Free Market Bringing Things Back In Line
The Times Union reports from New York. “If demand for a product drops, then prices being paid for it fall, too. That’s Economics 101. Yet in the Capital Region, the number of homes sold in the last six months has declined significantly, but the median price being paid for those homes has not decreased, at least in most areas.”
“Salvatore Prividera, spokesman for the New York State Association of Realtors, pointed out that lenders, spooked by problems in the subprime mortgage market, have become less willing to offer loans to potential borrowers with shaky credit or low incomes.”
“The effect of that, he said, is that fewer really cheap homes are being sold, which has an effect on the overall median price. It keeps prices higher.”
“It’s also possible people are using the declining market as a way to buy slightly larger homes than they previously would have been able to afford. That, too, would keep the median price from dropping.”
“To be sure, prices have fallen in some areas of the Capital Region: Saratoga County, home to the area’s most expensive housing, on average, saw a 5 percent drop in the median sale price in the first half, to $250,000. At the same time, the number of homes sold dropped 15 percent.”
“‘There’s price adjustment in the Saratoga market much more so than in the Albany market,’ aid Douglas Engels, GCAR president. ‘That’s the free market bringing things back in line.’”
“An increase sometimes can be a decrease. The 1 percent year-to-year median price increase in Rensselaer County, for example, is below the rate of inflation. That means, in real dollars, home prices in Rensselaer County have fallen.”
“And they may continue to fall. Many observers don’t expect the Capital Region’s trend of slackening home sales to end soon. ‘I think the market will continue to slow for the rest of the year,’ Engels said. ‘Not by any means are we going to turn this around in August and September.’”
The New York Daily News. “America’s mortgage meltdown is a national scandal, with dozens of mortgage companies going belly up and millions of families now at high risk of losing their homes to foreclosure.”
“Edward Jordan…was talked into refinancing his home to cover a money shortfall - only to discover that the initial 1% rate changed to 8% after just two months, increasing his monthly payments from $1,347 to more than $2,600.”
“In New York City, there were just under 7,000 notices of foreclosure filed in 2005, a number that jumped to 9,000 last year. This year, the number is well on its way to surpassing 14,000, according to Sarah Ludwig, executive director of the Neighborhood Economic Development Advocacy Project.”
“‘It’s going to get a lot worse before it gets better. In the last quarter of 2007, all hell is going to break loose,’ says Ludwig, noting that a lot of risky loans are set to be repriced upward starting in October.”
The Queens Courier from New York. “Queens residents, especially those in the southeast portion of the borough, continue to suffer from a record-high number of foreclosures, primarily because of subprime mortgages.”
“City Comptroller William Thompson established a Foreclosure Prevention Hotline in April of this year, and already the number has received more than 1,200 calls from throughout the city, state and even some from other parts of the country.”
“Thompson’s office said that nearly 45 percent of the calls to the hotline have come from Queens residents, and many foreclosure incidents involve subprime loans.”
The Cape Cod Times from Massachusetts. “Foreclosures on the Cape spiked to a 13-year high last month, with 35 such transactions filed at the Barnstable County Registry of Deeds.”
“‘There was a bad foreclosure period about 15 years ago and I don’t think it was as bad as this one,’ said Rick Presbrey, chief executive of the Hyannis-based Housing Assistance Corp.”
“This year, 138 foreclosures were completed in the first seven months, an increase of more than 260 percent when compared with the same period of 2006.”
“Through the first six months of 2007, the number of auction announcements in the state has increased more quickly than the number of petitions, a phenomenon that could mean fewer homeowners are escaping foreclosure once the process has begun, according to Timothy Warren, CEO of The Warren Group.”
“‘If this trend continues unabated, it will certainly have an increasing effect on the housing market at large,’ Warren said.”
“The number of petitions to foreclose filed on the Cape between January and June this year increased by 76 percent when compared with the same period of 2006, according to numbers released this week by The Warren Group. However, the number of auction announcements went up nearly 190 percent in the same span.”
“The high number of low-priced foreclosure sales has contributed to a drop in real estate prices, said Aaron Gornstein, executive director of a community development group in Boston.”
