Bits Bucket And Craigslist Finds For September 9, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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PLEASE BE CAUTIOUS IF YOU HAVE RESPIRATORY PROBLEMS.
http://tampa.craigslist.org/rfs/414131716.html
Is that black mold on one of the ceilings? LMAO! You couldn’t GIVE me that house.
It certainly looks like water damage - which is totally shocking, because obviously the garage was converted to a bedroom by a licensed, dependable and thorough contractor.
And by licensed, I mean convicted felon.
Is that what I think it is, black garbage bags stuffed in the kitchen cabinets?
wow! major pos with zero potential. burn it down. How much is the land worth? 10k?
Do you mean the shadows from the fan? In the other picture, the dark spot in an air-conditioning vent.
This price is actually cheap for Tampa, especially since it has a yard. Mold is the norm here, along with high levels of airborne bacteria. Of course, now there aren’t many suckers left to buy this junk since they can’t get rigged loans, though I think the county and city still offer deals to low-income families.
In this area of the “hood” in St Pete this house could have been had for less than 40K pre bubble!
It was tax appraised at $60k in 2004 and sold last for $116k in 2005 according to Zillow. No separate value for the land is given.
So land may be worth 10k and it will probably cost 25K to remove and dispose of house. Wait for tax forclosure and buy it for a buck!
Detroit has been knocking down and removing derelict houses for years…
All it does is deny the meth trade a place to hang, and leaves big gaps next to the last few remaining houses in the neighborhood.
“Wait for tax forclosure and buy it for a buck! “
And the city should give you an award for improving the neighborhood.
Flipping a foreclosure. Nice. Is that a mobile home?
Pretty cool TA/chart comparing 1987, 1998, 2000, and 2007 DJIA which was put out by Citigroup FX. According to these guys a crash is for certain with the only question being the magnitude.
WARNING: PDF
http://trentland.com/strats/djia0907.pdf
wow. During those plunges, gold didn’t move significantly.
Zoom out to 6 months then zoom back to one month. Look at the low on Aug 16. If the discount rate was not lowered on Aug 17, we would be looking at a different outcome.
http://tinyurl.com/2wdqx5
agreed, coupled with liquidity actions… the magnitude of potential down is, MAGNIFIED.
Safety players with knowledge of the collapse are wating this one out. I’ve said before the stars are aligning for a real correction. And, since many “historic norms” are tossed out the window, the sheeple spooked, and the office of shoe dropping working 24 hours….people are doing what they can just to get out of the way.
Makes me wonder how much more leveraged everything is these days, and if a 21% drop in the stock market would take a many more investors past their breaking point.
Hmmm… I am just wondering what would (will?) happen to house prices if the dollar crashes. This question is brought on by the dollar going below it’s major support line of .80 on Friday.
Since a good portion of the financing came from foreigner buyers of MBS and related products I imagine that an fx devaluation in addition to the multiplying quality issues will impact the availability of financing. The falling USD is another log on the housing bonfire.
Got smores?
Another question is what will happen to the US economy if the dollar falls further and what pressures that might bring on the PTB to protect it.
which makes me ask………..just how can it be protected?
Higher interest rates and lower net borrowing. Most economist think the US would have to volunteer for these measures; IMO it would be forced. Don’t forget, a big drop in the greenback slashes the value of all pension/retirement plans. Not very popular.
I just finished 9 months of “working” with a pension manager on projects. It was a scary experience.
scary experience
Like what?
The pitches this manager received from various hedge funds, IBs, etc. I reviewed them.
e.g., load up the plan w/CDOs and MBSs and oily who knows what came from where “AAA” funds???? :O
Actually that plus the equity strategies some of them have.
I did some work shutting down/freezing plans, I can only imagine the sh!t that is in each portfolio at his point
this point
Weimar Wall Street Republic
LOL
it’s already weimar in some places in america. like in the big cities.where i come from. i’ve seen this for years..cripples roam the streets seeking food in dumpsters while others are drinking 500 dollar glasses of brandy.
Agreed.
Traditional protection measures are combination of interest rates, central bank purchases/sales. Exports automatically increase because the currency is more competitive.
Initially, housing drops more slowly, because foreign buyers increase demand due to the currency difference. However, the eventual rate increase will cause housing to drop. The only question is when does it become feasible to increase the interest rate.
JP — in this case, though, where there is a huge unoccupied inventory and J6P cannot buy a house under “real” lending conditions, why would a foreigner buy a house that can easily deteriorate or lose value via comparable sales, and that would bring way less in rent than the carrying cost? Their carrying cost might be in cheap dollars, but so will the rent.
They are afraid to cut.
http://www.marketwatch.com/news/story/rate-cut-may-not-necessary/story.aspx?guid=%7B3688B792%2DCCC1%2D4A07%2DA89D%2D58AB81286B53%7D
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Ben,
As a currency speculator for more than 15 years, dollar wouldn’t fall much further until the US economy is in a depression. Dollar’s further fall would create problem for the whole world economy and not just the US. Of course, this would change when the world economy is in depression already and conflicting forces will sort themselves out.
The current dollar already had priced in a probable recession. The further fall would need that it is more serious than most expect.
Jas
Declining dollar helps bring foreign buyers for NYC apartments. I doubt it will help Hemet or Sacramento or Chandler.
