More ‘Ill Omens’ For The Housing Bubble
Reuters reports on the loan volume numbers. “U.S. mortgage applications fell last week to their lowest level this year despite a marked drop in interest rates, an industry trade group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended March 17 decreased 1.6 percent to 565.0 from the previous week’s 574.4, its lowest level so far this year.”
“The group’s seasonally adjusted index of refinancing applications decreased 0.6 percent to 1,574.5 compared to 1,583.6 the previous week. A year earlier the index stood at 1,894.4.”
“The MBA’s seasonally adjusted purchase mortgage index dropped 2.3 percent to 393.6 from the previous week’s 403.0. The index was only a few points above its two-year low of 391.7 reached during the week ended February 10. The index was also below its year-ago level of 446.4. The index, considered a timely gauge of U.S. home sales, was also below its year-ago level of 446.4.”
“Historically low mortgage rates have fueled a five-year housing boom, helping support the U.S. economy’s recovery from recession despite uncertain business investment. Despite last week’s rate drop, most analysts say that mortgage rates are on the rise. While they may differ on whether or not there is a housing bubble, most agree that the market is now cooling off from its record run.”
The Canadians look at the trend. “The downdraft has been gentle, but the winds have finally shifted in favour of a cooling U.S. housing market, and worry about a slowdown in consumer spending is mounting. ‘We knew that the market was flying too high for way too long,’ economist Beata Caranci said.”
“Ill omens have been building: Housing construction fell in February, the inventory of unsold homes has risen, and indicators of home-builder and home-buyer sentiment have turned down. As for mortgage applications, Ms. Caranci said the index has fallen a little less than 20 per cent since hitting a peak on June 10.”
“That seems like a mild slip compared with refinancing activity, which has tumbled about 50 per cent since its peak last summer. Ms. Caranci said the more muted decline in mortgage applications is ‘as positive as we can expect;’ It means that the air is coming out of the U.S. housing market slowly, at least so far.”
“Just as expected, Ms. Caranci said, numbers are declining faster in the U.S. West and Northeast, where economists saw more evidence of frothiness. A more significant harbinger will be tomorrow’s report on existing home sales. While housing starts and mortgage applications tend to swing wildly, Ms. Caranci said that the much larger and less volatile resale market has certainly come off its peak.”
“Ms. Caranci expects the downward trend in prices and transactions that have been seen for about five months will continue. Prices have remained more stubborn, but the number of homes changing hands has fallen markedly.”
“Meanwhile, Merrill Lynch & Co. Inc. has been monitoring how the slowdown in the real estate market is influencing Wall Street. Executives at some of the big brokerages say revenue from mortgage bonds in that $6.9-trillion (U.S.) market is dropping as rising rates depress home sales. Moreover, Lehman Brothers is cutting nearly 200 jobs at two home-lending units in California.”
Some foreclosure numbers out this morning too. Check out the table at the bottom for state by state changes.
‘117,259 properties nationwide entered some stage of foreclosure in February, a 13 percent increase from the previous month and a 68 percent increase from February 2005. This is the third straight month the U.S. foreclosure rate has moved higher, and it’s the second straight month new foreclosures have topped 100,000′
A 538% increase in households in foreclosure in Massachusetts from Jan to Feb? An 899% increase in Connecticut? Are these numbers subject to a lot of variability, or is that a significant omen? Remembering yesterday’s article about 27% of Mass households spending more than 50% of gross income on housing …
The market is nearly exactly following the 1989-90 script.
The resulting REO sales are going to destroy comps. Those who have been able to refi their way out will be cut off. We’ll be hearing a lot more of the ABC stories this year as more ARMs reset.
A mortgage company nearby just closed down. During the boom there were at least 30 fancy cars in their lot each day. Brand new Ferarris, MBZs, BMWs, Porsches, etc. Young kids making 250K+/yr. I wonder where the money will come from to pay those monthlies now?
Maybe my students will start coming to class again, now that six-figure RE opportunities for pre-college graduates are drying up.
They won’t pay. They will more than likely have to give them back. That’s what happened in the dot bomb era. A friend of mine picked up a very nicely cared for 320SL because it was a give-back by someone who needed to pay Uncle Sam.
BayQT~
RE: ABC story on foreclosures…
Did you see the size and masonry build quality of those homes in that foreclosuree’s neighborhood?