“However, rising interest rates mean that housing is still unaffordable for many prospective buyers. ‘Prices have dropped, but not enough to make it affordable for many working families,’ Gornstein said. ‘But it has allowed some people to buy a home where they wouldn’t be able to do so two years ago.’”
The Boston Globe from Massachusetts. “Advertisements for foreclosure auctions continued to rise in June. There were 1,322 such announcements of sales of foreclosed homes in newspapers across Massachusetts in June, up from 719 in June 2006.”
“For the year through June, foreclosures are nearly three times higher than last year: 7,539 so far this year, up from 2,797 in the first six months of 2006, according to The Warren Group.”
“‘Petitions to foreclose and auction announcements are still rising at staggering rates,’ said Timothy Warren Jr., chief executive. ‘Nearly every county in the state is being hit hard by this trend,’ he said.”
“After spending nearly a year shopping for a larger home to replace their Brookline condo, Nicole and Kevin Forrest came to a surprising conclusion about where they should consider living next: a rental unit.”
“‘Given the current housing market, it’s not that crazy of an idea to rent as opposed to buy,’ Kevin Forrest said.”
“Real estate analysts said the tepid housing market is responsible. Two reports released last week showed that home sales in Massachusetts dropped as much as 8 percent in June, with prices also falling.”
“The housing market’s uncertainty, particularly the many forecasts that predict sales will weaken for possibly another year, has kept many would-be buyers on the sidelines: They don’t want to buy a house today that will be worth less in a year.”
“‘No one’s giving away automobiles to rent their apartments,’ cracked Robert Imperato, president of Boston Realty Associates, which manages 500 units in the Boston area.”
“These days, newcomers to town are doing something practically unheard of in recent years, renting in neighborhoods where they hope to eventually own, in order to keep an eye on the market for a year or two.”
“‘When the sales market was hot, they tended to buy right then and there,’ said Nancy McCreary, manager of the Hammond Residential GMAC Real Estate headquarters in Brookline. ‘They felt confident they could turn right around and sell it if it didn’t work out.’”
“But now those folks are not sure where the bottom of the housing market is and they don’t want to stretch to pay a mortgage on a property that might not appreciate, said Sam Chandan, chief economist for the New York-based real estate research firm Reis Inc.”
“A few years ago, ‘people might have said to themselves, I really do need to buy right now,’ Chandan said. ‘The urgency has dissipated significantly.’”
“Newton landlords Cathy and Lenny Nyren realized that they needed to renovate the kitchen of their brick duplex when the previous tenant left a couple months ago. They spent $8,500 gutting the kitchen, putting in new cabinets, countertops and composite floors.”
“Even so, they didn’t think they could justify raising the $1,580 rent on the two-bedroom, one-bath apartment. ‘We wanted to keep it competitive and get it rented,’ Lenny said.”
“Looking online at craigslist, the couple noticed apartments were taking a while to rent. ‘Places weren’t going as quickly as they were five years ago,’ Cathy said. ‘I think people expect more than they did before.’”
‘The Cape Cod Times from Massachusetts. ‘Foreclosures on the Cape spiked to a 13-year high last month, with 35 such transactions filed at the Barnstable County Registry of Deeds.’
‘There was a bad foreclosure period about 15 years ago and I don’t think it was as bad as this one,’ said Rick Presbrey’
There ya go CarrieAnn!
Thanks Ben!
Big smile for the info.
My mother lives on Cape Cod and in the lat 80’s her house valuation went from 150K to 300K. Then in early 1990’s it was back to 180K. 2005 houses like hers were selling for almost 400K. we are talking 2 br ranches smack dab in the middle of the Cape not near the ocean. 4 houses for sale on her small street. One has been for sale for 2 years.
From the CCTimes article:
“All but seven of the Cape’s July foreclosures were on properties valued below the median home price of $340,000, and only two were valued above $500,000.
The concentration of foreclosures in this market segment highlights the lack of reasonably priced housing options on the Cape, Presbrey said.”
Entry level is getting wacked, as one would expect in an area where wealth is imported and not home grown.
