Bits Bucket And Craigslist Finds For July 25, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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More news from Massachusetts:
“The Patrick administration is considering a plan that would make mortgage lenders pay moving expenses as well as the first and last months’ rent of homeowners who lose their homes to foreclosure.
“The plan would make lenders that foreclose on homeowners pay $5,000 for the relocation and administrative costs that nonprofit agencies would incur in finding them a new home, according to a draft obtained by the Globe.”
Link to Boston Globe:
http://www.boston.com/business/articles/2007/07/25/foreclosure_plan_would_make_lenders_pay/
If any/all of his proposals go through, who will provide loans in Massachusetts? If I was a lender I’d leave the state in a heart beat.
“In addition, the initiative calls on lenders to delay foreclosure proceedings in some cases; reduce loan amounts and waive prepayment penalties in others; and work with the state to transfer vacant, foreclosed properties to first-time home buyers or nonprofit agencies, the draft said.”
I think the reason this little proposal is being leaked is Massachusetts is jealous of California’s number 1 position in the foreclosure race, and wants all the lenders to speed along foreclosures.
If a homeowner doesn’t have $5.0k to get first/last/moving expenses, perhaps they should foreclose on themselves?
I suggest all banks foreclose IMMEDIATELY in MA, and call every loan in the state in that is callable.
Since Great Depression, can’t call those loans.
It’s a good thing–calling the loans made the contraction worse. A downturn (once called a “panic”) is one thing, but an over-contraction like the GD is not desireable. Remember that plenty of sound banks went under, as well as plenty of sound businesses. Capitalism was starting to break down. Armed bands of farmers actually destroyed produce, while people were starving in the cities, because they didn’t like the coin that was being offered for their labors.
You don’t see angry farmers now because in an inflationary environment, they win.
The farmers are nearly all corporations now. They’ll do what is best for business and leave the emotions out of it.
According to Yun, “The Realtors are forecasting that sales of existing homes will fall by 5.6 percent this year with prices dropping by 1.4 percent. That would mark the first annual price decline on record.”
How come the Great Depression doesn’t count in the record-keeping?
(If any/all of his proposals go through, who will provide loans in Massachusetts?)
Those who lend to people capable of paying the money back?
How about lenders who can conduct themselves according to sound business principles?
All this does is cause Mass. rates to be higher, kind of like a hidden tax.
Exactly. This won’t stop lenders from lending in Mass. The only difference is that now everyone will have an extra $5000 fee factored into their mortgage/rate in Mass, to cover those who will get foreclosed on. Think of it like mandatory relocation insurance…
I am definitely against this idea.
Nah, I don’t think this would lead to an across-the-board increase.
Think about it: lenders are competing for clients on cost. A lender can offer a cheaper loan by using stricter underwriting standards to lessen the likelihood that they would ever have to pay out those fees. That is, it’s a disincentive to offer risky loans, and it’s risky loans that caused this mess in the first place.
I know that if this law was passed and I was a lender, I’d be targeting Mass residents with good credit history and good affordability ratios.
At worst, it raises the price of offering subprime loans in Mass. Whoopie-poo. That in turn dries up the supply of subprime borrowers, which lowers the demand for housing (owning, not renting), and lowers housing prices.
Sure beats a system that rewards short-term behavior (e.g. commisions) over long-range responsible business plans.
Agreed. And if Mass prices come down next year as a result, so much the better. It’s already soft, but still unaffordable. High prices just punish young families (renting in Mass can be risky, what with all the ancient rentals on gas heat, lead pipes, lead paint) and old folks (can’t pay prop tax). Let ‘em come down!
Great analysis, NoVAwatcher. The bad lenders have to “give back” some of the outrageous fee they got out of borrower in the first place and have an additional incentive to actually check if future borrowers can afford the houses they want to buy. Who knows? They might even demand a significant downpayment from future borrowers. What an idea! Who ever heard of that before?
“I know that if this law was passed and I was a lender, I’d be targeting Mass residents with good credit history and good affordability ratios.”
True in the short term and as a hand slap for present conditions but….
Employment numbers are still strong. What happens if mass layoffs appear?
What do the banks do if they’ve been responsible but other forces intervene? Would they have to cough up the $5000 for foreclosures resulting from those conditions? Or maybe the former employers should be prepared for that payment?
Well, with better underwriting standards, the banks will have fewer foreclosures on their books in the event of layoffs.
What a great idea! Buy a home you can not afford, default and the lender gets to hold the bag and pay you to move. See how easy it is for the Nanny State to take care of you and make the bad stuff go away.
To be fair, I like the idea of lenders picking up the tab for the moving costs, versus the taxpayers (me) or nonprofits who could use the cash for better uses, i.e. truly poor people, not failed homedebtors.
I *especially* like the idea after reviewing the link provided further down in the comments to Mozilo’s SEC filings. These scumbags can afford it.
*Or* the person could get their family and friends to help them move, and then pay for their own rent.
That’s my preferred solution.
The taxpayer always gets it in the end. Rear end that is.
Watch how quickly the lenders stop offering subprime suicide loans under this scheme.
Hell, I’d propose $5K moving costs PLUS $5K fine, payable to the Commonwealth.
Heheheheh.
One would think that after not making mortgage payments for 6 months, the FB could easily afford to move.
And there we have it.
Yeah - decent apartment complexes will just be falling all over themselves to rent out to these forclosed tennants. And, I’m sure the system of administering/distributing these monies will be smooth and easy.
Ironically - if it did go through, I’ll bet people trying to access these forclosure funds will face tougher disclosure regimens than they did in applying for their low-doc/no-doc loan in the first place.
One interesting thing this might do is to cause lenders to look over mortgage applications for fraud in attempts to avoid having to pay these amounts. This is however one of the worst Ideas I have heard along these lines. IMO in 90% of cases where a person in foreclosed on quickly there was loan fraud. I would like to see the State of MA taking the initiative to house these individuals at one of their fine prison institutions.
But the fraud was not simply the buyer against the lender but also the broker against the lender (big commission).
This provides a big disincentive for lenders to use independent brokers.
This can’t possible legal, can it?
Centex Homes. Looks like things are shaping up just fine for them.
http://www.dallasnews.com/sharedcontent/dws/bus/stories/072507dnbuscentex.1f6cb03.html
I hope all the HBs involved in the housing bubble get boned. They deserve it. The wreckage they’ve created in communities across the country is not to be underestimated: gulag architecture, low quality houses that homeowners will have to spend years and $$ fixing, employment of illegals who they dump on communities for health care, education of children and increased costs of law enforcement, scarring of the landscape, changes in flooding and traffic patterns, and just in general lowering the quality of life.
Centex is still building like there’s no tomorrow around here. And it is fugly.
Yes. They just now broke ground on a large development near me. Sound policy, that.
80% of houses that Centex sold (in dollar terms) in the last quarter were financed by their own mortgage company. I wonder where they get money from, what will happen to them six months hence…
Testify, palmy!
Nice to see that wall street is back to true form - CTX is up 4% today on their wonderful quarter.
wtf? up today???? the market needs a little 10% prick. It is so going against any fundamentals I learned in Finance. The music stopped 3 months ago for sure and they are still dancing.
They must all surely be smoking crack.
is there a word filter here? I used the word pr!ck - as in pr!ck (pop) the bubble and my post never took…
hmmmm…..no offense Ben!!!
An unusually sophisticated north side crime syndicate ran operations ranging from mortgage fraud to drug dealing, kidnapping and torture, according to state and federal charges filed against a handful of people over the last week.
A federal criminal complaint, also filed Thursday, charges Lock and Jerhonda McCray with wire fraud in connection with a 2005 mortgage-related scam. The charges allege the scam used falsified loan applications and bogus appraisals from McCray, doing business as USA Appraisals, to inflate the value of mortgages that straw buyers could get for Lock on distressed central-city properties.
http://www.jsonline.com/story/index.aspx?id=637669
ouch
I can’t say I’m surprised.
Where I live now, one of my neighbors was being hauled off by the police (attempted murder; he almost took some dude’s head off with a tire iron) and yelled, “$%& you! I have three condos in Miami!” This after being told by one of the assoc. members that they were moving to evict him.
I have no doubt there is some crazy criminal activity surrounding the bubble.
Nice guy. Scarey.
Is his name “Hoz?”
Is his name “Hoz?”
Hey Ben, could you delete this?
“Hey Ben, could you delete this?”
Easy Spike, that’s a slippery slope.
The quality of Hoz’s comments speak for themselves. Regardless of “Bill in Phoenix’s” disposition, cream always floats to the top.
Crap always sinks to the bottom of the toilet, too.
Don’t forget the exception that every now and then you get a “floater”.
We’ve all been beneficiaries of Hoz’s business acumen, i’d say…
Agreed, Aladinsane!!
