It’s An Emotional Time In Real Estate
It’s Friday desk clearing time for this blogger! “There’s a large inventory of unsold condominiums in the Miami market. There are at least 50 buildings under construction or nearly completed in the downtown Miami area alone, consisting of about 20,000 units. To move inventories along, developers have gone to the auction block to get them sold.”
“A two bedroom unit that sold for about $600,000 last year, sold on average for $295,000. Dien Pham walked away with a two bedroom unit on the 19th floor. To put the price in perspective, a one bedroom priced at $350,000 sold on average at auction for $176,000, almost half.”
“He said, ‘I might be doing this prematurely. Perhaps in three to six months from now ten other buildings will be going to auction, and there might be better offers.’”
“Newtown currently has more than a year’s worth of housing stock on the market even though prices have dropped almost ten percent on average from the same period in 2006. One website is reporting more than half of those available homes may be currently in or about to go into foreclosure.”
“‘If someone moved into town a year ago and bought a $500,000 home, and they have to settle for $450,000, once you figure realtor commissions, bank and closing fees, and other related expenses, they might be writing a check to walk away,’ said Robert at Prudential Connecticut Realty.”
“Hawaii had one of the lowest home foreclosure rates in the nation in August, but the numbers are up sharply from July. Hawaii reported 145 foreclosures last month, according to RealtyTrac. It’s the highest number of foreclosures in any month this year and is up from 85 in July.”
“An article in a national real estate appraisers magazine that indicates Enid, Oklahma has a large problem with real estate appraisal collusion and possible fraud has many local professionals in the industry buzzing about the potential fallout.”
“‘Do I think the tendency for some of the newer companies or out-of-town lenders who have come in to make some money, are their practices of internal control a little lacking? Well, yeah,’ said Carmen Ball, who is the former VP of mortgage lending at Central National Bank.”
“House prices across much of Western Europe have stalled or begun to fall as spiralling borrowing costs and fears of over-supply take their toll on markets from Ireland to Spain, an industry survey has revealed.”
“The German housing market has been hit hardest. A glut of property for sale in former East Germany dragged down price inflation countrywide, leaving the national average down 6.9 per cent over the 12 months to the end of June.”
“The latest sign of stagnant home sales in the Valley is really a sign: ‘For Sale By Owner.’ Robert Baker put his two-bedroom, two-bath home on the market in April. And then he waited. And waited. He dropped his asking price four times to $240,000, below the Matanuska-Susitna Borough’s assessed value, normally viewed as a low estimate for sales.”
“He left his Realtor, a 40-year industry veteran, and struck out on his own. Nothing. ‘You don’t want to scare them away but I’m thinking, is there a big hook?’ he said. ‘Bring ‘em in, get ‘em drunk and have ‘em sign something before they leave?’”
“Russell Joyce, president of the Valley Board of Realtors, tells clients that they will most likely sell their homes for what they paid and not much more. People who did 100 percent financing since 2005, the last boom year for housing prices in the Mat-Su, without equity will likely pay to sell their house.”
“‘I have to be frank with anybody I’m listing a house for now: Be realistic on price,’ Joyce said. ‘If you want to build negotiating room in, or anything like that, or think there’s been any appreciation since 2005, unless it’s very certain instances, they’re missing the boat. They are.’”
“U.S. homebuilder shares jumped after the Federal Reserve cut interest rates. ‘Maybe our boy has righted the ship,’ Robert Toll, CEO of Toll Bros. Inc., the largest U.S. luxury homebuilder, said of Fed Chairman Ben S. Bernanke.”
“Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California at Berkeley and chairman of Rosen Consulting Group, called the rate cut ‘a small positive for homebuilders.’”
“‘We have such a huge inventory of unsold homes,’ Rosen said. ‘It’s the bad loans and overbuilding and over-speculation that caused the problem, not interest rates.’”
“You might conclude the Fed has signaled it will aggressively fight off a recession before it happens and take comfort in that. But it’s too early to buy into a happy ending for this story.”
“Here’s another one to chew on: 2.6 million. That’s roughly the number of empty houses in America, said investment strategist Jim Swanson. It’s not the number of homes for sale. These are places where nobody’s home. That’s in the neighborhood of 3 percent of the country’s housing inventory.”
“‘We’ve never seen numbers like that, and the Fed move doesn’t change that,’ Swanson said.”
“Last Tuesday, the Federal Reserve lowered interest rates half a point. It’s way too late for Shane Lovett, an Oregon man who received his foreclosure notice last January.”
“Lovett decided if he wasn’t going to live in his house, neither was anyone else. Before he locked the door and dropped off the key to his mortgage company, he smashed all his windows, ripped out part of the foundation, dumped a load of gravel on the roof and left three pigs in his living room, hoping that they’d finish off the place. It’s an emotional time in real estate.”
“One of the big questions about the foreclosure crisis is, why didn’t anyone see it coming? Why didn’t anyone look at the subprime lending industry and react the way Nancy DelMaro, a senior VP for Coldwell Banker and manager of the Salem branch did.”
“It just doesn’t make a lot of sense,’ says DelMaro.”
“Putting true victims of the housing crisis aside, there is a category of debtor that could be called “predatory borrowers.” These are individuals who have treated their homes like bottomless ATM machines and have played the housing game like ‘Wheel of Fortune.’”
“These borrowers purchased homes with little money down, with perhaps no income verification, and at debt levels they knew they could not sustain if their homes did not continue to appreciate.”
“For those borrowers who mortgaged a lifestyle they knew they could not sustain, the system should not come to their rescue.”