I clicked on an employment ad so see what they were offering to pay the assistant teacher at the local private school in Hyannis. $9.81/hr. Unless you own the restaurant or inn, no ones making money working in tourism either.
Preach it, Carrie! I had a cousin who operated a bed and breakfast with his partner. It was in the mid-Cape, and those guys did VERY well, TYVM.
So which is it:
“Tenants are not having as many options and landlords are not having to reduce their rents anymore,” said Nancy McCreary, manager of the Hammond Residential GMAC Real Estate headquarters in Brookline. She said the rental market began to turn upward this year when demand for apartments increased.
Or, from the same article:
Though vacancies continue to rise, renters are no longer in control. Vacancies in professionally managed properties with 40 or more units in Boston rose to 5.6 percent in the second quarter of 2007 from 4.7 percent last year, according to Reis. Chandan said it will rise to 6 percent by the end of the year with the projected completion of more than 5,600 new units.
So, as a Boston renter, I’m no longer in control despite increasing vacancy rates and more units due to come on-line. Is that why my rent remained the same when I renewed this year despite me not even bothering to negoitate?
“If we keep saying it in the newspaper, maybe it will come true!”
I’ve rented off-and on for 15 years, all over the country and I’ve never had a rent increase.
Lucky man.
Here in the DC Metro my rent has gone up at every oppurtunity. I paid $840/mo for a 1000sq 2BD/2BA in Aspen Hill MD (16mi outside DC) in 1998. By 2001 the same place was $1100. In 2005/6 an equivalent place was $1450/mo. Today I’m in a 660sq 1BD for $1015 which is $150 below average for the area.
I consider rent increases right alongside death and taxes.
Guy:
I, too, have never had a rent increase. In fact, this year I think I am going to demand a reduction. And, I live in Alexandria, Va. Think about it, what is better for the landlord, to raise the rent and possibly lose 1 or 2 months rent, or keep you, a good tenant? And, if they don’t agree- move and leave a couple upper deckers.
I think the big difference is probably individual landlord vs. something large enough to have a property management company involved. I’ve lived in large apartment complexes almost exclusively.
Individuals have good reason to care about keeping their good renters happy. Large companies care about getting the rent on time and *absolutely* nothing else.
I share a nice 3br townhouse built in the 1930’s in Arlington, near Columbia Pike and Walter Reed….I pay $700/mo in rent, which is less than I paid for my last place in Austin, TX.
I’ve rented this apartment for 5 years in Rensselaer County (mentioned in the article!) and not had an increase. I pay $600 per month for a 2 bed in a nice building with a single owner of the complex. Once I had a rent increase of 10% in Australia in an apartment I rented for 6 years from and individual landlord.
I’m outside DC now paying $975 for 1/1, justed moved down from Northern Baltimore City where I paid around $600 for the second and third story of a cape cod.
I say around because it started at $575 in 2002, then the landlord raised it to $650 in 2004. We paid that for six months, but then when the apt on the first floor had multiple turnovers, we got him to come back down to $600 or we’d move and he didn’t want to see us go.
Seeing as my parents have owned rentals since I was little, I’m careful to be a good tenant as I know it pays off. Which it did.
I live in Arlington and pay $950 for a very dumpy 2BR in an old converted house, way below what a similar-sized unit in an apt. building would go for in my area. But here’s the thing. My rent has only gone up $55 in five years. Way less than inflation.
The NY market has been so tight for so long it is absurd. But in the last real estate bust in the early 1990s, rents for market rate units did fall for a couple of years.
Nationally, according to the firm where I work, apartment rents have increased at about the rate of inflation since 1980, while commercial rents have lagged (especially for office). For-sale prices, or course, are through the roof.
rents in manhattan fell in 2001 and 2002. the rate didn’t fall but landlords gave out free months. funny thing is selling prices went up
Another contradiction in that piece:
Subhead -
After a lull in the rental market, tenants are filling vacant units and prices are rising again
but -,
“Newton landlords Cathy and Lenny Nyren realized that they needed to renovate the kitchen of their brick duplex when the previous tenant left a couple months ago. They spent $8,500 gutting the kitchen, putting in new cabinets, countertops and composite floors.”
