Bits Bucket And Craigslist Finds For September 3, 2007
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Happy Labor Day, campers. Let us give thanks that we have one more blessed day before the idiots in Washington REALLY get cranked up about a bailout. What makes it even more deadly is the fact that it is now also a campaign issue. Nice!
What makes it even more deadly is the fact that it is now also a campaign issue. Nice!
Everyone should write each candidate and tell them they won’t vote for anyone supporting a subprime bailout. If they get enough mail, they’ll move onto some other issue that won’t lose them votes. They’re only playing to the masses, and I don’t think they realize that the mass in this country wants no bailout.
I hope the R-can hopefuls get a clue and start calling out the D-rats on the folly of bailing out fools.
“me no subprime”
http://biz.yahoo.com/rb/070903/economy_credit.html?.v=4
“SINGAPORE (Reuters) - Key economic data from the United States this week may seal the case for the first cut in the federal funds rate in more than four years, which would help ease investor concerns about a fallout from the subprime crisis.”
Me thunk the latest GDP figure was ’stronger than expected’ and in excess of the Fed’s inflation-neutral speed limit (usually thought of as something like 2.5 percent). If 4 percent GDP growth is not sustainable, then I guess the Fed ought to be contemplating an FFR tightening to take away the punch bowl before they let inflation go back up to late 1970s levels?
I hope you mean 1979 levels… >14% mortgage rate
Thats where we are headed if the Fed decides to fully pursue the respiking path (in response to Cramer’s mad rant…).
Massive NY Times magazine article on foreclosures leading to vacancy and falling prices leading to rising taxes and service cuts leading to middle class flight in Ohio, and the nation.
http://www.nytimes.com/2007/09/02/magazine/02wwln-lede-t.html?ref=magazine
In reality, this is just a sympton of excess supply. Inner suburban neighborhoods like those profiled have lost out as people moved to McMansions in the Cleveland area, where traffic is light and the economy is bad. In other places, it is the McMansions that are being abandoned.
The houses have to be sold at market rather than held vacant and allowed to deteriorate. The result, in non-price-bubble markets, will be affordable housing. It could be that formerly middle-class towns become working poor, and former upper middle class towns become middle class mixed race, but that’s the way it goes. It certainly isn’t bad for everyone.
Towns becoming middle class is bad? It’s great. I work for a small manufacturer. About 1/2 of our business is exports. At least one of the assembly guys can’t afford to buy a house in the area. He’s really good and it would hurt the company if he left the area.
Affordable housing for blue/pink collar workers is CRITICAL to our economy. The higher level folks (engineering, sales, management) need these guys to be successful. Long Island needs more of this sort of housing. A housing price collapse is good for the economy.
A housing price collapse is good for the economy.
In the long run, absolutely. Provided the underlying economy is strong. Even though Rust Belt prices are cheap and falling, the underlying economy will not recover until manufacturers and workers quit doing things the old way.
And on top of that we need to focus this country’s efforts on training more people to be middle class. We have a dire shortage of skilled tradesmen in this country. Machinists, welders, plumbers, etc. and the problem is only getting worse. Our “send all kids to college” mentality is completely asinine. We need to get more vocational and technical training and quit dumping zillions into college student loans. That would help the middle class maintain their middle class lifestyle and help the U.S. compete more effectively globally. A solid base of skilled tradespeople is great for an economy. We don’t need any more sociology or psychology majors.
I actually think being a plumber would be a pretty sweet job:
1) You can never be outsourced
2) You’re not stuck working at the same place day-after-day
3) Each job is a new problem to solve.
If it wasn’t for your plumber where would you go?
But it can be “insourced” by illegals.
My dad was a plumber for 40 years. While there were always toilets to unplug, he made his money in the 60s and 70s in new construction. When the construction industry went south after 1975 he had a terrible time finding work.
The number of plumbers expands as construction expands. When construction declines, all the new plumbers compete for the remaining jobs, creating cronic under-employment for everyone in the trade.
Plumber’s CRACK is not a drug.
“We have a dire shortage of skilled tradesmen in this country. Machinists, welders, plumbers, etc. and the problem is only getting worse. “
But it does not help that if you go into those jobs or most others there is the threat that if you don’t except third world wages you will be either outsourced or insourced.
“We need to get more vocational and technical training and quit dumping zillions into college student loans”
Agreed, but before this happens we need a change of heart in our collective value systems. We need to stop labeling those workers as below grade to be condescended to and start treating them like the valuable and necessary cogs in the wheel that they are. People want to have pride in their vocations no matter how humble they might be. Are people with lower paying jobs valued in our society? Are the welder or machinist treated like the stockbroker or lawyer? When we talk about declining numbers of tradesmen, it’s more than about the schools.
We need to stop labeling those workers as below grade to be condescended to and start treating them like the valuable and necessary cogs in the wheel that they are.
College-grad engineers and techs get looked down on plenty in the value system of corporate America. It’s worse for non-grad VoTech people. We have a culture that worships the slick-tongued talker and the corporate politician. People who actually *do* things are considered disposable.
You got it. The honest hard working people are focusing on a project while the credit taken away by a slick dishonest individuals whom are only interested in furthering their career. All they have to do is let others assume they created or sold in a project. Hey you didn’t take credit, so they will. The reason the “people who actually do things are disposable is because they are the only proof that the slick-tongued talker is a lying his a** off and is scared to death of the hard worker.
Our “send all kids to college” mentality is completely asinine. We need to get more vocational and technical training and quit dumping zillions into college student loans.
A-freaking-Men! I have been saying this for a long time. Not everyone is cut out for college ( be the reason financial or intellectual). Some people are far better off learning a marketable trade. There’s a hell of a lot more value in being a good mason or electrician than having another psychology major working as a secretary in some doctor’s office with $50,000 in student loans that need to be paid off.
“Our “send all kids to college” mentality is completely asinine. We need to get more vocational and technical training and quit dumping zillions into college student loans.”
Community Colleges actually have a quite large list of “skilled craft” certificates. Some folks still need grants and loans to complete these certs, as some of them take a year or more to complete…and that’s attending college full-time.
DOC
the number of non-college grad team leaders at Microsoft is quite impressive– voc tech or on-the-job training, then these folks rose through the ranks.
NYC: what you propose will be a another bubble. If everyone proceeds down that route, they end up competiting for the same business opportunity. Look at what happened with Microsoft certification. It was lucrative, then became a commodity. I agree with you that not everyone is destined to get a graduate degree especially if is something like Internet studies with minor in applied frizby throwing.
I’m not proposing a bubble. I am proposing balance. There is no balance in the “college for everybody” mentality. I don’t think we have to worry about a plumber and machinist bubble. Most of these snotty little kids wouldn’t stoop to manual labor, even if they were starving. They would rather get food stamps. Their pride allows them to sponge but not to get dirty.
” Most of these snotty little kids wouldn’t stoop to manual labor, even if they were starving.”
Now that’s what I’m talking about. But they’re like that because of their parents’ attitudes that that type of labor is below them. Like my acquaintance that was proud to announce she’s never once mowed a lawn because she would never be seen sweating. So her 2 boys would ever consider a trade?
I told my son that he might want to consider being a diesel mechanic. I have read that good ones can pull down 6 figures.
Being in a career like plumbing or carpentry is grueling. Most plumbers don’t get to drive around in a van and visit you in your nice house. Most work construction. Hot in the summer, freezing in the winter, layoffs during downturns. Plus it takes a heavy toll on one’s body. You can’t be a plumber for the 40 to 50 years of a normal career. I know a blue collar worker who died of lukemia linked to the chemicals used in his work.
Agreed that these careers need to have a higher stature, but we also need to raise educational status of workers . Are they looked down on because of their career choices, or because many are undereducated? A college edgumacation is an excellent thing to have. What one decides to do with it is the discussion point.
BTW, my brother in law has a masters in social anthropology and was doing work deciphering Mayan hieroglyphs. He became an electrican because of the better pay and greater opportunities to earn a living. He still does anthropology as an avocation and contributes to the field in his spare time….Best of both worlds?