“It is remarkable how quickly the sentiment surrounding the housing market has turned from embracing accommodating lenders who facilitated people’s ability to benefit from the unending price spiral of real estate to now vilifying the same lenders for making borrowing too easy.”
“In an upcoming election year, politicians simply lack the courage to make individuals accountable for their actions. Rather, it is more expedient to blame faceless corporations for any negative outcome to the consumer simply because more votes come from homeowners than from corporate boardrooms.”
“As children, we were taught that consuming too much cake and ice cream would have the consequences of a stomachache. But for many adults, who have gorged themselves on too much debt, their financial indulgence is now somehow someone else’s fault and they should not have to pay the price.”
“For those who have overindulged in debt and abused the system, their most valuable compensation should come in the form of an important lesson that they can pass along to their children.”
Another fantastic week, and one that dealt us some technical issues. My thanks to those who support this blog and to Jason, who kept everything together. Please check back this weekend for news, your market observations and topics.
Another fantastic week
A little eventless for my taste. Bring in the clowns!!
A shock fed cut, a record low on the dollar and you want “events” ??
Canadian dollar reaches parity with the US dollar. This hasn’t happened in 30 years.
Apologize if someone has already posted the new article by Mike Whitney (Mike, are you a HBB?). Certainly makes these out to be ‘eventful’ times:
“We are at an end of an era…Now begins global financial instability. It is impossible to speculate how long today’s turmoil will last-but there now exists an uncertainty and lack of confidence that has been unparalleled since the 1930s-and this ignorance and fear is itself a crucial factor. The moment of reckoning for bankers and bosses has arrived. What is very clear is that losses are massive and the entire developed world is now experiencing the worst economic crisis since 1945, one in which troubles in one nation compound those in others.”
Actually, it’s full of nice stats and quotes, though a bit provocative. And he does loathe the FED.
http://www.smirkingchimp.com/thread/10066
OT..warning PDF..
From MAREALTOR website..Annual Statewide Average Selling Price - Table 1968 through 2006
http://tinyurl.com/3crypq
A couple of years ago I told some Alt-A Bay Area Kool-Aid drinkers that Massachusetts had the highest house price growth from 1980 until that time (perhaps it was in 2004 or so).
They couldn’t believe it, thinking that only the Golden Gate could be so “special”.
Well, perhaps not.
I agree with you, jack. In 2004, I became aware of the bubble as a result of the news of exorbitant housing appreciation in Massachusetts that was reported on my ISP’s news page. It seemed like every few days there was a story about Massachusetts housing. From this, I got the impression that Massachusetts led the bubble time-wise in peaking prices.
Is that perhaps where AG got his “10% price decline” idea — from the 10% decline in MA’s average statewide annual selling price from 2005-2006? I have a feeling the 2007 numbers will turn out to be much more interesting, given the subprime implosion and the credit crunch.
I had been watching my home state of MA. go nuts with it real estate pricing from 2001 -2005. This was when in alot of areas houses double or even triple their values. Alot of us blue collar and lower waged white collar worker were simply priced out of the market and/or had to turn to more creative means of finacing to purchase a home. So honestly I hope the Massachusettes market goes down 50%. It would be nice if us lower wage guys can have a place to call home permently. I know that a 50% drop is probably not going to happen in most of the state. But I do have a good feeling about 30% for certain areas of the state. I’ll have to wait and see.
hehehe…Mazzholeland, where it takes 10 minutes to make a left hand turn, and the governor wants to whack everybody with a 5 cents per mile commuter tax on top of a 50% increase in the gasoline tax.
Ya gotta be on serious drugs to want to lay down roots in this sewer.
So true … when I moved from MA to CA in 91, I knew I’d be getting better weather, but I was totally surprised to find (a) my state income taxes lower and (b) easier driving conditions in LA than Boston. I admit MA has since amended income tax code but driving is still UFB.
“but I was totally surprised to find (b) easier driving conditions in LA than Boston”
Are you kidding? Boston is the worst city on the planet for driving? My time in L.A. seemed like a breeze compared to my time in Boston. Boston is by far the worst place I can think of to drive. Awful in every way.
My point exactly. They don’t even mark the lanes. Just, how many taxicabs abreast can squeeze into the road.
Boston is the one city where you are better off being drunk while driving than being sober. I was in luck when I visited.
But the Big Dig solved all those problems.
/sarc off
Didn’t the Big Dig solve all of “Bahstin’s” traffic porblems?
Or did it just replace it with falling concrete ceilings?
I know A lot of people hate Boston and MA. in general but I love the south shore and it culture. Btw I currently forced to live in Northern NJ. just 15 mins or so outside of Newark. And All I got to say about Newark is:
HOLY $H!T that place is a disaster. Plus If you want to live in the most corrupt state and over taxed state in the union,Jersey’s it. I take MA. and it’s problems anyday over NJ. guys.
One thing about Boston and the surrounding areas: the people are dicks, at least when it comes to strangers. Even in California the strangers are a bit nicer. The south, of course, is the best. They may be a bunch of poor country bumpkins down there, but they sure are nice to strangers. Cheers!
I just tried to post a reply and got lost somewhere so let us try it again.
Look guys I understand a lot of people hate boston and MA in general. But I love the south shore and it culture. And will hopefully return one day.