Winding staircases-TEXAS STYLE!!
Yeah, like I got allot of empathy for these people.
Remember, foreclosure is a fairly uncommon result so if it goes from 10 to 90 that’s a whopper of a percentage increase when it still might be in the noise as far as aall households are concerned.
Expect to see a lot of these eye-popping percentage increases in foreclosure reporting if the downtrend continues.
look at the per household numbers. MA has over 3 million homes so 370 in a month isn’t much.
Hehehe…MA-This state wants to tag small businesses who do not provide health insurance for their employees with a surcharge to pay for all the illegal immigrants cloggin’ up the ER’s and runnin’ the state’s subsidized healthcare tab skyhigh.
The younger workers who provide the generation link to pay for the welfare entitlements and lavish public employee pensions are bailin’ left and right…
Abandon hope all Ye who enter here…
Speaking of foreclosure. This story led ABC last night.
http://abcnews.go.com/Business/story?id=1750615&page=1.
Their numbers are pretty wicked for home loses between now and 2011
Boo hoo. Hideous Hiedi, another NYC slimer who’s eyes got bigger than her wallet. Where do they find these people? Where do they come from? Do they ever run the fukking numbers BEFORE signing?
i have posted this once before, but my search for motivated mortgage brokers is still on. i have talked to a few yesterday, but didn’t hear desparation in their voices…
Mortgage broker told my realtor this morning things were deadly slow.
WTF should things be slow. The posted mortgage rate at my BofA branch yesterday had 30-year fixed rates at 6.3 w/ 1.5 points. BB’s way, way behind, LMFAO…
Looks like the musical chair game has finally stopped.
Suckers have all been fished out of the pond.
hd74man:::: yeah as I like to say!
Its harvest time for the bankers….as they foreclose - resale foreclose -resale- foresclose and resale. Always at lower property values and higher interest rates.
And this time is different they get to lien your property on your credit card defaults while they charge you 15+% So they can foreclose and resale! As the lemmings go to market!
As any knowledgable Realtor (TM) can tell you, foreclosures always go up…
I want to thank yesterday’s postee’s for the ABC site. Here in Salinas we do not get ABC tv even with satellite. OT, but yesterdays info on Boston suggests that the ‘Bust’ will come in the low end housing first. The poor, the immigrants, and the low income are stretched further than any other group. They not only have their mortgage but have been the bigger buyers of large screen tv’s, expensive cell phone contracts, cable, cars on lease, etc.
I just love the thinking (moral) associated with the ABC story, next time I’ll buy a fixed rate mortgage…..not I will not buy more than I can afford!
i dont think it is like that. she bought more than she can afford because she went for adjustable. Therefore, had she gone for fixed, she would have qualified for lesser mortgage and hence smaller home
But that’s exactly why the big moral teardrop is so, I don’t want to say funny, but off the wall … this woman thinks that she somehow got screwed, that she made a mistake that anyone could make, and that if she could just go back in time and replace her ARM with a fixed-rate mortgage, everything would be fine and her husband would still love the house and her dogs would still love the house and it would be her dream home. Everything could be just fine. Damn you ARM …!
look when Alan kept rates @ 1% for 2yrs, and JOB - Japan equivalent is now in its 10th year @ 0% …Why wouldn’t unsophisticated people believe or hope it will continue for ever! $1700. to $3000 is substantial…What a messssss coming down the pike. Theses people were preyed upon (period)…A flipper or seculator trying to get rich..deserves no mercy.. but Hiedi does! IMO
Or probably not quallified at all.
You can’t tell me that the women did not know that her payment would go up 40% . Did you see how big that house was ? She wanted to get in on the appreciation of home factor . Everybody else is making money , I want my share .
I didnt feel sorry for this women at all .
You can’t tell me that the women did not know that her payment would go up 40% .
It’s very possible that she didn’t. Americans in general are terrible at math. I’ve heard anecdotally that quite a few people believe that if interest rates go up 3%, then their mortgage will go up 3%.
People just don’t run the numbers when making the biggest financial decision of their lives. It’s astonishing. They’ll do more research shopping for a digital camera than buying a half-million dollar house.
they should be shown by the lender how the truth in lending disclosure works. and sign it with a notary present.
I think it’s the same sort of thinking that leads people to ‘invest’ in the lottery (say $10 per week), rather than taking that same $10 and truly investing in an IRA.
