This Spiraling Scenario Is Hauntingly Similar
The Daily Herald reports from Illinois. “The highest number of existing homes in two years are sitting on the market in the suburbs, and they’re facing the lowest percentage of sales in recent times, according to figures released by local Realtors. Existing, single family homes for sale in Arlington Heights, Mount Prospect and Palatine in May, for example, are at their highest level in recent years.”
“Together, the three communities had 2,126 homes for sale, nearly twice as many as compared to 1,120 in May 2005. May is the traditional start of the selling season. In May, the percentage of homes sold in those three towns was 7.5 percent, compared to about 13 percent in May 2006 and 22 percent in May 2005.”
“This spiraling scenario is hauntingly similar in Libertyville, Vernon Hills and Mundelein in Lake County; Naperville, Bloomingdale and Addison in DuPage County; and Elgin, Cary and St. Charles in the Fox Valley.”
“In many cases, the more homes that were on the market, the fewer were sold, according to numbers obtained through the Broker Metrics database and Stark & Co. ‘This is the most challenging market I’ve ever seen,’ said Connie Hofherr, Starck VP in Mount Prospect. She’s been selling here for about 30 years.”
“Several negatives have caused a depression in the suburban housing market, which reflects similar problems nationwide. Creeping inflation, a slow economy, layoffs from major local employers, subprime lenders going belly-up, and a high number of foreclosures and bankruptcies all have taken their toll.”
“Doug Crowe, director of a real estate education firm and a broadcaster on real estate investment, said both buyers and sellers are like deer in the proverbial headlights. ‘Sellers don’t want to cut their prices and buyers are afraid that if they buy something now, it will be the same or less in six months,’ Crowe said.”
“‘It’s a lot like a Mexican stand-off,’ Crowe said. ‘People are waiting for something to happen. But when the buyers and the sellers aren’t even flinching, nothing happens.’”
The Kane County Chronicle. “Home sales in Kane County fell 20 percent in May compared to the same month last year, the Illinois Association of Realtors reported Monday.”
“‘The market is soft, there’s no question about it,’ said Donald Parisi, president of the Realtor Association of the Fox Valley. ‘Sellers who think it’s the same as last year are sorely mistaken.’”
From Chicago Business in Illinois. “Home sales in the Chicago area plummeted 20.7% last month compared with May 2006, according to the Illinois Assn. of Realtors.”
“A total of 9,750 single-family homes and condominiums were sold in the nine-county Chicago area last month. The biggest drop in sales last month occurred in outlying DeKalb, Grundy and McHenry counties. Sales in Cook County fell 20.1%.”
The Chicago Tribune. “The Illinois Association of Realtors said…statewide sales were 18.6 percent below those of May 2006. ‘I don’t think there’s a positive here,’ said economist Patrick Newport. ‘Whatever numbers came in for May are irrelevant because of what has happened in the past six weeks.’”
“Newport said the recent rise in mortgage-interest rates and the tightening credit standards because of turmoil in subprime lending are causing his firm to reassess its housing forecast.”
“‘A few weeks ago we were saying [a housing recovery was possible] in the first quarter of 2008,’ he said. ‘We’re going to rethink that, given the recent changes. We may push it back. The news isn’t good.’”
“Chicagoan Mark Stinson signed a contract to sell his Roscoe Village home after just three weeks on the market. ‘It was real fast, a lot faster than I expected,’ said Stinson, who credited the speedy sale to reasonable price expectations.”
“‘Like any seller, you have images of your home being worth a lot. But we’ve seen a lot of people around the neighborhood who price their homes high and they just sit there,’ Stinson said.”
The Post Dispatch from Missouri. “The national market for existing homes remains mired in a slump, and the St. Louis market hasn’t bucked the trend. Indeed, compared with sales a year ago, the local region fared worse than the nation.”
“In the St. Louis area, 3,751 homes were sold, a 12.7 percent decline over May 2006. At the current sales pace, it would take nine months to sell the homes listed for sale in the St. Louis region.”
“Colleen Ramonez of Glen Carbon hopes she won’t have to wait that long. Despite new carpet, light fixtures and a remodeled bathroom, her two-story brick home has been on the market since mid-January, when her husband was transferred to Maryland.”
“They priced their house below median price for similar homes in her neighborhood, and a few months ago reduced it by $5,000. Still, no offers. Her real estate agent blames the housing market, said Ramonez.”
“The housing market must clear several hurdles, experts say, including the fallout in the subprime loan market, say real estate experts.”
