Bits Bucket And Craigslist Finds For September 22, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Just read this in the Economist (”When it goes wrong…”, September 22, 2007 issue)
These days, for instance, lenders are less likely to foreclose on defaulting borrowers: in America, less than a quarter of loans 90 days late or more are in foreclosure, compared with three-quarters in the late 1990s, points out Charles Calomiris, of Columbia University. When a late payer gets back on track his loan is once again labelled “current”, and his chequered history does not have to be fully disclosed when the loan goes into a securitised pool. So even the most diligent buyer would struggle to spot that some of the “prime” collateral of mortgage-backed bonds was, in fact, of questionable quality.
Who will ever buy a mortgage backed security again? I can only see the government being stupid enough to touch these things and I mean OUR government. No foreign government will ever buy this junk again.
Why not, if they are guaranteed by the U.S. taxpayer?
Atlas Shrugged
The U.S. taxpayer is tapped out.
I guess the burden will have to fall on our children and our foreign creditors, then.
Can you say default? Sure, I knew you could!
I agree NYCB ,and that’s part of the problem they have now in that market that investors don’t want to buy swamp land mortages anymore .Also ,it’s risky making loans in a declining market .
I predict that loans will end up being insured in the future or backed by the US government . This lack of trust will result in the cost of money going up for homebuyers on loans either in the form of insurance and higher rates . Of course that is after the powers attempt to bail out all the bad loans already on the books .
Here you have a mortgage system that has been corrupt for 4 or 5 years now and I don’t see attempts to address that issue ,(such as appraisers hitting the mark or starving ,and fraud in lending because of high commissions ). By the way the government is acting ,they just want to continue to deal with fraudulent lending institutions, when a purging is needed and a overhaul or criminal indictments are warranted .
“I guess the burden will have to fall on our children…”
Indentured servitude?
I found a fascinating article (albeit long) that details the benefits and dangers of CDOs, credit derivatives, etc. at:
http://lsr.nellco.org/cgi/viewcontent.cgi?article=1129&context=upenn/wps
I recommend reading it to get a better understanding of the reasons behind the creation of these instruments, and the statement by Buffett that these are “financial weapons of mass destruction” and could cause mega-catastrophic destruction to the economy.
Could? I believe the destruction is occurring right now as we speak or type.
That’s a good read Statsman! Thank you.
Exactly! Which means FRAUD was conducted! People are going to jail!
I doubt seriously that anyone (except a token few badguys like Charles Keating the last go around) will ever see the inside of a prison. The thing was engineered from the beginning first off. Second, there is no way that they are going to put away hundreds of thousands, if not millions, or middle class people into Federal prison for mortgage fraud. Won’t happen. Right now anyone in the FBI can open that daily newspaper in his/her town and see outright fraud and none of them are doing anything about it. So obviously the orders have been given that they are not to touch that issue. At least IMHO.
The FBI is doing a great deal about fraud in California. Investigations, arrests, and successful prosecutions, with more under way.
Jingle,
I wish that you were correct but I have been in r.e. in some fashion for over 20 years now and anyone with even a moderate level of industry knowledge knew the most recent bubble (starting in 2003) contained lots of fraud. So at least four years ago (as far as CA goes), they could have put an end to this but they didn’t and the FBI has some fairly talented CPA’s and attorneys. So even if they are starting to do their job, the damage has already been done.
I tend to agree with you Chrisusc because the fraud became so commonplace and widespread we don’t have enough prison cells .
But ,that being said ,do we have to reward all the people that engaged in this real estate investment scheme with liar loans ,when they really should be going to jail and they should be happy they are getting off scott free . Should we give these people 3% fixed loans and bail them out of foreclosure while prudent people who didn’t buy into the frenzy have to pay the going rate ? Should we let these gamblers that were willing to commit fraud for perceived gain off the hook on the tax bill on a short sale ,(which will cost the tax payers money because they are giving the write off to the bank )?
I would just like a little Justice to prevail rather than borrowers or lenders being rewarded for bad behavior .
” A society that does not render reward and punishment in a just manner is doomed to fail and fall . ”
(Author Unknown )
tattoo ‘criminal” right above their eyes - 1 inch letters. Let people beware in dealing with them in the future.
The scarlet FB
This is just further proof or how “corrupt” the whole system is. It is not just a certain segment or one or two bad apples. It has become endemic to the whole thing government and all. It seems to me if we as a nation can’t acknowledge it then we are just doom to fail in the long run(really not that long). There are hard decisions that are going to have to be made by “The People” here. We can’t just pretend that “they” will fix it. I mean I guess we can but then we have what we have. I pray that we will rediscover our honor and backbone to do whatever is needed for not only our sake but more importantly for our posterity.
“Why Can’t the U.S. Have the Debate about Naomi Klein’s Book That Europe Has?
By Jan Frel, AlterNet. Posted September 21, 2007.
In Europe and Canada debate is raging about Naomi Klein’s new book on disaster capitalism, The Shock Doctrine. This interview with Klein considers why U.S. public debate is unable to ask fundamental questions about our economic system.”
http://www.alternet.org/workplace/63178/
http://www.alternet.org/workplace/63288/
Asking such questions might damage our self-esteem. We can’t have that.
‘unable to ask fundamental questions about our economic system.’
- Why would Juan Sixpack need to contemplate fundamental questions about economic systems?
TV tells him all that he needs to know, new pick trucks on sale, 100″ Flat Screen tv’s, football schedule, etc,
“hy U.S. public debate is unable to ask fundamental questions about our economic system”
I thought the Greenspan interview with John Stewart was one of the best interviews I’ve seen. Stewart questioned rate cuts, how they benefit hedge funds and punish working class and savers. Stewart even questioned the need for the Fed in a free capitalist society.
It’s sad when the best interviews are on Comedy Central and scheduled after Reno 911.
“It’s sad when the best interviews are on Comedy Central”
It’s also sad when some of the greatest moments of slapstick are on CNBC.
I really enjoyed AG’s candid explanation of how the Greenspan put drives up stock prices. That part of the interview kept Fed spinmeisters busy the rest of the week trying to deny the existence of a Greenspan-Bernanke put.
I think it should be more appropriately named…
The Stewart Put
The 2000’s: The Jon Stewart Decade
Our tv is on life support (won’t work in a year or 2) and if it wasn’t for the 1-2 punch of The Daily Show and The Colbert Report…
We’d have given it the heave-ho, long ago
Seems a bit whiney to me…are they complaining that The Media ™ in the US is not advertising the book, and associated debate, as they “should”? Maybe the powers that be should *require* us all to read the book?
It almost seems that the rant is inspired by their social and economic views…that something is wrong because the the result (number of people buying and debating the book) is not the same in the US as in the rest of the world.
