Bits Bucket And Craigslist Finds For June 21, 2007
Plese post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Shock and auuuugh!
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7LCp2Acv2aw&refer=home
Yeah, sucks doesn’t it, when you have to face the truth. Makes it hard to give yourself a bonus based on ephemeral “values”
A sale would give banks, brokerages and investors the one thing they want to avoid: a real price on the bonds in the fund that could serve as a benchmark. The securities are known as collateralized debt obligations, which exceed $1 trillion and comprise the fastest-growing part of the bond market.
Because there is little trading in the securities, prices may not reflect the highest rate of mortgage delinquencies in 13 years. An auction that confirms concerns that CDOs are overvalued may spark a chain reaction of writedowns that causes billions of dollars in losses for everyone from hedge funds to pension funds to foreign banks.
now that’s what I call junk in the trunk
NYT has some info not in the bloomberg article:
http://www.nytimes.com/2007/06/21/business/21bonds.html
It sounds like they leveraged AAA to by junk, and were playing the spread.
What year is it again?
Can’t wait for the Olympic Games to start in Los Angeles…
It’s like all the FB neighbors trying to decide which is worse, a bank owned repo or somebody accepting a lowball offer.
This will have a much bigger impact that stretches far beyond current hedge funds and current CDOs. As these CDOs become progressively worthless, credit markets will continue to tighten, especially in residential real estate credit markets. In a few years, I imagine the tightening will close down almost all suprime loans, most Alt-A loans, and even start to tighten prime mortgages. In the long run, the tightening credit markets may affect the housing market far more than all these foreclosures.
“Because there is little trading in the securities, prices may not reflect the highest rate of mortgage delinquencies in 13 years.”
Houses face a similar pricing problem in a dead market to that of CDO assets. What is an appropriate comp when nothing has sold in the neighborhood for months?
Is it safe for me to leave my securities in Merrill’s custody?
If not there, where?
Is it safe for me to leave my securities in Merrill’s custody?
My widowed mother is asking the same question.
Interestingly, without my nightly HBB and Drudge inspired news reports at the dinner table she wouldn’t have a clue.
This may get ugly. Really, really ugly. Not just for the funds investors, but for all of us. Could this be the start of the meltdown?
“Could this be the start of the meltdown?”
I think it may be the biggest story to housing since I’ve started coming to Ben’s blog (early 2005).
Remember, in the end the thing that allowed the “fog a mirror” loans was investor appetite for mortgages, and MORTGAGE BACKED SECURITIES.
The investors paid higher and higher prices for these things (MBS, CDO, CDS, etc), which dropped their yields, which dropped the interest rates on mortgages for future homedebtors.
as housing continued to rise, the financial sector got more “innovative” and thought that they eliminated all risk. This allowed them to drop the prices of the financial products, thus dropping mortgage rates further
The last 1 year the risk has shown itself, but it masqueraded as “contained”.
Now Bear Stearns (one of the big boys, an inner circle group if you will) is bleeding, and taking down other big boys (Merrill, BofA, Citigroup) as well.
The sharks are turning on themselves (Merrill attacks Bear, Bear trying to fend itself off, etc).
The problem-once those CDOs sell (or don’t), we’ll have a new clearing price for CDOs, presumably much lower than was originally thought.
Around the country, firms will need to scramble as they realize what their holdings are “worth”
this will make investor appetite for these products (CDS/CDO/MBS) wane, in a reverse process of 2002-2006. Investors will thus demand a higher yield to compensate for the “new” risk, which will in turn raise mortgage rates.
Fed cannot stop this. Lowering the Fed Funds Rate won’t work, just like raising the FFR didn’t raise the mortgage rates the last few years, Greenspan’s so called “conundrum”
The only thing the Fed can do, would be to actively intervene and purchase the Bear Stearns/Merrill/BofA/Citigroup securities, so that they can never make it to market.
they may do this as part of the PPT, if they recognize this as systemic risk… it would also have a side benefit of pissing GetStucco off.
I would not be surprised if the Fed covertly does just that. It averts “systemic risk”, it saves a big boy from collapse, it keeps everyone happy (except aforementioned GetStucco)
FWIW:
GS: we’ve amicably butted heads about the PPT involvement many a time.
I still strenuously disagree that they have intervened much in the equities markets over the last half year, even during the February correction, and even with respect to Homebuilder stocks.
However, I believe even more strongly that the PPT WILL intervene with this Bear Stearns situation, if not now, then once the next card falls.
This is precisely why the President’s Working Group on Financial Markets was created IMO.
In many ways, it’s simply a repeat of LTCM.
will they succeed? I dunno. But the $$ amounts are “small” enough that they just might.
that said, even if they do succeed, you will quietly (behind the scenes) see tightening of the CDO/CDS/MBS markets anyway.
(Fed will behind the scenes say ‘no more’-and nobody fights the Fed, not even the big boys… they know who keeps them safe at night)
HIC, Please clarify a point. Assuming a small bailout occurs (very plausible), the FED just can’t say “no more” can they? I mean the mortgages are defaulting and no one can stop that so who gives a rat’s ass what the FED says? Bear Stearns would have stopped it already if they had control over these things so I don’t see where intervention does anything other than kick the problem to a later date when other defaults occur. Eventually either the FED buys up all the CDO’s or they start being sold at market value, in which case they all get marked to market. What am I missing?
HIC, You are on the right track, the problem is the CDO issue size. There are Trillions of dollars of CDOs that will have to be marked to the market (MTM), some of these CDOs are quality, some are nightmares.
The problem is not in CDOs themselves, the problem is that the rating services (S&P, Moody’s etc.) allowed subprime/Alt ‘A’ borrowers to be pooled and the resulting CDO rated/sold as AAA security. It is not possible to pay AAA prices for ‘C’ paper and adequately hedge.
Around the country, firms will need to scramble as they realize what their holdings are “worth”
Sure ain’t gonna be what all those bogus appraisal reports prepared by HS educated, rubber stamping, hacks said.
DON’T BLAME ME-I”M ONLY THE APPRAISER
-Vic the appraiser from “The Sopranos”
-LMAO…
“The only thing the Fed can do, would be to actively intervene and purchase the Bear Stearns/Merrill/BofA/Citigroup securities, so that they can never make it to market. ”
That would guarantee hyperinflation. Gold: 10K? 25k? 100K per ounce? Quite possibly dollars will be so worthless than no amount of them will make anyone part with gold.
There are several options the Federal Reserve could use without direct intervention. The NY Fed did not directly intervene in LTCM (by the way, Myron Scholes is seeking a license to advise Japanese pension funds after opening an office in the country.Before he set up Platinum, Scholes was a partner at Long- Term Capital Management LP, which collapsed in September 1998 as bets it made in world bond markets went awry.) The NY Fed requested (insisted, demanded?) that all major street firms pony up and bail out LTCM. If you want to play in NY and the Fed says anti up, you anti up.
In this case, this is not likely. The reason is akin to a private individual that buys a US T Bond. The bond cost the buyer 100K, the buyer clips her coupons and doesn’t care where the bond trades. However the Bond is Marked - to - Market and if interest rates rise the Bond is worth a lot less. Regarding the CDOs, should the sale of Bear’s funds go off at 60% discount to booked value. Every holder of those CDOs are hit with the New MTM value and hedges are settled within 24 hrs. Depending on the size of this issue, the amount of quick funds needed to meet margin calls could be $30 - $50B.
Not many street players are going to take a position that has a negative Sharpe’s ratio.
So the Fed may request that a player take over the entire position. This is more likely if the Hedged positions are truly hedged and not the normal BS that the hedgies pass off as hedged.
No worries, according to well-informed sources:
Treasury Secretary Paulson says housing correction is likely near the bottom
By Martin Crutsinger
ASSOCIATED PRESS
2:36 p.m. June 20, 2007
WASHINGTON – The major slump in the housing market is nearing an end and should not have a significant impact on the overall economy, Treasury Secretary Henry Paulson said Wednesday.
http://www.signonsandiego.com/news/business/20070620-1436-economy-paulson.html
Yeah, it’s getting near a lot of FBs’, HBs’, wage slaves’ and assorted investors’ bottom, ready to bite….
