It’s A White-Knuckle Ride In California
The Contra Costa Times reports from California. “The East Bay’s housing ailments are nowhere near over and are likely to afflict the region’s economy for about another year and a half. That assessment came Tuesday from a quarterly outlook about the East Bay economy produced by the UCLA Anderson Forecast. The current sluggishness in the region’s job market will persist through the end of 2008, it said.”
“‘Housing has become a source of weakness,’ said Ryan Ratcliff, an economist with the Anderson Forecast. ‘You’re going to see (residential) real estate act as a drag on the economy.’”
“Job growth in these housing-tied industries peaked in September 2005 at 58,900 employees. Since then, the East Bay has shed 4,200 of these jobs, a decline of 7 percent in fewer than two years. The big worry is whether the economic problems will ripple beyond the housing market.”
“Even worse, industry watchers believe the housing market faces more obstacles before it can escape the current doldrums.”
“‘We have not hit bottom,’ said Alan Nevin, chief economist with the California Building Industry Association. ‘It is still trending down.’”
“‘We could hit 150,000 units statewide if we’re really lucky,’ Nevin said. ‘It could dip as low as 130,000. The first six months of permits are not very encouraging.’”
“In 2005, developers constructed 209,000 residential units in California. In 2006, they built 163,000. ‘We are having a big, big decline,’ Nevin said.”
“‘The consensus of the local builders is they are looking to the second half of 2008 before things start turning around,’ said Joseph Perkins, president of the San Ramon-based Home Builders Association of Northern California. ‘We don’t believe things will decline precipitously. But we won’t see that rebound we’re all waiting for until then.’”
The Santa Cruz Sentinel. “American Home Mortgage has closed its Santa Cruz office, which employed 18 people. ‘It’s a bummer,’ said Dirk Allman, the Santa Cruz branch manager. ‘We’ve got a lot on our plate. We’re trying to take care of our clients.’”
“‘AHM’s lending focus wasn’t on borrowers with troubled credit served by the subprime sector; their loans were to people with good jobs, good credit and good properties,’ said Peter Ogilvie, president of the California Association of Mortgage Brokers.”
“The problem, he said, is that Wall Street investors ’seem to have lost all confidence in mortgage-backed securities, whether those securities are derived from risky subprime loans or from grade-A jumbo loans.’”
“When American Home Mortgage couldn’t sell the loans it had funded, it ‘didn’t have funds to lend on new loans,’ Ogilvie said, adding that ‘hundreds of lenders across the country’ are just as vulnerable.”
“In Santa Cruz County, 452 homeowners have missed mortgage payments this year, 239 homes are in foreclosure and 125 homes have been lost in foreclosure sales.”
“In the tri-county area, which includes Santa Cruz, Monterey and San Benito, 583 homes have been lost to foreclosure, 10 times the number last year at this time.”
“‘This is unprecedented,’ said Liese Varenkamp, publisher of the Santa Cruz Record, which tracks the numbers weekly. ‘Banks are coming down on their minimum bids, but investors are still waiting. We’re losing Realtors right and left because it’s such a difficult market.’”
“Sean O’Brien, a mortgage planning specialist in Scotts Valley, called the current situation a ‘liquidity crisis,’ adding, ‘Changes are literally happening overnight without warning.’”
“Interest rates are going up on loans of more than $417,000, he said, because investors require a higher rate of return. The median home price in Santa Cruz County has been hovering in the $700,000 range.”
The LA Times. “The sub-prime mortgage crisis is wreaking havoc on the normally predictable home lending market, with rates for even the most credit-worthy borrowers swinging wildly from one day, and one lender, to the next.”
“Late last week, the cost of ‘jumbo,’ loans was soaring. And individual lenders were quoting rates all over the map.”
“Some lenders that scale back or fold may still fund loans that are already in the pipeline, but others won’t, leaving borrowers scrambling, said Greg Nierenberg, branch manager at Approved Capital Mortgage in Woodland Hills. ‘For borrowers, it’s a white-knuckle ride,’ he said.”
“The average California borrower took out a $436,749 mortgage during the first half of 2007, according to DataQuick, just $19,749 over the conforming loan limit.”
“When investors in (the) secondary market get nervous about borrowers’ ability to repay their loans, they demand a higher return.”
“That’s happening even though there’s no indication that credit-worthy borrowers with high-balance loans are any less likely to repay than those with conforming loans, said Mike Hegna, regional mortgage executive for Southern California at Bank of America.”
“‘Yes, it will get better,’ Hegna said. ‘Will it be six weeks or six months? I have no idea.’”
“His advice: Know your loan and what you can handle. If you have an adjustable-rate loan that’s likely to re-price in 60 days or less, you probably need to act now. But, if there’s no reason you must refinance or buy a home today, it might make sense to wait.”
“Prospective home buyers are likely to find increasingly anxious sellers, who might be willing to accept less for their house or agree to finance a portion of the purchase price, said Jeff Lazerson, president of Mortgage Grader.”
“‘I think you are going to see increasingly desperate sellers out there,’ he said. ‘If you can manage not to get emotionally attached to a house, I think you can get yourself a screaming deal.’”
The Tribune. “Since the local real estate market started its downturn, more residences are sitting longer on the market. Countywide, the average number of days that homes spent on the market between Jan. 1 and July 30 was 112, compared with 87 days last year and just 67 days in 2005, according to the Central Coast Regional MLS.”
“In June, real estate tracking firm DataQuick reported the fewest county home sales of any June in the past 11 years. The median price in June—the most recent available—was $536,500, down nearly 8 percent from June 2006.”
“The downturn has scared off many speculators, who in past years enjoyed quick profits by reselling property after a rapid climb in prices. But local agents say the frenzied sales pace of 2004 and 2005 was unusual.”
“‘There are fewer buyers, (but) it’s really just more of a normal market,’ said Becky Adams, an agent in Cambria.”
“In San Luis Obispo County…agents throughout the county indicate their sales did not dip significantly. ‘The only thing affecting the price is the extra supply’ in the overall market, said Gary Gracia, a broker associate in Arroyo Grande. ‘The demand has not changed.’”
“Tim Wittman of Blue Heron Realty in Avila Beach, has seen a shift toward less expensive homes in Cambria. As of July 30, 10 homes sold for more than $1 million. During the same period of 2007, 19 homes in that range were sold.”
“Now he sees more clients shopping for properties priced $600,000 and under. ‘In Cambria, there’s been a 180-degree difference,’ said Watkins. ‘Last year, the upper end was doing well, now the lower end is selling better.’”
“Take a walk through any new housing subdivision and start knocking on doors. Construction defects aren’t hard to find.”
“One man has a crack in his foundation that the builder refuses to fix, because the crack isn’t big enough yet. Down the street, a father of seven is packing up and moving out because he says mold is taking over the family’s two-year-old house.”
“In a subdivision two cities away, a woman gave up trying to get her builder to replace a poorly installed granite countertop.”
“‘It’s a big investment, the biggest investment you’re going to make,’ said Gene O’Neil, president of the Better Business Bureau’s Golden Gate division. ‘You can’t be too careful.’”
“Pete Westlund bought his Brentwood tract home a little more than a year ago and said it’s been an uphill battle since to get the builder to fix the construction defects in his house.”
“He paid $270 this summer to get his air conditioner fixed, and he’s had to badger the builder into fixing cracks in his stucco. The builder refuses to do anything about the cracks in Westlund’s downstairs floor because he had the floor remodeled by an outside contractor.”
“‘It’s exasperating to me as a homeowner, always having to apologize to my family and friends and neighbors and clients about my new home that has so many flukes in it,’ Westlund said. ‘They give you lip service and say they’ll fix the problem…but after they leave, it’s a totally different story, unfortunately.’”
“Some homeowners are more proactive, putting signs and banners outside their houses warning buyers to turn around and choose a better builder. Jeff Browne is one such homeowner.”
“The 36-year-old father of seven is moving out of his Brentwood home because he’s convinced water is seeping through his foundation, slowly eating the house from the inside out with toxic mold. He says tests he commissioned indicate his house could have been built over a near-surface water source, such as an abandoned septic tank, agricultural pond or underground spring. Browne’s builder rejects that claim.”
“Outside Browne’s eight-bedroom mansion, he put up a white vinyl banner describing his legal wrangling with the developer over the repairs to his $800,000 house. ‘We just want our dream home repaired,’ he said.”
Weakness in the peripheral regions of the Bay Area like Contra Costa and Santa Cruz. I think for real damage to occur we need to see a precipetous drop in San Jose, santa Clara and places like Los Gatos/Saratoga.
patience, grasshopper.
Patience won’t do much in these areas. The crappy houses will come down in price but you won’t want to buy those. The ones you want will remain in demand at elevated prices. These towns just don’t have much supply because of how it has been artificially constrained by local government zoning and building regulations.
If the crappy one’s come down in price, then the others will come down too. Comps are comps…
They will all fall the same as last time. Once things are really in trouble prices remaining stagnant or slipping just slightly for a few years is all that is necessary.