He should tell that to the judge, owning three condos in Miami right now may be proof of insanity and he could get off
On the bright side, had he lost his head, we know dead homeless people can still get mortgages and property in FLA.
That was the NBA’s poster-boy ex-ref, right?
Credit to Momoney.
http://tinyurl.com/2qtxs5
Classic… If they made copies of this, I’m sure they’d sell like hotcakes…
would make great t-shirts
Defaults start to skyrocket
Stretched is how Rosedale homeowners Darrin and Diane Couch have been feeling since February. That’s when their monthly loan payments jumped from $1,300 a month to $2,700.
http://www.bakersfield.com/hourly_news/story/196847.html
“Worst of all, they thought they had taken out a flat-rate loan…”
- ??!!
ignorance is no excuse for stupidity.
“There’s a big difference between qualifying and affording,” Hudson said.
Ya think! That’s the problem, you should not be able to get a loan in the first place if you can not afford the payment.
“There’s a big difference between qualifying and affording,”
Oh, boy, that’s the money quote. If ever there was a motto for the housing bubble, that’s it for sure.
MA would have you bail them out
biz will flee that state and their FREEer healthcare too
I thought MA real estate was a ‘can’t lose’ proposition for the banks. It’s special here. 10% annual appreciation for all. The banks will make money foreclosing because the homes are worth so much more now. What’s a little $5K tax?
My favorite for the money quote of the housing bubble was :
“Bankers are rediscovering that making loans is not the hard part. Getting their money back is the hard part”.
LOL. Ain’t that the truth!
and conversely, debtors are discovering that borrowing is the easy part of debt. Repayment is however real pain.
Little did these people realize that “liberating” their equity involved enslaving themselves.
Palmetto, here is another money quote from the Sacramento Bee this morning. The headline is “Missed payments, foreclosures surging in region” and deep in the article……Christine McCullough will lose her Natomas house to the bank in September….
“It was a bad time to buy,” she said. “I shouldn’t have purchased. It was just a bad time.”
I thought the NAR said it was always a good time to buy. I just had to post this here, since we have first hand reporting from an actual FB, that it is not a good time to buy.
http://www.sacbee.com/142/story/290365.html (registration required, but Ben may post more of this story in the California thread today)
Jingle,
I was taking to someone about a rental in West Sac and I asked him why he didn’t just sell the place. His reply was “in this market? no way!”. He would have broke even after living in it for 4 yrs and that wasn’t enough profit for him so he doubled down and rented the place out at a loss to large family that is trashing the place.
I see this all the time in our area.
What on earth were they doing a refi from a fixed rate on ~130k into an ARM at 206k four years later? No sympathy here, they were adults who signed the dotted line to cash in on the paper gains in their home not looking a few years down the road when it would come back to haunt them. I only feel for the children who will be tramatized due to the ignorance of their parents.
They were likely financially unsophisticated people who heard an ad or got a piece of junk mail from a lender touting HELOC and didn’t fully understand the downside. All they saw were dollars and they got greedy. Not excusing them, but most people are not as financially savvy as folks here.
Seriously, a lot of people don’t understand what is at stake and they are content to listen to what the lender’s sales rep (what they really are) has to say.
At least once each week I get these sh!t offers from Countrywide in the mail.
I don’t believe those numbers for a minute. There’s no way their $2700/mo. payment is on a $206k loan. There’s also no way that their $137k home only appreciated to ~200k in that time. They must have cashed out 200k and added that to the balance.
I have a dear friend how refied out of a fixed 110K into a 415k ARM.Where? midtown sacramento and none of that money went into repairs or upgrades. He thought the value of the house just magically rose. He’s now back into a fixed at 432k. I love these people like family but even my idiotic family isn’t that nuts.
wow! 110 ->432? Harsh toke
Now only 54.6 percent escape foreclosure by selling, refinancing or catching up with their payments.
The amount of people who can escape foreclosure will become less and less as home prices fall, people get layed off, and credit standards tighten.
Also did anybody see the news about the i-phones? It seems like maybe they did not sell that many afterall. And what about American Express, who started letting people pay their mortgage thorugh them in April? Well they 2 million new cards, however people were falling behind on payments in record numbers.
No worries - dow futures are up!
I wish they would let me pay my rent through my Amex! Even better, through my Discover card that has cash back! That would shave 1-5% off my rent (depending on what the offer is from the CC).
Actually, what Amex is doing is a good idea; I just don’t think they they should have done it in the middle of a housing collapse. Good idea, bad timing.
LEAD ARTICE NYT !!! (The Mortgage market is getting scary IMHO)
Top Lender Sees Mortgage Woes for ‘Good’ Risks
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By VIKAS BAJAJ
Published: July 25, 2007
Countrywide Financial, the nation’s largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.
I love that CFC Mozilo comment about “no one saw this coming”
makes me want to grab a stack of denied mortgage applications from the past week and smack him right across the head.
The Leather Man saw this coming, otherwise he would not have been dumping his shares all year. Info on insider sales is widely available…and we’ve been tracking it here…wouldn’t you think some “analyst’ would have noticed it and called him on it?
Leather Man AKA Tan Man AKA Mister UVB.
…..just like jocelyn wildenstein is the lion woman…..
We need to give him a genus, as it is not homosapien. He looks repilian to me, not feline or equine or bovine.
Turtles are too handsome. He is even more leathery. How about a kimodo dragon? Any takers there?
countrywide is my mortgage holder, not by choice my loan was bought by them. you would not believe the junk refi mail i get from them weekly. they will promise you the moon. i have an 20% down 30 year fixed 6.25% loan. they are not going to shake me out of that loan.
Here, this will help:
http://www.secform4.com/insider-trading/25191.htm
That is, in a word, disgusting.
holy sh!t. why isn’t he in jail?
Heehee
So that site is saying that between 5/14/07 and 7/23/07, Mozilo sold 1,370,000 shares for 51,962, 962 USD.
If accurate, well, clearly someone did see something coming.
Nice little nest egg that.
Note to self: If the CEO and other directors of the company are selling stocks like rats leaving a sinking ship, perhaps it’s not the best time to buy
If I were him, I would wouldn’t show up to the next shareholder meeting.
“We did not see this coming, but we sold all of our shares.” - Mozillo.
I smell shareholder lawsuit. The thing about a lawsuit involving Countrywide is that you have to admit you were long in that POS stock. The shareholders can start a 12 step program…
“Hi, my name is John, am I am an A-hole. I own Countrywide stock.”
Hello,
I posted this elsewhere but I think it is very telling…
Shares of Nomura have declined 5.6 percent this year, trailing the 4.3 percent gain of the benchmark Topix index. The stock slid 1.4 percent to 2,120 yen in Tokyo today.
Nomura reduced its U.S. subprime loan portfolio to 71.1 billion yen at the end of June from 210.2 billion yen on March 31. The company buys subprime loans, packages them into securities and sells them. Demand from investors declined as loan defaults reached a 10-year high in the U.S.
“We took a hit from the subprime loan business,” Chief Financial Officer Masafumi Nakada said at a press conference in Tokyo. “We kept reducing our position rapidly, but the market’s deterioration was faster.”
Nomura will carry out a “drastic overhaul” in the U.S., Chief Executive Officer Nobuyuki Koga said in a statement today. The company cut 105 jobs during the past quarter.
from: http://www.bloomberg.com/apps/news?pid=20601087&sid=aXDgqs_9xMi8&refer=home
I also did a random check of beach houses an availability in the Outer Banks of NC. for the last 2 weeks of August.
You can still get oceanside/beachfront today. If gas goes to $100 bbl then next year they may actually get cheaper. The Outer Banks always reminds me of CA when I was a wee lad.
That why I would never go to the outerbanks - Oregon has the best beaches!
New minor variation on the “it’s different here” theme.
Bumped into an aquaintance on the Metro yesterday. We were generally catching up and I mentioned that I was basically out of the house/condo searching game until credit requirements tighten up (that is my standard way of explaining - that since I have good credit and a down payment, I don’t want to fight with people who have bad credit and no down payment). Her response?
Her: Well, don’t wait too long, because interest rates will go up.
Nothing, new, you say? Wait…
Me: Great, that will lower prices.
Her: No, higher interest rates won’t effect prices at all. Not for stuff that is close to the city.
Huh? She admitted that the houses that are far out (long commutes to DC) are already down, but higher interest rates won’t affect stuff closer to the city because people want to live close in. I have never heard anyone assert that changing interest rates will only affect certain parts of a geographical region.
Or maybe she just meant that nothing will cause prices to go down in the easy commute area?