Yes, yes, I concur. It seems that we have reached a permanently-high plateau…
Perfect timing:
Congress Weighs End to Hedge Fund Tax Break
“Leaders of the tax-writing committees in Congress are considering a new proposal to end a little-known tax break that has allowed wealthy financiers who run private equity firms and hedge funds to cut their total income tax bills by billions of dollars, aides to lawmakers say…. [T]he new proposal would affect many more firms and could raise $4 billion to $6 billion annually. It may be attached to a tax bill expected as early as July as a way of helping offset the cost to the Treasury of relieving the growing burden of the alternative minimum tax on large numbers of taxpayers, aides said.”
How long will it be before Congress takes away or cuts the amount of the 500K exclusion on capital gains from real estate ? That tax exclusion was just to good to be true and no question it set up alot of two year flipper investment plans .
Fiscal wake up tour! Question do the masses really care about this?
http://www.washingtonpost.com/wp-dyn/content/article/2007/06/20/AR2007062002342.html
LMAO!! The tour was sponsored in Tampa by Mel Martinez, R-Cuba. ROTFLMAO!! Maybe Mel ought to sponsor that same tour in all the illegal immigrant neighborhoods and the companies that employ them and tell them to stop soaking the American taxpayer for welfare, education, health care and increased law enforcement costs. Maybe Mel ought to sponsor a symposium for CONgress and tell them to give up their numerous perks, health care (which we don’t get) and taxpayer funded pensions. Maybe Mel could sponsor a tour for corporate government contractors like Blackwater and Halliburton and tell the to refund all the wasted billions they received as a result of the Iraq war. Hey, maybe he could sponsor an international tour and tell the many countries to which we send billions in aid that the teat is gonna dry up.
Concord Coalition…..Basically a plea by the upper crust think tanks (Brookings/Heritage) to snooker taxpayers and people who have worked all their lives…..just take 1/3 of your pensions instead of a whole go away like a good little serf…we need to save the nation for bankers.
Yah, this has elephant and donkey poo all over it. No wonder Martinez and company want the 5 dollar an hour labor in here to cut the throats of every American worker’s wage scale.
Can sell them 4.2 million unsold houses too…3 illegal families to a house as Bloomberg Radio was postulating last week.
“If projections hold, Farrell and his contemporaries could face a near-doubling of their income taxes over the next 35 years just to care for the burgeoning ranks of older Americans.”
This is being disseminated on the taxpayer dime to young professionals and kids in college. Typical totalitarian disinformation campaign. No wonder there’s so much animosity toward boomers. It is being fomented by design. Interesting, too, that we’ll probably see campus demonstrations about it, when students in the US couldn’t get it up to protest the biggest corporate scam ever, the Iraq debacle.
” biggest corporate scam ever, the Iraq debacle.”
Dang. I forgot to give honorable mention to the housing bubble.
Believe me, the hostility toward Boomers is not being “fomented” by design. I’ve felt that way about the generation of breast implants and tanning salons ever since I was a young child, long before social security privatization came onto the national agenda.
Decadence, drugs, divorce, divisive, ridiculously-emotional politics, and now the Housing Bubble — these are the legacies of the Boomers. In a few years, “crushing tax increases” will be added to the list.
One of the reasons why I am so fascinated by this housing bubble, aside from the obvious reason that I am completely priced out of the market and cannot afford to buy a house, is that I think it will ruin many, many Boomers. And this time, they’ll be too old to get back into the game.
In fact, the crash of the market seems to be coming along at exactly the right time — the market is going to tank just BEFORE the Boomers start retiring en masse! It’s like, Karma, man.
Couldn’t have said it any better Joe.
“breast implants and tanning salons”
Tell it to Paris Hilton
“Decadence, drugs,”
Tell it to Lindsay and Brittney
“I am completely priced out of the market and cannot afford to buy a house”
Tell it to the NAR
the generation of breast implants and tanning salons
Honey most of us are past breast implants and tanning salons and most of us weren’t a part of that in our younger days. Boomers don’t hold a monopoly on stupidity and greed, it’s a multi generational thing.
Yeah, gotta love that animosity. Of course they want to work for our companies and law firms and be paid top dollar for it.
Here’s a better read on the mindset of these people:
http://www.thestreet.com/funds/saving-money/10363207.html
Thank you Mabel. Most Boomers had nothing to do with the hippie crap of the late 60s and early 70s, the drugs, or any of the rest of it. The reason it seems like they did is because so many of the freaks who were into this stuff went on to become (1) “journalists” and (2) university professors–and they’ve greatly misrepresented their numbers and their historical importance. These old hippies, now groveling for cash, do not represent Boomers; they represent Boomer outcasts.
The Yuppies of the 80s were far, far, far, more responsible for the mess we are now in. They were the ones who told us that greed was good, that everyone had to wear designer labels on the outside of their clothes, and that nothing in life was more important than externally outdoing the Jonses. Their grown children are even worse, and together with their pretentious parents have given us the housing bubble and all of the trimmings: Hummers, granite, etc. I don’t know any Boomers rushing in for plastic surgery, but boy I see a lot of 20 and 30 somethings going in and out of the clinics nearby.
These guys (most of them are men, but I’m sure the gender distribution of middle-aged burnouts from my generation will be more equitable) spent their young lives earning lots of money and saving so they could live in the posh, if culturally impoverished, suburbs of northern Westchester, then they hit 40 or 50, leave their families, get a girlfriend or three, and blow all their retirement savings trying to buy back their youth.
Here’s a crock o crap…All the 40 & 50 YO single men I know have been cleaned out in gender biased courts by divorces largely instigated by their emotionally unhappy spouses.
With pensions divided by half, real estate liquidated by court mandates, alimony and child support payments, the costs of maintaining 2 households, it’s laughable that he should think there’s sufficent resources left to support “a girlfriend or 3″, who in great GenX&Y tradition, believe they are entitled to all the finer things in life.
Talk about a fantasy world.
Well, it is definitely the Boomers that come up to small places like Eureka, CA, Chico, Ashland, OR, Bend, et al and grossly inflate property values. It is not Gen X or Y since there are no jobs in any of those places. It is greedy Boomers who never saved a dime but suddenly have all this “equity wealth” and wish to throw their weight around.
That is why I refuse to buy a house from any of these people: they are so caught up in the idea of not “giving the house away!” that they will just sit in it and bleed cash. I’ll let them–it will ensure that I don’t pay for somebody’s retirement.
We took our equity and changed the economic prices of housing, in my town…
What’d the town get in return?
Solid people that won’t be foreclosed on.
Big P~
Here’s one to chew on…from Drudge this AM.
http://greenvilleonline.com/apps/pbcs.dll/article?AID=/20070620/NEWS01/706200388/1004/NEWS01
“Berry said investigators were not surprised by the number of positive skin tests because so many of the employees are foreign-born. People born in other countries are nearly nine times more likely to have TB than those born in the U.S., according to the U.S. Centers for Disease Control and Prevention.”
Notice how carefully they avoid saying “illegal immigrants.” People born in England are not nine times as likely to have TB as people born in the U.S. This average for “People born in other countries” is PC doublespeak lumping all foreign-born people into one absurd average.
When our own government–including the CDC–places PC above truth, and the Press is apparently incapable of plain speech, how can anybody here trust anything in print?
“poultry-processing plant” - yep… those are illegals.
You da MAN, hd. Wow, even though I shouldn’t be shocked, I am. The media hyperventilated ad nauseum over the one American Anglo guy who flew on a plane. But I don’t see them hyperventilating over all the illegals handling the food, nossir!
Those comments after the story were pretty incisive. I hope they call Lindsey Graham and ask him why he’s working so hard to snuff out his consituents.
This seems to be an example of the budget perception issues that we are being warned about. Interest payments are huge and social security and medicare are set to explode. Serious attempts to study the cost of immigrants have never come to consensus, though they always find much lower numbers than entitlement programs explicitly require. Foriegn Aid is also a very small slice of the budget relative to other elements such as Military Operations and of course the really big stuff like the interest payments and entitlement programs that are set to explode.