Key Lime, it seems Klein’s argument is that democratic socialism works better than US-style radical capitalism. Without getting into that debate, I’d like to say that democratic socialism would be a bad choice FOR THE US, because I believe it would amount to Soviet-style state capitalism or more recent Russian crony capitalism. As someone posted last night, the main constituency served by our government is…ITSELF.
The problem is not that Capitalism can’t work but that it truly takes people of honor and integrity to make it so. Just like our Constitutional Republic.
I think a lot of other isms could work if those kind of people existed in any abundance.
KKR, Goldman pull out of $8B Harman buy
KKR on Friday had success in attracting investors to a $5 billion loan used for its acquisition of First Data Corp. (Charts, Fortune 500) Initial reluctance by Wall Street caused the buyout shop to lower the amount of its borrowing - and come out with an initial $5 billion instead of an original plan to raise $14 billion.
>>>> they have to 9bn from their pockets.
this is huge !!!! wait till when blackstone ditches Hilton deeal. then hilton(HLT) will be a good buy. cheep $ will improve the US tourism.
Here’s an arrogant idiot who doesn’t quite understand what’s going on in Florida right now.
$1350 Are you the right tennant?
Reply to: hous-428263236@craigslist.org
Date: 2007-09-21, 12:43PM EDT
A beautiful pool home on a small lake with big bass. Two bedrooms with Den or three bedrooms two bath.
Truly looking for someone to make me feel comfortable as a first time landlord. The house is for sale and will remain so. You must be willing to allow showings as nescessary and keep the house tidy. Sorry, I cannot take a chance with smokers or pets.
We can talk about length of lease and we can discuss furnished or not.
If you think you might be “the right tennant” and are interested in living in a very nice home, call me at 828-450-3235 or just email me.
Sorry, I cannot take a chance on a landlord who doesn’t know how to spell tenant.
“Sorry, I cannot take a chance on a landlord who doesn’t know how to spell tenant.”
In Florida you’d have no choice.
Sign outside Pinellas Florist, “Send a Romance Bookay.”
For the demands he makes, his rent should be about $500 a month. These people have serious balls on them.
Nope, not serious balls.
Serious stupidity is more like it.
He should have just written, “you can pay me the exorbitant rent. You just can’t live in my fine house.”
Is the “bookay” a special for Hallloween?
Top Lenders of Crisp and Cole - defaults now at 94:
http://www.bakersfield.com/hourly_news/story/242620.html
Top 3 lenders by volume
SunTrust Mortgage Inc., 29 loans now in default
Aegis Wholesale Corp., 10 loans now in default
Long Beach Mortgage Co., 9 loans now in default
http://www.bakersfield.com/hourly_news/story/242618.html
By the numbers
94 — Properties in default or foreclosed as of Tuesday tied to staffers, family members, business associates and customers of the former Crisp, Cole & Associates company and its offshoots.
22 — Months, between March 2005 and December 2006, when the bulk of the now-troubled loans were recorded with the county.
$47.7 million — Amount of first loans delinquent or foreclosed as of Tuesday. Another $10.9 million in second loans are at risk of failure.
Sources: Kern County Hall of Records; First American Real Estate Solutions; Californian analysis
Crispy:
Those posts warm my heart. Vindication for Crispy!!!
For those of you who don’t visit Bakersfield Bubble, Crispy & Rob Dawg have been opening a can of whup a$$ on the local media.
LMAO!!
you go boys!
$60,000,000 in loans in 22 months? They probably over encumbered the houses by 50%, so they may have pulled out $30,000,000 in cash. No wonder they needed jets, body guards, and fast cars. You can’t carry all that money in a Volkswagen Bug! $1,000,000 a month in cash out refi proceeds is difficult to carry, particularly when you don’t even bother to pay off the underlying liens!
Crisp and Cole will soon be residents in a very exclusive gate community……just not one of their choosing!
Good work Crispy. The world will soon be a better place for your efforts. Think about all the innocent peripheral players who had to compete with these fraudsters to buy a nice home in Bakersfield. Now they realize why they are stuck with overpriced homes. Soon, they will realize that dumping $60,000,000 in foreclosed real estate on the Bakersfield market is going to cost them another 30% in value below today’s prices. Ouch. Bakersfield needs an old fashioned lynch mob!
“Now they realize why they are stuck with overpriced homes.”
Very true. In fact I am hearing rumors of class actions lawsuits against all of these guys. Primarly due to over inflated appraisals, however, I doubt there is money to be gained here. I think they will just throw good money after bad…
WOW. That’s all I can say. Amazing how much they got away with before getting caught.
This whole C&C mess reminds me of that 80s bratpack that called themselves the Billionaire Boys Club. All hat, no cattle, and a lot of criminal activity.
Is Judd Nelson too old to play Crisp in the TV movie?
And people wonder how homes went up in price so fast . All it takes is the criminals driving up the comps and than everbody else uses those comps . I think I would resent paying my property taxes if I knew my value was determined by guys like Crisp and their fake deals .
Is Vanilla Ice available?
New video covering the Houston exurbs.
http://tinyurl.com/229vhy
The cross is interesting.
This should have been posted in weekend topic suggestions, but I didn’t think of this till now. How about discussion on the benefits of lower home prices? No one in the MSM talks about the other side of the coin, that there are many benefits to lower housing costs. When trade with China was opened up it was touted as being a great thing for the average American, because of the lower prices. Why shouldn’t housing costs be viewed the same way. Lower cost housing is a benefit to the average American, it leaves more money in their pockets at the end of the month. High housing costs are a burden to the average American. I have a few ideas.
1. Future foreclosure rates will be lower, buyers won’t be overextended.
2. Eventually SSI and Medicare will become a major problem, tax will be raised to pay for it. It will be important that young people have low housing costs, so that they can afford the tax increases.
3. Low housing costs give people more discretionary income to spend in the economy on goods and services other than mortgage interest. Which helps promote a more diverse and vibrant economy for everyone.
Houses all over the rustbelt are available from a few thousand Dollars, and have been for years…
Low housing costs haven’t seemed to help the local economies much
“Low housing costs haven’t seemed to help the local economies much”
And high prices would only make it that much more miserable for the people in those areas. Which brings up another point, a lower cost of living makes American businesses more competitive internationally.
Buffalo, Cleveland, Detroit et al…
Are a blueprint of our future, past and present
After all, what industry(ies) could the rustbelt attract that would really turn things around? Up north here they have tried everything - tourism, gambling, tech, insurance - but no combination can match the strength of the industries they lost. There may be local successes but nothing near the scale to support the population as a whole.
Remember read somewhere that AIR CONDITIONING really changed demographics of US. Maybe people rather endure heat that cold. Plus unions are big in the south
vmaxer,
upstate NY with its’ high taxes is still not competitive…you can buy a cheap house, but the taxes kill the deal. And, utilities are expensive…with the Falls power plant right there, you’d think electricity would be cheaper, but it costs more per kilowatt than Con Ed here in NYC.
