Bits Bucket And Craigslist Finds For June 14, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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First!! How about that stock market. PPT boys were working overtime yesterday,
Headline PPI isn’t going to help a lot, but I suppose all the MSM focus will be on the core figure.
Higher PPI inflation, lower l-t T-bond yields. Go figure…
http://www.marketwatch.com/quotes/?sid=11421
with 5.25% for the 10-year bond an important number, I don’t think it is any surprise if we get a least a decent pullback.
If it was about inflation the yield would be pushing north of 9%. Like I said below, the recent uptick was not about inflation. I wouldn’t be surprised to see yields depress south of 500 in the near term. By Sept, though, 570-600 is where my bets are leaning.
I guess I don’t get the argument about a disconnect between l-t Treasury bond yields and inflation perceptions. But if everyone believed there was a disconnect, then I suppose there would be one. This could be one consequence of the conundrum, which flattened risk premiums (including the inflation risk premium on treasury bonds).
When all these numbers turn green, I have to wonder whether the stock market bulls or the bond market bears will win the tug of war. My money is on the bond market bears…
http://www.marketwatch.com/tools/marketsummary/
It is essential during an ongoing correction to throw the sheeple off with a few bull runs. If ever the sheeple reach a consensus perception of what a selloff in the bond market means for stock valuations, look out below. (For a hint, check out what happened in the stock market after the bond market crashed in spring 1987.)
Yesterday was all about short covering in my mind.
A fool and his money are soon parted!
Given real inflation is running in the hood of 12 to 14% one can only marvel at the idiocy of anyone holding a measly t note yielding 520. All that front end inflation (money and credit creation) is what’s keeping the stock pig inflated. Prices are only a tangential effect thereof. The pig lives for another day (shootin up in the sky today like a rocket) but remember it’s not immortal. All pigs die eventually. For my money it’s demise will accelerate this fall.
BTW, the recent bond demise was postulated by Bill Barnhart at the Chi Trib to be merely a programmed trading glitch that was self reinforcing. Given today’s and yesterday’s bond price rise inspite of the recent price data I’m inclined to agree.
Headline on Yahoo Finance: Inflation numbers are up primarily because of the gasoline prices, but everything else down.
I’ll leave it to people actually living in the US to confirm whether or not food prices actually DID go down in May.
Well USDA choice beef for roasting was $1.99/lb (about $4.40/kilo) while pork loins were $2.39/lb (about $5.30/kilo) in our Elmwood Park, Illinois market last weekend. Both were about $3.00/lb two months ago.
Since this is not the season for pot roast, we stocked the freezer with ground beef.
Fresh fruits and vegetables seem to be dropping as well. However, there is a seasonal drop in food prices every summer, I cannot tell if its bigger than normal this year or not.
Make sure it isn’t the recalled ground beef (e-coli yet again).
Sorry for the poor wording, we bought the roasts and ground them ourselves. The store wanted near $3.00/lb for ground round.
Long as you don’t mind the lack of taste and really dry texture, you can cook the heck out of meat to assassinate that e. coli. Good thing I love jerky. If Americans of the pre-1900s worried about half the stuff we worry about today, I think they might have died from the stress rather than whatever actually did them in. Take booze, for example. Widely underestimated at the time, except by snake-oil salesman who were held in disrepute, as a relaxer and joy-increaser and prolonger of life, if only in perception — which matters.
Modern folks properly appreciate hooch’s medicinal and psychological benefits, but then they go and over-price it.
Me, I drink ethanol. Great stuff. Subsidized by the taxpayers, pure corn likker, and currently being produced (if you believe the market reports) in quantities far larger than will be demanded by greenies and their greenhicles in the foreseeable future. What grows aground comes around — isn’t that the expression? Melody, pls. help me out here.
Point taken — one can never separate the short-covering hypothesis from the plunge protection hypothesis on the basis of one-day market moves.
Thanks for finally getting through to me what PPT stands for. (The “T” is “team,” I guess.)
Not very soon in todays global economic cooperation, when China sells melamine as protein to US, and uses the profits to buy toxic loans from it, all transactions done in currency that does not exist at all.
Sorry, the previous post was a reply to:
“A fool and his money are soon parted!”
The fingerprints of the PPT are all over the T-bond yield curve today. Market action cannot explain yields frozen in place across the entire duration spectrum.
http://www.bloomberg.com/markets/rates/index.html
OT… SEC / Change
http://www.nytimes.com/2007/06/14/business/14sec.html?_r=1&ref=business&oref=slogin
Tangentially along those lines - I notice that oftentimes my short cover orders “adjust” automatically - e.g. just yesterday my cover at market of $20 of PHM adjusted automatically to $19.96. This I’m sure is due to dividends - they decleared a .04 dividend for yesterday - it seems odd that this would affect an unexecuted order though. One would expect instead that it would just be taken out of the account as cash, and the order would remain as is. Is this behavior the same for all brokers?
The question for me is: Why does it take 3 days to settle a trade in the year 2007? Gimme a break, the shares should settle instantly. It’s not like we’re moving around stock certificates any longer.
The reason, for delayed settlement of Stocks and bonds transactions, is they are not fully fungible. The stock that you purchase and keep in the brokers account has been loaned out by the brokerage institution to others. You signed an agreement to allow the brokerage institution this right. The brokerage firm has 5 business days to settle the account upon a sale or purchase.
I suspect this reversal is going to not only turn out to be a poor move as volatility in the market is reminding me of salad days of the tech boom, but also lead to even greater volatility. Not to mention the ability of computerized trading programs to squeeze individual traders as information is assimilated and processed at lightning speed.
not to forget that derivative trading is the most lucrative line of business for the big boys… so expansion of that line is, well, not DISINTERESTED.
UK… price nightmare
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=461758&in_page_id=1770
Gee, you mean soaring housing prices relative to income aren’t a good thing?
In the long run - I mean the really really long run (like 100-300 years) it is predictable that housing prices will increase relative to average income. It’s an inevitable by-product of population increase - eventually a smaller percentage of the population can own homes since we simply are “running out of land” (localized for now in some places like England).
However that being said -
- The rapid increase in this ratio over the last few years is unnatural and will reset back closer to historical norms.
- In the U.S. at least - the trend of the last 50 years or so has been to slowly decrease lot sizes, which should offset the population increase - e.g. (pulling numbers out of the air to illustrate the principle) in 1950 when the population was 150 million, the average lot size was 1/2 acre, now with the population being 300 million if the average lot size is 1/4 acre then the affect of land availability is exactly offset by average lot size. This can’t go on indefinitely though obviously since the lot size can’t get smaller than the house.
One stat that I never see, that I think should be given more often - is home prices relative not to house size ($ per sq. ft) but relative to lot sizes ($ per acre).
Or perhaps the most comprehensive measure would be a combination of the two. We’ve been talking a lot about $/sqft here as being a more accurate measure than overall median - but I would submit that it also is inherantly inaccurate - that true apples-apples comparisons would also have to include $/acre of lot sizes.
this $/acre would not work at all because the quality of the lots varies even more around the country than the quality of the homes themselves (which makes tracking home prices in $/sqft a futile exercise). Tracking lot prices would only provide useful information if you track the same lots where nothing happens in the neighborhood that could influence lot value; that’s pretty difficult nowadays.
to give an example, the price of lots near the coast or lake areas in New Zealand has risen something like 25-28% per year on average for the last 25 years or so … and that’s a country with very low population density. Fortunately city lots don’t increase at that rate indefinitely, otherwise we would all be living by now in homes with just a few sqft per person.
That’s exactly my point though. You’re defining “lot quality” in terms of location, and the more desirable locations have had price increases higher than others. I would submit that it’s exactly due to the reasons I state - less land available to support the demand for land. As a result, over time a decreasing percentage of the population can afford land - i.e. only the richest N%. This principle is exacerbated in the highest-demand areas - e.g. the coast. The actual “worth” of the lots, in terms of the benefit provided, has not changed relative to land in flyover country, just that as population increases a larger absolute number wants coast land. The ability to build on the coast is much more limited however than other areas - i.e. the supply is more restricted, thus the higher rate of price increase.
NHZ: seriously, 25-28% per year? 1.26 to the power of 25 is 323, so prices have gone up 32200% since 1982?
yes, I found that on the size of one of the major NZ RE brokers, with a quite lengthy explanation and some other statistics; looks credible. Of course, NZ land prices were in the dump around 1982 …
PMI residential property overview New Zealand May 2007
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-Publications
Annual percentage change:
2000: 1.8%
2001: 1.1%
2002: 7.0%
2003: 10.9%
2004: 17.8%
2005: 13.4%
2006: 10.6%
2007: 12.1%
“This can’t go on indefinitely though obviously since the lot size can’t get smaller than the house.”