It was only recently that I realized Ben’s suspension of his Money and Metals blog (July 26) coincided very closely with the all time high of the Brazilian real, the Icelandic krona, and the Australian and New Zealand dollars. Hmm, I am wondering what sinister meaning I could impute to this coincidence!?
It coincided with the work I’m doing on a book and RE consulting in N AZ. I didn’t want to stop, but to keep the HBB going, something had to give.
“RE consulting in N AZ.”
I am glad you are doing this. There is a role for the good guys in the mitigation of this RE disaster, assuming there are businesses and people out there that genuinely want help and are willing to confront the realities of the situation. The first step in solving any problem is being able to confront reality. Those who are unable to do so, never solve their problems.
“When all else fails, men turn to reason”. Abba Eban
You’re nuts. Keep it up!
The HBB is the Holy Grail of all bubble blogs and I hope nothing ever interferes with your ability to keep it going. To that end, once again, I am sending in my quarterly donation of $50. It is a small price to pay for saving me from making a $300,000 error in Dec. 2005.
“BOOK” !!!!??????
PLEASE tell me it’s a compilation of quotes from the industry illustrating just how bad they were at predicting events.
Ben,
How much along are you on the book?
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Ben’s Book Suggestion –
It would a great service if you can nail down the culprits behind the bubble. In 2002, there were suggestions from private sector economists that the housing could get the economy out of the doldrums (the employment was still falling). For the record, the Household Formations declined by two million during 2002 (graph source: Census/Haver).
How was it possible to launch a housing boom in the midst of seriously falling fundamental demand? And who all were to gain if it could be done no matter what??
BTW, Ben, how about a weekend topic – Culprits Behind the Housing Bubble.
Jas
“Culprits Behind the Housing Bubble”
Not possible Jas because the culprits are above the law, the make the laws, decide which laws, etc., and they are even above criticism least you wish to be tarred.
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Let us hope that we can at least criticize those who are “above the law.” With all my pessimism, I do believe that we still do retain some of what made America great (I am a big fan of old America and Americans, no saints but very practical doers).
Jas
I think that a best-selling book would be a fitting reward for the incredible amount of work Ben has put into this blog. I’ve followed it for two and a half years now and cannot remember a day when he didn’t post. Everyone else, presumably including most of us posters, takes a vacation once in a while and forgets completely about work for a day or two. Every other blogger I read takes time off here and there and many have dried up and blown away.
I suppose we’re assuming that Ben’s book is about the Bubble, but whatever it is, I’ll buy it and be proud to own it.
Groan — “everyone else” doesn’t work with “most of us…” but you get the idea.
Sure it does. Everyone else (other than Ben). You’re such a critic.
I’d say at this point in the game, the Dollar is for all intents and puropses…
Toast (melba)
Imagine someone fearful of the market and putting all their wealth in passbook savings. Not good. Extreme, right? But if we have a depression, it could be good to be in passbook savings.
However, haven’t T-bills kept up with inflation over the long term? I think Jas Jain pointed that out.
Doesn’t the US government have a habit of paying off its creditors? I have no fear of owning US Government securities because they can simply print more money to pay my interest income.
A very bearish individual who is averse to stocks, but does not know if hyperinflation or severe deflation is in store would probably do well to buy units of gold, TIPS, T-Bills, ten year notes, and Series I Bonds.
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Yes, T-Bills have more than kept up with inflation. Real return (after inflation) for 3-Month T-Bills for the past 54 years is 1.3% compounded. After taxes, it is small but still positive.
Jas
“However, haven’t T-bills kept up with inflation over the long term?”
They have done better than federal wage increases, and if you were able to buy treasuries during the early eighties when rates were very high you were in tall cotton.
RE. the dollar: great question, and often overlooked. I agree the $$$ is toast because of US debt and the urge to diversify. And I agree that the Fed et al will respond by raising interest rates. This puts the “when will you buy” discussion on today’s site into a completely different light. You have to think about not only what the domestic housing market is doing but also what is likely to happen in money markets. For me, this means looking for a decent house at a price 20% or so off peak and going for it before rates rise. Sure, it’s not an optimal strategy. But why get toasted waiting for something that will probably never happen — a 50% decline in house prices without concurrent fall in the $$$$. Just think about what the small declines to-date have done to investor confidence. And this is just the beginning. The end of the dollar will be much more painful than the end of the housing bubble.
Mortgage brokers are already skirting the new licensing requirements….
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/08/AR2007090800159.html
“States need to know because these transactions involve homes, which for many people are their largest assets. If you are put into the wrong loan, you could lose your home.”
Bleeding-heart BS. Fraud can be prosecuted under previous laws, if anyone will bother. Without outright lies, nobody can be “PUT” into the wrong loan. All of this is based on some mentality that says homeownership is a birthright.
Naturally I am against any new requirement that I should have a license. The problem is correcting itself as there is no longer a secondary market for loans that can’t be repaid.
If Alberto would have enforced the existing laws on the books instead of worrying about what attorneys to fire, then some people would already be in jail.
I saw a televised symposium held by a law school (I forget which one) where they had three of the fired attorneys fielding questions from some of the students and faculty. Any one of these attorneys towers head and shoulders above Gonzo when it comes to the law. I was especially impressed with Iglesias. That’s the man we should have had for AG.