Now, I have to agree with one thing - there is a certain group of Washington elite that can pay cash for mansions in Georgetown or Chevy Chase or McLean and mortgage interest rates don’t have to affect them - general market pressure and desire to get a discount from peak when all the peons are getting a discount from peak will affect them, but mortgage interest rates, might not. Of course, I’m not going to be buying one on those, not even if I could afford one - you still have to clean/heat/cool the thing. Bleh.
So, you heard it here first - Washington, DC in particular, but perhaps big cities in general have a magic real estate price bubble around them that is impervious to everything, including high mortgage interest rates.
Oh, her parents are long retired, but they were real estate agents.
DC is definetly going to be yet another town where we will get to see who is really swiming naked when the tide goes out. That might be a rather nasty sight here in the “Ugly Peoples Hollywood.”
I understand why that is such a truism here because in many ways it has been true in the past. Why? Because before people might take a hit on the value of the house but they had not overextended themselves due to the absence of HELOC’s and ARMS.
The economy here was for the most part more shock resistant than other cities because of the prevalence of the Fed. Government. That changed in the 90’s as did lending requirements.
A recession is tough if you have a house at 2.5 times wages but can be done as long as you have at least one steady income.
This time in the metro area it is going to be different. I think the following factors:
1. Rise in gas prices. In the 80’s an early 90’s 5 - 10 miles outside the beltway was still considered far away.
2. The job mix is a lot different. Us snoozing parasites on the flabby body of the common man as represented by the Fed. Gov. are more of a minority.
3. People are a lot more overextended.
4. 2.5 income is no longer a correct measurement of qualification for the middle class.
NOVA, you are very right on the differnece in the job mix. I found a stat one time where it said only about 20% of the jobs are gubment. The way people talk, I assumed it was like 80%. You 2.5 income statement will be the biggest hit. All it takes is one baby or one job loss, and people will be hurting bad. You can definitely tell in this area more then most that people only care about the monthly payment and have no idea what value for your dollar means.
90% is government- the contractors etc are ALL gov work after you scratch the surface
highest Median pay of any city
The key is that contractors are a lot more like corporate jobs in the downturn. The government switched to contractors because RIFs and furloughs are exceedingly difficult to use, and outsourcing the layoffs is much more expedient.
The job mix includes a whole lot of federal contractors, though. And while contracts come and go, with the amount of money sloshing around DC, there’s always work on some contract available for a lot of these deadbeats. So they’re not suckling directly on the federal teat, but the same milk has been bottled for them.
disclaimer: I am a federal contractor, although I intend to get out of this industry within a year or so. can’t take it any more!
(So, you heard it here first - Washington, DC in particular, but perhaps big cities in general have a magic real estate price bubble around them that is impervious to everything, including high mortgage interest rates.)
Same story in the New York area. Yes, there has been a structural shift that has made economically viable urban areas (onl a few left) more valuable relative to suburbs and exurbs (now abundant and generic). And that will affect relative property values.
But this structural effect is overwhelmed by the housing bubble, and will result in steep declines. In NY prices are so high close in that the long term structural effect is already OVER-priced in.
Oh, please. I was born and raised there, and lived throught the “affordable housing crisis” of the 1980’s. Mr. Market took care that, bringing the median home price back to 3 times median income in the early 90’s - for the metro area as a whole.
“New York is different,” in a pig’s eye.
I thought after that the lesson was so harsh that a similar bubble would never happen again. WRONG!
NY observation- Considering the previous housing bloodbath on the 90’s, I can’t quite understand how people here continue to say the dumbest $hit I’ve ever heard, i.e, “real estate prices will just plateau but they wont go down”. For God sakes it was only 10 years ago that people ran from real estate here.
And let’s not even get started on the 70’s - you could buy row houses (brownstones, in NY parlance) for under 100K on the Upper West Side or in the Village. In many neighborhoods, you couldn’t even give them away, so they just set them on fire for the insurance money.
That is why, to this day, the old-timers at FDNY call the 1970’s, “the war years.”
in the 70’s, i was but a child…..but interest rates were strong healthy adults….
it is different this time…rates are too low.
(that is my standard way of explaining - that since I have good credit and a down payment, I don’t want to fight with people who have bad credit and no down payment).
Seems like we’ve all had to come up with faux reasons for sitting out this time bomb, er, real estate market. Sometimes I slip and tell the truth, though.
As the largest employer, the government DOES bring much greater stability to the DC area than say, Napels FL. OTOH, those stable Gov Jobs simply don’t support near million dollar home prices in Bethesda and Northwest. Long term, 8 to 10 times income simply won’t work, even if you ARE unlikely to lose your job. That small elite (lawyers and lobbyiests I suspect), are no more representative of the average G-worker than J-Lo is a median SAG member.
When I thought elite, I was thinking high end private lawyers and lobbyists (as you suggested) and a very few others - high profile journalists and, for the moment, some of the general business executives (but the real estate developers might be on the way out of that elite). A couple of the most prestigious non-profit jobs might afford a million plus house, but they would probably be doing it with a mortgage, not without.
Here is a link to the DC pay scale table for feds:
http://www.opm.gov/oca/07tables/html/dcb.asp
In my office only first level managers and a very, very few senior technical people are ever 15’s. A lot of lawyers make it to 14, but some will never get promoted past 13. Presidential Managment Fellows (the lawyers right out of law school) start out as 9’s (step one).
jim - you mean j-lo is a median SLAG member!
A few days ago I posted about an acquaintance who was trying to sell his condo for $100,000 more than a direct comp and was complaining that distressed sellers were setting their asking prices “too low” and hurting the market. He wanted everyone to “hold out” for higher prices.
Update - my acquaintance must have finally realized his place won’t sell when a direct comp asking $100,000 less isn’t selling. So his solution is…..(drumroll please)…..to rent it out at a monthly loss for a couple of years so he can make “an even bigger profit” when he sells.
I put quotes around “an even bigger profit” because the asking price for that direct comp is $70,000 less than what he paid (ie, he’s $70,000 underwater and is still clinging to the idea of walking away with a profit).
The denial continues to run deep.
Your acquantance sounds like a real brain surgeon.
More like a victim of brain surgery, like Rosemay Kennedy.
D’oh that’s Rosemary Kennedy.
Here is a new incentive to me,
the Miami Herald is reporting that a local designer is offering a 20K wardrobe to the buyer of his luxury condo…
This is getting good, got popcorn?
Wow, you mean I can get 20K of soon to be out of date fashions (if they ever were in in the first place) and all I have to do is buy a overpriced Miami Condo????. Sign me up.
The only thing that could make this better is if he was selling a CondoHotel.
If they are any good, they had better give me a whole lot more then 20k. That’s a drop in the bucket.
UBER-STUPID!
Fashion-istas should always, and I mean this, finance your Madison Avenue Bullsh*T on a mortgage.
Just saw an ad: New Toyota Tundra’s available for 0% financing. Tundra’s only…
Hmm…
I can see that… construction down fuel cost up sales down.
Don’t read too much into that. Toyota is trying it’s best to kill GM and Ford in the full-size truck market and they are willing to use incentives to do it. Ford and GM are trying to reduce reliance on incentives for their most profitable vehicles at the same time that sales are slowing for those same products.
Didn’t the new Tundra plant come on-line in Texas earlier this year?
Toyota is trying it’s best to kill GM and Ford in the full-size truck market and they are willing to use incentives to do it.
BF and I were just discussing. He thinks Toyota is going to make serious inroads to Ford’s truck market, especially among the young. I think if it happens, it will occur over time, not in the near future.
I think Toyota could put Detroit on the ropes very quickly but they’re much smarter than that. Personally, I would buy a Turdra, but to each his own.
yeah but for a simple, cheaper work truck, I would go w/ ford or gm
Was just in the Ford dealer, they are offering 0% and 2007 cash back on all trucks.
Just trying to clear inventory this time of year, but more desperate because those contractor specials didn’t sell.
That’s funny, I just saw a commercial offering a lease on the Volvo XC90 (their SUV) for “Zero, Zero, Zero” as in zero down payment, zero security payment, and zero first payment on a 24 month lease.
I believe this is signficant because the higher-end car manufacturers are normally very reluctant to advertise the high end models using “zero down” gimmicks because it can cheapen the brand and hurt them in the long run.
They must be in serious trouble if they are offering a deal like this.
Considering Vulva is manufactured by Ford and is nothing more than a Ford escape, it is no surprise. I wouldn’t buy anything that remotely sounds like female anatomy not less something built in Scandinavia.
‘Course when I had a Volvo, it was assembled in…Belgium.
It’s all eurotrash.