On similar note. Because of work I’m currently living in Northern NJ. 15 min outside Newark. And all I got to say about Newark is that is got to be the worst city I’ve ever been in. Basically it looks like a frig’in warzone. What other city has bill boards that read “Help Wanted Murder”
As for NJ in general I find it to be 1000 times more corrupt than MA. And I know they call MA. Taxachusettes all over the country but it don’t compare to this rathole of a state. So Yeah I going back to MA. as soon as possible because it far better than where I’m now.
It’s amazing. One of the top engineering schools is here (MIT), yet they don’t hire any of its graduates to plan the roadways.
Of course if the events at Logan Airport are any indication, perhaps MIT is turning out a bunch of nitwits these days anyway….
“2007-09-21 20:16:55
One thing about Boston and the surrounding areas: the people are dicks, at least when it comes to strangers. Even in California the strangers are a bit nicer. The south, of course, is the best. They may be a bunch of poor country bumpkins down there, but they sure are nice to strangers. Cheers”
That is the true sign of someone who has never lived here in the south. The south is filled with petty vindictive small minded cliques that make highschool look like a papal visit. You are talking on cliches when you say that. I have lived everywhere in the south from Atlanta to Nashville to Charlotte to Raleigh. Same thing different zip.
They WILL write a check…
“‘If someone moved into town a year ago and bought a $500,000 home, and they have to settle for $450,000, once you figure realtor commissions, bank and closing fees, and other related expenses, they might be writing a check to walk away,’ said Robert at Prudential Connecticut Realty.”
Its amazing how they forgot 1990’s LA. Writing a check at closing was common.
2008 will be interesting. We’ll still be waiting in 2009.
Got popcorn?
Neil
Neil, you have that right. I worked with somebody down south that had lived in the L.A. area. He told me about selling his house in L.A. in the mid ’90s. He had to bring a $20,000 check to the closing just to get out so he could move back south.
Have you ever tried carmel corn with vodka? It’s pretty good.
Have you ever tried carmel corn with vodka? It’s pretty good.
It sounds like you’re having a great time!
“Here’s another one to chew on: 2.6 million. That’s roughly the number of empty houses in America, said investment strategist Jim Swanson. It’s not the number of homes for sale. These are places where nobody’s home. That’s in the neighborhood of 3 percent of the country’s housing inventory.”
“‘We’ve never seen numbers like that, and the Fed move doesn’t change that,’ Swanson said.”
True. This is where the bailout measures to increase the Fannie/Freddie portfolios, add a govt guarantee and hike the conforming loan limit come into play to bail out mortgage lenders and investors who currently hold the bag on foolish loans. It might work well on homes priced up to $700,000 & change (or whatever absurd redefinition of the upper limit of ‘affordable’ D-ratic Congressmen have cooked up), but won’t do much for zip codes like San Diego 92127, where last week’s median used SFR list price was stuck at $1,300,000, and this week’s has come unglued — already down to $1,277,000 (you read correctly — that is a drop of $23,000 in the median used SFR list price on the MLS over one week).
BTW, if that 2.6m figure is right, then we have one empty house per every 44 households (based on a recent census figure of 114m U.S. households). While these houses sit empty, rents are rapidly climbing in places like San Deigo where few qualified buyers are willing to catch themselves a falling knife by purchasing a home at the moment.
GS - it’s not hard to imagine that there are a subset of FB’s who, once resigned to sending jingle mail, will spend like crazy on retail purchases until they’re forced to relocate… That said, the real slowdown, as we all know, is still ahead, but far worse than anyone on Wall Street is willing to acknowledge out loud…
Within easy walking distance of my house, there are 10 vacant houses. Three are empty and for sale. Two of those three definitely reflect this part of the original post in that the current asking prices aren’t much more than what the sellers paid 2-3 years ago:
“Russell Joyce, president of the Valley Board of Realtors, tells clients that they will most likely sell their homes for what they paid and not much more. People who did 100 percent financing since 2005, the last boom year for housing prices in the Mat-Su, without equity will likely pay to sell their house.”
But I’m not finished with my neighborhood tale of woe yet.
Another one of the Vacant 10 Houses was purchased last year, remodeled inside and out, and now just sits there. Dad bought the place for his daughter and her boyfriend. That was before the daughter dropped out of school and ran off to Hawaii. I don’t know what happened to the boyfriend.
The other six are rentals. Four of them are lot splits, where an “investor” built a cheapo house in back of an existing house. They’re not turning out to be the tenant magnets that the “investors” were hoping for. They’ve sported “for rent” signs for many weeks.
PB/GS, I had a quick look at the MLS for 92127 and found that the number of houses in the $1M-$1.5M is about 80. I admit I was lazy, but this implies a mean price interval of about $6250, so couldn’t the median be moved by $23K if it just happened that a few of the high-priced ones got sold or de-listed?
“…so couldn’t the median be moved by $23K if it just happened that a few of the high-priced ones got sold or de-listed?”
Your point is taken, except (not being of the lazy sort) I notice the following prices in the nearby neighborhood of the median SFR list price (each X represents a home at the price shown):
$999,000 XXXXX
$1,000,000 XXX
$1,049,000 X
$1,050,000 XXXX
$1,075,000 XX
$1,100,000 XX
$1,125,000 X
$1,135,000 X
$1,149,900 X
$1,150,000 X
$1,160,000 X
$1,169,000 X
$1,189,000 XX
$1,195,000 X
$1,199,000 X
$1,225,000 X
$1,229,000 X
$1,250,000 X
$1,275,000 XX
$1,279,000 X
$1,287,900 X
$1,289,000 XX
$1,295,000 X
$1,299,000 XXX
$1,299,900 X
$1,300,000 XX
- 43 total homes over the range from $999,000 to $1,300,000
- Average density on this range is $301,000/43 => 1 home for every $7000 of the range.