Whether it’s playing ‘powerball’ or home equity appreciation, one sees the same human emotions at play. Afterall, scoring a big lottery win or hundreds of thousands in home equity appreciation is both exciting and requires almost no work. Besides it’s so much fun….until, of course, you get kicked out of your home by the lien holder or have to eat cat food because there’s no savings for retirement.
I’ve often wondered why it is that basic financial skills aren’t taught at any educational level in the U.S. Unless, of course, such information is at odds with our consumer-driven economy.
And even if she did know that the number might go up, her realtor/mortgage broker probably told her she could just refi to a fixed rate later, or take out a HELOC, etc., etc.
Forgot to say, “Oh, by the way, this assumes that your husband doesn’t lose his job.”
A classic Harvard Business Textbook example of
the instant gratification, gotta-have-it-now
culture we live in.
The social pressures to conform and become
part of ‘the group’ are enormous.
The result: Unsustainable lifestyles financed
by debt, without any sense of when the day
of reckoning will finally come.
Real life personal example: I live in Irvine, Ca. (Orange
County). One of the nicer neighborhoods (Woodbridge).
Came in to work at 4:00 am this past Monday. (still dark
outside). Stopped and questioned on Yale loop by Irvine
Police Dept. because I ‘didn’t fit into neighborhood’.
(I drive and old Chevy truck). If I drove a Hummer or
BMW I never would of been stopped.
No kidding. True story. 2 days ago.
Conclusion: Even Irvine PD thinks everyone in Irvine
be rich ’cause “everyone” drives a Hummer or Beemer.
Footnote: I wonder how long it will be until
‘unsustainable spending ruined by life’ stories
hit TV’s Dr. Phil?
This is for octal77’s comment:
“…Came in to work at 4:00 am this past Monday. (still dark
outside). Stopped and questioned on Yale loop by Irvine
Police Dept. because I ‘didn’t fit into neighborhood’.
(I drive and old Chevy truck). If I drove a Hummer or
BMW I never would of been stopped.
No kidding. True story. 2 days ago…”
Glad you warned me. I drive occasionally past Yale loop, in a 1982 Volvo. Definitely would be suspicuous to OC LE.
I’ve heard similar stories from renter friends in Ladera Ranch. Driving home at 10pm in a older civic, stopped by the police because it didn’t look like they lived in the area. A week later another friend was leaving their house and the same thing happened.
Not only do our police have nothing better to do, their conditioned to believe that every 20 something must drive a bmw or he’s a lawbreaker.
In my area of Contra Costa County CA, If you are white you had better be in a new car or you will be pulled over. If you are in an old car and don’t want to be pulled over you had better be Hispanic and in a gardener/maid/laborer uniform
I used to work within a mile of Yale Loop in Irvine. My 1993 Lexus SC300 with 117,000 miles looks like a new car. Never been approached by police in it anywhere. They can’t tell what year it is. Stealth vehicle!
Watch out if you drive through Huntington Beach or Newport Beach. They are the most aggressive. I know from experience from outside and inside.
I seriously doubt that many of the recent subprime borrowers with 103% financed I/O option ARMs had a clue about the issue of resets covered on the Money & Investing pages of the WSJ. For instance, do you suppose that the lender warned her that a 1% increase in interest rates on a $500,000 home would cost her an additional $5000 a year out of her $30,000/yr paycheck? Puh-lease!!!
(Oops, sorry — I forgot about the fabulous tax benefits of the home mortgage interest deduction. Nah, scratch that — she doesn’t itemize…)
Former Boston area girl here. In 1999 we were looking at $1500-$2000/mo rents for 3 bedrooms in burbs which you need when you have kids. Low incomes may have figured buying would at least stop the escalation in their housing prices. You have to live somewhere.
Yep, I see lines of ‘em at Best Buy every time I go in.
Always, look they got don’t have a pot to pizz in, but that new 52″ inch Plasma is sittin’ in the shoppin’ cart ready to be checked out.
My heart bleeds…
KB Homes announces earnings tonight after the bell, for the stock-watchers. Also Feb Existing Home Sales on Thursday, then Feb Home Sales on Friday.
All that controversy about Canadian timber? This will cease to be a problem. The housing mania has been feeding the trade imbalance for many things, including lumber. There will be lots of unemployed lumberjacks in BC this time next year.