I miss Gone-zo…
Unintentional humor is the best kind.
LOL, good one!
It only shows that we need legislation across the board to cut off any loop hole these guys can try to get through. Remember for the last 3-5 years these “brokers” have enjoyed and spent on 6 figure incomes. It is very hard to give up the forbidden fruit once you have tasted it.
Greenspan Seemingly Suffers From Acute Amnesia.
Alan Greenspan takes another step down. After his transformation from “Maestro” to “Easy Al” he now fights for the nickname “Greenshill”, at least when one follows his comments from Friday. Alan Greenspan, the man solehandedly responsible for the mortgage mess concluded in a speech to economists that today’s turmoil resembles the sentiment before the crises of ‘87 and ‘98. According to him the mortgage malaise has infected the rest of the economy. This assessment comes from the man who preferred to douse every monetary inflationary excess with more of the poison that caused all exaggerations in the first place.
Greenspan must suffer from acute total amnesia. It was him who once praised the doubtful fact that all Americans could buy a house because there were such financial innovations like zero down ARMs.
http://seekingalpha.com/article/46698-greenspan-seemingly-suffers-from-acute-amnesia?source=d_email
“Alan Greenspan, the man solehandedly responsible for the mortgage mess”
While he may have played a very large role in the whole mess, I don’t hold him solely responsible by any means. I’ve been wondering if Greenspan might actually have a touch of Alzheimer’s.
Good thing Andrea Mitchell is not Andrea Greenspan.
John McCain says on the economy that he would ask Alan Greenspan and whatever Alan said to do, John McCain would do.
No wonder he won’t be elected President.
Didn’t Andrea Mitchell admit to euthanizing her mother or father tens years or more ago? I might have her confused with another reporter. If not, Greenspan may have some inkling of his future.
gads, that’s sick. I knew a doctor’s wife (a nurse) who did that to her own mom. She was telling me how to do it with my ailing mother (who recovered). very sick people.
It was Betty rollin, sorry about that, and her mother with cancer committed suicide. She helped get her pills.
http://en.wikipedia.org/wiki/Betty_Rollin
I hope my bad joke didn’t go any farther.
“I don’t hold him solely responsible by any means.”
I don’t either. The ultimate responsibility lies with the buyer. No matter what the enticements the buyer has the final say. It is from the buyer that the final and the firm word of “No” needs to be heard.
Exactly, combo. I was thinking about this yesterday while I was driving around looking at all the fugly development around here. If people didn’t actually buy those homes, the builders wouldn’t build them. It is up to individuals at ground level to say yes or no. If anything, the bubble/bust makes an excellent case for the overhaul of the educational system in the US. Speaking of which, the Florida gov is looking for ways to slash the budget. An excellent start would be to scrap the FCAT test.
“If anything, the bubble/bust makes an excellent case for the overhaul fo the educational system in the U.S.”
I suspect the educational system, the part dealing with how to handle money, is currently being overhauled by Professor Market.
Many have paid/are paying some very expensive tuition; I just hope they get the lesson.
“I suspect the educational system, the part dealing with how to handle money, is currently being overhauled by Professor Market.”
I would say it is being keelhauled.
This is what i have been saying for the last few years just by watching the people ask for certain music, and the inability to even spell the name of the artist or song properly. Of course my assessment its more to the point:
This is “THE MORON GENERATION”
Palmetto- I would suggest that nothing teaches like life experience. The young people today will never forget the experience they are about to go through. Tales will be told for generations about the “great depression” when paper millionaires became paupers and houses were free.
I just hope they get the lesson.
don’t bet the house (ha!) with our victim society, I give only a 10% chance that people will learn a life lesson and pass it on to kids…
Can’t people always credit charge their way out of a Great Depression this time around? Keep charging to the limit and only paying the monthly minimum. Food is on the table and file bankruptcy later. What’s the worse that could happen? If you were a subprimer anyway, who cares if your credit scores fall? Ohhhhhh, big deal.
generational learning gaps. This has been a theme as of late around here, and I have to agree.
The type of learning (depression/deep recession)provided for my grandparents and parents is now lost. The lack of knowledge based on “living” history is an important lesson this country needs in order to move forward as a sutainable economy.In order for a real learning experience to occur, the necessity of a “wide and deep recession” grows.
Everybody loves the gains, nobody wants to experience the pain. The real learning comes not from the gain;rather, the depth of the pain.
I hold the ultimate lenders (i.e., the people who demanded and then bought this now-worthless paper) even more responsible than the lenders. It’s been proven throughout history, probably back to biblical times, that people will borrow anything available today and worry about paying it back tomorrow (particularly if they think they can make a ton of money in something like a flip). To me, it is up to the LENDER to make sure that the borrower has a reasonable chance of being able to pay back the loan.
But the borrower has to know if he/she can afford the loan. Nobody else but the borrower could have this information.
The borrower has the information, but the lender has the right to ask for proof of income, back taxes, ownership history, etc. If they opt not to request this information, or reject proven lending standards established throughout the years, then it is the lender’s fault for making excessive loans to people who don’t deserve them. The lender is the one taking the risk.
