Home Prices Are Clearly Moving Lower
Some housing bubble news from Wall Street and Washington. Fortune, “Barney Frank and Hank Paulson and Ben Bernanke want everyone to know this: They are not engaging in morally hazardous behavior. ‘Nothing being contemplated rises to the level,’ said Frank, chairman of the House Financial Services Committee. ‘I don’t see a moral hazard,’ said Paulson, secretary of the Treasury. ‘I see no problem,’ said Bernanke, chairman of the Federal Reserve Board.”
“No one wants to be accused of bailing out greedy lenders or irresponsible borrowers.”
“There was only one Presidential candidate at his hearing Thursday, though this ‘08 prospect wasn’t buying into the morality play Frank was eager to sketch. Libertarian Republican Ron Paul of Texas complained that ‘abnormally low interest rates’ — including the Fed’s rate cut this week — led to a morally questionable bailout of Wall Street.”
“‘We talk about market discipline, but there’s no possibility to have market discipline,’ the candidate declared. ‘What moral justification do we have to deliberately devalue the dollar?’”
From Bloomberg. “Bear Stearns Cos., the securities firm hit the hardest by the collapse of the subprime-mortgage market, reported its biggest profit decline in more than a decade Thursday.”
“Bear Stearns wrote down the value of mortgage assets and leveraged loan commitments by $700 million, after using financial-market hedges to mitigate the loss, according to Bear Stearns Chief Financial Officer Samuel Molinaro.”
The Orlando Sentinel. “Bear Stearns and its rivals may benefit from the Federal Reserve lowering its benchmark short-term interest rate Tuesday by a half-point to 4.75 percent. The cut reduced the cost of financing trades and loans for the securities industry.”
“Bear Stearns’ largest shareholder is now billionaire Joe Lewis. Lewis paid $860.4 million from July to September to quietly acquire more than 8 million shares of the investment-banking company.”
“‘The worst is definitely behind us,’ Molinaro said during a conference call with investors.”
The LA Times. “Yields on long-term Treasury bonds jumped, the U.S. dollar sank and the price of gold surged Thursday, intensifying questions about whether the Federal Reserve’s move this week to stimulate the economy could backfire.”
“‘The cost of getting a mortgage has gone up, not down, since rates were cut,’ said Jim Keegan, a bond fund manager at American Century Investments. ‘So far the market’s voting that [the Fed cut was] not the right thing to do.’”
“Former Federal Reserve Chairman Alan Greenspan said the odds of a recession remain ’somewhat more’ than one in three even after this week’s cut in interest rates, with home prices likely to drop further and hurt consumer spending.”
“‘Remember, we still have a problem out there, which is a large overhang of unsold newly constructed homes,’ Greenspan said. Home prices ‘are down only about 3 percent, but they are clearly moving lower.’”
“Greenspan said home values are ‘very important’ because they contribute to household wealth and support borrowing to finance consumer spending. Prices are unlikely to drop more than 10 percent, he said.”
“The former Fed chief reiterated he was wary of the Fed taking part in regulating the mortgage market, adding ‘I don’t know the answer’ of whether it is proper for the central bank to increase regulation of the market.”
“Bernanke indicated no doubt, repeating a pledge to lawmakers to come up with new consumer protections. ‘We are looking closely at some mortgage lending practices,’ Bernanke said in his remarks. ‘We will use our rulemaking authority’ to ‘propose additional consumer protections later this year.’”
“Greenspan said ‘it is fundamentally a job for state attorneys general,’ he added, citing fraud as a particular problem. ‘I think what you need is experts in criminal acts.’”
The BBC. “The US Federal Reserve chairman, Ben Bernanke has told a US finance committee that losses from sub-prime mortgages are worse that ‘even the most pessimistic estimates.’”
“Mr Bernanke went on to say that the loses were set to continue and estimated some 320,000 foreclosures - or repossessions adding ‘We are committed to preventing problems from recurring, while still preserving responsible sub-prime lending.’”
The Associated Press. “The government is casting a wide net in its scrutiny of Wall Street banks, investors, credit-rating agencies and others and the role they played in the subprime mortgage crisis.”
“‘We look at all the players’ to determine whether there were missteps in accounting and disclosure and possible insider trading, says Walter Ricciardi, deputy enforcement director at the Securities and Exchange Commission.”
“Ricciardi said the SEC is asking mutual fund managers, lawyers, company executives and credit-rating analysts for details of their involvement in trading of securities that came from bundled mortgages.”
“As housing market conditions worsen, regulators are realizing how hard it is to track the trail of transactions from home borrower to lender to investor, and that it may be even harder to determine blame and liability on some of the players.”
“‘They’ve thrown this dragnet out, trying to find out what these relationships are,’ said James Cox, a professor at Duke University who specializes in securities law. He called the undertaking ’staggering.’”
“‘It is time those responsible are held accountable —- and until now, Wall Street has been getting a free ride,’ said Sen. Robert Menendez, a member of the Senate Banking Committee. ‘We need to question what it will take to make sure we do not end up here again.’”
From Hedge Fund Net. “The month after it triumphantly announced it had anticipated the subprime meltdown and its clients would be rewarded, Australian hedge fund firm HFA said it had posted its largest loss in 10 years.”
“CEO Paul Jensen announced he would resign in the wake of the miserable performance. Fellow Australian hedge fund firms Basis Capital and Mariner Bridge have also been hurt in recent months. Both have cited fallout from the collapse in U.S. subprime.”
Frm Reuters. “HSBC Holdings Plc, Europe’s biggest bank, said on Friday that it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking an $880 million writedown, because the business is no longer sustainable.”
“For HSBC, it was the latest blow from the meltdown in the U.S. market for loans to home buyers with poor credit histories.”
The Baltimore Business Journal. “All year-end delivery homes reduced by thousands. Live FREE for a year, Really. The Smart Home Savings event. Deal of the Century.”
“Those are just a few of the full-page advertising slogans home builders are trying out in newspapers throughout the region in the hopes of kick-starting the Baltimore area’s housing market. Across Baltimore, home sales are down and foreclosures are up, prompting nationwide home builders to try out the new sales techniques.”
“At the High View at Hunt Valley in Baltimore County, starting home prices were recently cut back by about $15,000, and home buyers will also get $2,500 toward their closing costs. Josh Brandt, a sales associate for High View, said the offers are helping to sustain interest from potential buyers even in the depressed housing market.”
“‘We’ve actually been doing very well’ Brandt said. ‘Part of the reason is the incentives. I think right now, in this market, people do expect some seller concessions.’”
“In Baltimore City, Pulte Homes has reduced prices at its McHenry Pointe townhome development in South Baltimore, with three-bedroom townhouses cut back from $618,485 to $549,990.”
“A record 26 percent of U.S. homeowners say the value of their homes has fallen during the past year, above the previous peak of 24 percent seen in 1992, a survey released on Friday showed.”
“‘Overall, the data indicate no let-up in the slump in home prices,’ said Richard Curtin, director of the consumer surveys, in a statement.”