“‘Lenders have tightened their lending standards because of the problems with the subprime market, and that is part of the problem,’ said Stephanie Tonnies, CEO of the Realtor Association of Southwestern Illinois. ‘And many sellers are still thinking of the gains they saw in the market in previous years and are not willing to adjust their asking prices.’”
“May was a particularly bad month regionally. Comparing May 2006 with May 2007, sales declined 33 percent in the Metro East area and 8 percent on the Missouri side of the St. Louis area.”
“Al Suguitan, CEO of the Greater Gateway Association of Realtors in Glen Carbon, finds the Metro East number higher than he believes it to be, but he agrees that the market is off from the last couple of years.”
“‘I feel uncomfortable with those numbers. I believe that for the first five months of the year, we are off about 8 percent,’ Suguitan said. ‘It surprises me that it is so high.’”
“Several negatives have caused a depression in the suburban housing market, which reflects similar problems nationwide. Creeping inflation, a slow economy, layoffs from major local employers, subprime lenders going belly-up, and a high number of foreclosures and bankruptcies all have taken their toll.”
since almost 70% of American Housholds are Homeowners
who exactly is left to buy? where is all the demand suppose to come from? Not to mention that J6P has had a negative saving rate for the past 27 months has the highest mortgage debt in history and these clowns think creeping inflation is hurting sales.
Immigration bill advances in Senate
http://news.yahoo.com/s/ap/20070626/ap_on_go_co/immigration_congress
Watch for the push to “integrate” these people into our society. Integrate means lots of debt, of course.
As before, the American people will rise up against this bill. The opposition to it is very well organized. And growing.
It doesn’t matter if 95% were against it. It will pass. If it was going to be killed, today was the day.
LOL!!!! When was the last time King George has listened to anyone? Except for his self hating gay advisor’s and chicken hawks who make money for their corporate puppet masters.
I can’t even listen to this “man” on TV anymore, I think he is actually working with some of the larger TV manufacturers in a plot to have people throw things at their TVs to break them and have to have them replaced.
This is the emperor, sans clothes…
http://www.youtube.com/watch?v=D-ZlXHCCzaE
Watch what happens when his teleprompter goes kaput.
The House of Representatives is probably not going to vote for this turkey.
Unbelievably, they are pushing it thru despite the fury of the citizenry. Sen Kennedy addressing his future voters in Spanish.
Say goodbye forever to the America we knew and loved. She’s gone.
Here are the REAL numbers that are coming into the country under this bill http://www.heritage.org/Research/Immigration/wm1076.cfm
Just so everyone is clear on this. We have witnessed the ability of a group of unelected businessmen to move a bill through congress that is almost (86% or so) unanimously opposed by the american people.
This little piece of the puzzle is also being implemented quite quickly
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=52684
For those that haven’t kept abreast of who is actually running our gov’t, please review:
http://afgen.com/trilateral.html
You will be happy to note that both the Bush family and Clinton family are members (perhaps that is a clue for 08?).
Regardless, it is a wonderful revelation that all is going according to plan.
Opposed by whom? 86%? Not me, nor many others I know. Don’t forget about us, I guess we’re the new silent majority.
As someone who married a foreign Citizen, I wholeheartedly oppose this measure. In fact it sickens me to the core to see it. Yesterday some dufus on the radio was harking how we need more tech workers in the states, so we needed to open it to people from indochina. I replied that what companies are pushing for is for more CHEAP tech workers from india and china in order to lower the salaries of those in the tech field, not that that has not been acomplished in the last 10 years with the tech bust, and outsourcing. Still a lot of work needs to be done on site, and it is still one of the best paid jobs out there short of being an MD or a DMD. Unfortunately it wont last too much longer…. SIGH….
86% was the number of americans AGAINST this immigration bill. Of course this is a pretty tenuous number since every time a poll is taken the question asked gets changed depending on the outcome the pollster is looking for. If you are FOR it then I suppose you would be part of the 14%. Although I can’t for the life of me understand why anyone would be for this idiocy.
I suggest you watch how this whole thing started. You will be shocked, but knowledge is power.
http://video.google.com/videoplay?docid=-515319560256183936&q=Money+Masters&total=1069&start=0&num=10&so=0&type=search&plindex=0
I should say that I don’t think that will be enough to fix the problem… just that the politicos will plug as many holes as they can.
Welcome to our nightmare…..
Watch for the push to “integrate” these people into our society. Integrate means lots of debt, of course.
And watch them flee home when they walk away from their debt (of course they will take the Suburban with them).