Alzheimer’s EXACTLY!!!!!!!!!!! Please remember that Ronald Reagan was displaying signs of this disease throughout his second administration!
and some would say his first…
I do not believe CW is too big to fail. CW adopted the “new lending” schemes whereby character and ability meant nothing, and being as big as they are, their self inflicted wounds are irreparable as their knife of choice was a butcher’s 24″ cleaver.
Now as far as the fallout, Mozilo will lose a significant portion of his net worth in long, drawn out civil suits filed by the shareholders. They will want reimbursement for his recent $100+ million dollars of “compensation”. There probably will be criminal charges filed by some state attorney(s), but these will not stick because Mozilo is both slick and smart. He prolly hired the very best people to dot all the i’s and cross all the t’s that would enable him to raid the corporate treasury with impunity via the conduit of stock options.
Whatever money form his personal fortune is lost in these lawsuits may very well be replaced if he can get hired at a hedge fund to run some large private outfit. That is, if he chooses to stay in the game at his age.
Got 10% down?
Nobody can do what Countrywide can.
oops forgot to add (TM)
CW will be bought out for the name by some big investor or group or hedge fund for the name and structure. Lot’s of people will lose money but it will be resurrected. When the dot.com’s went down there was always someone to help slow the ride down.
I think you are right. They will be bought out by one the banks. The banks are loving the fact that all the non-bank lenders are going out of business. It was to get rid of them by hitting the jugular. No secondary market buyers=no business.
This seems like more of the same nonsense……..Black is white……Bad is Good…….now we have…… Down is Up.
Latest Employment Report: Another Case of PR Gamesmanship.
Given that the BLS calls “trending down” “trending up” their characterization of the current report should come as no surprise.
http://seekingalpha.com/article/46701-latest-employment-report-another-case-of-pr-gamesmanship?source=d_email
footie
I posted a similar analysis on Friday after the numbers came out. A piece of confirming datat that this guy missed is the household survey, which shows an enormous loss of 316,000 jobs in August. I developed the idea a bit more fully in .
footie
I posted a similar analysis on Friday after the numbers came out. A piece of confirming datat that this guy missed is the household survey, which shows an enormous loss of 316,000 jobs in August. I developed the idea a bit more fully in my blog:
http://jengafinance.blogspot.com/
Propaganda eventually leads to a disastrous reconciliation of the facts on the ground versus the mythical memes that were propagated in the MSM. The end of the story is quite similar to the ending of The Emperor’s New Clothes.
Hey Palmetto, how’s it going? I have a few questions for you (if you don’t mind):
1. How long have you lived in the Tampa Bay Area?
2. Would you raise a family here?
3. What is your “buy signal” or target house?
4. What is your opinion of the state itself (I know, waaaay loaded question)?
Actually, consider that an open question to anyone in the region.
Hey, Muggy, I wouldn’t mind hearing about your thoughts on the state. We have a governor and lawmakers that are acting like deer caught in the headlights. They are looking for answers. I do regularly contact my representatives and the gov’s office. I criticize, yes, but if I’m going to do that, I like to offer suggestions or alternatives to what is being done or being contemplated.
We’re going to have to mitigate the results of the over development in FLA. I’m not sure how that will be done.
Hi, Muggy, in answer to your questions:
1) Since 2000, before that, South Florida since 1980.
2) I don’t have a family, but if I did, raising one here would depend upon the circumstances. I wouldn’t want to put children in the schools in this immediate area, so if I had to raise a family here, I’d look at alternatives. Not familiar with the schools in other parts of the Tampa Bay area, so I’m not qualified to speak on that issue.
3) My target house is an older (pre 1980) Florida concrete block house in a modest but relatively safe neighborhood. I’m looking to pay cash, under $50,000. Bear in mind it is just for me, I don’t have a family to raise.
4) My “opinion” of the state is only that, an opinion. One of my first posts on this blog was about my view of Florida. I like it here and I’m hanging on, hoping it will get better and hoping I could contribute in some small way to that. Florida has always been a low wage state, but that was offset by low cost of living. It has its drawbacks, like the heat and humidity. But I always liked the sort of laid back attitude, which exists more now in the northern half of the state. It has some great natural beauty apart from the beaches that many don’t get a chance to see. Excellent boating and fishing. As I’ve said, Florida has an inferiority complex and wannabe some hybrid of New York and CA. Good luck with that. If Florida would just assess its strengths and go with those points, it would pull out of its recession. I think it has a future in dealing with environmental issues and alternative energy, like solar and ocean energy. Also in health care, especially geriatrics, a field I think AZ would also do well in. Leave high tech and education to other states, but invite those in high tech to come here to apply their specialized knowledge to the environment and alternative energy. Invite those from other states who excel in geriatrics and health care to come here to apply their knowledge to those fields. With its beaches and waterfront areas, Florida will always be involved in tourism and resorts in some way, but needs to get over its condo kick and go back to encouraging mom and pop businesses that cater to tourists on a budget.
Also want to add, Florida can and should concentrate on biology, particularly plant and marine, as its area of expertise in science. Forget chemistry, computers, etc.
Speaking of your ‘hood, Ben, the bubble is alive. $1750 rent, $599K purchase price. In Dallas the rent for a 599K house would be at least 4K
http://flagstaff.craigslist.org/apa/414764104.html
txchick57 - I have a brother who lives in Portland, OR. Although not as much of a differential. The rent vs. purchase is skewed. It looks like duplexes are selling for ~ 300k for two unit building, however the rent prices are ~800 - 1000 per side per month. Less than a 10% yeild.