Ditto for Peak Oil (it takes lotsa oil to fuel a construction mania in both the USA and China…)
Lou M- - Lumber issue..if you check the major railroad lumber shipments reported each week (tues?) you can see YOY raw forest products down 25+% thru March17th… you do the housing/jobs math!
Gstucco- Oil & gas production lost from Katrina in the Gulf….much of the platforms knocked out in August still off line(not economical below $70 /barrell to rebuild…shortfall around 24% of total 2005 production for the Gulf region…How prices below and gas &oil inventories up since 8/25/06 catastrophy is a mystery! Impact on GDP? see details
http://www.UrbanSurvival .com
Everyday we hear about people losing their home’s to forclosure, yet there is one or two people on this blog that insist on not waiting any longer to buy a home. My answer to this is go BUY your home and enjoy, you dont need to be on this blog since everything thing on here is fringe society.
Fringe society??? What are you talking about?
What I’m referring to is no one believes that the bubble is coming, now it is finally coming out in the general public. I have had discussions with people in the past who referred to the bubble as a fringe belief.
I still don’t understand what you are saying… Are you saying that “bubble” is mainstream news now? Then what are the “fringe” people discussing about these days? Thanks.
Actually I spoke with friend who’s husband is in insurance risk and Dad is former stockbroker. She said her Dad has been saying similar arguments to those made here for years….and that her Dad thinks our generation (now 30ish’s) is responsible for the worst damage ever done to our country due to our irresponsibility. Unfortunately, last 20 years no one has equated age with wisdom. My parents had spending wars themselves….but how many parents will look at us in a year or 2, sadly shake their heads and think….”told ya so”
Well, many of our parents share as much or more of the blame for building this pyramid up.
If any generation should be blamed for the bubble (and dotcom bubble), it’s the boomers (of which I’m one of).
But I think there are bozos in every age group which has contributed to these messes. There is plenty blame to go around.
Realtrolls (TM)= maximum fringe, and soon-to-be unemployed…
accroyo- yes we may be fringe…BUT
There is always someone out at the top - why not us?
a realtor’s 15 minutes of fame
The volume of real estate sales in December 2004 was down 20.7% from December 2004. However the average property sale price was up 2.6%. Year-to-date: Sales volume is down 9.3% Total Sales Volume is down 4.4% Individual Sales Value… MORE->
About Nancy L. Clayton
Really, if I had to pick a signal for the absolute top of the market, it would have to be the HGTV “Filp This House” program. Once the program hit mainstream TV it was all over. Same conclusion when grannys formed investment clubs to buy NASDAQ stocks.
Yep — just like when they came out with trading cards featuring venture capitalists just before the end of the dot-com mania.
The Beardstown ladies was a classic — an investment club of 16 senior ladies, who served up a mix of investment advice and tasty recipes. Their investment picks were widely touted as beating the pros, until it was discovered that their ‘gains’ included not only those in their stocks but also their club dues.
The speculative fever was impressive when the Beardstown ladies were riding high, and I think they even had a regular spot on CNBC. Now few people can even remember them. Probably this will be the case for all of today’s RE flippers and enablers. As Trotsky is quoted: “Fortunately, history anesthetizes those whom it intends to destroy.”
“U.S. mortgage applications fell last week to their lowest level this year despite a marked drop in interest rates, an industry trade group said on Wednesday.”
Shades of Japan, circa 1990.
The main stream media is still reporting the BOOM/BUST question as
a ARM loans problem ,( that will be solved if people go for the fixed).They are not addressing the GOLD FEVER problem , false markets problem, prices out of line with rents/jobs ,etc. issues .My guess is its a topic to hot to handle right now .
The media have to keep some of their powder dry, so they can keep the discussion about the unfolding woes of the housing market going for years into the future
OT, but maybe $54 is a good plunge protection level for FNM after all, as the share price rocketed back up to that level this morning after a severe pummeling yesterday afternoon. This suggests a volatility play: Buy out-of-the-money puts and calls on Fannie, and let the PPT help you make some dough. Any hedge fund experts out there who think this sounds like a good plan?
P.S. http://tinyurl.com/cw3zt
“Meanwhile, Merrill Lynch & Co. Inc. has been monitoring how the slowdown in the real estate market is influencing Wall Street. Executives at some of the big brokerages say revenue from mortgage bonds in that $6.9-trillion (U.S.) market is dropping as rising rates depress home sales. Moreover, Lehman Brothers is cutting nearly 200 jobs at two home-lending units in California.”