As far as the housing bubble itself goes, it is unlikely that immigrants and foriegners are going to turn out to be the key. Structural things like the interest payment exception on taxes are factors, but probably not as key as the vortex of bad loan making that went on. None of that was driven by foreign involvement, and it isn’t likely to be covered by a bail out because the numbers are too big and the debts are too toxic.
Does anybody have the latest on how Paris Hilton is doing?
She has been given the great duty of mowing lawns to help time go buy.
(Question do the masses really care about this?)
Did they care about whether people could pay off the inflated mortgages two years ago? What we have is a generational war. The kids are too lazy stupid to fight back (some of them are doing to their personal finances what prior generations are doing to the public finances), and (most of) their parents aren’t fighting for them. And then it will be too late — kind of like the losses on subprime mortgage bonds.
What the rich people in the know care about is the estate tax. They want their own kids to be insulated from the world they are creating.
What are you, kidding? We’re not too “lazy and stupid” to fight back. We can’t fight back! We have nothing! In politics, money=influence, and we don’t have any money. We have student loan debts, temp gigs, and — for now — limited opportunities for advancement, given the number of Boomers who already occupy all the good jobs.
Even if we were to get active in politics, the Boomers would still outnumber the Gen-X’ers by almost two to one! Eventually the X’ers and the Y’ers will be able to join forces, but the Y’ers are still a decade or more away from the age when political participation starts to meaningfully increase.
IMO, the only thing that will change this is time. The tables will turn eventually, but organizing a bunch of “protest marches’ isn’t going to accomplish anything.
“We’re not too “lazy and stupid” to fight back. We can’t fight back! We have nothing!”
Ah, I see. Generation Whine.
No need to fight back or whine >; )
Henry: Fight me, and you’ll lose.
Phillip: I can’t lose, Henry. I have time. Why, just look at you. Great heavy arms. But each year they get a little heavier. The sand goes pit-pat in the glass. I’m in no hurry, Henry. I’ve got time.
Henry: Suppose I hurry things along. Suppose I say that England is at war with France.
Phillip: Then France surrenders. I don’t have to fight to win. Take all you want… this county, that one. You won’t keep it long.
Henry: What kind of courage have you got?
Phillip: The tidal kind… it comes and goes.
Henry: By God, I’d love to turn you loose on Eleanor.
The Lion in Winter
“We can’t fight back! We have nothing! In politics, money=influence, and we don’t have any money.”
Tell it to Monica Goodling and Kyle Sampson.
They had blind faith backing them up…
“But I’m near the end and I just ain’t got the time
And I’m wasted and I can’t find my way home.”
Blind Faith
Here’s a brief read to turn that frown upside-down. Go “team XY & honest boomers”!
http://www.lewrockwell.com/ostrowski/ostrowski83.html
Thanks, Carolina W. That made my day. Also interesting is Michael Bloomberg’s latest move. The silence was deafening at the Clinton campaign and also at the Giuliani campaign. No, I wouldn’t vote for Bloomberg if he did run, I’m Ron Paul all the way.
Joe:
I’m gonna disagree with you here.
The Boomers ORGANIZED and they FOUGHT and were heard, even in their youth (teens and early 20’s).
I watch footage from before I was born of people like my parents taking to the streets en mass…
the current Gen X/Yers (which includes me) have been pampered by the Boomers, so much so that our fight is gone.
We don’t take to the streets because we DON”T CARE. We simply ignore what’s going on around us.
who knows why? maybe we have no hope? maybe we’ve been brainwashed? Maybe we DO have it too good?
but our parents had a tougher environment than we do (they had a draft, they had stagflation, etc) and they did something about it.
(not always the best solution, but they tried anyway).
we could take to the streets. A vote costs $0. you don’t need money, especially with the internet… things can be organized very cheaply (see Howard Dean as example… or what’s going on with Ron Paul).
The problem is that Gen X and Gen Y don’t care either, as long as they get theirs. (or as long as the PROMISE exists that they’ll get theirs)
blindside them with high debt, (but lots of goodies to show for the debt) and low monthly payments.
I guess Marx had it wrong, “LOW PAYMENTS are the opiate of the people”
(actually, I think the Marx quote is a common misquote)
But anyway, if a bunch of stoned hippies could organize and protest and make change, then so can the youth of today.
‘What we have is a generational war.’
And please take it to the generational war blog….
Ben, this is relevent (although slightly off the wall) because many silly boomers counted on their homes as cash machines and expected a shack built of wood and plaster to pay for their retirement.
I’m afraid my generation will end up paying for retirement for those who pissed away their money on SUVs, boats, and McMansions, constraining our ability to grow the economy.
Anybody here know ANY Boomer who has saved for retirement? If you do don’t they stand out? Meanwhile ALL of my x-gen friends are saving for retirement and KNOW they have no chance of SS.
then why the negative savings rate?
I don’t know why people believe they will get “nothing” from SS. Its not like they are going to stop collecting the payroll tax. Discounted benefits? You bet. But none seems unlikely.
then why the negative savings rate?
I think 401(ks) and IRAs don’t count.
FWIW, most Gen X’ers that I know save nothing. But they look great in their BMWs.
401(K) and other pre-tax IRAs are ABSOLUTELY counted as savings in the personal savings rate stat. In fact, they are counted at their full pretax amount versus the post-tax disposable income.
Here,where I work, the older staff have almost nothing saved other then what UC says they have to save towards retirement which is very small. Forget personal savings, these people are in debt up to their eyeballs despite buying homes before 99′. Now these people do have some control over the money if they wish to but they uniformly say “I’ll put my money where UC says I should”. They have no interest in the markets or their place in them.
However, they follow American Idol like hawks and know every detail about Hilton going to jail - I kid you not! I thought people like that were a myth until recently.
Boomers saving for retirement? Maybe I’m in a weird place, but I actually know quite a few here who do. That’s not to say it’s a majority, but some of us really, really do save $20k/year and upwards. Hmmm… makes me think we’re not living it up like we should be. Either that or we’re overpaid (perhaps true, doh!).
The people I was referring to are older staff, not faculty. Faculty are shoving it away in droves apparently - when they aren’t getting the UC to fund their remodelling project that is. That’s a rant for another time.
These are also the same people that think I’m weird because I watch the markets and read Bloomberg, MarketWatch, WSJ etc. But then these are also folks that believe they will be getting 800k in 3 years for a home they bought in 99 for 120k. Reality is just that “stuff” that happens outside of Davis I guess.
As to student loans, first thing I did after grad school was pay those puppies down aggressively. Took me 12 yrs to pay off 85k (yes it can be done but now you know where all my .com salaries went). I’ve had zero debt since school, in part because owing 85K freaked me out enough that I wanted that monkey off my back as fast as possible. I was a young girl in the late 70s in the OC and I watched first hand how people where eaten alive by even good debt when the economy takes a dive. I didn’t want to be the poor friend sleeping in the spare room if we got back to that point.
Not to mention my mother has some chilling stories from growing up in Germany in the 30s and 40s - that’ll freak any kid into being sensible.
Anybody here know ANY Boomer who has saved for retirement?
Me. In fact I have already saved enough to retire on.
>>Even if we were to get active in politics, the Boomers would still outnumber the Gen-X’ers by almost two to one!
Here’s a suggestion: take a look at the US Census for whatever period you deem Boomer and whatever you deem X. What you will quickly notice is that there are more Xers than Boomers.
This is very easy to do, but true, it does require a few minutes of typing into a computer. So, whatever.
I am confused. ronin, you made a good point, and then you close with… nothingness. “So, whatever.” Huh? Whatever what? Must be NewKidSpeak.
We can’t fight back! We have nothing!
“Oh well a young man ain’t got nothin’ in the world these days
I said a young man ain’t got nothin’ in the world these days”
The Who
Sadly ironic…
Here’s what I don’t get. A good tort reform that raises the burden of proof on malpractice could easily drop cost of medical care by 25% or more.
Sure, a lot of laywers will have to find another line of work. Sure, going to the doc will no longer be the equiv. of buying a powerball ticket.
But, it is a GIANT step toward fixing the unfunded govt obligations in regards to Medicare.
try getting rid of or minimizing the finance/insurance industry component in health care cost. malpractice cost does add way less than your figure.