I am currently in the Atlanta area and have been asked if I would be interested in moving out west- due to the resignation of an area rep recently. I will most likley move to Portland.
Anyone have good knowlege of the Portland area market. I will definatly be renting and watching.
Check out the Pearl District. It’s really awesome. Very overpriced though.
I have been to Portland a twice in the last few years. Back in December of 2004. and just last year fall of 2006. It is a neat area, of course from I hear similar things “property values are still going up, however the rent values have not gone up any if at all”. To me it just looks like they are will just start the price declines at a later date. Still 600B of resets around the corner.
I lived in Hillsboro for several years. The reason rents are so low is that there are a high number of apartments in the Intel area. They always have rent specials like first month free etc. I bet they now have first 3 months free.
Portland will be one of the last to fall. Come here and rent for a couple years. Check out: http://www.repdx.com/
Hey, Chick, you don’t know the California math. It is like who needs dividends from growth stocks! In California myth, all tech stocks are growth stocks. In reality, techs are among the most cyclical stocks. But, please don’t bother me with facts. Facts are for Michiganians. Michigan was the California of 75 years ago.
Jas
I think they can do better. how about 250k?
http://chicago.craigslist.org/nwc/rfs/417764512.html
those are just ugly
I just remembered, that area was flooded last month.
http://www.dailyherald.com/story/?id=28373
I lived right down River Rd. from this area in downtown Des Plaines, first and only time I ever had to pay flood insurance. A misstep to be sure - buying anything in that particular flood plain is a huge mistake.
Matt — LOL — your post seems to have “fried” that ad in a hurry — it is g-o-n-e.
Those appliances look exactly like the ones in my last rental. They were crap. Made by Frigidaire and every single one had issues. Getting them serviced under warrantee was next to impossible. After my experience with those, I would never buy a Frigidaire appliance ever.
And to think my mom still has a fridgidaire refridge from the 60’s with the freezer on the bottom….
Yes they are crap, I repair appliances for sears. The problem is, its not Frigidaire its Electrolux. it says Frigidaire but is built by Electrolux. Or its says Maytag and is built buy whirlpool. The quality of appliances has fallen due to consumer demand for style and energy efficancy over quality. Everyone thought brands denoted quality, but they are all want to be the top seller. So now is style, colors, and efficancy they want so its quality out the door. How can the same companys have 20 diffrent types of ovens and keep quality up. The production line changes as soon as it gets the quality up.
When I bought appliances for my apartment a couple of years ago I found out that (at time) the only remaining refrigerator manufacturer (mid market) in the US was Maytag/Amana. If I remember correctly Frigidaire and Whirlpool had moved their production to Mexico. I certainly wasn’t about to order an “American refrigerator” made in Mexico so ordered a Maytag/Amana. So far okay (knock on wood) and no problems.
I also found that Kitchen Aid products were still made in America and bought a few of them for the apartment also.
Now I’d like to have this toy:
http://www.turbochef.com/residential/
If this is the “best deal ever”, then I would not want to see the worst deal ever.
Got 10% down?
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And soon will be 10% under.
Jas
Palmetto, I really enjoy your posts about Tampa. I was born there but have lived in Atlanta since the 50’s. I moved to Tampa a couple of years ago, but the pay scale was too low to make a decent living in my field, so I’m back in Atlanta now. I’m going to Tampa this week and am very interested in riding around and checking out the real estate market. I think Atlanta is a much better town to live in as it has a good job market, superior medical services and good friendly people, etc., but I miss Florida.
Thanks, Barbara, I rather like it around here. I had a boss back when I lived in So Fla who moved to Atlanta for exactly the reasons you did.
Also, one of the reasons I continue to hang out in Florida is that I like to be near the water. Lake Lanier wouldn’t be enough of a consolation for me. If I lived inland, I’d at least have to be near one of the less polluted Great Lakes. Speaking of which, can anyone from up in that area tell me which of the Great Lakes are swimmable?
Lake Huron for one. The Bruce peninsula, in Ontario, is spectacularly beautiful, much like Maine, with pine and white birch forests, rocky cliffs, mild, humidity-free summers. Also, the St. Lawrence River-Lake Ontario area of the Thousand Islands–check out Alexandria Bay or Cape Vincent.
Rent for $1300 a month
http://phoenix.craigslist.org/apa/417582201.html
Or buy for $345K
http://phoenix.craigslist.org/rfs/417804834.html
Interest alone is $1900 a month at 6.5%. Total payment has to be $2600 a month.
Twice as much to buy as rent! WHY??? Why on earth would anyone do that? Oh, that’s right. A greaer fool will come along and pay 3x as much to buy as rent…..
On the rental - what is this??? “Master bath features glass double door den/office”
I listened to some of Bob Brinkers Moneyline yesterday. A realtor with 37 years experience in CA realestate was complaining that the MSM was focusing on the negative aspects of the subprime while not looking to the good that has been done by putting many people into homes that eventually went on to become holders of conventional mortgages. He contended that subprime in default makes up only a tiny portion of the realestate at large. The poor guy seemed to be in denial as to what is really going on around him.
He should know better and tell the truth. Why are so many people giving these liars a chance to spread their lies?