“While the Federal Reserve’s half-percentage-point interest rate cut on Tuesday would help homeowners whose mortgage rates are about to reset, shrinking home values and tougher credit requirements would overwhelm the positive impact from cash-out refinancing in the coming year, according to Curtin.”
“Homeowners in the western United States, where some of the most dramatic home appreciation had occurred, have been especially hard hit by the real estate downturn.”
“In the third quarter, 33 percent of homeowners surveyed in the West said their home value fell during the past year, up from 23 percent in the second quarter. Nearly a quarter expect home prices to fall further in the coming year, up from 17 percent in the second quarter, said Reuters/University of Michigan.”
This stuff in Washington is getting comical. What do you do when you are powerless to stop something? Desperately act like you are doing something!
‘Bear Stearns wrote down the value of mortgage assets and leveraged loan commitments by $700 million, after using financial-market hedges to mitigate the loss’ ‘HFA said it had posted its largest loss in 10 years.’
‘HSBC Holdings Plc, Europe’s biggest bank, said on Friday that it would close its U.S. subprime mortgage unit, cutting 750 jobs and taking an $880 million writedown, because the business is no longer sustainable.’
Another 2 or 3 billion - poof!
A billion here A billion there and all of a sudden it becomes real money…
Kinda like the dot.com bust. A little here, a little there, and before you know it, the market is 75% below its high.
And 7 years later, it is STILL only half its high.
We are going to get the same here.
Median price is only 10% down from previous reporting period. Of course, it sounds better than noting that is 30% down from peak. And another 10% will be reported, while the overall decline gets close to 50%.
Watch for these types of statistics.
Nickels and dimes will kill ya every time.
Speaking of statistics, when you’re referring to “the market,” are you referring to the NASDAQ index? It’s about 50% off its year 2000 high.
Yes, the NASDAQ.
It gives us a pretty good idea of what will happen.
This NASDAQ chart also shows what ‘return to mean’ looks like.
http://en.wikipedia.org/wiki/Image:Nasdaq_Composite_dot-com_bubble.svg
Didn’t you hear Greenspan?
“Greenspan said home values are ‘very important’ because they contribute to household wealth and support borrowing to finance consumer spending. Prices are unlikely to drop more than 10 percent, he said.”
Prices are unlikely to drop more than ten per cent!!! Is he s**ting us????
SMF, you’re right. Prices will go below 50% from peak. In fact, prices in many places have dropped way below the Greenspan floor of 10%. In Orlando, truth be known (i.e. dont listen to NAR) some prices are already at 50% of peak.
Even at that level, I’m still not buying.
This guy looks dumber each time he opens his pie hole! Strap old Greenie to a gurney (sounds like a country song) and tape his friggin mouth shut!!
He ain’t lookin’ all that smart now, is he?
The frightening part is, He was drivin’ the bus when all this went down!! Do any of these people know s**t? What is there to convince anyone that Bernake now knows best and won’t make this worse? After all he was raised on Greenies knee.
Just in the past month I can see the Central Florida market unraveling rapidly at a rate I did not expect. We all knew the bubble was going to pop but this looks like it will escalate and it is not pretty. Most of this stuff is not in the news.
The unfortunate part is that I now am resigned that we will have a nationwide recession, worse in Fla, Cal, Az and Nev than in most states. A total meltdown is not out of the question.
I don’t think they are stupid at all. I think they are protecting their friends (banks) and screwing the rest of us.
The destruction of the middle class is vital to achieve control. By creating a generation (or more) of mindless consumers, the plan began. Victory came with the outsourcing and insourcing of jobs, the War on Savers, and finally with the Housing Bubble, a wonderfully evil creation that allows the rich to take the houses AND the money of the middle class. Admittedly, some of the prey will slip through the net since they put nothing down and have no problems with “disappearing” to avoid their past catching up with them, but still, the damage was done.
Now, devalue the currency and everyone strap on in for the ride to Banana Republic of America land!
“What do you do when you are powerless to stop something? Desperately act like you are doing something!”
Exactly! Come next election, these guys want to say they did something. They don’t want to be accused of doing nothing while Rome burned. They are just peeing in the wind as it burns, however.
OK so whats the verdict on the honovin deal of the century….is this news reporting or a press release from the company?
September 20, 2007 06:00 AM Eastern Daylight Time
Ohio Homebuyers Respond Enthusiastically to K. Hovnanian’s Deal of the Century
CANTON, Ohio–(BUSINESS WIRE)–Ohio residents were among about 460 people who made deals this past weekend at new-home communities offered by K. Hovnanian Homes and Oster Homes in Ohio and other Midwestern states.
The three-day sale was part of the company’s first national sales event. Called the Deal of the Century, the sale offered tremendous buying opportunities at all of its communities across the 19 states where the company sells homes. Nationwide, more than 2,100 gross sales were recorded.
“The preliminary results exceeded our expectations,” said Ara K. Hovnanian, president and chief executive officer of Hovnanian Enterprises, parent company to K. Hovnanian Homes. “The high level of traffic we saw in our sales offices and models over the weekend and over the past several weeks convinces us that there are interested buyers in the market today.”
The company reports its financial matters in geographic segments. Ohio is in the Midwestern segment, which includes Illinois, Kentucky, Michigan, Minnesota and Ohio. In those states, the company recorded about 460 gross sales. Gross sales include contracts and deposits. For its fiscal quarter ending July 31, the company had 268 contracts for Illinois, Kentucky, Michigan, Minnesota and Ohio.
“We have been seeing traffic and sales increasing in many of our communities over the past few weeks, telling us that people are ready to buy homes again,” said Bruce Grosse, division president of K. Hovnanian Homes in Ohio. “We believe people are getting more realistic about the price of homes, and that’s resulting in increasing sales.”
Customers packed K. Hovnanian’s sales centers across Ohio over the weekend. Incentives varied in each community, but included combinations of price reductions, premium waivers and free upgrades. Although those wishing to buy homes have been reluctant to enter the market, the Deal of the Century brought them out in droves.
“Confidence is returning,” said Evelyn Oster, co-division president of Oster Homes, a division of Hovnanian Enterprises, in Cleveland. “People have stayed out of the market for almost two years, and that has built up demand. They see that the economy continues to be good, interest rates are staying low, there are many homes to choose from and the deals have never been better. Savvy homebuyers also understand that prices have pretty much stabilized and that there are still good, conventional mortgages available. During our Deal of the Century event, we gave home buyers the best reason to purchase a new home: unbeatable quality at a once-in-a-lifetime price.”
Home prices have returned to pre-sale levels in K. Hovnanian communities around the state, although buyers can still find value, said Grosse.
“Homebuyers want beautiful, practical floor plans, but they also want a quality home,” Grosse said. “We’re able to show them that we’ve been in business since 1959 and that nine out of 10 of our customers would recommend us to their friends and families. Coupled with the features and choices we’re including and the good deals we’re offering, we expect people to continue to buy homes.”
K. Hovnanian Homes is the sixth largest homebuilder in the nation. The company delivered 1,984 homes in Illinois, Kentucky, Michigan, Minnesota and Ohio during its 2006 fiscal year.
