the last year home prices have begun to level off, reflecting a rising number of houses on the market. But prices have remained remarkably resilient, especially considering that they rose fairly consistently from the mid-1990s to the middle of this decade.
Even recent hikes in interest rates and more-stringent lending standards — a byproduct of abuses in the subprime lending market — aren’t having a huge effect on home prices.
In the Portland-South Portland-Biddeford metropolitan area, median home prices have continued to rise over the last three years, going from $224,800 in 2004 to $243,800 last year, the report said. That rate of increase did level off during 2006, although the median price declined modestly from $245,700 in the final three months of 2005 to $245,200 in the fourth quarter of 2006.
During a time in which all indicators would suggest much more significant price declines, it’s a phenomenon known as “sticky prices,” Retsinas said.
If you’re looking for reassurance that the situation is an aberration that will end soon, Retsinas suggests you talk to someone else. There’s no indication that rents have peaked, he said, and those sticky prices seem likely to hold longer.
“We don’t see it easing,” he said. “We’re seeing home prices at a much higher percentage of income, and we really haven’t seen precipitous price declines.”
http://business.mainetoday.com/story.php?id=113077&ac=PHbiz
Bernanke conundrum: Tighten the reins to convince markets the Fed is serious about containing inflationary pressures, or let the l-t T-bond yields continue correcting to the upside. (I still think it would be prudent to cap those pesky inflation risk premiums on 10yr- and 30yr- T bonds, as it sends a signal to the markets that now is a good time to buy stocks and houses…)
———————————————————————————-
IRWIN KELLNER
The impossible dream
Commentary: Why the Fed could raise rates as early as this month
By Dr. Irwin Kellner, MarketWatch
Last Update: 9:49 AM ET Jun 12, 2007
http://www.marketwatch.com/news/story/why-fed-could-raise-rates/story.aspx?guid=%7B81E84356%2DE386%2D4430%2DA82A%2DE2126E34188E%7D
Raising rates is badly needed medicine, IMHO. Every day the rates are not raised, the patient is sicker and closer to death. Could the medicine come too late?
Another metaphor for Dr. Bernanke’s conundrum:
- Let the patient suffer untreated, and the disease may kill him.
- Administer medication, and the medicine may prove worse than the disease.
real meds would come in the form of mid month, whats the word….SUPRISE!! tightening….. too much to ask for?
You may as well hope for helicopter drops. I think the Fed has deer-in-the-headlights syndrome.
Here’s a clear message for the “do nothing” Fed:
“‘Do the Volcker’ and drain the liquidity cesspool!”
[I should add - before we all drown...]
http://www.youtube.com/watch?v=jYqDS9i8zJw&mode=related&search=
LOL!
TC- That guy in the video is named Tom Vu from, you guessed it, Orlando, fl. That video is from the 1980’s he ended up in jail for fraud. He defrauded 1000’s of his students promising them he would back theor deals financially if they brought them to him. He basically took theor money and his scam was seminars and not real estate. Low life crook from being a bus boy. Imagine that!
LMAO, dime. I remember that. We used to make fun of it. “You makka munni in weaw estate”.
FYI- From my own research, Tom Vu was never in jail and never convicted of fraud. As he delivered seminars as promised, that was not a scam either.
That water fall is a feng shui thing. Supposed to bring prosperity if placed in the front yard. Just read that in a book today at Barnes & Noble. Guess it can also bring jailtime.
Got Money?
“Economists are guessing milk prices will be up 80 percent this summer. It’s already as expensive as what we’re paying for a gallon of gas. And much as rising oil prices are felt in other parts of the economy, so too will be the higher cost of milk.
Marketplace’s Jill Barshay now on why it’s suddenly getting so expensive.
Jill Barshay: Every year for the last 15 years, Americans drank less milk.
Bill Herndon is a dairy economist at Mississippi State University. He says we’re drinking more milk now — a lot more.
Bill Herndon: The market is really in a new era.
Herndon says Americans drank 1.4 percent more milk during the first three months this year, compared to the same period last year. In China, India and Latin America, people are enjoying more dairy delicacies, like ice cream and butter.
Fast-food restaurants all over the world are serving milk with their kiddie meals. And food companies are using much more dried whey. It’s a by-product of cheese making, used in all sorts of beverages.
Herndon: These high energy drinks, you know like Red Bull, that’s what goes in those energy drinks.
Herndon says all this demand is driving the price of milk way up. American farmers are getting 50 percent more for their milk than a year ago.