Test
Do these people talk like this with a straight face\?
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aN64WudO99kM
The worst U.S. housing slump in 16 years will begin to ease in the next month or two, and job growth will lift home prices and spur construction early next year, Bank of America Corp. Chief Executive Officer Kenneth Lewis said.
“The drag stops in the next few months,’’ Lewis said in an interview yesterday in New York. “It’s just about to be over. We’re seeing the worst of it.’’
“We do not see a recession,’’ Lewis said. “Because that drag stops, you’ll see the economy begin to pick up in the third and fourth quarters.’’
http://news.yahoo.com/s/ap/20070620/ap_on_go_ca_st_pe/economy_paulson_2
The major slump in the housing market is nearing an end and should not have a significant impact on the overall economy, Treasury Secretary Henry Paulson said Wednesday.
“We have had a major housing correction in this country,” Paulson said in an interview with a small group of reporters at the Treasury Department. “I do believe we are at or near the bottom.”
Anybody know how to hack into these sites and append the Credit Suisse chart just below the bullish comments?
The headline makes it sound like they’re covering their short positions.
http://www.reuters.com/article/bondsNews/idUSN2030782820070620
This reminds me of the late “great” Irving Fisher in 1929 :-O
The stock market crash of 1929 and the subsequent Great Depression cost Fisher much of his personal wealth and academic reputation. He famously predicted, a few days before the Stock Market Crash of 1929, “Stock prices have reached what looks like a permanently high plateau.” Irving Fisher stated on the 21st, “the market was only shaking out of the lunatic fringe” and went on to explain why he felt the prices still have not caught up with their real value and should go much higher”
http://en.wikipedia.org/wiki/Irving_Fisher
Is Mr. Lewis saying the housing market and turn the economy around or that the economy will turn around and pick up the housing market? Either way he’s wrong but he really didn’t make it clear.
I love how these bottom callers never really give specific reasons for their theories. It’s just going to to happen “because”.
Dutch Lottery loser sues
Can you imagine what would happen if the Dutch housing market falls and the neighbor is forced to sell for a loss?
I just had to look her name up. “De Gier”. I knew in German “Gier” means greed — so very apropos in this situation! So given that the two languages are so similar, I thought I’d cross check it on an online Dutch translator. Nope, it doesn’t mean the same in Dutch; it came up as… “liquid manure”! Seriously. OK, perhaps that’s apropos, too, for an idiot who wants to sue because the neighbors’ won and she (who didn’t even buy a ticket) didn’t!
Actually it’s even funnier, ‘de Gier’ literally means ‘the Vulture’, as in the scavenging bird. ‘Gier’ also means liquid manure, btw. Classic. I’m dutch, but live on the west coast. My friends & family back home are convinced the housing market will continue to go up over there. Valuations are quite incredible, even by California standards.
Regarding that top zip codes for foreclosures list someone posted a link to yesterday.
My zip code is on that list. We’re #1 in Texas. Yeah! (That was a Howard Dean scream.)
I am beating myself up for not selling a few years ago. Instead we refi’d our 30-year loan into a 15-year. No, we didn’t take any mad money out. We saved a huge amount on interest payments but locked ourselves into an area which went down the toilet PDQ. Shame, there are nice houses here and decent subdivisions, but sprinkled amongst them like dog turds are older Houston RE bust-era subdivisions where the low-income FB’s bought. Bulldoze ‘em all.
The biggest financial mistake I have ever made was to buy this house. But my wife really liked it, I was young and much less savvy, so I went along with it. I should have put my foot down and bought elsewhere, which is what I wanted to do. My advice to young couples buying their first house: If you have misgivings and your spouse is eager to make the leap, put your foot down and refuse. Your inner voice is probably right. It’s not that women make bad choices, men are equally stupid when it comes to buying a house.
I agree with you. My wife and I need a new house like tomorrow and it’s hard to wait this out but she is pushing hard, but I will not do it until this market straightnens itself out.
This is why I keep beating the tired old drum about DFW and if you must live here, stay inside the loop. Same thing here, in places like Allen, McKinney, Frisco, Keller, etc., along with those hillbilly heavens east of town like Mesquite and Garland.
At least you are not hosed financially and when this crap swings up again, you’ll be able to sell.
Hillbilly Heaven - ha ha! I grew up over there near Dallas Athletic Club, Casa View area. It was a good enough area at that time and was still pretty decent the last time I drove through it. Unbelievable growth on the 30 and 80 corriders. There a subdivision out near Terrell called Windmill Farms where people actually commute to Dallas from, wow.
Frisco is already having problems from what I read recently. Those places you mentioned will be hosed. Old East Dallas, off Gaston around Baylor seems to have enjoyed a bit of a turn around.
That’s where I live now. East of White Rock. You could throw a rock in the water from the front yard of my house.
If you’re Roger Clemens, that is
“Men equally stupid”
Last December I posted about an 80-year-old friend of mine (male) who had “downsized” by buying a 2BR house BEFORE (alas) listing his 3BR 2LR house for sale. When I expressed horror, he said they were going like hotcakes. In Feb or Mar I posted here again to report that the hotcake (listed at $547K) had not sold yet. Later in the spring, I perused the listings of his agent, and did not see his house so supposed it might have sold. I saw him yesterday here in Maine (he’s from PA), and he says he is not taking a previously-planned trip to Bermuda because (surprise surprise) his $547K house has been reduced to $497K and is still not sold. I felt like repeating Stucco’s idea — it will sell in a week if you price it correctly — but the 80-yo has a lot more $$$ than I do, so is unlikely to consider my financial advice seriously. Correction: he HAS HAD a lot more money than I do. Of course there is no mortgage on either house, but just paying the two sets of HOA and taxes, and losing the investment income, must be an unpleasantness for him.
Lou, your neighborhood looks lovely. Maybe a few low-income types have moved in, but it still seems to be a very nice place.
Also, one of the big risks in residential RE is that you can’t always tell when a neighborhood will turn. It used to be that the nicer the neighborhood, the less susceptible it is to going down the tubes. That’s not really true any more. In many cities, the once Mayberry-like inner-ring suburbs are going down the tubes, while once-abandoned city neighborhoods have appreciated dramatically, despite the fact that the schools are still terrible.
Heck, the town next to mine is one of the “old money” areas of LA. But over the past 20 years or so, it’s deteriorated into an upper-middle-class neighborhood. I was not aware that this could happen, I thought the top end always stayed nice. But it doesn’t. People who inherited vast fortunes built really nice houses, and ambitious businessmen who had social insecurities aspired to live there. Now the only people living there are wealthy immigrants and two-income professional couples. It’s obviously still a very nice neighborhood, don’t get me wrong, but its salad days are over forever. The yacht and country club set has gone and will never return. Heck, in another 40 years the neighborhood may even reach middle class status. It’s still a nice place, but if the surrounding neighborhoods deteriorate….
Anyway, that’s just the way it is with residential neighborhoods. Neighborhoods change and there is really no predicting it. And since you’ve got a 15-year mortgage, don’t worry — you’ll be able to move eventually if you want to. I know you have kids and are worried about them, but the neighborhood should be okay for more than long enough, it’s obviously still a pretty idyllic setting. If it ever gets to a point where you really need to move for better schools, etc., you’ll be in a financial position to do so given that you have a 15-year mortgage.
“I am completely priced out of the market and cannot afford to buy a house”
Otay! Now everything makes sense. You are not priced out of THE market. You are priced out of A PARTICULAR market. I was, too, back in the day. So I moved to another state.
‘You are not priced out of THE market. You are priced out of A PARTICULAR market. I was, too, back in the day. So I moved to another state.’
Which harks to the notion that once home prices in California get back to more manageable payment levels, expatriates in other states will pull up stakes and head back to CA.
Yes, indeedy, and who will they sell their “alternate reality” houses in places like Texas to? The locals ain’t gonna pay their wishing prices.
This slumming of the neighborhood deal is more common than people realize. My dad told me of a once upscale suburb of Cleveland in the 50s was trashed in the 60s. My parents’ neighborhood went from middle class to low class when section 8 apartments were built there. This is why I love the party of LBJ (I’m being sarcastic, of course).