“Even so, they didn’t think they could justify raising the $1,580 rent on the two-bedroom, one-bath apartment. ‘We wanted to keep it competitive and get it rented,’ Lenny said.”
FWIW $8500 is a heck of a lot of money to sink into a unit if you don’t intend to raise the rent.
When I had rentals, I don’t know if I spent that much on improvements in one year. Unless I had to replace a roof.
We are talking about Newton here, so:
a) this might be justified to attract a better quality tenant, as expectations of luxury are pretty high, and
b) if these folks have plenty of other income this may be relatively tax-efficient for them.
Newton has a lot of older properties so the place may have been in really bad shape. It would help to know the neighborhood that the place is in.
Coming from a renter to “almost bought” back to renter, I can say that the rental market is flooded with flippers, multi-family investments, and small professional managed buildings that cant be filled.
When I was looking for a place to rent, almost 80% of the people who were the landlords, bought the multi-family or condo to flip and never sold. What I dont get are these larger professional communities (like Avalon) that keep growing but when I look at the prices its no worse that carrying an mortgage. Maybe its alot of people who are downsizing…
As for me, I found a flipper who couldn’t sell his condo for $420k in 2005. This spring he tried again to sell it for $400k and it just sat. I knew the history of the condo and contacted the seller if he wanted to make back any of your money, I will rent it until the market corrects (hehe). So I just signed a 18 month lease for a 2200sq ft. 3BA/2BA condo for $1200 month…score!
I knew the history of the condo and contacted the seller if he wanted to make back any of your money, I will rent it until the market corrects (hehe).
This is what I’m hoping to do. So many of the units in my TH development are for sale that soon the owners will start looking for tenants. I’m sharing a house right now and figure if I get a good deal in the same community, moving won’t be such a PITA.
I too am puzzled by groups like Avalon. They have been busy on the west coast, and their rents are high. Makes no sense to pay their price when you can rent a private residence for much less. Not to mention, the residence is probably much nicer. No one ever said Joe 6 Pack was smart.
I actually rent from a community here for a small premium over an individual landlord. I’ve rented from both, and at the end of the day, with the exception of one really nice landlord that let me do all the maintenance in exchange for a rent deduction, I’ve had better luck with the big companies.
One guy I rented a house from who lived next door had a washer and dryer in the basement. The landlord did not have a washer and dryer, and thought nothing of allowing his wife to come in during the days I was at work to do their laundry. And he had the nerve to say, “well, it isn’t really a violation of privacy since you’re at work.”
I find the small premium on paying higher rent worth the lack of headaches.
“Tenants are not having as many options and landlords are not having to reduce their rents anymore,” said Nancy McCreary,
They are not increasing rents much, either.
I rent in southestern MA. I have only seen negligible increase in my rent. We started renting this 2-bdrm condo at $1050 in August 2004. Heat & Hotwater are inlcuded. That was a good deal then. Currently we pay $1075, lease is good till August 2008. This is an even better deal now than in 2004, given the rampant price inflation of all other necessities in life.
From my experience and from what I’ve seen advertised on Craigslist, rents are lower today than they were four years ago.
I’ve lived in Somerville, Mass., since 2000. In 2003, I was paying $667/month to live in a tiny bedroom in a 3 BR place that was about a 17-minute walk to the T (subway for you non-Mass residents).
In September 2003, I moved to a 5 BR and got a huge room for 560/month and live about 10 minutes from the T. Next month, I’ll be moving to a 3 BR, 11 minutes from the T. I’ll be paying $633/month.
My thoughts about the person whose mortgage interest rate went from 1% to 8%, did he really believe that someone could afford to loan him money at 1%? He used his house as a credit card and 8% is not a bad rate for a credit card.
what’s the differences between a credit card at 24% over 5 years versus a home equity at 6% over 30 years. You end up paying almost the same amount.
Oh, I forgot, you can LOSE YOUR HOUSE in the latter.
They bumped my rent $10 for the first time in three years. 1495 to 1505 in Newton Ma. I gave it to them as I’m sure there heating bills have gone up in the three years I’ve been there. I get heat and hot water included.