Nah, they’ll just invite another 5 family members to move in to help pay the bills. That also means at least another car parked on the front lawn.
You are right in that they will be replaced 5 times over.
RIP migrant workers…
http://www.wired.com/science/discoveries/news/2007/06/robo_picker
Amen……..we simply don’t have enough people to fill these holes and if they want one they can’t afford it.
Looks like Blackstone is taking a beating today. I wonder if it is other hedge funds sticking it to them or people just getting sick and tired of buying their crap.
What the corporate controlled media doesn’t want to report on is that Blackstone (like many other hedge funds which hope to IPO) went public for 2 reasons: 1) To give its principals a massive cash windfall / exit strategy. 2) Because highly leveraged funds are entering the “Valley of Darkness”, a time when all that high-risk paper just might come home to roost. The problem for all those other funds looking at going public as a “way out”, is that if the market doesn’t support the BX shareprice then “going public” probably isn’t the answer.
Which means the banks, and the high-net investors will be the one’s eating the losses — not the retail investors.
Of course, a couple two martini lunches with some pension fund suits, and they’ll find a way to pass some of the paper off on mom and pop — but still — most of the losses will be contained within the banks — which in turn, will mean those banks unwinding their other investments — which means it’s crash time…
Sohonyc,
Too true. Private equity firms going public means they can’t replicate their previous track records. Plus, with credit tightening, the ez cash that made private equity such a lucrative game is drying up. Insiders selling at the height, while buyers are just being suckered.
I’ve been saying for about the past year that you’ll know when the private equity / hedge fund party is over when they start selling shares to the general public. Its an all too easy way for the insiders to cash out and let someone else be the bagholder when all that leverage blows up.
Private investor bagholders, i like it.
There is no bubble in Illinois. So why are 3/1 crack shacks in Elgin selling for double 2001 prices?
How much were they in 01? $37,950?
“Existing, single family homes for sale in Arlington Heights, Mount Prospect and Palatine in May, for example, are at their highest level in recent years”..
Yeah sure, but in Arling. Hts. there is just nothing interesting on the market in the “HOT” downtown location. What is up with that?
I love how AH acts like it’s downtown is on par with Chicago neighborhoods. Yeah, there are a couple nice bars & restaurants and you’re close to public trans but the prices they are charging there are ridiculous.
Yeah.. people here worship this town. It’s way overpriced!
My Mom’s 70 year-old, rundown house—in a central Illinois town of 2000 people smack in the middle of corn and soybeans—recently appraised at double the value 5 years ago (she was hit with a big tax increase as a result). Unfricking believable!
Contrary to Dean Baker’s comments yesterday, I don’t think there is a place in the country that WASN’T hit by the RE bubble mania.
My house is worth the same it was 5 years ago. In the nine years we have owned it it has appreciated from 270K to maybe 350K (probably less). That’s a whopping 30% increase over 9 years (an average increase of 3% per year). So my house has barely kept pace with inflation.
Had it doubled like your Mom’s house I would have sold it and rented a place,
Appraised or assessed? A big difference, I suspect it is an assessed value and the assessor is comparing her house to newer houses. This is why one out of three people believe they will lose their home to tax increases in states like Illinois and Wisconsin.
True but also true is that a house that was worth $100K five years ago and now appraised at $200K is still a $100K house for all practical purposes. That is, if I sell for $200K all that I can purchase for the same price is just another $100K house that has been inflated to $200K and the only way out is to sell, rent, invest the money and pray that house values will retreat to affordable levels.
your right,
“…but you tripled the home prices in the metro areas over a period of five years! Did everyone really have that much extra cash around? If it was 90k in 2001, and worth 410k in 2005….its still not a steal at 260k now!”
You are correct: assessed. The assessor wasn’t comparing it to newer homes, but similar aged homes, sq ft, etc… It is a huge house, and therefore a high assessment even though it is not in very good shape.
Still, RE prices in that little town have shot way up the past few years. As recently as ‘98 my Dad sold a completely remodeled turn of the century farm house, 4/2, great yard in a great location for $60k (appreciated from $15k after 30 years and a lot of remodeling). Now you see new tract homes in the $300’s and who knows what that old house would be worth. Doesn’t make sense.
Turn of the century no longer means what it used to mean.
“Yes, grandpa was there during the crash of aught 8, little Sammy. It was a dark and stormy spring buying season…”
I presently live in Sarasota and six months ago i bought a charming 2/2 1300sq ft condo in St. Louis Mo for 140.000 There is NOTHING comporable in Sarasota for that money. Now my plan is to sell my home in here in Sarasota, than rent a condo in Sarasota and live part time in FL and in Mo
Wish me luck!