I lived in a really nice neighborhood in Missouri, out in the country. The worst problem we had was a carb missing from my neighbors’ truck one night. Within 5 years after we moved, the place looked horrible and run down, with one guy having a used car lot and people putting up metal sheds, etc. Used to be competition for the nicest yard. At one point we received letters in the mailboxes from people who WANTED to buy our house if we were willing to move to get into the neighborhood.
My brother tried to buy a house there a couple years ago, but the bubble had inflated prices about $30k more than they should be.
God, I remember the late 1980s. We were living in a 400 square foot ground floor front apartment overlooking an expressway, and had been for some time. Saving every penny. Bedroom so small our bed only had one edge — I had to crawl over the base and do a flip over the covers to take the spot near the wall. Bathroom so small I could crap and shave at the same time. Etc.
Every now and then my wife would get disgusted and upset and come home with the house and apartment listings. But we stayed put year after year until the market corrected.
And then we had no worries. We both worked part time when the kids were young. We’ve got lots of money in the bank, for college and retirement. We give lots away to charity. All because we saved and didn’t overpay for housing.
It’s a whole different life.
Sorry to hear about your (paper) loss Lou…
but that said, there ARE more important things than money.
sure, you’re losing some money (on paper) now… but hopefully you have a wife who is content.
I’d rather lose my money and my things, than lose my wife.
That said, if I made her mad she’d divorce me, TAKING over half my money and my things anyway!
thus, you’re probably still further ahead by keeping the little lady happy…
why does it have to be that way? i don’t know… ask Venus.
Besides, even if you had bought elsewhere, it may not have changed anything.
See below for my short anecdotal story from my ‘hood
HIC
Lou, just out of curiosity, where else would you have bought? Another part of Houston? Or another city? I ask because my wife and I are considering moving back to Houston but are having a hard time coming to a consensus as to which part. At this point, the only area we can both agree on is The Woodlands, but I’d like to have other options. Thanks!
I like the Woodlands too.
He’s in Katy I think or Sugarland. Those are just awful parts of town if you hope to ever make any appreciation.
You must buy inside the 610 Loop. It’s expensive and bubbly there but it’s the only part of town that holds value.
Speaking of Sugar Land, I live there and out of the 9 houses sold in our subdivision so far this year, 1 was purchased by an out of state (Walnut, CA) specvestulator. He paid $4K over the list price ($172,000) and then promptly put it on the market as a rental for $2000 a month. After several weeks on the market and no takers he lowered the rental to $1795 a month. After a few more weeks on the market it was finally rented out.
Frankly, I don’t see how he is covering PITI every month. If he’s hoping for a big payout next year, I don’t see that happening either. I’m afraid we’re going to have a foreclosure here pretty soon.
I love your blog handle!
Whoops, the list price was $265,000 and he paid $269,000. Sorry.
He had no business paying the asking price, much less over it. Houston ain’t San Diego, but he’ll learn.
Reminds me of a friend of mine who moved to Carrollton (NNW suburb of Dallas). His wife was hot to trot for a house, any house, and while he worked all day and just went along with it, she got tied in with some realtor to show them around during every minute of his free time.
Well, they drove all over that part of town looking at a few houses, offered on two over the course of a month and got outbid, and he pronounced to us at work that “There are just no houses out there”.
There were HUNDREDS of houses out there! What about all the signs up that his agent drove past with them? “Oh, she said those were already under contract.” More like, being sold by another agency, I said. But he refused to even call anyone else, saying his wife trusted “her realtor”. Her realtor, riiiight.
In the end, they bid about 5% *OVER* the asking price on a cookie cutter house in Carrollton — only way to tell his house apart from the nieghbors on that treeless stretch of bland houses is because for some reason his yard was gray from fungus instead of light brown from drought. I can’t believe they paid more than asking. But then, he was moving from Miami when houses were selling fast, so I guess he thought that was normal.
And so my friend and his wife were ecstatic when their wild offer was accepted. I bet the seller and all the agents were ecstatic, too. All I could do is shake my head.
It depends on what your lifestyle and place of work will be. Why not rent for 6 months?
I’m an inner looper myself based on where I want to hang out.
Lots of areas in Houston are good, particularly if you stay in the mammoth master-planned communities with stringent deed restrictions. I know many people don’t like HOAs, but in Houston they are vital since there are no zoning laws. It’s the Wild West here, and your HOA is the local sheriff.
Cinco Ranch is where I should have bought, or any of those other mega developments south of I-10 in Katy. The Woodlands is superb, but my line of work is not oil & gas and most of those people commute to a different part of town. Sugar Land is good. Champions is good. Rule of thumb: The “wealth belt” is sandwiched between the Katy Freeway and Westheimer, from downtown all the way to the farthest western exurbs. That belt is about 5 miles x 30 miles. It emcompasses River Oaks, Memorial, the Villages, Cinco Ranch, etc.
We never treated our house as an investment, just a nice place to live. We have a ton of “equity” (haha) in the house and would sell it free and clear even if it dropped 70%. We’ll probably stick it out a few more years unless things get much worse. We all want to move to San Antonio, but things are even crazier in that city right now.
You didn’t mention if you had children but if you do here’s a recent article which lists the best high schools in the Houston area.
http://www.houstonpress.com/2006-03-02/news/these-kids-go-to-the-best-public-high-school-in-houston/
Not yet. My first one is on the way. That’s one of the reasons we’re ready to get the hell out of Orlando. Thanks for the link. I also know that the Chronicle has a link to Houston area school ratings, searchable by ISD:
http://www.chron.com/class/realestate/homefront/reportcards.html
I didn’t have high expectations but the average SAT scores for the best high schools in Houston aren’t impressive. I’m not buying those graduation rates either. They have as much believablity as the so called “Houston Miracle in Education”
The Houston Chronicle is good for your standard “man bites dog” story but for in depth analysis they are a joke. Their best high schools list is a compilation of test scores and that’s about it. Check out the Houston Press series of articles for a list that looks to have been generated using a more comprehensive methodology.
But for your specific situation, OTownCajun, if your child isn’t even born yet, why don’t you just rent? That way you can get a feel for the city, do some more research in the area yourself, and most importantly, save your money! Also, you’ll have a chance to see how the housing market is going and whether you really want to buy or not. This blog is an excellent source for information in that regard.
Thanks to all for the advice. Regarding renting, we are definitely going to do that for a while. But I figure that it never hurts to start compiling data as soon as possible (even though in today’s market, data can change on a dime).
I lived in the Clear Lake area about 10 years ago and, last time I visited the area, was amazed at how quickly it had changed (and not for the better IMHO). Then again, I have a buddy who bought about 6 years ago in Fall Creek (off the Beltway in Humble) and not much has changed over there since then. When he bought, he was all geeked about the community golf course (not that he’s a golfer) and that the Shell Open was played on it. Six years later and there still aren’t many amenities (e.g., grocery stores) near the community, and he says that he would likely lose money if he sold (which he badly wants to do because his house is a ridiculously sized McMansion for a family of 3).
I agree. Hubby and I had the same debate about buying a few years ago: he was eager to buy, I wanted to wait. He agrees that we probably made the right decision by not buying, but he’s sill sore about it.
Buy now or be priced out forever…I guess that line is good no matter what the situation.
http://tinyurl.com/26m39x
My favorite line is: “Will never fall below market value”
–
Q1: How many people here consider this fraud and deception?
Q2: Is this part of the free market system?
Jas
That’s my fave, too. Sad thing about it is, the fact that it works shows the rampant illiteracy in the population. Pick out the word they don’t understand. “Market”.
A couple of his “surefire signs it’s time to buy” are actually valid, for instance, “you are comfortable with your compromises.” I guess he’s saying I should buy when I’m comfortable with the compromises involved in doing so. Ha ha. That time will come. It isn’t here yet.
I came across this flock of fore-sale signs on Google Maps’ new Street View feature:
http://tinyurl.com/34ojl3
(I saw this when streetviewr.com featured it, but the “permalink” to that scene no longer works, otherwise I would have linked directly there.)