If Mattel had a brain, they would start moving some of their Chinese factories to Alabama, and have Made in USA across every box, with the emphasis on safety, instead of crawling around their Chinese masters.
Maybe more global warming needs to happen first. When the South is broiling and places like Buffalo have moderate winters, who knows how migration patterns will change.
Don’t hold your breath.
Climate Change: Did NASA scientist James Hansen, the global warming alarmist in chief, once believe we were headed for . . . an ice age? An old Washington Post story indicates he did.
http://www.ibdeditorials.com/IBDArticles.aspx?id=275267681833290
The earth has had hundreds of “warm” ages and ice ages long before humans. We will have more of these. The problem these days is not global warming, but the uwillingness of people to accept change. If we indeed are going to heat up and Los Angeles temperatures in the summer become like Phoenix, it will illustrate that home ownership will be the worst place to spend your money on. Renters can adjust and move to Alaska, if need be! On the other hand, natural events in the near future may cause an ice age (lots of volcanic activity causing ash in the atmosphere blocking the sun’s rays, kind of like nuclear winter).
There is a big political market to make people worry. Politicians who want great political power over individuals and groups are fanning the flames of worry. The people who are unwilling to accept change will favor security over freedom.
Politicians such as Gore are much more frightening to me than global warming or global cooling.
“An old Washington Post story indicates he did.”
no it doesn’t, that was a computer program he wrote. that’s like blaming the inventor of the calculator for someone’s erroneous math.
Climate myths: They predicted global cooling in the 1970s
http://environment.newscientist.com/channel/earth/climate-change/dn11643
Climate myths: Many leading scientists question climate change
http://environment.newscientist.com/channel/earth/climate-change/dn11654
The prices still have to be low in comparison to the local incomes. If there are no local incomes, then no price is low enough. It sounds like the rustbelt is still overpriced.
A lot of the rust belt housing that’s really cheap is in areas that no one would live long enough to make the first mortgage payment. In the area I live in the lowest section of NE OH, 10 mi from the PA border, we have nothing much below $75,000 and that’s for a house that needs a ton of work. Go north 25 miles into Youngstown and you can buy a house for $4000-12000 and grand old mansions for $150,000. Of course you wouldn’t want to live in the 4-12k area or park your car on the street. It’s nothing but drug houses, drive by shootings & armed robberies. Some idiot from California actually bought one of those houses “over the internet” and he called a realtor friend of mine to try to get her to sell it. She told him no and he said he’d called 10 or so companies and no would take the listing. Duh, the only way to get in there to sell it, would be to go in with a swat team. I guess he’ll have to sell it to some other idiot who buys over the internet without checking out the area.
Upstate does have income though. it’s not this burnt out place where people can only pay $30,000 for a house.
I know that delapidated two families are only a mile and a half from homes costing $700,000.
housing costs are low but they are still high. you can pick up a home for cheap, but it’s not in good shape and it’s not in a good area.
the reason why those homes are cheap are because landlords didn’t make enough money and didn’t keep up the properties. also, the population is falling, so some of those homes were probably just abandoned and not cared for.
I have never understood this. On the CNN show Open House, for instance, the host Geri Willis will speak of lowered housing prices as if it’s blasphemous, and will then interview someone about how awful it is that these families or towns are being destroyed because they had to take on all of these exotic mortgages to get into homes. I sit and watch and simply can’t see why, if she can’t make the connection, that someone can’t point it out for her or the rest of the MSM so that they can have a lightbulb moment.
At least today she had on a guy who called her shit about all the people who will be homeless. He just shot back that there will be a vast amount of rental properties available.
Yep, it’s nuts.
With lower prices, people wouldn’t need the toxic loans AND they could save their money (reducing future need for government handouts) or spend the extra money on “stuff” that would help the economy.
But no - for those in charge, it is far better for everyone to have mountains of debt. I get so sick of hearing about a “housing recovery” at some point in the future, as if toxic loans and sky-high prices are a good thing. Maybe when gas prices rise we should start talking about how they are “recovering” - seems fair!
“When trade with China was opened up it was touted as being a great thing for the average American, because of the lower prices.”
Seems to though the first question ought to be… Is it? Is what we are doing better? Is the cost of goods the only important consideration for us as a nation? “Globalization” of which this is a part is also touted as the panacea and good for all? Is it really?
Auctions are not selling houses in Sacramento. Maybe they will try giving them away next time!
The July 22 auction in Sacramento by Hudson & Marshall listed 61 homes up for bid in Sacramento County. 60 days later, only 11 have closed escrow and 11 are “pending”. 34 houses are back on the market in MLS.
So much for “selling a home in 5 minutes, instead of 5 months.”
http://sacrealstats.blogspot.com/2007/09/july-22-auction-results.html
H & M is auctioning off 700 houses around Detroit this weekend, will be fun to see how many actually close.
Auctions are not selling houses in Sacramento. Maybe they will try giving them away next time!
The July 22 auction in Sacramento by Hudson & Marshall listed 61 homes up for bid in Sacramento County. 60 days later, only 11 have closed escrow and 11 are “pending”. 34 houses are back on the market in MLS.
So much for “selling a home in 5 minutes, instead of 5 months.”
http://sacrealstats.blogspot.com/2007/09/july-22-auction-results.html
We have yet another comment spam attack this AM folks, so there will probably be some delays.
….and double posts. I must have hit the send button twice, just above. My apologies.
Hey Ben,
do you have any idea who is launching these attacks? The State dept. this am they are hiring muslim-americans to work on international blogs.
Apparently, some folks find freedom of speech on the internet threatening.
“Apparently, some folks find freedom of speech on the internet threatening.”
Exercising of one’s constitutional rights is un-American.
Indeed.
No, most are out of Russia, so there’s no way of finding out.
Comrade Greenspan did say the Russians helped inflate the HBB…
Apparently from internet geniuses who have pretty poor learning skills, considering how effective previous spam attacks have been.
Sort of like a web-based version of a Tazer?
Don’t taz me bro!
I am happy to learn that the WSJ editors agree with the point I have frequently raised on this blog about the folly of forcing the U.S. taxpayer to guarantee radioactive subprime debt.
STAND UP, AMERICA! DON’T LET THE REIC STEAL FROM YOU!!!
Uncle Sam: Subprime Lender
An ill-conceived plan to place taxpayers atop the housing bubble.
Saturday, September 22, 2007 12:01 a.m. EDT
This week the House of Representatives overwhelmingly approved a plan to erase billions of dollars of subprime loan defaults in the private mortgage industry. How? By making taxpayers responsible for future losses.
The Bush Administration recently announced support for a similar plan, and the housing industry is in full lobbying mode. One of the lone skeptics is Alabama Senator Richard Shelby, who warns that this could be one of the most expensive federal bailouts since the savings and loan crisis of the late 1980s. He’s on to something.