This last week I got a cup of coffee at Starbucks to sit out in the sun and read the local rag to blow off steam after a few rough meetings. The two 18 year olds next to me made me sick. The one guy could not decide on which color Bently to get for his birthday as the one he was driving was last years modle. I only thought to myslef, this is the epiffany the entitlement generation. A few good years of manual labor would do him some good.
I agree with the send all kids to college.
Yeah, so they can come oout with a degree in English, be $120k in student loan debt, and end up getting a waitress job at Denny’s.
A few years ago I stopped in to a Boston Market fast-food place near D.C. A guy I knew from college - one of those asswipes who used to wear a QUESTION AUTHORITY t-shirt and went to school on Daddy’s dime, while he ran around pestering students to sign various protest petitions - was the assistant manager (after six years there). From talking to him, I could tell he’d learned a few hard lessons about life’s realities from his post-college experiences. It was kind of amusing.
I also know a plumber that makes about $5k a week. That’s pretty good if you ask me.
He must own a business, or charge $125 per hour.
In our area plumbers make way more money than any college educated person. There’s big bucks in being a plumber.
Machinists and welders make good money in our area also.
A person can make a living doing long-haul trucking, and that job can’t be outsourced, either… oops. Back in the day, someone who had acquired a great deal of knowledge in, say, fishing, could open a shop for fishing supplies, and make a living. Enter Walmart. Now, I’m not one of those people that slam Walmart for every evil that exists on this earth. I shop there, their prices are low (as is their quality.) But as a society, yeah, we pay a price. That fishing supplies merchant is a livelihood that could exist for someone, and could be a livelihood that is more rewarding than stocking shelves at Walmart, but we have chosen the lower prices and the lower service. Or has someone else chosen, for us?
“A person can make a living doing long-haul trucking, and that job can’t be outsourced, either”
As of September 6th the Bush administration has the OK to allow Mexican truck full access to USA roads.
There go the Teamsters good paying jobs.
that scares the hell out of me for so many reasons
HEY NYCBOY come to Queens blvd Sunnyside there is a line of people around the block CAMPED OUT waiting to fill out applications for the plumbers union on Tuesday….some of these people have been there for days camped out! A half dozen portable toilets boom boxes, all waiting for this chance.
Waiting in line for a union job is the same damn thing as waiting in line for a gov’t hand out. If people want to be free, they’ll market their own plumbing services and stay far away from the union sweat shops.
Paul
I lived here 8 years and NEVER have seen this happen before
2007 APPRENTICESHIP RECRUITMENT UPDATE
Plumbers Local Union No. 1 Trade Education Fund and
the Joint Apprenticeship and Training Committee are planning to distribute 1000 applications on the morning of September 4, 2007 at: Plumbers Local 1 Training Center
37 – 11 47th Avenue Long Island City, N.Y. 11101
“We need to get more vocational and technical training and quit dumping zillions into college student loans.”
Great post NYCB. Maybe if we didn’t call grads of VoTech ed Joe Six Pack (J6P) in such a condesending way as every Ivy League educated and Coastal elite seems to think is appropriate, we could find young people who would be interested in these careers.
Sorry for that rant. Have a great Labor day.
Touche.
I’ve got to rant the other way. Perhaps if we spent some time giving people the basic education they deserve, they could look at a lending market of 2002 to 2007 and see it for what it was, and to look ahead to the repercussions.
In college I learned to question things that were interesting, unclear, or odd. I also gained the skill to find out why they were interesting, unclear or odd.
BTW…Isn’t painting everyone who went to and Ivy League school or is from the coasts as elitist the exact same thing as calling the average man on the street J6P? IMO, generalizations are generally too general.
I agree w/u about generalizations.
However, I’ll bet you are not a recent grad as I now see college as too overpriced and somewhat dumbed-down. Glad I went when I did. Big difference (bad) btwn my undergrad and mba. Much more rigor 20+ years ago. Even professors will admit this offline.
Doubly insulting to get a dumbed down degree AND have thousands in debt.
Ohio is among the top 6, I believe, most heavily taxed states. This is continuously increasing, as for example the Cuyahoga County (Cleveland) just increased the sales tax yet again, this time bypassing the usual avenue of putting it to popular vote.
The local politicians have given up any semblance of improvement of education or city services, as over the last few decades they have become stooges for developers building this or that boondoggle, with taxpayer subsidies to the same old cast of developers.
No wonder people are draining out of the county- jobs plummet, taxes soar, and the politicians could care, as they go only after the main chance.
So sad.
The linked article says nothing about Ohio. It describes lending industry changes that led to poor lending standards, however:
The world began to change in the late 1970s, when Salomon Brothers, in the person of a banker named Lewis Ranieri, pioneered the mortgage security.
“The result, in non-price-bubble markets, will be affordable housing.”
Why not in bubble-price markets as well? I would guess the overvalued inventory avalanche will be far more severe in markets where bubblelicious valuations drove overbuilding to the extreme (e.g., San Diego). The only way I can see for this not to occur is if taxpayer-funded (or future-generation-funded) bailouts are used to prevent the free market from reaching equilibrium.
Housing troubles worsen for the poor (CNN):
http://tinyurl.com/39ro87
Good morning. Just a small observation about one owner/flipper/disappointed almost owner in my area. (Winchester VA)
On the road to the babysitter this past year I have watched a house go up. The owners lived on-site in a RV. I think they were contracting it themselves. The house is finally done, and what do I see last week?
For Sale By Owner!! the Rv has dissapeared too.
I have a sneaking suspicion that perhaps,just possibly, they were unable to line up financing to convert the land/construction loan to a regular mortgage. It would fit, they finished up right around the time that selling Toejam for abig fat profit at the farmers market is more likely than obtaining a jumbo loan.
Oy, and such an ugly house too. Future haunted house club member, the kind where kids dare each other to run up and touch it.
What happened to beautiful? Gracefull? Pleasing? I know this bubble is responsible for a lot of damaging things, but fugly idiotic architecture is one of the biggest crimes. Gosh, I feel better now.
“fugly idiotic architecture is one of the biggest crimes.”
Yes, the attitude is “Let them eat $h!t”. Gulag architecture, I call it. Boiling the frogs by turning up the heat slowly to see how much crap will be accepted by the sheeple. I read an article yesterday about some guy in Connecticut who is building a mansion larger than Gates’ crib. They had photos. Gawd. What a monstrosity.
I think there’s a direct link between size and pleasing exteriors. After a certain point the square footage looks like a commercial buiding.
Is it one of the ones where all you can see as you look at the front of the house is the huge garage doors?
Thye don’t even look like houses to me. More like a storage facility.
No the garage doors cant be seen from the front. That is a plus. Also in their favor it is all brick. Not that ugly three side vinyl, one side brick. All 4 are brick. This one seems solid, and is not as ugly as the look-at-meeeeeecmansions but it is ugly. There is just something about it that makes me go ughhh. I always figured if you are going to live on-site for a year building a house, something that looks good would be a plus.
I think it may be the roof. I dont know what the name of the roof style is, but each piece of the roof slopes up and meetsin the middle, not the regular old two sides meet in the middle and overhan the short sides. I keep thinking of the old romance books my grandma and mom read, with the dark and stormy night, in england or wales, and a woman is running away from a house on a hill. this is that kind of house dark, stark and ugly.
I guess part of the problem is there is no landscaping, and it used tobe an orchard. the farmer still has lots of orchard trees left around the parcel he soldoff and it looks stark. (lots of orchards being ripped up around here fordevelopment. Winchester was an apple capital, now land worth more without trees than with)
I think you’re referring to a “hip” (hipped?) roof. A lot of grocery store houseplans have that complex roofing.
Hips are different from a “mansard” roof, which is the Munster House roof we usually get in the Victorian/Goth novels. Mansard roofs slope up to a flat top (sometimes with a crow’s nest). Hips are still peaked at the top.
I’m convinced all these fugly houses are violating some geometric rule that our eyes are used to. Something is out of proportion. The windows are too small or too flush with the wall, the house is too square, or too tall for its footprint, or something. And all those unnecessary gables! How is it that a gabled Tudor — of any size of style — looks gorgeous, while a gabled grocery-store plan looks horrid? I don’t know!