So how many of you are going to cry for these poor Investment Bankers whose bonuses are going to drop from 5 million to 4 million. I hope the layed off bankers didn’t have big mortages.
Simmssays…
AmericanInventorSpot.com
I don’t feel sorry at all. These people take huge risks and then when it hits the fan, they want responsible people to bail them out. Screw that. Flippers can eat ALPO for all I care.
getstucco, peak oil is what?
John Law, I have only six things to say to you (off the top of my head):
1) Statisticians will tell you that it is very hard to draw an inference from a sample with only one data point.
2) Resource economists have long pointed out that the rate of finding new oil reserves depends heavily on the market price, and that proven reserves tend to keep materializing over time, much to the chagrin of those who made their careers by sparking concern that we would soon run out of oil (Meadows and Meadows - Limits to Growth).
3) Last I heard (maybe yesterday afternoon) the Chinese were negotiating a deal with the Russians to build a pipeline in order to help quench their growing thirst for black gold.
4) Someday history will prove the Neocons right, the Iraq war will end, and Iraq will come back on line at full production capacity. Ditto for other war-tarn regions of the world which are temporarily producing below capacity.
5) When (not if) the conundrum ends and easy money to fund investment in housing (USA) and all facets of modern economic infrastructure (China and India) dries up, so will real oil demand.
6) Speculative demand for energy which has driven the oil price bubble will dry up with the construction boom which fueled it.
none of what you said really has to do with the major point of peak oil. oil production is in decline in a lot of major fields and we’ll never produce more oil than we have been right about now. there is some demand that will go down when the bubbles burst, but china and india are on the march towards becoming a world economic powerhouses. they will keep consuming oil at higher rates. demand for oil is outpacing supply.
hubbert made his career predicting a peak in US oil production and he was right. now people familiar with his work say the world peak is happening about this time. now it looks like the same is happening in Saudi Arabia, the North Sea and Mexico.
I forgot to mention:
7) There are unforeseeable backstop technologies which tend to emerge just when it looked like we were going to run out of oil (don’t notice many buggy whip firms around these days, do you?)
a) feedback effects (no more bubbles, no more Peak Oil)
b) wave motion (any trend which is not sustainable will stop)
I enjoy your real-estate posts but disagree wholeheartedly on Peak Oil. I would pay more attention to the petroleum geologists on this issue, and less to ‘resource economists’. The major oil companies are quite honest in their assessment of proven reserve life. You can find these statements in their SEC filings. Peak oil, unfortunately, is now accepted geologic fact.
I don’t think I’ll be selling my oil shares, just yet.
The best blog holding debates on “peak oil” is http://www.theoildrum.com , with many oil/gas professionals (note, not ‘economists’) participating.
Even if we’re not at ‘peak oil’ just yet, there are little or no reserves built into the system. That is why threats of disruption have such a big impact on the $ per barrel price. Just this past week, when George W. reiterated his ‘preemptive strike’ policy and began saber rattling against Iran, the spot price for oil jumped ~2-3 dollars per barrel. If the neocons are so foolish as to launch a preemptive attack against Iran, oil could easily go over $100 per barrel, as the system could not afford to lose their 3+ million barrels/day even on a short-term basis. And, of course, hurricane season is starting up again, with the promise of Katrina-level hurricanes again hitting the Gulf coast, where lie the bulk of our domestic oil and gas production and refining capacity. The last time I looked, 20% of the Gulf oil/gas production was still shut-in, and not likely to ever be restored due to high recovery costs.
Getstucco makes a rather whimsical argument that some other energy source will come to the rescue. These deus ex machinas require real dollars, yet George W.’s next fiscal budget has only major cuts for research into energy alternatives.
1) It does not have to be $US that will fund the R&D…
2) You are confusing long-run and short-run outlooks. We will not run out of oil in the near term, and the current perception that we are at the point of Peak Oil repeats exactly the same mistake that was made in the 1970s, when a short-term squeeze on supply (due among other reasons to OPEC’s inauguration, the collapse of the Bretton Woods fixed exchange rate regime, Nixon’s price controls (remember gas lines?!), and easy money from our Fed) was misconstrued as a sign that we were running out of oil. A more likely outcome than the end-of-the-world view you fellows seem to prefer is that (1) BB will look much more like PV than GWM; (2) like in the 1980s, oil prices and the speculators who have bet the farm on them going up forever (kinda like flippers) will be a casualty of monetary tightening over the next six years.