…
We wonder if either end of Pennsylvania Avenue grasps the irony of what they are proposing. At the very moment when private mortgage lenders are under pressure from regulators, rating agencies and shareholders to tighten underwriting to avoid another mortgage meltdown, the FHA is relaxing its standards so it can insure more questionable mortgages. If that is permitted to happen, America’s newest and largest subprime lender will be Uncle Sam. Don’t expect this story to have a happy taxpayer ending.
http://www.opinionjournal.com/weekend/hottopic/?id=110010639
Listening to the candidates of the Democratic debate on Thursday night, I can tell you that none of them has a clue. They were falling all over themselves in a rush to compliment the job Bernanke is doing. It was brutal.
The stock market went up last week, so he must be doing a heckuva job!
The great unknowing public hears only one thing, to clue them in to matters of fiscal fitness…
It seems to satisfy.
yada yada yada yada strong day up 53 points, near record territory yada yada yada yada
I agree, the Dems are so economically clueless it’s frightening. Not that the Repubs are any better. Ron Paul, in his questioning of Bernanke seemed to be the only Congressman with a handle on the situation–boy, did he make old Ben sweat. I suspect Bloomberg might be knowledgeable as well.
For the rest, as the old book called it, it’s a Confederacy of Dunces.
conFEDeracy of Dunces
Cagey B, ringleader
I liked Biden’s comment. I read it as:
look, this is a real mess created by idiots, but the truth is, we’re all going to get taken down if we don’t do something.
Last week Dave Ramsey described ALL Politicians as “Blood Sucking Parasites”. He said that there is nothing you can do for people that do stupid things except letting them learn from their
mistake. There is nothing the government can do for these people except to put it on the backs of the taxpayer. Everyone on this board and their contacts should let the (BSP)s know how we feel about the bailout through FHA. We need Moral Hazard!
Observations in northern Virgina - inventories here of course really spiked last year - peaking right at mid-summer at record highs. However then they started going down a fair amount, and the peak this year hasn’t been as high as last - presumably many people giving up on selling. *However* now inventories are still climbing - normally they’re heading down by fall. So inventories are just about back to record highs, when seasonally adjusted:
http://www.recharts.com/nova/nova.html
My guess is this is due in large part to the higher interest rates on jumbo loans. I look for another leg down in median prices this fall and winter (they’ve been flat for a while after an initial leg down last year; officially at least).
Another observation is that a lot of houses for sale aren’t reflected in the MLS. Yesterday when I rode my bike out of the neighborhood I went by 4 houses for sale. When I got home I checked and only 1 of those 4 was in the MLS. And they weren’t FSBO’s. I thought that was weird. So I’m wondering - is there a large inventory of even realtor-offered homes that isn’t posted on MLS? I know it costs some $$ to post on MLS, but surely it’s not *that* much.
My hometown doesn’t know what a “jumbo loan” is and I still see the inventory shooting up. I would believe this is taking place everywhere. This is the Autumn of Fear.
- Since the peak time for adjustable loan resets is next summer, next fall will be mighty fearful.
We have one more year of accelerated forclosures before we ‘Get Back’ to todays ’steady as she goes’ forclosure pace.
Pacman:
In my area of Alexandria, I saw the same thing- a drop off in the number of homes for sale early/mid-August- but I attributed it to people taking their homes off the market as I did not see anyone move out or in. In the past 2 weeks, however, a whole bunch of new ones just went on the market and there are still a number of lockboxes on doors.
drop off in the number of homes for sale ??
You may see more of it as we move into November…For the most part people do not want people tromping through their home during the holidays…Watch for a big spike in Febuary is my guess…
Watch for a big spike in Febuary is my guess…
Actually about Jan 15th is when people start listing in our area. They figure it’ll be Mar before they have to move. Mar of what year, I’m not sure.
Thanks for the good news! I’m moving back to NoVa (Stafford) in October. I’m not dreading this as I did last time I moved there. I’ll actually be able to rent a nice house at a decent price near work AND get the pleasure of listening to everyone complain about how BAD the RE market is. Quite a change from summer 2005 when I left
I’ll be fat with cash when the market truly collapses so I can buy one of these overpriced homes for pennies on the dollar.
“I’ll be fat with cash when the market truly collapses so I can buy one of these overpriced homes for pennies on the dollar.”
Unless you’re independently wealthy with a diversified portfolio - you won’t be buying anything. You will be lucky to survive what’s coming.
“Unless you’re independently wealthy with a diversified portfolio - you won’t be buying anything. You will be lucky to survive what’s coming.”
That bear repeating. I’m not sure many people grasp just how far reaching this whole debacle is going to be.
Wandering around south Arlington (on my bike), there were a couple houses that had the “for sale” sign go up with the “under contract!” tag apparently on it from day one in early summer, which became “sold!”s a month or two later. They still haven’t shown up in the local tax records as a sale, but the sign came down… I’m wondering if it was some kind of strange marketing thing.
Just another white lie, who could it hurt?
Ending of the confidence game that was the real estate industry.
Realtors also put up sold signs the week of closing, however many never make it thru the closing table.
They probably haven’t sold and are expired listings. If real estate companies are cutting back they probably aren’t sending anyone out to take down the signs. I saw a faded, worn out sign at the end of a development in an area near me. The street was in, but there was absolutely not a house in sight. That development was started a couple years ago. Some signs just weather away until the wind blows them down.
Just what America needs: A bigger Fannie.
Limits on Fannie, Freddie Could Be Lifted
By Damian Paletta
Word Count: 451 | Companies Featured in This Article: Fannie Mae, Freddie Mac
WASHINGTON — The top regulator for Fannie Mae and Freddie Mac said limits on both companies’ investment portfolios could be entirely lifted in February if they begin filing timely and audited financial statements.
http://online.wsj.com/article/SB119043195086936118.html?mod=hpp_us_whats_news
Do the dimwitted politicians who support this measure know or care that letting Fannie and Freddie further bloat themselves would only serve to undermine their affordable housing missions? Paradoxically, a smaller Fannie would result in more affordable housing.
Just what America needs: A bigger Fannie ??
I.E…..posterier ??
the better to fit a joshua tree.
Every time I read about “liquidity issues” I immediately think of “liquidation issues”. I think this stupid market needs less liquidity and more liquidation.
The double-speak is maddening. We subsidize housing both to make it affordable and make it overpriced. Wow. The system is broken. The weekend topic should be about what we can do to fix it. I see scumbags marching all the time and getting their wretched voices heard. Why don’t we get our voices heard?
“Why don’t we get our voices heard?”
We do. Give the MSM some credit for paying attention.
Exhibit A: Check out the WSJ Op-Ed piece I posted.
Why don’t we get our voices heard?
Because you have been tamed and do what you are told. A few years ago, the Capital would have been set ablaze. Think about it, in the late 18th century, the first Americans led an armed insurrection because the government placed a tax on whiskey- a REVOLT.
