Those Promises Have Turned Out Not To Be True
The Chicago Tribune reports from Illinois. “Most anybody in the mortgage business will tell you that August was a month that will live in infamy. How bad was it? A survey of mortgage brokers suggests that one in three consumers who recently signed purchase contracts canceled in August, up from just 4 percent three years ago, according to the research firm that conducted the survey for Inside Mortgage Finance.”
“‘Our office had four sales in one week that failed to close because the seller didn’t have the cash,’ said the real estate agent, who declined to be identified because she feared office repercussions.”
“The sellers couldn’t come up with the money?”
“The problem seems to start, she said, with those formerly easy-to-snatch mortgages that cover 95 or 100 percent, or more, of the purchase price.”
“My real estate agent acquaintance grabs a settlement sheet from a recent transaction on a home that cost just under $600,000. Reeling off a few of the line items, she notes…numerous charges drove the closing costs to about $3,400.”
“And that didn’t include the pro-rated property taxes for which the seller was liable and which weren’t covered by the escrow account. Then, ahem, there’s the commission.”
“‘If you’re listing a house for $410,000 and the mortgage is $390,000, you’ve got a problem,’ she said, in a bit of an understatement.”
“‘They’re probably people who have borrowed the equity out of their houses,’ said John O’Brien, chairman of the Illinois Real Estate Lawyers Association. ‘Some people don’t understand that a home-equity loan is a lien against the house and it has to be paid back at closing.’”
“Or, he said, they may have been among the legions of borrowers with hefty loans who have come to find, gulp, that those promises of home prices appreciating in perpetuity have turned out not to be true.”
“‘All those fees, they don’t seem so big when you’re looking at a $50,000 check coming your way,’ my friend said, her voice trailing away. ‘But when you’ve spent all your equity on a new car …’”
The Springfield Business Journal from Missouri. “As of Sept. 26, Greene County has seen more than 500 home foreclosures, according to records maintained by the Recorder of Deeds office. After just nine months, the county is poised to surpass last year’s total of 513 foreclosures.”
“‘You get people that were able to afford these homes on these interest-only ARMs, and on $100,000, you’re talking a couple hundred bucks a month (when the interest rate increases),’ said said Bart Evans, director of residential lending for Great Southern. ‘That’s a lot. This is a monthly payment society.’”
The Des Moines Register from Iowa. “Builders like Tom Gratias, Keith Butz and others say dozens of new homes are empty in the Des Moines area. The buildup in inventory means homes are staying on the market longer. Gratias estimates that his homes are on the market twice as long as they were at the peak of the market in 2005.”
“Butz, president of the Home Builders Association of Iowa, acknowledges that some builders are leaving the market - some switching to other kinds of construction such as commercial, others through bankruptcy.”
“‘Some builders are finding other things to do in life,’ said Butz.”
“Lenders filed lawsuits this fall seeking to foreclose against some big residential players, including Oaks Development, which promotes itself as the state’s largest land developer. Oaks attorney Jerrold Wanek has said lenders are panicked because of ‘a perceived’ decline in land values.”
“David Vollmar, executive secretary of the Home Builders Association of Greater Des Moines, said the exit of some builders is a natural shakeout. ‘When the market was booming, every guy with a saw in his truck called himself a builder,’ Vollmar said.”
“Butz said he expects a return to a normal market similar to 2002, the year before the big housing run-up that peaked in 2005. Five years ago, the value of housing sat at $461.9 million with nearly 3,200 homes constructed. Two years ago, building skyrocketed to $860.1 million in value, with nearly 5,100 homes constructed.”
The Business Journal from Indiana. “For most of this decade, the Indianapolis residential real estate market enjoyed a very good run. But now it’s muddling through the doldrums just like the rest of the country, and builders are pulling out all the stops to avoid getting stuck with inventory.”
“‘There are just not a lot of people out there looking,’ said Jeff Kontor, VP of sales, Indianapolis-based Brenwick Development. ‘So far as numbers are concerned, whether it’s for lots or homes, it’s definitely down right now.’”
“Not surprisingly, selling new homes in Indianapolis has suddenly become a dicier proposition. Especially since so many builders have chosen to crowd into one price point.”
“‘Seventy-five percent of this market is for homes between $100,000 and $200,000,’ said Dax Meredith, who directs the Indianapolis office of American Metrostudy Corp. ‘So that makes for a very, very crowded field.’”
“‘Part of the problem is that people cannot sell their existing homes,’ Kontor said. ‘They may want to move, but they can’t sell.’”