Couldn’t you make the case that in a high rise condo building that the average lot size is smaller than the size of the unit. I know a condo owner doesn’t actually OWN property (land) per se but they do pay property tax. If you have an 700 unit building built on a couple of acres the average unit size would be larger than the “lot size” if you divided the space the building was on by 700.
“One stat that I never see, that I think should be given more often - is home prices relative not to house size ($ per sq. ft) but relative to lot sizes ($ per acre). ”
I’d be very interested to see that.
Guess I was thinking strictly of SFH comparisons.
With condos all bets are off - there’s way too much variability in other factors, including what you mention. Defintely there $/acre is irrelevant - even $/sqft can be somewhat irrelevant - e.g. a 7-story condo is much cheaper per unit than a 2-story condo, due to economies of scale with regards to roof, floors, plumbing, etc.
Actually the same is true for SFH to a great extent. E.g. a 1-story 3,000 sq. ft house costs way more to build than a 3-story 3,000 sq. ft house. Since houses these days typically have way more stories than in the past - voila another reason why $/sqft is not an accurate indication of long-term trends.
“With condos all bets are off - there’s way too much variability in other factors, including what you mention. Defintely there $/acre is irrelevant…”
Actually, I think it would be relevent as a means to open the eyes of condo buyers. It would show you how much you’re paying relative to the space you’re taking up, which is minimal.
I think condo prices are even more out of whack than SFH prices. Someone needs to break it down for the sheeple.
Yes it can. Check out Hong Kong.
In the long run of 100-300 years, we aren’t running out of “land”. This is because “land” will include “land” gained by oceanic and space colonization.
Also, have lot sizes truly decreased or is the average lower due to condos which didn’t really exist in 1950?
What population increase? I don’t think there will be more people living on this planet 100 years from now at the rate we’re depleting clean air and water. Add to this the transfer of wealth to a very small minority, exploding food prices and no real alternative to dwindling fossil fuel and I think we’re going to see some major bloodshed 10-20 years from now…
They are a good thing if your income is soaring above the rest of the country’s (look at the top 0.5% of the wealth distribution for example).
Apparently, at this point the whole UK housing market is being driven by the money being pumped into london by foreign investors, including Oil Arabs and newly rich russian oil types.
A single London purchase creates a chain of subsequent purchases, which ultimately end up in the rural areas. The boom is not income dependent, but god forbid the foreign money stops flowing into London.
The UK, and particularly the area around London, also has a genuine shortage of housing. If you check out the new home volumes for the UK, they are remarkably low compared to the population, which has been increasing more than expected due to (legal) immigration from Eastern Europe.
There is a hugely powerful NIMBY lobby throughout the UK which makes it very difficult to get planning permission for large-scale development.
definitely, this is why the housing boom started relatively early in financial capitals like Amsterdam, London, Shanghai etc. Those are the places where the easy money from central banks started pouring into the economy.
not just in UK … in Netherlands average home price is now 8.5x income, but in some areas it is probably in the 12-15 range. I guess in Spain some areas must be around 15x local wage too because prices are pushed up by loads of foreign speculators.
local wage is irrelevant in todays global economy, except for the modern robber barons that produce at low local wages and sell to high income customers on the other side of the globe.
Freddie Mac (NYSE: FRE - News) today reported a net loss of $211 million, or $0.46 per diluted common share, in the first quarter of 2007, compared to net income of $2.0 billion, or $2.80 per diluted common share, for the same period in 2006. The company also reported a decline in fair value of net assets attributable to common stockholders, before capital transactions, of approximately $300 million in the first quarter of 2007, compared to an increase of $1.0 billion for the same period a year ago. The declines in net income and fair value results were primarily due to losses on mark-to-market items.
During the first quarter of 2007, the company recorded mark-to-market losses totaling $1.2 billion on items included in other non-interest income (loss), compared to a mark-to-market gain of $742 million in the first quarter of 2006
Credit-related expenses, consisting of provision (benefit) for credit losses and real estate owned (REO) operations expense, were $193 million in the first quarter of 2007, compared to $60 million in the first quarter of 2006. (up 221%)
at least they promise to file on time……
here some of the pr part of their release…….
“I’m particularly proud that our company took a leadership role in the subprime mortgage market, announcing new underwriting standards and products and committing to purchase up to $20 billion in mortgages to support subprime borrowers.”
“We took a leadership role in creating the subprime disaster, and we are proud of it!”
Wouldn’t it be more appropriate to say “abolishing underwriting standards?”
these numbers are suspect at best. I would not go near Mr. Mac with monopoly money.
I’m perplexed by the phenomenon of houses sitting on the market for extended periods of time, then selling for at or near the asking price. Aside from the situtation where the time on the market has been so long that the price has become market value via the inflation rate and other such changes (wither to the house or to the market) that bring the price in line with market value, why would anyone pay full price for a house sitting on the market; or, put another way, why would a realtor continue to list a home at the same price? I’m watching houses sit for months and months with no price change.
Anybody know the carrying cost for realtor’s? If it’s 30 bucks a month and the potential commission is 30K, I’d be tempted to hold them for a while.
A few thoughts come to mind -
- Probably most of these have little realtor involvement after the first month or two - e.g. I would imagine most of these don’t have open houses very often, and if they do they’re probably not with the realtor present. Once the realtor gives tips on how to present your house, and submits the MLS listing - they have essentially no more work to do until the closing. So it’s no skin of their back to keep it listed.
- Probably some of these cases are where people are doing various fixing up, and expect the value of the home to increase. Not many like this though I’m sure (I would do it, but not many would).
- Most cases I’m sure are people with significant equity in the house, and not in a hurry to sell. They’d rather wait a long time to sell and get a few extra $10k’s than lower the price and sell quicker. This is an OK strategy if there truly was to be a market recovery, or the market just went flat for a long time and waited for inflation to catch up. (As most of us know though - this ain’t going to happen anytime soon)
- Sometimes the GF really does come along and they get lucky.
tx pacman -
Forgot about those folks with lots of equity that aren’t in a hurry to sell. I guess even those folks will start to lower their prices once they realize that they are losing money in a tanking market.
Yes agree.
For now though I think we see a lot of stubborn prices because a) we’re not far enough into the downturn for capitulation to happen for many, and b) many still believe that this downturn is a temporary lull, as being promoted by the REIC.
good points; in my area of the Netherlands there are many homes that have lingered on the market for 3, 5 or sometimes even 8 years without any price cuts (sometimes even price increases when relisting!). A large percentage of those homes are empty, and apparently nobody is in a hurry to sell them because they think that sooner or later there will be a sale at their wish price (point number three). Some of these have been relisted more than ten times with another realtor, apparently the cost is so low compared to what they make on the sale that the realtymob does not care either. As long as Dutch rates are extremely low and prices keep rising, no one will blink I guess. And yes, sometimes a seller hits the jackpot, like a few years ago when someone sold a 1.5M euro home to a retired banker who previously lived in London (UK) and purchased without negotiating; he must have thought he got the deal of a lifetime ….
Kingpins suffer consequences of bad subprime bets…one would think a firm with ‘Bear’ in its name would know better?
Earnings at Bear, Goldman Suffer Due to Subprime Mess
By Mike Barris, Jonathan Vuocolo and Judy Lam Staff Reporters of The Wall Street Journal
Word Count: 1,043 | Companies Featured in This Article: Bear Stearns, Goldman Sachs Group, Lehman Brothers Holdings, Morgan Stanley
Bear Stearns Cos. on Thursday posted a 33% drop in earnings for its fiscal second quarter, as continuing turmoil in the market for risky mortgages crimped revenue in the investment bank’s fixed-income division. Rival Goldman Sachs Group Inc. was also hurt by the subprime mortgage woes, posting a 1% decline in revenue.
Bear Stearns, a leading Wall Street underwriter of mortgage bonds, said net income fell to $361.7 million, or $2.52 a share, for the period ended May 31, compared with $539.3 million, or $3.72 a share, a year earlier.
The latest results included a noncash charge of $227 million, …
http://online.wsj.com/article/SB118182223250235230.html?mod=home_whats_news_us
Pass the trash…
Bear’s Fund Is Facing Mortgage Losses
By Kate Kelly and Serena Ng
Word Count: 1,044 | Companies Featured in This Article: Bear Stearns, Goldman Sachs Group, Bank of America
A hedge fund managed by Bear Stearns Cos. is scrambling to sell large amounts of mortgage securities, a setback for a Wall Street firm known for its savvy debt-market trading.
The fund makes bets on bonds backed by mortgages, many of which are subprime, meaning they go to especially risky borrowers.
Faced with losses on its investments, the fund, called High-Grade Structured Credit Strategies Enhanced Leverage Fund, together with a sister fund, is trying to sell about $4 billion in mortgage-backed bonds to raise cash, according to people close to the fund and traders who have been solicited to buy …
http://online.wsj.com/article/SB118178670315434803.html?mod=home_whats_news_us
“Faced with losses on its investments, the fund, called High-Grade Structured Credit Strategies Enhanced Leverage Fund, together with a sister fund, is trying to sell about $4 billion in mortgage-backed bonds to raise cash”
LMAO! Got Mortgage-Backed Toilet Paper?