Dumbing down of our country. The typical American can’t identify the Pres, VP and four Cabinet Members, let alone his/her Senators and Congressperson. So how in the world will the average American have a clue about fractional reserve banking, r.e. bubbles, easy credit, etc. THey have clue they are being sold down the river. They will get a clue shortly when their general standard of living goes down to about that of the typical third world country. Who knows what will happen then…
s.b. no clue
“They will get a clue shortly when their general standard of living goes down to about that of the typical third world country.”
That’s what happens when you choose to live your life with your head up your a$$. Americans deserve everything that’s coming, and then some.
“We subsidize housing both to make it affordable and make it overpriced.”
Whenever you subsidize something you create additional demand that otherwise wouldn’t be there. So guess what happens to prices.
At least when they subsidize milk, everyone is clear that the intent is to keep the wholesale price up so that local producers can stay in business.
In Mass. dairy is not very cost effective … they tried cutting the subsidy several years back and we started getting spoiled milk from New York. No thanks.
Don’t forget the broader lending industry does not want the GSEs on its turf.
Which is entirely reasonable. How is it fair for Fannie and Freddie to get an implicit too-big-to-fail interest rate subsidy as a marketing advantage over rival private-sector securitisers?
“if they begin filing timely and audited financial statements.”
IF. I’ll believe that when I see it. Both should have been delisted years ago. Both are financial black holes.
I’m thinking their black holes may have gotten lots deeper this year, with the subprime implosion and the credit crunch and all. It could be mighty interesting to see how their balance sheets look the next time they file “timely and audited financial statements.”
The meltdown may be in full swing by Feb and they can raise limits to the sky, but many won’t be able to afford a house. Plus many more by then won’t qualify for the Fannie and Freddie standards.
“…won’t qualify for the Fannie and Freddie standards.”
As long as the pols are talking about raising GSE portfolio limits, increasing the conforming loan limit and turning the FHA into a govt-sponsored subprime lender which insures 100% financed subprime loans, I see no reasons they cannot relax the underwriting standards for FNM/FRE securitization. It will probably take a few years for the taxpayer to get left holding the bag, at which point the PTB can conveniently overlook the stupidity which led to yet another mess requiring a bailout.
That’s what I fear: there is NOTHING preventing the idiot politicians from simply allowing any loan of any sort to be made by the government and turn the whole real estate market into some sort of socialist entity, where housing is forever unaffordable and we all pay taxes to support that level of unaffordability.
NYC skyscraper prices always go up, right?
Macklowes On a Wire
By Jennifer S. Forsyth
Word Count: 1,206
Harry Macklowe has ridden the booms and busts of the New York real-estate market for 40 years, with brash bets that paid off big or cost him millions. But his ability to survive this year’s bet on seven Manhattan skyscrapers — with almost no equity, huge short-term debt and rental income that doesn’t cover his interest payments — could either be the crowning achievement of his career, or a disaster that cripples his company and wipes out most of his personal fortune.
http://online.wsj.com/article/SB119041496907835832.html?mod=hpp_us_whats_news
sounds like a really dumb thing to do.
There goes the neighborhood!
HOME FRONT
The Invasion of the Renters
Housing Slump Spurs Rentals and Complaints;
Bikes on the Balcony
By BEN CASSELMAN
September 21, 2007; Page W1
Mark Spector was happy with his new neighborhood. Then the renters started moving in.
In 2004, Mr. Spector and his wife, Deanna, paid $350,000 for a six-bedroom house in Bridgewater, a new development in Wesley Chapel, Fla., about 25 miles north of Tampa. They moved into their home and looked forward to meeting their neighbors.
[Mark Spector (top) says an increase in renters -- and absentee landlords -- in the Florida subdivision where he and his wife bought a home in 2004 has resulted in unkempt lawns (the home pictured above is a rental), more noise and higher crime rates.]
Mark Spector says an increase in renters — and absentee landlords — in the Florida subdivision where he and his wife bought a home in 2004 has resulted in unkempt lawns (the home pictured below is a rental), more noise and higher crime rates.
Then Florida’s once-feverish housing market started to cool. Investors who’d bought a large percentage of the properties in Bridgewater found they couldn’t flip them for a quick profit, and brought in tenants, instead. By last year, Mr. Spector estimates, close to half of the residents in the subdivision of 750-plus homes were renters.
http://online.wsj.com/article/SB119033237399734594.html?mod=todays_us_nonsub_weekendjournal
A subprime renter is no worse than a subprime buyer.
Actually, they may be better: at least when moved down here in 2000, you actually had to have a job and some proof of income to rent in Maryland, which is a tougher standard than required to get a toxic loan. But who knows - maybe these days the standards to rent have also fallen to zero.
After reading that article - it makes me wonder why anyone could ever make a case for spending so much on houses in an increasingly mobile and fractious society. Throughout this boom the REIC sold people on a fictious image that roughly resembled the quintessential 1950’s suburb. Sure, no one will admit it - because of today’s PC “sensibilities” - but that’s the idyllic image that made many of these buyers sign up. Considering the risks that now exist for any community to quite suddenly change its socioeconomic composition overnight - house prices should be getting progressively cheaper - a sort of risk premium if you will.
Xactly. My point is we are becoming more mobile, like it or not. The cost of mobility is you do not have the ability or desire to be neighborly. While I was in another state working, for example, my apartment was broken into by the next door neighbor (through a common wall). Of course, the nut was caught and jailed. However, being mobile is very much worth it. I’m making more than double the income I would otherwise make if I had a job locally with no travel. As a matter of fact, I’m due to move to the east coast temporarily any week and be there from 5 months to a year. My move will take 8 hours (plane flight, trip to and from the airports). I’ll get an apartment with short term lease, rent a car there, and put excess income into savings bonds, precious metals, and stocks.
Good luck to you on your trip. By the way, I appreciate your posts on being mobile - it is becoming more true every day.
Thanks! I had to cancel my plane/car/hotel reservations for last week. Then made new reservations as I was told they are ready for me. There is a chance I may have to cancel ‘em again - will find out Monday. The management here in Phoenix in the subsidiary corporation told the parent corporation yesterday that I may have to work in Phoenix a few more days.
I’m interested in a change of scenery but will be back in the Valley every 2 or 3 weeks after I get out there!
bill in phx will become bill in _____
Hummm… I wonder if the Fed should worry about that spike in oil and gold prices right after their FOMC meeting announcement last week?
Lagging Consumer Stocks Offer
A Warning Signal Amid Euphoria
By PETER A. MCKAY
September 22, 2007
Stocks just had their best two weeks since 2004, but to get a sense of what the market thinks of the economy’s future prospects, look at consumer-oriented stocks. They have lagged behind, which may not bode well for the months ahead.
…
The broad Standard & Poor’s 500-stock index also had its best two-week gain in percentage terms since November 2004, including a gain of 0.5%, or seven points Friday, to 1525.75. The S&P gained 2.8% in the week ended Friday and 2.1% the previous week.