Riiiight…
And the fact the median price of homes in the South Bay have gone up 100% in just 6 years was because of a massive influx of super rich people? Funny, but my rent has actually gone down since then — but how could that be if so many people have moved here since then? All those Googlionaires used to be renters? Everyone but me and my friends received massive pay raises? What praytell, caused this massive price increase?
Oh, I know, it’s because everyone used to rent and suddenly everyone all became super rich just as the prices coincidentally shot way the hell up. It couldn’t have been easy credit, or HELOCs to fund multiple homes, or anything else the rest of the country did, right? Funny I haven’t seen those facts presented anywhere.
Or could it really be because people here are even more leveraged than everyone else in the country? Now those facts I have seen presented. I knew at least 3 people at my old job where they purchased 2nd or 3rd homes with the intent to flip them after 2years. No pay raises or magic stock options there though. That was just a bit over 1yr ago — wonder how that’s going for them now.
I totally agree with kThomas — patience there, Kwai Chang Caine. This whole area is going to crash and burn — it’s special here, just like everywhere else.
Rob
Lots of California, Florida, Nevada and Pheoniz are going to be extra special at the end of this
All those Googlionaires used to be renters?
Well hold on…the ones that started in 1998 or 2001 and cashed out are gone, there may have been around 300 or so buts that all. Just because one worked in google dont make them millionaires… there have been plenty that left before IPO as well.
As for Los Gatos,…
LG dropped by 25 percent back in 2001. The stock options dried up and today the Stock options are all but gone. A few here and there but not the high PEs back in 1999.
One should also look at the high level of exotic options in San Jose region. Well over 50 percent are iO loans.
http://www.businessweek.com/common_ssi/map_of_misery.htm
Rob-in-Sunnyvale,
All the data I’ve found thus far says prices in towns like Atherton, Menlo Park, Palo Alto, Woodside, Los Altos etc are still going up.
Do you have URL’s to different information?
I love Los Gatos and Saratoga. But the problem is that even if prices fall 30%, the 2 million home is now….1.4 million. SO Maybe that means it is slightly more affordable, yes, but still tough even to what I would call regular upper middle class–pulling in say $300k a year. Plenty of people there–if my friends and family are any guide–will pass the house (and the prop 13 exemption) down the line. And I think the limited supply does make a difference.
But hey, if I can get a LG home for 5X median salary great–barring the 2nd great depression I think I’m SOL. But jey, would be great.
OhMy-
I don’t put a whole lot of faith in those stats, the number of homes sold in the markets you describe is simply too low, and the range of homes is too great.
I’m seeing some cracks, mainly in the form of people not being able to simply put a price tag on a home and getting it. This is both with some ULTRA high-end homes in Atherton, and I saw the same thing with a townhome in Menlo Park (they dropped their asking price by ~20% when they couldn’t sell the unit in 2006, sold in 2007).
The pendulum is slower to swing here, but I think we’re past the peak…
I’m planning to rent for a while longer.
BTW, I always said that I wouldn’t even consider buying until mortgage lenders were requiring 20% down and proof of income…we’re almost there, but I think I’ll let the new mortgage reality whack homes here first, especially after the ARM resets scheduled for early 2008.
…one vulture to another, “Patience, my ass. I’m gonna kill something.”
that’s a good one
‘McGraw-Hill Construction, part of The McGraw-Hill Companies , today released Construction In-Sight: California, a report that provides invaluable market intelligence for the sizable California construction market.’
‘The study shows that the California construction market will be a mix of pluses and minuses for 2007. Net results reveal that construction starts will total $65 billion, down 2% from 2006 but still 23% higher than construction starts in 2000. The 2007 decline follows an 8% downturn in 2006, which was the first drop in California construction since 1995.’
‘The reason behind the downturn is the bursting of the housing bubble, which caused sharp declines in the state’s residential construction market during both 2006 and 2007.’
They measure housing starts in $?
“Take a walk through any new housing subdivision and start knocking on doors. Construction defects aren’t hard to find.”
Insult to injury. As housing values decline, the defects come to light. New homes, too, costing upwards of $800,000.00 That’s gotta hurt. I guarantee in five years, we’re really going see some fun.
Ahhhhh, the American dream. Can’t wait to get me a peice of that.
I’m tellin’ ya… When I first glommed onto this blog, the quality of the housing that was being built was and still is one of my main issues. I saw what was going up around here in the Tampa Bay area. I’ve taken drives through half-built developments, partially inhabited and seen the unfinished houses and it ain’t pretty. If mold is a problem in CA, imagine what it is like here in FLA, the mold capital of the US.
The issue of housing defects is going to become a tsunami in tandem with the mortgage re-sets, IMHO. I wonder if there are any builders that do have a good reputation.
In 1998 we closed on our Ry***d McMansion, on top of a hill (views of the city below from 6 rooms), with a built in refridge. We thought we found nirvana.
With an Attorney coaching us, and an 18 month journey to get the house in acceptable shape, we learned our lesson.
These FB’s and fools are in for the fight of their lives.
“These FB’s and fools are in for the fight of their lives.”
Yep, they have NO idea. Look at what Mike Morgan is going through in his struggle with Lennar. Look at what happened to those folks living in a KB development built over a bombing range in the Carolinas. And on, and on. When it happens en masse, the builder will just go BK or dissolve the corporation and re-group. And at that point, any “goodwill” attached to the name will be gone, so what the hey.
Just wait until some of the big builders follow the subprime sector’s lead and go out of business. It will be very hard to get recourse for shoddy construction out of bankrupt builders…
And I thought I had already thought of all the possible repurcussions of this mess… Thanks a lot…
Palmetto -
What knowledge do you have of thew quality of factory-built housing? Your impressions?
Thanks in advance.
Hello, Eudemon, I don’t have any knowledge of factory built housing, but I have heard good things about the houses built around factory containers. A company around here is building them, using the containers as a base. Supposed to be solid as a rock and pretty much hurricane proof.
Eudemon,
check out this web site…http://www.fabprefab.com/
has the latest on prefab and a whole section on container construction.
I’ve been inside a few - Wisconsin seems to be a burgeoning hotbed for factory built. I was impressed - the three I saw (each assembled by a different company) appeared to be of much better construction and design than I anticipated. Not at all like saltine boxes either.
I know nothing about the factory container housing you spoke of…I’ll have to look that up.
Thanks, spike 66. I’ll do just that.
Mold was BS until the scum bag lawyers in Texas got in the act. A brand new industry started by a bunch of college egg heads to extract their bit of the pot along with the realtors, title folk,and local taxing authorities.
As a So Ca R E Broker, I went to a seminar put on by an honest Attorney. He told us that the swamp coolers some of us grew up with (window unit you added water too) had mold too, and we all lived through it. He said it was a cottage industry, and in his opinion the scare was bogus.
This is exactly what scares the hell out of me when thinking about buying a new home. At some point you just get tired of asking the builder to fix their mistake and you have someone else take care of it. How much is it going to cost you to take legal action against builders who don’t honor thier warranties?
“How much is it going to cost you to take legal action against builders who don’t honor their warranties?”
For a $250/hr atty, a one-hour consult & demand letter - probably about $600. For a complaint that goes to trial: about $25k (includes discovery (esp. depostions), expert witness(es), research, atty appearance fees.
~Misstrial
Wanted to add that many warranties have arbitration clauses.
~Misstrial
Arbitration might be OK, but who gets to choose the arbiter?
In Texas you are forced to go to arbitration. But don’t worry, its all fair, Governor Perry has appointed some really wise former builders to the state commission over seeing the arbitration.
“Ahhhhh, the American dream. Can’t wait to get me a peice of that.”
Getting a piece of it is easy, since “pieces” of it are falling off theses peoples….
Pick up as large a piece as you’d like…..
I’m gonna save my sympathy. Who bought a tract home in the past few years, 800k or no, that wasn’t built by illegal labor gangs.
It wasn’t just the contractors and developers, but the buyers knew and figured it helped keep the cost of their “dream home” down.
Well, you bought what illegal, unskilled labor builds, no crying now.
That old W.C. Fields line comes to mind “you can’t cheat an honest man”.
“Well, you bought what illegal, unskilled labor builds, no crying now.
That old W.C. Fields line comes to mind “you can’t cheat an honest man”.
TES-TI-FY, brothah spike! Add to that, the illegal, unskilled, UNSUPERVISED labor. Let ‘em jump around, throw things up any which way, hammer everything in sight and presto! We got us a house, yuk-yuk.
Plus, in this area, the local gov was so overwhelmed, they were letting the developers do their own inspections. LMAO!
True story from Tucson: I used to live across the street from an apartment complex that is now undergoing a condo conversion attempt. From what my former landlady and her boyfriend-next-door say, the conversion isn’t going too well.
But I digress.
Back when this complex was being built in 2000, there was a HUGE rain and windstorm. Blew part of the roofing felt off of one of the buildings.
Did the illegal alien workforce replace that portion of the felt? Nope. They just put the shingles right down on the OSB.
We, the observers of this from across the street, didn’t envy the people who would occupy the unit below this section of the roof. And, seven years later, we still don’t.
Our 1998 McMansion was built by illegals, inspected my back pocket compension, and it was so bad, the windy rain came through the walls (stapled flashing, not one sheet) right into our consevatory grand piano (which we could not afford to replace, but lucky we saved it- got the water out immediately).