To be extremely fair, horrendous commercial architecture isn’t brand new. There was a mall near my home town with crenellated walls.
It was ugly, but at least it was funny. The view of the tops of those walls from across the vast suburban parking lot was incredible
“crenellated walls”
Crossbowmen to the battlements! Prepare the boiling oil!
Hi. I like hip roofs. With hip roofs no gables. If you have a frame house better to have hip roof. Shingles last 15 - 25 years vs. painting a gamble. For brick houses the gable roof is probably less exspensive that the brick gable. Hip roofs can look very nice if the proportions are right. But yes the bubble has create some UGLY houses. Yes the ugle commercial architecture is not new. The new de Young museum in Golden Gate park seems pretty ugly to me. It’s as if they could not make it any uglier if they had tried.
TYPO: “For brick houses the gable roof is probably less exspensive that the brick gable.” Should read for the brick houses hip roof … More coffee please.
Happy Labor Day all. Watching Discovery Times and they just did a minute about foreclosures with what seemed like talking points from the NAR. The tag line was something about this being a bubble that won’t burst.
I was just chatting with my sister who lives in the Melbourne area of Florida. She just put her house up for sale because her husband got a new job in D.C. She was telling me about the trials and tribulations of getting a competent realtor. It’s really rather hair raising. The realtor came to her house on Saturday to take pictures for the internet. The first thing he does is asks for a beer, then throws himself down on her couch with a sigh and complains about his horrible day at an open house. My sister, whose husband is already in DC, is looking at this guy like he’s nuts and tells him to please take the pictures because she had someplace to go with her daughters.(she didn’t of course)
This man winded up taking really lopsided pictures, with odd darkened area on them and posted them on realtor.com. I’m thinking the guy had already tied one on by the time he got to her house. I told her for her own safety to either talk to the owner of the realty company or sell it on her own(which is darn near impossible since she’ll be moving to an apt. by the end of the month in another state.)
Not sure what the implications are of drunken realtors showing up at ones house is but it feels significant.
Danni
“compent realtor”
Isn’t that an oxymoron?
apparently it is.
In all seriousness, perhaps I have a very Pollyanna view of life but I can’t believe ALL people from one profession is ALL evil. I’m not saying good people are easy to find but by golly don’t they exsist somewhere ?
Anyone who was a realtor during the last downturn should at least have some coping skills. She needs to figure out when that was in her area and try to find someone who managed to make a living during that time.
If someone who supposedly worked for me came into my space, flopped on a sofa and asked for a beer, I would have fired him on the spot.
It seems to me that this would be enough to break any contract they have.
She should have given him an Old Milwaukees Best.
True, but there is a difference between being evil and lacking competence.
And, in all seriousness, if a realtor came to my house, flopped down on the couch and asked for a beer I would show him the door and look for another realtor. This is a bad market to be trying to sell into… and your sister needs the most help she can get. Doesn’t sound as if she got it.
“… I can’t believe ALL people from one profession is ALL evil.”
They’re not ALL evil, just the ones that were making the big bucks are. The honest ones were left with the crumbs.
Most the honest ones got out, because they couldn’t stand to be on the other side of a transaction with the greedy ones making the big bucks. The honest ones worry a lot about their clients getting screwed by the dishonest ones. I know that’s why I got out. Too much sleeze.
i know a few hardworking, conscientous realtors who through experience, a certain amount of understanding, sensitivity have developed to be extremely worthy of their business and ethics.
Earlier there was some discussion about how important labors should be respected for their real value. Historically real estate has had lots of problems with crooked, greedy brokers, but the realtors have most often been local women working part time vending their knowledge of the area to help buyers and sellers come together. There is real honor to the profession, and those that are good at it can also hold a good conversation about development issues, urbanism, Jane Jacobs and all the rest.
It is absolutely critical when hiring any kind of agent for any kind of service to get references and constantly test agents in various ways and dump them the moment anything isn’t completely right. There are always other agents. To get the property exchange you really want handled smoothly it is necessary not to just pick up any old dregs from the street and to be clear from the start how things have to be.
By being realistic and also very picky I have had a number of excellent experiences with realtors helping myself and others find properties and also steer away from potential problems. A really good realtor will try to prevent bad deals because they get by through their references and return business.
Keeping an open mind and being realistic are also important. One thing to consider is that someone who knows properties the way you would like and can make a transaction go smoothly might not be someone you would like to spend time with outside of the business of property exchange.
In all seriousness, perhaps I have a very Pollyanna view of life but I can’t believe ALL people from one profession is ALL evil. I’m not saying good people are easy to find but by golly don’t they exsist somewhere ?
Understood. The theme here is all or none. Kind of hypocritical when most people here laugh at those who bet their virgin daughters in real estate. A lot of these posters here are going to be the same type of victims in the next bubble as the FBs in this bubble.
I get hated here because I am for moderation.
At least the price of her Melbourne home is rising. That should bring her comfort. It has to be rising because I was told, over dinner, last November that Melbourne prices are going up. This was from a woman that had a cousin that owned in Melbourne. I asked her, “so you are trying to tell me that your cousin owns the one home in Florida that is rising in value?” She stood by her statement. I nearly shoved an osso buco down her throat.
How many meals have we, the logical ones, had ruined by idiotic statements from idiots that are so idiotic?
Good luck finding a decent realtor. It can be like looking for a needle in a pile of needles.
My sister is not so disillusioned to believe prices are going up. She looked for the cheapest price sold in her neighborhood and priced her house 15% below that.
How long is the contract for with this fool? If she is really willing to price it right she should have a lot of leverage to negotiate with the “realtors”. They should be dying to get a client like her that is pricing to sell, not to sit. Tell her to negotiate the contract down to one or two months. If they don’t like it, tell them to go ——-.
Actually she made them put a clause in there that she may cancel at anytime. When I told her I would have fired his a** she said “Danni you know that people down here are not as uptight as northerners maybe his relaxed attitude is why his sales volume is so high. People feel comfortable around him.” I nearly screamed!
She didn’t feel comfortable….I think she’s just feeling the pinch in her timing of this sale.
“maybe his relaxed attitude is why his sales volume is so high. People feel comfortable around him.”
Sure, but most of those people start their conversations with him by saying, “hi, I’m NYCityBoy and I’m an alcoholic”.
“Hello, NYCityBoy,” he responds.
“Danni you know that people down here are not as uptight as northerners maybe his relaxed attitude is why his sales volume is so high. People feel comfortable around him.” I nearly screamed!
If his sales volume is so high I can bet you he’s more interested in moving from one deal to another quickly. Those kind of realtors have so many irons in the fire that they never really represent your property like they should. They just move from one deal to another hoping if there’s enough deals, some will fall thru the cracks and they’ll make money. She’ll be lucky if she ever hears from him once she moves. Any realtor that has over 12 or 15 listings cannot service them properly unless they have a whole team of workers, and then you never actually hear from the realtors themselves.
Good luck to your sister. There’s no reason why she can’t have him come out and take new pictures. In this market every little thing matters. If she’s priced well and the house is in good shape for showing, she’s doing what should be done. With sellers now competing for buyers, the most attractive package, price and condition, will give her the best odds.
Makes you wonder if most people have any conception of what’s happening. My wife told me she was talking to a woman at her gym (here in southern california) who said, “Oh, I don’t see prices dropping much more than they have. I hear Florida home prices have already started to move up.”
It sounds like “silicon induced hallucinations”.
My friend, a mortgage broker who leveraged herself to the hilt in FL and pulled out equity after equity to buy more homes, has an invesment property where the carrying costs are about $2500 a month for her. She put it up for rent for $1600 instead of selling it because “she refuses to take a loss”. A bigger house next door rented out for $1100 per month. She just got new tennants and told me they are paying $1600 per mo. Nice folks I guess. Somehow I don’t believe her when she told me the amount of money they pay in rent. If they are then they are either stupid or their credit really sucks and no one will rent to them. I expect the place to get lots of wear and tear if that is the case.
I guess he figures your sister is an airhead and wont listen to reason, and knock 10% off the price right now to move the house…reason so why bother….