$140? Must be East St. Louis.
140.000 meaning 140,000 simply means Mike is from any country EXCEPT the United States.
Mike, you’ll need luck if you are in St. Louis proper, not to mention selling a house in Sarasota. Did you forget the order? It’s Sell THEN buy. Also, I thought “charming” was realtorspeak for “lacking basic amenities.” But, all the best.
You meant to say “Western Illinois”- a much more dignified label for the high-class area.
Sarcasm off.
OT, but:
I know that everyone is tracking ABX “BBB-” as a proxy for sub prime risk, but take a look at ABX “A” for 7-1:
http://www.markit.com/information/affiliations/abx
(click on ABX-HE-A 07-1)
A pretty interesting drop since January, and another one in late May.
Are the letter designations (”A”, “AA”, etc.) different “tranches”? What type of securities have the “A” designation?
Different tranches and the letters designate their credit ratings.
The ratings go AAA, AA, A, BBB, “nuclear waste”.
A going down is ugly.
I stand by my predictions that a 25% down payment will be required for all non-FHA loans during the darkest days of this downturn.
Got popcorn?
Neil
you forgot Bbb, bbb, and c which when pooled together give you AAA. Ask Bear Stearns, they know everything.
I know we have discussed this before, but I concur, Neil. The banksters, however, will hang on as long as possible w/o downpayments needed to keep this party going. Everyone by now knows most people in the US have no savings. Second, everyone knows that housing is at atrocious prices. Even 10% of 500K is a tough bar to meet. They also know that those of us with cash might not be so wuick to part with that cash now or in the future. However, when they all finally cave in and the housing market finally requires 25% that will kill the goose that laid the golden egg.
Seriously, prices will freefall at that point. Sure, if I have 50-100K min in the bank, do you honestly think I will part that quickly with it for some home that is selling for 400-600K? Get a grip. Now, compound that with all the other issues: i.e. foreclosures, short sales, inventory and starts rising at still astonomical paces, no cash to be found anywhere, no more buyers since everyone seemed to have bought, etc. etc. Once we return to down payments this market will collapse so fast it won’t even be funny. In fact, the overcorrection could be really bad.
And yes, EVEN THE WESTSIDE OF LA AND THE BAY AREA WILL BE AFFECTED! Sorry to say, but with no cash savings and salaries stuck, no one is left to buy these 600-700K crapboxes, let alone afford all the impounds on such PoS!
Robert Samuelson of Newsweek says the biggest threat to the U.S. economy is savers! http://today.msnbc.msn.com/id/19389298/site/newsweek/
Didn’t Bill Patterson in “Calvin and Hobbes” say the same, years ago?
“I stand by my predictions that a 25% down payment will be required for all non-FHA loans during the darkest days of this downturn.”
Gee, maybe during the darkest days one will actually be able to buy a nice piece of property on the CalVet or GI loan.
“The highest number of existing homes in two years are sitting on the market in the suburbs, and they’re facing the lowest percentage of sales in recent times, according to figures released by local Realtors. Existing, single family homes for sale in Arlington Heights, Mount Prospect and Palatine in May, for example, are at their highest level in recent years.”
A Midwest Palatinean Exodous?
The only revolution I enjoy seeing is at Arlington race track. This is gorgeous and designed to watch the ponies run in circles. (Although I have better luck at Bay Meadows.)
From Chicago Business in Illinois. “Home sales in the Chicago area plummeted 20.7% last month compared with May 2006, according to the Illinois Assn. of Realtors.”
“A total of 9,750 single-family homes and condominiums were sold in the nine-county Chicago area last month. The biggest drop in sales last month occurred in outlying DeKalb, Grundy and McHenry counties. Sales in Cook County fell 20.1%.”
This past weekend I did a lot of walking around downtown Chicago, as I’ve visitors in from out of town. As I passed many a tower under construction, I wondered about the appropriateness of using monthly sales as an indicator downtown.
Here’s my reasoning… Over the last few years, downtown projects have changed. Now they are almost exclusively large and tall towers. Sales get counted when a unit closes, and right now these closings aren’t happening all that often (tall towers take a long time to build).
It seems that here (being downtown specifically) the projects are getting nicer and that sales are doing fairly ok. This contradicts the numbers and the overall market, so I really am a bit confused on the whole thing. There are 4 or 5 towers under construction right now that I would actually consider buying [at the right price], which is really saying something.