Why do you say that?
leases are for fools. talk about a merry go round. ugh! buy late model used
Long time lurker, first time poster here. I was in North Carolina for work last week and I heard on the radio an ad from a real estate agency in the golf resort area of Pinehurst. People there must be having some trouble selling their real estate because the ad’s big pitch was that the agency that was representing the seller would buy the property if they couldn’t find another buyer in a timely manner. So the seller has nothing to worry about because they can rest easy knowing that their house will get sold. Of course, terms and conditions apply. Also, no conflict of interest between the seller and seller’s agent could possibly exist here… right?
A person should sell their house first to see how much money they are going to net before they buy another place . The RE industry keeps wanting to get people to put the cart before the horse . Why the RE industry expects people to make contract commitments on high price real estate ,before they know exactly how much money they will have from closed home proceeds to work with, is just not right . The real estate industry has lost all concern for what is good for the customer and people are just being treated like dumb marks for con artists schemes . I’m discusted with all of it .
hw - they are being treated like marKs….because they ARE!!!
Sage advice from economists to SD homeowners: DON’T PANIC!
County foreclosures leap higher
Homeowners should not panic, economists say, though latest spike in defaults is worrisome
By Emmet Pierce
and Lori Weisberg
STAFF WRITERS
Home foreclosures in San Diego County continued a troublesome climb into record territory in June, but analysts say the number has yet to reach a threshold that creates a drag on real estate prices or the economy. DataQuick Information Systems reported yesterday that during the first half of 2007, San Diego County had 2,896 foreclosures compared with 445 during the first half of 2006, a 551 percent increase.
http://www.signonsandiego.com/uniontrib/20070725/index.html?0.9272067452275237
Seems like an opportune time to recall some comments that appeared in the SD Union Tribune Homes section three days back…
“It really is the real estate market that’s causing this,” said Kelly Cunningham, an economist at the San Diego Institute for Policy Research. “Even though job growth in the visitors industry and the professional business sector is still positive, we’re losing as many jobs as we are adding.”
For the past year, Cunningham and Gin have been predicting that San Diego would be able to survive the real estate slowdown without falling into a recession. Now they say they are not sure.
“If this trend keeps going on for the next couple months, it would suggest that we might have a recession before the end of the year,” Cunningham said. “Not a big recession, but a slight one.”
Cunningham added that if the number of real estate foreclosures begins to increase substantially – which he doesn’t think will happen – a recession could be more severe.
http://www.signonsandiego.com/news/business/20070721-9999-1n21jobs.html
Top lender describes a widening housing slump
News from Countrywide sparks stock market fall
By Vikas Bajaj
NEW YORK TIMES NEWS SERVICE
July 25, 2007
Countrywide Financial, America’s largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.
http://www.signonsandiego.com/uniontrib/20070725/news_1b25country.html
I wonder if this was a factor in CFC’s share price drop?
Last 10 Insider Actions for Countrywide Financial Corp
Date Name Shares Stock Transaction
07/23/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 70,000 CFC Exercise of Stock Options
at cost of $695,800.00
07/23/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 70,000 CFC Open Market Sale
proceeds of $2,395,400.00
07/20/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 70,000 CFC Exercise of Stock Options
at cost of $695,800.00
07/20/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 70,000 CFC Open Market Sale
proceeds of $2,388,400.00
07/19/2007 DAVID SAMBOL
President & Chief Operating Officer 4,250 CFC Exercise of Stock Options
at cost of $56,270.00
07/19/2007 DAVID SAMBOL
President & Chief Operating Officer 4,250 CFC Open Market Sale
proceeds of $149,855.00
07/18/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 46,000 CFC Exercise of Stock Options
at cost of $500,940.00
07/18/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 46,000 CFC Open Market Sale
proceeds of $1,578,720.00
07/16/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 70,000 CFC Exercise of Stock Options
at cost of $695,800.00
07/16/2007 ANGELO R MOZILO
Chairman & Chief Executive Officer 70,000 CFC Open Market Sale
proceeds of $2,508,100.00
http://www.marketwatch.com/tools/quotes/insiders.asp?symb=CFC&sid=1426&dist=TQP_Nav_insider_actions
Then CNN Money has a headline that says home prices posted gains. I know they’re using the median price trick but it still steams me. Giving sellers false hope is just cruel.
At least the UT didn’t hide this on page 5 of the business section.
It tok up half the front page….
“Sage advice from economists to SD homeowners: DON’T PANIC!”
But if you ARE going to panic, be the FIRST to panic!
Jon
I noticed in the morning paper the City of Chula Vista, which currently has some 700 foreclosed homes sitting empty has ordered lenders to maintain them … Link
This is of interest, since it places more incentive on lenders not to sit on foreclosed properties, so if this becomes a trend we may see more of this in cities across America.
Chula Vista is on my short list of cities people should deeply desire to live in if they can’t get to Bakersfried, Calif. Seriously!
It’s easy to spot the abandoned homes that lenders seized from cash-strapped owners in Chula Vista. Look for a dried-up front lawn, broken windows and – the dead giveaway – a green, swamplike swimming pool.
Why don’t the lenders just sell instead of sitting on foreclosed properties with green algae on top of the pool? I don’t understand the value to the lender of riding falling knives down to the bottom…
Clearly lenders are trying to artificially prop up the market by keeping these homes off the market. If they flood the market with foreclosed homes they lose, because prices fall further and they end up holding the bag on more foreclosed properties, and if they sit on them they have to pay upkeep and taxes as well as having to lock up that cash in a dead asset which is steadily declining. I doubt they can hold out forever unless the federal government starts buying the bad debts and associated properties in an effort to stabilize the markets, but this is not something I really see happening.
“…unless the federal government starts buying the bad debts and associated properties in an effort to stabilize the markets…”
Hopefully the federal government will first look into how well that policy worked out for Japan before seriously contemplating its use here…
Shhhh! Don’t even say such things out loud, this might be just the ticket for Ben get the helicopter drop straight to the debtor, er, consumer… God knows both political parties are dancing on coals right now, you might even see cooperation on such a measure…
Actually is there anyone on the board in banking? when I worked at a bank in the 90’s I remember there were rules as to how long they could keep houses and how they were reported, but I am seeing houses being held for more than a year down here.
I just researched one yesterday that appears to have been REO for nearly 2 years.
I’m in banking. Here’s the deal. We can hold a property indefinitely if we want to, however, it must be appraised annually and the book amount written down to appraised value.
Obviously holding non-performing RE is not a valid business model due to holding costs, opportunity costs, selling costs, etc. . . . so, for the most part, we try to blow them out and off the books as quick as possible. If an OREO is lingering, it’s because no one is paying close attention or they are stubbornly holding on based on a bad appraisal.
plus if the bank is holding on to the REO it has to set aside more capital under risk weighted capital regulations than say for a single family loan. If a bank has too much REO it will tie up too much capital messing up all their ratios and restrictiing growth or actually causing the bank’s ratings to go down which will cause the amount of deposit insurance premiums to go up.
Your post suggests there is not much in it for banks to sit on REO. So what is on the minds of SD lenders’ minds which are hanging on to declining-value assets with green swimming pools? Are they expecting some kind of cargo drop from the feds?
Most bankers are slow to recognize losses. We live in a society where results and perfomance are rated quarterly. Wouldn’t want to damage my bonus by taking a loss on a loan that can be stashed on the ledger called a “Foreclosed and Repossessed Assets”.
Well, THIS certainly comes at a good time. NJ is 68 billion in the hole for future retiree health benefits:
http://www.nytimes.com/2007/07/25/nyregion/25retiree.html?_r=1&hp&oref=slogin
Of course, this skeleton is hiding in the closets of probably almost every other state, county and municipality that offers retiree health benefits or generous pensions. And, it appears that info is about to start coming to the fore.
How the hell are we going to pay for these promises?
“How the hell are we going to pay for these promises?”
Sufficiently high inflation seems key…
Inflation doesn’t help NY, which has inflation adjusted pensions. And of course health care inflation runs ahead of everything else.
How about raising taxes, ending infrastructure maintenance, and eliminating free high school? It’s for the seniors, after all.
Use “quality adjustment” to report inflation as significantly less than it actually is. 8% inflation gets reported as 3%.
In actuality, we’re going to have to socailize medicine and have significant tort reform for malpractice. Right now, 25% of medical expenses go to pay malpractice insurance. A good tort reform could easily shave 15-20% off medical costs.
“hedonic adjustment” = one way to under-report inflation
The problem with tort reform, is that it assumes lawsuits are the problem. We already have tort reforms, yet medical costs continue to climb.
Which HMO ceo absconded with a $1.1 BILLION retirement package? HMO’s have been getting their 20% skim off the health care system for 30 years. Time to get rid of them.
Which HMO ceo was it that absconded with $1.1 BILLION in retirement? HMO’s have been skimming “their” 25% from the health care system for 30 years. Get rid of them and you solve the problem.
Do you seriously think insurance rates will drop significantly if this movement is successful? Not likely. See, e.g., this paper on the subject of the results in Texas after the “reform” passed there.