===========================================
Not sure what the implications are of drunken realtors showing up at ones house is but it feels significant.
why do people use realwhores?
craigslist is all I ever need
The problem I have with real estate agents is that for years now they were all brainwashed into believing all the false investment advice they were giving . To bad the sheep believed commissioned salespeople . The RE salespeople go to meetings that teach them how to overcome objections from buyers or sellers ,so they got all the pat answers . I would just say ,do your own homeowork on a real estate transaction ,because it’s hard to tell if you have a honest real estate agent or not . I would question all stats. given by these clowns .
“This man winded up taking really lopsided pictures, with odd darkened area on them and posted them on realtor.com.”
I have seen this a lot on listings for houses, poor quality photos(take your thumb off the lens), obviously inaccurate information(no, the house does not have 5 bathrooms and 2 bedrooms), or simply lack of information(hey, I am buying real estate, so tell me how big the lot is) For a six percent commission you would think they could spell check as well.
Most of them do know how to use a photo editing tool to stretch an image to make rooms look bigger. Sometimes they distort the pictures to absurdity.
Or Photoshop themselves for an instant 30 lb weight loss. Pathetic indeed!
We closed on our home sale in Melbourne (Indian Harbour Beach) in July. We hired a realtor who had worked previous downturns and was not afraid of the market. She even offered a 90 day listing (others wanted 6 months) saying if she couldn’t prove her worth to us in 90 days we should hire some one else. It took her 120 days to sell it, but she did. And she was the consumate professional. I always said who needs a realtor, but in this market, it was the best 6% I have ever spent.
I bet he was hitting on your sister LOL! Probably thought since she was in FL, she goes for Redneck Realtor Couch Potatos who drink lots of beer and watch TV.
Did any of you Californians watch the NASCAR race last night? I know NASCAR is considered evil by some on this blog. I still think it’s the most enjoyable event to go to. You eat. You drink. You people watch. I’m not a redneck but I miss going to the races.
Last night’s race was in Fontana, CA. I must have heard, at least 100 times, about how hot it was at the race. When it was 9:00 EST they were saying that it was still 95 degrees. Over and over they called it the “hottest race of the year” and a lot of these races are run in the south in July and August. It must really be hot there.
Local boy Jimmie Johnson won the race. He is from El Cajon. For those of you that hate NASCAR but have never been, maybe you should go to a race. It’s a lot of fun and very educational. After all, many of the people at that race are the middle class we so frequently discuss on this blog.
I remember watcher a CART Champcar race (the last one) held at Fontana. There was so much haze, that it was hard to see the far side of the track. So…each straight is a mile long… visibility was maybe 2-3 miles due to the smog blowing in from the coastal cities?
Yea, NYC CityBoy, Nascar is great, but they think 95 is hot???
OK, maybe it is.
I like the fact that College football is finally getting started and the UW Badgers are going to be in LV next weekend. They have the best alumni parties, beer, brats, college bands, cheerleaders, etc. Look out LV, there’s a sea of red coming your way.
Also In AZ, football season is a sign that the temps are going to start moderating into the 90’s rather than the 105-110’s.
Gee, I wonder if the real estate market is going to get any better this fall??
I have always wanted to go. I was a huge NASCAR fan for years, but stopped watching for a while after Dale died. This year I watched Daytona, but haven’t really resumed watching the regular Winston Cup races.
While there is a speedway here in CA, the traffic is such a nightmare that I cannot imagine attending a race. I was stuck on the freeway for almost two hours one night on race day, and we were just driving past the speedway on I-10, not actually attending.
Also, our CA rednecks have a sort of sullen, angry edge to them that you don’t find in the South and Midwest. The working-class whites here can be awfully disagreeable people. Quite frankly, I don’t want to spend much time around them. The archetypical CA Inland Empire working-class white guy is Jesse James from “Monster Garage.” Pretty much every SoCal working class guy patterns himself after that ideal to some degree. Just picture Jesse James cussing about “criminal illegals” and that’s basically the white demographic in the IE for you. These days there are also some middle management types but they are a distinct minority.
By contrast, the archetype of the working-class town in Chicago where I grew up in was Tony Soprano, except that people were only nominally ethnic in our town. It is interesting to see just how much working-class culture can vary from region to region. For example, the working class culture in the SF Bay Area is quite similar to that of the Midwest, believe it or not. Here, by contrast, it’s like the Ozarks, except that the people in the real Ozarks are much nicer and less bitter.
It’s funny, when people here talk about the IE it’s difficult to convey just how awful, IMO, it is. It’s not just a desert exurb with a long commute, it’s a cultural desert as well. The second-generation Hispanics, who probably comprise about 60% of the IE these days, are nice people, as are the middle-class blacks. But the NASCAR crowd is hideous. I would like to say something nice about them, but I simply cannot. The thought of paying $450,000 to live next to a bunch of sullen, angry rednecks is simply unthinkable.
Back in… ‘97-’99 I was on a pit crew for a Winston West team. We raced at Fontana a few times.
One time air temp was like ‘95 but in the infield of that tack it felt EVERY bit as hot as PHX in the dead summer. There is NO breeze because you’re surrounded by a very tall ring of bleachers. The entire bottom of the bowl is very black asphault.
And, you’re wearing fire protective clothing and working your butt off. We ALL had heat exhaustion bordering on heat stroke! We couldn’t drink ice water fast enough to do much good. We had to get a bucket of ice water to keep dunking out heads in.
Freakin Hot!!!
Thanks for the racing info. I don’t follow as clossely as I did when my father was alive. He was a big race fan. I gre up 10 miles from the Darlington Speedway (Darlington, SC). WE watched the cars come and go to the track.
NASCAR - Non Athletic Sport Centered Around Rednecks.
Dude, relax, you don’t have to justify your enjoyment in watching cars make left turns over and over and over again. Just make sure you keep your little soccer fetish to yourself, though…
Hey guys can i get some advice, my grandmas sister who is 93 has decided she wants to move from the bay area to bakersfield. I did some driving last night and found over 30 housed just on my side of town with signs. Did i search on yahoo and there are even more REO’s in fact my neighbor (who refi to get a sweet truck) just walked away to alabama and let the bank take the house.
How would I go about finding out who owns the house next to my grandmothers and seeing if we can make a deal that way.
Or how much do you think we should try to low ball them. 30% off asking?
“Or how much do you think we should try to low ball them. 30% off asking?”
Welcome. This must be your first time visiting the HBB. Ben will be sending you a fruit basket to welcome you aboard.
Why would a 93 year old go through the hassle of buying and also place that burden of selling the place down to the manager of her estate? Talk about a great candidate for a rental.
NYCB, you are exactly correct. Houses in Bakersfield will cost 2 times the price of renting, plus they will be going down in value for 3-4 more years. You can buy a $350,000 house, pay $3,000/mon and lose $150,000 in value over the next five years(total cost $320,000 over 5 years) or she can rent a nice place for $1500/mon (total cost $90,000 over 5 years) and bank $230,000 plus interest.
I just went thru this whole excercise with my 89 year old mother. Buying at this age, in this market is like throwing money away. (….hmmm, where have I heard that phrase before???)
Its all alittle complicated. She is 93 her home in the bay area is 50 years old and it was cheap when her husband bult it. But its has a big lot, her options for selling are somewhat unknow. The financing would be done by her younger sister. Part of what my family does in town is rental, both houses and apartments. Her younger sister figers home for her older sister, and when that is no longer do able roll it over into a rental.
So I’m gettin’ caught up with an old buddy on the phone last night who is having a hard time selling his home in Rochester, NY. He tells me another one of our friends wants to buy his house, but needs to sell his Phoenix home first. The best part: the Phoenix home was bought in ‘05 with an I/O.
Unbelievable. I wouldn’t label either of these guys fools. But then again…
“I wouldn’t label either of these guys fools.”
You don’t need to. The t-shirts they are wearing with the words, “I’m with stupid” embroidered on the front and an arrow pointing upwards say it all for you.
That reminds me of “One Crazy Summer”… Bobcat’s finest hour.
au contraire, mon frere. you obviously haven’t rented “Shakes the Clown.”