One more thing. That 2000 foot, 160 floor condo tower proposed for downtown is getting every closer to reality. I noticed more equipment on the site this weekend, some digging is being done, and pieces of a crane have been delivered. Is this the next Empire State Building?
If they really build that thing I will be impressed. It’s an Irish company financing it if I remember correctly. It’s on the north end near the water by Wrigleyville, right? Can you imagine taking your friends up to your 158th floor condo to watch Cubs games with binoculars? You could probably see Michigan over the lake
No, it’s in Streeterville, close to Navy Pier. You definitely should be able to see Michigan on a clear day from there.
Just hope it doesn’t become terror plot place #1 as I work 3 blocks away from it…
Ok, I was way off - maybe Bears games at Soldier Field then? This says 150 floors…
http://en.wikipedia.org/wiki/Chicago_Spire
Steve, my thought exactly. Heck, while they are building just put a big bullseye on it that says hit it here (punb def. intended). Geez, 160-story building! This is wrong on sooooo many levels, I don’t even know where to start.
The site is downtown, very close to Navy Pier. The eastern border of the property is Lake Shore Drive, the southern border is the Chicago River, and the northern border is the Ogden Slip. It will have it’s own access ramps to Lower Lake Shore Drive.
But yes, on a clear day you will be able to see Michigan from the top (I’ve seen what looks like the St Joseph Michigan Lighthouse from the 95th floor of the Hancock building). You would also have line of sight to the tallest building in Milwaukee (approx distance 90 miles).
Anything anywhere near Millenium Park is money. And that’s not just market euphoria. There’s significant international investment dollars entering the Chicago market. And if the city gets the ‘16 Olympics, all bets are off.
The Spire will have no problem selling out. According to Kelleher, they have more international inquiries than planned units. It’s going to be an internationally iconic structure, so, in this case, the bearish marketplace will probably not have much of an effect. Additionally, if this does indeed get going, and if there is indeed ample international sales, I suspect there will be a competing structure proposed nearby. If developers figure out they can draw ungodly sums of money from places like Europe and Dubai, the incentive to build a “Spire 2″ might be too hard to resist.
When you start talking tall buildings and Dubai money, you may as well be talking about building another Great Pyramid as far as regular folks are concerned. I wonder if any Americans will even own anything above the 90th floor in the Spire? If the top 60 floors were full of rich Arabs it would probably discourage the worried-about terrorism. Sort of a “mafia grandmother street” effect?
On the contrary. The middle eastern sheiks with money are the “corrupt bootlickers to the Crusaders and Jews” that Osama wants to kill too.
The shieks with cash are going to Dubai because
1) they don’t trust their own governments to let them keep their money
2) They don’t trust the US government to let them keep their money
so they won’t ever put money or assets in any bank responsive to US jurisdiction or long-arm of subpoena power.
Dubai has enough real estate built there now, to house the entire population of the Middle East. 20% of the worlds building cranes are in Dubai. The world has enough housing already built to last us till 2020. Unless the world is planning another baby boom.
Chris, what color are your pom pons?
I’m not sure he’s wrong about this tower and the intended customers. You know the almost nonexistent financial impact you feel when you feed a dollar into a vending machine? That’s about how inconsequential it is for some of the middle-east oil shieks to buy a 10 million dollar condo in a tall building somewhere.
You may be right but I usually don’t see oil sheiks walking around in down town Chicago. Seems to me that they tend to go for the more exotic US cities.
I heard this same crap last year from MSM on how Chinese money would buy southern California and Florida. It is the first time I have ever agreed with Mr. Trump who said “financial suicide . . . a pipe dream. There won’t be any institution stupid enough to finance it”
For international investors to wish to purchase a property in Chicago there must an attraction. Dubai has the attraction. Dubai has real money.
Why would some investor buy a property in a “sliver” 150 story tower, when they could buy a nice co-op on E. Lake Shore Dr. for the same moneys that a sliver condo in the tower would cost? And during the summer they get to enjoy all the beautiful women on Oak Street Beach. :>)
“I heard this same crap last year from MSM on how Chinese money would buy southern California and Florida”
Um, who says they won’t, especially now that it’s going on sale, they have $1 trillion US, and the Yuan is set to jump against the dollar bigtime? I think the MSM mistakenly thought the Chinese would pay last year’s retail prices…
As far as the attraction, just saying that you live on the highest floor of any residential building ever built is enough for some people.