The parent company, Hovnanian Enterprises, Inc., was founded by Kevork Hovnanian in 1959 and is headquartered in Red Bank, N.J. It sold 20,201 homes nationally during Fiscal 2006, generating $6.1 billion in total revenues. The company builds planned communities that include single-family, townhomes, garden homes as well as mid-rise, high-rise and mixed-use buildings. The company also is known for its active-adult homes and its expertise in community redevelopment and environment rehabilitation. More information is available at http://www.khov.com . Information about K. Hovnanian Homes is available at 888-KHOV-444. Information about Oster Homes also is available at (440) 985-7440.
“People have stayed out of the market for almost two years, and that has built up demand.”
Whoa - whoa - foul. Two years? Staying away for two years already - when just months ago no shill would even acknowledge things slowed down?
Like they say - you can only see recessions through the rearview mirror.
is this news reporting or a press release from the company?
I vote for (b)
It’s got to be a press release from the company.
Khov only hopes these sales go through. I bet they don’t tell us how many do not qualify and fall out next month. Khov trys to do the upgrade deals(which save only half at best) to these potential buyers. Most buyers are not savy on financial deals and will follow the lead of the seller as to what is a good deal. If they were smart the only thing that would count is lower price. Since the future value of money plays a great deal in total cost for a shelter every dollar save on PTI is highly important.
Press release. Business wire is used for press releases.
Horvanian only had a $20,000 reduction on houses in Ohio. Since I still have an active real estate license, even though I don’t use it, I received their flyer along with the commission stucture. The commission went up if you sold more than 1 unit. These buyers will be upside down by the first of the year. The flyer was for the big cities in Ohio, so I’m not sure $20k was that big of a discount. If they’d done that in our area people would have flocked to the sale. Our prices went up 1-2% a year or sideways since 2000.
In my area of the Ohio, new home prices are as follows:
low-end house wtih no basement - $180K-$200k
mid-level house (3/4 small bed/2 bath - $220-280k
high-end houses typcially $380 and up.
(not much new stuff in the 280-380k range)
So we are probably talking 10% off
You have completely different data then do. NEOH prices have increased tremondously. Especially in the high end burbs. But they are starting to come down.
Tons of houses expiring and not relisting (yet).
“cutting 750 jobs” And just what type of housing did they own? After all, high end property is holding up well because the high end earner can afford it! I think we are about to test that thesis.
“Barney Frank and Hank Paulson and Ben Bernanke want everyone to know this: They are not engaging in morally hazardous behavior.”
******
Bullshi*!
My apologies for the one word post.
But I have to say the record of these guys in calling things “contained”, our “Goldilocks” economy, “the best business economy in my 32 years in business”, and on and on - can we believe much of what they are telling us?
I’m beginning to have my doubts.
And thankfully, someone in the MSM is starting to ask the right questions:
“So back to my original question: is raising the cap on the conforming loan, which allows Fannie and Freddie to sell higher-priced loans, just a big ol’ bailout of a market gone awry and a message that says, ‘Okay, you screwed up, we’ll just raise our loan limits to help you out’? And if the loan limit is actually based on home prices, which are actually going down, then isn’t this a bigger bailout than even its face value?”
http://www.cnbc.com/id/20889594
What the hell is going on there in Washington?
Ms Diana Olick has called this blog one of her favorites.
She has excellent taste, and knows where to get the info served up straight.
Thanks, Ben.
“Ms Diana Olick has called this blog one of her favorites. ”
I day late and a dollar short!! Where were theses GURU’s
18 months ago. They are all jumoing on the bandwagon now, I think it’s time to look in the other direction as a contrarian.
What’s a contrarian to do, when the rest of the world wakes up to your view?
Better late than never!
I do not read her regularly, but Ms. Olick has in the past presented some topics the rest of the MSM had previously ignored.
She did it again today and I certainly give her credit for that.
She cowtows to the reic too much but she is pretty cute.
I have noticed that her articles are fantastic.
She has also said all real estate is local.
Don’t worry, aladin. The rest of the world has not awakened to our point of view. Just read that “digg” blog thing from last night and see all the comments from nincompoops spouting Lereah-speak of yesteryear.
Maybe some good data miner could find out but I wonder hown many homes as a percentage accross the country fall at or below the $417K conforming limit….My guess would be its a huge percentage…maybe 75-80% ??…If that is the case, isn’t the raiseing of the conforming limit just helping out the major metro cities ??
You can pretty much regard the expansion of the conforming loan limit above $417K as a wealth transfer from the Red States (where almost no homes are valued above $417K) to the Blue States (where many are valued above $417K). ‘Tis a puzzlement why GWB thinks it is a good idea to support the transfer of large amounts of wealth into the hands of Blue State voters and the D-ratic politicians whose campaign coffers will benefit from the implicit kickbacks from the banking industry.
That and California: Home of the Endless National Campaign Whistle Stop Money Grabbing Curcuit.
Why should any politician go out of his way for California? It’s gone so thoroughly Democrat that no Republican would bother trying there, and no Democrat would need to — he’s got the electoral votes sewed up regardless of whether he blows the state off entirely.
Read somewhere that 20% of national campaign dollars come from California pockets. Gotta keep the spigots open.
Did CA’s Democrat heavy-ness stop the Governator? I don’t think it did…
Ahhnold is no Republican, despite the claims. Neither is John McCain, IMHO.
“Ahhnold is no Republican, despite the claims. Neither is John McCain, IMHO.”
I’ve abandoned the Dem party but still, you can’t dump these two losers on the Dems. They are prime Republican meat.
If that’s the case, I’m bailing on the GOP. Is it time to look at the Libertarians???
Arnold was elected with no Republican primary, which is perhaps the only way a Republican can be elected in CA. Conduct an R primary and you get a religious zealot or homophobe or abortion-clinic-bomber or …
First rule of holes: stop digging.
Grown men and women on Wall Street, are in the process of digging a hole to China.
They’ve been at it, awhile.
$417k in Ohio would buy a 3000-4000sf house, so I’m guessing most are under the limit.
it will soon. right now a 4000K foot house is 475K - 650K
I saw Alphonso Jackson, Bush’s housing person, on Nightly Business Report last night. He said that the administration is not interested in bailing out, and I quote, “yuppies” by raising the conforming loan limit by any sizeable margin. He specifically said they were thinking of raising it 2% per year for a short period (didn’t specify how long). So it doesn’t appear that much will change regarding Fannie and Freddie’s loan limits until Hilary is elected president.
I saw that too, and my blood boiled a little when he talked about the “yuppies.” But I look at it this way: if they are looking to screen out yuppies, at least they are looking at what they’re buying, which is more than I can say for Moody’s or the Bank of Europe. And while they’re at it, why don’t they look for 3% equity as a criteria too?
I think the Fannie/Freddie thing is going to splat anyway. By the time you screen out second homes, re-fi’s, less than 3% equity, and yuppies, and oh by the way liar loans, who’s left? Just us, probably. And we didn’t buy.
I find it interesting that George’s advisors have told him that raising the conforming loan limit is going to help homeowners (yuppies). As soon as he figures out that it’s Wall Street who will benefit, he’ll be like, “…nevermind what I said before. God spoke to me last night, and He said that an increase in the comforting loan limit is necesserious after all.”