- The median ($1,279,000 as of this evening) is a fairly volatile measure of central tendency, as homes priced to sell (at the low end of the range) tend to get snapped up while homes at the high end of the range tend to eventually get taken off the market when the owners figure out they will never sell at the offered wishing price. However, the median is effectively hemmed in by the clumping of homes priced slightly higher and slightly lower. For instance, if as many as 16 homes (out of 269 currently on the market) priced below the median sold with no offsetting change in homes priced above the median, it would only suffice to move the median back up to $1,300,000.
- I have been watching the median listing price in 92127 since the end of January 2007, and until this week, it has been consistently stuck on the range from $1.3m-$1.4m. Though the median bounces around, this drop out of the recent trading range is potentially meaningful.
if as many as 16
Make it 20…
I see what you mean. Because there are at least 10 homes in the $1.28M-$1.3M range, a shift of the median downward across this range required removal of about 20 homes from above this price, or addition of about 20 below this price, or 10 reductions crossing this interval, etc.
Yes, but only if you assume a boxcar distribution.
“It just doesn’t make a lot of sense,’ says DelMaro.”
It makes plenty of sense alright, once you tally up the fantastic profits the lending industry enjoyed at the expense of most everyone else in the U.S., then factor in the bailout measures that are rapidly getting passed to further reward the bad actors in the mortgage lending industry.
“House prices across much of Western Europe have stalled or begun to fall as spiralling borrowing costs and fears of over-supply take their toll on markets from Ireland to Spain, an industry survey has revealed.”
There’s no bursting bubble in Spain, right?
The Europeans are even more insane than Americans on home prices. At least they don’t build big ugly McMansions
There’s no bursting bubble in Spain, right?
Spain exists to make the Florida RE market look healthy. Chuckle…
Got popcorn?
Neil
Crisp and Cole updates:
http://www.bakersfield.com/hourly_news/story/242228.html
http://www.bakersfield.com/hourly_news/story/242155.html
One more - Former staffer out of jail - BAHHAHAHAHAHA:
http://www.bakersfield.com/hourly_news/story/242113.html
“When everything was good I was gambling a lot,” Costa said of the once-heady days he worked for David Crisp and Carl Cole making real estate deals.
Look out LA:
Costa said he is currently working in Los Angeles developing condos and apartments.
“I’m getting out of the whole mortgage game,” Costa said. “There’s no money in it right now.”
“Mortgage Game” - Right on the money!
“Lovett decided if he wasn’t going to live in his house, neither was anyone else. Before he locked the door and dropped off the key to his mortgage company, he smashed all his windows, ripped out part of the foundation, dumped a load of gravel on the roof and left three pigs in his living room, hoping that they’d finish off the place. It’s an emotional time in real estate.”
This was something my sis pointed out to me, the resentment of people who wouldn’t normally be able to “own” a home, all of a sudden being approved for a mortgage and they’re thinking “Pinch me, I have a house!”. And then finding out that not only can’t they keep the house, their finances are trashed as a result and possibly they’ve been made a fool of. I know, I know, many of these wounds were self-inflicted, but there were so many people who just felt that by virtue of the fact they “qualified” for a mortgage, any mortgage at all, they must be able to pay it, right? Wrong.
I understand for Mr. Lovett that he is under enormous stress but that is no reason to take it out on the pigs. How mean. He just left them there to fend for themselves? I assume he didn’t pick up the glass so they can walk on it and get bloody feet. What a complete and utter heartless jerk. I am not sorry at all what happened to him, just sorry for the innocents he takes it out on.
I hope he gets charged for animal cruelty charges to boot. What a neanderthal.
One of the hogs was named ‘Pork Chop’.
Shane Lovett, an Oregon man who received his foreclosure notice last January.”
“Lovett decided if he wasn’t going to live in his house, neither was anyone else. Before he locked the door and dropped off the key to his mortgage company, he smashed all his windows, ripped out part of the foundation, dumped a load of gravel on the roof and left three pigs in his living room, hoping that they’d finish off the place. It’s an emotional time in real estate.”
Typical lowlife–no personal responsible. he’s not responsible for the loan terms he agreed to with the lender, right? asset values only go up and never go down. he’s just pissed off that he didn’t make the 100K he thought he would. so screw the lender.
The real animal in this story is NOT any of those pigs.
“Lovett decided if he wasn’t going to live in his house, neither was anyone else.
That sounds like one of those creeps who kills an ex wife or girlfriend since if he couldn’t have her, nobody else could. He really has some psychological problems and should be locked up in the cuckoo’s nest before he hurts someone.
When we bought our first house in 1997 we stayed away from foreclosures and one that seemed like a messy divorce. Bad Karma.
Good luck with that this time. Foreclosures will make up a sizable amount of inventory. That bad karma stuff is a bunch of crap.
“Putting true victims of the housing crisis aside, there is a category of debtor that could be called “predatory borrowers.” These are individuals who have treated their homes like bottomless ATM machines and have played the housing game like ‘Wheel of Fortune.’”
Awesome editorial by Mr. Bruce Percelay! Thanks for posting, Ben and have a great weekend. Finally getting some cooler weather, aren’t we? Go for a hike, dude!
“These are individuals who have treated their homes like bottomless ATM machines and have played the housing game like ‘Wheel of Fortune.’”