The only thing the so-called “reform” will accomplish is increasing insurer profits at the expense of screwed victims. People calling for the limitation and/or elimination of noneconomic damages should have to get some exposure to serious pain and other “noneconomic” injuries before they decide that victims don’t deserve compensation.
In case of inflation-adjusted pensions, one must rely on under-reported inflation to eat away at those liabilities…
This is my take on everything as well. The retirements will be paid out, and Social Security will not go broke, it just wont be worth as much as folks are planning on.
Raise taxes. Next question please.
Exactly. I can see that happening, and the max tax rates going back up to 70% for income. It will be the pre-Reagan level. We can cheer on, but the politicos will make sure it will snag the upper middle class. It will be a high tax that will last 4 to 8 years and then the big tax revolt will occur. Just my prediction. The “soak it to the productive” tax will happen sometime between 2009 and 2017. This is why I will convert to Roth in 2010 and why I buy municipal bonds, savings bonds, and other investments that I can use to avoid or defer taxes.
So long as old people vote disproportionately more than people of working age….
Jim, I doubt if there will be enough money in Roths to make it worthwhile to tax. That’s especially if most people have the same distrust of politicians as you and don’t put money in. I like to diversify among tax avoidance schemes in my investing. I have about half and half in tax deferred and non tax deferred anyway, in my portfolio.
This is why I will convert to Roth in 2010 and why I buy municipal bonds, savings bonds, and other investments that I can use to avoid or defer taxes.
And of course we know that the government would NEVER change the rules after you’ve relied on their promise not to tax those things. Right?
That’s definitely coming. Remember how they tried to test the sheeple a year or so ago, by hinting that they might get rid of the mortgage deduction? I can honestly say that I fully expect things to get much tighter in terms of tax audits, etc. There are new tax preparer penalties that started in May of this year and they basically require tax preparers to disclose anything deductions that may not be upheld in an audit. So they are going after the self-employed and small business owners right now. Next will be the working middle class. Expect AMT or some other kin to that, to be fully-implemented on middle class within the next few years.
Real Federal Tax Burden Is Double If ‘Collateral Damage’ Is Included
http://www.ibdeditorials.com/IBDArticles.aspx?id=270164621264348
The “collateral damage” to us has been authenticated by a Nobel laureate and quantified by distinguished scholars. They say that the ratio of lost income to tax collected is nearly one-to-one. Thus the real federal tax burden in America is each year about double what the government tells us.
State governments running huge deficits are screwed - they are bankrupt already. Might take a few years for them to realize it. For example, Calf just floated what, $50B in bonds or something like that? And they can’t be paid back without drastically increasing taxes.
Unlike state governments, The fed’s can print money to pay for stuff, until the money becomes worthless. I’ll get my first SSI check in 10 or 15 years, but the the monthly check might not buy a gallon of gas.
In states like Ca, with an overwhelming immigration problem, it will be even more difficult. I doubt the bonds will ever be paid back. Remember back when Arnie ran on the promise of a balanced budget and no more debt? What a bunch of crooks!
Wonder when we’ll get the executive order to repeal Prop 13? Boy will that kill the market. Seriously, what else can they do? The average CA consumer is bust.
Except that propositions passed are really amendments to the state constitution, which can only be undone by further amendments to the state constitution; one of the endemic flaws in California’s political system. While I may not trust lawmakers to write laws in my best interest or the best interest of the people at large, I do trust that they will do a better job of making the law implement whatever their actual intent is, unlike the so-called “citizen initiatives”, which ALWAYS have horrendous unintended side effects.
Truly amazing that nobody ever learns. Take a look at this.
Home Craze Gazumps London With Record Prices, $500,000 Parking
http://bloomberg.com/apps/news?pid=20601109&sid=aGs1kkbtSKPw&refer=home
Anon E. Moose, if you’re out there -
I just saw your question from yesterday’s thread and posted a reply.
http://www.bloomberg.com/apps/news?pid=20601039&sid=aIOWGBzzWpNo&refer=home
Per Bloomberg, crack cocaine accounting fueled subprime. Basically, it appears originators can book “profits” when they sell loans (and sell their company stock and cash in stock options) even though they are potentially on the hook if the loans go bad via buybacks. This makes them “addicted” to short term volume.
Oops…
COMMON SENSE
American Home Mortgage Plunge
Is Portfolio-Management Lesson
By JAMES B. STEWART
July 25, 2007; Page D3
What do you do when a stock you own takes a hit?
Regular readers of this column are familiar with my strategy for buying lower, selling higher, using targets on a broad market index like the Nasdaq. Recently I’ve been deluged with emails and calls asking whether I use the same strategy for individual stocks.
The short answer is “no.”
Before elaborating, let me explain that the reason for all these inquiries is the precipitous decline in shares of American Home Mortgage Investment, a mortgage real-estate investment trust that I have recommended.
http://online.wsj.com/article/SB118532544780576920.html?mod=hpp_us_personal_finance
I bought shares myself, thinking that the carnage in the subprime-mortgage market should be reflected in its share price, especially since AHM has almost no direct exposure to the subprime market. My reasoning turned out to be wrong, to put it mildly.
I don’t think that reasoning was wrong. The carnage IS being reflected in the share price. His “buy” recommendation is what was wrong.
Moral of the story:
1) Don’t predict the share price movements of individual stocks.
2) Don’t recommend individual stocks.
3) Don’t act on bogus recommendations, unless you want a pile of black swan guano to land in your eye.
I agree with 2) and 3), but 1) can be fun. Just don’t do it with money you need for food or retirement. Some people go to casinos to gamble. There, the atmosphere is depressing (IMHO), and the odds are stacked against you. Speculating on stocks is much more fun, so long as you realize that you are speculating, not investing, and so long as you never put more chips on the table than you have money in your pocket.
I agree, and would add that gambling on the stock market has the added advantages of (1) respectibility (”I’m not gambling, I’m investing“) and (2) wider legality (stock market gambling is legal in Utah, casino gambling is not).
Dollar-diversification choices, please?
GETTING GOING
When a Simpler 401(k) Is Just Dumb
By JEFF D. OPDYKE
July 25, 2007; Page D1
Employers have long hoped that simpler 401(k) plans would entice more workers to save. But for more-savvy investors, that may not be good news.
Many companies have pruned the number of investment options in their plans to keep workers from feeling overwhelmed by too much choice. General Motors Corp. and Delphi Corp., for instance, recently cut these options by nearly half. Meanwhile, other companies have loaded up their plans with a slew of target-date funds — one-stop shopping for retirement savers — while shrinking the variety of other funds.
But simple isn’t always better. In paring choices, companies may be reducing workers’ ability to diversify their assets, leaving them exposed to the downdrafts that sometimes roil stocks and bonds simultaneously.
http://online.wsj.com/article/SB118531797652476820.html?mod=hpp_us_personal_finance
RE a$$clown quote of the week:
“(He’s) wringing his hands about how hard it is for people to “cobble together” a down payment without seeming to be aware how many people agonize over whether or not to pay cash for the unit, or how to thank their parents for the graduation gift of a new condo.”
Dips will buy… A quick skimming of the dead tree version of the article suggests they forgot to mention Godzilla’s huge recent insider sales as a factor in the share price slump.
Countrywide Shows Even Prime Loans Are Beginning to Sour
By James R. Hagerty and Karen Richardson
Word Count: 713 | Companies Featured in This Article: Countrywide Financial
The dips, twists and turns taken by Countrywide Financial Corp.’s share price over the past year and a half would make even the biggest roller-coaster fanatic a bit squeamish. And that was before yesterday’s plunge, which sent stock of the nation’s No. 1 mortgage lender down to its lowest point since late 2005.
Behind the ride has been a faith among many investors that Countrywide’s lending smarts would protect it from the worst of the mortgage market’s woes.
Every time the stock fell, investors jumped in and drove the price back up.
http://online.wsj.com/article/SB118532754211277079.html?mod=hpp_us_whats_news
Nobody can do what Countrywide can.
Like making shorts lots of money, I suspect.
Reverend!
Wish I had put more funny money where my mouth was. The clincher for me to sell short was all of the junk mail that I got from CFC. They were like a woman (or man) who keeps calling long after you’ve given them the boot. I mean, Angelo, I’m diggin’ the orange oompa loompa thing you’ve got goin’ on and I’m likin’ the crazy cashflow you’re pulling out of your sugar mama, but it’s not working for me. Buy to cover!!
MrBubble
DCB does not appear to have legs today…
http://www.marketwatch.com/tools/marketsummary/
PPT intervention headed off another daily plunge around 10:50am EST… I guess if the market has a 100 point selloff, a “dead-cat bounce” must be in the bag for the following day?