“Alan Goldsticker, president of Ryland Homes of Indiana, said the bottom line is that pretty much everyone who wants to drive a hard bargain for a new home must first endure the trials of selling the old one. In other words, before buyers can benefit from the down market, they must first put themselves at its mercy.”
“Goldsticker said that while the current bust may signal the end of the recent banner years for builders, it’s not the end of the world. No slump ever is.”
“‘I’m in my twenty-fifth year with Ryland and this is my third downturn,’ he said. ‘If you get too fat during the upturns, that means you have to take off a lot more weight during the slow times. And I don’t like that.’”
The Journal Sentinel from Wisconsin. “Housing’s forecast: cloudy with intermittent storms, increasing chance of sunniness in a year.”
“‘Slump’ is a fair description of what we’re seeing,’ said Nigel Gault, a managing director at a financial and informational services firm. ‘Whether it’s a crash depends on which part of the country you’re in,’ he said in an online session.”
“Three market bubbles - home price appreciation, speculative building and risky mortgages- formed during the 2001-’05 boom. Now, they have popped, said Gault’s colleague, Jim Diffley.”
“Price bubbles were confined to several lightning-growth areas - notably Florida, Arizona, California and Nevada - but overbuilding and bad loans ‘were distributed pretty much across the nation,’ Diffley said.”
“New houses in Metro Milwaukee have been growing bigger and more luxurious all decade, said Matt Moroney, executive director of the builders association.”
“‘Our average price has gone up 57% since 2000 from $195,902 to $307,000,’ excluding land and improvements, he said. ‘I think we’ll see that average price come down, as builders put a greater emphasis on affordability.’”
“A few builders are rethinking model layouts and subdivision configurations to allow for lower-priced housing, Moroney said.”
‘As the American (and world) economy feels the impact of the collapsing U.S. housing bubble, Athens County hasn’t been entirely immune. ‘I would say that our market here can’t be compared to what the rest of the country is going through, particularly on the East and West coasts,’ Chamberlain said.’
‘He added, however, that in Ohio’s bigger urban markets like Columbus, fear of a housing meltdown among realtors he talks to is getting serious. ‘They’re scared,’ he reported.’
Athens Ohio has basically one employer…. a failry large University. (Ohio University, not Ohio State University). Educational institutions are subject to macro economic forces just like everyone else, but they tend to lag Corporate America in both the ups and downs.
‘They’re scared,’ he reported.’
And they should be
I’m happy to report that MY economy isn’t collapsing. I rent, not own.
I also am in the stock market - my return so far this year now is the highest to date - up 16%.
I LOVE stock market bears. Nothing beats being a contrarian.
Yes it does!
Ha ha ha! (Get it?)
RE: that in Ohio’s bigger urban markets like Columbus, fear of a housing meltdown among realtors he talks to is getting serious.
Man, I just back from the Gathering of the Mustangs and Legends held at Rickenbacker airport.
On the way back and forth to the airport from Circleville (20+ miles S. of Columbus) I saw signs for NEW subdivsions of new tract colonials with prices advertised @ $120k.
$120k for a new house and there is fear of a “meltdown”?
YIKES!
Hell of an air show, wasn’t it? With plenty of the great weather that Ohio supposedly never gets.
I live in NW Cols , and am getting a lot more ‘feeler’ mailers in the box from realtors I’ve never heard from before. One usually sends a list of recent sales in my area (with prices and DOM), and her last list showed a noticeable slowdown in sales.
One local builder, DHOM, is running on an extended credit line according to recent news items, and I wonder how long they can stay afloat. But the ultimate anecdotal evidence will be from a younger realtor I’ve known for years… if I see her back bartending again (which is where I met up with her), I’ll know the market is dead.
Now that the easy-money spigot has been turned completely off, we will watch the prices starting to adjust in a pretty severe fashion in the coming 12 months.
It’s already far severer here then people or the MSM realize. Wife got a call from an old friend (wife’s an attorney, friends calling her business line are never a good sign). We’ve known them for close to 10 years now. Two kids in college, one in high school. Wanted to know about BK. Seems she put her house on the market four months ago for 299k. Dropped down to 230K over the previous three months. Realtor just told her she’s going to need to drop to 200k… She owes 230k and can’t absorb that much in a closing.
That’s a 100k drop in four months on ASKING price (and we all know in today’s market asking is still likely a bit higher then your actually going to get…).
A third off in four months is rather huge, especially in this area of town.