Why up 2% a year?
It went up 100% or more in recent years (see below).
Why doesn’t it go down to match falling house prices?
“What the hell is going there in Washington?”
*********
CLL = Conforming Loan Limit
“So I decided I didn’t know enough about the CLL (sorry, it’s too long to write out, so I’m making that up) to discuss it wisely, and have hence done some research. I was interested to find that from 1990 to 1999, the CLL jumped from $187,450 to $240,000, which if my Outlook calculator is correct is $52,550.
From 2000 to today, the CLL rose from $252,700 to $417,000. That’s 164,300!! Since the CLL is based on an assessment of home prices, that’s a pretty scary indicator of how price appreciated positively soared during this recent housing boom.”
http://www.cnbc.com/id/20889594
Sfjack,
given the evidence accumulated on this blog, it is best to assume anyone connected with government is lying, unless you have significant evidence that they are not. The exception is Ron Paul.
Did they also mention that they are not engaged in propagating economic propaganda?
They mean that they are not engaged in morally hazardous behavior *together*. No wide stances for them, uh-uh.
More on that behavior. This may have been posted yesterday:
“But his [Bernanke's] non-answer is not germane. The element that Ron Paul introduced is: the morality of the Federal Reserve’s constant injection of credit into the system at the slightest hint of macroeconomic distress. And I mean slightest: we haven’t even seen a GDP print below 0. We were only down 4.2% from the ALL TIME high in the Dow (the Fed’s own research suggests that the stock market is the best leading indicator of the economy)…
Bravo to Ron Paul for giving voice to the hundreds of millions or pensioners, savers, working stiffs, poor, fixed income beneficiaries, laborers, gasoline-, bread-, milk-, and egg-buyers who weren’t able to ask Mr. Bernanke why he – like every Fed chairman before him since 1913 – screwed them for the benefit of the top 5% of the population of this country.”
Scott Reamer at Minyanville:
http://www.minyanville.com/articles/bernanke-ron+paul-testimony-wall-street-america-dollar/index/a/14185
Scott Reamer runs Union Tree Capital, a Denver-based hedge fund, as well as Scout Research Partners. Previously, he was a sell-side analyst for nine years covering the technology, media, and Internet sectors for Prudential Securities, Bear Stearns, Donaldson Lufkin & Jenrette and SG Cowen.
“Bear Stearns Cos., the securities firm hit the hardest by the collapse of the subprime-mortgage market, reported its biggest profit decline in more than a decade Thursday.”
1984 speak: Loss = profit decline
The overall firm still made money.
Remember when the builders were reporting profit declines, say a year ago or more? As I said at the time, profit declines are no big deal. Losses are a big deal.
The question is, who is holding the paper, and among those who are, will they write it down before, during, or as late as possible after the moment when defaults ensure the lower tranches will not be paid?
Goldman’s profit, besides the sale of an energy unit, came from shorting MBS…the same toxic stuff they’ve been offloading on their clients. Must make the stooges, (er, sophisticated investors) who’ve taken a bath on their Alpha Fund feel all warm and cozy.
WT Economist,
You must be kidding. There is great lattitude in how a brokerage firm can pull forward or shift positions at quarters end. I’d wager their books look different today than they did at quarters end. In effect they can, within reason, report what they want.
Good to see at least one of the Wall Street playas get some well-deserved comp uppance.
“Greenspan said home values are ‘very important’ because they contribute to household wealth and support borrowing to finance consumer spending. Prices are unlikely to drop more than 10 percent, he said.”
So … last week he said housing prices drop double digits (maybe I dreamed that). He meant, exactly 10.0000001%?
Now he is going to use national figures, they look nicer. Never mind what is happening specifically in FL, NV, CA, and AZ. Those numbers only serve to confuse the issue and make it look worst than he wants it too.
Now is the time for my favority statistics quote:
” He uses numbers lika a drunk uses a lamppost, for support rather than illumination”
The only thing about this RE market that is local will be the pain of homedebtors who sell at a loss, or can’t sell at all.
“The only thing about this RE market that is local… ”
*******
Remember this line - whenever some Alt-A Bay Area clown tries to talk about how “local” real estate is… I just remind them:
“Real estate may just be local. But financing is international.”
Exactly! Actually, national decline of 10% is huge. But of course people in CA,NV,FL, and AZ hear AG as saying it’ll only be 10% where they are. Not the way it works, folks. 10% down nationally means folks living in bubble areas get hammered hard.
I am guessing AG meant double digit real house price declines, as apparently the Fed has just revealed their campaign to try and inflate away their problems.
And has the Paper Knight, Sir Alan Greenspam, bothered to tell us where the WAGE INFLATION will come from? From competition with every 3rd world hellhole nation out there? Or, maybe all the illegals in America will drive up our wages?
Perhaps the Paper Knight is trying to explain that America will become like all the other 3rd world banana republics, where the currancy is replaced every few years because of hyperinflation… hey, then our wages will be low enough to compete with China. Of course, we’ll be living in huts and eating chicken necks, but he’s fine with that. It won’t affect him…
House prices will stay up simply because people love to shop? Is that what he’s saying, because it sure sounded like it. LMAO - the myth of the infinite hyper-consumer. No need to ever work again - we can all be just like Congress.
Always sneak up on your investment…
“Bear Stearns’ largest shareholder is now billionaire Joe Lewis. Lewis paid $860.4 million from July to September to quietly acquire more than 8 million shares of the investment-banking company.”
This market rally is a total joke.The fed admits we have seriuos issues and the stock market rallies.I know it ia a short squeeze but lets get real here.
Personally, thats why I stay away from the market Arizona….I know I will get my butt handed to me….
This market rally is a total joke.
??? It makes complete sense given the environment. You now have billions of bucks looking for return, and interest-bearing instruments are going to be delivering less yield. Naturally, money moves from bonds to equities.
“The month after it triumphantly announced it had anticipated the subprime meltdown and its clients would be rewarded, Australian hedge fund firm HFA said it had posted its largest loss in 10 years.”
*******
Hey!
All you hedgies and banker Pig Men:
“How’s your model lookin’ today?!”
********
Speaking of hedgies, when are we going to hear from our very own HFA (hedge fund analyst) again?
I would expect he’s excited that Helicopter Ben turned on the firehouse again for him and his buddies.
This is getting out of hand: Bernanke & Co have not only pissed on us, they are also telling all who would care to listen that it’s raining, and that we should be dancing.
“‘We talk about market discipline, but there’s no possibility to have market discipline,’ the candidate declared. ‘What moral justification do we have to deliberately devalue the dollar?’”
Last week I was convinced that while a .25 rate cut was baked in, the Fed would not, could not lower by .5. Why? The risk to dollar values and the possibility of ‘dollar-flight’, coupled with a sharp rise in interest rates were too dangerous a combo. But now I’m looking to a different scenerio: that the Fed ’shot their wad’ in one move, knowing that any less would be a blow to the Street and that anything they did would result in a blow to the dollar. So if so, what about the Oct. 30 meeting? The dollar continues to fall, interest rates on especially long notes continues rising and the talking heads are already questioning the move. So they do nothing and hold. The Street is hooked and will demand more juice - but maybe just maybe BB will say no - and take the real heat this burning kitchen of an economy is about to unlease.