And because of these individuals, there will, in the end, be reprisals from CONgress for the people, mark my words. Oh, not just yet, elections are coming. But just like the “reckless spending habits” that the banksters complained about in their lobbying of CONNEDgress that brought about “bankruptcy reform”, this “treating their homes like ATMs” will become some sort of lobbying battle cry for the banksters to take their revenge on the people through CONgress. Wait for it. 2009 should be a real laugh-a-minute.
Bravo indeed! I hope we see more editorials of this sort. Maybe all the non-FBs out there will speak up and tell congress to let the speculators and other over leveraged fools wither on the vine.
And the number of vacant homes is staggering. I was not aware that it had already reached 3% of total stock, but I have noticed that a great number of homes for sale in my area (east bay area CA) are vacant. Where I rent, people are trying to sell for a bit under what they paid two years ago and the homes just sit and sit. Good luck with that..
Same here. I too live in the East Bay in what could be described as white-picket-fence, whitewashed affluency. Yet even here, homes are just sitting, and sitting and sitting. There’s one down the street from me that has had a price reduced sign on it for months.
I can beat ya on that one, Jetson. On Tucson’s Mountain Avenue, there’s a house that’s been sporting a reduced price sign for a year. It’s just south of Prince Road, and I can’t resist saying something sarcastic whenever I pedal by.
We’re getting close to that. There is a home around the corner from us that has had the “For Sale” sign in front of it since January. Still there…
Time to repeat my post from Calif unit: 11/05 price $580K, 11/06 price $460K, 3/07 price $440K, this week’s price $420K (a particular 800-sqft house in Morro Bay). Same owner the whole time, who bought for $350K or less but probably HELOC’d it to death just to have money to pay the mortgage.
RE: “Putting true victims of the housing crisis aside, there is a category of debtor that could be called “predatory borrowers.” These are individuals who have treated their homes like bottomless ATM machines and have played the housing game like ‘Wheel of Fortune.’”
They needn’t fear.
HUD/FHA with the ardent backing of liberal Dem’s aka- the Nancy and Barney Show - will see to it that all of these people are made whole again. Maybe they’ll even see to that FHA instructs their appraisers to even fudge a bit on their appraisal and give them a few extra thousand for a couple of 125% l/V HELOC’s. Just so XMas is good for the kiddies.
And YOU the taxpayer will get to be the bagholder!
SO DON’T PITY THE PIGS IN THE LIVING ROOM!
test
“‘Do I think the tendency for some of the newer companies or out-of-town lenders who have come in to make some money, are their practices of internal control a little lacking? Well, yeah,’ said Carmen Ball, who is the former VP of mortgage lending at Central National Bank.”
No, it’s like this, Carmen: brokers for lenders, perhaps even some lenders directly, acted like mobsters and threatened appraisers with loss of livelihood if they didn’t “hit the numbers”. Ditto for some realtors as well. The threats may not have been direct in many cases, but any appraiser who didn’t “hit the numbers” didn’t get repeat business. Got it, Carmen? Thanks for playing.
Palmetto, your posts and others are what makes this place great.
I just want to take a minute to remind everyone that everyone has something of value to add and we all learn.
What an amazing gift ,to expose the greed and scams that went on. People that would sell their Soul for a few dollars.
I read here every day and and can’t help but feel I know some of you personally.
Thanks for all the work Ben.
Carry on!
When I heard Bernanke’s reply to Ron Paul I kept hearing “the wheels on the truck go round and round….” LOL
RE: The threats may not have been direct in many cases, but any appraiser who didn’t “hit the numbers” didn’t get repeat business
You got it all down, P-Man.
It’s called Enron auditing for the real estate biz.
I don’t know about you guys, but I’m not feeling so smart right now about holding all this cash. Yes, I have some metals but not nearly enough. I don’t know what’s worse, buying real estate right now and watching it decline in value, or holding dollars and watching them turn into pesos.
Lainvestorgirl, I agree with you on everything except the pesos comment - since PEMEX has repeatedly announced that they’re not pumping enough oil to meet export needs the Pesos is as toast as the dollar - now the Maple Leaf - that’s the story!
I traded futures in the mid 1990’s and the Canadian Dollar hit a low of about 57 cents back then.
It was never that low. It was down to 62 cents a few years ago though.
Serious forecasters see Mexican oil production declining significantly to where Mexico might become a net importer of oil. Their major filed Cantarell -one of the biggst in the world -might be at or near peak production
Yeah, I feel the same. I have this overwhelming urge to seriously bump up my PM to about 30% of what we have. Beranke’s “hey - let’s add some fuel to the blazing white man’s fire” of inflation attitude is disconcerting to say the least.
At least we have some PMs, which is more than I can say for anyone I know. The masses are used to some inflation but there’s no experience or prepardness with what seems to be both here and on the horizon.
Hold that thought and add another ingredient… I just watched Ron Paul’s comments and question for Ben Bernanke. In his response he said that the Fed must “protect the domestic inflation rate” or “to maintain price stability” but he said in the context of dollar denominated goods created and offered for sale in the US. His response ignores the global value of the dollar and leaves the door open for additional dilution. These are tough times for many people, as our ability to buy imported goods is reduced and we are all left to pay a hidden tax to support Wall Street’s bankers.
http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml
Long rates not falling, only short-term rates are, looks like investors aren’t buying Bendover Ben’s latest clearance sale on the dollar, and maybe he shouldn’t be selling it. No one wants bonds with an expiration date longer than milk. Without demand for that long-term paper, how will the US continue run its debt machine? And with all the devaluation of the $$ it’s causing, it doesn’t even help FBs, only the banksters and their stock portfolios.