It wont even be within 500 feet of the largest residential tower - see Dubai’s tower. And it will cost twice as much per sq ft, the apartments will be smaller, and the elevators will have to be reduced for the top 60 floors - - also known as an hr ride to your penthouse floor. It is a BS project. It is a non functioning ego trip.
Wow, you’re right - the Dubai tower is much taller, and is under construction now. Mabye the Chicago tower will be for getaway weekends?
http://en.wikipedia.org/wiki/Burj_Dubai
Chris, I would still hate to see the HOAs and/or fees associated with living there. I am sure the 5-6K monthly mortgages we talk about will make those fees look like pocket change. AZ is also right. Regular folks need not apply to this one. This is strictly for oil magnates and the like.
Regular folks need not apply to this one
The sales firm hired to do marketing is in London. Americans are NOT the target customer.
Olympics? Most folks would just be happy to see their bus/train route keep running.
Go Tokyo - 2016!
“Sales get counted when a unit closes…”
Is that correct? It’s my understanding that the NAR counts sales when contracts get signed not at closing. I think a lot of these “sales” will fall by the wayside when 1) the new towers are done and the buyer moving in can’t sell their old place or 2) the buyer realizes how bad things are back tracking and wants out
Yeah if Florida is a litmus test for how this will go down, look for lots of interest and signing then lots of lawyers and back peddling.
Its possible that it’s different in different places, but I’ve correlated local sales numbers with closings via the MLS database. In Chicago, sales are closings.
I think all roads lead to overcapacity in the mid to high end condo market in Chicago. You just can’t add that amount of inventory and maintain pricing power. Once we are in recession later this year it will get really ugly
Agreed, the anecdotal evidence on the streets is everywhere lately. The towers downtown and near north are different animals as they appeal to global capital, but they’ll have their slump too. In the neighborhoods the story is different, things have really gone into slo-mo. When the downtown jobs start going - look out below.
Everquest is a Cayman Islands-registered business jointly run by Bear Stearns Asset Management and Stone Tower Capital LLC, a hedge fund firm specializing in debt.
Do words Everquest, Bear and Cayman Islands go together as a place anyone would put their money?
It depends. Does the PPT stand ready to back up these investment schemes? (From the looks of last week’s hedge fund blowup, I am guessing the answer is NO.)
I agree, it depends. Where do they hold their stockholder’s meetings?
“In many cases, the more homes that were on the market, the fewer were sold, according to numbers obtained through the Broker Metrics database and Stark & Co. ‘This is the most challenging market I’ve ever seen,’ said Connie Hofherr, Starck VP in Mount Prospect. She’s been selling here for about 30 years.”
It sounds as though buyers don’t want to try and catch falling knives.
It also sounds like the classic end to an investment mania…
The standoff is here.
I’m saving $2,500 a month renting vs. buying.
With rents declining in the area… I’m sure I can hold out longer than home sellers. Oh… I might buy a spectacular property before the bottom; but it will be knowing the risks and potential benefits. Not being a stupid sheeple. And certainly not before december 2008 (lowball) or more likely in 2009.
For we have mass foreclosures entering the bank’s books now. When they finally liquidate those foreclosures (probably June through September 2008), it will trigger another round of foreclosures. Only when those 2nd foreclosures enter the market will it be “ripe enough” to enter. I shall have no pity lowballing the bank. Bwaaa haaa haa.
Yes, we’re going to have a double dip downturn.
Got popcorn?
Neil
Neil and GS, what is really the problem with the investment mania is/was that we had all this liquidity running around coupled with many solid middle class people chasing greed. What happened to good old fashioned work? Wasn’t that what Smith Barney used to pitch? What happened to thrift and saving for the future? Even if you didn’t live to use it you could donate it or leave to other family members to get a head start in life? The attitude has really morphed into spend into oblivion because I might die tomorrow. And since when did Texas Hold’em Poker become a means to Bill Gates’-like wealth?
I know every generation complains, but what I have witnessed in the last 25 years is frightening. I, for one, can’t wait for this collapse and shakeout. This country can be great again, if we can right the ship. I know we have always had and always will have snakeoil salesmen, but the last 25 years seems really bad, esp. with the explosion of information available. We need a good ECONOMIC cleansing in this country. It might just reinstill some good old-fashioned economic values. Then again, maybe I wrong.
OCDAN” I, for one, can’t wait for this collapse and shakeout. This country can be great again”
I agree with where you are coming from and I share your angst, on the other hand I can’t help thinking about the soldiers waiting to hit the beaches of Normandy without realizing what truly is lurking ahead. Brings back memories of how naive I was when first serving in Viet-nam.
oc dan,
i usually agree with your posts, but if they push thru this immigration deal, then all hopes of righting the ship are lost.