“High-Grade” toilet paper, of course.
that name is too short= roflow
calpers will buy some
HGSCSELF fund = Helpya Go SCrew yerSELF fund
Caveat emptor.
Subprime Fallout For Bear Stearns
By Joseph Schuman The Wall Street Journal Online
Word Count: 2,268
The Morning Brief, a look at the day’s biggest news, is emailed to subscribers by 7 a.m. every business day. Sign up for the e-mail here.
A big bet on the value of risky subprime loans has apparently sunk a Bear Stearns hedge fund in a lot of trouble.
The investment bank, the No. 2 U.S. underwriter of mortgage-backed bonds, is looking to sell some $3.8 billion of the home-loan-related investment vehicles owned by High-Grade Structured Credit Strategies Enhanced Leverage Fund, three people familiar with the situation tell Bloomberg. The 10-month-old fund, which had about $600 million of investors’ money …
http://online.wsj.com/article/the_morning_brief.html
Margin calls. Again, I’d love to know what the fund managers were paid last year and this year to date.
Read my NYT link below.
Oops, looks like it was deleted. What’d I do? I suppose I was a little profane, but I did edit the profanity with symbols.
Subprime woes weigh on Goldman, Bear results
Charge drags Bear earnings down 33%, while Goldman has 1% profit gain
By Greg Morcroft, MarketWatch
Last Update: 9:39 AM ET Jun 14, 2007
NEW YORK (MarketWatch) — Wall Street brokers Goldman Sachs and Bear Stearns said Thursday that persistent weakness in the subprime mortgage market weighed on second-quarter earnings.
Shares of both firms fell on the results, as Wall Street was a bit surprised by the weakness in the mortgage business, as analysts had expected the banks to largely dodge problems with the subprime sector.
However, without addressing any company specifically, Goldman CFO David Viniar said in a conference call with reporters Thursday that the subprime sector’s woes are not over.
Vinair said to expect “more pain” in the sector before the problem is purged.
Bear shares fell 1.8% and Goldman shares slipped almost 3%.
http://tinyurl.com/2yxo4j
How about those Chinese, eh? Little story in the AP about their military buildup. I guess it is starting to sink in that their US paper isn’t worth very much and now they are embarking on a collection effort. Either that, or they’re pissed we don’t like their melamine and other poisons in their food.
I’m tellin’ ya, doing busines with China was one of the lousiest ideas ever.
Business. Or, bidniz.
I suspect you’re right. I doubt that they will be happy bagholders…if it causes them domestic and financial distress, you would expect that they would extract some payback.
You meant: Business. Or, pidgen.
(The origen of the word “pidgen” is the English word “business” as pronounced by coastal Chinese in the late 19th century. Damn, it’s a crummy joke when you have to explain it.)
I expect to wake up one morning to find out that China has invaded Taiwan. Meanwhile, whoever is in charge of the US at the time will hem and haw.
You bet, In Colorado. When I wuz a pup, I recall reading some Jean Dixon astrological prediction in one of the tabloids that someday the US would be allies with Russia against China. Better do some fence-mending with Putin, and fast.
I expect to wake up one morning to find out that China dictates the economic and military policies of the United States Government…
You mean they don’t already?
Not quite yet. That’s why the build-up, I think.
Fake colgate toothpaste has been found in several states. Colgate says you can identify fake product by misspellings on the label.
Counterfiet products are rampant thanks to china.
Stuff may well have glycol among other things…Chinese toothpaste already pulled from shelves had this contaminant–a component of anti-freeze. Deadly for your pets too.
So you’re telling me that the “Koolgate Teethpaste” I got at the 99-cent store may not be such a great bargain? That sucks. I need a beer — this Buddwhiser looks pretty good, and, hey, it’s on sale!!!
LMAO! I always get a kick out of Leno when he does the bit with the products from the Dollar Store and reads the directions and descriptions.
Mmmm…you can really taste the melamine.
lol
Palmetto, the real concerning thing the type of weapons they are buying-building, anti-aircraft carrier cruise missiles, submarines and aircraft carriers. Since we are the only nation with aircraft carriers who do you think the buildup is meant for?
The Chinese are building nuclear missile submarines. They are going to name the first one the “Wal-Mart”. Thanks, American suckers, for financing China’s military. Hope you like watching your children die at the hands of American financed weapons.
Good grief. I think you are all greatly inflating your fears.
Tell it to Tibet.
Testify, watcher.
Or Cuba. Securing neighboring seas and airspace is a basic matter of national policy for China, and we in the US should not be at all caught off guard by this as it is the same kind of thing we do and for all the same reasons.
TES-TI-FY, george c. That is SO exactly right. And every time some smarmy snot says “Globalization is here to stay”, my hope for them is that they spend the rest of their lives up to their necks in the sewage of some Chinese river. Reminds me of the old joke about “Yellow River by IP Daily”. Yellow River is in China, I believe.
“Hope you like watching your children die at the hands of American financed weapons.” where u been george?? it’s happening right now and been happening for decades.
oh no, maybe they are building a fleet to enforce a trade embargo on the US; now that would really hurt …
what are the Chinese spending on this military buildup? maybe 1% of what the US is spending on its army?
Actually NHZ, the best guesstimates is that they are spending up to 100 billion dollars. Of course you have to remember it is much cheaper to field a military when the pay is probably 5% of our folks. The spying they are currently doing is better than the Soviets and they weren’t chumps.
“maybe they are building a fleet to enforce a trade embargo on the US; now that would really hurt …”
Oh, no, I want my MELAMINE!
> don’t like their melamine and other poisons in their food.
As I posted earlier, we can’t complain about it, as they sell poisoned food and buy toxic mortgages, what a great balance.
Either that, or they’re pissed we don’t like their melamine and other poisons in their food.
…or lead in the paint of our children’s toys…
http://www.cpsc.gov/cpscpub/prerel/prhtml07/07212.html
Dallas Observer notes a local auction: “Home Sweet Auctioned Off Home”
http://blogs.dallasobserver.com/unfairpark/2007/06/home_sweet_auctionedoff_home.php
Part of 250 houses statewide in several locations this month.
Dallas/Ft Worth auction:
From $25000! Oh My!
http://sev.prnewswire.com/real-estate/20070612/DCTU07712062007-1.html
Other Texas auctions:
http://www.hudsonandmarshall.com/auctionInfo.asp?auctionName=Over+250+Homes+in+Texas%21%21++&auctionID=353
Including an article featured house is at 702 Tiki Drive, “Village of Tiki”, Texas, 77554 and has “Bay View Canal Lot with Boat Lift! Wine Cellar off the Kitchen!”
This is one of the houses (all with boat slip) built on a manufactured (?) island just off the mainland side of the bridge to Galveston, TX. (i.e.: Hurricane Zone 1)
http://www.hudsonandmarshall.com/PropertyInformation.asp?propertyID=29133&display=702+Tiki+Drive+%2D++Village+Of+Tiki%2C+Texas
Map
http://maps.yahoo.com/broadband#mvt=s&q1=702+Tiki+Drive%2C+77554&trf=0&lon=-94.906737&lat=29.300144&mag=2
LOL!!!!!!!!!!!!!!!! I haven’t read the Observer lately, thanks for posting that.
You know, that Frisco place in the picture is one of those ones that was part of that Nigerian straw buyer scam in ‘05. They suckered some lender out of north of 500K for that place if I recall correctly. Bet it sells for under 200 since Frisco really isn’t a townhouse kinda town and there is huge inventory and high foreclosures there.
Take it from the reassuring byline: Inflation, just like subprime, is contained.
Wholesale Price Increased in May, But ‘Core’ Was Largely Contained
By Brian Blackstone
Word Count: 760
WASHINGTON — U.S. wholesale prices rose sharply for a fourth-straight month in May on higher energy prices, but outside of volatile food and energy sectors prices remained largely contained, suggesting that while inflation remains a risk, it doesn’t appear to be taking a significant hold in the economy.
The producer price index for finished goods rose 0.9% in May, the Labor Department said Thursday, up from an unrevised 0.7% gain in April. The “core” PPI, which excludes food and energy, was up 0.2% after holding steady the previous two months.
http://online.wsj.com/article/SB118182332542135252.html?mod=home_whats_news_us
Subprime Meltdown Was Largely Contained, Pay No Attention to the Men in Radiation Suits
Does anyone round here not eat or use energy because they are too volatile?
No kidding. Its not like you can skip eating until food prices come down. I guess the geniuses in the beltway figure that the unwashed will just downgrade their diets, while they dine on lobbyist paid lobster dinners.