Getting close to time for the post-lunch PPT respiking operation…
The 3pm respiking is proving effective to spark a “reflief” rally. What a relief — if the market fell two days in a row, even contrarians might start to worry…
I’m considering a nice promotion in Chantilly VA. Where’s a good resource to begin researching rentals? It’s just me, so 1-br or even a big studio… 800-1000 sq ft…
Are rents falling in Chantilly?
train1@gmail.com
I don’t have any Chantilly-specific tips, but I do have one idea for you. Get in the car some Saturday (or, even better, take a day off and do it in the middle of the week) and drive around the areas you most want to live. Walk in the coffee shops and look on the bulletin boards. Go into apartment complexes and ask for the manager.
Craigslist, classifieds and web-based searches are fine, but it’s been my experience that when you actually put shoe to sidewalk, you get more choices — and you’re not competing with as many other folks who are just using web and newspaper.
I found an apartment I absolutely loved by this method, and also found a great place for a distraught girlfriend who could not find anything she liked via classifieds, as well.
Hope this helps.
Except I currently live 1000 miles away. It’s a relocation deal.
Ah — well, you might be well-served by going with a short-term furnished corporate rental (I know Oakwood is one national brand in this area) and getting to know the area first. Not a lot going on in Chantilly - it’s a far suburb - great for families. While Arlington — which is a better place for the single life — would probably be too far of a reverse commute — you might be happier near Tysons Corner, for example, which isn’t too far of a haul to Chantilly. Or maybe Reston Town Center, or Herndon.
Good luck — I’m sure it’ll be a challenge.
Condo’s for rent are often listed in the MRIS system and an agent can run you list down in your price range. You’ll have more choices with apartment complexes probably that far out.
If your are a young and single guy, you may want to look at being closer in to the city and doing a reverse commute out.
Oh yeah! I used to reverse commute from Alexandria, VA (nice town) to Prince William County. I took DASH to Metro (or walked) and then took the OmniRide MetroConnect bus. Reverse commute times are generally less because there are less passengers and the operators are zipping along to make up time. Nice, easy, and I got to live in a much more exciting zip code.
I spent two years living in downtown DC (left 3 weeks before 9/11) so I’m kinda familiar with the area.
Looks like the relocation expenses negotiated in the package will pretty much decide how desperate I am when I get there. I’ve pretty much decided to take any offer they throw my way (32, never married, no kids or meaningful debt).
Single life was tough even in Falls Church. DC was so much better. Didn’t help me become non-single, but it was much better. We had an office in Chantilly and I never even wen there b/c of the traffic.
get close to the builder line and you’ll get cheap rent
Reston town center is ok,but there’s lots of welfare housing in Reston
try WorldGate- lots of yuppie action
I’d stay away from a rental within a block RT 50 (the part east of 28).
If you want someplace that is a little less family oriented, but does not have a long commute, try the Fair Oaks/Fair Lakes area. It’s also a reverse commute, but instead of being 10, 15, 20 miles away, it should be within 5 miles, depending on where you will be working in Chantilly.
I would stay away from South Riding. Nice area, but the commutes down Rt50 in the morning are like root canal.
SPEC-U-VESTORS are now posting to “make a wish” websites to try to get help for their mistakes. Take a look at this sad story:
http://www.wishood.com/Wish.aspx?w=2283
That site crashed my browser.:(
Incredible gas plant explosion near downtown Dallas. Ash raining over downtown. And trust me, developers were looking at some of those areas for housing!
Incredible blast! By the way Mr. Hunter has been charged with manipulating natural gas prices.
The Tucson Citizen shills for realtors: Still a buyer’s market for local home sales
With a poll, no less: Do you agree that the market now is the best in the last decade for buyers?
TXU coming undone - Chrysler has hit a snag
“KKR, with four major buyout deals in the debt pipeline, is refusing to budge on lending terms agreed to with investment banks, even as debt investors show a weakening appetite.
That tough stance amid shaky debt markets means banks will have to shoulder all the risk and perhaps take significant losses on the massive loans.”
International Herald Tribune
July 24
KKR is forcing banks to honor commitment terms for 121B. If the banks take the hit, are they going to give any more commitments? Probably, but with terms that adjust to the market. This will slow down any other takeunders.
I’ve never covered that short (TXU) and won’t.
QUESTION:
When the NAR releases their median home prices, is this the median of all their data from every state or just a stat from sample data? I thought I read one time that they just use some sample data which is a % of total data collected from all the states?
My guess is that is the median of all homes sold in the country. Which means the national median could go up even if the median in every single state and metro area went down, if sales fall more in low-priced areas than in high-priced areas.
they actually use a complicated MSU algorithm (Making Stuff Up)
Does anyone have link to what forumla they use and what data goes into their numbers?
Hey GS, “…from the mind of Minolta”
Bernanke says managing perceptions important
Fed chief tells Harvard audience investors expectations affect inflation
http://www.msnbc.msn.com/id/19696660/
It’s been quite obvious for many years that the Fed as been engaged in a public relations campaign for the minority of benefactors of the trickledown theory, regardless how flawed that theory is.
Milton Friedman took a dim view of such fooling games, which seem to be an increasingly important tool in the Fed’s standard menu of policy options…
‘Friedman used Abraham Lincoln in explaining his position on monetary policy: “You can fool all of the people some of the time, and some of the people all of the time. But you can’t fool all of the people all of the time.” A central bank can have occasional impact on the level of economic activity by controlling interest rates. But if this power is used too often, firms and households will adjust expectations of price changes and neutralise any impact on real activity. This is the core of monetarism, and it was and still is correct.’
http://www.opendemocracy.net/globalization-vision_reflections/friedman_4132.jsp
Man, this market is very unstable now. More swings than a Hedonism vacation! Looks VERY shortable to moi and I’m doing that.
AAPL results come in at 5pm. It should be interesting. Expectations must be very high, although AT&T took some wind away yesterday. It seems J6P may be a little too tapped-out for a $600 phone and $60min. service plan.
Amen. Short and cover, short and cover. Loving it!
OK - maybe this is a dumb question - but wouldn’t you be better off just shorting once and covering once - to reduce your commissions? Or are you referring to different stocks?
Not a dumb question. Buy and hold investing does work better with very low volatility. With high volatility, you save on commissions if you only trade/cash out once, but the beauty of volatility is that you can ride the waves many, many times. Sometimes you wipeout (time it wrong), but as long as the market keeps choppingup and down, it’s pretty easy to make money, even after deducting transaction costs.
This is the kind of stuff that was routine in 2000 - early 2003. I thrive on this.
More swings than a Hedonism vacation!
LMAO!
It’s official…. the first acknowledgement by a senior member of the NYC REIC, Jonathan Miller, president and CEO of appraisal firm Miller Samuel
“But the boom is behind the housing market, according to Mr. Miller and others, even if prices, especially at the luxury end, cause the occasional stir. The office market should enter its own protracted twilight soon—though, like the housing market, it’ll have its day again. This is New York, after all.”
http://nyobserver.com/2007/has-fizz-left-bottle-worrying-signs-manhattan-real-estate
So I watched “A Crude Awakening” last night. I know that Peak Oil is a term usually reserved for the doomsdayers among us, but man, that movie was scary. How many people here think that peak oil is less than 20 years away? How many think it’s over 100 years away? When it does come, it’s going to make this discussion of housing look pretty silly.
Bugs: “eh got oil”?
Production from non-OPEC Russia will remain steady until 2020, its Economy Ministry said on Tuesday, broadly confirming the outlook by the International Energy Agency.
The ministry said in its long-term economic outlook that it expected production from Russia, the world’s second-largest oil exporter after Saudi Arabia, to level off at 10.6 million barrels per day between 2015 and 2020
There were also expectations that crude supplies from OPEC were rising.
Oil consultant Petrologistics, which tracks tanker shipments, said overall OPEC output was set to rise 300,000 barrels per day to 30.7 million bpd this month, as producers took advantage of near record crude oil prices
http://www.reuters.com/article/hotStocksNews/idUSLAU46967120070725?pageNumber=2
Keeping Our Motor Running
By INVESTOR’S BUSINESS DAILY | Posted Thursday, July 19, 2007 4:20 PM PT
Energy: Experts inside the oil industry have assessed the situation, and their outlook for the future is rather bright. Unlike those on the outside, these are the people who know what they’re talking about.
http://www.ibdeditorials.com/IBDArticles.aspx?id=269738402436372&kw=peak,oil
“these are the people who know what they’re talking about”
————————————————————————–
I couldn’t disagree more. I know quite a few folks in the oil and oil services industry. One petroleum engineer has refused to purchase BP Trusts for himself or his children since trading at ~$10 (yes, the ones paying 10% to 18% dividend) because he’s anticipating a downdraft; a BP civil engineer who had never heard of the peak oil controversy has insisted since $35 that it’s going back to $15-20 any day now. The king crab fishermen here in Alaska have a better market sense.