Ack - I meant “for-sale signs,” of course. Sorry - coffee hasn’t sunk in yet.
You think that they would be smart enough to have just one sign. If I came up to that location with a realtor I would ask what is wrong with this place and then drive on.
If you rotate the view, looks like it might be condos/town houses. I think the multiple signs are for differnt units in the development.
I wouldn’t apologize — “fore-sale” has a nice foreclosure/REO ring to it. I think you’ve coined a phrase here !
Hmmm… for those with golf on the mind, it also signals immediate danger. Maybe my subconscious was being clever.
Check it out - I just noticed if you zoom out once and then pan to the left, there are even more for-sale signs on the other side of the driveway.
This is probably the street end of one of the older condo (formerly apartment) complexes in Santa Clara. Could be the only visible place for signs for 100 or so condos. I have friends who live in one of these. No one will pay the $30,000 plus assessment for earthquake retrofit, units are dark as caves, etc.
NYC Appraisal firms sign AG statement acknowledging pressure to jack up house prices — Mr. Miller - if you are reading this blog, as I know you do - it’s about time. Would love to read any press releases/ news clips showing how you crusaded against RE pressure from oh, say 2001-2006…Also woulda been nice if your research acknowledged the problem of appraisal inflation during those years.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCHC0uxmqYoU
I don’t get the Appraisers being victims thing. They are adults and professionals and are supposed to have ethics. Why is it the Lender or Broker or Real Estate Agents fault? The Appraiser makes final decision.
Why is it the Lender or Broker or Real Estate Agents fault? The Appraiser makes final decision.
Man, is this your first time on the HBB Board?
The racketeering between L/O, real estate agents, and appraiser’s relative to how they arrive at a pre-determined magic number has been discussed extensively.
jonathan miller is a worthless shill hack
with his stupid graphs/ what a jerk
As head of the second-largest U.S. bank by assets, Lewis, 60, has a sense of consumer demand.
Isn’t consumer demand what got us in this mess in the 1st place.
I saw first hand what people demand by the neighbors who used to live next door to us.
New leased cars every 2 years. New gadgets come out on cars, pay off the lease early with a credit card and lease something nicer.
House mortgaged to the very top, decorated by a professional, including an interior designer along with her entourage to give you that perfect look every Christmas. Remodel, remodel, remodel. Landscaping to rival any English estate, plus lawn and landscape service weekly. Handyman to pick up sticks after a storm, or change an outside burned out light bulb. Babysitter 4 days a week in the summer so the wife, who doesn’t work, can have some free time. House cleaner twice a week. Vacations at the Grand Floridian in Disney with 4 kids, and of course a babysitter (total 7 people). Dinner at Victoria and Alberts. All Character meals or fancy sit down restaurants. Birthday parties to rival the inauguration. Wife always flew to New York for 5 days twice a year to buy new clothes. She took kayak lessons in Hilton Head, so she went down for a week every month for 6 months. We live in “Ohio”. They got bored on the weekends, so they bought a huge house on a lake 45 minutes away. Bought another house with 8 garages in town to store all the collector cars. Husband needed a hobby. Bought a $100,000 motor home. Finally sold and built a bigger house in town, added an inground pool and a pool house many of us would love to live in. Kids went to private schools and started in private colleges, but after 1 semester dropped out. Too much work I guess. The extravagances go on and on. There’s too many to list.
Fast forward to 2005. Had to declare bankruptcy for the 35 year old jewelry business he inherited from his father. We gave him 5 years to run it into the ground, but it only took them 4 years. They divorced. He came home from work early one afternoon and apparently the wife had found someone who could give her another service she couldn’t live without.
Fast forward to 2007. I used to envy their lifestyle, now I’m sure they envy mine. Our house is paid for, theirs still mortgaged beyond what it’s worth. Their kids have no usable skills except spending money, and mine graduated college and we have no debt for that. We drove cars until they died, then purchased a newer model and drove it for 10-12 years. They are driving older cars now and probably don’t have the money to repair them. Every day they are being sued by someone and it’s all over the newspaper. Multiply these people by hundreds and hundreds of thousands just like them and that tells the housing story and the lifestyle that goes with it.
Be proud if you’re a little conservative because now they’re envying us.
“Be proud if you’re a little conservative because now they’re envying us.”
Great post! But I doubt if they’re bright or even aware enuf to envy us.
“Multiply these people by hundreds and hundreds of thousands just like them and that tells the housing story and the lifestyle that goes with it”
That’s what is great about the O.C., …That sort of financial behavior…is non-existent and is rarely displayed!
Nice story, Ghostwriter…
Yes, nicely written. I’ve never been around that kind of money, but take one zero off all the numbers and that’s the story of all the FBs I know.
The point is, they didn’t have that kind of money, they just spent like they did. Credit Card debt out the wazoo (all run through the business, so it wouldn’t affect the house). No equity in anything. At the time of the business bankruptcy they had $1.2mil in debt just to the big creditors. There’s probably another $500k in small debts that get written off, because there’s no collateral.
That’s a sickening story. What did he think, he won the lottery? Success in the retail jewelry business requires attention to detail, establishing and maintaining relationships with customers and employees, being knowledgeable and available, even humility. There’s a ton of competition. (Quality, price, service - you gotta have at least 2 of the 3.) How anybody could think a business like that could run on auto-pilot is a fool and a cad.
A town in Ohio, huh? This sort of stuff went on in my wife’s hometown, also in OH. Yours doesn’t happen to have the initials “CF” by any chance, does it?
No, no CF.
Heh heh, CF. Would the second word be Falls?
Multiply these people by hundreds and hundreds of thousands just like them and that tells the housing story and the lifestyle that goes with it.
I like the part where the wife bails when the shit hits the fan.
“Their kids have no usable skills except spending money…”
Count this as another HBB gem.
Problem with sub prime hedge funds is that the many of the investments of the hedge fund are not widely traded and they are valued using a “model” because there is not a real live market in those securites. So guess what happens when all these thin traded illiquid securities hit the market, they are not worth what the hedge fund manager thought they were and the losses are even greater than first thought. But that is not it, now every other hedge fund holding the same securities has to mark their investments down because the bank holding the securities as collateral realizes based on the sale of the securities/derivatives of the failing hedge fund that the collateral is not worth anywhere near what they originally thought. Now every one will start getting margin calls.
“Now every one will start getting margin calls.”
Bugs: eh, why is Daffy signing, “Oh Happy Days”?
on CNBC there are what looks to be like rumors that the funds might survive and etc. if you ask me, I bet a lot of people are terrified that bad auction results will mean that the value of their/others hedge funds aren’t the same anymore and they don’t want that.
Just read the top items at Bloomberg today. It’s practically a “washington and wall street” post all by itself.
Real-Estate Investors Head Overseas
By Jeff D. Opdyke
Word Count: 1,377 | Companies Featured in This Article: WisdomTree International Real Estate
Investing in real estate once meant owning rental property downtown or buying shares in a U.S.-based real-estate investment trust. Today, it increasingly means putting money in a REIT trading in Singapore or buying a pied-à-terre in a refurbished medieval village in northern Italy.
These days, real-estate investing is a international proposition. Nearly a score of global real-estate mutual funds have launched in the U.S. in the past two years, more than doubling in number. They now manage some $16.8 billion collectively, with more than $5.8 billion in new money flowing in this year alone, according to investment researchers Morningstar Inc.
http://online.wsj.com/article/SB118239257163142955.html?mod=hpp_us_at_glance_pj
Coldwell Banker acquires rival firm
Drop in home sales shakes industry
By Dean Calbreath
STAFF WRITER
June 21, 2007
SCOTT LINNETT / Union-Tribune
Clark D’Amico replaced a One Source sign with a Coldwell Banker sign in front of an Oceanside home yesterday after Coldwell Banker acquired the rival company.
In a further sign of the tightening real estate market, one of San Diego County’s largest real estate firms has acquired one of its rivals – a move that could be a harbinger of things to come in a sharply contracting industry.
The regional office of the Coldwell Banker real estate firm, which has 2,000 sales associates in San Diego and Riverside counties, has purchased Seaman Real Estate Services, a 200-employee firm that operates as One Source Realty in San Diego.