And the “for sale” signs are sprouting like weeds to boot.
Where is this at?
Phoenix technically, Paradise Valley services however. I’m not 100% sure if she is actually in our zip code (85028).
Phoenix-area mobile-home dwellers still perfect in their performance on loans made by yours truly. But the average outstanding balance per borrower is maybe $40K. Something real people can manage, even if retired.
“‘Our office had four sales in one week that failed to close because the seller didn’t have the cash,’ said the real estate agent, who declined to be identified because she feared office repercussions.”
“The sellers couldn’t come up with the money?”
******
Some laughed in 2004 and 2005 in the Alt-A Bay Area when I said that I was related stories in the early 90’s about “house owners having to come to closings with a check”.
It’s real quiet now. No one’s laughing any more…
“said the real estate agent, who declined to be identified because she feared office repercussions.”
Puss!
Wrong. I’M laughing. I’m laughing lots. I have a cheery nature. Oh, and a vengeful, spiteful one, too.
Technically, we call that a cackle, not a laugh.
If the *Seller* can’t come up with the money, aren’t they still on the hook? Can’t the *buyer* sue for performance? I need to read a standard R-E sales contract to see what it says.
Hey!
Why do they keep calling them “sales”? A sale can’t fall through because it indicates the completion of a transaction.
Example: “I made a sale today.” That indicates knowledge of what a sale really is.
It should not sound like, “I prayed to God last night that by burying six St. Joseph statues a little baby sale might be delivered unto my doorstep.”
ROTFLMAO (first time using that phrase in 14+ years of Internet)
Sign of the times..they laughed at us and told us we were “wasting our money” with a downpayment…hmmm…I guess they felt that being underwater could never happen…luckily my market is still holding steady..never really hit the bubble like SFL…and I also bought and sold and the right time…
“Some people don’t understand that a home-equity loan is a lien against the house and it has to be paid back at closing.”
Good grief.
Heh. You mean it isn’t free money from the magical HELOC fairy?
close ital
It is YOUR money. You are just taking it out.
I thought they were just income supplements!! Silly me.
Pretty much sums up the whole bubble experience doesn’t it?
Tell me about it. I got stupider just reading that statement. WTF (where or what) did these people think that this money was coming from? It’s like a “bonus” for owning a home???
Oh my god, that might be the stupidest thing I have ever read on this blog. I am going to go make myself a martini… Just contemplating that some people don’t understand that LOANS have to be repaid is causing my much mental pain. Something only Ketel can cure.
Have you ever watched the HGTV show, “What’s my house worth?” basically the show is about people who are looking for huge equity positions in the home to either remodel or move…I am still waiting for a 2007 show..they seem to be all re-runs of 05-06….
I’ve been reading Ben’s blog faithfully for two and a half years, but stuff like this still astonishes me.
Well, but, to be fair, this statement (about people’s ignorance) is just what some attorney SAID, not something documented (though I don’t doubt there are some who are as ignorant as he suggested).
It’s nothing more than making your current loan bigger.
Same house. Just a bigger loan.
“Oaks attorney Jerrold Wanek has said lenders are panicked because of ‘a perceived’ decline in land values.”
- I feel much better now that Jerry has reasured me that those declines in land prices are not real…only a perception.
Kind of backwards that. Land prices are a reflection of people’s “perception” of value.
Anita Spriggs shoots her neighbor over hedge dispute.
http://tinyurl.com/ywkq2g
You can’t make this stuff up. Well, you can, but no one would believe you. Spriggs?
Evidently really really fond of her plants.
She’s 65yo for crying out loud!! I laughed so hard, I had to run upstairs to the restroom!
Ya just can’t make this stuff up!
Thanks,
Leigh
(although I know it’s not funny to shoot folks, this just hit the old funny and pelvic bones)
Whatd’ya mean, it’s not funny to shoot folks?
You’re simply shooting the wrong folks, missy.
And didn’t you just go to a gun show and get yourself some nice new guns? Only a week or two ago?
Oh, and you never did tell us what kind.
SKS…going to a BIG one in Milwaukee on Oct 19. Weee.
Just in time for All Hallows Eve! What will you get there?
mo guns of course. I hope to land a 40cal, stainless steel semi, 9mil for hubby, and another semi. weee.
Leigh,
do you live in eastern Montana by chance?
Wisconsin…it gets about as cold : )
She probably coundn’t afford her house anymore and needed some free medical as well. Shot neighbor and go to jail, viola, free room, board and medical.
oops.