Foreign exchange is scary, but there is no need at all to hold USD. It is clearly going to crash. This morning I bought a wad of NZD government bonds yielding 6.2% in NZD for one year, AAA rated. The NZD has been volatile, rising strongly vs USD through most of the year, then falling probably 10% in a week or so starting July 27, then leveling off, and of course THIS week it’s the USD that’s crashing. It’s really easy to buy AUD and NZD govt bonds, use any full-service broker. BRL (BB rated, 9%+ yield) is more difficult, you have to put in about $125K(US) because the Brazilian govt does not issue little packets. ISK (AAA, 9%+) requires a specialty broker. I stick with these four because stuff like the Euro and the UK pound do not yield anything much.
whats a good way to short the euro? I think they may soon lower rates there also.
Buy the FXC and FXA. Both countries are stable and strong commodities plays. They pay a decent rate too.
I’m hedging my falling dollars against PM mining stocks long and lenders short. So far I’m staying well ahead in the game and it’s only taking about 25% of my cash to do it.
What PM miners do you like? I have NEM and PAAS looking to buy more.
You can look at KGC as well for gold.
You can use FXA (aussie), FXC (loonie) as dollar down the tubes type plays.
Well, at least houses are denominated in dollars…
U.S. homebuilder shares jumped after the Federal Reserve cut interest rates. ‘Maybe our boy has righted the ship,’ Robert Toll, CEO of Toll Bros. Inc., the largest U.S. luxury homebuilder, said of Fed Chairman Ben S. Bernanke.”
A couple more rate cuts and Bernanke will be Toll’s B$tch.
After this weeks earnings announcements, it looks like Wall street snookered the FED real good.
Yes, vmaxer, isn’t it interesting that Toll called Bernanke “OUR boy”. You can bet I’ll be on the horn Monday screaming in the ears of the staffers of my CONgresscritters.
HBBers, read that quote a few times over and let it be branded into your brains. There’s no pretending anymore. Washington works for Wall Street. Never forget it.
Nahh - Washington works for Washington and spends much of it’s time keep the masses placated.
I have to admit that I was expecting at least a small capitulation by the Fed and Helicopter Ben. I was thinking .25 point but no more. 0.5 was an impressive signal although what’s happening at the discount window seems more significant.
I’m still wondering, though, if what we are dealing with is an attempt to avoid destiny: that is, the horrible horrendous stock market crashes that have always happened in September and October. There is no better season to have given the stock market all the cash they want. I’d bump the interest rates back up in Christmas when everyone is out buying their lastest Tickle Me Elmo or some such and not paying that much attention (assuming we make it through Sept. and October without aforementioned crash)
At any rate, endless liquitidy cannot continue. Congress is too reliant on foriegners and Americans can’t buy up all the debt. Hyperinflation is the end of the currency and therefore, the end of the Fed. If the Treasury starts to run out of money and official inflation numbers start to increase entitlement payments I guarantee that the Fed will remember who they work for and it ain’t Wall Street.
I’m not saying that hyperinflation couldn’t happen - I’m just saying that there are forces working against hyperinflation and that the Fed is not 100% owned by Wall Street (maybe 80 or 95%, but not 100%. ;)….)
Good comment Vermonter, but I wonder what your definition of hyperinflation is. Let’s say they let it run at 10% for a few years on food, oil, commodities, while houses depreciate by 10% per and China junk stays the same or also decreases in price. How will the average J6P feel about it…
In 2010:
“Well, gas went back up to $3.70 a gallon, milk and hamburger are up about 50%, but I bought the house next door to my brother for less than he paid in 2003, and got a new 42 inch plasma TV for $250.”
Three or four years of 10% will do wonders on the current debt levels, while not necessarily killing the consumer - AS LONG AS wages also keep up (the big unknown).
Just keep watching the 10 year - already set to pass 5%, then 6%, 7, 8…
AS LONG AS wages also keep up
That’s the tricky bit, isn’t it? Wages have had and will continue to have downward forces on them. That maybe a factor that prevents an all out “inflate away our problems” scenario by the Fed.
I think of hyperinflation as the German Weirmeir (sp?) type scenario where people are bringing wheelbarrows to buy a loaf of bread. That will happen if the Fed holds interest rates down or pushes them down further everytime options expire on Wall Street.
I think your type of inflation (10%) is far more likely and what has me worried at the moment. Cash at 5% interest is still losing 5% per year. The only consolation is that the stock market or any asset besides gold and commodities may lose more value by 2010. And thanks for the tip - will start watching the 10 year more closely.
“AS LONG AS wages keep up”
I keep hearing the CEO types on CNBC saying not to worry about inflation, because labor is 70% of business costs and that cost hasn’t risen at all. Translation: big business doesn’t care about inflation because it can sell more products overseas, without giving it’s US workers (or Indian works) a raise. How nice for them.
Wages won’t go up in real money anyway not until the dollar gets cheap enough to slow outsourcing
I think that’s a good point. Here’s the real reason nobody in America buys made in America anymore: we insist on paying ourselves too much. Americans can’t even afford American labor, how’s that for irony. Of course, exporting countries in Asia are happy to feed our egos and prop up our dollars. While they can, anyway, or at least while it behooves them.
Frankly, our salaries are outrageous, and IMHO are due for a decline in purchasing power relative to much of the world. There’s no fundamental reason why a programmer/surgeon/phone operator/whatever in India has to make 75% less than the same position in Missouri. There’s no fundamental reason some toy maker schlub in China has to work 2 weeks to buy a barrel of oil, and the like-skilled laborer in Ohio only works 1 day to buy the same barrel of oil.
because when the guy in Ohio needs to poop, it goes somewhere else. and he can drink the water out of his well, and he just turns the knob with no pumping.