We sold since the beautiful on the inside pos. We want an older one-story (no HOA)on a decent lot, lots of big trees, and some character and charm to the house and property.
Plus, in this area, the local gov was so overwhelmed, they were letting the developers do their own inspections. LMAO!
Every time a hurricane devastates FL there is a lot of talk about houses that where not up to code. Will these communities in FL ever learn?
Got 10% down?
“‘This is unprecedented,’ said Liese Varenkamp, publisher of the Santa Cruz Record, which tracks the numbers weekly. ‘Banks are coming down on their minimum bids, but investors are still waiting. We’re losing Realtors right and left because it’s such a difficult market.’”
The mind, once expanded by the dimensions of larger ideas, never returns to it’s original size, paraphrasing Oliver Wendell Holmes. A lot of RE industry heads are going to be exploding soon. When these “boots on the ground” start openly wailing to their friends and relatives, then perhaps the full blown panic will ensue. Perhaps later this year, as the dead of winter begins.
Just like cops, these industry “professionals” are about as effective and timely at providing real world protection of your assets as those who show up to draw a chalk circle around your lifeless body.
‘The only thing affecting the price is the extra supply’ in the overall market, said Gary Gracia, a broker associate in Arroyo Grande. ‘The demand has not changed.’”
Still a little ways to go for us here on the Central Coast. The hubris and denial is overwhelming. Will be fun to finally see the confidence dam burst among Central Coast homeowners.
The mind, once expanded by the dimensions of larger ideas, never returns to it’s original size, paraphrasing Oliver Wendell Holmes.
Nice quote. FBs and banks may think that 5% off peak-bubble prices is a “steal”, but savvy buyers and experienced investors are well aware they are still grossly overpriced when compared to ROI and supporting market fundamentals (area rents & incomes).
We’re at the top of the 2nd in a 9+ inning game.
So buyers were kicked to the ground and kicked some more for years by specuvestors and the whole Ponzi scheme invented by Greenspan, and now as prices have barely begun to readjust those morons think all will return to normal after a few % of readjustment.
Let the buyers now kick the sellers for a few years, and maybe a few years more until technology makes a quantum leap and houses become just another consumer commodity like stereos and cars…
Defective consumer electronics is not worth fixing, you return it and get another one, and the defective unit goes in a dump somewhere in China. (The product comes full circle in this strange way.) Housing will be the same. You do not fix bad houses, you raze them and start all over.
Got 10% down?
“Just like cops, these industry “professionals” are about as effective and timely at providing real world protection of your assets as those who show up to draw a chalk circle around your lifeless body.”
This is just great writing, imo, and great insight.
This is just great writing, imo, and great insight.
Ditto.
We’re losing Realtors right and left because it’s such a difficult market.
Munch munch munch.
I’m sorry, was someone screaming?
Munch munch munch.
‘The demand has not changed.’
I think he’s a little wrong… we’ve all been looking at sales graphs. Wait until they wake up to the new mortgage markets.
Munch munch munch.
Got popcorn?
Neil
I couldn’t tell if it was screaming, or sniveling… They both sound so alike in these articles.
Neil, you have such a great sense of humor! I’m still chuckling at that post and I’ve gone back to read it about three times!
Wait until they wake up to the new mortgage markets.
Man, I’m testing this locally. I’ve got three homes around my neighborhood that “sold” very recently… as in sold signs still lingering on the marquis. Now, this is a neighborhood with small lot sizes where people who could actually afford the price at full-doc (~750k) would generally not choose to buy. My suspicion is that these sold signs were borne of “stated” loan prospects yet to fund…
And considering that all non-funded stated loans were cut down dead last friday, I’m really curious to see what happens to these sold signs now.
One thing is in the bag– August will be the biggest MoM + YoY median and sales drop in recorded history.
“Quote me on that” –ajas
Funny enough, a friend of mine was commenting on how curious it was that three house on her three block street had SOLD signs on their housesfor about two months now…This weekend one of them was removed and the for sale sign still stands.
Considering how many months the sold signs have been on these other houses it makes me wonder if they are based on pending loans as well.
Whatever happened to the “IN CONTRACT” signs?
Danni
I may tick some off here by saying this, but I have found some Californians to be too optimistic or even arrogant in their verbal posturing at times. Bless them for the sunshine and super huge economy they have, but market conditions do routinely outwit even positive thought.
“I have found some Californians to be too optimistic or even arrogant in their verbal posturing at times.”
It’s optimism which sometimes comes off as arrogance. For years, CA has been the golden state, the leader in the US for trends, innovation, entertainment, etc. Not to mention food. CA has led a charmed existence for a long time.
Yes, CA has been the leader in trends and the latest trend is the “Entitlement”, “Me First” elitism. The housing bust can’t possibly happen here because I’m entitled to an expensive house, expensive car, big parties, etc… NO MATTER WHAT WAH WAH WAH
As a So Ca gal, I agree. Californians are romanticizing the present, based on a fading past. Our state is in shambles.
I grew up here, and I am so sick of meeting 60 year old people with so much plastic surgery, they look like caricatures of themselves.
Our infrastructure is in horrible shape, the illegals and third worlders have invaded, our taxes are high, and the quality of life has taken a 180.
Good paying jobs are being outsourced or insourced. As my 104 year old granny use to say “you can’t eat sunshine”.
We need more attitudes like yours - I like the state with the population we have (actually, we could use a few less people - and I think they’re finally leaving). After moving here in ‘97 I can’t imagine living anywhere else. I can, however, imagine a bunch of *other* people living somewhere else!
There are *many* of us out here who are just normal folk…
Yes, Ca. is short for Candide.
“Still a little ways to go for us here on the Central Coast. The hubris and denial is overwhelming. Will be fun to finally see the confidence dam burst among Central Coast homeowners.”
Completely agree. They’re still waiting for the equity locusts from the BA & LA/OC.
~Misstrial
“‘Housing has become a source of weakness,’
And other such similar terms, like “struggling housing market”. I think I’ve about had it with this stuff. Since when did housing become a “market” to make people shiver and shake? Call me naive, but housing shouldn’t be something that sucks up all the oxygen. Houses are just places to live, fer cryin’ out loud. Some are better than others.
The reason “housing” has become such a big deal, IMHO, is that we in the US don’t really have much of an underlying economy now, do we? What would “stabilize” the housing market? High paying jobs or at least decent paying jobs, that’s what. DUH! Here’s all the economists wringing their hands over the housing market and the answer is simple: just pay people more so they can pay for those McCrapBoxes.
Palmetto,
are you suggesting wage demands by the labor units?
We’re not talking CEOs here, ibankers, or hedgies, the guys who make the earth revolve, but mere labor units?
What are you, a commie?
LOL, spike. Well, these hedge frauds and bankers keep begging for a bailout, don’t they? So my idea is, you wanna keep people shelling out for the crapboxes, PAY THEM so they can afford it. I mean, that’s one solution, isn’t it?
C’mon, Boyz, you can do it. Instead of putting your money in politicians’ pockets, put it in the pockets of the folks who pay the mortgages. GIVE, you stinkin’ pigs. GIVE ‘TIL IT HURTS!!!
ahem,
Federal Reserve Chairman today announced inflation is now not Moderating; rather, its acting similiar to the space shuttle as it takes flight.
jungle_man, I had one of those moments of blog dyslexia where I read your post and thought you wrote “Federal Reserve Chinaman”. LOL.
He’s correct about inflation, though. Finally.
I just saw it again at a restaurant. For $40, I enjoyed a meal which would have set me back no more than $20 a couple of years ago. But no worries — food and energy are excluded from the all-important core inflation that gives the Fed cause to fret.
And BTW, the restaurant, which I am relatively sure would have been full with a waiting line this time last summer, was 80% empty.
So, palmetto, I take it you think inflation is a problem? Other than the basic necessities of life, where’s the inflation? And if that’s the only inflation we have, a recession is the only possible result. And recessions lead to lower fed funds rates, right? So, either Ben is ignorant, or he’s hiding something…
Assuming you mean Ben Bernanke and not Ben Jones, the problem is a long standing one. Measuring inflation is difficult. Any measure that is deeply connected to one lifestyle is irrelevant to another. Any measure that captures all the spikes ends up being useless to a decision maker, and any measure that is completely smoothed over ends up pretty unsatisfying. Come up with a good answer to this and you could get very rich and famous from it. As it is, you are saying that gas having spiked means the Fed needs to do the same with interest rates. Given how interest rate changes cause ripples 15 years out and gas and food prices go up and down like crazy all the time, that might not be such a great idea. Throughout the 1970s the base measure most used for inflation was the cost of bread, but Atkins and others caused a very large percentage of Americans to stop eating bread. Still convinced this is all simple?
Mole Man, of course I mean Bernanke. And this stuff is pretty simple. People with a vested interest try to make it difficult. When our middle class is barely paying the monthly bills, our standard of living only has one way to go. DOWN!
Sadly the inflation is always completely obvious in retrospect.
Sadly the inflation is always completely obvious in retrospect.