>Itallics off
There’s a $747 about to take off again…
Hop on, there’s still seating available.
“And that didn’t include the pro-rated property taxes for which the seller was liable and which weren’t covered by the escrow account. Then, ahem, there’s the commission.”
One of the future benefits of the current bust may be that the RE agent’s commissions may eventually decline to 1 or 2% instead of 5 or 6%. It is mind-boggling that for a 400K house, the realtwhore expects to be paid 20 to 24K commission. Why? What is the value provided here?
Plenty of our fellow citizens work their butt off, day in and day out, for $7 to $8/hr. For a 40-hr work week, that comes to ~16K per year before social security taxes take away a good chunk.
If Ron Paul gets elected and they could opt out then they could be making $17,200 instead of $14,776(after SS) because of the employer half of FICA. They probably wouldn’t owe much income tax at that pay level.
The Journal Sentinel from Wisconsin. “Housing’s forecast: cloudy with intermittent storms, increasing chance of sunniness in a year.”
Ooohh Yeah, Right !!!..NAR and Suzanne will will part the Waters of Lake Michigin and the cheesehead FB’s will be as sucessful as the Detroit Flippers. Just make those payments this WINTER and Keep the Faith…The buyers WILL call…Will call..WILL call..
You speak truth. Wisconsin house shopping experience from yesterday:
Hubby and I met with realtor and looked a three home. Hubby wants to buy the fisrt and prettiest, but I threatened to chop of his head (and was nice enough to let him pick which one…ahem)
Well–it was $399,900 and I wasn’t watching him all so close when he set up the appointment–shame on me. (In his defense, she was purtyw/8 ac).
The second home, for the love of Jeesh, was the same price. (At this time I was eyeballing his head).
Now mind you, I grew up in Pittsburgh and see, we don’t have barns there…especially ones with 2 acres converted into a humogous home! (I was secretly planning his untimely demise in my head for wasting my time–he must have sensed it–probably got burned by the laser lights shooting from my eyes) and quickly asked said realtor to show us number 3. Oh, BTW, the barn had granite countertops/SS and you could have a hoe-down in the kitchen alone. Did I say “big barn?”
Disaster, 3ac “round house” 1970. $210k. Not one damn thing updated. Nothing I own would even fit in the dang place.
Moral of the story, hubby not allowed to schedule showings. It was a beautiful day for a drive and we did have a delightful meal.
And the Packers won! Confetti for everyone except hubby, who is hiding said heads.
LOL,
Leigh
Was this in Eagle? I thought Eagle was relatively inexpensive for farmettes? $400K is not inexpensive! 8 Acres makes a great garden, jumbo pumpkins galore.
No…I rent in Eagle. The first home was in Mayville, 2nd Richfield, and third in Erin. You wouldn’t recognize Eagle. Waaaaaaaaaaaaaaay overdeveloped with more on the way. I swear, it’s a good thing I don’t shoot people.
Safety Memo to self:
Avoid ALL Jefferson and Walworth county backroads in the daytime as well as night from NOW on
There’s something very fishy going on in the United Kingdom…
It matters not, whether the Gold in question is alloyed or pure, this is pure poppycock, and a delaying tactic of some sort. There is something most definitely wrong in the state of Denmark, in regards to what is “really” in the UK’s reserves…
And what’s with having just $8 Billion worth?
Shocking!
“A Freedom of Information request by trade journal Metal Bulletin revealed that the cracks and fissures had appeared in some gold.”
“The deterioration could temporarily cut the value of the country’s 320-tonne reserve, which is held by the Bank on behalf of the Treasury.”
“A Bank of England spokesman insisted the problem was only superficial and not an issue of the gold’s purity. But the affected gold would attract a lower price were it to be sold now and the bank would have to re-refine it to bring it up to standard.”
http://ukpress.google.com/article/ALeqM5jE63_izoY3Zxg57jBEDeelpieuFw
I like how they blame poor refining of the 1930s; of course gold that was refined 500 years ago and has been lying in the ocean since then is still sparking new when they bring it up. Sounds to me like the BOE has been passing off stucco as gold bricks.
It reeks of wrong.
They’re a little crazy at this site, but it’s an interesting post relating to the cracking gold.
http://www.urbansurvival.com/week.htm
You can read some of the history of the BoE gold sales here or the official summary which says in part:
If you care to read the history by clicking on the “here” link (it’s a bit long) but most enlightening.
Makes you wonder just how our supply @ Fort Knox, is or isn’t doing?