If you listen to Bob then you’ll remember that within the past year he was spouting the mantra on the RE market especially on ocean front property “they aren’t making any more of it” thereby justifying the prices. I think he was drinking some of the coolaid too.
I don’t listen to him on a regular basis (Money Talk) however lately when I have I think he and Dave Ramsey have been suprised as to how fast this is unwinding by the volume of calls dealing with realestate. He did have guest Charles Maxwell oil analyist on the show. He said oil should be at $100 a barrel or higher in 2010-2011 based on current trends.
I used to listen to MoneyTalk with Bob Brinker, but got too frustrated with Bob becuase he at times seems way too obtuse, and it was just painful listening to his answers. I am a subscriber, though, and did very well with his 2000 and 2003 market calls.
I am addicted to Dave Ramsey. I even have one of his bumper stickers (Debt Free & loving it!) on my car, to the consternation of my children (since when is it shameful to be out of debt?). There are some shows when several callers in succession are upside-down on their mortgages, or have ARM loans that are resetting, or have to move due to job relocations and cannot sell their houses. Although I respect DR, he was denying there was a housing bubble in the US for the last two years. I’ve decided to filter him - listen to his advice about personal finance and behavior, and ignore his advice on Economics.
Even if he has been wrong on calling the bubble, if you followed his advice (”live on less than you make”, “don’t buy more of a house than you can afford”) you would certainly b better off than following the advice of a real estate agent or mortgage broker…
Mr. Brinker:
1. Tight Money: Brinker says, Fed Discount window is open, and
all who are members are free to get as much as they can carry,
establishing orderly mortgage market fundamentals going forward.
2. Rising Rates: Brinker says Fed is gonna cut, and this is
positive for the market.
3. High inflation: Brinker says reported numbers are well within
comfort zone, and not only that, inflation does not matter growth is the key.
4. Rapid Growth: GDP is moderate, rates are low, and this
signals continued growth
5. High Valuation: based on current earnings environment, S&P
should see mid 1600’s.
Problems:
1. I guess going to the Discount window is a bullish sign for financials.
2. Rising rates: Even if fed cuts, its not gonna stop the bleeding in housing. Not to mention an increasing spread in the TED (Treasury/EuroDollar)
3.High Inflation: gmme a break.
4.If GDP is moderate, and inflation is low, Why should the FED act?
5.High valuations: the lack of disocunted earnings, will sucker you in at fantasy P/E’s
Might wanna check that Citigroup FX chart. Greenspan still has a way to tackle the bubbles everytime his lips move.
On an aside: the Oracle of Omaha going long basic food (Kraft) and Rail, is what I consider a Depression strategy.
We use to be Bob Brinker fans, but got tired of him. Brinker is an MSM type, who gets ‘religion’ when his gig is up. (The truth is out there, and he can’t deny it anymore.)
One day (a five minute listen) he would not entertain an intelligent caller’s ?’s about Gold, Hyper-Inflation vs. Deflation, etc… Brinker discredited this guy, and he was bright.
Jim Puplava or Peter Schiff are more realistic, and smarter IMO.
–
Bob Brinker was bought. And so are many economists who inform the public. The “best” money CAN buy!
We humans are corruptible. The vast majority of the best and the brightest end up serving those in power who have goodies (money, honors, etc.) to distribute. The same was the case in Nazi Germany.
Jas
Agreed. Good points.
“Even if fed cuts, its not gonna stop the bleeding in housing.”
Voz — agree — nothing will save housing — nothing — any more than dotcoms or tulip bulbs were “saved.” The PTB should practice some economic and financial triage and try to save what else they can.
“…while not looking to the good that has been done by putting many people into homes that eventually went on to become holders of conventional mortgages.”
Was he able to fine one?
I miss the beach a lot and would love to live near the water, but I think Georgia is a much more livable state. The Georgia coast is very nice and has a lot to offer. Especially around the Savannah area. Right now Florida just has too many negatives. But I have good friends in Tampa and look forward to being there sometime this week.
Happy I left, but happy to visit..
–
Lived in FL for six months (25 miles west of Ft. Lauderdale) and only visited GA few times. I liked GA much better, especially, the women’s accent. I liked the greenery and spacious old homes. FL to me is featureless. I lived on a man-made lake some 10 ft above the sea level and it wasn’t worth the mosquito problem.
Jas
I called my credit union because I have a CD about to mature and I wanted to know what they were offering at this time. I about fell over when she told me as of the 10th they were offering an 8 month CD at 7% and 9% with a checking account or loan. Of course this is for new money only. I’m kind of worried and thinking about pulling my money.
I asked a friend if she would like to put her money in a 5 year CD that pays 15% interest and she practically burned her hand, thrusting into her purse to write a check…
When I explained it didn’t exist (yet) she seemed disappointed.
Be careful applying old rules of engagement to this brave new world of money…
Things Change
Where should you put the money?
Well. I wasn’t going to stuff it in the mattress if that’s what you were thinking.
There are other banks. I was a little worried about their bottom line though. The banks I’ve seen offering the best interest rates (for instance Countrywide) aren’t places I’d like to park my money.