But its consumer-oriented components have hardly fared as well, up just 3.3% in the past two weeks. For the year, the S&P is ahead 7.6%, while its consumer-discretionary components are off 3.5%, and its consumer-staples components are up just 5.5%, as measured by a family of exchange-traded funds tracking the index.
In a worst-case scenario for the economy, inflation would rekindle before growth, and the rest of the market might join consumer stocks in the doldrums.
“I don’t think there’s any question that the possibility of a U.S. recession, or something close to it, has increased,” said Lehman Brothers strategist Simeon Hyman. “As such, we do want to reduce risk a little bit here.”
http://online.wsj.com/article/SB119043177832436114.html?mod=todays_us_nonsub_money_and_investing
You can add the spike in long bond yields to the list, B-52 Ben screwed up royaly.
Watch Cagey B get an academic lesson from Ron Paul…
http://www.youtube.com/watch?v=AeHWW5gbc0w&eurl=http%3A%2F%2Fwww%2Eprisonplanet%2Ecom%2Farticles%2Fseptember2007%2F200907%5Fdollar%5Fmeltdown%2Ehtm
Watch this “tell” on Cagey B…
He closes his eyes after each utterance of his, that seems completely @ odds with the truth…
Watch him when talks of the inflation rate being 2%
He closes his eyes and looks down.
Thanks for the post Aladinsane…I heard about but missed seeing it…
The Fed is either really spooked or really reckless.
Updated message: Subprime will be contained — by March 2008.
spooked…..
The Feds’ new cash delivery system, it can also carry cruise missiles.
http://en.wikipedia.org/wiki/Image:Usaf.Boeing_B-52.jpg
Cool looking helicopter!
Is there still no bursting bubble?
Fed chief triggers bond volatility
By Eoin Callan in Washington
Published: September 21 2007 23:27 | Last updated: September 21 2007 23:27
Don Kohn, Federal Reserve vice-chairman, underlined the US central bank’s concerns about inflation in the wake of this week’s rate cut, saying explicit price goals could provide greater certainty.
The senior Fed member has in the past opposed the US following other central banks and setting formal inflation targets, and his comments during a speech in Frankfurt on Friday triggered volatility in bond markets.
There has been heightened concern about the risk of resurgent inflation after the Fed aggressively cut interest rates this week amid the crisis in credit markets.
…
House prices tend to be seen “rising by the escalator and falling by the elevator”, he said, adding that central banks’ response to bubbles was often more dramatic when they burst than when they inflated gradually.
http://www.ft.com/cms/s/0/b322ac1a-6890-11dc-b475-0000779fd2ac.html
if any of you have failed to buy into the FED inflation model, the next rate cut, and the one after that will convinve you.
County’s jobless rate put at 4.8%
Highest in three years, worse than nationwide
By Dean Calbreath
STAFF WRITER
September 22, 2007
Despite a spurt of summertime hiring, San Diego County’s unemployment rate in August stayed at its highest point in three years, outstripping the national average for the first time this decade, according to data released by the state Employment Development Department yesterday.
The county’s monthly unemployment rate hit 4.8 percent in August, compared with the national rate, which was 4.6 percent without adjusting for seasonal fluctuations. Both were far better than for California, which had a 5.4 percent unadjusted jobless rate.
“It’s the same old story, as it’s been lately: a weakening economy with rising unemployment,” said Christopher Thornberg, an economist with Beacon Economics in Los Angeles. “Last fall, San Diego’s unemployment rate was below 4 percent. That’s a pretty steep increase.”
On a seasonally adjusted basis, which weeds out periodic fluctuations in such sectors as tourism and education, California had a 5.5 percent jobless rate, compared with 4.6 for the nation.
http://www.signonsandiego.com/uniontrib/20070922/news_1b22jobs.html
ramping the unemployment data to soften the blow for recession hitting the fron page before Halloween.
Northern Rock borrows £3bn
By Chris Giles, Jane Croft, Kate Burgess and Gillian Tett
Published: September 21 2007 21:40 | Last updated: September 21 2007 21:40
Northern Rock has been forced to borrow about £3bn from the Bank of England over the past week, it emerged on Friday in the first official estimate of the extent of its funding crisis.
The scale of the taxpayer-funded loans were revealed as Northern Rock said it intended to press ahead with a dividend payout to shareholders even though the company had acknowledged it was not legally obliged to do so.
Adam Applegarth, chief executive, would receive £13,952 from the payment of the interim dividend announced at the end of July before the crisis. David Baker, former finance director, would get £8,878 and Matt Ridley, chairman, £6,553.
Northern Rock refused to comment on whether the executives would waive their payments given the crisis and fierce criticism of the aggressive expansion of its lending this year and its reliance on funding from wholesale markets.
The stricken bank is due to pay shareholders who stick with it until next Friday an interim dividend of 14.2p per share next month, which will cost it £59m.
Executives must decide in the next few days whether to abandon the dividend payments, which are certain to provoke criticism, especially in the light of the sums lent and underwritten by the taxpayer.
Northern Rock’s recourse to borrowing from the Bank of England (revealed in the central bank’s weekly publication of its balance sheet) represents 10 per cent of its deposit base.
Commenting on the Bank’s support to money markets, Simon Ward, economist at New Star, said: “The Bank of England’s balance sheet has expanded by 13 per cent over the last week as a result of its intervention to stabilise the banking system.”
http://www.ft.com/cms/s/0/efbc281a-687a-11dc-b475-0000779fd2ac.html
Borrow a cup of Billions, Guv?
Eurozone suffers ‘worst’ jolt since 9/11
By Ralph Atkins in Frankfurt
Published: September 21 2007 11:20 | Last updated: September 21 2007 17:27
The eurozone economy has this month suffered its biggest jolt since the aftermath of the September 2001 terrorist attacks, with global financial turmoil hitting the services sector particularly hard, according to a closely watched survey.
The unexpectedly steep fall on Friday in the eurozone purchasing managers’ index – the third consecutive monthly drop – could knock policymakers’ previous confidence that the 13-country eurozone economy would escape largely unscathed from the US subprime mortgage crisis.
http://www.ft.com/cms/s/0/d42aed9c-6826-11dc-b475-0000779fd2ac.html
ECB is the next to cut rates.
Count on the “global cuts” coming forward.
Increase the systemic risk fears, and watch the inflation fires burning.
“Don Kohn, Federal Reserve vice-chairman, underlined the US central bank’s concerns about inflation in the wake of this week’s rate cut, saying explicit price goals could provide greater certainty.
The senior Fed member has in the past opposed the US following other central banks and setting formal inflation targets, and his comments during a speech in Frankfurt on Friday triggered volatility in bond markets.
There has been heightened concern about the risk of resurgent inflation after the Fed aggressively cut interest rates this week amid the crisis in credit markets.
Peter Hooper, an economist at Deutsche Bank, said: “The Fed is concerned about gains in inflation expectations giving way as they counteract the significant tightening of credit conditions.”