“but needs to sell his Phoenix home first.”
Much of the bubble was based on people selling an inflated price home to buy another inflated price home. They forgot that while this can be done in small scale it fails in large scale because there is not enough people out there who can afford to buy the inflated price home.
As to not being fools, they simply followed the pack, and as I said above what works in small numbers does not work when everyone tries to do it.
Then the music stopped…
Musical chairs in reverse. 100 million poeple and 100 million chairs. Music starts.
Rules:
1) You make money when you stand up.
2) The later in the game that you stand up, the more money you make….
3) You can’t get up until someone agrees to take your chair from you.
4) You can control more than one chair at a time, if you want, by placing name cards on a chair, allowing others to stand up, making them avaialable to take other chairs.
5) When the music stops, any chairs you still control are subtracted from your profit.
Let’s play:
2002 the music starts and people start moving around and making money.
2003 activity picks up.
2004 and 2005 people go crazy moving around, controlling multiple chairs. They hardly notice that an additional 5 million chairs have been added to the game.
2006 some of the smart people start leaving the game while more and more poeple add to the number of chairs they control.
2007 Music stops. People in chairs they don’t like or controlling multiple chairs demand the music be turned back on! “We were supposed to find greater fools, not BE the greater fools”, they complain!
Anybody Want to Harrass a Seller???
This nimrod keeps listing his house about 10 times a day on Craigslist. I just emailed him and told him he would be better served by lowering the price. Try it, it’s fun.
http://phoenix.craigslist.org/rfs/412500782.html
He got flagged….
Those pages go down pretty fast when linked here. Maybe if you quote some notable details people might go hunting this denizen.
Not sure what you mean Mole Man. This guy advertises 10 times a day, the same add, same place, day after day for a couple of weeks now. I’m amazed that the guy thinks that this repetition is going to find him a buyer. We’ve seem his house and we’re not interested, period. Of course I’m not interested at any price.
Here’s my concerns on the overall market. In the US we are experiencing and will see high inflation for consumable commodities: food, energy, utilities, transportation services, borrowed money, raw materials. We now compete world-wide for these resources with other seriously developing countries.
At the same time, US labor rates will not keep pace with this inflation. The global supply of labor is greater than ever. Accessibility to that labor… whether it be in India, China, Bangledesh, or places like Kenya … is greater than ever and becoming greater. Whether it is physical transportation of manufactured goods… or virtual transportation via web technologies… the labor supply is truly global and there is no shortage.
For a “maxed” out society like the US who has strapped themselves with an impaired and decreasing “discretionary” budget… (i.e. too much budget going to house payments, car payments, and boat payments). What’s left over, has to go to food, energy, transporation, taxes, healthcare etc… which are all going up in price.
If income is fixed… every dollar of other non-house capital “expense” a Home owner incurs has to be shifted away from the hard assets that can be afforded. In fact it is like a reverse earnings per share… Every dollar I have less in my budget…due to increasing costs of variable expenses… I have to have an equivalent 10x, or 15x or 18x corresponding decrease in the house or “hard assets” I can afford.
Inflation makes the situation worse. Most would presume that our house values would increase with inflation. It has been said.. Real estate is a great hedge against inflation. The assumption is, though, that wages will go up by that same inflated rate. Today that is not the case. It is also said (over and over)… there is only so much land.. hinting that real estate is scarce. It is not. Once the economy turns REAL bad… we’ll just see how many second homes are not really desired… and how many relatives can pile into a SFH or Condo or apartment.
We are seeing a disconnect between hard assets (housing, etc) and non-asset based expenses. The former will go down… the later will go up!
This creates a real double wammy on the US. As a nation We have indebted ourselves to hard assets that are falling in value with fixed or increasing payments!…. while we struggle to pay increasing bills for all of the stuff we need to keep those assets (cost of money, energy, utilities, insurance, taxes, etc.)
If you buy into the above arguments… then it is safe to say that as a nation of consumers, we will have far fewer dollars for discretionary expenditures. Beyond food, basic clothing, transportation, insurance, taxes, house payments, car payments, etc. there may be no discretionary money in many households.
Now, look at our economy. When you drive down the anywhere US streets… what do you see? Stripmalls! Shopping Centers! Look at every business within 20 square miles of your house and categorize the businesses as taking in “discretionary” or “necessary” expenditures. Then ask… Can each of those business survive if their incomes were to drop by 30%, 40%, 50% or 60% during the next couple of years. Then, vision what your neighborhood would look like if that were to happen.
If we think having abandoned foreclosed houses in our neighborhood is bad… think about having abandoned foreclosed shopping centers scattered around anywhere USA.
From an investor stand point of view… look at the terrible decisions home buyers have made. They bought stock in the housing market using 100% (or more) leverage at a variable interest rate (going up). Would folks normally buy a stock in the market at 100% leverage? Never. Investors bought “options” by putting down payments on condos. In some cases they thought they could “flip” the “options” before the condo was completed or right after the condo was completed. They are losing 100% of their “option” investments. In many cases these investors bought highly risky “options” with borrowed money!
Our banks and financial institutions have bragged to the market how great they are by churning out mortgages and debts at ever increasing rates “racking in fees”… and then pushing the value of their stock with a huge “multiples” based on that transaction rate. The rate of originations will plummet… as will the value of their stock because they will not keep the pace of financings up. This pain is in addition to real fall in the “assets” or “debts” value that they hold.
Manufacturing capacity, distribution capacity, transporation capacity, retail capacity… All highly physical asset based functions will suffer losses as shrinking US household budgets no longer affford the materials (junk) these assets make, distribute, transport, and sell. The assets that support these functions (manufacturing plants, distribution warehouses, trucks, planes, trains, and retail stores (strip malls) all will plummet in value. The leveraged (liquid?) financial instruments that back all of these assets (debts) will suffer significantly.
And for the great American consumers who have not been killed with the rope around the neck… we are still giving them bullets for the gun in terms of credit cards… that they are still using to “keep afloat”.
At some point… we will see a geat unwinding of our financial system. Hopefully it will be orderly… but nevertheless, it will be painful. I will take a lot of financial wizardry to pull off an orderly decline… and it may require more leeway than we as a nation or society have left ourselves with.
Shiller and Feldstein agree with doom and gloomers. Hat tip htieK:
US homes may lose as much as half their value in some US cities as the housing bust deepens, according to Yale University professor Robert Shiller. Meanwhile, Martin Feldstein of Harvard University says that experience suggests that the dramatic decline in residential construction provides an early warning of a coming recession. The likelihood of a recession is increased by what is happening in credit markets and in mortgage borrowing. Feldstein says that most of these forces are inadequately captured by the formal macroeconomic models used by the Federal Reserve and other macro forecasters.
http://www.finfacts.com/irelandbusinessnews/publish/article_1011005.shtml
Do yourself a favor and read this article. According to Feldstein:
If house prices now decline enough to reestablish the traditional price-rent relation – recall Shiller’s comment that a 50 percent decline in real house prices is “entirely possible” – there will be serious losses of household wealth and resulting declines in consumer spending. Since housing wealth is now about $21 trillion, even a 20 percent nominal decline would cut wealth by some $4 trillion and might cut consumer spending by $200 billion or about 1.5 percent of GDP. The multiplier consequences of this could easily push the economy into recession….
Once defaults became widespread, the process could snowball, putting more homes on the market and driving prices down further. Banks and other holders of mortgages would see their highly leveraged portfolios greatly impaired. Problems of illiquidity of financial institutions could become problems of insolvency.
I think the 20% is already baked in. Except, just like the hedge funds and investment banks don’t want to mark to market the mortgage bonds, home sellers don’t want to mark to market their houses. The prices houses were selling for was never economically justified. Now that reality is returning, there’s a huge gap between what people can afford and sellers expectations.
Still looking at the near term…No doubt about a recession…No one has talked about or even suggested… what the next “asset inflation” gift item to the American populace is going to be…
In any order of delivery…
run on bank deposits
mortgage loans @ 14% or greater
wage inflation… combined with… work disruptions
5 million in US prisons & the financial $$$$$$ tax dollar support that will be needed to “service” it.