Yeah, but that is what I was thinking in August…..
I heard someone say that this 50bp move was about banking system stability only, and that the spread between some of the junk trying to be cleared through the market and the risk free rate was too narrow. Thus, a logjam, deer in headlights, etc.
Their theory was that the 50bp move was an effort to help clear this paper. The implication of which is that once this paper is cleared, underwriting going forward should be adjusted to current market perceptions, and the Fed will be stingier going forward to combat inflation/weakening dollar.
They’re scared and the desparation is starting to show. They’re blowing their wad at the worst time of the year - RE will slow if for no other reason than it will be 4Q - probably offsetting their actions. Although IMO they must think they are priming the pump to avert a third silent spring.
“The annualized yield on the 10-year Treasury note, a benchmark for mortgages, surged to 4.70% from 4.54% on Wednesday and 4.47% on Tuesday.”
I want 6.0%. Nothing less would even tempt me given the risks, even with short-term rates coming down.
For stocks I want a PE of 15, with earnings as recorded once we are in recession and losses are admitted to.
House I’ve got. I don’t need two.
With that kind of jump just since Tuesday, I’d say 6% isn’t that far off.
US Treasury to halt state, local securities sales…Reuters.
Wheeeeeeeeeeeeee…look ma–no hands.
Dang–Ya just can’t make this stuff up. Sigh.
test
Prices in the midwest are still high. Look what you have to pay for a McMansion in the nice little town (I’ve been there) of Verdigre, NE:
http://homesellerpak.com/listing.php?listing=3898
$79k for a 5 bedroom house in little Bohemia, with freshly baked poppyseed kolaches around the corner, at the bakery…
Sweet~
and they take USD’s
quaint
Oh. my. god. Wine cellar? One acre with vinyard and small orchard? And it’s on the “edge of town” but the nearest intersection is Main Street? $79K?
Something has to be wrong with this place.
I’m sure nothing is wrong with it except that it’s a small town. Many snobs in this country look down on small towns.
I’m always amazed, when I see things like this. I understand the economics of it and all the rest. But still, if I were a young man just starting out I’d have a T-1 installed and telecommute. No way, would I spend 6 or 700k for a house with this available. No way… No where…
So few telecommute in the US because any job NOT involving your physical presence on a regular basis is already in Bangalore or Beijing. welcome to globalization…
I just got off the phone with one of those. It was a call to Xerox. I was so pi$$ed by the time I got off the phone that I want to throw our copiers out the window. I couldn’t understand anything being said to me so I hung up and figured the problem out myself. Maybe it is tough love, forcing me to think for myself. Mission accomplished!
You would have to think, and this is just my opionion mind you, that if you had a cost basis of 79k for your living arrangement. Your cost of service and benefit of employment would be competitive with an employee in Bangalore or Bejing. Just my opinion no research behind it.
Sounds like a great retirement castle. As long as you’re within 50 miles of a wal-mart you wouldn’t have to leave the property. Oh, and don’t get sick.
Not true. I’ve been telecommuted off & on since 1999. If you can convince an employer to let you work from home at 56K, you’ve really accomplished something!
Word!
It is so ridiculous - they can send stuff over the ocean but to tap into talent in the next state over in this “time of skills shortage — please more H-1Bs” is verboten.
Where I live in a small town in OH 600-700k just blows my mind. I could buy a 5500-7000sf house with that kind of money. That 79k house in our area would probably sell for 100-120k. Plus our small town has large grocery stores, all the fast food restaurants, several sit downs, 5 banks and we’re 15 minutes from a large city center with every imaginable business and restaurant you could want. Actually the cities house prices aren’t much more than ours. New 2300sf houses are about 225-250k.
Median salary is 30-35k. We’re closer to $100k so living here is really cheap.
An old time porch to watch the world go by: on a dead end street?
“‘It is time those responsible are held accountable —- and until now, Wall Street has been getting a free ride,’ said Sen. Robert Menendez, a member of the Senate Banking Committee.
BWAHAHAHAHAHAHAHAHAHAHAH!
Yeah, that unneceasry rate cut sure sent those “Wall Streeters” a tough message!!
Oh man, I love the smell of desperate politicans posturing and pontificating early in the morning!
And sorry to burst the homedebtor’s “other” bubble (thinking Washington will save them): NOTHING the Fed, the Pressidnt or the useless Congress do will stop the Housing Titanic from sinking.
Glup, glup, glup.
It was mighty nice of Helicopter Ben to help make sure the Wall Street IBs who funded the bubble could get onto their Titanic life rafts before the ship goes down, though…
The $hip of Fools is well and truly loaded…
I glimpse a few fatcat rats, leaving vis a vis the mooring ropes~
Dow 14,000, welcome back.
Baltimore city townhomes at 549K? Baltimore is on track to have the highest murder rate in the country this year. And its population has been dropping since the bubble started.
These prices are comical. But the government is going to do what it can to prop them up. Having Fannie buy bigger mortgages and insuring super-jumbo mortgages will help lenders and hedge fund managers. I guess these top people, moving seamlessly from top jobs at investment houses into and out of the government helps insulate them from any risk they take, no matter how ill-advised.
Privatize the gains, socialize the losses, and help keep housing at stratospheric levels so this foreclosure problem just keeps repeating itself - good plans.
Although it is only my opinion, I find it comical that people spend so much to live in a big city. Even though my home has always been in one my gut always told me it isn’t worth stretching for - for me this means $150k tops. Sorry, but it just isn’t.
Now, I know all the arguments about the benefits of big city living - and its not a gulag by no means. At the same time the streets are mean and getting meaner - $549k for a townhome in any city is just plain nuts. Once it gets to that point why not go back to school, try a new career and go somewhere more affordable?
There’s a fine line between persistence and insanity.
It’s all about priorities. For me, I’m stuck in Chicagoland with you because my family (and spouse’s) are here, most of our friends are still here, and being able to get to the occasional Bears and White Sox (and yes, even Blackhawks) game makes up for it. We get along with our neighbors, no one treats us as outsiders (as may happen in smaller towns).
We’re lucky enough to be in jobs where we could work anywhere, and we did seriously consider moving out to somewhere smaller and more Mountainous. But, the above won out, and although it stinks to be throwing money away in property taxes and mortgage and parking and all that garbage, it’s home.
Is it true that the only time the Blackhawks sell out is when they’re playing the Red Wings???
Nowadays, they rarely sell out even with all the detroit fans. real sad. Growing up it was packed every night until about the mid 90s. I need the Bill Wirtz Bubble Blog.
sorry for the OT hockey ramble
That’s ok, at least you have Da Bears. The wheels ought to be falling off the Lions bandwagon shortly.
Love small-town living, as well as outdoor life…..so midwest weather is out. Ok, I’m a wuss, but humidity, tornados, snowdrifts, bugs, heat…did I say humidity? Moved to N.W. Illinois in 1999……fled back to Oregon less than 2 years later. No thanks.