The top executives at Coldwell Banker and Seaman portrayed the acquisition as a marriage of two strong firms and denied that the weakness in the real estate market had an impact on their decision to merge.
“The acquisition was not over an issue of finance,” said Seaman founder Gregg Seaman. “It was an opportunity to be involved with a much larger firm.”
http://www.signonsandiego.com/uniontrib/20070621/news_1n21broker.html
‘Clark D’Amico replaced a One Source sign with a Coldwell Banker sign in front of an Oceanside home yesterday after Coldwell Banker acquired the rival company”
I’m going to start picking these signs up from the dumpster… to use in the Doo Dah parade this fall
talk about signs:
two buildings down the street from me has “short sale” sign out in front. fancy neighborhood mixed with condos. could this be the new sign?
Anecdote:
I’ve spoken about “the Russian” a few times over the years. He basically tore down run down homes on the block behind mine (we share an alley) and built huge beautiful homes there.
One sold for $750,000, and the other for around $650,000 I think (this is a lot for Minneapolis).
here’s the fun part:
Right next door to one of the houses is a duplex.
After the sales: the duplex went RENTAL. The owner couldn’t get enough rent, so he rented to Section 8.
SO now, you have 2 affluent families living in huge homes, right next a duplex with Section 8. The Section 8 duplex each is 3Br/3Bath.
there are at least 8 adults living in ONE unit, and at least 7 children. they are always outside having barbecues… so much so that the yard is now all dirt (the grass couldn’t survive). They are always playing loud music, and are quite offensive to the neighborhood.
(one day the women of the duplex were on the front step cat-calling the other women on the block… saying things like “Hey, you, you’re so hot!” and “what you got for me mama!”)
so long story short, buying has risk… because the neighborhood can change quickly with just 1 house.
Since that duplex went Section 8, we’ve had 4 breakins into garages in the alley (not mine yet).
anyway… you’re never “safe” I guess.
Hey Inspector,
does your town have tight zoning laws? On LI for example, there are limits on the number of unrelated adults that can legally occupy a home…a law meant to control “group rentals”. You might check..
It’s difficult to enforce these types of regulations because the tenants will always claim to be somehow related. Proving non-relationship requires fairly elaborate proof and in most cases, code enforcement agencies tend to treat that type of violation as a lower priority item.
It probably varies…this is out in the Hamptons, and the “groups” were young professionals, but no matter, the towns enforce this with a vengeance. Lordlords are on the hook for violations. It’s worth checking, if it’s where I lived.
And this is one of the reasons one shouldn’t be too quick to buy and when you do it should be on location, location, location.
Nice to see one of the big houses get nailed!
Hope this doesn’t get lost in the shuffle here:
http://www.minyanville.com/articles/BSC-CDO-collateral-credit-rating-agencies/index/a/13171
Actually, tx, I wanted to comment about this, but no space was left:
“Yeah, gotta love that animosity. Of course they want to work for our companies and law firms and be paid top dollar for it.
Here’s a better read on the mindset of these people:
http://www.thestreet.com/funds/saving-money/10363207.html”
After reading that story, I had to check whether I just got beamed up to some alternate reality. How did that jamoke even get a gig? Good lord a’mighty. Maybe we could take up a collection so the guy can recover his lost youth. Better yet, maybe he should tell it to the kids in Iraq.
I thought he was actually related to Cramer somehow? At first I thought it was just a joke…now I don’t know what he really thinks, but I’m confident that it’s intended to stir people up and get page views more than anything.
Picture from the ‘Jesus, improve the Real Estate Market’ prayer luncheon
http://tinyurl.com/2bskve
God (assuming there is one) help us! These people are downright nauseating. What makes them think potential buyers THEY’VE priced out of the market aren’t holding their own bible-thump down the street asking God for lower prices?
Oh….there is one! No doubt about that!
True story: Back in the early 1980s, when Pittsburgh’s economy was really hitting the skids, there was a public prayer for a turnaround. I remember seeing a picture of desperate-looking people with arms reaching up toward heaven.
Fat lotta good that did. Pittsburgh’s economy has NEVER recovered.
Methinks these agents would be better served if they used their God-given minds and bodies in other career fields.
God help us!
WWJD? Would he revive the bubble to help out sixpercenters, developers, mortgage brokers, and tax collectors or would he allow bubble to burst to allow simple working folks the ability to afford a simple, modest home?
Tyler Durden: Listen to me! You have to consider the possibility that God does not like you. He never wanted you. In all probability, he hates you.
Ack! This makes me sick (and I’m a believer). God’s just a magic genie to give us The American Dream, combined with the power of positive thinking. Maybe these people should visit ‘The International Center for Possibility Thinking’ on the campus of Crystal Cathedral (just visited there last weekend). Quixtar meeting following the service . . .
I was reading “Fooled by Randomness” the other day and the book describes what’s happening in the housing market right now and it was written 6 years ago. all these people(like crisp and cole, mortgage lenders, speculators and would-be moguls)were just not accounting for a black swan in the form of lower prices. the thing is, I’m not even sure falling housing prices could be considered a black swan.
Who is BB kidding? It’s no longer contained. It’s the begining of a cataclysmic financial meltdown:
June 21 (Bloomberg) — The perceived risk of owning corporate debt soared worldwide on concern that the collapse of two hedge funds run by Bear Stearns Cos. may cause a chain reaction that sparks losses for other hedge funds and the banks that finance them.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6TGPW9nPtVY&refer=home
Grab your popcorn and run for the hills!
Bear Sterns’ overvalued assets will find a buyer, even if it is the Fed, and that will save the system “for awhile”. However, they’re only going to be able to protect this system for so long.
Foreclosures will climb, the losses on those properties will soar, eventually those CDOs and MBSs will crash, the leveraged positioning will unravel, and the financial system will crash hard.
What does it mean if they’re saying every 15 minutes on CNBC that the subprime mess is contained? My husband says it means they’re lying? Anyone know how to profit from it?
What does it mean if they’re saying every 15 minutes on CNBC that the subprime mess is contained? Anyone know how to profit from it?
It means they are taking a short break from talking about raising tax rate on hedge funds. My gawd I’m tired of hearing about that!
It means that someone saw the Financial Times headline:
Bernanke hints at thinking on housing
http://tinyurl.com/2m9dry
Welcome to the crack-up boom:
http://www.safehaven.com/article-7806.htm
Gary North on inflation and the Fed:
http://www.lewrockwell.com/north/north539.html
What the current ARM environment looks like (graph):
http://realestate.yahoo.com/loans/rate_trends.html?type=mtg&period=5y&prod_id4=on&national=on&state_code=CA&submit=Update+Chart
Good luck to the flood of people that are reseting into this environment (per the famous/infamous Credit Suisse “ARM reset” graph).
Merrill Sells Portion of $850 Million Bear Funds, Person Says
By Jody Shenn
June 21 (Bloomberg) — Merrill Lynch & Co. backed away from its threat to dump about $850 million of securities it seized from Bear Stearns Cos. hedge funds, according to a person with knowledge of the firm’s plans.
Merrill Lynch sold a small portion of the collateralized debt obligations through an auction, said the person, who declined to be identified because the decision hasn’t been announced. The firm plans to hold onto the remaining securities for now, the person said.
The threat by Merrill Lynch to sell all the securities had sent shudders across Wall Street because it would have forced banks, brokerages and owners of similar securities to revalue their assets.
Collateralized debt obligations, or CDOs exceed $1 trillion and comprise the fastest-growing part of the bond market.
Merrill Lynch spokeswoman Jessica Oppenheim declined to comment.
“Merrill Lynch sold a small portion…The firm plans to hold onto the remaining securities for now…The threat by Merrill Lynch to sell all the securities had sent shudders across Wall Street because it would have forced banks, brokerages and owners of similar securities to revalue their assets. ”
Might as well keep them on the books as “book value”, so that hings look rosier than they are.
It’s no wonder we live in a “Goldilocks Economy”, no matter what happens, the numbers come out rosy (as long as it is *you* making up the numbers).
so basically a lot of people probably yelled at them not to spoil the bleeping party for everyone else? hey, don’t ruin the comps!
now where is my popcorn bowl?