I’m getting 5.4% and 5.35% on 6-month CDs at a bank and a credit union, respectively, here in Orlando. That is a comfortable rate in today’s market. I agree with the others — 7% is too good to be true, at least it is on Sept. 9, 2007. If Coast knows of a huge shoe that will drop tomorrow and push up CD rates in general by about 2% overnight, I’d be impressed. And I’ll also bet 100-1 they don’t. If they actually offer that rate tomorrow, I’d like to see a link.
5.4 is what I’m getting on the CD that’s rolling over. I only got that rate by bringing my bankrate.com list and negotiating. Coast was offering 4.60 at the time.
I think it’s more than a little too good to be true and I’m waiting to see if that’s actually true. Especially the 9% with a checking.
Where’s the deal?
California Coast Credit Union. I was told that she wasn’t supposed to say anything till the 10th. Anyway, I just rolled over a CD last month into a 5 month for 5% with 2 penalty free withdrawals.
Coast has 52% of its loans in realestate at the end of June.
watch out,
when the regioinal thrifts are trying to attract money on the form of higher than rational (read..NATIONAL) rates this is a strong signal that internals are upside down.
I was born at Tampa General Hospital and lived in Tampa until I was nine years old and I do have memories of living there. Florida is definitely home to me even though I have lived most of my life in Atlanta. I love to ride around Tampa and try to find familiar places.
Barbara, I have found that Florida sort of gets into one’s blood. Of course, some of the wags on this blog would say “Yeah, like an infection”. Whenever I leave to visit other places, I am happy to come back. So that’s how I know it has become home for me.
I agree, it’s definitely in my blood. I’m always happy when I’m down there and there’s so much to do. I’m much more active and walk a lot in Florida. But I don’t think it’s an easy life down there, I worry about the crime. And everything seems to be more expensive in Fla.
I think Palmetto hit it on the head earlier when he noted that the northern part of Florida is far closer to “the way it was” than the southern half. Been here in central FL since the ’50s.
I have heard that Barney Frank and some other members of the Senate Banking Committee have pretty much ordered Bernanke to cut the rate.
Direct congrssional control of the FED would be the end of the dollar, I think–safe assumption?
If Bernanke cuts the rate after these statements could the credibility of the FED take a fatal hit and crash the dollar?
Do these make statements make it more difficult or impossible for Bernanke to cut–or is this orchestrated; where BB can just say: Look these folks are the real boss–whatever happens is on them?
Where is Hoz?
He posts very well on this kind of thing.
Sorry–he is on the Congressional Banking Committee–I forgot he was in the house.
Frank didn’t seem that stupid to me.
“I have heard that Barney Frank and some other members of the Senate Banking Committee have pretty much ordered Bernanke to cut the rate.”
The problem for the Fed now (assuming it truly would prefer to cut the FFR and cushion the economy from widely-perceived recession risk) is that if it does so, the world may take the impression that the Dodds and Franks of the D-ratic party (not to mention Cramer) are pulling Bernanke’s puppet strings. In order to offset this perception, it may be necessary for Bernanke to stand pat at the next meeting, given that everyone knows an easing is baked into the cake. Otherwise, folks in the know may conclude the Fed has abdicated its independence, which could be widely perceived as a signal of heightened future inflation risk.
I cannot imagine what will happen to dollar if foreign investors become convinced that congress, in an election year, with a struggling economy, has taken charge of US monetary policy. Hell, it makes we want to tell my boss that I want to be pais in whiskey, corn, gold or some other useful commodity.
Producers (1968): Sell 25,000% of a play, fail when it’s a surprise hit
Producers (2007): Leverage 25,000% of a hedgefund, walk away when it’s $hit
OT but we’re not earning any more but at least we’re still spending.
“There is lots to worry about with weak employment, but for now we may still be pleasantly surprised with retail sales,” Niemira said. ”
http://www.marketwatch.com/news/story/hovering-over-us-consumer/story.aspx?guid=%7B077A3BCC%2DB20E%2D48A2%2DAE65%2DC25D2D41F7E9%7D
As long as the credit card money keeps flowing, it’s all good.
The story in the Dallas Morning News from late last week would throw a big monkey wrench into this scenario. I can’t find a link for the darn thing but it discussed a tightening of credit in plastic - which critically included decreases in credit lines.
Hi. Lots of Kool Aid still around:
“Pressure from family members led Richard Hsieh to leave a shared apartment and find a place of his own.”
The $1.5 million condo comes with free breakfast. Nice life for a 24 year old. He bought it with his family. Collectively they most likely can afford it. But they still think rent was throwing away money. They must have a lot of money but for how long ?
http://www.nytimes.com/2007/09/09/realestate/09hunt.html?_r=1&ref=realestate&oref=slogin
http://lasvegassun.com/sunbin/stories/sun/2007/sep/08/566640424.html
Wow. Ol’Jimmy after a great run rolled snake eyes along with the rest of the Vegas REIC…
“Jimmy Dague, who has sold real estate in Las Vegas since 1978 and whose business was the No. 1 worldwide in sales for Century 21 from 2002 to 2006, filed last week for Chapter 11 bankruptcy protection from creditors while he reorganizes to pay off his debts.
The 54-year-old said that even when his business was Century 21’s top seller in 2006, he still lost money. Dague said that’s because his sales fell 60 percent from 2005 to 2006, but he kept the same number of staff - and the same overhead - in his nine offices.