Is there any official measurement published on energy and food for 12-month periods? I mean, it’s obvious prices fluctuate month to month, but at some point you can’t argue that prices are generally way way way higher than 2-3 years ago.
I was reading this morning that the PPI rose 0.9% in May and 0.7% in April. The “core” PPI was much lower (let ‘em eat Plasma TV’s). My guess is that we are experiencing 10% real inflation.
You can bulk purchase staples, though. I did that a lot. I’ve eaten most of my stash, though, and the prices at the supermarket are freaking me out.
Besides that Mrs Lincoln, how was the play?
Rising Yields May Not Mean Inflation Angst
By Justin Lahart
Word Count: 549
The rise in long-term interest rates has less to do with inflation than one might think.
Investors have been selling bonds the world over, pushing yields higher. In the U.S., the yield on the 10-year Treasury note has gone to 5.20% from 4.50% over the past three months. Bond yields have risen by similar amounts in Germany, Japan and the United Kingdom.
Over the same period, the yield on the 10-year Treasury inflation-protected securities has risen nearly as much. TIPS, as these bonds are called, give investors a payment that rises and falls with the inflation rate. Treasurys, by contrast, offer a set payment so higher inflation hurts their value.
If investors were worried about inflation, Treasury yields would be rising, but TIPS yields would be unchanged, because holders of those bonds know that they will get a guaranteed return above the inflation rate. Because yields on both bonds are rising, it means that investors’ inflation expectations have barely budged. Other countries’ inflation indexed bonds carry a similar message.
http://online.wsj.com/article/SB118177829264934622.html?mod=hpp_us_at_glance_columnists
Alternative hypothesis: Nobody believes the CPI fully captures actual inflation.
“Treasury yields would be rising, but TIPS yields would be unchanged, because holders of those bonds know that they will get a guaranteed return above the inflation rate.”
I have another theory—that TIP bondholders have received a tip that the inflation rate upon which their TIP yield is based is understated and the USD is overvalued.
That is what I was trying to say in my italicized remark at the bottom…
Reading too fast and missed your comment.
Great minds think alike
How about just avoiding the stock market altogether, in order to avoid getting caught on the wrong side of a selloff in the wake of a bond market crash? Those passbook savings accounts are looking better every day.
Sorry, I forgot, the PPT ensures that the stock market always goes up (and that the value of passbook savings accounts soon get inflated away to near zero).
Running From Rate Storm
By Karen Richardson and David Reilly
Word Count: 866 | Companies Featured in This Article: Wal-Mart Stores, Procter & Gamble, Tiffany, Apple, Citigroup
Bonds are driving the stock market right now, so stock investors looking to profit from the rise in interest rates need to figure out what is going on in the bond market.
Yields have risen quickly because expectations for economic growth, which had been tepid, suddenly got stronger — even if they remain modest. If the economy was growing strongly already, then a boost in growth would have spurred inflation fears.
This leaves the economy, and stocks, in a sweet spot that should benefit cyclical stocks, such as retailers and basic-materials companies that gain from growth. But investors should keep their eye on more-defensive names such as drug companies and consumer staples like food companies later this year as higher interest rates could eventually slow the economy.
http://online.wsj.com/article/SB118178541948834778.html?mod=hpp_us_at_glance_columnists
Okay I think I caught your sarcasm in the second paragraph about the bilderbergers, er, I mean, PPT.
Yes, let’s be as stupid as the people who got into the real estate bubble. They invested everything, including their daughter’s virginity in real estate. We can be as extreme as them and we will probably be just as sorry by completely ignoring the advantages of dollar cost averaging into all the assets - precious metals, treasuries, stocks.
There are nuts who say we should be completely out of T-notes. When yields are rising, you have to have a reverse pyramid type of strategy where you buy fewer L-T notes at lower yields and more and more L-T notes at higher yields. WTF is wrong with that (addressed not to you, but to Claw). If in 1980 most of your L-T notes/bonds were bought that year, why cry if you bought some the previous year at a 2% rate lower when you were getting 14%? Holy Mother!
Sorry. I just get p.o’ed when I see bloggers being just as extremist as the FB real estate investors. My mantra is - diversify over various assets. Even I have recently started taking small steps in real estate - very small. One of my stocks is involved in real estate and I buy a little at a time. I will invest more and more in RE over the next few years in my stock and will get into REITs.
“bilderbergers” ?
I’m poking fun at conspiracy theory types. “Bilderbergers,” trilateralists, Council on Foreign Relations, all that have been the bogey men for generations. Now we have PPT.
I dunno why this all seems so tin foil hat to you, Bill. The CFR does exist and so do a lot of other international policy “think skanks”. The PNAC is a lot of the reason why we’re in this mess in Iraq right now. Bilderberg is just the name of a hotel, for chrissakes. Those who attend the international finance policy meetings there are called “Bilderbergers”.
Things like black ops, psyops, they DO exist and have been part of international control for centuries, pre-Roman Empire. One thing the people involved in these operations know and have known down through the ages: the way to hide something is to make it so incredible that no one would believe it.
The real conspiracy theorists are the people who believe inflation is contained, and core inflation reflects reality, and government bonds offer a reasonable yield at least equal to inflation. Bonds are the worst investment going, besides the USD.
watcher, you are really testifyin’ today! You go! LMAO!
Nah the Zimbabwe dollar may be the worst investment going. The only problem with US Treasury investments is the risk/reward ratio is not favorable. Remember that over the last 30 years the best return of any investment strategy was US Treasuries - I recall that the compounded rate of return of US Treasuries was 13% vs slightly more than 10% for US stocks. This has resulted in a bond bubble that is as large as the housing market bubble. Trading in bubble markets is very profitable until the bubble bursts.
At least Zimbabwe’s asset markets are doing very well, by Fed standards.
———————————————————————-
Zimbabwe Stock Market Booms As Robert Mugabe Prints More Money
Posted by Bill Bonner on Jun 4th, 2007
Money isn’t everything. We provide additional proof this morning by looking at a place with a lot of money - Zimbabwe. Nowhere on the entire planet is money piling up at a more rapid pace. The printing presses in that hellhole must be working around the clock. Consumer price inflation is increasing at an annual rate of 1,729%!
“My bad,” says Robert Mugabe, the nation’s democratically elected tyrant.
We look to Zimbabwe not merely for entertainment but for instruction. It shows us that not only is money not a good gauge of wealth and happiness, neither are asset prices. Rich Americans look at rising stock prices. ‘All is well,’ they say. ‘We’re getting wealthier.’ Poor and middle class Americans look at their house prices. ‘All is well,’ they say. ‘Our houses are worth twice as much as they were 5 years ago; we’re getting wealthier.’
http://www.dailyreckoning.com.au/zimbabwe-stock-market-booms/2007/06/04/
“…the way to hide something is to make it so incredible that no one would believe it.”
It is easy to hide things in plain view from folks like Bill, who summarily dismisses anyone who points to visible evidence as a ‘conspiracy theorist.’
Sales down 24% from 2006
County home prices rise slightly – analysts say you can thank the millionaires for that
By Roger Showley
STAFF WRITER
June 14, 2007
San Diego County home prices inched up $2,000 from April to May, driven by demand for high-cost houses, even as sales dropped nearly 25 percent from a year ago, DataQuick Information Systems reported yesterday.
http://www.signonsandiego.com/uniontrib/20070614/news_1b14prices.html
Not sure where DataQuack’s “high end” starts, but there are currently
only 410 out of 19,083 homes listed above $3m on the market (at least according to ziprealty.com). How 2.14% of the listings can drive the median is a mystery to me. Anyone who passed a basic statistics course in college knows the median is robust to outliers.
BTW, SD zip shows only 384 homes listed at $3m+ as of this morning. Maybe 26 $3m+ homes sold since yesterday? I guess there was a run on them, as SD is running out of multimillion dollar homes…
In some parts of the USA, the “county home” was the government-run facility where helpless indigents were warehoused.
Surprise, surprise, surprise…
MORTGAGES
Mortgage rates leap on Treasury weakness
Biggest weekly jump in three years; 30-year hits 6.74%
By Steve Kerch, MarketWatch
Last Update: 10:34 AM ET Jun 14, 2007
CHICAGO (MarketWatch) — U.S. mortgage rates jumped this week as a sell-off in the Treasury market pushed benchmark interest rates up sharply. Freddie Mac in its weekly survey Thursday said the national average on the 30-year fixed-rate mortgage hit 6.74%, up from 6.53% a week ago and the highest level since July 2006.
“Mortgage rates moved sharply upward this week, with rates on 30-year fixed-rate mortgages jumping more than 20 basis points, the largest upward movement in over three years,” said Frank Nothaft, Freddie Mac chief economist.