Any idea of what the purity of pre-33 melted gold coins would look like? I seem to recall an article several months ago that mentioned it would be only mid-low 90’s pure and would be an issue meeting London standard. Just wondering if that stuff showed up in the UK?
The standard for English Gold Sovereigns has been 22K for an awful long time…
It might take a week to refine $8 Billion worth of alloyed Gold, into 5 nines fine 24K Gold ingots~
The idea that Gold that isn’t pure, isn’t salable is strictly laughable.
A few times a year, i’d take all the scrap 9k, 10k, 14k, 16k, 18k, 22k Gold I had and melt it into dore’ bars, do a fire assay on said bar, and sell the bar on the basis of the assay.
I’d sell it downtown @ the el lay jewelry mart for a few bux back of melt, per oz.
Another article from the Australian…
“This is not about purity, this is about physical appearance,” the bank insisted, saying its bars were 99.9 per cent pure gold. The problem was due to the age of the bars, many of which were imported from the US in the 1930s and 1940s.”
If they are 99.9% pure, (3 nines fine) it’s impossible that their appearance would change. Pure Gold is inert and incapable of changing it’s look. Can’t happen.
This could be a HUGE story…
http://www.theaustralian.news.com.au/story/0,25197,22508835-20142,00.html
Bubble-related things I’ve witnessed in the last week:
Coworker (also former FB, now renter) whose homebuilder landlord got arrested in Arizona a few months ago doing some sort of shady deal finally moved out of F’d landlord’s house a week ago and of course didn’t get his deposit (what deposit?) back.
Coworker 2, FB status unknown, is being pressured by bankrupt homebuilder father to buy him (father) a house!?!?!? Apparently father managed to liquidate all but one, has nothing in the pipeline, but is unable to sell last one (and is living in it until the bank takes it away). Still seems to think renting is for losers, though. Is willing to make payments on new house (theoretically) but no longer has credit to finance it himself.
Old friend former FB who managed to un-f himself over the last few years (we always seem to lead parallel lives) has been getting pressure from F’d father in law (FFIL) to buy “about to take off” local bank stock directly from sleazy FFIL. He figured it must be bogus and I encouraged him to keep thinking that.
Things seem to be getting crazier quickly, especially for the friends and family of people in the building industries and all the other BS “professions” that have done so well the last few years.
To ‘Former FB’
- Suggest that you look for new friends!
No point in posting about my friends that have avoided the bubble entirely :-). But in all 3 cases above, these are good people who have seen the light. They are just dealing with the repercussions of their relationships with those who haven’t. I find the real-life examples here to be the most interesting ones…
This is a monthly payment society.’”
Wow; how broke are we? People are living like casino gamblers flushing their last few bucks down the slots. Working and saving are suckers’ bets now as your earning power vanishes faster than you can make it. Get out there and scheme, borrow, flip, hustle, inflate…but if you are wrong even once your bankroll is gone. Pretty bleak future when all we can do is play three card monte against each other using houses instead of cards.
This is a hand to mouth society.
You have summed the situation up quite well. Everybody believes that there is a gravy train waiting for them somewhere, and all they need is a connection or some sort of insider information to find easy street.
Let’s see how long it can go on this way. Seems like we might find out sooner than later.
Off Topic and apologizes if aldeady posted elsewhere on this blog:
http://money.cnn.com/2007/10/01/real_estate/subprime_bankruptcy_change/
That deserves its own post by Ben.
I’m just trying to figure out what the investors would think of this. Basically they would be compltely screwed and this will cause a seizure of the MBS market.
Moral hazzard on this is just… well amazing
Lien stripping to “FMV”. This was an issue that was litigated in the last big housing dum p in the early ’90s
http://caselaw.lp.findlaw.com/data2/circs/8th/016008p.pdf
Hey txchick,
The link requires a login.
Could you provide a short summary of what this case was and the ruling?
Thanks.
Pen
Pen, hear is a way to read it in the entirety. Copy the title. Open goole, hit news tab, hit business, paste into business browser…it comes up free : )
er…here
It probably won’t matter in the current situation. People are going to be so screwed they aren’t going to even WANT to have a “do over” with a mortgage…..at least not ANOTHER mortgage that exceeds the value of the house…a house still falling in value.
Yeah, investors would shun mortgages if this ever got passed.
Can’t pay x? What about y? What about z? What would you be willing to pay off? Nothing would probably be the most frequent answer.