B’more is a happen’ place! We’ve got it all - working towards a murder a day, we’re the inspiration and origin of the “Stop Snitchin’” DVD, people who speak out against the druggies get fire-bombed, the police department is full of corruption, the ex mayor (now governor) falsified the crime states, and the current mayor is under criminal investigation for illegal government no-bid government contracts awarded to family members and cronies.
In B’more, you know it is sundown because they light the cars on fire… oh, and they steal the street lamps, too, for the copper wire and scrap metal value. And no, I am not kidding.
Yeah, great place… Does it come with a bullet-proof vest and a AK-47?
“The US Federal Reserve chairman, Ben Bernanke has told a US finance committee that losses from sub-prime mortgages are worse that ‘even the most pessimistic estimates.’”
come on Cagey B, don’t sugarcoat it…
We are about to find out if Ben Bernanke has the balls for this job. All the happy talk is over, and the real crap is rolling. He will either fold and cut the rate to 4%, or stand up and say that’s it, boys. He’s about to earn his pay either way.
He’s a one-trick pony…
The die has been cast
We need Paul Volker!!! Let’s cut to the chase… Strengthen the dollar and bring back respect to this country!!!!
He’s already shown his ‘put-dealing’ hand.
As someone stated, “he’s our boy” or Wall Street’s bit*h
On the other hand, Bernanke said “while still preserving responsible sub-prime lending.’”
So says Bernanke, but his pal, Alphonse Jackson says “teachers, firemen, police officers and nurses” should be bailed out because they are not educated enough to understand and sign mortgage docs.
So, Bernanke, who are these “responsible” sub prime people you speak of?
So says Bernanke, but his pal, Alphonse Jackson says “teachers, firemen, police officers and nurses” should be bailed out because they are not educated enough to understand and sign mortgage docs.
I don’t know about firemen,but in our area police officers, nurses and teachers all have 4 year degrees and they had to take the same basic classes that we business majors took. They’re not stupid. I’d say maybe the people that never finished high school are the ones that may not understand docs.
Alphonse Jackson is a total nimrod. What about all the pension fund and money managers who bought securitized subprime mortgages? Apparently, Bernanke thinks they were too uneducated to know what they were doing, so he had to bail them out.
“No one wants to be accused of bailing out greedy lenders or irresponsible borrowers.”
No duh - but they wouldn’t mind being seen as bailing out greedy and irresponsible VOTERS.
Nice wording. They want to DO it! They just don’t want to be accused of it!
Bingo. Great observation.
“In the third quarter, 33 percent of homeowners surveyed in the West said their home value fell during the past year, up from 23 percent in the second quarter. Nearly a quarter expect home prices to fall further in the coming year, up from 17 percent in the second quarter, said Reuters/University of Michigan.”
Any evidence on how the value of invester-owned second (or third, fourth, fifth, etc) homes are holding up in the West?
Anecdotally, I will say that a lot of properties are going begging in Sun Valley, ID and on Maui. These are overwhelmingly vacation / second homes and often owned by wealthy Californians. Have heard similar things of other resort areas but can’t confirm from first hand observation.
Alan Greenspan said the odds of a recession remain ’somewhat more’ than one in three even after this week’s cut in interest rates, with home prices likely to drop further and hurt consumer spending.”
“Greenspan said home values are ‘very important’ because they contribute to household wealth and support borrowing to finance consumer spending.”
Definitely Greenspeak: “hurt consumer spending and support consumer spending”. Mr. Greenspend just doesn’t get it, people should not be using their houses as ATM machines. He and his ilk didn’t understand that when housing prices rose beyond reasonable income to debt levels that the mortgage became the giant vacuum sucking up disposible income dollars needed in the economy and that it was the phantom HELOC dollars that the Fed’s had in their sights.
“Greenspan said home values are ‘very important’ because they … support borrowing to finance consumer spending.”
The mere fact that that high officials or former high officials see borrowing for consumer spending as desirable shows how very far gone we are.
Bernanke said, “‘We will use our rulemaking authority’ to ‘propose additional consumer protections later this year.’”
Better late than never, I guess. However, Greenspan adds, “‘it is fundamentally a job for state attorneys general….’”
How can belated Bernanke propose new consumer protection laws when his predecessor continues to argue states are responsible for protecting consumers?
CNBC is in Denver this morning, and they report with such a nice smile all is well, the Real Estate market is doing quit well here they said?
This is such a balant untruth, i don’t see how they have the nerve to report such a thing, Denver never really took part in the boom their market has been in the tubes for years and its continues today, most people who want to leave can’t because they can’t sell their house and forclose property abounds. These are the people you want to believe as far as investing not me???
This is why Rupert Murdoch sees an opportunity in business news reporting.
If done right (their claim is a “Main Street” audience), it will be easy pickings.
Bloomberg radio reported this morning the King of Porn, Rupert Murdoch is giving more $$ to democratic presidential candidates than republican.
How can anyone be so stupid to suggest that the corporatists don’t own the system?
It’s called hedging.
John Mack, aka Mack the Knife, head of Morgan Stanley, just held a fundraiser for Hilbil, and sent a letter to all his employees explaining why he’s abandoning the repubs for Hil.
He was an original “Bush Ranger”-spending big money to support W. But the pickings for Wall Street must look a lot better on Hil’s side of the street now. I suppose it would be rude to say that Hil plans on being Wall Street’s bitch.
The President, former and future, regardless of who, seems to be Wall Streets bitch.
Off topic:
So I keep track of my own economic “barometers”. Thought I would share some 2006 vs. 2007 numbers for Traderonline (Autotrader)
http://www.Traderonline.com
50% gain in Commercial trucks for sale
40% gain in Motorcycles for sale
25% gain in Equipment for sale
5% gain in boats for sale
-50% in collector cars for sale
-30% reduction in Aircraft for sale
-23% in RVs
(plain auto sales I was not able to calculate due to changes in the website)
Draw your own conclusions (unless you want to pay for mine
If you’d like a standard issue circa 1977 Cessna 172, with tons of miles from being a student trainer…
I think $15 to 20k would buy you one now.
-23% drop in RV’s? Something stinks about that one.
Not really. Know a couple who sold at the peak of the Tucson real estate market. They now live fulltime in an RV. For a lot less than they’d be spending to live in the house they had up the street.
I track new RV shipments closely. Shipments of 5th wheels are down roughly 15% over last year which tells me there are fewer buyers and 5vers are the choice of full time retirees.
Boat owners are silly.
-30% reduction in Aircraft for sale
Huh? They must have moved onto other sites. I work in the aviation industry and we’re bombarded with the news of the number of used aircraft available. My work is a small microcosm of this. Three years ago… coworkers were buying aircraft. Now they’ve sold or are trying to sell. Only one coworker is looking to buy. But because of the dropping prices, he’s holding off. (Instead of affording the same airframe with a 4 cylinder, he’s holding out for a lower price 6 cylinder with a certain propeller for takeoff performance in Wisconsin where he is going to retire.)
Very analogous to the housing market…
Got popcorn?
Neil
Question, does anybody know where i can find the number of homes sold for a given month in a given city?