All sports stadiums in the US paid for with city/county/state/federal taxes
will I think you get the idea…the future…of…America
“Problems of illiquidity of financial institutions could become problems of insolvency”
“Effective insolvency’’ …yeah babeeeeeeeeeeeeeeeeee
To quote President Push: “Bring it on!”
That Feldstein is a f—ing idiot. His solution is to re-inflate the asset bubbles without worrying about inflation. What a jerk.
Agreed. All you hear is people on TV say lower rates. Everyone assumes lower interest raes will fix things. They don’t know that it means higher inflation. I wish some people on the media, like Sponge Bob or Barney, would explain this to people.
Sponge Bob or Barney explain things? Get real! You have to save those big guns for restoring confidence once the depression hits.
‘Sponge Bob or Barney explain things? Get real! You have to save those big guns for restoring confidence once the depression hits.’
LMAO!
The last time a cartoon character explained things to us, we got saddled with income tax withholding…
Paul
Although we can disagree and debate Feldstein’s conclusion to cut rates, his description of falling home prices, credit market turmoil, and subsequent impact on consumer spending and the economy is largely accurate and frequently voiced on this blog.
Desperate times require desperate measures.
Until now the RE market was seen as a Great Wealth Creator. Soon it will be seen as a Great Wealth Distributator.
I hope Shiller finally gets the respect he deserves. At the height of the boom, I saw him once those “forum” shows that the news puts on — the ones with the audience and the panel of “experts.”
Shiller was there on the panel. A realtor guy was hawking I/O’s. “If you get an I/O you can invest the difference between the I/O payment and the full amort payment…” I was screaming at the TV…Yes, that works for rich people who HAVE the money, but the people now can’t afford the full and have nothing to invest etc. … Poor Shiller knew that there was no way he could explain that in his allotted soundbytes, so he kept referring to the dot.bomb. The starry-eyed realtors, knowing they had the audience on their side, hammered Shiller good.
I hope they listen to him now…
“Meanwhile, Martin Feldstein of Harvard University says that experience suggests that the dramatic decline in residential construction provides an early warning of a coming recession.”
Wow — the president of the NBER is pointing out something I have been saying since last year. COOL!
Some of the discussions and debates here are being echoed in Jackson. Leamer even challenges the discipline:
The bad news is that I am not a macro-economist. Wicksell and Hayek and Keynes and Friedman and Tobin and Lucas and Prescott speak foreign languages with which I have familiarity but not mastery.
The good news is that I am not a macro-economist. That frees me from the heavy conceptual burdens that most macro economists seem to carry. It allows me to conclude that Keynesian thinking, monetarism, rational expectations and real business cycles all suffer from the same problem – too much theory and not enough data. In particular, none of these comes to grips with the role of housing in modern US recessions.
http://blog.inman.com/LeamerHousingandBusinessCycle.pdf
“…too much theory and not enough data.”
Here is some data for the Jackson Hole gang to chew on. Seven out of seven previous times since 1955 when U.S. residential construction fell by 25% or more, the macroeconomy concurrently went into a recession. We are currently in the eighth such episode since 1955. Luckily, seven is not a ’statistically significant’ sample size, or I would be a bit concerned about now.
“The examples we have of past cycles indicate that major declines in real home prices — even 50 percent declines in some places — are entirely possible going forward from today or from the not too distant future,” Shiller said in a paper presented last Friday at the Federal Reserve Economic Symposium in Jackson Hole, Wyoming. Yawn…
It appears that Shiller has precious little faith in the potential for cargo drops of freshly-printed liquidity to save the bubble economy. What makes him so utterly convinced that helicopters unloading cargo drops of cash will not be sufficient to contain the subprime problem going forward? What he says sounds entirely too sensible to capture the abject surrealism of life after the bubble.
‘Falling real-estate values may undermine consumer spending by spurring households to save more and by preventing them from tapping home equity.
Because price gains were larger and more widespread this time compared with past speculative booms, the risk of “substantial” price declines is greater, wrote Shiller, who is also the chief economist and co-founder of MacroMarkets LLC.’
He said that 50 percent declines in the worth of some cities’ homes wouldn’t be unprecedented. Prices in London and Los Angeles fell by almost that amount from the late 1980s to mid-1990s.
No way! California real estate always goes up!!!
“Lowering interest rates may result in a “stronger economy with higher inflation than the Fed desires,” a scenario that Feldstein described as the “lesser of two evils.””
Inflation? Would you like to super-size that?!
I have 2 observations to report:
“I’ve noticed something interesting happening to the demographics of our street as the crisis plays out. Our neighborhood is graying. Every single house that’s sold has been bought by a couple with grown children. Couples with kids are rapidly becoming the minority. We used to be over-run with elementary-schoolers! I think this is a fascinating side-effect of credit tightening. Anybody else see something similar?”
My friend who priced low and had 4 written offers had a similar experience. One couple was empty nesters and were downsizing from a Victorian on a gentleman’s farm, 2 were retired single men, and only one was a family w/a small child.
This was even more interesting. Landlords are having problems getting mortgages to buy rentals in the Syracuse area.
Robert Congel is the developer of Destiny USA (planned megamall). I’m not sure if this person making the statement is related.
“.1. Not easy, especially around here
by mcongel, 8/30/07 12:45 ET
Re: house flipping by gathgar1, 8/30/07
“Rentals are still good here if you’re willing to be a landlord (not easy). I flip properties from landlords to landlords. So do other people around here. In my opinion, that’s an easier way to make money right now. The big problem with that is that it’s not easy for landlords to get loans right now.”
Mark E. Congel
From the Syracuse Real Estate blog
From the Sacramento Landing blog:
“Tracy Trammell sold the boat, the extra vehicles and tried everything to “find a way to refinance, or do what I could not to lose the house for my children.” She is in a bind all too common in Sacramento: a home losing value and an adjustable-rate mortgage with payments that jumped $1,000 a month in June.
…
Trammel made her new $3,000 payment in June. She made another in July. Then she considered reality. She is bound to lose the house with this loan, a loan with one more year before its pre-payment penalty expires. When Countrywide suggested a roommate, Trammell felt insulted. She skipped a payment. It is one more foreclosure now in motion.”
———————————-
This is the table really turns - when stories like this get into the papers. Quiet suffering (while commendable) dont get to your neighbours.
Well she musn’t be too damn worried about “saving the house for the kids” (spare me, like they’d give a damn) or she’d get a roommate. Why would that be so terrible? People don’t want to a damn thing - they want handouts and quick fixes.
hows your handle on the JAVA (once SUNW) after the 4.60 territory only weeks ago, when you recommended the long position? Think its got more upside after the .11 move on friday?
I don’t know about Sun’s market valuation, but I do know that they have done so many stupid things in the recent past that I categorically refuse to buy anything from them. Their business plan appears to be based on overpriced under performing hardware combined with really idiotic marketing.
The stock symbol change is a glaring example of Sun’s clueless management.
If she was worried about the kids and she knew her mortgage was going to reset that tells me she had an ARM and not a fixed, which she probably didn’t qualify for. So why is she owning extra cars and a boat.
Why does she feel insulted by the roommate suggestion? She bought the home even though she probably knew perfectly when she got the loan that she wouldn’t be able to pay the higher rate when the reset came. Renting part of the home is a very common way of making ends meet during hard times and is a great suggestion for her to be able to keep her home. The real problem is probably that she couldn’t get $1000 from a roommate to make up for the increase in price.
But Suzanne researched it and told her not to worry that she could afford it. Her broker said that in a few years she could refinance or sell the house.
Well guess that won’t be happening.
Why didn’t she read the loan docs? In 24 pt type on the front page is a statement to the effect that ‘ this is an adjustable loan’. Should we blame the schools for her ignorance? Should we blame her for not keeping her legs together? I don’t feel sorry for her. Don’t bail out the stupidos with my tax money.
Flash ,cash,and trash ……I have a message for you toward the bottom on the last thread from yesterday . I went to bed and I didn’t see your last response .Enjoy .