Sadly the inflation is always completely obvious in retrospect.
Sadly the obvious is always completely inflation in retrospect.
Retrospectively the sadness is inflated obviously in completion.
tee hee …
I think the inflation numbers would be much more meaningful if they included food and energy, but only did so by taking a running average of the past x years. What, 5 years?
So, yes, they are volatile, so take the volatility out by using a longer term running average. That way, if there is a short term dislocation in food or energy, it isn’t reflected in the inflation numbers, but if that dislocation persists, it eventually shows up 100% in the numbers.
In theory I agree, but in practicality I definitely do not.
Salaries shouldn’t be increasing; rather, housing should continue to take a nosedive. With no bailout packages in the offing. Increasing their salaries will just feed many Americans’ ongoing penchant for spending themselves into oblivion. I want them to learn how to start saving money.
“Salaries shouldn’t be increasing.” Tee-hee! Or, in other words, “Let them eat cake”! Good one, Eudoman! What are these stupid bastards that actually work for a living thinking? Only stockholders and executives are allowed to reap the benefits, eh?
I wasn’t aware I said anything like you suggested I did.
What I did say is that salaries shouldn’t be increasing to make thoroughly unreasonable housing prices more affordable to the masses. The prices of houses that increased in “value” by $50-$100K a year for 3-05 years in a row should drop precipitously.
And before you run off accusing me of something else, consider this: I quit my $80K a year corporate job two years ago to become an elementary school teacher. This at age 42. My starting salary at age 44 will be somewhere in the neighborhood of $40K.
I did so because I’m appalled at the poor instruction children receive, the piss-poor discipline and the criminal socialist propaganda children are exposed to. Time to burn all those Al Gore’s Global WarmingTM videos that Grades 3-6 are forced to watch.
All that said, I say go suck an egg.
hmmm, perhaps you and your high horse AND your judgements should perhaps be worn as earrings. Including some body parts.
Same to you. There’s nothing worse than a liberal who has lots of money yet frowns on others who do (or want to) as well.
I bet there’s nary a liberal out there who took out a HELOC and then gave the proceeds to charity.
That’s because the piece of pie they already own in the Hamptons, on San Francisco Bay or on Sanibel isn’t large enough. Or because they don’t have enough toys.
Perhaps instead, maybe they needed the HELOC money to pay off lawyers who in turn guaranteed that no one could encroach on their piece of pie? All in the name of “environmental stewardship,” naturally.
What better way to say “F-You” to anyone who seeks to enjoy their wealth in the same way that they already do than to implement zoning restrictions once they’ve got yours.
Typical elitist liberalism.
palmetto, you say we don’t have much of an underlying economy. I agree with that part, we are not producing much in the USA except houses. POS houses, at that. Then you say the solution is to “Just pay people more.” Nope, sorry, that is not a solution. What is the source of their pay? and I don’t mean their boss. Where does the money actually come from? If you just pay them more to produce the same goods and services as before, what do you have? INFLATION, duh. So I guess you are saying, inflate our way out of the housing bust? that is exactly the sort of attack on savers that GetStucco bemoans quasi-daily. I’m on his side in this matter.
If you just pay them more to produce the same goods and services as before, what do you have? INFLATION, duh.
Okay, but what if you cut the pay of people that don’t produce: CEO, middle management… It’s the same net pay for the same production (capitalism ain’t so good at deallocating useless resources except at market discontinuity). That implies no inflation, right? Haha, not really, Fed prefers inflation models where the rich people have all the money rather than where the workers have a little more.
That’s the inverted analogy that’s so funny in this– folks like us laugh at the hedgie implosion like it’s subprime… pop pop pop! Everyone laughs and says “Idiots! What were you thinking?!” But the pension collapse will be like Alt-A, unbelievable then shocking, and wiping out the middle class.
Yikes, conclusion I hadn’t thought of when I started the analogy: Fannie/Freddie bailout is like PBGC? ~~shiver~~
“‘Yes, it will get better,’ Hegna said. ‘Will it be six weeks or six months? I have no idea.’”
It’s already getting better. A return to pucker-butt underwriting standards is just what the doctor ordered. If this yahoo thinks loose money is going to return any time soon, think again.
Matthew 18:22 Parallel Translations
Jesus answered him, “I tell you, not just seven times, but seventy times seven
History of the World, Part 1:
Moses: “The Lord, the Lord Jehovah has given unto you these 15… [drops one of the tablets] Oy! 10! 10 commandments for all to obey!”
Testify brotha!
six weeks or six months… yea. I’m not worried about price inflation for six years! Yes, I’ll buy before then… but no need to worry (or hope) for it before then.
Got popcorn?
Neil
“A return to pucker-butt underwriting standards is just what the doctor ordered.”
Will this affect the 780+ FICO, 20% - 30% down, 28% - 32% of gross, plenty of cash in reserves, zero other debt, type of borrowers? I bet these types of borrowers are starting to look real good to banks.
I bet there’s a bunch of us right here, but until prices get cut in half, why bother. We waited this long, the real payoff is still down the road.
“….prices get cut in half”
at that point, I wouldn’t even need a mtge..
I don’t see a 50% drop here within 30 miles of Boston. Not that it is different here, but I just don’t see a 50% cut from today’s prices. Not that I wouldn’t welcome it. That being said, I’d be happy with a 20% cut from today’s prices over the next few months. I really don’t want to have to time this in years.
I just don’t see a 50% cut from today’s prices
You keep saying that, but you don’t say why. Why???
Pen, wasn’t Boston one of the places where median started dropping earlier and more seriously? A lot of us are waiting for the Alt-A seizure to hit the high end, but Boston should be leading the way.
That said, 20% in a few months is not realistic… December maybe if you are desperate?
That’s gotta be like..what? 0.1% of the population?
I got the 800+ FICO down but in L.A. a first-time homebuyer has about as much chance of coming up with 20% down as . . .[insert humorous analogy here]
“Will this affect the 780+ FICO, 20% - 30% down, 28% - 32% of gross, plenty of cash in reserves, zero other debt, type of borrowers?”
Yes. Those who get sucked in to buying now get to catch the falling knife, as the market soon discovers en masse that price support is about as thick as the air atop Denali.
We’re in the 800’s on our FICO’s, plan to pay cash for our next home, and we see no reason to catch a falling knife. No debt whatsoever. Pay in full on CC’s every month.
BTW, FICO scoring is about to change. If you use 10% or below your credit available, your score will go up. If you are a credit-holic (close or at your max) you’re in for a surprise on the downside on your FICO.
I believe the new scoring is called ‘Advantage’.
I bet these types of borrowers are starting to look real good to banks.
Too bad there aren’t any…
Besides, lenders have gotten too used to fleecing marginal borrowers. To ask them to do business with solid folks now, well - it just wouldn’t satisfy their sportin’ urges.
Uh, here here!
‘They give you lip service and say they’ll fix the problem…but after they leave, it’s a totally different story, unfortunately.’”
And I bet you believed them when they said they wouldn’t lower prices either. Here’s your sign…..
Anything built between 2003 and 2007 is at extremely high risk for major faults in workmanship. Go ahead and deduct an extra 15% off your low-ball bid for planned maintenance expenses due to faulty workmanship.
Better yet, scratch those properties off your list entirely. Who wants to negotiate a “deal” that turns out to be an endless money pit and litigation nightmare?
Well said! In a frenzy market, it’s quantity over quality.
Does anyone hold them accountable to their statements when reporting?
“‘The consensus of the local builders is they are looking to the second half of 2008 before things start turning around,’ said Joseph Perkins,
Really they are looking at the second half of 2008? And what is their belief that this is going to happen, is this another gut feeling? Can a reporter stop for a second and ask them what they are referencing when they say this? Can you imagine the skid marks these people would leave if a reporter would just ask them their sources or the facts they are speaking of?
“This week, Homeland Security Secretary Michael Chertoff said he had a “gut feeling” that the United States faced a heightened risk of attack this summer…”
Well, it is my gut feeling what will reemerge from this is Housing 2.0 with Ikea style efficiency and no realtors and warranties to match those offered for cars if you want to be taken seriously.
I share your gut feeling re: Housing 2.0 from Ikea. It may even be big in bombed out older cities like Detroit and Cleveland. I agree with your hunch - rather strongly I might add.
Someone here a few months back said that once this mess is through, housing in many areas will be treated as if it were a commodity…bought and sold like cars. Here you are, reiterating that idea.
problem is that houses can’t be pitched like cars… a whole bunch on a lot easy to compare in a half hour, bait’n switched with a hand wave.
That said, relitters prey on buyers with their only weapon being the MLS. If the downturn lasts only the next year, they will still have some power there. But with a down-turn extending into 2009 they will be decimated by no income and desperate sellers turning to internet sites run probably by Google or Microsoft.
It’s a classic predator-prey difeq. In natural equilibrium, the populations resemble offset waves, differences in population balance each other at offsets. However, when there is an overabundance of prey, the predators balloon even greater in turn, success breeding exponentially when not damped by limited resources. This results in divergence of populations, extinction of predators when the prey population rapidly contracts and the meek inherit the earth.