There are no vacancies that I can tell in my complex of about 80 apartments. In my building over the past year or so, a person moves out, the painters come in the next day, and the next tenant moves in within a couple days. The rent is little above half of what it would cost to own a condo in the area probably less if you include heat and hot water.
Meant as a reply to Bad Chili
The Cape Cod Times from Massachusetts. “Foreclosures on the Cape spiked to a 13-year high last month, with 35 such transactions filed at the Barnstable County Registry of Deeds.”
“‘There was a bad foreclosure period about 15 years ago and I don’t think it was as bad as this one,’ said Rick Presbrey, chief executive of the Hyannis-based Housing Assistance Corp.”
I remember Mass 15 years ago - it was alot worse than this - which means we still have a long way to go…
I remember Mass in 80-82, 90-90 WAS NOTHING!!!!
What a voice he had…
Start spreading the news, contagion’s here to stay
You’ll be a part of it- New York, New York
These cement loan overshoes are about to make you pay
Right through the very heart of it- New York, New York
I want to wake up in a city, with prices in retreat
They say “it’s different here”, I say: “sheep is sheep”
The little town housing bubble blues, seemed so far away
It showed up just like clockwork- in old New York
If the bubble can make it here, it can show up anywhere
Face it, you’re screwed-New York, New York
I keep thinking of that Lou Reed song, what are lyrics? “The klieg lights are up on Broadway, but the lights are out on the mean streets”
I sure hope history doesn’t rhyme this time, but it’s looking more dim by the day
“Watch out when the going gets tough”
“…and the things that we learn are no longer enough”
“Dance, dance, dance to the radio…..”
Transmission 1979 Joy Division…
(Lou Reed was a piker conpared to this band)
That’s “Dirty Boulevard”.
This room cost 2,000 dollars a month
You can believe it man its true
Somewhere a landlords laughing till he wets his pants
No one here dreams of being a doctor or a lawyer or anything
They dream of dealing on the dirty boulevard
Outside its a bright night
Theres an opera at lincoln center
Movie stars arrive by limousine
The klieg lights shoot up over the skyline of manhattan
But the lights are out on the mean streets
Ah thanks guys (and Pool) - much more poetic than my dusty recollection (and more fitting)
Check out this one on Yahoo finance this morning. AHM officially closing and filing BK.
http://biz.yahoo.com/rb/070803/americanhomemortgage_closing.html?.v=1
I thought companies had to give employees 60 days notice before a mass layoff. That was one of Ohio Senator Metzembaum’s big legislation back in the late 70s/early 80s following all the plant closings in the ‘Rust Belt’.
Granted, a pending BK may invalidate that requirement.
That’s called the WARN Act. It’s full of wiggle room.
Why that stock was allowed to rally close to $5 yesterday is beyond me. Of course it is 76 cents today.
From the TU article: “Realtors say the first answer to the question is simple: The housing market in the Capital Region is still strong, if not at the Popeye-type strength of recent years. And contrary to other areas of the country, the Capital Region never saw the rapid price increases that would lead to similar declines.”
Don’t be fooled. This propaganda is utter nonsense. I can name a dozen locales in Saratoga/Warren/Washington/Albany/Schenectady counties where prices DOUBLED in the last 6 years. These guys are making a pathetic case that the 100% gains are actually less as a means to preclude having to work the market back down to where it was. I’ve personally kept track of (Fat) Salvatore Privadera’s outrageous press releases on http://www.nysar.com. They may get away with this charade to cover their fat a$$es for what they’ve done to buyers over the last 6 years and allay the panic of delusional sellers but it won’t work. The economy there doesn’t support 200k housing no less the 260k median that they report.
I’ll second that BS call exeter.
H’s friends were in Rensselaer/Clifton Park. Housing was on par w/Syracuse when we first started looking at Albany area in 2001. Then we looked again about 18mos ago. Same size homes as mine but older and much less property were on average $100k more.
There was one home they showed us that should have been a tear down. Garbage strewn lot surrounded by heavy industrial property. Severe problems in a deteriorating 100 year old home. I almost started crying that someone thought they deserved $259k for such a horror show. The realtors were showing it straight faced and all I wanted to do was get my kids out of there before they caught some disease. (Shudder!)