Steve Bartlett, president and CEO of the Financial Services Roundtable, contends the ultimate price would be paid by consumers. “If enacted, [the House bill] could have a de-stabilizing effect on the mortgage markets, which are now begging to stabilize,” Bartlett told a House Judiciary subcommittee.
Funding for the mortgage-debt market would dry up, and consumers would pay the ultimate price, he said. “This will force mortgage lenders to charge much higher interest rates for all types of mortgage loans. This will dry up credit for any American who cannot afford these higher interest rates.”
But mortgages that go into foreclosure hurt the value of mortgage securities and the pricing of mortgages, too. And since investors and homeowners lose either way, said Henry Hildebrand III, a Chapter 13 bankruptcy trustee in Tennessee, at least being allowed to modify primary residence loans under Chapter 13 means everyone takes a lesser hit than they would in foreclosure.
Here we go again with the bailout plan.
1 - Center for Responsible Lending (CRL) calls it a tweak..this is pretty @#@$%^ing far from a tweak.
2 - I have to believe that this would pretty much be the death knell for the mortgage backed securities market or the risk premium would be so high, that it would have the same outcome. And then again, what good would the risk premium be, if the lender was just going to be forced to re-write the note anyway.
3 - Why isn’t there a Center for Responsible Borrowing?
Since lenders already have the option of doing this voluntarily, having it forced on them by a judge, would roll back lending standards greatly. It just increases the risk of making a loan. I’m all for it. The more standards are tightened, the more house prices fall. And the FB’s will just be back in the same position of being underwater. This kind of legislation will have a snowball effect on house prices falling.
Note that this wasn’t even proposed by politicians but just by a “consumer group”. Not a probable outcome at all.
Off Note: I was at Fry’s(Electronics Store) at lunch looking for an LCD. I’m not in a rush to buy, just seeing whats out there. Anyway, where was this couple, I’d say mid 20’s with one kid and another in the oven. They were looking at this HUGE $3100 Sony TV. Maybe I’m judging them by how they were dressed but my first thought was shouldn’t you two be saving your money? I’m thinking this another example of America’s buy now, (maybe) pay later.
I hear you. I’m kicking around the idea of getting one for Christmas, but there is no way I am going to spend anywhere nearly that much. $1200 tops, hopefully under $1000 (thinking about a 42″ set).
Psst. Get on your computer at 1201, the minutes after Thanksgiving day–you’ll see deals they’ll talk about for centuries to come. (I ordered online in 2000 and saved a bundle, this one is going to make 00 look like child’s play IMHO).
I remember the cheap goodies during the 2000-2001 tech crash as well. This included some good Banana Republic clothing going at 70% discounts that one winter season when things got really bad for the yuppie demographic. Heck I am still enjoying those fine Itallian wool sweaters.
I have friends that swear by buying electronics in early February. All the holiday hoopla is long gone, returns have occurred, etc so things can be had cheaply. If true, I suspect that this upcoming Feb will present even better options.
Wait till after Christmas and before the big electronics show. Its nice to have a new TV for the holidays but you are better off waiting for prices to really drop.
You may be correct, but the deals I got in 00 were not repeated in Feb. Remeber, it’s all about the 4Q profits (or so they say)
I agree..not to sound morbid but right after 9/11 we booked a cruise for the entire family for $1500 for 5 days..cabin with balcony..just cause I knew prices for any kind of travel were too good to pass up..
There will be bargains galore especially after the first 2 weeks in December when all of the stores will be asking, “If consumer spending is so strong..Where is everyone????”
Go check out website Slickdeals.net - you can get a 47″ good quality LCD for $1250 already…. 42″ will hit $650 this holiday season.
FB’s want too much for used stuff. The car deals here in San Antonio (via Craigslist) suck. Rather pay new than overpay on some 1999 without warranty (they all want $6500 for something that should be $2400)
Can anyone please explain to me why stocks closed at a record high today, and why despite our currency being in the toilet, Wall Street thinks another rate cut is forthcoming?
Another rate cut is coming, and that is highly inflationary. Don’t conflate stock market rallies with healthy economies; Zimbabwae had the best-performing stock market last year. Welcome to inflation nation, where we will all be millionaires, and paupers.
Perhaps they expect the ECB to cut rates (and cause the euro to fall). This will fool the masses into thinking that the dollar is rising and then they can cut the FFR again.
I think your post answered your question. Revaluation of equities due to the tumbling dollar is definitely at work. Of course the FED will continue it’s cheap dollar policy until someone is finally honest about the inflation numbers.