California: http://dqnews.com/
“As housing market conditions worsen, regulators are realizing how hard it is to track the trail of transactions from home borrower to lender to investor, and that it may be even harder to determine blame and liability on some of the players.”
It was a Friday, I was working Real Estate Bunko
My name is Friday, I carry a badge…
dum dum dum dum, dum dum dum dum dum
“‘They’ve thrown this dragnet out, trying to find out what these relationships are,’ said James Cox, a professor at Duke University who specializes in securities law. He called the undertaking ’staggering.’”
Hmmm. Let me see….Who is responsible for this mess. Top of the list is Mr. Bubble-Boy Magoo and his free money machine. Two of the biggest and most financially damaging booms and busts in recent years, which caught the financially unaware (99% of the country), were on Bubble-Boy Magoo’s watch. First the tech boom and bust and now the property boom and bust.
How about that joke government agency called the SEC which is supposed to keep on eye on the Financial Gangsters of Wall Street (a.k.a Da Boyz) but in fact are really there to protect the Financial Gangsters as they steal and plunder with impunity. How about the politicians who were too busy doing photo-ops and collecting favors off the fat cat corporations and are now doing their usual “holier-than-thou” and “how- could-this-have-happened”, acts. Even my 9 year old grandson knew what was going on with fraudulent realtors, brokers and appraisers, all working together to push prices higher so how come the low life pond scum in Washington didn’t see it?
The banks of course. However, they never really worry too much. If it becomes a financial crisis the government (or should I say the taxpayer who has no say in it) will bail them out.
How about the CEO’s who skimmed, manipulated options and made out like bandits? Nah! American CEO’s are too honest (lol) and besides, the SEC is always on the lookout for any hanky-panky going on in the corporate world.
Greedy speculators perhaps? Pretty much down the list because if any of the above had been honest, they would not have found the ground so fertile. Average Joe Sixpack? Well, not really. Those average Joe Sixpack’s who jumped on the fast moving freight train to riches and found it was really a freight train to disaster are simply getting financially fu*ked as usual in these boom and bust scenarios? So again, way down the list. They are at certainly at fault but they are not powerful and dishonest politicians and big brokers and big realtors and CEO’s. They are mostly poor schmucks who figured they could at least get a little extra like a new car and a vacation in Hawaii or, at the most, a little nest egg to protect them in the future and maybe add something to their retirement. In other words, caught up in dreams which, for many, have now changed to nightmares. Maybe there were some who thought they could even retire a few years earlier.
Nope. The fault lies right at the top of the sh*t pile. Politicians, bankers, the Financial Gangsters of Wall Street, the corrupt American CEO’s (plenty of them these days), etc.
Now what? Well, there is one golden rule in life. A lesson my long gone mom drilled into me all the time. “The piper ALWAYS gets paid.” So….guess who’s going to pay the piper for the criminal acts of the Financial Gangsters of Wall Street, the politicians, the corrupt bankers and CEO’s? One word. YOU.
If “the Piper always gets paid “,like your mom said ,than the piper is calling for anybody that engaged in gambling and fraud in lending ,which would include borrower and lender alike ,deserves their fate . Your giving a pass to the borrower ,and I won’t do that when those buyers bought houses they couldn’t afford or willingly lied on their loan applications . The fact that the borrowers were stupid enough to believe the investment scheme of real estate is not the tax payers problem .
The only people that I want to see bail out are people that were victims of fraud ,and they would have to prove that to me in a court of law with evidence .To me ,the court system is the recourse for someone that is a real victim ,otherwise it just was a investment scheme that went bad for all parties to the contract who willingly committed fraud for perceived gain .
“No one wants to be accused of bailing out greedy lenders or irresponsible borrowers.”
Yeah, please don’t accuse us of bailing out the rich while we’re bailing out the rich.
Official denial of the practice is of utmost importance when funneling reverse-Robin-Hood welfare money to the wealthy.
PALMETTO PAGING BILL IN CAROLINA, MY APOLOGIES FOR MY RESPONSE TO YOU IN THE FLORIDA THREAD.
Geez, tampaesq pointed out that the way I had written my post implied I was an illegal slipping across the border after committing a crime. I went back and read it. ROTFLMAO! No wonder you responded the way you did. Classic blog blunder on my part. LMAO! OK, you found me out. I’m really a palmetto picker. LOL! In fact they had a story in the local paper recently about the arrest of like 15 guys from Guatemala who were caught illegally harvesting saw palmetto berries from one of the public preserves around here.
Sheesh, sorry for biting your face off, Bill. That was actually a very witty response to my blunder.
Thanks, tampaesq.
And if anyone sees a post from Bill in Carolina, please tell him old curmudgeon palmetto apologizes.
Sorry, you are now officially busted, Juan.
do palmetto berries bring a lot on the black market?
LOL, philly gal, I got egg on my face and I’m having crow for lunch. (palmetto bangs head against computer keyboard).
I dunno what kind of prices palmetto berries get, it depends on what kind. There are different kinds of palmetto. The saw palmetto has berries that are considered a remedy for prostate problems and are in fact used in prostate medications as well as herbally. Back in 2000 when I was driving back and forth from South Florida to Hillsborough County, I used to see signs posted on the highway in the middle of the state by a company that was offering cash to any property owner that had acreage with saw palmetto on it and who would let them come and harvest the berries. The Guatemalans were caught with huge bags of the berries loaded into trucks, so I guess there’s a market for it. Enough for them to risk breaking the law to pick the stuff on public land and then get deported. Like I said, since the construction jobs dried up, illegals are looking for other avenues of income.
Phillygal, I wrote a post that seems to have been eaten, but here’s a link on saw palmetto berries:
http://www.freshplaza.com/news_detail.asp?id=7283
I didn’t even make the connection to the healing application of the plant…I was thinking maybe people smoke them or something.
Of course, *head slap*… SAW PALMETTO
it’s the natural viagra too, isn’t it?
“it’s the natural viagra too, isn’t it?”
Dang, phillygal, I’m just glad everyone’s all immersed in Bernanke and the tools in Washington, or I’d have to change my blog handle.
I was going to say something, but thought from your response you had figured it out.
LOL, Blano, this buddy of mine, whenever we have a misunderstanding and I apologize for my end of things, always says “Well, I wasn’t gonna say anything, BUT….”
(10% down nationally means folks living in bubble areas get hammered hard.)
Don’t you mean benefit from more affordable housing? Yes I own, but my kids don’t.
Exactly. We own our house now with no mortgage, but I have 2 kids that I worry about them ever being able to afford RE.
“The Federal Reserve said the crisis will be over by March 2008.” Really? As far as I’m concerned, you can add that to:
(1) “The sub-prime problem will not spread to other parts of the economy.”
(2) “The job of the Federal Reserve is to keep the dollar strong.”
(3) “Mission Accomplished.”
(4) “The Maestro.”
(5) “We do not see a recession.”
(6) “The average American is doing very well financially.”
(7) “The Iraq invasion should cost less than $10 billion”.
(8) “We are bringing Freedom and Democracy to the middle east.”
(9) “Brownie, you’re doing a heck of a job.”
(10)”You go to war with what you have - not with what you want.”