Yeah, I forgot to mention Renns. County. Clifton Park is close to if not THE epicenter of Koolade imbibing-bong hitting spacemen in upstate.
Clifton Park is in Saratoga County not Rensselaer.
financial jobs increase was mostly grief councilors and social workers = no 100k action there folks
“The effect of that, he said, is that fewer really cheap homes are being sold, which has an effect on the overall median price. It keeps prices higher.”
Nice try there Sal, but could you please back up that comment with some historical data?
It will never happen wmbz. Pinocchio Lereah and Larry FunYun have nothing on Sally Privadera.
Also… If you look at the bottom of the TU article you’ll find a link with the headline “Region’s foreclosure filings skyrocket”… Enough of the BS please.
“Real estate analysts said the tepid housing market is responsible. Two reports released last week showed that home sales in Massachusetts dropped as much as 8 percent in June, with prices also falling.”
Falling, yes, but the prices are still astronomical. All that I can say is that the sellers are really dumb to chase down the market. Smart sellers should undercut others. And, undercut quickly and heavily if they want to catch the buyers attention. I am a potential buyer. I am watching houses in my neighborhood (in Quincy) being listed now for around 300K, similar houses were around 400K in the fall of 2005. But they ought to be really below 250K to attract buyers. It already getting late for sellers to make their moves. Winter will be a brutal time, very few sales.
Agreed. The Credit Suisse chart says those resets hit bigtime in October.
For sellers, this is their last chance to get out. A smart realtor would show those charts to potential buyers, and get them to undercut the competition…a commission on a lower price has got to beat no sale.
It will take a while from reset to missed payments to foreclosure to sale, especially if banks continue to chase the market down by bidding the mortgage value to avoid the short-term writeoff. Perhaps foreclosure sales will spike in mid-2008 — three years after the peak.
The Credit Suisse chart says those resets hit bigtime in October.
Also time to fill those big fuel oil tanks with in New England to heat your drafty old colonial vintage energy hog.
Happy Halloween!
You aren’t kidding. I’ve got gas heat for my building and am in the process of splitting the meter so I am no longer paying heat for the units on the system. My gas bill for last year was approx $4750. I’ll pay half that to seperate the system, then see an annual savings of over $2700. My sister-in-law is in for a shock this winter when she starts paying her own heat. I already give them a $200/mo discount on the rent, so I think it’s a reasonable thing to do.
“drafty old colonial vintage energy hog.”
Catchy.
“…fewer really cheap homes are being sold, which has an effect on the overall median price. It keeps prices higher.”
That’s what I’m seeing on the SF Peninsula.
The secondary market is now moving into “vapor lock” and that will impact high cost areas, specifically the SF Bay Area.
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=23758838
Well Ben, things could finally start to get ugly around here.
“It’s currently difficult to trade even AAA-rated parts of private mortgage-backed securities. Only mortgages that conform to the standards of government-sponsored enterprises, or GSEs, like Fannie currently are trading, Perry said.”
And those standards are 20% down, 10% with PMI, and 30% of proven income for the mortgage, right? No neg am, no 100% financing, no liar loans.
HellBoy - writing from the east bay here. I agree with you, it could finally happen. The sooner the better. According to Credit Suisse, 40% of bay area loans originated in 2006 were interest only or neg-am. Eventually those bills come home to roost. With such a large percentage of the market, our area will not be immune. All of CA is living in fantasy land. Once the FBs get through the seven stages of grief, the fall-out will be awesome.
Sorry, just to clarify my post above: with the I/O and neg-am loans comprising such a large percentage of the bay area market, the area will not be immune to significant price correction.
Well Ben, the declines may finally start to be seen in places like the Bay Area. I’ve been waiting for this for over 2 years and now it looks like financing of loans is getting much harder to come by. Check this story out;
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=23758838
With the secondary market in “vapor lock” there is now way stuff in the Bay Area can keep going up and if this condition hangs around it’s bad news for the $1 to $2 million mid market and even worse news for the $600 to $700k entry level market.