“an anyone please explain to me why stocks closed at a record high today, and why despite our currency being in the toilet, Wall Street thinks another rate cut is forthcoming?”
Because, “the fix is in”. And Wall street knows it. They’ve got the Fed by the short ones. The financial institutions created such a huge mess that the Fed has no choice.
Bad news is now good news, for wall street.
“can anyone please explain to me why stocks closed at a record high today”
Wasn’t it the lower than expected manufacturing numbers? To quote Vmaxer guess the market believes the fix is in on the next rate cut.
The average stock market increase during the past ~13 fed easing cycles is about 13%. (or 14 & 14, I forget which.)
Hence the expression, don’t fight the fed.
“Can anyone please explain to me why stocks closed at a record high today, and why despite our currency being in the toilet….”
Listen to Kudlow in a bit on CNBC. He’ll give you his unbiased opinion.
“‘If you’re listing a house for $410,000 and the mortgage is $390,000, you’ve got a problem,’ she said, in a bit of an understatement.”
Pure idiocy…
Ummm, Ms. Mystery Agent, you’re describing three of the house listings in my neighborhood. The neighbors and I are thinking that all three will be “sell at a loss” situations.
Seriously OT, but FYI Ben, whatever spam filters you’ve got going is preventing Gwenster from posting. She is reading, though.
She should send me an email the next time she tries. I can fix it.
This is a monthly payment society.
When I read this, all I could think of was the line from the movie “Rudy”, where Coach Parseghian says to the backup QB something like, “That sums up your sorry a$$ of a career here at ND.”
Well, that just about sums up our sorry A$$ of an economy.
“Howmuchamonth” is what we have become.
Wanted to add…
Can anyone say, debtor society.
It is nice to live debt-free. I have tried the other way and it doesn’t compare to debt-free. Maybe prices would come down on a lot of stuff if more people tried to live within their means.
Hi OCDan, How are you?
Oh, BTW…
May the pee of an Inland Empire Foreclosee end up in your office’s coffeepot.
Glad I don’t drink coffee. Seriously, I don’t.
In other news, I am a lifelong Mets fan.
Therefore, may the wives of three Phillies be picked up for prostitution.
Yeah, I am bitter. Figures the Mets would create the biggest collpase in baseball history. Oh well, I guess I was due to see one in my lifetime finally. OTH, old ‘SC hung on for the win.
Dan, speaking as someone who was there when it happened, the late-season collapse of the 1964 Phillies was a much bigger deal.
Yes, but think about the poor Cubs fans.
Another Bartman moment about to strike.
Get in the playoffs, lose on an error and then another century of cursing goats.
If I lived in Chicago, I would be a White Sox fan. The White Sox are a stand up club, the Cubs are whiners, always somebody elses fault. LOL
(from a Brewers fan)
Believe it or not, the Cubs in the playoffs might actually help move a few north side condos. Despite being born and raised on the north side I am still amazed at how Wrigley Field bedazzles so many transplants - who seem drawn to that area like moths to a lamp.
Because it’s so much fun to have fans from the burbs releasing all kinds of body fluids right on your front doorstep. Living in Wrigleyville definitely has its pluses and minuses.
Hey, we O’s fans have to remember the 1997 season when they went “wire to wire” and were knocked out of the playoffs by Armondo’s pitching.
Therefore, may the wives of three Phillies be picked up for prostitution.
Well said, Too Many HELOC Breath…
Ara, please come back . . . . . .
test
“‘I’m in my twenty-fifth year with Ryland and this is my third downturn,’ he said. ‘If you get too fat during the upturns, that means you have to take off a lot more weight during the slow times. And I don’t like that.’”
Some of these guys could cut to the bone and it still wouldn’t help. Like our flipper friends of yesteryear, they’ve got more high priced fat than they can possibly chew and it’s choking them off.
His next comment isn’t too swift either:
“Over time, it almost always works out,” he said. “If we’re at a low and you need to sell, but then turn around and buy a new home during the same low, it all works out. On the other hand, if you sold your house at the high and bought a new one at the high, it all works out, too.”
Well yeah, but then what happens if you buy high and sell low - which is what a lot of people are facing now?
Dumb talking heads
“Or, he said, they may have been among the legions of borrowers with hefty loans who have come to find, gulp, that those promises of home prices appreciating in perpetuity have turned out not to be true.”
Ya mean real estate does not always go up? Well, at least the stock market always goes up…
From the Chicago Tribune article:
“They’re probably people who have borrowed the equity out of their houses,” he said. “Some people don’t understand that a home-equity loan is a lien against the house and it has to be paid back at closing.”