There are a LOT more.
Great list!
You really need to add a few before 1).
-2) There is no national housing market.
-1) The housing price increase is based on fundamentals.
0) We have accomplished a ’soft landing’
“All Real Estate is Local”
“All Real Estate is Local”
A realtor said that too me recently. I answered “too bad banking is international”.
Her face fell.
It’s different here. Some of you have mourned the loss of bubble denyers from the comments section here. For your amusement, check out the comments on this post from a Brooklyn real estate site. The post is about a new condo building hard by the Manahttan Bridge now renting units. (The bridge has a subway trains rolling over it 24/7. The building is also near to a major 6-lane highway with bumper to bumper traffic 18 hours a day).
http://www.brownstoner.com/brownstoner/archives/2007/09/rental_of_the_d_2.php#comments
There are a couple of conos like this right next to the Manhattan bridge. What crappy streets. Worse is the Oro over by the BQE and the housing projects.
It’s Fats Domino, we’re just watching them fall…
You made some cry, when they found you lied
Ain’t that a shame?
Some tears fell like rain
Ain’t that a shame?
You’re the ones to blame
You broke some hearts when redemption didn’t start
Ain’t that a shame?
Deceit was your game
By the way, where’s the shame?
You’re the ones i’d blame
Farewell, goodbye, Gulfstream V
Ain’t that a shame?
Severe financial pain
Ain’t that a shame?
And you’re the ones to blame…
http://www.youtube.com/watch?v=bm8YpHd4_Is
Folks will soon be hurting, says Mr. Curtin
“While the Federal Reserve’s half-percentage-point interest rate cut on Tuesday would help homeowners whose mortgage rates are about to reset, shrinking home values and tougher credit requirements would overwhelm the positive impact from cash-out refinancing in the coming year, according to Curtin.”
Maybe he’s a year behind. Cash out refi essentially rolled over last year and basically died in the spring.
“Mr Bernanke went on to say that the loses were set to continue and estimated some 320,000 foreclosures - or repossessions adding ‘We are committed to preventing problems from recurring, while still preserving responsible sub-prime lending.’”
How does the Fed cook up these cockeyed estimates? According to an article I have posted at least twice already this week:
Nationwide, RealtyTrac reported 243,947 foreclosure filings in August, increases of 36 percent from July and 115 percent from August 2006.
Is the Fed assuming that August 2007 foreclosures constitute 76% (243,947 / 320,000 X 100%) of their overall foreclosure estimate??? Their estimate does not look quite pessimistic enough to me.
http://www.signonsandiego.com/news/metro/20070919-9999-1n19default.html
sometimes “sub-prime” lending does not apply to housing, except on this blog.
Without it, most cars could not be sold.
Where do you draw the line between incentives and calling it a new cash back scheme . If I pay someones mortgage of 3k a month for a year I’m giving cash back of 36 thousand dollars .This means the appraisal should be adjusted down 36K and the 20% down buyer have to put $7,200 more down to make appraisal/lending in compliance .Until this faulty lending stops people, I suggest to investors to not invest in mortgage loans and certainly for FHA not to purchase faulty loan LTV’s.
That Baltimore piece is a blatant lie. I just looked at High View at Hunt Valley and they have dropped the prices from 330k down to 273k plus 20,000 towards closing costs and condo fees.
Shows you how slimy realtors are. What a bunch of scumbags liars.
I’m confused. Greenspan says that housing will fall no more than 10% (which would still cause big problems) but then he is saying that housing could fall more. I’d say it’s mathematically impossible if housing both falls more than 10% AND falls less than 10% nationwide.
one for the homies:
remember learning is always “painfull”:
A bubble can only happen when the confluence of critical thinkers
say “This is so”, and the sheeple believe “this is so”
What happens: all the money runs to the thing that is so, creating a
bubble. The trick turns out to be the time that it takes to disprove
the “This is so”.
Lets look at whats happening in the stock market: Bonds are toast,
FED has lost control and is piling on the kool aid, next I have
stated that Tech would lead out, that is happening…I have stated
that energy is gonna bubble, WHY? inflation. dollar crashing, and
housing going totally out the fricken window.
Everyone sit back, continue to talk to the comrades in arms, and find
out “What is so.”
The comment about WAMU is something that I continue to here as well.
What happens to WAMU over the cycle of the next 18 months:
1. The dollar crashes we go into a depression
2. The dollar does not crash, we have a recession, and earnings pull
back.
3. The market is primed full, and most likely will touch new highs.
We need to continue the game plan. Follow the herd, think about “What
is so.” pile in, sell it off, before the people stop believing.
Gotta tell ya’ WAMU is approaching the “This is so” situation, and I
am almost convinced the other will be true. Do they have bad stuff,
yes. Do they have more downside, yes. Is the market gonna crash in
OCTOBER?
HEAVY and I mean HEAVY pressure is gonna whip this market down.
Except the things that are “so”. TECH will lead out. Financials will
crash. The dollar will tank. and Energy……..think bubbles,
think “This is so.”
We can use these tools to provide the keys to financial freedom in
this market. I know this is true.
ITs not what you dont know. Its what you know for sure that turns out
not to be so.
What do we know for sure?
When will it turn out not to be so?
This is the essence of climbing the wall of worry. This is the
essence of buying into the pain. This is the essence of risk. This is
our time. This is our market. We must be ready to act, quickly and
decisively, wihtout fear.
Welcome the pain, embrace the “This is so”. Everything, and I mean
everything we do and say will be so.
Here’s where I am:
BONDS ARE TOAST
DOLLAR IS CRASHING
TECH WILL LEAD OUT
FINANCIALS ARE HIDING THE PAIN
INFLATION IS GETTING OUT OF CONTROL
ENERGY IS GONNA BUBBLE
RECESSION IS COMING (IF NOT ALREADY HERE)
HOUSING IS FINISHED
Who are we kidding? By lowering interest rates last week, the Fed torpedoed hopes that this credit crunch currently strangling the U.S. housing market will somehow go away. This thing created by the “greedy investors and irresponsible borrowers” has stumped even our brightest economists. Our battleship is sunk. The signs are everywhere – Bear Stearns declaring its largest profit decline in over a decade; the cost of obtaining a home loan has gone up; Europe’s largest bank – HSBC – will shut down its sub-prime sector and cut 770 jobs; and worst of all, current Fed Chair Ben Bernanke and recumbent Fed Chair, Alan Greenspan, don’t even agree with a recovery plan. Who on Earth (and I literally mean Earth) thought this was a good decision? Surely not the thousands of employees being laid off by the HSBCs or CITs of the world. Surely not the average American homeowner, whose home’s value has already declined 3% and will likely continue. Surely not the Aussie hedge funds or German banks that were so deeply entrenched in the American sub-prime mortgages that they’re now facing record losses. Even the poor schmuck who thinks he’s got it made by refinancing at a lower rate will see his home’s equity value take a hit far in excess of his meager refinanced gain. I see no rhyme or reason to any of this – it feels like this decision was a clueless stab at an unknown monster.
I do know this, however, the one in three odds Greenspan gave the U.S. economy for entering a recession is starting to look like a mighty small number.