RE: If the Treasury starts to run out of money
LMFAO…What do you mean if?
Ballgame’s over baby.
77 million boomers who want their old age entitlements says so.
Whooboy…glad to mobile.
The Fed is not “owned” by Wall street at all, nor the US giv, nor teh people. It is created and owned by 5 international banks.
Beat me to it.
The audacity, mendacity, gall and brass balls that Robert Toll has in calling Bernanke “our boy.”
The most tragic thing of course is that most American thinks that the rate cut is for them.
Cinch
Ben bernake called “Our boy” you got to be kidding ? not good
Sounds kind of gay, doesn’t it? Does Barney Frank call him “our boy” too?
Like Bush and Kenny boy. You know what happened to the latter.
There is a 5th dimension beyond that which is known to man
It is the middle ground between profit and loss
It’s a land of comps, cashbacks and cons
It is an area which we call The Empty Zone…
“Here’s another one to chew on: 2.6 million. That’s roughly the number of empty houses in America, said investment strategist Jim Swanson. It’s not the number of homes for sale. These are places where nobody’s home. That’s in the neighborhood of 3 percent of the country’s housing inventory.”
Wow, half off in Miami already. No surprise. I know a couple who bought in north Tampa exurbs in 2006 for $200k. Latest comp? $170k.
That sale was from 3 months ago.
Cannonball!!!
Ouchie! Yes, Tampa area seems to be doing the LIFO thing, last in first out. At least, by all accounts. Couldn’t tell it by the wishing prices in craigslist, though.
those are the FISH - First In, Still Here
Received an email a few hours ago from Mr. Foreclosure, real estate agent Gary Kent, in san diego. Hot deals are here to stay according to our man…
Get On Our San Diego “Foreclosure Hot-List”
Five major lenders have asked me to handle their foreclosures, and I’m looking for a short list of investors or people wanting to buy a home or investment up to 5-10% below market.
I think he forgot another digit. also, market == mark to model, for those of your not well versed in real estate lingo.
…and I’m looking for a short list of investors
not a long list, a short list.. because the bus is short.
He setting up multiple short lists so he can phantom bid them off each other.
What a great deal “5-10%” below market. Thanks for presenting this great opportunity to all of us on the blog.
a negative bubble:
its the whole concept of over shooting on the downside.
we just got over the top, and “hot deals” just do not exist yet.
Next housing round is buying foreclosures from idiots buying “hot deals” in foreclosure.
tell two friends.
“Five major lenders” came to him?
So I guess he will be trying to sell a couple thousand houses then?
“I think we’re going to need a bigger list.”
Previously, I had only seen on his foreclosure list properties from Wells Fargo, Coldwell Bank, and Countrywide. I’m curious as to the other two. Must be IndyMac and BofA, though BofA has been conspicuously silent about their REOs. Wouldn’t want to spook those investors out there.
Foreclosure = Tummyache
“As children, we were taught that consuming too much cake and ice cream would have the consequences of a stomachache. But for many adults, who have gorged themselves on too much debt, their financial indulgence is now somehow someone else’s fault and they should not have to pay the price.”
Do you guys remember that Florida Craigslist ad with the dismembered torso in it? Well, I forwarded the ad to the Plant City Police Department, and here’s their response:
In regards to the email you sent us, I looked into the house that is for sale on Craigs List at 506 N. Warnell St. I spoke to the owner and found out the picture you are refering to is actually the tenants’ young child and he is facing the camera looking straight up at the ceiling. When I first saw the picture I thought the samething you did, it looked creepy, then after meeting with the tenants and speaking to the owner I now see it is the child looking up at the ceiling. Thanks for letting us know of your concern and if you have any questions please feel free to call me at 757-9200 extension 2227.
Thanks,
Sgt. Jim Shultz
Plant City Police Department
the tenants’ young child and he is facing the camera looking straight up at the ceiling
ahh.. an attempted cover-up .. I remember that pic and it was obviously an immature, plantlike pod.
The invasion of “Plant” City occured some months ago… the police dept was a primary target.
Thanks, I just sprayed my “evening beverage” all over the keyboard!!!!
Big V, thanks for the follow-up. I was the one who posted that link, I probably should have done the same thing you did, especially since Hillsborough County is where I live. I just wasn’t sure what the image was. One of the posters here did say they thought it was a kid. Sorta weird, though, to put a kid in a real estate photo without any clothing, even if it is the torso. I’m glad the police looked into it.
But, here’s another Tampa Bay craigslist gem. Note the optional bonus. How about it, boys? Anyone interested?
http://tampa.craigslist.org/rfs/428267978.html
LOL, notice how much she’s asking per acre. That’s the first time I’ve ever seen a personal solicitation disguised as a real estate ad.
I’m continuously amaze that you guys can find such thing. Don’t we all have fantasy of slipping in a quick one in our property search? Think American Beauty.
Cinch
That’s hilarious! A FB Couger.
Got popcorn?
Neil
53 yr old? Not everyone is Cher.
Funny, I didn’t know Cagey B was the Captain of the Titanic…
‘Maybe our boy has righted the ship,’ Robert Toll, CEO of Toll Bros. Inc., the largest U.S. luxury homebuilder, said of Fed Chairman Ben S. Bernanke.”