RE: $600 to $700k entry level market.
“Entry level”…LMFAO
Up until 2001, entry level in my old area was 30k…. Thats right….30k.
And, that’s often for a 50 years old 1200 square foot 2br stucco box in an iffy neighborhood. (These sold for $250K-$300K as recently as 2003.)
Don’t know if this posted? Anyway, the secondary market is getting ugly and it will affect high cost areas, specifically the SF Bay Area;
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=23758838
Things could start to get ugly around here…
The New York Daily News. “America’s mortgage meltdown is a national scandal, with dozens of mortgage companies going belly up and millions of families now at high risk of losing their homes to foreclosure.”
Too late the messenger. The damage is done, just like the coming massive pension bills for the legions of retiring public employee parasites.
A large number of people on this blog. have been sayin’ the same thing for 2 years now.
And the absurdly paid MSM pundits are just getting on board?
Talk about being behind the yield curve.
MSM pundits are good at describing whatever is happening at present. It was the same story back in late 90s when the dot-com was bubbling. Only few wise people were predicting a huge bust, and MSM readers weren’t bothered.
OT, It is funny how the Chinese market is now zooming like crazy. Does anybody if the US market/economy will be impacted in an any big way when the Chinese stock market crashes? My feeling is that our stores (Wal-mart, Kmart, Sears, etc) will continue to be supplied with Chinese goods (they can’t stop, they are trapped into producing, right?) even if their stock market collapses. Anybody has other thoughts/
Chinese stock prices reflect low wages in China, and high sales prices (in yuan) in the U.S. When the U.S. can no longer buy more than it sells, Chinese companies will have to price goods for Chinese consumers, and profits will fall as the standard of living in China rises.
The trade thing with China is interesting…the Mattel recall, coming on top of all the other recalls, is damaging the “China brand” sufficiently so that the Chinese Gov’t is hiring western pr firms. The EU went after China much more strongly on this toys deal…of course, we need to keep selling them worthless debt, so our gov’t is treading more lightly. How many parents will keep shelling out for toys, 80% made in China, when their kids could be sucking on lead paint? There must be a market for small, domestically made toys with “organic” or extra safety features, that parents would rather buy. All those unemployed furniture workers in NC could be making wooden trains to replace the Thomas trains recalled.
An interesting article in the August Esquire mag, about a visit to Shenzhen, by Colby Buzzell…
The Wild, Wild East
The tinfoil hat crowd is constantly harping about an upcoming huge market crash or high inflation…but one makes the other less likely.
With all the easy money of the last five years, high oil costs, and bubbly China, I see inflation soaking up a lot of the value of cash both here and in China. It’s a lot like the 1970s, except this time around China has taken the role of Japan, and China has locked their exhange rate way below where it should be.
For this generation the entire world has taken the US model of government-for-and-by-business, so that means a lot of cheap stuff along with the erosion of US competitiveness. Today there are no ideological wars or major governments proposing communism. It may be a wash in the end, for the US still has tons of resources and research facilities relative to its population (vs. the rest of the world). Housing will drop a lot, as land is extremely plentiful in the US and artificially controlled on the coasts, while fuel/transportation costs are likely to rise.
You know, I say I’m going to take a break but anger brings me back here. Try this.
Please buy my ludicrously overpriced crackerbox so I can go to grad school debt free:
http://dallas.craigslist.org/rfs/388337120.html
or this. Hedge fund zillionaires and oily rich battling each other for million dollar mansions. Let the rest of the world f**ing starve, who cares if they got theirs and can compete in the “largest pe**s [house] contest:
http://www.dallasnews.com/sharedcontent/dws/classifieds/news/homecenter/realestate/stories/class080307dnbusmillions.db151b48.html
oh, and in California news (Minyanville)
Washington Mutual and Countrywide Financial are the two mortgage players that need to be watched closely right now. They are being hit very hard and have significant California exposure.
Is this action a sign that a repricing of the real estate market is at hand in California? It bears watching.
Angry or not, we’re glad you’re back, Txchick.
The snark tank gets awfully low in Tx’s absence.