Here is a link to the full story…
http://tinyurl.com/ypsojh
I nearly spat out my coffee this morning when I read this:
“DataQuick analyst John Karevoll interpreted the changes as evidence that San Diego may have absorbed most of the downside of the current real estate cycle, while the other counties have a way to go before hitting bottom.
“San Diego is in much better shape than the rest of the region,” he said. “Most of the declines are behind it.”
For now, he said, prices should stay relatively stable, with the top end on the rise and starter homes likely to drop for a few more months before leveling off.”
I know it’s a bit early, but I nominate this to be the quote of the year: “San Diego is in much better shape than the rest of the region, most of the declines are behind it.”
I have saved the business section of todays paper, so I can send it to Mr. Analyst a year from now.
Thanks for providing me the SDDT NOD/Trustee link the other day OB_Tom.
You’re welcome.
It is the SD SFR market on the price range from $450K-$3m that bears watching. The current used SFR inventory on this range is 7652 according to ziprealty.com, compared to 12,284 SFRs overall (76% of current listings). This is likely a fairly serious understatement of current inventory, given all the new construction that is not on the MLS plus FSBO, but it is nonetheless a good indicator of where the market is headed.
Given that median HH income in San Diego county is under $70K, homes priced on this range are affordable to less than 10% of county households. And there are a ton of “new home communities” with new home inventory currently under construction or otherwise not on the MLS, also priced on this range. I am expecting the glut of SFRs on this range to swamp the SD market, given the current rising rate / falling price environment.
That 450K house just became $225 per month more.
Huh? They compare sale activity YoY, but compare median price MoM, and draw conclusions on the future by mixing their baselines?
Are they dense or merely disingenuous?
San Diego real estate buffs mark your calendars. Don’t miss the chance to hear NAR spokespersons call a bottom in 2010.
Realtors group inks ‘09 date for first San Diego meeting
By Roger Showley
STAFF WRITER
June 14, 2007
One of the nation’s largest conventions, the annual meeting of the politically powerful National Association of Realtors, will be held in San Diego for the first time in November 2009.
Drawing an expected 18,000 members, spouses and family, the meeting could give a $67.8 million boost to the local economy, including $1.1 million in sales and hotel-room taxes, according to the San Diego Convention Center Corp.
http://www.signonsandiego.com/uniontrib/20070614/news_1b14realtor.html
So the 18,000 NAR members are each going to spend nearly $1000 a day in November 2009? Ha ha ha.
Anyway, check out where they meet the next 3 times:
2007: Las Vegas
2008: Orlando
2009: San Diego
Great timing. Las Vegas is a disaster now, I’m sure Orlando and San Diego will be that too by the time they meet.
Will there be 18,000 NAR members in 2009? Me thinks not!
Yesterday in the bits bucket I updated a Chicago west side condo that was priced at $249,000 adn then dropped to $235,000. Well, I received a voice mail, not JUST an email, from the realtor that the price is now $229,000. This is what it sold for in March of 2005.
Here’s the listing http://tinyurl.com/27xlco
Offer $175K.
I don’t want it and I ain’t lookin’ to buy.
Frankly, I’m afraid if I offered $175,000 they’d take it. I don’t believe it’s worth anymore than $150,000.
Plus you have to walk up THREE flights of stairs not the usual TWO…..to get to your KONDOZE!
Lotsa kiddies snapped up three story walk up condos in Chicago these past years. I know of two right off hand who plopped north of $400k on such units - blocks of 2600 N Southport and 3000 N Racine.
Too bad the only folks who can get a loan that size anymore don’t like carrying groceries up three floors. Yeah, great “investments”.
Time for plan B, Neil?
http://www3.whdh.com/news/articles/national/BO54912/
excellent
Does the stock symbol BSC now mean “Black Swan Coming”??
————-
A hedge fund managed by Bear Stearns Cos. is scrambling to sell large amounts of mortgage securities, a setback for a Wall Street firm known for its savvy debt-market trading.
The fund makes bets on bonds backed by mortgages, many of which are subprime, meaning they go to especially risky borrowers.
Faced with losses on its investments, the fund, called High-Grade Structured Credit Strategies Enhanced Leverage Fund, together with a sister fund, is trying to sell about $4 billion in mortgage-backed bonds to raise cash, according to people close to the fund and traders who have been solicited to buy the bonds
(WSJ, 6/14/2007)
Over on patrick’s blog, people are saying that Ivy Zelman, the analyst at Credit Suisse with the reset chart so often quoted on this blog, has been either “reassigned” or let go. Anyone here know?
If so, that’s a sign. Didn’t they fire those bearish on tech in 2000?
http://www.defective-homes.net/wallstreet
Morgan and those in his camp will win this one, if they can get it to trial. Some homebuilders may have deep pockets, but Wall Street and the banks have deeper pockets.
Calculated Risk says her departure has been confirmed.
I hope she writes a tell-all book.
There’s nothing like integrity in your work to get you canned.
Perhaps a last quote from Zelman (while at CS) per MSM:
http://www.usnews.com/usnews/biztech/articles/070610/18realestate.htm
That stinks! I though she was great. Well thought-out analyses. Obviously not bought. I want more info on this one |:[
A little on the street reporting from western Colorado, where the energy boom will save everyone, along with skiers and the uber-wealthy. About 6 years ago I sold an Arabian horse to a woman near Montrose whose husband is a builder. They have a very nice place and currently board another horse of mine. Got a call yest. from her, she wants to give me the horse back, as they’re so broke she can’t hardly buy hay (now at $8 a bale, takes about two days for a horse to eat a bale) - she’s selling everything she can to keep her place going, no work for him at all and her horse training business has gone from really busy to nothing (she’s from Vermont and has a gentle method people like). They subdivided their place into the house and a few acres plus an empty parcel and are trying to sell, but I think they missed the gold rush.
I’ll take the horse back, of course, and start paying her board for that one also (I always kind of regretted selling her anyway), but now I’m beginning to worry about the parts of this housing bust that aren’t going to be so pretty. Schaudenfreude (sp) won’t be as prevalant in my outlook when the bad economy hits the innocents…
But who is innocent?
The poor horses. And the 50 cats in that foreclosed house yesterday on the east coast. And the kids whose parents thought McMansions and plasma tvs were more important than financial security and stability. (Financial and emotional upheaval has a profound impact on children.)
$8/bale? It’s going for a lot more than that here in California. $12/bale (mostly higher!) for the good solid stuff.
There are shortages in many states; and I read somewhere (possibly without much basis in fact) just in the past month that it is being exported from the USA on empty cargo ships.
Kind of a reverse trickle down is what I think will happen. The spending of money on lavishness and expectations of cargo cult mentality perpetual motion, that will dry up. When everyone will want to get paid for the credit extensions, that is when having cash and having minimal debt will help out. The cost of borrowing money will go up.
I stayed overnight in Grand Junction last summer & thought that it looked unusually prosperous compared to other towns its size. I doubt the energy boom will “save” the town, but surely it will lessen the coming economic pain out there. News articles there have mentioned the energy crash of 1981 when Exxon laid off 2100 people & closed down its oil shale project, so people who experienced that are still doing business now. The whole area around Montrose sure is a pretty place to visit in the summer.
Yesterday someone mentioned tornadoes in north metro Denver (in the Calif thread).
In the 12 years that we have lived here I have only heard of one tornado that caused any damage (it knocked down a rickety tool shed).
A comparison was made between Escondido, CA and Berthoud, CO, with the nod being given to Escondido, while Berthoud was described as “desolate”.
I once lived in Escondido. It does have some nicer areas (Country Club, Lake Hodges), but it is mostly an armpit that is overrun with illegals.
I am very familiar with Berthoud. It is a small town of 5000 that is 10 minutes south of Loveland (pop 60k) and 10 minutes north of Longmont (80K). While it has agricultural roots, Berthoud has become a bit of a yuppie town. Its median household income is about 60K, which is about 10K higher than Escondido.
A major problem in Berthoud is that builders over estimated the yuppie population growth, as Berthoud is basically a suburb of Longmont for those who want “country living”. They built a LOT of McMansions on acreage (I never understood why having acreage is such a status symbol in northern Colorado). Unfortunately for the builders 500K+ is still considered to be a lot of dough out here, and the typical McMansion is 6000 sq ft on 20 acres and goes for 1 million.
There are about 200 houses for sale in Berthoud and I would say that 3/4 of them fall into the McMansion with acreage category.
I used to work for IBM (manufacturing engineering) and once recall the entire plant there north of Boulder being closed down and everyone sent home because of tornado sightings - it was pretty weird seeing those big black clouds coming. I also commuted from Ft. Collins to Boulder for one semester in grad school, went through those towns at about 6 am, once saw a black bear ambling down the streets in Loveland early in the morning, had the town to himself. I can’t imagine McMansions in Berthoud - seems about totally unlikely…
I can’t imagine McMansions in Berthoud - seems about totally unlikely…
I think that the builders really misread the market in Berthoud.