Right now, we are at the starvation phase of buyers with relitters soon to follow.
I’m not so sure about that, ajas. Houses won’t be sold as commodities on anywhere near the same scale as cars, obviously, but the thought process and motivation behind such a phenomenom has some merit.
Perhaps one day people will wake up and realize that buying a home from an investment stand point gives a poor return over the long haul. Real Estate is not going to make you rich, from that stand point. My parents house that they bought in 1961 for $18,600.00 has a market “value” today of $415,000.00(inflation) if they could find a buyer. Do the math, I have no idea what the maintenance costs have added up to over the years much less Ins. etc… I can name a dozen ways they could have made millions on the same money. They bought their home to raise a family. These fools today have been watching to many Carlton Shits Ads. To many other ways to make money… Live in your home, the vast majority are trying to get rich quick… Hows that working out?
“erhaps one day people will wake up and realize that buying a home from an investment stand point gives a poor return over the long haul. Real Estate is not going to make you rich, from that stand point. My parents house that they bought in 1961 for $18,600.00 has a market “value” today of $415,000.00(inflation) if they could find a buyer. Do the math, I have no idea what the maintenance costs have added up to over the years much less Ins. etc… I can name a dozen ways they could have made millions on the same money. They bought their home to raise a family. These fools today have been watching to many Carlton Shits Ads. To many other ways to make money… Live in your home, the vast majority are trying to get rich quick… Hows that working out?”
Just a hair under 7% per year over 44 years. You’re close to the return on bonds over the long haul.
Bonds!? Bonds?! When was the last time I heard anyone say anything good about bonds? Ever since 1981 (about when rates really peaked) I have been an ardent buyer of bonds, listening to the scoffing of stockbrokers and RE salesmen. Sc**w those people, bonds can do very well for any of you younger people provided you don’t buy long maturities in a rising-rate environment. I remember the Harvard meteorology professor who said to me, “You can’t live in your bonds.” BS, of course I can. I can and I do and have done so for a long time.
Still bullish on the sovereign debt of Aust, Iceland, Brazil.
“These fools today have been watching to many Carlton Shits Ads. ”
LOL. I agree though. Too many people want to get rich quick and pass on that boring 40 year career. Laziness + greed + obesity = typical American these days.
I am not sure I follow. They got to live in that house. They got a tax write off on the interest. They get a freebie on capital gains up to $500k. If they were renting they would have paid much much more. I agree it is not a get rich quick scheme but for the last fifty years it has been better than a poke in the eye.
say what?
“Take a walk through any new housing subdivision and start knocking on doors. Construction defects aren’t hard to find. One man has a crack in his foundation….”
A home inspector first observed the crack when the man bent over to perform a plumbing repair under his kitchen sink.
“Jen Bones”
Jen Bones who? Got a number?
This is our bird-rescuing friend, who found herself in Utah.
Utah, Nebraska, Arizona, whatever….I just want to know who boned who.
Utah, Nebraska, Arizona, whatever….I just want to know who boned who.
“A home inspector first observed the crack when the man bent over to perform a plumbing repair under his kitchen sink.”
LMAO! Reminds me of the Dan Aykroyd SNL Norge refrigerator repairman comedy bit.
“One man has a crack in his foundation that the builder refuses to fix, because the crack isn’t big enough yet.”
Oh, don’t you worry, mister…. this markets just getting started on yer “crack” By next year yer crack’s gonna be HUGE….
And that’s just the way Mr Joshua Tree likes it!
So who is the clown who certified those houses as “habitable”?
Try to build your own dwelling with love here in San Diego and I heard the inspectors will be like Hyenas swooping on you every 2 weeks to make sure every screw and every bolt is in the blueprint. Meanwhile gangs of illiterate illegals coming into the construction site in non insured vehicles and no license do as they damn well please putting shoddy POS overpriced shaks that are worst built than those in shantytowns of Mexico and favellas of Rio…
Rule of law my a**!!!
Yep, Ian, I’ve seen that here in Florida. It has taken some people I know the better part of a year just to get their home repaired and re-built from a fire. Inspections are now holding up occupancy. Meanwhile, a local supermarket went up in like 4 months from scratch to opening for shoppers. It took me the better part of year back in 2000/2001 just to clear an easement and get a variance approved so I could sell off some land. I got a probing worthy of those space alien guys with the big heads and eyes.
But now, a builder or developer? The county gov drops their collective panties. Oh, also, you can hear homeowners bragging about the hardworking illegals who built their homes in record time. This is where we get to really enjoy the schadenfreude, when the complaints start rolling in about the crappy construction.
Frank Zappa: Do ya love it, do ya hate it, there it is, the way ya made it.
WOW! Dammned interesting info - I had no idea the inspectors were in on the graft … err ” quality control ” when a homeowner wants to build their own.
Makes sense though. Cant have these amateurs mucking up the system for the pros . . reminds me of the attitude I received as a Pro Se litigant in the FL legal system … Judges hated me because I actually made their judicial assistants do some WORK, regular lawyers were snotty ,of course, from the lack of work, but surprise surprise, the court clerks were very very helpful & cool about it all.
I think they actually enjoyed helping David take on Goliath as clerks get dumped-on with all the paperwork & little respect.
(Of course it helped a lot that I treated them with courtesy & respect from the start, something most people cant do as they get pissed off at the system & scream at the clerks.)
apologies for the lenghty sidetrack analogy.
Just out of curiosity, what kind of lawsuits were you involved in.
Just out of curiosity, what kind of lawsuits were you involved in.
Aquis,
totally off the subject, but I once took my landlord to court over a lease issue. The pro se guys in Housing Court were really helpful, but the judge’s clerk really helped me word my complaint to suit the judge. I won too.
Chrisusc
I was reluctantly a party in many Family Law actions in Hillsborough County, FL. My ex-wife really manipulated the system until I learned the ropes & fought back.
Also involved in a few minor & one major criminal cases, same county. My last name is the same as a first appearance judge & long time retired sheriff so the State Attorneys office misses no chance to try to make an example of me if I so much as jaywalk.
I always win my cases but I’ve been through hell & back, brother!
Spike: I dont know where youy are but there used to be a few very helpful judicial aides, but the new Hillsborough County Courthouse has them all removed from public access now, except for an intercom.
In the interest of “security”, no doubt. (and a lot of pressure from the Attorneys who bitched about para-legal style case infringement I bet. Be sure n’ call em ” Attorneys” they HATE it when you call em “Lawyers”. “Attorney” is soooo hoity toity uppercrust pass the grey poupon dontcha know . . . !! )
Anyway, glad you prevailed, my friend.
” Justice delayed is justice denied ” : Gladstone
Off subject here too but I heard high priced lawyers are always crap whereas public defendants, as burdened and overworked as they are, know the ropes and the street and how to get the best deal or defense for a criminal defendant.
Case in point: Paris Hilton could have lowered her DUI to a simple reckless driving given she was at the 0.8 threshold, but her dumb high priced lawyer screwed her over and she ended up being made the example she was.
hmmm, and that is a relevant example in CA?
Jen, you are VERY funny. Your comments make me laugh out loud. By any chance have you written any short screenplays, or have a desire to do so? I am an award winning short film director and would like to talk to you about this if there is any interest.
Let me know.
DP
I’d like to add my resume’ to yer next short film as leading man .. hell, who am I kidding, I’d take a fluffer part, just give me proper credit.
DP
I’d like to add my resume’ to yer next short film as leading man .. hell, who am I kidding, I’d take a fluffer part, just give me proper credit.
Why don’t you do a short about us HBBer’s? Too boring? Maybe make it like “Best In Show” — where all the players take themselves way too seriously (just like us).
“… all the players take themselves way too seriously (just like us).”
LOL! Good one.
good stuff
“Outside Browne’s eight-bedroom mansion, he put up a white vinyl banner describing his legal wrangling with the developer over the repairs to his $800,000 house. ‘We just want our dream home repaired,’ he said.”
Yeah, that really sounds like my idea of a dream, Jeff, or may I call you J6P? By the way, that banner you put up is an excellent way to ensure your “dream home” is valued at less than half of what you paid for it, if not less. But you showed ‘em, all right!
What freaks me out about this one is — SEVEN kids! What’s with that?
no money left after paying big mortgage
….no movies, no dinners….. must rely on completely on “free entertainment”
oh….. no money for condoms either
Heard on the radio that MA was looking at providing some protection to renters where the owner gets foreclosed on.
State lawmakers are weighing a proposal to make banks that foreclose on rental units honor renters’ leases, aiming to help tenants caught in the middle of property seizures.
A mortgage-reform bill currently before the Legislature would prohibit parties that acquire homes through foreclosure from automatically voiding tenants’ leases.
Current law generally doesn’t require lenders or private investors who purchase homes at foreclosure to honor landlord-tenant agreements.
Instead, as the Herald first reported Saturday, lenders who’ve been seizing Bay State rentals from landlords who fall behind have been evicting even tenants who paid rent on time.
http://business.bostonherald.com/realestateNews/view.bg?articleid=1015871
So all of the renters here may have a little more protection against foreclosures in MA this fall. I don’t know what else is in that bill but it’s nice to see this consumer protection for the renter and I’m sure that there are lots of them reading here.