I am in the camp that a “Peak Oil” situation could effect the US within the next 20 years; either caused by geopolitics or actual oil shortages in the ground. In the future, I will be looking for RE investments that are within walking distance to public transportation, that currently have routes to jobs centers and marketplaces.
We may already be past the peak. Global production hasn’t budged for almost two years now, and Ghawar & Cantarell are already in decline. Tough times ahead, but a great investment opportunity.
The DX had a major gap up at the open followed by a spike to 80.7. This has got to be major intervention by the PPT with assistance by friendlies. Anybody have any news?
Profit taking, unwinding the “carry trade”. The Yen is rallying big and if this is the end of the carry trade expect the rally to last for 3 or 4 months.
Remember the Euro is grossly overvalued and is in its own bubble market. If all things go equal the Euro will go to ~ 1.16, the Yen to 85
So you see it as the USD strengthening against the EURO and the GBP while cratering against the Yen as the carry trade unwinds with the current USD pop reflecting profit taking against GBP and EURO before cratering against the YEN due to the carry trade unwinding. Makes sense.
One thing we really take for granted, is the instant information flow of the internet…
In the el lay housing bubble of ‘88-’91, just one of a few regional bubbles of the time, information about the downturn could be kept quite secret.
This housing bubble is 100x as big.
The end is nearer than you’d think.
Nearer to the end, but very, very far from any new beginning.
What’s in it for Blackstone to go bottom fishing for subprime hedge funds down under? Is the PPT behind this bailout? I know the U.S. taxpayer is unwittingly doing his part, as Blackstone gets to pay lower taxes than most U.S. corporations…
Subprime Fix in Sydney?
Basis Capital Hopes
Blackstone Can
Head Off Fire Sale
By REBECCA THURLOW
July 25, 2007; Page C3
SYDNEY, Australia — Hedge-fund manager Basis Capital Group said it appointed Blackstone Group LP of the U.S. to act as financial adviser on two of its funds in an attempt to avoid a fire sale of their assets.
http://online.wsj.com/article/SB118529190863976259.html?mod=googlenews_wsj
“Blackstone recently advised Bear Stearns ”
And that worked out so well…..
Subprime woes reach Down Under
Published: July 25 2007 11:18 | Last updated: July 25 2007 19:10
In a bear market, few are surprised when prices fall. It is a worrying sign, therefore, that the reaction to the subprime storm that is hitting Australian shores is resignation rather than shock.
Two funds managed by local hedge fund Basis Capital have been the latest to suffer from the loss of faith in high-risk property lending in the US. The funds have A$675m of Basis Capital’s estimated A$1bn assets under management. Already, a number of banks are thought to have sold some of the funds’ underlying assets at deep discounts. Basis Capital has now hired Blackstone – fresh from advising Bear Stearns – to help negotiations with creditors and investors. That is hardly likely to inspire confidence.
http://www.ft.com/cms/s/8b53ef4c-3a8b-11dc-8f9e-0000779fd2ac,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F8b53ef4c-3a8b-11dc-8f9e-0000779fd2ac%2Cdwp_uuid%3De8477cc4-c820-11db-b0dc-000b5df10621.html&_i_referer=http%3A%2F%2Fnews.google.com%2Fnwshp%3Fclient%3Dfirefox-a
Bravo’s new series called: Flipping Out
More on California foreclosure boom:
LA Times:
http://www.latimes.com/business/la-fi-housing25jul25,1,1022350,full.story?coll=la-headlines-business
Foreclosures in state hit record high
The housing crisis spreads to middle-class buyers. The economic outlook ranges from a slowdown to recession.
By David Streitfeld, Times Staff Writer
July 25, 2007
“Foreclosures soared to 17,408 for the three months ended June 30, an increase of 799% from the same period last year. The current rate handily exceeds the previous foreclosure peak set in 1996, when the state was in the final throes of a six-year slump.”
“Separately, Countrywide Financial Corp. — the nation’s largest mortgage lender — reported a sharp rise in delinquencies, even among customers with good credit. That sent shivers down Wall Street, helping to trigger a 226-point plunge in the Dow Jones industrial average.”
…
“”The economy will bend further under the weight of the mounting housing and mortgage problems, but it will not break,” said Mark Zandi, chief economist at Moody’s Economy.com.
That’s what passes for optimism these days. Others are more downbeat.
“All the artificial stimulus housing gave the economy is going to go away,” said Rich Toscano, a financial advisor with Pacific Capital Associates in San Diego who runs the popular Piggington.com real estate website. “There will be individual pain for people who made the wrong decisions. We all may end up in a recession.”
The good news, as seen by Toscano: “I don’t envision a ‘Grapes of Wrath’ scenario where we all have to pile in the family car and look for harvesting work.”"
http://www.latimes.com/business/la-fi-housing25jul25,1,1022350,full.story?coll=la-headlines-business
We are staying with my mother for our summer vacation in Florida and over the last two months she has received four offers from CFC:
“Dear X,
Wouldn’t you like to have extra cash at the end of every month? At Countrywide Home Loans, we know how hard you work for your money and that’s why we’re inviting you to apply for a 40 year loan…
With a 40 year home loan, you could possibly have a lower, more affordable monthly mortgage than traditional 15 or 30 year loans as well as Extra Cash..
X, the bottom line is Countrywide is here to help you. And we specialize in fast funding…”
Anybody else getting this “Great News” from Countrywide?
Mom got her loan about 20 years ago and refinanced when interest rates hit their bottom about fours ago and reduced the repayment period. Not to mention that the loan will be paid off this October. Go Mom!!!
Lenders bombarding people with this drivel month to month should be illegal. Hell, they should be taken out and shot.
LA Times
Countrywide feels pain of ailing mortgage market
CEO reports that even ‘prime’ borrowers are having more trouble making payments. Company’s second-quarter profit slides 33%.
By Annette Haddad, Times Staff Writer
July 25, 2007
http://tinyurl.com/2y3884
“The spillover into prime, I don’t think, is something that should shock anybody,” Angelo Mozilo, Countrywide’s chief executive, said in a three-hour conference call with investors and analysts to report second-quarter earnings.”
—
OK, what’s happening here, no one is talking soft landings any more, no one is talking housing market “soufflés” any more, and now, all of a sudden, not only is sub-prime NOT contained, but it’s “spilling over” all the way into PRIME.
Are those all signs of the apocalypse?
CNBC, that loves to do point-counter-point interviews had 2 people on right after the existing home data was released. Intead of “good-news”/”bad-news” counter points, the two guys were “bad-news”/”horrid-news”…. but, but, but, prices are up sas the spokes-model. Median is up, only because the bottom of the market is getting crushed harder than the top. But, but, but, inventry down. Inventory only down due to foreclosures, people giving up and renting. Still 8.8 months’ supply, and that is BAD!!!
When BNBC gives up the point/counter-point format and just days “this sucks”, then we’re getting close to panic time.
NERA Economic Consulting
United States: The Subprime Meltdown: A Primer*
19 July 2007
Article by Faten Sabry and Thomas Schopflocher
Originally published 21 June 2007
Part 1 of the NERA Insights: Subprime Lending Series
Forthcoming topics in this subprime lending series will include:
* Finance & Accounting Aspects of a Securitization
* Anatomy of a Fraudulent Conveyance
* De-Mystifying the Economics of Complex Mortgage Transactions
* The Domino Effect: Economic Impact of When Exotic Mortgages Reset
http://www.mondaq.com/article.asp?articleid=50464
What’s the HBB consensus on Friday’s release of the 2nd quarter GDP number?
I just can’t swallow the a 3.6% growth figure being thrown out by the MarketWatch consensus with autos in the toilet, cruddy retail figures in two out of three months, the continuing housing contraction, increase in imports, and inflation. I’m saying at best 2% reflecting inventory building, defense spending, and aeronautics but being a selfish Bear hoping for lower.
3.6 sounds reasonable. export is up.
Boeing shipped a lot of planes! 3.5%
Heavy equipment sales were down, GMC and Cat were losers.
I’ve found a fantastic opportunity for any former mrtg brokers or RE agents with basic computer skills!
http://www.washingtonpost.com/wl/jobs/JS_JobSearchDetail?jobid=24099141&jobSummaryIndex=0&agentID=&QUICK_SEARCH=1
WAAAY off topic, but still an awesome help-wanted post! Maybe this part will interest you doubters:
“Responsibilities for this position include: acquiring and exploiting digital images using forensic tools to examine file structure, conduct text searches, examine deleted files and unallocated space to extract files of interest.”…”Identify loose media files and digital media files of interest which have intelligence value for upload into National Harmony database.”