I also commuted from Ft. Collins to Boulder for one semester in grad school, went through those towns at about 6 am, once saw a black bear ambling down the streets in Loveland early in the morning
Those were the days. There are plenty of cars on the road at 6 AM in Loveland now, and plenty of traffic on southbound 287, which is now 4 lanes all the way from Denver to Fort Collins. This in large part because so many Lovelander’s now commute to to jobs in Denver. With the demise of the local quality employers (HP, Agilent, etc.) Loveland has become an exurb, which is probably one reason why there has been no meaningful appreciation here since 2001. What little new development there is, is happening right on the I-25 corridor (for easier commuting to Denver).
Fortunately though the bears roam around all the time there now, so you don’t have to be up at six am to see them.
It seems like once a year a young black bear will wander down from the foothills into town. Black bears are pretty mellow. Much scarier when a cougar comes into town. I once saw one dash across hwy 287 just north of Ft. Collins. That sucker was huge.
Exurb sounds so 2005ish. I’ve always thought that exurbs were stupid, nothing more than bedroom communities for Yuppies with no jobs other than service industries. Even worse was the yuppies masquerading to the distant town for a job each morning, piloting a 7 passenger school Bus, I mean Suburban. I’ll be real happy if those days are behind us.
Loveland used to be a Hewlett-Packard town. At one point thousands worked for HP in Loveland. They actually made stuff here. There were a few other smaller quality employers, like Lucas Electronics, Colorado Memory Systems, etc. Those are all gone. Loveland has devolved into a bedroom community. Same thing is happening at nearby Windsor, as the local Kodak plant slowly fizzles away. Longmont too has been victimized by the offshoring beast.
Actually the really big McMansions are way outside of Berthoud, because they are built on acreage.
As far as Berthoud town itself, I would divide it into 3 zones:
1) Old Berthoud - This part of town has the old victorian houses
2) Not so old Berthoud - On the north side, has the 60’s and 70’s vintage split levels. 150-200K houses.
3) Newer Berthoud - On the south side. This is where the non acreage yuppies live. 300K houses.
One of the problems for building for yuppies, is that if they’re younger and they might just decide to have children and then realize that they live in no man’s land rather far away from any real support services (or company) if they should need them. I have some friends who live there and came to this conclusion after their second child. Last I checked they were thinking about moving to Longmont or Loveland.
I have wondered that myself. When we first moved out here we bought a house off the road to Masonville (with a great view of the Devil’s Backbone). It was a good 10 minute drive to the grocery store. The neighborhood consisted of 1 acre lots, so it wasn’t little house on prairie solitude. Still, we decided that it wasn’t for us and we sold and moved into town.
Thats said I know all sorts of people who love the McMansion on the Prarie experience, and have lived there for years. Some have kids, some are empty nesters.
The other problem in building for yuppies is that they are trend followers. If the new trend is moving downtown and living in condos, you can bet your bottom dollar the suburbs would empty out in a hurry. Always chasing the next fad, but anyone who is at the leading edge of the fad wins, and those at the trailing edge lose.
It’s hard to project any kind of long-term business model when your market is so wishy-washy. Just ask Ford motor company.
The acreage thing out here seems to be more than a fad. Its also trendy to have a loft in Denver’s LoDo district, but these trends attract different types of yuppies. The acreage types aren’t your typical effette yuppies. Many of them built their own homes.
You’re probably right, I am over-generalizing. However, I still believe the acerage/exurb thing is a transitionary period that will not last in the current form. As transportation costs rise exponentially in the coming years, people will be forced to move closer. Outlying areas of McMansions are already screwed by the skewed demand, and when it costs $500 to heat/cool a 3000sq ft home, that cozy 750 sq. ft apartment looks mighty inviting.
Geez, IC, you sure bring back the memories.
Back in the 70’s I remember us temporarily evacuating one evening when a dozen funnel clouds were visible all around us (out east of Longmont). Never suffered any real damage.
bet GE will take a hit
junk in the trunk
http://finance.yahoo.com/q?s=BSC
FEDERAL TAX LIENS and Lawsuits
http://www.bakersfield.com/hourly_news/story/164483.html
FEDERAL TAX LIENS and Lawsuits:
http://www.bakersfield.com/hourly_news/story/164483.html
oh man, that article is a real gem - “When you have a big business, there’s always things, sometimes, that falls through the cracks,” Crisp said Wednesday. “And when you notice it, you take care of it. That’s it.”
don’t mess woith the IRS, crispo
“The federal tax lien comes on top of eleven default notices that have been sent to Crisp, his wife, Jennifer Crisp, and his mother, Tu Crisp, since mid-April.”
I guess he must have a really big business, ’cause it seems like a lot of things are falling through the cracks.
I just love that name of Tu Crisp - must have gotten burned somewhere.
Crisp plans to pay the IRS next Wednesday, after the close of several big deals, he said.
See no problem, just close several “big deals” No wonder his eyes are brown!
“How many times has Donald Trump filed bankruptcy?” Crisp asked.
There you are America…the new business paradigm…Hey, Donnie “pucker lips” Strump…you’ve got a Bakersfried City “apprentice” to model your “Crispy” style..Keep selling those “how to get wealthy with real estate” CD’s babeeeeeeeeeeeee
At Ben’s HBB: “It gets better everyday!”
Misinformation out via Associated Press
http://www.washingtonpost.com/wp-dyn/content/article/2007/06/14/AR2007061400513.html
“People who have taken out subprime mortgages, especially adjustable-rate loans, have been clobbered as rising interest rates and weak home prices have made it increasingly difficult for them to keep up with their monthly payments. ”
Weak home prices have nothing to do with people being able to make their monthly payments.
“Weak home prices have nothing to do with people being able to make their monthly payments.”
But they have everything to do with why people who are unable to make their monthly payments are also unable to sell their homes at prices that will cover the loan balance.
Check this guy out:
“I am thinking about doing a 2 property deal tomorrow and would like to hear what you think about it. The properties are in extremly desireable areas of the Phoenix metro area(3,000 sqft. in Chandler & 1700 sqft. in Gilbert). Chandler property is a sale price of $515,000 and the Gilbert property is a sale price of $360,000. I will get a total of $65,000 back at the close of both properties. I will live in one and rent the other out. I plan to use the money to do a couple of rehab projects. I can borrow from hard money and use my 65,000 to do the repairs. These type of projects are hard to find but still can make $10,000- $15,000 profit off of each. Also I want to invest in some pre-construction projects but will have to make some quick cash first to pay my 2 huge mortgages. My problem is I am scared to do this deal. What if it goes wrong? I have never even owned a home before. I am young and have never invested money in anything. I make decent money but not enough to cover this mortgage for to long if my plan does not work out. I do know a good deal about real estate, I am a mortgage broker with a background in construction. I think this will all work out but like I said I am afraid to think what will happen if it don’t. Please give me any words of wisdom you may have. Thanks from th bottom of my heart.”
Anyone care to save this guy?
http://tinyurl.com/38b9vk
Yes I will try to help him. I feel bad for him because he says he has a “background in construction” which probably means he mixed cement at a summer job while in college.
I don’t think this kid appreciates that his own instinct is trying to save him:
My problem is I am scared to do this deal. What if it goes wrong? I have never even owned a home before. I am young and have never invested money in anything.
I love it that a first time buyers is buying two houses.
Also if he is a mortgage broker he should know about the bust. He must be kool aid enthusiast (sounds like a name for a new magazine).
And finally, who would pay 500K to live in a 3000 sq ft tract home in Phoenix? I never realized that there was a certain cachet in being a Zonie.
“kool aid enthusiast (sounds like a name for a new magazine).”
Hahaha - and its companion book, “What Flavor Is Your Kool-Aid?”
“I am a mortgage broker with a background in construction”
Experience in two industry’s that have no barriers to entry, attract those people between jobs/loafers, require no education, and as Phillygal said, his experience probably consists of rubber stamping loans and doing framing for a living until the mortgage gig came along. Good luck pal.
well, he says he already “knows a good deal about real estate” - maybe someone needs to educate him about the variant meanings on that phrase…
I second the “Only Up” respondent: “Go for it!”
You just know davecade is going to ignore the sensible advice and zoom right in on “Only Up”. With laser beam focus.
Casey-Serin-itis spreads
Check out the number of foreclosed properties Countrywide has for sale in Las Vegas and Henderson.
http://www.countrywide.com/purchase/f_reo.asp
Just taking a look at random:
7828 Galloping Hills St, Las Vegas, NV 89113
CFC is asking 589,000.
Here is a zillow link
And here is the sales history:
03/05/2007: $504,000
10/18/2005: $667,000
08/04/2005: $575,000
08/14/2003: $340,000
What’s going on with the 3 month sale at less than CFC is asking? Trying to get a feel for how far things have fallen … gotta love the August 05 flipper that make 92k for 10 weeks work.