Due to their big mortgage exposure, anyone here think that banking with WaMu could be dangerous to one’s future financial health? I’ve been considering moving to another bank, perhaps a local credit union or something of that nature. When I went to make a deposit the other day, they had a sign out side advertising a $500K home loan with some ridiculously low payments as examples. It also said it was I/O and/or neg-am terms. “Please ask about our great deals inside!”
I have my checking account and many CDs with them. Stupid, I know.
“Let the rest of the world f**ing starve, who cares if they got theirs and can compete in the “largest pe**s [house] contest”
Hey Tx, I understand your frustration some of what you see is sickening. I have a friend of mine trying to tell me right now that the high end of the market (multi-millions) is not going to go down because their are too many people with money. They are the only ones with liquidity and they don’t care about what is happening and will continue to buy homes for themselves and their family members.
Well, of course that is not true and in fact the high end of the spectrum falls the fastest and the most in percentage terms when it finally gives way.
I will say that in an inflationary cycle such as the one we are currently experiencing, the wealth disparity grows tremendously and the ultimate separation between rich and poor is at its worst. Of course, by and large their is a large decrease in the size of the middle class as well.
Probably doesn’t help any of your frustrations, just thought I would throw in my 2 cents.
Housing analysts attributed the mansion-buying binge to everything from Wall Street buyouts to baby boomer inheritance.
I don’t believe these mansions are bought by baby boomer inheritance. Everything in the last few years has pointed to the fact that baby boomers are not going to get the inheritances they thought they would. Also the parents of boomers tended to have 3 or 4 kids, so that inheritance is split many ways. Unless their parents were super wealthy, million dollar homes are not in their future.
OT: commercial real estate for sale ads
anything better than loopnet ? they’re pricey
tia
FTA: “The effect of that, he said, is that fewer really cheap homes are being sold, which has an effect on the overall median price. It keeps prices higher.”
LOL. Wow. No, my friend, what it means is that those “cheap homes” aren’t cheap enough to attract buyers. The market price is far south of what you consider “cheap”. What it means is that prices are going to plunge, and the pain is going to be legendary.
Right sohonyc, like Antarctic south. That said, I need a short-term rental for NYC from late August through Sept., and I want to rent in Soho. Do you know of anything?
Bear Stearns says they are going to be extremely profitable and not to worry. BSC jumps and gains most of what hey lost from fears of their hedge fund collapses.
Baghdad Bear Stearns
Are you kidding?
They dropped over 7% today. That’s not gaining back most of what they lost. They have been fried and toasted nicely.
Chuck Ponzi
The Times Union reports from New York. “If demand for a product drops, then prices being paid for it fall, too. That’s Economics 101. Yet in the Capital Region, the number of homes sold in the last six months has declined significantly, but the median price being paid for those homes has not decreased, at least in most areas.”
Same story around here. Realtors pumping prices by telling buyers there are multiple offers. Realtors just use fake phantom bids to make screw buyers in increasing their offers.
Very common in SF Bay Area to see realtors talk about multiple offers on every open house regardless if we are seeing sales cut by 50% and inventory up 100%. Add to that foreclosures hitting the market. …. Just does not add up! I have seen sellers get one offer only and those went for 10-15% above asking. Like I said … one single offer… whould you overpay knowing you were the only bidder? More likely you would low ball the offer by 10-15% and say “take it or leave it” to the seller !
Market is still full of Realtor fraud… Appraisers are still being pumped by realtors to inflate prices. Its all fraud!
Mortgage lenders have/are going under but that not the ending just yet! We need some real serious hit to uncover all the real fraud that in the market. After that we will a nice free fall in prices.
On LEND.
Bought towards close yesterday around $5.15 and sold today at $7.75. I day traded it because I knew the fools would rush in. I didn’t see any value in this play other than profiting off of other people’s stupidity.
I’ll let you know I did it legally and ethically. The Mortgage brokers and realtors that profit off of other people’s stupidity and are now suffering because the market dried up on making stupid loans. I want to say it ran out of stupid people, but I just can’t believe that.
Cramer says FED needs to come out and say “We won’t let markets drop”
He also wants them to lower rates to jump 1000 points. (INFLATION).
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