Mr Kohn and other Fed speakers yesterday also sought to defend their decision to cut interest rates by 50 basis points to 4.75 per cent. Critics said the move could create moral hazard by encouraging Wall Street to take big risks in the hope of bail-outs.
Kevin Warsh, Fed governor, said the central bank was under no obligation to rescue banks from losses. “The desire for well-functioning markets does not require us to insulate asset prices or individual financial institutions from the buffeting of the marketplace.” Ethan Harris, an economist at Lehman Brothers, said: “Fed speakers seemed somewhat defensive, arguing that their actions did not increase moral hazard and were aimed at the real economy.”
I’m sorry, but I don’t think there’s much the Fed can do to stop an unwinding of the credit bubbles. They could drop rates below zero if they find a way to and still won’t be able to stop the unwinding. Why? No one has any money in the USA. Unless they physically print more money, unlikely in my opinion, this credit bubble will disintegrate, and all of your virtual finance will dissappear in a puff of magic. We would roll back to 2000 levels of credit and debt in the USA. Not very far back chronologically, but consider that the entire credit market in 2000 was somewhere in the 100 trillion range worldwide compared with over 400 trillion now. Big drop if you ask me.
The Fed’s confidence about their ability to stop the housing bubble tsunami is somewhat surprising, given their failure to stop the tech stock bust in the early part of this decade.
They usually don’t cut this big early in a downturn. What does that tell you?
I have never posted but thought I might give it a try and update what is really happening in the Seattle area.
First some background. After reading this blog and others for about a year, I have convinced MrsDonnyM that we should sell the house which we bought in the beginning of 03’. We never bought to make money, just to have a nice place to live.
These are the current stats of our house
(1) 13 agents pulled the house up on the computer.
(2) One showing.
(3) Been on the market 11 days.
(4) Average day till offer is 45 days
(5) Listed for about 15% less than comps in the area
For those who spew the typical lines “seattle is different” please open you eyes and look around. Every other house with a sale sign on it say “PRICE REDUCED”, “PRICED TO SELL”, “BUYER INCENTIVES”, or any combination of the three. Yet they aren’t selling. Are we better off than other areas?…..Yes but not for long. And yes, there is a condo problem here too. Seattle is not different just behind the curve. I have tried many times to convince friends and family that they are going to get screwed, no one listens. I just get the “I think you are living in a world of paranoia” line.
By the way, is anyone else loosing sleep over what is going to happen to the economy? For those who plan on hiding in a bunker for what is about to happen, fine. But why not try and make things better. Start a MFG company, or better yet run for office. We need to start taking our country back, there are way too many idiots running things.
Ahhhhh. I feel better now. Thanks for the vent.
Good luck selling, have you been able to talk her into renting for a while?
yes, we will rent. rent vs. mortgage prices are closer here than other areas, but i am looking forward to not paying for maintenance
“Start a MFG company, or better yet run for office”
Both of those are very good ideas. We need to move away froma service economy and get back to agrarian and manufacturing based communities. That is a must - and sooner than later.
We need to move away from a service economy
We certainly do!
That’s what Catherine Austin Fitts (solari.com) has been educating folk about for the last couple of years. Her website contains a mountain of data ref. the financial/political crooks and bozos who are runnin’ the joint.
As bad as this rate cut is mabye it will hasten the housing crash. So many people think it could be their chance to get out. Inventory is spiking here in DC. Saw a house (short sale) in a not bad part of Capitol Hill for $399K. Have not seen that price for a few years. Condo prices continue to drop
The spring of hope turned into the summer of hell. A lot of inventory went on ice this summer. What’s more, we are just begining to enter the fall/winter ARM reset mountain. Consequently, inventory is anticipated to surge. With promotions like ‘Deal of the Century,’ the rush for the exits has begun.
“The spring of hope turned into the summer of hell.”
Next up: Housing market nuculer winter, starting early during the ice-cold fall sales season.
I like it, but lets tweak it a little:
Spring of False Hope
Summer of Hell
Fall of Despair
Nuculer Winter
“nuculer winter,”?
Professor– sure hope you’re being ironic.
I live in San Mateo County, CA. I was looking at Craigslist last night and saw 3-4 listings advertising short sales. Still too high.
Greenspan heckled at NY book signing…..
http://www.youtube.com/watch?v=S5wfNnV6vTU&eurl=http%3A%2F%2Fgoldismoney%2Einfo%2Fforums%2Fshowthread%2Ephp%3Ft%3D180248
Wow…
Good to see the youth of America paying attention. There may be hope yet. I recommend everyone watch this. Love that Rep. For a split second the guy inspired me to go into politics!
that one guy yelled “I learned the federal reserve was a tool for the confiscation of wealth from you.”
I’m sure the cops are puzzled that people would actually heckle alan greenspan, especially calling him a traitor.
what are they talking about with bohemian growth or something that sounds like it?
Bohemian Grove - a summer retreat for the PTB. The LA Times published an article in the 80’s referencing Jerry Brown attending and running through the woods naked. It’s a ‘brotherly’ event for the sick MF’s who run this country.
Bernie Sanders, despite being a New Yorker ;), (Howard Dean is too, by the way) has always been a straightforward kind of guy. Truth be told, he’s a little too left for most people in the state but we sent to him to Congress to minimize his impact.
He’s one of the few people whom I would actually trust in the den of theives called DC. You may not like his politics but he has been an amazingly consistent spokesperson for the working classes.
Wow! Sanders makes Ron Paul look like the wimp banker tool he truly is.
http://afp.google.com/article/ALeqM5ii7AB_Vq-sXh5W5ZgHjh4kN09Anw
Baby deaths spark US recall of million Chinese-made cribs
Okay - does anyone have any idea on what’s up with the flurish of Chinese related recalls?
I have known that stuff coming out of China=totally crappy products for years and gone out of my way to search for quality when I could. This crap must have been going on for years. Why are we instilling fears in the mass now? To what end?
My husband suggested the current media coverage is like overturning a rock because you’ve noticed a bug coming out out it. Overturn the rock (because now you’re looking) and get totally grossed out by the amount of life residing under it.
It would not break my heart to see at least some manufacturing return because of all this but I’m wondering if there’s something bigger going on…
not all chinese goods are bad. just like in the US or any other country, people can cut corners in any country. there might be more chinese goods recalled because it makes the news and because they produce so many goods.
the chinese are probably deathly afraid of made in china meaning a defective and deadly product. that’s their economy.
Exactly - and that’s why I’m wondering if this isn’t all a coincidence. Maybe the PTB have woken up to that old idea about “when the servant becomes the master??”
It’s probably something simpler but it all seems kinda weird.
It’s too bad it won’t be possible to recall Chinese food products after Americans have eaten them.
Recalled because dumfuque murkin consumers assembled the railing upside down and guillotined their babies.
Gravity. Oh. That.