I stopped by a new home development in flyover country by Taylor-Morley. Walking in I startled the sales lady. I asked how biz was and she said, “Good. Good, but slow.” Two houses and a display are up out of 28 sites in nine months since opening. TM has issues-
http://www.stltoday.com/stltoday/business/columnists.nsf/joewhittington/story/9977202179AA73FA862572FA000BAC61?OpenDocument
This morning on 99.7 fm “La Invasora” a spanish language radio station in San Diego, a woman asked for help renting her home. It is a 2bed 2 bath condo in a gated community. She wants to rent it for $1500.00/mo.
The DJ said it was to expensive, and how much would she discount for “la Raza.” She said that here house payment was $3000.00/mo, so she was discounting it by half, and just wanted to save her home.
The whole conversation was in spanish, and this radio station caters to landscapers, maids, and short-order cooks.
Buh-bye house…
Paul
Gotta love the San Diego lifestyle. People making $10/hr living in 400K condos. I remember when illegals used to camp out in the (back then) empty hills in north county. You could see their campfires at night while driving down 78.
I also love the station’s name “la invasora” (the invader), which is a very apt name given San Diego’s illegal situation.
I also love the station’s name “la invasora” (the invader), which is a very apt name
Mercy goodness me, In Colorado, however can you say that? They are helpful people who only want to assimilate and learn our language and be respectful of every little one of our laws.
And they’re doing the jobs Americans do NOT want to do…GOT THAT?
Did you happen to see The Awesome Lou Dobbs’ exchange with the head of La Raza last eve? CNBC
I agree with phillygal! I teach many students who are either from Mexico or whose parents are from Mexico. These students are more polite than most other students and have strong family relations. I see a students who takes AP classes and graduate with a 3.7 GPA or higher but cannot go to college because they are illegal. This happens every year. What a waste!
I used to teach what they then called ESL, now they call it ELL, in Glenwood Springs at Colo. Mtn College - some of my students could tell you stories about how they got into the US (car trunks, etc.) - this was in the late 80s. Sure, they’re good students, but WTF? Why should we pay for them to go to college? Some of these people were real gems, but why the heck isn’t Mexico solving its own problems? Send everyone home to start the revolution they need.
They can go to college….in Mexico. Mexico has a vast network of nearly free universities.
now they call it ELL
English as a Loco Language?
Aw shucks, WAman - I was being sarcastic when I replied to In Colorado…but I do have a softer side when it comes to this issue. In general, I don’t think anyone who enters the USA illegally should stay here. However, I have witnessed busboys and busgirls, illegal aliens working hard for $hit pay. And my heart goes out to them. And I have witnessed them being taken advantage of by business owners of their own nationality.
But so far no one has been able to answer one simple question for me: Why are the rules different for illegals entering from south of our border than the rules were when my parents immigrated from their country…and were naturalized according to SOP?
And I agree with what lost in utah posted:
Some of these people were real gems, but why the heck isn’t Mexico solving its own problems? Send everyone home to start the revolution they need.
It sounds like some of the students you taught have a good foundation courtesy of the education they received here, and could make a positive contribution in their native land.
BTW WAman, I think Philly was being sarcastic, if I am not mistaken.
I see a students who takes AP classes and graduate with a 3.7 GPA or higher but cannot go to college because they are illegal.
What you really mean is that they are not eligible for taxpayer subsidized education. And in many states taxpayers do foot the bill for higher ed for illegals (we gabachos are chumps).
Why should they be subsidized? Even after getting their degrees they can’t work at any real job (unless they use a stolen identity).
but why the heck isn’t Mexico solving its own problems? Send everyone home to start the revolution they need.
As long as we are content to be Mexico’s escape valve nothing will change in Mexico (at least not for the better).
I think Lou Dobbs is on CNN.
This issue hits very close to home with me - on many levels. My cousin, also the son of legal immigrants, married a Brazilian girl who is now a US citizen thanks to corralling him. When I first met her I felt bad for her because she seemed so meek and mild and my cuz can be a Class A prick. But after that ring appeared on her finger, the real Claudia emerged. I was in the middle of a battle between the two of them when he referred to the illegal alien invasion. Madre de dios what a scene. The wife was practically spitting as she turned on her husband, defending the “rights” of the illegals.
I just looked at my cuz, raised my eyebrows, and took my leave. All I could think was, “dag did he do the right thing by breaking out the pre-nup two nights before their wedding.”
Testify, In Colorado. I suppose even parasites can be polite if they want to, but I find the “politeness” to be completey phony.
Many Americans are, for the most part, in COMPLETE CONFUSION on this issue, which is why it has come to this insane illegal immigration bill.
However, had anyone seen Bill Richardson on Meet The Press a couple of weeks ago, uncontritely acknowledging that he gave a free pass to Alberto Gonzales simply because he was Hispanic, it might “unconfuse” things in a hurry. Then again, maybe not. After all, Bill Richardson was very polite about excusing the trashing of the Constitution.
“However, I have witnessed busboys and busgirls, illegal aliens working hard for $hit pay. And my heart goes out to them. And I have witnessed them being taken advantage of by business owners of their own nationality.”
My heart goes out to them to, because the ones I know are very friendly and just trying so hard to make a life for themselves. Each time I visit my favorite restaurant, I make it a point to go by and say “Hola, como estas” to them and try and be friendly. However, I don’t think they are being taken advantage of, because if that were true, they could just go back home.
I’ve dated a couple ‘Mexicans’ and find the culture and their values charming - with one glaring exception. In all of them I know, illegal immigration is generally accepted and the laws restricting such activity are to be ignored. My friend was duped into marrying a guy for a green card. The ones I also know don’t care about car insurance and the like either, because when you have nothing, you have nothing to lose.
Utah loves illegals - they use them to apply pesticides (usually illegally) and they won’t complain about being poisoned (esp. in the orchards). Same in Colorado. They get sick from pesticide poisoning and keep working until they literally die. I truly believe being illegal can do more harm to these people than if they’d just come here legally, then they couldn’t be taken advantage of so easily. Businesses love them - disposable labor, no benefits, no way to complain or sue. No wonder Bush keeps trying to get the amnesty bill passed, the liberals (and I can be one depending on the issue) seem pretty clueless on the real reasons for the amnesty bill.
See:
http://www.denverpost.com/economy/ci_6043004
Interesting article about subsidized housing for (legal) migrant laborers in central Colorado. I’ve been there. 20 years ago I had considered moving there, but It’s truly the middle of nowhere. Very flat, dry, high-altitude farming country, really cold in the winter. Mountains all around. Very productive for potatoes, lettuce, etc., but a very very long way from markets. Last time I drove through, there were small mountains of potatoes being buried with huge bulldozers because of a surplus. $10 million in subsidies for migrant housing, just 2 projects, all basically to subsidize the growing of potatoes & lettuce, products that could be grown a lot closer to the markets. It’s nice the workers have decent housing, but it seems a waste of resources, considering the location of the area. I think that if the local growers can’t find enough workers to handle these crops, they should be growing something else rather than have the rest of us taxpayers pour our money into this subsidy.
Really, all the Mexican kids I meet are little monsters. Loud, littering, unintersted in studying. You must be living in some strange enclave of the world, WAman.
I think this is happening in a lot of other places as well, but the chicago tribune seems to have stopped updating its “recent home closing prices”. Nothing since March (and they had generally been up there within a month of a sale).
Go to Crain’s website (www.chicagobusiness.com). There’s a link for public records and then another link for Cook County property transactions. They are current to the middle of May.
I’d written several comments on how our local paper’s site was no longer showing recent sales. Well, they just posted 2 weeks’ worth that are a month old. So, it seems that instaed of getting them within a couple weeks, we’ll now be getting them a month late.
Are any of the nationwide foreclosure tracking pay-sites particularly good, or bad? Looking for comments from any HB’ers who have used them.
Thanks!
Many of the foreclosure sites are a scam and have old data. You need to find the judicial site for your state/county and get the information hot off the court house steps. For example, Maryland has this site:
http://casesearch.courts.state.md.us/inquiry/inquiry-index.jsp
I do wildcard searches on last names by just plugging in the letter “A” to see all the cases that begin with an “A.”
Set the case type to civil and the type party to defendant, then select the county.
Doing this I can see all the foreclosures getting filed in Md in real time and way ahead of all the folks paying those crappy websites for this free public data.
You can view the data on Md home loans at this public site:
http://www.mdlandrec.net/msa/stagser/s1700/s1741/cfm/index.cfm#CLIENT.URLTOKEN#
For California, this is the best pay-site available:
http://www.foreclosureradar.com
~Misstrial
NEW YORK, June 14 (Reuters) - Bear Stearns put $4 billion of mortgage bonds, mostly top-rated assets likely to attract buyers, on sale on Thursday to raise cash to cover reported losses by one of its hedge funds, fund managers and other sources said.