There is a “very desirable” subdivision called Cress Creek in Naperville which is a fine example of “pricing yourself out of your own house” with HELOCs. There was a house under contract for 480K, fell of, last comparable in the same street 391k in late July.
Still housing market in Naperville is “strong”, the IRS shows a median income of 90k for the city (city officials say 120k but I rather believe the IRS) and the median house selling price is 570k…and the houses are either old 70s-80s no renovation since they were built or Mcmansions for +1.5M…But rents are still quite affordable! The townhouse next to ours is for sale, asking price 275k for a severn years old, 1600sqf+basement+two car garage townhouse, they bought it in 2004 for 225K. Latest similar model sale end last year for 265K. Rent for the same unit:1300 per month! Taxes will be 6k a year and HOA 2k…we save a ton just renting, but I just cannot believe someone will buy that townhouse for that price…
I am so frustrated with Naperville market that we have decided to rent for a couple of years more and move somewhere else.
Wait about 24 months. Keep your cash dry. Incredible deals will be for the taking.
Ewww my god. Your taxes are as high as FL! 265K unit has a 6K a year tax bill? That’s obsence with home prices like you describe above. At least your insurance is not through the roof as well, but wow, I thought FL pretty much stood alone with 400K median prices and taxes at 2% of value.
Our HOAs are typically higher then that here though; the HOA on the home I rent is about 5K a year. Add in the 10K in taxes, and ~4-5K in insurance… That’s a stinger!
Illinois can be a very inexpensive place to live, depending on your lifestyle. If you don’t own any property and don’t take shine to expensive trinkets, it’s dirt cheap. I live in the city is a 2 ba 2bd rental for $700/month. In Ravenswood, a very tony area.
Income tax is a flat 3%, regardless of income.
It is about to get a little more expensive. I heard on the news last night that Cook County is trying to raise sales tax to 11% (not on groceries, though). Yikes!
I heard the city is spending $120M (yes, you read it right, one hundred twenty million American dollars) in a new high school…most of the property taxes goes to fund the local school system. We think it will be made of pure gold and marble for that kind of money. HOA is very expensive here taking into account that there is no swimming pool in this subdivision, nothing more than a retention pond and some grass. Oh well! I am not paying it.
HOAs in general are not worthwhile— I’ve seen one in my city that is $200+ per month and you get squat-all.
I can understand a minor fee if they’ve got a community grass-cutter or a pool but HOAs seem to mostly be a bunch of busybodies. My parents live in an HOA-free neighborhood that has been nice for the last 30 years… without calling the police on neighbors or having to do much of anything. No force involved, just decent neighbors.
Naperville, IL schools have a very good reputation so families with kids like the area.
35 minutes on the express trains to the Loop as well.
Michael Fink, that’s insane! How do people do that? In my n. colo 3/2, taxes are around 1800 and insurance is 550. That’s yearly, not monthly! Ye gods.
You got me. Debt, lots and lots of debt.
And, take those numbers above, and compound them with a median home price of about 400K and a median family income of around 50K. You tell me how well that’s going to work.
testing
Wheat prices continue to climb. What inflation?
DJ US Wheat Review: KCBT, MGE Rally To New All-Time Highs
CHICAGO (Dow Jones)–U.S. wheat futures soared Monday amid forecasts for continued dryness in Australia, with Kansas City Board of Trade and Minneapolis Grain Exchange wheat rising to fresh all-time highs, traders said.
Chicago Board of Trade December wheat climbed 13 1/2 cents at $9.52 1/2 per bushel. The contract rose as high as $9.58 1/2 during the day session.
http://tinyurl.com/2ho54d
No Ca thread
?
ditto!!
I’m sick of Ca.. need more Chicago.
More Chicago!
Wow you mean to tell me that this isn’t JUST the people who bought this last year and it is more than that? The people who refied their house into the dirt and spent the equity like sailors on leave?
Well….there goes that whole theory by the head in sand folks about this being only the people who bought in the last 2-3 years.
Just so all of you know, Idaho is fine and will not be effected by this whole housing bubble whatchamacallit. The governor said so!
http://www.idahostatesman.com/business/story/170764.html
Their fookin’ governor is named ‘Butch Otter’. I can’t even stop the giggling.
That’s as good as that realtor prez, where was it, Florida? Who is named ‘Gaylord McLance’ or something.
Durn it, I cannot remember the particulars! Anyone? Anyone?