“This is the result of an exuberant market and us growing and, honestly, I had signed leases for nine offices. Now I have five,” he said. “As you can imagine, the four landlords are not happy.”
Rather than fighting it out in civil court - “I can’t afford to fight the market and pay attorneys, too” - he went the route of bankruptcy. In court filings, Dague lists assets of between $10,000 and $100,000 and debts totaling between $100,000 and $1 million.
A year ago, he said, 700 real estate agents worked in his nine offices. Today, he has five offices and about 500 agents . He also has cut 50 percent of his hourly staff.”
#1 realtor goes bust - OUCH!!
I don’t believe that he didn’t tranfer his money into other accounts and all the other tricks that people like this guy does when they don’t want to pay up . Based on the kind of money that this cat was making for years ,it’s hard to believe that at least on a personal level or even business level that he is BK .
Wiz — that is exactly what I thought. 900 employees and assets under $100K? Impossible, except through the legerdemain of lawyers and tax magic that we commoners can’t put to use (or are too ethical to). Wonder if there is a “Dague Foundation?” Makes me sick.
Off topic: Scary Stuff
The Untold Story of Delta Flight 1824 Sept.9th Orlando FL
http://www.homelandsecurityus.com/090907Flt1824
Real Estate And Mortgate Fraud Information
http://www.fraudproblem.com/home/
Lots of information about real estate scams and some of the folks being prosecuted for committing them, including lists of criminal indictments and disciplinary actions being taken against real estate agents, banks, brokers and loan originators.
Good information . By what I read ,alot of the laws where already on the books against what went on regarding the borrowers/sellers and the REIC fraud ,during the housing boom .
They have a section that defines “material misrepresentation “,which covers just about all the lies from the REIC that took place .Also they are finally talking about double escrows being a no no ,yet this was common practice during the boom . Alot of information about scams ,including builder scams . Interesting that they consider giving a car as a incentive in a property transaction as a scam.
As I have said many times , what took place during the boom regarding violations of laws already on the books was everyday common practice during the boom. In fact, there is so much evidence of violations by the REIC ,it isn’t funny .
A .5M rehab? WTF!
http://chicago.craigslist.org/nwc/rfs/417939479.html
I wonder how much they would take for the sofa?
That is some seriously ugly decor.
Any gold bugs here have advice on where to purchase gold bullion or ingots in the Sacramento area?
Just want to own some for kicks. Nothing more than 1 or 2% of the old portfolio.
On a side note…. cashed out all my investments about 2 weeks ago. Everything is in one CD or another right now (thinking about TIPS or T-Bills also). Except for the current 401K at the job started 8 months ago (nothing but dogs to choose from…..Pimco…yeah).
Me confused. If the credit crunch was a serious crisis, then how could it still be unfolding?
The IMF chiefs’ remarks bring to mind what a politician might say as a tsunami approaches a coastal city: “This wave is probably a welcome one but it does not mean that it will be a painless one.”
IMF chief sees hope in market turmoil
By John Thornhill in Cernobbio
Published: September 9 2007 21:48 | Last updated: September 9 2007 21:48
Rodrigo de Rato, managing director of the International Monetary Fund, has said the dramatic repricing of risk in the financial markets should be healthy for the medium-term stability of the global economy even if it results in short-term pain.
“This reckoning is probably a welcome one but it does not mean that it will be a painless one,” he told the Financial Times in an interview at the Ambrosetti forum in Cernobbio, Italy.
Rodrigo de Rato, managing director of the International Monetary Fund, discusses with John Thornhill the crisis in the markets and ways to restore trust
He said the credit squeeze was a “serious crisis” that was still unfolding with a high degree of uncertainty. He said its effects would be limited by the strength of the global economy and the high credibility of monetary authorities around the world.
http://www.ft.com/cms/s/0/f731cb4c-5eff-11dc-837c-0000779fd2ac.html
Asia’s stock markets are sliding already first thing Monday. I guess it is up to the PPT to get global stock prices headed back in the right direction…
Japan slides on Wall Street decline
By V. Phani Kumar
Last Update: 8:35 PM ET Sep 9, 2007
HONG KONG (MarketWatch) — Japanese stocks fell sharply early Monday on a sell-off on Wall Street in the previous session and a stronger yen, with exporters such as Sony Corp. (SNE: Last: 47.31-1.99-4.04% 4:01pm 09/07/2007) and financials such as Mizuho Financial Group (MFG: Last: 11.80-0.38-3.12% 4:02pm 09/07/2007) leading the decline. The Nikkei 225 average (Last: 15,680.89-441.27-2.74% 9:59am 09/10/2007) fell 2.2% to 15,762.32 and the broader Topix index lost 2.4% at 1,519.16. Australia’s S&P/ASX 200 declined 1.1% to 6,211.40, New Zealand’s NZX 50 index lost 0.7% to 4,121.24 and South Korea’s Kospi dropped 2.3% to 1,841.54. Friday on Wall Street, the Dow Jones Industrial Average [$INDU] fell 250 points to 13,113.4, after a big decline in August employment sparked worries the country could be headed for a recession.
http://www.marketwatch.com/news/story/japan-slides-wall-street-decline/story.aspx?guid=%7BB0D942F0%2DABF9%2D4291%2DBFDD%2DF7CF4C21C650%7D