Merrill looks to have sold $100 million of the $850 million… and interest rates click up a couple more basis points.
Looks like every financial institution is preasuring Merril Lynch to do the sales with non-disclosure agreements on the price, and everyone is wondering if that is legal.
It allows the rest of the institutions to continue to pretend that their holdings are not overvalued and keeps the system for melting down.
SO….. our economy is now to the point where solvancy is 100% dependant on money managers being able to play “make believe” with the values of their holdings.
Three monkeys.. hear no evil, see no evil, speak no evil…. If we are forced to open our eyes, the entire financial sector collapses.
Nice.
The Fed is behind this. There are so many more ways for the “PPT” to operate than to simply inject liquidity at a problem.
Silent deals. Handshakes. Etc. It’s happened before (LTCM) and it’s happening right now (Bear Stearns, and probably Fannie Mae)
“eat the losses, we’ll get them back to you AND more in the future”
Never fight the Fed. and know who can keep you warm at night (the Fed)
Also, Merrill may have found out after doing some accounting digging, that they are better off not to sell, given their other holdings with mark to market accounting.
Blacksotne IPO way oversubscribed, to tune of 10-12x as many shares wanted as available… May price ABOVE it’s $29-31 range.
WHAT THE?????
All we hear about is how the assets of hedge funds are way overvalued… And still everyone want to buy into it?
I do not get it.
Now KKR wants to IPO. WHAT? Who is buying this crud?
Flippers.
“All we hear about is how the assets of hedge funds are way overvalued… And still everyone want to buy into it?”
Remember internet stock IPOs during the tech stock bubble…?
Throw the black stone in the middle of the pond and watch where the ripples come to the shore. Don’t get wet.
Surprise, US senator wants to block China’s purchase on National Security grounds.
US senator opposes Blackstone deal
“US Senator Jim Webb asked federal authorities on Wednesday to look into “national security implications” he said are posed by Chinese government involvement with Blackstone Group LP as it moves toward a stock offering expected to raise more than $4 billion.
Webb raised concerns in a letter to Securities and Exchange Commission Chairman Christopher Cox, Treasury Secretary Henry Paulson and Homeland Security Secretary Michael Chertoff.
In the letter, Webb said SEC records show Blackstone’s holdings include military and satellite technology companies.
“If true, it is incumbent upon the SEC and the Committee for Foreign Investment in the United States (CFIUS) to ensure that this technology not be acquired by the government of China,” the Virginia Democrat wrote in the letter.
New York-based Blackstone, one of the nation’s largest private equity firms, agreed in May to sell a $3 billion stake to China’s state investment company ahead of the IPO.
Blackstone declined to comment.
Webb asked the SEC to delay the Blackstone IPO “until such time as serious questions about this transaction can be carefully examined and resolved.” …
http://tinyurl.com/2284yp
This site was new to me:
http://www.foreclosureradar.com/
You can do a free search using zip-codes. You don’t get the exact address, but you do get a cool, very detailed map of pre-foreclosures, auctions and bank-owned. Beats foreclosure.com’s free data.
These sites, including RealtyTrac are ludicrous. For my area (Silicon Valley) they list homes at $620,000 with a debt of $66! Come on now………………..
Some humor.. you guys have probably seen this one.
http://www.dennistoomey.com/RemaxIL/modules/agent/agent.asp?p=text&id=1466&acc=32722&s=craig55
That is too funny and oh so true.
http://www.voiceofsandiego.org/articles/2007/06/21/toscano/905mayjobs062107.txt
“The employment sectors that benefited from our erstwhile housing boom, while having experienced seasonal growth in recent months, continue to shed jobs based on a year-over-year comparison. Between May 2006 and May 2007, the construction industry lost 6,900 jobs, retail lost 1,800 jobs, and finance and real estate gave up 3,200 jobs. The three sectors shed 11,900 jobs between them.
Meanwhile, the rest of the economy slowed its rate of expansion. Up until May, year-over-year employment growth outside the housing beneficiary sectors had been running at about 20,000 jobs. May, however, saw the addition of only 16,100 jobs from the prior year. This was still more than enough to make up for the housing-related losses, but the margin was quite a bit narrower than in recent months.”
Hopefully those 16,100 jobs are in not in $7/hour sectors like “hospitality”.
I can’t stop laughing…..
http://www.redfin.com/stingray/do/printable-listing?listing-id=810105
“‘ON SALE UNTIL JUNE 23, WHEN THE HOME WILL HAVE THE BIG REVEAL’ SELLER HAS REMODELED THE MASTER BATH AND SECONDARY BATH UPSTAIRS, PUT IN NEW CARPET, PAINTED THROUGHOUT, CHANGED FRONT DOORS, CHANGED OUT FIXTURES THROUGHOUT, IT LOOKS LIKE AN ENTIRELY DIFFERENT HOME, UPDATED, UPGRADED AND READY TO GO! DON’T MISS OUT! SELLER PLANS ON RAISING PRICE ON JUNE 23, SO DON’T DELAY, THIS ONE WON’T LAST!”
Hope springs eternal.
What would the local property tax be like for an abode like that?
Just read a little lower on the info page: $10,428.00. That seems awfully low for a $1,635,000 price.
In that neighborhood it’s a bit over 1% - so you’d be looking at about $16k. What I like about that area is it’s an older neighborhood that doesn’t have mello roos or the other junk you see in (newer) South County. Unfortunately that home is a bit rich for my blood….
Mark Gilbert’s column today in Bloomberg
Granddad, Did You Believe in Central Banks Once?
“`Granddad Benny, is it true that central bankers used to believe they could steer the global economy with quarter-point twitches in overnight rates?”
Granddad looked up from his GoogleSoft iSpreadsheet, where a flashing red “health care” box was blocking 2027’s planned expenditure from matching the income cell. “Yes, Joel. For about a decade we all believed central banks could ensure people had jobs, and could afford food and housing and such. That all changed after the Gigantic Global Bubble Burst of 2008.” ….
…`Granddad, it also says here that hedge funds and the derivatives market made things worse. What are hedge funds and the derivatives market?”
“Well, they are illegal now, Joel. As the global economy started to crumble under the weight of soaring raw material costs, financial markets melted down, with prices of stocks and bonds whipsawing. Hedge funds were supposed to be clever investors; it turned out that they had all made the same bet on the global economy staying wonderful for ever.”
http://tinyurl.com/ypg89f
From FSBOinGainesville.com in recently changed prices:
Ellis Park - 2073 N.W. 101st Street Great home in N.W. pool and playground community that is priced well below market at $135/per s.f.. This home features 3 bedrooms, 2 bathrooms, rear entry 2 car garage, built in 2005, lawn maintenance is done as part of the HOA fees, Energy Star rated, and lots more. Easy access to shops and schools. Great location! 3BR/2BA, Year Built: 2005, 1807 s.f., Price: $234,500
Rentals here work out about $100/sqft (if not less). I don’t think we need any more proof that prices here are sky high.
Some of the other “recently changed” on the page still had prices about $200/sqft.
You’re paying another $100/sqft for the intangibles, I suppose … living next door to a divorced professor with a HELOC Porsche … going downtown in your Prius once a week to pretend you’re green at the Farmer’s Market … bumping shoulders with drunks in the downtown plaza for movie nights … walking from one end of the Oaks Mall to the other, wondering why the joy is gone.
A bit of admittedly waaay off-topic levity, from a Yahoo article today about summer solstice groupies at Stonehenge, at dawn this morning:
“Happy solstice!” said Laura Tungate, a 26-year-old financial adviser from Newcastle, who wore a giant rainbow sweater and offered hugs to smiling passers-by. Taking a swig from a mug of vodka and Red Bull, she said she had been coming to the solstice ceremony for the past eight years. “I love the whole vibe, and the energy, and the fact that these stones, that they are alive, they do breathe, and they do grow … and they’re massive!” she said.
Lemme see. I need a financial advisor. I’m sorting out my criteria (personality compatibility, scotch or Margeaux or beer?, seeks agressive returns or just wants to follow my lead…
I dunno. I’m willing to bet the farm. What do you think about Laura as a possibility?