About that tidy little waterfront house in Kemah I wrote about last week. The roller coaster opened on Friday. Here is the background.
http://www.chron.com/disp/story.mpl/front/5103258.html
Hi, I’ve been reading for 6 months, but new to posting. Does anyone have local observations about the market in Princeton, NJ? What about the rental market?
I suggest James Bednar’s blog. njrereport.com
–
Housing and the Business Cycle
[73 page paper by the professor who thinks that “the Fed merited an `F' for failing to prevent the housing bubble and then not reducing rates as it burst.”]
http://blog.inman.com/LeamerHousingandBusinessCycle.pdf
-x-x-x-x-x-x-x-x-
My personal forecast is that “the business cylce” will make a a low not seen for centuries due to very long-term cycles where ups and down are 200-400 years in duration.
Jas
Travails of the Super-Rich
by Barbara Ehrenreich
http://www.commondreams.org/archive/2007/09/01/3562/
Axel Weber, president of the Bundesbank, describes the current credit market turmoil as a classic run on non-traditional banks. From the FT:
Mr Weber told fellow central bankers and economists at the Federal Reserve’s Jackson Hole symposium that the only difference between a classic banking crisis and the turmoil under way in the markets is that the institutions most affected at the moment are conduits and investment vehicles raising funds in the commercial bond market, rather than regulated banks.
These entities were inherently vulnerable to a sudden loss of confidence on the part of their funders because “there is a maturity mismatch” on the part of financial institutions that have invested in long term mortgage-backed or asset-backed securities using short-term finance.
“Most of the conduits are owned by the banks,” he said. In many cases, sponsoring banks are being forced to take risky assets back onto their balance sheets, in turn causing banks to keep hold of their own cash, putting pressure on short-term money markets, he argued.
http://www.ft.com/cms/s/0/d79548f2-5984-11dc-aef5-0000779fd2ac.html
Is Mr. Weber proposing a return to the classics?
In Feb., non-traditional mortgage originators began flaming out. As a result, mortgage warehouses were shut. In August, the mortgage segment of the ABCP ignited. Consequently, firefighting central banks were forced to pump massive amounts of liquidity to keep it afloat. Now, according to Weber, “sponsoring banks are being forced to take risky assets back onto their balance sheets.”
I have coined a term for the people that you have described. I call them “debt peddlers”. They are the middle-people that hook these stupid deals together.
I know a few debt peddlers here in NYC. They are pi$$ed that their services are no longer wanted. They don’t realize that their services were never actually needed. They should be grateful they got the chance to fleece the system in the first place and move on.
Fred Hooper,
Re Your Post Yesterday- Maricopa County AZ (Phoenix metro) Notice of Trustee’s Sales:
May I ask where you got that info. I put it in an Excell spreadsheet.
Also, does anyone have an opinion in how long a house will stay on the market once the Notice of Trustee Sale goes out. Per Fred’s figures there have been 16,711 in Maricopa Co (PHX Metro) this year.
Thanks,
Lip
Can debt peddling bankers wait until Sept. 18 to get their fix? More from the FT:
A backlog of nearly $500bn in outstanding financial deals – including leveraged loans to fund private equity buy-outs, delayed initial public offerings and corporate bond issues – has built up over the summer because of the market turbulence….
“No one at the moment is saying I’m going to the 44th floor and I’m going to jump. But certainly September will tell us more about how the story will unfold and how big a problem we have,” said one banker.
http://www.ft.com/cms/s/0/567b700c-5975-11dc-aef5-0000779fd2ac.html
My friend is looking for rentals. She called a referred realtor for help as rentals are darn scarce in this neck of the woods. She was told that they don’t have a lot of “transients” in their community….So renters are transients? Nice! On the same par as Gypsies, Tramps and Thieves?
Oh, she must be a classy agent: Rolex’, diamonds, etc.
Pearls and swine.
She probably should have said many people stay in the area permanently and therefore there’s few rentals. When I lived in Margate FL in the 70’s in an apartment building everyone said FL was very transient. We never knew who the neighbors in our apartment building were from one week to the next. It was a nice complex, but people seemed to move constantly.
What area is your friend looking?
If the economy is so strong, shouldn’t the debate be over whether the Fed should tighten rates, and not loosen them? I guess Cramer is in the driver’s seat these days when it comes to U.S. monetary policy.
Reports suggest economy was stable before credit crunch worsened
By Jeannine Aversa
THE ASSOCIATED PRESS
08/25/2007
WASHINGTON — Sales of new houses increased and factory orders soared in July, suggesting the economy was on stable footing before a credit crunch took a turn for the worse.
The Commerce Department reported Friday that sales of new houses rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units. The increase came after a 4 percent drop in June.
Another report from the department showed that orders placed with factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.
The latest batch of economic information was better than analysts had expected. They were forecasting house sales to fall and were calling for a much smaller 1 percent gain in factory orders.
The housing report showing the July sales boost comes as credit standards have been tightening on mortgages. Credit problems took a turn for the worse in August, making it even harder for some buyers to get financing.
That means house sales in the coming months likely will show renewed weakness, economists said.
“Sales in August will face significant headwinds from further tightening in credit conditions, reduced availability of mortgage credit as many lenders shuttered their doors and upward pressure on mortgage rates, especially for non-conforming jumbo loans” of more than $417,000, predicted Brian Bethune, economist at Global Insight.
http://www.stltoday.com/stltoday/business/stories.nsf/yourmoney/story/3A6303E63FD4E879862573420007BD44?OpenDocument
“…sales of new houses rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units”
Contrast an 870,000 annual sales rate to the most recent DOC news release on U.S. residential construction:
US new home construction dives to 10-year low
WASHINGTON: Construction of new homes in the United States fell in July to a ten-year low, a further sign of deterioration in the distressed housing market, the Commerce Department said Thursday.
New home construction plunged 6.1 per cent in July from June to an annualised 1.381 million units, the slowest pace since January 1997.
http://www.channelnewsasia.com/stories/afp_world_business/view/294404/1/.html
Now for a little 5th grade arithmetic:
1,381,000 - 870,000 = 511,000 = current rate of addition to unwanted, unneeded U.S. housing stock.
Does anyone else see a slight problem here, or is it just me?
Sorry if I was unclear, but I meant to say that new homes are being added to the excess U.S. housing stock at a 511,000 annual rate. Sounds to me like a recipe for a hard landing…
Sorry to sound like a broken record, but how many elephants can be hidden under the living room rug before the even the Fed has to acknowledge that there are lots of elephants hiding under the living room rug?
Perhaps it is a *magic* rug?
S E
Will a rate cut improve integrity? Morici argues IBs and bond rating agencies lack integrity. From the Asia Times:
Subprime mortgages are hardly the whole credit market, but the meltdown of their bonds cast a spotlight on the decaying integrity of investment banks and bond-rating agencies. These institutions underwrite and rate all manner of credit, and if they could be corrupted in the subprime-mortgage market, then all commercial paper and bonds become suspect.
Over the past several weeks, creditors have increasingly sensed they can’t trust banks or bond-rating agencies, and they have fled to short-term Treasury securities. This was much worse than the collapse of mortgage companies that originated housing loans, because it caused all segments of the credit market to collapse….
http://www.atimes.com/atimes/Global_Economy/II01Dj01.html
Went looking at model homes yesterday. Centex advertised homes starting at $399,000. When I got there, the man said there was a Labor Day weekend sale and the home was actually $379,000. “This weekend Only!” I giggled and said “ok”. Honestly, they were pretty bad. Poor quality and tight layouts. The higher priced ones were nice, of course. Anyway, the man warned me to “buy now”, for they are going to start building smaller homes. Certainly they’ll have to dump these first? The high end ones were not marked down at all and the $399,000 one was not worth it.
Then I went to an open house. The realtor was offering beer and wine coolers. She looked me right in the eye, even after I told her I have some knowledge of what is going on in the market, and she said, “Now is the time to buy. Prices are going to go up”.
I should have taken the beer.
Let me guess…She was serving: Milwaukee’s Best :-O
You should have locked her in a closet and taken ALL the beer and wine coolers, to better celebrate this lovely Labor Day weekend.