American shoppers are feeling the pinch as well. The average supermarket price for a gallon of whole milk was $3.38 in May. That’s up 18 cents since December. Some dairy experts say milk could go as high as $4.50 a gallon. …”
market place
http://tinyurl.com/2q7c8r
and from SA
“South African dairy producers say the price of milk products will rise, but not too dramatically, as the national shortage is likely to be felt until the end of the year.
The shortage is being fuelled by local economics and a global shortage of diary products which has pushed the price of imported milk through the roof, say producers….”
IOL
http://tinyurl.com/227u54
It is only going to get worse. A basic food source for most americans is now becoming a luxury food group. It is sad that it is cheaper to drink soda than milk.
That the government screws around with money is one thing, but to screw around with food for dubious reasons is stupidity at its finest.
and even China is banning the conversion of corn to ethanol
“The country would approve no projects designed to produce ethanol fuel with food from now on, an official of the National Development and Reform Commission (NDRC) told a seminar on China’s fuel ethanol development held in Beijing on Saturday.”
China Daily June 11
food prices are going up because of ethanol- corn is the basic cow feed and ethanol demand has doubled the price of corn- ethanol get federal subsidies so higher food prices are the unintended consequences of govt policy…
Brad, the reason milk is going up is that every gallon produced in the US is being bid for by China. On the 15th of the month I will get my mailbox check for Mays milk. In May, my April check was $16.51/100 - I think this months check will be a lot higher.
From a food perspective, almost every food has milk/milk by products in it. The pass through of the increase in prices is not in the market yet. In November the pass through will show up. It will not be easy for most Americans to purchase groceries next winter.
Another wonder of globalization. I expect that dairy farmers will try to increase production, but that will take time (you don’t build cows on an assembly line).
And the cost of feed will remain a major factor. Of course cows don’t have to eat corn, but if demand shifts from corn to other types of feed then we can expect other forms of feed to become more expensive.
Say buh bye to $2.00 gallon milk. It was nice knowing you.
It will not be easy for most Americans to purchase groceries next winter.
Maybe the silver lining is that we won’t be as obese as we have been.
Most likely it will come out of other expenditures.
Not to worry, Hoz, as the Bernanke Fed has assured us that they will contain inflationary pressures.
I thought Chinese were lactose intolerant.
Not all of them. I’ve read that the market for diary products is indeed growing in China.
And then there is India and other emerging Asian economies.
We are going to have to change our dietary habits.
Higher food prices? better adjust the CPI calcs…. Inflations contained. FED says so.
That’s right. Just don’t include food, housing, energy and healthcare, then everything is hunky dory! Plasma TV’s for everyone!
I saw yesterday that the foreclosed house that was discussed here before the auction in SD a few weeks ago has had its latest flip finished. This is the one on Morning Creek Dr. The For Sale sign went up a couple of days after the auction, and the flipper has been repainting inside, putting in sod, replacing appliances, and building some shelves along a wall in the garage. Just some minimal superficial stuff that didn’t look like it addressed any of the bigger problems. For example, the fence is still leaning in by 2 feet and I didn’t see any work on the roof.
This little flipper thinks he is going to get just $10-20K less for the house than its record selling price of $685K in 2004 in a neighborhood where nothing is selling. Current wishing price is $669-679K for a ~1700sq ft 20+ year old house.
My family’s from NW Colo where it can be really cold in the winter (subzero is common), and lots of folks sell their houses there when they retire and move to the area around Grand Junction, where it’s warmer. Very common trend, so much so that the transplants have annual get-togethers.
Now everything’s so expensive nobody can afford to relocate. Development prices for any size plot of land, no matter how far out or how desolate or how depressingly barren (lots of adobe soil) - ridiculously expensive, as well as houses. Was talking to a saleman at the RV place there and he said prices won’t come down on housing because of the oil boom. I still maintain that the average oil industry worker can’t afford these prices either (and most are rednecks with little interest in a house, their jobs require mobility, and they spend their money on meth, a real problem as their jobs are so demanding - High Country News did a big series on this recently). It’s interesting how the RE boondoggle has affected sociological trends and people’s lives -unforeseen consequences.
I lived in Wyoming for 5 years while going to school. Big time right on the meth problem with the oil workers. Those guys pull major hours doing some pretty hard work, so they need the “pick me up.” Too bad they are working with some pretty dangerous equipment if you aren’t looking.