My guess is that Congress, the Fed and company will wage an ongoing campaign to transfer the “$100 billion or so of losses expected from reckless subprime lending” onto the backs of the U.S. taxpayer before this is over — at least the part that is not claimed from foreign creditors by a devaluing dollar. The process started in earnest this past week, against a backdrop of vehement denials from Fed governors and other top economic policymakers.
COMMENT FROM breakingviews
Not Out of the Woods Yet
Markets Begin to Heal
But Big Dangers Loom
Over Slow Path to Recovery
September 22, 2007; Page B14
For almost two months, financial markets have been embroiled in a bloody war. This past week, an uneasy truce descended, largely because of increasingly generous action by the world’s central banks. Not only did the Federal Reserve cut rates by half a percentage point but United Kingdom authorities rushed to the aid of Northern Rock PLC, a midsize bank that was facing a frightening run on deposits. Four investment banks also reported results that ranged from extremely good (at Goldman Sachs Group Inc.) to not-a-total-disaster (at Bear Stearns Cos.).
It is tempting to hope the worst is over. But this truce is extremely fragile. Conditions in the money markets are improving, but only slowly. So it could take months to get back to normalcy. During that period, there are any of a number of ways that hostilities could flare up again.
…
So why is the market still fragile?
To start with, less than 10% of the $100 billion or so of losses expected from reckless subprime lending have been recognized. Even if the U.S. housing market doesn’t deteriorate further, that overhang suggests a steady stream of salvos directed at still jittery markets. And thanks to the interlinked nature of modern global finance, the actual losses are likely to keep popping up in unexpected places. Another run on a bank in another part of the world could get everybody ducking for cover again.
http://online.wsj.com/article/SB119042850176136014.html?mod=googlenews_wsj
I was reading the zillow message boards, but I’d rather post my thoughts here among reasonable folk…
Assume for a minute that 6x - 10x income is the new paradigm and that is what we will now pay for houses (putting aside all of the logical impossibilities of this.) If that is how much houses cost, and that is how much debt I need to take on in order to buy, then I simply do not want a house. It is not a media brainwashing, not due to jealousy of homeowners, or any of that crap. This is me making a choice about how I want to live and my values. I’ve been accused of the “bitter renter” thing before and it is ridiculous - I sold my condo at the top (which I bought at the time because it was cheaper to buy than rent) and walked away with a very nice windfall/nest egg. I’m hardly bitter about my luck - I am just constitutionally incapable of buying a house that I feel is mispriced. If prices stay at their current levels they will still be mispriced no matter how long they stay there. My aversion to making a stupid financial decision is greater than my desire for a home, which is very real.
So, if the sellers band together and refuse to sell at lower prices (ha) then I’ll just accept that. I will think about other things I can do with my money. That is what these idiots don’t understand - there is probably pent-up demand out there, after a fashion, but the only people left who actually can buy a house are the non-sheep who are in control of their decisions, they are not going to let themselves be railroaded into making stupid choices. It wouldn’t matter if this market were “created by the media” or “bottom feeders” or whatever victim narrative that greedy speculators now comfort themselves with. I do not have to buy a house on anyone’s terms but my own.
If prices do not come down nominally 50% I can rent for the rest of my working life if need be, and think about moving somewhere reasonable at retirement. There are plenty of gorgeous rentals out there, the one I live in now is a “luxury” unit that would cost 400-700K if I bought it as a condo. Nobody is buying these types of units so if prices hold steady I expect luxury rentals will be available to me indefinitely.
Thanks for listening, HBBers
Oh and phooey on all of you who complain about wives demanding their husbands stick their heads in a noose to buy overpriced houses. I had to convince my husband to get on board with selling the condo - he thought it was an axiom that it is always better to own than to rent, and so did all of the men in my family - some of them are paying dearly for that belief right now.
This board seems to attract a small subset of men who somehow believe that an “outie” between the legs gives them a better handle on rational thinking. I usually get a little chuckle from the idea that long term marital hapiness depends on buying an overpriced box for “the little woman”. I’m sure txchick57 has a 20 lb trout for all of them.
In any event, in our marriage I’m the CPA and investment consultant - I ran the numbers and talked my husband into selling our house. The women are here, we’re just less likely to complain about our spouses.
Lets hear it for the “innies”!
I can do anything my wife lets me.
I think that it comes down to who has more time/interest in studying this subject. The vast majority of people have grown up with the idea that renting is a bad strategy and that owning is “always” better. That said, my wife was very attached to our house, but respects me enough to let me sell it. I got the whole “not gona give it away” and “but you said we could stay here forever” and tears, anger, depression, bargaining. Now that we are undercontact she has finially accepted it and is starting to get excited about buying a place with cash in a few years (We have 140K in waiting).
Everyone is different. I feel very sorry for the women out there who cannot convince their husbands to sell (or not to buy). It can be VERY stressful on a mariage in the shortterm, but hopefully in the longterm they will respect you more and be very grateful.
Looks a little Weimar-ish…
http://www.financialsense.com/fsu/editorials/bloom/2007/0921.html
FLASH: Credit Crunch spreads to Russia!
MOSCOW (Reuters) - Russia’s top consumer lender, Russian Standard Bank, has temporarily halted issuing cash loans as a result of the global credit crunch, the Financial Times reported on Saturday.
The FT quoted Chief Executive Dmitry Levin as saying the stoppage would last to the end of this month. The bank was also tightening requirements for credit cards and point-of-sale loans.
http://www.reuters.com/article/ousiv/idUSL2246689420070922
Will be interesting to hear comrade Greenspan’s viewpoint. After all, the fall of communism unleashed a savings glut onto world economies, drove down interest rates, and bubbles resulted. From the FT:
Russian Standard Bank is owned by Roustam Tariko, the Russian consumer credit magnate who also produces vodka under the same brand name. The bank has been a pioneer in the country’s consumer lending boom.
But it borrowed heavily on international financial markets to fund rapid growth, which gave it 40 per cent of the consumer credit market and more than 70 per cent of the credit card market.
Consumer lending in Russia has nearly doubled annually in recent years and has hit 7 per cent of gross domestic product.
More than 60 per cent of the bank’s financing has been raised on international financial markets, while just 5 per cent of its financing base has come from private deposits.
http://tinyurl.com/2hyowz
Methinks the worldwide eCONomy is about…
To Get Small
A big lift, or a sign of Trouble? From the NYTimes regarding the rate cut:
Mr. Yardeni agreed with the market’s verdict on the Fed’s move, but he suggested that the big rate cut was a sign of a big underlying problem.
“There are so many linkages between global capital markets and the global economy that if the financial markets continue to remain in a chaotic state, it could cause not just a modest recession but a very severe one,” he said. The easing of rates and huge injections of money into the system by the Fed and its counterparts in Europe and Britain are “clearly related to the worst-case scenario being viewed as a big possibility.”
http://tinyurl.com/2hfazw