1. It’s not like anyone else was coming to the Open House, probably.
2. If it’s such crappy construction then realtor lady would be able to kick her way out of the flimsy closet before she starved, so it’s not like any permanent damage would be done.
3. You could have been really generous and tossed a beer in there with her before you slammed the closet door and locked it.
–
pdf file link.
Fed Gov. Mishkin: “The solid line shows the optimal response and outcomes for the benchmark version of the FRB/US model, while the dashed line shows the optimal response in the model with magnified transmission mechanisms. The first thing to notice… is that the federal funds rate is lowered more aggressively and substantially faster than with the Taylor-rule reaction function. This difference is exactly what we would expect because the monetary authorities would not wait to react until output had already fallen, as in the Taylor rule, but instead would react immediately to the house-price decline when they see it.”
Pages 36-37:
http://www.federalreserve.gov/pubs/feds/2007/200740/200740pap.pdf
No reaction by the Fed when housing prices are rising extremely fast but should react aggressively when prices are falling?
Jas
Why can’t Mishkin and friends stay the course and wait until they are 100% they see a bubble through the rear view mirror? Preemptive mop-up operations might tempt further financial inanity on Wall Street and in Greenwich in the form of rampant moral hazard.
Optimal-smoptimal. Where in the Fed’s mandate does it say they are supposed to bail out fools?
My apologies up front in case formatting comes out bad. I took these numbers from http://www.azcentral.com/class/marketplace/homes.php where you can look up recent home sales for any zip code in maricopa county. These numbers go along with what 85249 is Toast posted a little over a week ago. Unfortunately, they are a few weeks behind, but I am anxious to see if the trend continues for August.
County Starting Number
Week Sold Median Past 4 weeks Last year
Sold Median Sold Median
Maricopa 08/07/2007 11 $423,015 113 $415,000 169 $420,000
Maricopa 08/01/2007 32 $461,540 149 $410,000 186 $450,000
Maricopa 07/24/2007 51 $415,000 147 $415,000 178 $454,992
Maricopa 07/16/2007 47 $418,690 196 $413,332 160 $478,924
Source: Information Market
Sorry about the formatting. The columns are County, Starting Week, Number sold, Median, number sold past 4 weeks, median, number sold last year, median.
Like I said, I am most impressed with the drop off of home sales: 51, 32, 11, ?? - any guesses what next week’s number will be?
No one is talking about what the decline in prices will end up looking like. Imagine all the FBs now having to live on their paychecks because there’s no equity machine attached to the driveway and their credit cards are maxed out. Guess all those tweens will have to stop demanding designer clothes for back to school and mama may have to give up being a walking advertisement for nouveau riche.
HBB Brethren & Sisters: I, Brother Sammy, am most pleased to share with you one confirmed save of a would-be homebuyer. A young guy I met last Fall at a neighbor’s barbeque, just out of the military and newly engaged, happened to mention that his realtor-neighbor was “helping me find a place to buy.” Well, Brother Sammy thought, What Would Palmetto Do?, and over the course of the next half hour, did wax forth most profoundly on the matter of debt servitude and the housing bubble implosion. Persuasively too, as it turned out. Yesterday I saw the young couple, and they thanked me PROFUSELY for helping them to see the light. Per my advice, they’d gone to this site, and Dollarcollapse.com, and decided to rent for at least a year instead of buying. A sound decision, they now realize.
Now pardon me, as I retreat to my backyard to launch into my soul-filling redention of “Bringing in the Sheaves.”
Sammy:
Love it!!
Preach it brother!
Northern Virginia market update and car buying update.
First No. VA. I had the opportunity to head to a park in Springfield a couple of times this weekend with the dog to let him swim a bit and hike. It’s just off of 495 at the Braddock Road exit. You have to weave through Ravenswood to get to the park and my eyeballs almost fell out of my head by the number of homes for sale. I got a bit lost thanks to Google directions (a nice lady told me the more direct route) and the number of homes for sale there is jaw-dropping. I don’t know anything about Springfield but it seemed pretty enough and clean. There seemed to be many homes for sale that were empty too (being a nosey HH I weaved around the streets for a while to notice the empties.)
The thing that struck me most about this is that this is not far from where I live in Falls Church in a pretty desirable neighborhood. I thought that most of the real price declines in this area were much farther out like Loudoun and Prince William Counties but when I came home and checked, this neighborhood has huge declines.
It creeps closer to “inside the beltway”, really close in fact.
So: car buying. I’d pretty much given up. Dealers are dealing, but not in a big way. This one guy at Chrysler has been calling and calling. They were doing double rebates this weekend and actually got my trade up to KBB value. I still walked. I’m not paying the same amount for a Chrysler at initial sticker price that I could buy a much more reliable Toyota or Honda for. They would have to cut the intial price significantly and then give me double rebates and KBB for my current Honda to get me to buy a Chrysler. The dealer kept saying, “But we have a LIFETIME powertrain warranty.” I said, “What happens if Chrysler goes down the tubes?” He ignored that at first. Then he got the manager to answer the question and he said, “The warranty will be honored, it’s covered by the insurance policy.” I didn’t go further into it, but the fact that they actually answered the question spoke volumes to me. I tells me that I’m not the only one who asked.
FWIW.
novasold
Great job Sammy.
Can’t help but wonder what effect we have had on the market? I know I have talked at least three people out of buying and two others into selling. There are five FB’s to be that are no longer. I’m sure many of you have had the same experience.
There was an editorial a few weeks ago that congratulated us for single-handedly bringing down the housing market without corresponding job losses. We all know that theory is crap - the prices getting too high brought down the market - but maybe we are accelerating it? If so, good for us for being the anti-realtors! At least we caused the changes through historical information, cold hard facts and realistic expecations about finances and the economy, unlike the REIC which built it all up based on emotions!
HERB GREENBERG
Why California housing matters
Commentary: Affordability ultimately hits the economy
By Herb Greenberg, MarketWatch
Last Update: 7:47 PM ET Sep 3, 2007
SAN DIEGO (MarketWatch) — Stephen Levy is worried about the health of the housing market in California.
Even if you haven’t heard of him or are simply tired of hearing about anything having to do with housing, Levy is a man who should be listened to. As senior economist at the Center for Continuing Study of the California Economy in Palo Alto, Calif., which he co-founded more than 35 years ago, Levy has seen more than his share of cycles.
This cycle doesn’t look like it is going to end well, he says. His reasoning is deceptively simple: “There’s a limit to what people can afford.” When the coastal areas of the state were reporting home prices that seemed unrealistically high in the late 1990s, Levy was among those who thought prices throughout the state, on average, could go even higher.
The centerpiece of his theory at the time was that prices remained below or in line with the national average in places such as Sacramento, Riverside and Fresno. “People would say, ‘It’s a long commute, but I can get a good home,’ ” Levy says.
Since then, fueled by what Levy terms “bizarre mortgages,”
home prices have ballooned to 80% more than the national average in some of these markets. The median home price in the state, recent price declines notwithstanding, hovered at $586,000 as of late July, according to the latest figures from California Association of Realtors. That is more than double the national average of $228,900.
http://www.marketwatch.com/news/story/herb-greenberg-why-california-housing/story.aspx?guid=%7BDD9839A0%2D1A46%2D4B94%2DAF0D%2DF6C2706BC99A%7D&dist=hplatest
Jeepers — I never knew NY’s economy was such a poor stepchild to Cali’s. To hear New Yorkers talk about it, you would think their state’s economy was No.1.
“Why should non-Californians care about the California housing market, especially when the S&P/Case-Shiller Home Price Index shows year-over-year increases in such cities as Charlotte, N.C., Portland, Ore., and Seattle? Because the Golden State accounts for 13% of the country’s gross domestic product or the total value of all goods and services produced nearly double the No. 2 contributor, New York. That means that what happens in California, home to such growth industries as high-tech, biotech, venture capital and film, doesn’t necessarily stay in California. The impact of slow economic growth, or even recession, in the state will ripple through the rest of the country.”
Of course.
Craigs List Find:
390000 Moving out of state… we are only going to make $10,000 profit
http://boston.craigslist.org/nos/rfs/413051200.html
DON’T HOLD YOUR BREATH…….