Anyway, where do you find 19 year old kids just out of high school making $50k min? When I was that age, I was much smarter than I am now. I’m willing to bet that they are getting alot of interesting loans to pay a bunch for a regular house. You know, oil will never go down like it did in the 80’s. It is different now.
Too bad they are throwing everything they have at some Wyoming fields. Probably wipe out all the oil within 10-years. There goes the towns that are totally dependent on that industry for income (much like Medicine Bow when the uranium mines shut down.). People would probably cry if they saw that nice high school building sitting there unused.
This is hysterical. A stripper buys ten homes with no money down, loses them all to foreclosure, sees her credit ruined, then complains that she got screwed. Babe, considering your line of work, you should *know* when you’re being effed.
Excerpted from the Minneapolis Star Tribune:
She was 22 and tired of exotic dancing for a living. So Irene Thomas bet her future on real estate, hoping that becoming a landlord would be her first step toward exiting the stage.
With the help of Universal Mortgage Inc., a brokerage company in Brooklyn Park, Thomas signed the papers to buy a house early last year. And she kept signing. And signing. In 90 days, with none of her money down, Thomas had $2.4 million in debt and 10 houses in her name, most in north Minneapolis. Nine belonged to officials of Universal, the same company that handled the transactions for her.
Less than 18 months later, Thomas was losing every property to foreclosure after the monthly payments weren’t made. Her credit ruined, she now says she was duped by a group of real estate insiders who sold houses at inflated prices.
Nine mortgages processed by Universal and signed by Thomas incorrectly indicated that Thomas would live in the homes. In other cases, documents for two other Universal clients, both unemployed, stated they held jobs.
“All along I feel like they were just screwing me over and they knew what they were doing,” Thomas said.
http://www.startribune.com/462/story/1236301.html
This is yet another sad tale which illustrates why financially-stable middle income families would best sit on their hands and rent until the crazy loans (and the investers who used them to purchase multiple SFRs) are a footnote in U.S. financial history. Otherwise, you might find yourself overpaying for a home thanks to the need to outbid a stripper who has nothing to lose.
She’ll be ok…
Have you ever seen anybody slip a check between a strippers g string and body?
One of the few “cash” businesses left~
As they say, “You never know where your money has been before it lands in your wallet.”
Sounds like a co-conspiritor trying to play the part of victim to avoid serious jail time that she has coming. She signed saying she’d live in the places = mortgage fraud = jail time!
Trying to price a Boston relocation in case I get any nibbles on my job search - While a search of Boston apartments proper makes apartment prices look silly, I was thinking the crowd here might know where the best deals outside the city proper or on the fringes might be? Spent my college years there but I’m sure its changed in 9 years or so.
i don’t know about buying, but rents are nice in: Quincy, Braintree, East Boston (if you don’t mind airplane noise), Somerville (though not near Tufts), Malden, Medford, and Everett.
U.S. Mortgage Foreclosure Filings Rise 90% in May
June 12 (Bloomberg) — U.S. foreclosure filings surged 90 percent in May as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.
There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio, the Irvine, California-based seller of foreclosure data said in a report today. The median price for a U.S. home slid 1.8 percent the first three months of 2007 as the housing slump entered its second year, according to the National Association of Realtors.
A jump in foreclosures at a time of year that traditionally is the busiest for home sales means slide in prices probably isn’t over, said James Saccacio, chief executive officer of RealtyTrac. Typically, more than half of all home sales occur in the April to June period, according to Freddie Mac, the No. 2 mortgage buyer.
“Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year,” Saccacio said in the report. That will add “to the downward pressure on home prices in many areas.”
To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net .
The reported 90% increase is YOY. Designer foreclosures are the new black.
http://www.bloomberg.com/apps/news?pid=20601087&sid=av3bqU7edFDs&refer=home
It sure is good to see Nevada pulling ahead as the new foreclosure king. Almost twice per capita as Colorado.
I just thought of an equation which pretty much explains the present state of the U.S. housing market.
Deregulation gone wild +
excess liquidity looking for a “home” +
elimination of lending standards +
push to make every American a home owner +
investers trying to cash in on mania inflation +
builders trying to cash in on mania prices +
rampant and uncontrolled appraisal fraud = FINANCIAL DISASTER.
GetStucco
Might I respectfully add:
Stagnant real income +
liquidity leaving “home” (ie. HELOC’s) +
It’s hard to recall all the reasons for a real estate crash during one quick post. There are just too many of them for my little brain to spit them all out at once.