‘State lawmakers are weighing a proposal to make banks that foreclose on rental units honor renters’ leases, aiming to help tenants caught in the middle of property seizures.’
- Wow! If this happened in So Cal they would be required to speak Spanish to explain these rights to the renters.
I live in Az and “rent from a guy who does not even speak english. I hope he is not a FB…..If he is……….I’m a FR
LOL in about 5 years the landlords will be saying
“mi arrendatario no diga el español”
State lawmakers are weighing a proposal to make banks that foreclose on rental units honor renters’ leases, aiming to help tenants caught in the middle of property seizures.
How will they curtail fraud? If I were being foreclosed, I’d rent the place to my nephew for $1/month.
However, if its giving renters proper notice (60 days), than I’m all for it.
Or… if the rent is reasonable, there should be a provision for the lender to continue a lease for a reasonable term (say, 6 months).
This is getting interesting…
Got popcorn?
Neil
60 days notice??
Hahahahahahahahahahahahahahahahahahahahaha..
Here in MA, plan on a year and $5Gs to get a tenant out.
What happens when the renters stop paying rent to the banks?
Just another reason for the banks to not want to lend money here in the Commiewealth of MA.
I suspect if this kind of thing keeps up, that banks are only going to make loans to those folks that the bank is VERY sure will be able to make the payments.
“…banks are only going to make loans to those folks that the bank is VERY sure will be able to make the payments.”
Gee, what an unusual concept. Someone oughta write that down.
LOL!
Hey Penn~
Ya see all the BS mortgage protection Cloakley’s dreamin’ up?
All a crock, because the one biggie which she omits-makin’ it a felony to coerce or intimidate an appraiser while rendering a value a all federally related transaction.
The fix is still in.
Why don’t they just require the bank to notify all occupants of the house in question if it is in default & forclosure.
That way the tenants have some time to prepare.
Too easy and makes sense.
What about when the FB stated the property was to be owner occupied, but when the mortage holder goes to foreclose, finds a pack of renters in there. I’m inclined to think the bank should not have to honor a lease in this case. In such instances, I think the tenants have another cause of action against the landlord.
Maybe there’s a potential industry out there providing tenants credit/mortgage checks on potential landlords.
I know its a housing blog, but did everyone see the DJIA at the end? A minus 200 point, up 150 point toboggan ride. For some reason it remind me of that old cheesy song “Nine Coronas.” Its almost like after waking up with the hippo you go back to the bar for a few more rounds…
Got popcorn?
Neil
As Cramer would say, “BOO-YAH!”
The market is stupid. It’s like watching an idiot with St. Vitus Dance.
Rheumatic fever may appear in several different forms. St. Vitus’ dance, is one of five “major criteria” for the diagnosis of rheumatic fever. There are also four “minor criteria” and two types of laboratory tests associated with the disease. The “Jones criteria” define the diagnosis. [SOURCE: Arthritis-Symptom.com]
Ben Jones: blogger by day, rheumatologist by night!
Nine Coronas?
Are you sure you don’t mean, “Ten Rounds of Jose Cuervo”…Toby Keith I believe…
Correction: The Knack (”N-n-n-nine Coronas”)
‘My Sharona’ by the Knack.
‘Nine Coronas’ by John Mammoser is a parody.
From Wikipedia:
‘”My Sharona”’s easily recognizable riff was written by the band’s guitarist, Berton Averre, long before he ever joined The Knack. According to lead singer/guitarist Doug Fieger, he met a girl named Sharona (who was 17 at the time), and fell in love with her. Whenever he thought about her, he would think of Averre’s riff. The two worked out the structure and melody from there. The girl who inspired the song is Sharona Alperin, now a real estate agent in Los Angeles, California.
Ten Rounds of Jose Cuervo is by Tracy Byrd
I think the fed decided to leave rates unchanged but step up their federal stock buyback program just so people won’t get scared. As long as they just buy stocks and not houses… What a bunch of retards - I wish I could just print my own money too and play superhero to the financial world. Must be pretty empowering.
so…if you complain about the market being propped up, why don’t you make money on it?
I recall reading a poster on this blog (not you) who proclaimed he sold all his stocks and is into cash. This was more than one year ago. Lately, there has been a good selection of large company stocks whose valuations have gotten much better than a year ago and yields have increased higher than money market funds. It was easy to find good value stocks last week. Disclaimer: I have a lot of cash still in my brokerage, but I was not shy to convert some to stocks. I have mostly government securities outside my tax deferred plan.
Thanks Bill,
That is truly great advice (I mean it). Unfortunately I just cannot bring myself to go long as it just seems soooooo wrong to me in my gut. I guess I am destined to be poor and right. I wonder if anybody else is in the same predicament.
Delta Financial Corp is still showing 13 jobs available in California on its web site. stock symbol DFC
Trading at a P/E of 4 with a solid 25 year growth history.
AHMIQ.pk ( American Home Mortgage) is trading at $0.35 up $0.01
Hope springs eternal…
Hoz,
What do make of stocks today……..seems crazy.
Sorry……..What do you make of stocks today……..seems crazy.
Crazy is as crazy does…
I am of the opinion that the US stock market is the 4th trade in a major sequence of the “carry trade”.
The sequence is
1) borrow moneys in Japan from bank
2)buy Euro sell Yen =EuroYen
3) buy British Gilts
4) buy US stocks with Gilts as your margin requirement and remember for CSE’s there is little margin requirement.
I have interest only in the foreign currency side of the trade so I follow the EuroYen. I am long some stocks - just not in the US. I am short quite a few US stocks and I have no reason to cover.
This is a graph of the EuroYen vs the SP500 for 1 yr.
The correlation is 0.94, from a practical viewpoint if the EuroYen is higher than the previous day the stock market is going up - no matter how much bad news is out there.
http://tinyurl.com/2b9f3u
Today (last night) the EuroYen exploded on the dubious news about China getting ready to dump dollars. It would be an incredible act of bravery or stupidity for a “carry Trader” not to buy US stocks when 3 legs are done.
Ditto: the down move a few weeks ago was preceded by a drop in the EuroYen.
Twins!!!
This am (8/09), Euro/Yen is way down, dropping from about 165 to 162.5.
S&P futures are down 16.3 (substantially a 150+ point drop in the DOW).
Hmm, sort of tells you how much the U.S. stock market reflects all the ‘fundamental’ stuff the talking heads bring up, doesn’t it?
“‘It’s exasperating to me as a homeowner, always having to apologize to my family and friends and neighbors and clients about my new home that has so many flukes in it,’ Westlund said.”
You should be apologizing for serving Top Ramen at your “fancy” parties, not for the cracks in the stucco.
I think he use the Top Ramen to part the cracks in the stucco.
part = patch
I need to buy some Top Ramen stock!
http://preview.tinyurl.com/2omm2u
OT..
Did anyone see Cavuto’s interview with Bush today? It didn’t sound as though a Federal bailout is forthcoming.
“Gary Gracia, a broker associate in Arroyo Grande. ‘The demand has not changed.’”
hey numbnuts…..FEWER buyers is a REDUCTION OF DEMAND.
Please do not make fun of the folks on the short bus.
“Numbnuts”, tee hee… “Short bus”, please stop it, bwa ha!
LOL!
~Misstrial
“Gary Gracia, a broker associate in Arroyo Grande. ‘The demand has not changed.’”
He’s refering to his car payment, utility bills, grocery bill, Gasoline bill…
“Help me out here people! You know the DEMAND has not changed!”
Just talked to my elderly neighbor around the corner as I was driving by ,,,, she & her male next door neighbor were taking turns removing a large pile of dirt in their front lawn. My jaw dropped when they said they were quoted $8,000 to rip out some hedges & small front lawn!
I saw this elder rip-off abuse enough in FL / sad to see it perpetuate here in CA also. And with the general population aging we’ll see more dubious russian & gypsy scammers making the rounds.
( NO I dont want a driveway sealer for 32nd time! Or window upgrade; I dont care how much of a PG&E-SMUD rebate / no THANK you also to painting my number in front of my sidewalk . . .. leave me alone in my grouchy middle aged mid life crisis already!!! )
“no THANK you also to painting my number in front of my sidewalk”
That one is my personal favorite.
Actual conversation (well almost):
Him: “Hello, I painted the number on the curb, you owe me $10.”
Me: “I didn’t ask you to paint it.”
Him: “Yeah, well a week ago we put a flyer in your mailbox and if you didn’t want us to paint the number you should have taped the flyer over the old numbers.”
Me: “Yeah, well if you start running right now you might make it to your car before my attack dogs get you…”
smithers, release the hounds
I’ve had my curb painted too. But my peculiar policy of not answering the door unless I’m expecting someone worked pretty well. That’s a free house number paintjob out on my curb.
That’s funny stuff…
one time guy came back at night and grossly spray painted over numbers cause I wouldn’t pay him…
Next time it happens, use a sharpie to write ‘$10′ on a post it and hand it to him.
I wouldn’t even do that.
One of my housemates in college used to deter unwanted solicitors thusly: “If you don’t leave right now, I will urinate on you.” It worked every time!