This country can be great again, if we can right the ship.
Here in Mazzholeland the hand-outs describing the new mandatory health insurance law was printed in 14 different languages.
The seeds of political and cultural Balkanism have been sown.
No way this next fat, lazy, historically ingnorant, video-game generation gonna clean up the mess.
All hail Wal-Mart Nation.
“Yes, we’re going to have a double dip downturn. ”
A seventh inning stretch followed by extra innings.
“I’m saving $2,500 a month renting vs. buying.”
I sometimes wonder if the housing cheerleaders truely understand the savings in renting. this is truely a massive subsidation of renters by homeowners.
I assumed $10,000 saved initially and $2,500 saved each month at a conservative 5%.
after 3 years that’s $108,901.
now factor in declining home values…
http://www.dkcpa.com/calc/java_fv2.html
Neil, I live in Irvine and two homes have been sitting on the market now for over a year. According to several RE Agents they say prices will hold in Irvine until after the correction as this is too desirable for any correction.
Can I purchase some of your popcorn!
If there are people only on one side, how can it be a standoff?
Cross this line sucker! I Double-Dog Dare Ya!
The more homes on the market the more buyers wonder how many more will come up that they might be interested in. They don’t want to jump in and later wish they’d waited, because better ones are coming onto the market.
“In the St. Louis area, 3,751 homes were sold, a 12.7 percent decline over May 2006. At the current sales pace, it would take nine months to sell the homes listed for sale in the St. Louis region.”
St. Louis is not normally what one thinks of as a formerly red hot bubble market.
I’m telling ya… and Glen Carbon??? Where the heck is that? I lived in the Lou for years and I never heard of it… must be way south or west.
It’s about 7 or 8 miles east of the Mississippi, near Edwardsville. It’s not too far from the Southern Illinois University campus.
‘I don’t think there’s a positive here,’ said economist Patrick Newport. ‘Whatever numbers came in for May are irrelevant because of what has happened in the past six weeks.’
Talk about one-sided coverage. Obviously what’s negative for sellers is positive for buyers. The ongoing correction is also excellent news for anyone who prefers rational, normal markets to the housing hysteria of the past decade.
“The nose of a mob is its imagination. By this, at any time, it can be quietly led.”
Edgar Allan Poe
“Several negatives have caused a depression in the suburban housing market, which reflects similar problems nationwide….”
I’ve read the term “housing recession” several times, but this is the first time I’ve read “housing depression” - bet it won’t be the last.
What’s all this chatter I hear about Countrywide Financial being raided by the SEC? Does anyone know what’s going on, or is it all just vapor?
“NEW YORK, June 26 (Reuters) - Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) shares fell while the cost to insure its debt rose on speculation Tuesday that the largest U.S. mortgage lender may be involved in a government investigation related to subprime loans.
Rick Simon, a Countrywide spokesman, declined immediate comment.
A report on theflyonthewall.com indicated that Countrywide shares were down on “unconfirmed chatter of a subprime loan investigation.” Countrywide is based in Calabasas, California.
Countrywide shares closed down 96 cents or 2.6 percent at $36.31, after earlier falling to $36.13.
Near the close, 35,453 put options versus 9,779 call options traded in Countrywide, roughly four times normal daily volume, according to Track Data.
Paul Foster, an options strategist at theflyonthewall.com, said the volume and volatility was a result of the rumors.
The cost to insure Countrywide’s debt with credit default swaps jumped by about 10 basis points 70 basis points, or $70,000 per year for five years to insure $10 million of debt.”
Reuters
Hoz, I guess we all know why they were offering those CDs for 5.4%.
Got Cash, Countrywide?
So glad, I didn’t fall for that crap, but the greedy side of me was close to investing into one, but once again, props to this blog. You guys saved my butt with all the Mozillo selling shares links. Hey, if the captain Smith is bailing on the Titanic, it really isn’t a good idea to buy a ticket, now is it?
Countrywide offices raided by the FED’s????? All over the net
Hmmm, I’m going to have to look this one up…I have a bet with my wife re: Country Wide…
Tan o’shutter
Links?
Yahoo messages boards, Lender Implode forum, Housingwire.com, etc.., HOWEVER, no concrete confirmation.