Add+
Couples 55+ who want to sell & buy a Bigger home +
Couples with one or two childs who must have a 5 bdrm/ 3.5 bath /3 car +
= the future of America!
Help me out here… Regarding LA, I keep running into people whao say the following to justify the high prices here:
say what you will about all of LA’s problems, but it’s become a world city like london, nyc, tokyo, etc..,
Anyone got links to quotes from the peak of the last LA boom saying the same thing? Or any factual rebuttal? TIA
Yeah world city. Half the population are illegals and the other half are tattooed skinheads. My kinda town.
I think I have said this before, the only thing metro LA has going for it is Disneyland.
Yeah. Just listen to “I Love LA”, the popular song by (oh jeez, I think Randy Newman who sang “Short People”).
Actually, I love LA too. Also I love Manhattan, I love Phoenix, I love San Diego, I love San Francisco, I love Seattle…
Just say … yeah… a world city like Mubai, Sao Paulo, Lagos, Buenos Aires, Karachi, Dhaka, Moscow… oh, wait… the average house in those cities ISN’T going for $500k US?????
5.23% ten year note! Snagged that one! Fine for me. Guaranteed 5.23% certainly beats a 4.6% yielding BAC (and far better than a negative 5% valuation per year on a house)! Millions of others agree, thus investors are selling some stocks and buying up Long Term treasuries! Now I wonder if my Vanguard Prime Money Market fund will increase it’s yield?
Yes and pretty soon the money markets will be paying over 6% with US T bonds paying over 6%, when US T-bonds get up to 8+% yield - then I might consider buying. I don’t ride real estate down, I don’t ride stocks down and I don’t ride bonds down. There are many low risk investment opportunities, why gamble with a US T Bond?
Some Senators are trying to kick the T-bond market correction into overdrive. What makes them think the Chinese will want to fund our current account deficit if we try to kick them into revaluing the yuan to a higher level? Such a currency move would cause the value of their $US-denominated bonds to tank.
————————————————————————-
Bad cop takes center stage in yuan dispute
Congress likely to pass anti-China trade bill, experts say
By Greg Robb, MarketWatch
Last Update: 5:12 PM ET Jun 12, 2007
WASHINGTON (MarketWatch) — The U.S. Treasury Department and Congress have engaged in a good cop/bad cop routine with China on its currency in recent years. On Wednesday, the bad cop is expected to take the upper hand.
Treasury, like a good cop, has pleaded for cooperation and dialogue to get China to allow its yuan to strengthen against the dollar. At the same time, Congress, or the bad cop, would issue dark warnings about the consequences from lack of cooperation.
http://www.marketwatch.com/news/story/bad-cop-expected-beat-good/story.aspx?guid=%7BD7B49887%2D6E91%2D4AB1%2D8805%2D7010FE800BFA%7D
Hmmm. I rode stocks down in 1987 and in 2000 to 2002 in my mutual funds. It did a world of good to me since I bought more shares at lower NAVs. And my basis is pretty low.
Yield on the MM fund (I own it too) changes every day based on replacement of securities, mostly 60-90-day paper: certificates of deposit, bankers’ acceptances, and commercial paper (short-term corporate IOUs, typically rolled over a week or so at a time).
For 20 years (the 60s into the early 80s) there was a name nickname for bonds: fixed-income securities designed to go down in price. We’ve had a 20-25 hiatus from that moniker. But I think it will be resurrected in my lifetime.
OK, TS has HTF at my house.
I just got the notice of default in the mailbox yesterday, addressed to my landlord. From the amount due, I’d say he’s about 5 months late on the mortgage. How long do you guys think I have before the bank comes knocking at my door with the Sheriff in tow? Any advice on what I should do next? BTW, I live in San Jose, CA.
Get an attrny to get your deposit back, get out asap - from what I understand, it takes about 6 months before they can start foreclosure in earnest.
6 months from the first default, or 6 months from the notice of default?
OK, TS has HTF at my house.
I just got the notice of default in the mailbox yesterday, addressed to my landlord. From the amount due, I’d say he’s about 5 months late on the mortgage. How long do you guys think I have before the bank comes knocking at my door with the Sheriff in tow? Any advice on what I should do next? BTW, I live in San Jose, CA
i am so envious you got your LL’s the letter before my LL got
his letter. do you want to move? stop paying rent, right?
SIGN OF THE TIMES: Seen on the side of Roswell Road in Atlanta, a handwritten sign “Bid on my Luxury Home” and a phone # to call. LOL.