“For those who have overindulged in debt and abused the system, their most valuable compensation should come in the form of an important lesson that they can pass along to their children.”
A Lump of Debt?
‘Maybe our boy has righted the ship,’ Robert Toll, CEO of Toll Bros. Inc., the largest U.S. luxury homebuilder, said of Fed Chairman Ben S. Bernanke.”
This “Our Boy” of course infers that BB is bought and paid for along with a host of other congress critters we know of. If I was Ben B. I’d be on the horn to Robert Toll to tell him to shut his piehole in not so nice terms.
Uncle Ben has a meeting with the NAHB just a few weeks ago. The NAHB reps must have brought bags of money to the meeting and forgot to take it with them after the meeting.
That comment speaks volumes about the way corporate CEOs view BB’s rate cut move this week. I wonder if that was the signal BB wanted to send?
The Fed: ‘Wall Street’s Bitch’
The deeper than anticipated rate cut launched bloggers into feats of rhetorical gymnastics that showcased their wit and wonderment
http://www.businessweek.com/investor/content/sep2007/pi20070918_630235.htm
I saw an article and chart (sorry no link) that showed why Helicopter Ben did the 50 bps.
From overnight lending out to 12 months, there was ZERO money available. No one had any or if they did was willing to lend it. That means the ENTIRE money market arena would have gone belly up. The financial markets were not interested in rolling over debt on depreciating assets. (can you say catch a falling knife?) So the Fed stepped in as lender of last resort to keep the financial markets going. This also means that ALL commercial paper is rolling over DAILY and not spread out as in 1,3, 6, 12 month notes. Think what would have happened if the fed had not turned up the printing press and all those peole were taking their money out of Norther Rock?
Yeah, it’s that bad folks.
Reminds me of J.P. Morgan saving the day in 1906.
Can you imagine the panic if people saw “safe” money market funds go belly up?
It would be blood in streets time.
Sounds to me like the real estate bubble will wipe out more than just money. I’d be concerned of the political fallout from this mess. I think between Cramer’s blowup and this comment by Toll, we have a credability crisis in the USA. Go ahead and look at what the derivatives market can do to the banks.
Yep ,”Their Boy” is performing real good .
It’s a crack up already seeing Kudlow sitting up for the next interest rate cut Wall Street wants next meeting . Everytime Wall Street falters a little ,they want their boy to give them a cut .Who cares about inflation hitting Americans buying power when they are already into debt up to their ears ,its all about a bull run on the stock market and big business profits .
It seems to me that as long as they can sell the pitch that the “Global Markets ” are good ,(which is good for stocks ),than who care what happens on main street America. The fact that the American middle class lifestyle is going in the toilet ,with jobs being exported ,doesn’t matter to them Wall Street Boys .Wall Street has come to a standstill reguarding their profits off the housing boom ,that they created with their silly fraudulent low down loans that entirely destroyed real estate value and the wealth of many a person ,but Wall Street doesn’t care .
The Cheerleaders on the business TV programs won’t be honest and admit that a bubble mania created the housing boom that was supported by low interest rates and fraudulent lending .
Cramer showed his true colors when he said the other day ,”Low Interest rates are good for stocks .” What ever happened to Cramer screaming and yelling about the poor homedebtors that need to be saved ? Nothing should stand in the way of Cramers little stock calling program ,which would likely be cancelled if you had a bear run in the stock market .So, the American people should also bail out the builders that overbuilt on the premise of selling to investors with bogus loans during the greatest real estate ponzi scheme of the last 100 years .
BB wants to bail out the lenders and Wall Street or he would of went for saving the dollar .
The middle class has been screwed since the late sixties, early seventies. That’s why you really need to invest as much as you can, stay debt free, etc so you can swim up stream against the tide of crap coming down on the middle class.
I’m retired and sorta on a fixed income . I’m to old to risk money by risky investments. When you get to be my age you can’t take alot of risks because you have no time to make it back . Inflation really kills older people . I would imagine it kills younger people also if wages don’t keep up with inflation .
I am debt free ,except for my low mortgage on a low fixed rate .I’m not so worried about myself as much as I am about America ,and of course my kids and friends .
ben,
keep up the good work! please keep in the forfront the fact that people used their houses like atm machines. that is the honest truth. lets not forget about all those speculators that drove these housing prices up up up! the government keeps forgetting about those guys (or maybe thats who they want to help).
http://www.usatoday.com/news/nation/2007-09-20-roads_N.htm?csp=1
This has to be the dumbest idea of ever heard.
Much less efficient than taxing gas
Encourages the use of inefficient cars
Invades our privacy.
Next they’ll tax air use.
It’s a back door attempt to get sheeple to accept “commuter tax”.
After this “tax” is put on the books, do think for one minute that the “gas” tax will go away?
Encourages the use of inefficient cars
Invades our privacy.
…and that ain’t all
“By the time Turner reached Virginia, his bank account had been debited an extra $450 by ACME–$150 for three speeding infractions”
hmm.. the href link didnt work.. here’s a tinyurl.
http://tinyurl.com/25c98q
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“‘Maybe our boy has righted the ship,’ Robert Toll, CEO of Toll Bros. Inc., the largest U.S. luxury homebuilder, said of Fed Chairman Ben S. Bernanke.””
Yup, he is your boy alright, Mr. Troll. Along with bankers’ and financiers’ boy.
What happens to the American households is not Fed’s concern. Plutocracy, or corpocracy, anyone? Not that it was a democracy to begin with, but the tilt towards corporations, bankers and financiers is unmistaken.
Jas