From Reuters:
http://tinyurl.com/2bylhm
hehehe…
The scapegoat witchhunt begins.
test
Heck, I know we all like confirmation, but how many times do we have to see smoke to know there is a fire? Geez, you guys on this board have caught stuff the mainstream media has been months behind in reporting. In fact, I think some of you guys work in intelligence gathering. It really is a sorry state of affairs when I find myself saying “I wouldn’t be surprised” more and more often when something like happens, rather than taking the wait-and-see approach. It is just so sad when we can cross all the t’s and dot the i’s and read between the lines and everyone else is dressing for the formal dinner. I also find it a disheartening feeling about our economy when you guys are on the money so often even when the media is out to lunch. Dang, this country is so screwed up!
‘I don’t think there’s a positive here,’ said economist Patrick Newport. ‘Whatever numbers came in for May are irrelevant because of what has happened in the past six weeks.’”
Mr. Newport is correct the data is so old that they are rendered irrelevant. The numbers that we do not have are current sales on a daily basis. Mr Newport suggests that the market has deteriorated dramatically in the last 6 weeks. Looking at the debacle in the Bond markets, I would agree.
I love this blog for the simple reason that within all of the threads and posts, real truth is conveyed which is something that is sorely lacking in our mainstream media. I’ve gained a healthy respect for many of the regular posters on this blog for accurately calling events months before they occur - this despite a regular deluge of BS from many in the RE industry. I’ll be making another significant donation to Ben’s blog simply because it’s the best money I’ve ever spent!
I love this blog…
Ditto
This blog’s voice of reason has been herd loud and clear. The #1 source for truthful information on the housing bubble. If only we could duplicate it’s format to discuss the illegal imigration mess, as the main focus. Illegal imigration problem solved.
Everyone knows that the proper way to build consensus is in a smoky back room, and any thing sensible such as breaking up the legislation into the common bite sized pieces that we can all agree on (to make a small but measurable amount of progress) would just threaten the smoky consensus for the Big Damn Comprehensive Bill.
Also, doing it in public would make it harder to horse trade the stuff you already passed last year (that hasn’t been implemented yet) for a few more votes on the new bill.
This blog saved my ass.
Quick background:
I accepted a job in DC metro in Jan 2002. In accepting the job, I checked out the local housing market. Although houses were pricey, they were do-able, but *just*.
In APril of 2002 I came out to look for houses. This was just a look-see. I was recently divorced, and had it in my mind that I wanted a townhouse, as it was a house, but without the yardwork and such. When I had accepted, prices were $200-220k. In April, prices were around $220k, but I started hearing about bidding wars,
Six weeks later I came back and I was prepared to buy. Six weeks earlier, I had 20 townhouses to choose from in my price range. Now, in May 2002, I had 3, and they were price $20k higher. In the words of Kahneman, I had to “satisfice”. I got a place for $240k, and I was proud that I never got into a bidding war. Having said that, I was wavering between renting a 2br apartment closer to work, buying the townhouse farther out, or breaking my contract and not coming. Why? Well, I was accustomed to being able to buy a house with a fixed monthly payment that was less than a rental (more specifically, apartments with 1-2 less bedrooms)l. Well, I bought, and I figured at the time that the price burp was just that: an isolated increase, followed by years of appreciation at inflation. I’d wait it out, sell in a few years, and sell (either move to another part of DC metro or leave the area).
Just to add some context, I had just sold a 4br home (2400 sqft, or 3600 sqft including the basement) in the midwest for $195k.
My shock was when a few months later my neighbor pointed out that the townhouse across the street had just sold for $270k. $270k? That’s crazy! I had just bought for $245k 3 months earlier.
Next it was $300k, then $340k, and finally the unit next door sold for $380k (2004). From $240k to $380k in 18 months? That nuts! My GF at the time and I would walk around the neighborhood and shake our heads at the crazy appreciation. We knew something was wrong.
Fastforward to 2005-2006, and prices peaked at $430-$460k. In all honesty, I had seen that 2005 was the peak in Loudoun VA, and I laughed at the fools that payed that much. But at the time, I was in a weird place in my life, and I was not prepared to sell. I googled “nortern virginia housing bubble” and stubbled across Ben’s blog. Finally! People who thought the way that I did!
In early 2007, I saw a foreclosure on ZipRealty. At that time I was engaged to be married, so I put my place on the market and undercut all of my neighbors. Now my ‘profit’ is quietly earning interest in a TreasuryDirect account, and I am living with my fiancee.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXDYv12DZNcc
Default rates on alt-a rising off the floor (too many numbers to digest, but I believe it is up to 2% compared to 11% for subprime). Also jumbo loans starting to leak.