“Job growth in these housing-tied industries peaked in September 2005 at 58,900 employees. Since then, the East Bay has shed 4,200 of these jobs, a decline of 7 percent in fewer than two years.”
“‘We could hit 150,000 units statewide if we’re really lucky,’ Nevin said. ‘It could dip as low as 130,000. The first six months of permits are not very encouraging.’”
“In 2005, developers constructed 209,000 residential units in California. In 2006, they built 163,000. ‘We are having a big, big decline,’ Nevin said.”
25% drop in construction, maybe 35%, and only 7% drop in construction related jobs?????
Me thinks the jobs reports are pure fiction.
Same thing on the national level. Last week when the jobs report came out, CNBC did a chart of houses start to housing jobs. Near tick for tick changes on the way up. 50% drop in starts now, but 3% drop in jobs????
PUUUUHHHHHHLLLLEEEEASSSEEEEE
First of all, with all the defects, I would not be surprised if a lot of them are overblown for two reasons:
1. If I pay so much for a house, it better be perfect.
2. Justification for why they later don’t/can’t make the house payment because the house is a POS.
Second point.
I work in the design side of the construction industry, have done so for 18 years.
Prior to about 2000, it was hard to find any immigrants working in construction. It was also well known that very few people were coming into the construction trade.
Now it is very easy to find immigrants working at sites, and not just Mexicans, but plenty of Eastern Europeans.
Here the way houses are built are very different than what is done in other places. So these new workers were filling the jobs that did not have enough ‘natives’ to fill them. But they had lack of experience, and it will show. In the last several years we have had plenty of aggravation and problems from inexperienced individuals in the industry.
It is still very difficult to find ANYONE to work in the higher end positions of the industry. In our office, we have two people with H-1B visas.
To end this long post, we (personally in the office) have no idea how many of these workers were illegal, and not on the books. So the disappearance of 7,000 jobs is probably a low ball of how many are really gone.
“Prior to about 2000, it was hard to find any immigrants working in construction. It was also well known that very few people were coming into the construction trade.”
From what I’ve seen, this comment is true. Builders deliberately practiced discrimination against American citizens because they wanted to increase their profit margins by using low-cost labor. In fact, Orange Coast College in Costa Mesa, CA used to have a well-developed program to train young adults to be roofers, framers, dry-wallers, the various trades, etc. You could see the training facilities off Merrimac. It was exciting to see our community college help prepare students with practical skills. After 2000, however, with so many builders hiring illegals, there was no point in the community college offering this education and so it was torn down. Americans just could not take the financial risk to educate themselves in a field where they would face discrimination and not hired.
“It is still very difficult to find ANYONE to work in the higher end positions of the industry. In our office, we have two people with H-1B visas.” Same thing: HR depts in the industry are only looking to interview/hire citizens with EXACT qualifications. Reason why I am posting this is because I personally know someone who has attempted to move into the building industry after being laid off in aerospace - doing the same thing, just a dif industry. This reticence to hire was/is really a tactic to justify hiring H-1B workers who are largely coming from developing/3rd world countries. These H-1B workers are just 1 generation out of the hovel/shack/hut; so, how could they possibly have the required (of Americans) experience??? hmmmm
~Misstrial
valid point.
“‘We could hit 150,000 units statewide if we’re really lucky,’ Nevin said. ‘It could dip as low as 130,000. The first six months of permits are not very encouraging.’”
“In 2005, developers constructed 209,000 residential units in California. In 2006, they built 163,000. ‘We are having a big, big decline,’ Nevin said.”
A drop to 130,000 units would be a 38% slump off the peak level of 209,000 units. And when California’s economy catches the flu, the rest of the country’s economy will catch pneumonia.
I have said this many times, but will say it once more for good measure: Every time since 1955 (seven times out of seven) residential construction investment took a 25% haircut, the national economy concurrently went into a recession.
Hmm, I believe you
I received notice from my LL to move out….she wants to sell it (she bought it for 1-M right before I moved in).
Looking around South Bay in LA, HALF the current stock of rental properties are obviously flips in some form or another…..there is even a ton of stuff on the rental market that is brand new (for rent from the builder I thin)…and asking WAY too much.
Believe it or not, there are houses for rent in N. Redondo for 8,000/month! Listed as “Manhattan Beach Adjacent”. First time I have heard that. What a joke. Check it out at http://www.whizway.com I think that stands for “wizz your money away”.
I used to look at Marina Del Rey and Playa Vista and think about “hidden inventory”….it is all over.
There is a house about 4 blocks from me that came up for rent today. Funny thing is I was peering in the window the other day (recently remodeled). I checked out the sales history. Sold for 850K two years ago. Then sold for 1.15-M 70 days later!!!! Looks like it has been vacant for 2 years since then, had an extensive remodel, and then never sold! This is for a 1000 sqft house with no yard in a bad corner location. I figure with the 250-premium the guy paid, 2 years of carrying cost and a remodel, the guy is already out 400,000 if he sold it at the inflated price he bought at. More likely he is out 600,000 on a house which was arguably worth 850-K when he bought it…..forget about if it drops below that.
What is wrong with all these people trying to flip houses they bought for 1-M dollars?
At this point, if I were in your position, I would just stick with a regular apt complex like Oakwood. Too many strange things going on with these new LLs. Most likely, they won’t have the $$ to perform repairs anyway.
~Misstrial
I liked the Milano Apartments in Torrance on Anza.
More likely he is out 600,000 on a house which was arguably worth 850-K when he bought it…
Nope some MBS bagholder is the one who will lose.
I’m sure the clown doin’ the buyin’ got a 0% down liar loan and then piled a 125% HELOC on top.
Whew, I wonder when the bagholders wil be hiring hitmen for the orginators of this type of shit.
If your renting month-to-month, then the LL can give you a 30 day notice to quit; if you have a lease for a fixed term (6 months, 1 year, etc.), then the LL has no right to kick you out (assuming you want to stay). If you want to move, then you can work something out with the LL.
As for your last question, the answer is: lots of stupid, greedy people.
Apropos the earlier exchange about renters stuck in the middle of a foreclosure, I heard a story about how during the Depression, banks kept owners in the houses, sometime *for free* to keep the units maintained and occupied by someone who at least represented a “known quantity”. Kept the property looking OK and kept out squatters.
Perhaps a taste of things to come. Again.
The “owner” would have less reason to trash the place before getting evicted too.
Don’t be so sure. I’ve seen many REOs where the “owner” did as much damage as they could before the Sheriff put them out.
saw someone riding a bike today with a chandelier on his handlebars. No kidding. Waiting for what is next,
It hurts my head to read these quotes. What comes first, being a Realtor or being a moron? Is it like you can’t have a good personality and be a cop… you cant be smart and be a house seller.
Realtors Motto ……It’s not what you know , It’s what you can sell.
The realtor are not only stupid, but they are morally bankrupt (owner of the house is a realtor). I have known they would put the house on the market for about two months now. They have called at strategic intervals to say they wanted to do one thing or the other to prepare for selling……I think they were trying to get us to buy from them all along (they asked three times if I would buy it). Maybe even planned it from the start, who knows.
Yesterday I met with the owner (realtor) and her boss (another realtor)…..I wanted to meet just her and pick her brain as to what the hell all the morons were thinking (wife told me waste of time, she was right). Instead both of them showed up to double-team me! I have always pointedly never even entertained hearing a number from them. Anyways, after that incident they put it up for sale at 8:00 AM this morning. I guess they realized that I really not interested in buying the POS house. It is certainly not what she paid.
I have need found MLS listing yet, but I believe she is pricing at 1.2-M. Probably what she owes after -50,000 dollars in rent, property taxes and property management fees (plus two refi’s in one year”.
I hope she gets stuck.
They’ve already given you 30 days notice, right? Screw them. Let them wait to you move to show the place. At least make them abide by the rules. Since they haven’t given you 120 days notice they have to mail you a 24 hour notice with the time and date every time they wish to show the place. They have to show it during normal bussiness hours 8-5, no nights and weekends.
CA Landlord-Tenant Handbook has everything you need to know.
http://www.dca.ca.gov/ Go to Quick Hits > Landlord-Tenant
In KY a very religious bible thumping LL gave me 5 minutes notice that he was showing the place. Later, he even reminded me in his 30 day notice (that was post dated to appear as 30 full days, and that he slipped said document under the front door) that he gave me notice to show the apartment.
Sometimes I wish I had hired a legal eagle to ream him big time.
Got 10% down?
5 minutes would have been enough time to assemble a makeshift replica of Piss Christ. You totally should have!
Make sure you keep a copy of the rental agreement and other important documents offsite. You wouldnt want to come home to find the locks changed, and the owner telling the sherrif you never lived there and you cant prove it.
Pick what brains?
Yawn
The dollar sell off threats from China might be a blessing in disguise.
http://www.marketwatch.com/news/story/story.aspx?guid=%7B7FD5B99C%2D9BA0%2D4EC3%2D8EE2%2D187FB8F9D982%7D
“The 36-year-old father of seven is moving out of his Brentwood home because he’s convinced water is seeping through his foundation, slowly eating the house from the inside out with toxic mold. He says tests he commissioned indicate his house could have been built over a near-surface water source, such as an abandoned septic tank, agricultural pond or underground spring. Browne’s builder rejects that claim.”