‘The best blog holding debates on “peak oil” is http://www.theoildrum.com , with many oil/gas professionals (note, not ‘economists’) participating.’
No economists? In that case, I will run out and buy some oil drums today…
P.S. Another stupid mistake you are making: Assuming the opinions of oil/gas professionals as evidence of credibility for predicting where the market is headed. Can’t you see the similarity between this assumption and one we have discussed at length here: The myopia of many RE professionals which leads them to funnel their gambling winnings back into anti-diversification investments in residential RE? I guess those connections are hard to make if you are not an ‘economist’…
I am curious. When you say we will not run out of oil in the short-term, what is your definition of ‘run out’ and ’short-term’? Peak oil theory actually says we will never run out of oil. As for the time frame, most oil companies have proven reserves of 7-12 years. After that things get interesting. As for where the market is headed, most traders price oil in one year at $67 per barrel. Researcher estimates I believe to be credible price oil at $150 per barrel in four years. Of course, these are not economists. They actually put their money on the line, so I give their opinions more weight than statements by economists.
I have THE BEST story about a conversation I overheard last night at a Subway in West Hollywood next to the Beverly Center. Two flipper “partners” going over the numbers for a flip that obviously went bust and just sweating about it. It was AWESOME. The guy is talking about all the other houses he has in the area, saying ‘i don’t know what i’m gonna do’. I wish I had time to post the whole conversation - I will later.
Let me tell you - It’s really happening!
Here you go,
So, I stopped at Subway last night after work to have a sandwich. I walk in, and right away I notice two guys at the corner table going over some paperwork. One is a bald, meat head looking guy in his 30’s, the other an older Mexican fellow (please excuse the racial idicators, merely for visualization only). The bald guy is frantically shaking his leg and biting his lip, while the other guy sits looking unsatisfied with his arms crossed, slumped in the chair.
My first thought was, “ah, someone is trying to sell someone a mortgage”. The guy was talking very loudly, so it was not hard to listen in :
” Right here, here are all the figures….$20,000, from my own pocket. Here’s $93,500…..from my home equity line. Here’s $2500 on the Home Depot card, here’s $3000 on the American Express, here’s $6000 paid to labor, here’s a payment to the Equity line, here’s $2500 I gave you before you went to Mexico for those 2 weeks. The figures are all here. (turns the page), here it is again. (goes over similiar figures.)
This repeated several times, all with the guy reading the figures looking shocked and nervous, and the other guy angry :
“I don’t have a dime in my pocket after this project. I know you worked hard, but I put a lot into this project too. Every since November, I’ve put a lot into this. (goes back into figures) “Okay, okay, here it is again….$20,000 out of MY OWN POCKET, $93,500 from my equity line of credit, ….” (rinse, wash, repeat)
I finally get my sandwich and sit down next to them.
“I’m telling you, I don’t have a dime in my pocket, the transactions are all here. We were 50/50 partners, if you made $40,000, I should have $20,000 in my pocket
(other guy) “I dont have any money”.
“I don’t have a dime in my pocket after this project”. (furiously shaking his leg)
He keeps going over the figures, again and again. I am almost finished with my sandwich, then I hear :
“I don’t know what I’m going to do, I didn’t make a dime off of this project. I’ve got 2 houses over there (points toward West Hollywood), I’ve got that house on Stanley, I think I can rent it out. (pauses, bites lip, shakes leg furiously….. turns page, begins going over the figures again).
This continued, I went out to my car, called up a fellow housing bear (whose brother owns over 20 properties in San Diego w. Option ARMs (renters pay the MINIMUM payments)). As I backed up and left, he was still buried in his spreadsheets, reading the transactions to the other guy.
I WISH I had it on tape, it was classic. I thought that all of you would appreciate it. I so badly wanted to mutter ‘the real estate market is dead’, as I left - but I couldn’t get myself to do it.
“Two flipper “partners” going over the numbers for a flip that obviously went bust and just sweating about it. It was AWESOME.”
Their entire financial wisdom was learned from Flip That House. I wonder how many flippers that show has inspired. Twentysomethings driving Mercedes standing around gloating while hired help does the actual refurbishing labor.