Now we know why interest rates went up!
Great point! When kingpins are dumping mortgage bonds, the natural consequence is to depress prices, which is tantamount to an increase in interest rates (bond prices and interest rates are inversely related).
BOND REPORT
Treasurys yields resume upward climb at midday
By Leslie Wines, MarketWatch
Last Update: 12:28 PM ET Jun 14, 2007
NEW YORK (MarketWatch) — Treasury prices reversed course yet again in hectic midday trade Wednesday to post losses, as the fixed-income market reacted to new data and earnings reports from financial services companies showing continued deterioration in the sub-prime mortgage market.
Earlier prices were lifted by safe-haven demand spurred by recent reports from Wall Street banks, including Bear Stearns Cos. and Lehman Bros., that highlighted the weakness in the subprime sector.
However, the subprime worries also increased the nervousness in the market, which in the past week has experienced numerous selloffs due to widespread perception that global rates are headed higher.
“News of the $4 billion mortgage-backed securities bid list circulating from Bear Stearns’ hedge fund mortgage assets first began circulating late Tuesday,” Action Economics wrote on its website.
“That coincided with the capitulation blow-off in Treasury yields, which surpassed 1-year highs to mark a 5-year peak yesterday before settling lower,” the firm wrote.
“This also coincided with market rumors of a hedge fund and/or investment bank in distress earlier in the week that had perversely driven yields higher, rather than lower in line with any boost in the safety premium. Untangling of these assets still appears to be at the root of this price action,” according to the firm.
http://tinyurl.com/ytjsmf
I was listening to a podcast today about American automakers, specifically Ford. It pisses me off so bad that GM and Ford are fighting any increases in CAFE using fear mongering that people are going to confiscate pickup trucks. It looks like Ford is going to do a restructuring on the backs of the employees. I have little sympathy for a forklift driver making $88k a year, but I also don’t feel the workers should take a brunt of the punishment for piss-poor corporate decision making. If Ford would make a product that people wanted to buy, any kind of discussion of wages/benefits would be mood. Just 10 years ago Ford was one of the most profitable companies and they expected the SUV boom to last forever. I am 100000000% against any kind of taxpayer subsidy or bailout for the American auto makers. I will continue to buy American cars (all I have ever owned), but treating the symptoms and not the disease is a losing proposition. For all the time these companies are putting into propagandizing, they could be working on a new line of fuel efficient vehicles.
Oh by the way, my post above relates directly to the housing market with the masses pissing away cash-out refis on suvs and pickups (among other needless toys).
I oppose government-mandated fuel economy, especially in the way it’s been proposed. Our sub-intelligent legislators even want to mandate drastically improved fuel economy on semi-truck/trailer combinations, too bad no one has the faintest idea how to improve on the current situation. If the government wants to promote fuel conservation, a $5 a gallon tax on imported fuel would really do the trick, people would bail out of their SUV’s and other gas-hogs as fast as possible, and surely Ford, GM & Chrysler would just go out of business in a year or two. (Not to mention any legislator who supported this.
In the theory of free markets, I concur.
BUT…as we have seen repeatedly, people migrate to fuel efficient cars when gas is expensive and guzzlers when it’s cheap. If the automakers put some money into economy instead of raw horsepower we wouldn’t have the issues we do today. Remember that the auto industry was against seat belts, anti-lock brakes, and airbags, and look how beneficial they have been for society. Economy will be as well, and if GM/Ford still want to sell pickups, they will find a way to make them efficient. It’s a damn shame that economy hasn’t risen AT ALL In the past 20 years.
I agree that the current polices are naf (a fleet requirement just means that they have to build one really ugly but efficient econobox no one wants rather than working to achive a weight or size to mileage ratio), but I don’t want a high gas tax. One, I like driving, even in the 2nd worst traffic in the nation. Two, it would disproportionately affect poorer people who have to live beyond the burbs, rural people, etc. Third, I don’t want to even think about how much more produce would cost as it’s shipping skyrocketed.
If “people migrate to fuel efficient cars when gas is expensive and guzzlers when it’s cheap” what good will federally mandated fuel efficiency standards do? Just make gas expensive. People will take the course of least resistance. An alternative might be a very stiff annual tax on vehicles which get poor fuel economy.
I like driving too, but I think that way of life is on its way out. The USA has little choice in what it pays for motor fuel, since it produces so little and consumes so much of it. Poor people are already being disproportionately affected & they will be worse off as petroleum continues its inexorable rise. Isn’t everybody noticing how the price of food IS rising? It was enough to make me start tilling my backyard & putting some tomatoes, peppers, cukes & bok choy for the first time in a few years. Shipping these veggies from the field to my table will require very little gas.
The question is why aren’t SUVs and pickup trucks subject the same gas-guzzler tax that cars are. Just add a tax like that, and if people are willing to pay it, so be it. I don’t want expensive gas anymore than you, but we have to admit that there is a major problem right now, and our conflicting priorities of energy-independence and freedom to waste fuel are, well, conflicting.
Does anyone have info on the big three’s inventory as of late? Last I heard back in Febraury was that their vehicles were piling up and they were resorting to some clever tricks to hide that.
One of the most interesting proposals I heard to reduce both fuel consumption and accidents is to base car insurance costs on mileage driven. The technology has been worked out. In essence, since the cost would be per mile, and also based on driver hazard, the charge would tend to reduce miles driven especially for bad drivers. Since accident rates really do seem to be a function of miles driven times driver hazard, this is also the optimal pricing method for auto insurance.
A citation:
http://www.sightline.org/research/sust_toolkit/solutions/payd
Great idea, I would rarely drive, and this would force people to make economic choices on driving vs. living closer to work, etc.
Same here Living in NYC i drive maybe 4000 miles a year, and almost all of that is driving to my DJ gigs and my parents house in CT. Why should i pay the same for someone who drives 100 miles a day to work and back?
The money crunch is hitting home. Record high numbers of Minn. homeowners having their natural gas service disconnected for nonpayment:
“CenterPoint Energy, the state’s largest provider of natural gas, reports that about a third of its customers — about 208,000 businesses and households — owe money after the heating season. More than half of the delinquent customers are at least two months behind on their payments, and owe an average of $1,500, according to CenterPoint.
Economists, credit counselors and utility officials can’t point to an exact cause, but say that high consumer debt, rising payments on adjustable-rate mortgages, and higher levels of unemployment likely are driving forces.
CenterPoint has outstanding bills of $100 million, double what the company has seen in recent years. “I spoke with a 20-year veteran of the credit and collections department, and she’s never seen anything in her experience that comes close to the delinquency figure we have today,” said Rolf Lund, a spokesman with CenterPoint.”
Full story at
http://www.startribune.com/462/story/1244702.html
I guess Minnesotans were too busy spending their dough at the Mall of America to notice they had no money left to pay the gas bill?
——————————————————————————
Retail sales snap back - and then some
U.S. store sales jumped 1.4 percent, doubling forecasts; ex-autos up 1.3 percent.
By Parija B. Kavilanz, CNNMoney.com senior writer
June 13 2007: 11:25 AM EDT
NEW YORK (CNNMoney.com) — Retail sales snapped back with surprising strength in May from a weak April, the government said Wednesday, news that could ease growing worries about a possible consumer spending slowdown in the months ahead.
The Commerce Department said sales jumped 1.4 percent in May, boosted in part by higher gasoline prices, after falling 0.2 percent in April.
It was the biggest increase since January 2006 when sales jumped 3.3 percent. Economists surveyed by Briefing.com had forecast a rise of 0.6 percent.
http://money.cnn.com/2007/06/13/news/economy/may_sales/?postversion=2007061311
A good part of this problem is the 600% rise in the cost of natural gas since about 1980, as the gas wells supplying the USA decline in production. The USA imports very little natural gas (except from Canada) & is scarcely able to keep up with current demands. This is a whole other topic. The only part of the USA benefiting from this situation are places like Grand Junction Colorado, where new gas wells are being drilled as fast as possible.
Why these highly paid “utility officials” didn’t mentioned these facts is truly noteworthy.
Theft rising @ wally world…
http://apnews.myway.com/article/20070614/D8POH86O0.html
someone really hates realtors.
http://www.chicagotribune.com/news/local/chi-geneva_14jun14,1,4374852.story?track=rss&ctrack=1&cset=true
From Lemony Snicket’s “A Series of Unfortunate Events”
——————————————————————————-
Aunt Josephine: I hate it here.
Violet Baudelaire: Well, maybe, Aunt Josephine, you should think about moving.
Aunt Josephine: Oh, I could never, ever sell this house.
[pause]
Aunt Josephine: I’m terrified of realtors.
[flashback]
Realtor: Is this a bad time?
Aunt Josephine: Aaaaaaaaaaaah!
http://www.imdb.com/title/tt0339291/quotes