In Franklyn, KY an entire sub division (Wittland Dr area) was built in an area with poor drainage. After a heavy rain the ground stays puddled and soggy for days and days. I would hate to be a homedebtor trying to sell in this area.
Got 10% down?
agricultural pond?
ewwwwwwwwwwww
They gave me 120 days notice last week. What are the rules in that case?
whoops. I meant 60 days. I got a kid in first grade my wife is fning pissed.
Thanks for the link, I found, and then cut-and-pasted relavant information into an e-mail to the owner (she is trying to not follow, showed house today without letting me know in advance).
She will be pissed tomorrw.
Okay, let me explain it a little better this time. Your landlord has to mail you a notice of his intention to sell 120 days before he plans on putting it on the market. If he doesn’t the following rules apply: each and every time he shows the place he has to mail you or deliver in person a 24 hour notice to enter the place. the notice has to state the day and time the realtor enters and the realtor also has to leave their card. They may only enter during normal business hours, that is Monday-Friday 8-5, no weekends or evenings. The only real difference with the 120 day notice is that the realtor can give you the 24 hour notice with a phone call. All the other rules still apply. There is also a 2000 dollar fine per incident if the landlord tries to harrass you.
I would not under any circumstances allow them to put a lock box on your home. It is a security risk. I didn’t allow it and boy am I glad I didn’t because they tried to enter without notice while my teenage daughter was home alone. You also do not have to leave the house when they want to show it.
Here is the link again to the CA Landlord-Tenant Handbook. All you need to know is right there.
http://www.dca.ca.gov/ It’s right in the Quick Hits.
If China dumps dollars by selling some of the $1
trillion+ of our US treasuries on the market, we will
be in a world of hurt: The Fed will have to
aggressively increase interest rates to counteract the
inflation that will occur or the dollar will tank or a
combination of both.
Its interesting that the Fed stopped reporting on M3
earlier this year, the total supply of US dollars
outside of the country. I wonder why? Anyone up for
investing overseas or buying gold ??
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml
High-yielding foreign govt bonds (9%) available in Icelandic krona and Brazilian reals. Mid-yielding (6%) available in Australian or New Zealand dollars. All these currencies sold off a little bit about two weeks ago and are rising at the moment.
Hello there HBBers! It’s been a long time since I posted here, about 2 months or so, and as a bit player on this illustrious blog it was probably not noticed!
I finally made it out of California and made it back to Pittsburgh after a nice long cross country drive. I do admit that I found Highway 34 through Iowa the most pleasant drive of the trip *gasp*. No seriously, there are some damn rich farmers in Iowa!
It is only after sweltering in the heat here for the last couple of days that I missed certain aspects of the Santa Cruz lifestyle besides the amazing friends that I have left behind. Other than that everything is going well as my wife and I both have jobs here with our gross income only being slightly less than what we made together in California. In addition we have full coverage health insurance paid for by her employer for us both. Not a dime out of pocket SWEET!
It does make me laugh to read about the American Home mortgage going under in SC as I had made a joke about the building they were in before I had left. Anyone that lives in Santa Cruz knows that any tenant in that building will eventually go bankrupt. I don’t think any tenant has lasted more than 4 years in that place!
So what’s up with Pittsburgh? Well housing is cheap but even some owners here are delusional about the value of their houses. We have seen SO many places with typical crappy Pittsburgh additions (you know the type) with listing dream prices. Still this is are where the rent/mortgage ration still pencils out to benefit the mortgage side.
Well the only comment I have to make now is that wishing for China to dump the dollar seems foolish. They have more than enough reserves to cause misery to the rest of the world while insulating themselves from the turmoil. Bad debts in the financial sector mean absolutely nothing to the Chinese government and that sell off would only make chinese goods cheaper! Maybe the boyz and the treasury could absorb them all but who knows?
The day is coming soon when China will not NEED anything from the west that they just won’t try to take. All that “China is your friend” crap spewed on TV during the countdown festivals today to promote the Olympics made me shudder at the outright unsubtle propaganda of it all. What a bunch of pikers. It’s makes me shiver even more that I’m typing this message on and through equipment stamped “Hecho in China”. It may sound “armageddonish” but war with China is a distinct possiblity if the cold war raging around commodity resources doesn’t get resolved through financial terms. Better start hoping that Hank is as much of a China expert as he thinks he is. Just some thoughts, and mostly thoughts by an anti-globalization pundit so take it as you may.
Welcome back to the blog.
I hear you . When I was very young globalization was considered a commie plot that was not to be taken serious . I now look at all the problems globalization has caused and I think back in time and I remember 50 years ago the idea was just not a popular one .
Now when I hear the business talking heads think in terms of global markets and they talk about China threats ,I know a hard rain is going to fall .
Boeing’s new 787 “Dreamliner” jet will have the rudder (vertical control surface in tail section) sourced out of China. (75 airplanes a year @ $190 million each.) China can now use the “threat” of production delays to influence the outcome of issues they may have with us.
Got 10% down?
As a fellow anti-globalization pundit, I agree with you. But war with China is not gonna happen. Hell, we can’t even come up with enough troops to win the war in Iraq and Afghanistan. When China decides to move in for the kill, we’re gonna pull a Clayton Williams. “When rape is inevitable, you might as well lie back and enjoy it.”
Santacruzsucks
Dont know if you ever read the old F**KEDCOMPANY blog from 2000 but your writing style reminds me of a poster named BayAryan.
Nope that wasn’t me, but I do recognize the name. I mostly posted on the Old Man Murray forums in my younger days. Boy there were some great discussions/flame wars on that forum. I was sad to see it go….
China has plenty of internal problems and tons of potential war partners in its own neighborhood. The USA is far more capable of adapting to change and addressing its problems before they get out of hand. I’m betting China blows up while citizens of the USA use their democratic system/culture/values to keep the country healthy for centuries to come.
India will inevitably launch a nuclear war with China within a few years.
Good on ya. Nice to hear from you again.
It’s nice to make a post again as the move has certainly kept me busy for a while!
“The East Bay’s housing ailments are nowhere near over and are likely to afflict the region’s economy for about another year and a half. That assessment came Tuesday from a quarterly outlook about the East Bay economy produced by the UCLA Anderson Forecast. The current sluggishness in the region’s job market will persist through the end of 2008, it said.”
*********
Since the Anderson School continually missed its local projections for the Bay Area following the dotcomb implosion, I’m going out on a limb and predicting they miss this one, too.
One should at least double the length of time for every guess they make, unless of course, Bernanke does a Greenspan and fires up the helicopters.
Where oh where is txchick?
It’s time to move out of California. You can’t afford to buy a starter house even with the housing market slumping. Besides California’s future grows dimmer and dimmer with all it’s problems with traffic, overcrowding, illegals and taxes. It a high price to pay if you live in California and it’s all for the illegals, citizens suffer and the state legislature doesn’t care. Quality of life here is bad and getting worse. Lots of people just giving up and leaving the state and it will increase with the baby boomer retiring. It’s sad the native Californians have decided to leave their birth state, but the California dream has died.
Melinda
I hear yer angst & agree a bit with what you say. I also was disgusted at the bad turn California had taken, and seriously contemplated leaving.
As a native, that was a hard thought for me, but what changed my attitude was extensive travelling thouroughout the US in the past 4 years.
As an Air Force kid, I had to travel the world and some of the US, so I definately have seem some mileage,and was glad to choose CA as my place to put downpermanent roots back in ‘99 . . . and like you, I saw the bad changes over the decades from the 70’s on up to today.
However, I have to say this: as bad as CA is now, it’s still better overall for the average citizen than many parts of the country.
Each person has his or her values, and if yours lie elsewhere, than I wish you well in finding yer peace n harmony, but again, I have noticed a big, big difference in California compared to many other states.
NO CA is NOT perfect … no way at all .. it just suits me more than other areas. Maybe the fact that I live in N. Cal. makes a difference, in fact I’m sure it does as it seems Northern & Southern CA have a very different mindset. Thats what amuses me when I see people rail against the “California mindset”, “CA equity Locusts”, etc,, etc.
Thats not me, nor anyone I know.
I just really enjoy the variety of scenery, the climate & lack of humidity, and general absence of prolonged snow. I guess if you are more of an indoor person you can hang yer hat anywhere, but I am an outdoorsman.
I try not to let it go to my head as other places are paradise for other people. I just grit my teeth at the bad & try to carry on, hoping and helping in my own way, to try for a better tomorrow.
As mentioned before, as a fomer military kid, I’ve see my share of moving, and I’m ready to settle down, so I figure if I leave here I’ll never stop running.
This is where I make my stand. This is where I make my home, come what may.
Apologies for the soapbox - - - - have a good one & best to you Melinda whatever you decide.
It’s time to move out of California. You can’t afford to buy a starter house even with the housing market slumping
Jeez, have a bit of patience. Prices only just started dropping - of course they haven’t reached sane levels yet. It will be another story altogether in 4-5 years.