I have a friend at work doing it. Everyday at lunch he goes home to check on the house. He has his Mom oversee the crew.
It’s gonna be interesting as to where everyone is going to find work once this real estate sector collapses.
Self-employment in real estate has always been the last act of desperation for most people.
Oh well, looks like applications will be up for Wal-Mart greeters and Mickie D order takers. Or you can take a slow boat to Pakistan to work the customer service telephone lines.
Somehow I see a disconnect between wage levels and $400k starter homes…
I recommend Big Box Mart…
http://jibjab.com/Home.aspx
Or, in the case of all markets within California, a major disconnect between wage levels and $600k starter homes.
http://abcnews.go.com/Business/story?id=1750615&page=1&business=true
http://www.cbsnews.com/stories/2006/03/21/business/main1427300.shtml
http://www.detnews.com/apps/pbcs.dll/article?AID=/20060320/BIZ03/603200360
http://www.usatoday.com/money/perfi/housing/2006-03-16-mortgage-delinquent_x.htm
The lender foreclosure units should make the sleazebags responsible for the loans on these dumps to clean the places up themselves.
If we can hedge the housing bubble now, doesn’t that mean we priced-out renters ought to hurry up and go buy one?
—————————————————————————-
Hedging the housing bubble
S&P to launch home-price indexes; CME derivatives next
By John Spence, MarketWatch
Last Update: 11:37 AM ET Mar 22, 2006
http://tinyurl.com/s66za
nobody is say we’re running out of oil. what people are saying is the rate at which we can produce oil is peaking. it peaked in the US decades ago, even with new technology.
if you don’t think oil production can peak, just look at peak whale oil. production peaked and the price never went down below it’s price levels when whale oil production is peaking.
if there simply isn’t more oil out there it won’t be found, no matter what the technology.
Whale oil is analogous to my buggy-whip reference above; a technology which was abandoned when it became too expensive to utilize. The same thing is likely to happen to petroleum when the time is right. I cannot yet predict what will replace it, but there are lots of smart Indian, Chinese, and European minds who collectively will find a way. The older I get, the more I realize Julian Simon was on to something. (Pick up something he wrote when you get tired of reading what Peak Oil gloomsters have to say…)
Have you made any financial bets against Peak Oil? It is quite easy; you can simply short oil stocks, or sell oil contracts for the future. I wouldn’t be so quick to discount buggy whips, either. They are going to be a growth business, as Peak Oil will demonstrate to the doubters.
The interesting thing about oil stocks is how closely they’ve paralleled the $ per barrel of oil. The ones that I track are Occidental Petroleum (oil), ConocoPhillips (oil), Equitable Resources (natural gas) and Halliburton (oil services & ?). The %$ rise in a barrel of oil over the past ten years matches almost precisely the % increase in share price for this basket of energy stocks. So, indeed, if you were convinced that oil/gas was in a bubble, shorting these stocks (or other energy stocks) would be the way to go.
With the world’s three major superfields recently having gone peak (i.e., Saudia Arabia’s Ghawar, Kuwait’s Bergen, and now Mexico’s Cantarell (as noted by John Law)) and demand still at an all time high, however, my bet is that oil still has room to go higher….. in the long term.
There are likely bigger problems before we run out of fossil fuels. More and more evidences show that the Earth went through several positive feedback loop of global warming before. When the Earth warmed to certain temperature, some methane seabed melted and was released to the air and methane is a 21 times more powerful greenhouse gas than carbon dioxide. So the Earth was warmed even more and got into the feedback loop until all the methane on the seabed was released.
During the positive feedbacks loops, the oxygen level dropped from around 30% to 10%. Now almost all the ice sheets are melting faster than anyone has ever predicted and if we don’t break the feedback loop, most mammals won’t survive. The high temperature and low oxygen level might contribute to the domination of reptiles.
This is one of the two top news stories for today in the Business section of CNN’s website. Effectively, a “real estate futures market” — as if we needed further proof that America is a nation of degenerate gamblers. Happy reading:
http://money.cnn.com/2006/03/22/real_estate/playing_the_home_price_market/index.htm?cnn=yes
great flopper story in LA. It would be great to catch a lot of flopper conversations, and record or capture with video camera. especially since many cell phones now have recorders and video clip captures.