You can’t make this stuff up! Sad, but I did apply for funsies
California foreclosures up 799%. Look at the charts!
http://www.latimes.com/business/la-me-housing25jul25,0,331109.story
Headed straight into the stratosphere, with no levelling off in sight…
This will really help (not) the RE prices in the ex-urbs and suburbs:
http://www.forbes.com/forbeslife/2007/07/23/health-commute-pollution-forbeslife-cx_avd_0724commute.html
Basically, it says commuting is one of the worst things you can do for your health. Quote:
You might have heard that your commute is killing you. But it’s not the doughnut and jumbo-sized coffee you’ve been downing every morning that’s doing it.
What’s really taking a toll on your health is the polluted air you’re breathing, lengthy traffic delays and dodging accidents to and from work. Even as the stress mounts, we put up with it, since most of us can’t afford to or don’t want to live near our offices.
AFX News Limited
Japan’s Nomura Holdings says may exit US subprime market
07.25.07, 9:27 AM ET
TOKYO (Thomson Financial) - Nomura Holdings Inc, Japan’s biggest securities firm, indicated Wednesday that it may exit the troubled US market for subprime mortgages where it has suffered large losses.
Its exposure to subprime mortgages for people with weak credit histories was a blot on an impressive overall performance in the fiscal first quarter, when net profit rose almost four-fold to 76.7 billion yen.
http://www.forbes.com/business/feeds/afx/2007/07/25/afx3949668.html
Japan’s banks in $8.3bn subprime exposure
By Michiyo Nakamoto in Tokyo
Published: July 24 2007 22:07 | Last updated: July 24 2007 22:07
Japan’s large banks could have an aggregate exposure of Y1,000bn ($8.3bn) to the stricken US subprime mortgage market, highlighting the extent to which the problems of low-quality mortgages in the US are affecting investors globally.
http://www.ft.com/cms/s/59e40190-3a13-11dc-9d73-0000779fd2ac.html
U.S. Subprime Woes May Hit Emerging Markets, ING Says (Update1)
By Guillermo Parra-Bernal
July 25 (Bloomberg) — Emerging market debt will remain volatile for at least the next two weeks as a slew of earnings reports from companies affected by the slumping U.S. housing and subprime-mortgage markets are likely to disappoint investors, according to ING Bank NV report.
Volatility for emerging market debt is likely to rise by the end of the month as 28 U.S. subprime loan originators, home builders and building-material makers will report second-quarter earnings, wrote David Spegel, head of emerging-markets strategy at ING in New York. Results for nine of 13 companies that have already reported reflect poorly on upcoming data, he said.
“The implication of the heavily loaded calendar for real estate related company earnings is that credit market volatility may be expected to continue to feel related pressure for the next two weeks,” Spegel wrote in the report, dated yesterday.
“Although something of a “safe-haven,” emerging market debt may still suffer contagion or see outflows as money searches for cheaper assets on a relative credit risk basis.”
http://www.bloomberg.com/apps/news?pid=20601086&sid=av59Fc8fhNlk&refer=news
Maybe this is perfectly obvious (as suggested by the lack of any effort to explain it in the linked article), but what on God’s earth does emerging market debt have to do with subprime???
Unfortunately, “Emerging market debt” is defined as companies from countries that are not “market economies”. e.g. they export more than they have money to buy. So Korea is an emerging market even though Samsung is the 20th largest company in the world. Samsung gets its financing through world financing centers most of which is done in NY in the CLO/CDO markets. The CLO/CDO fiasco is going to hit here first.
The political push is on to turn the FHA into a govt-sponsored substitute for the collapsed subprime sector, with taxpayer-funded guarantees of 100% financed, below-market-interest, high risk loans…
Subprime loan alternatives
Where credit-challenged borrowers can go for a mortgage loan - without the painful interest rates
By Les Christie, CNNMoney.com staff writer
July 24 2007: 9:02 AM EDT
NEW YORK (CNNMoney.com) — After the subprime mortgage market collapsed, many products that were widely available have disappeared from the scene.
More than a score of subprime lending specialists have closed their doors. And many banks like Washington Mutual (Charts, Fortune 500) and Wells Fargo (Charts, Fortune 500) have cut back on or eliminated subprimes, leaving many credit-damaged home buyers scrambling to find a loan.
But now that the collapse has shaken out some of the sketchier players, some familiar and more reliable alternatives to subprime are making a comeback — but they do require some work.
According to Jerry Brown, a public affairs officer with the FHA, the administration wants to make it easier for low and middle income, credit damaged and first-time home buyers to get a foot in the door.
FHA loans originated during the Great Depression when foreclosure waves put hundreds of thousands of people onto the streets. They’re offered by private lenders but insured by the government, reducing risk, so lenders are willing to make them at favorable terms.
FHA loans used to be more popular, but they were eclipsed by easier-to-obtain subprime products. Their market share fell from 18 percent of all home loans in 1990 to less than 4 percent by 2006, according to the National Association of Home Builders.
One reason is that the application process for an FHA loan is more tedious and requires more paperwork than that of subprime loans touted during the housing boom.
Today, there’s a new push toward FHA. Assistant Secretary for Housing, Brian Montgomery, testified before a congressional committee in favor of modernizing the process for the benefit of “troubled subprime borrowers.”
Requested changes include: Eliminating a 3 percent down requirement, which would enable more low income borrowers to qualify; increasing the maximum loan to reflect the increase in home prices brought by the housing boom; assigning rates by risk to enable borrowers with higher credit scores to receive lower interest rates.
http://money.cnn.com/2007/07/23/real_estate/subprime_alternatives/
Just in case there are any principled Republicans in the virtual room, could you please comment on the virtues of these provisions, which sound to me as though they could have been drafted by the worst variety of Liberal Democrat social engineer who ever walked the face of the planet?
“Requested changes include: Eliminating a 3 percent down requirement, which would enable more low income borrowers to qualify; increasing the maximum loan to reflect the increase in home prices brought by the housing boom; assigning rates by risk to enable borrowers with higher credit scores to receive lower interest rates.”
I met a fellow employed by city gov in FL today. The local gov is indeed suffering from a drop in revenues apparently due to the implosion of prop values and this is causing staffing positions to go unfunded and unfilled. He says he is doing the job of 2 people at this point and is unhappy about that. No cash for equipment either. Interesting.
Homes (REO) aren’t the only deflating assets that banks have sitting on their books these days. Loans themselves are getting harder to move on the secondary market. Just lower the price, fools!
Kai Ryssdal:
The deal of most concern to Wall Street at the moment is the one taking Daimler Chrysler private. JP Morgan Chase and Goldman Sachs are the lead bankers on the deal. We learned today they and their counterparts aren’t going to be able to syndicate, or sell off, the loans it’s arranged for that deal — $10 billion worth. Which, no matter who you are, is a big chunk of money.
It’s also symptomatic of what some are calling a credit squeeze. Since debt is what makes the business world go ’round, we figured it might be time to find out whether that’s true or not. So we got Mike Hatley into the studio. He’s the president of Westgate Horizons Advisors. That’s a company that buys some of those loans from the big Wall Street banks. Mike, good to have you with us.
Mike Hatley: Thank you.
Ryssdal: Let’s take the news of the day that I was just talking about — the Chrysler thing. And then we roll in subprimes. We roll in private equity borrowing a whole bunch of money. And I’m going to ball it all up into one question, which is, Is there a problem in the credit market today?
Hatley: Yes, there definitely is a problem in the credit market today. There’s a definite supply overhang.
Ryssdal: What does that mean — supply overhang? It’s just money, right?
http://marketplace.publicradio.org/shows/2007/07/25/PM200707251.html
Why can’t the Fed just print more money and drop it out of helicopters into the laps of the right loosely-regulated hedge funds? I suggest Cerberus (aka The Three-headed Dog), Citadel and Blackstone, for starters…
Next ask the lightly-regulated hedge funds to snap up that debt that the banks are having a hard time unloading. Easy as pie!
Fitch predicts mass loan refinancing
By Saskia Scholtes in New York
Published: July 25 2007 23:36 | Last updated: July 25 2007 23:36
Junk-rated companies that have tapped generous loan markets in recent years could soon face funding difficulties, according to Fitch.
A report by the rating agency published on Thursday predicts that more than half of the $1,300bn leveraged loans market in the US will need to be refinanced in the next three years.
Companies that have low credit ratings have increasingly turned to the loan market for funding at a time of unprecedented liquidity from hedge funds and other non-traditional investors.
The report shows that about $680bn of loans will mature between 2008 and 2011 compared with only $180bn of maturing high-yield bonds.
http://www.ft.com/cms/s/06371f56-3ada-11dc-8f9e-0000779fd2ac.html