Bits Bucket And Craigslist Finds For October 7, 2007
Please post off topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Here in Eastern Australia, it can no longer be denied that (with the exception of some parts of Sydney’s western suburbs) prices are increasing sharply and houses are selling fast.
Rents are also up A LOT. In my city the median rent has increased 18% yoy and the vacancy rate is under 2%.
Massive amounts of Koolaid being consumed over here.
interesting, it seems that Oz is tracking the EU experience from around 2001 - there were some big pricedrops then in the hot areas (e.g. -30% for the more expensive homes around Amsterdam) but average prices for most countries never went down, and within a year it was off to the races again. In most of Europe prices are now 50-100% higher than before this minor correction, all thanks to loads of free ECB money (extremely loose lending) of course…
Looking at the US I would say the jury is still out. Average price declines for the whole country are still tiny compared to the previous runup; if B-52 Ben dumps enough free credit on American consumers, who knows …
“Looking at the US I would say the jury is still out. Average price declines for the whole country are still tiny compared to the previous runup; if B-52 Ben dumps enough free credit on American consumers, who knows …”
The financials are such I doubt you could refloat the U.S. market. Even if you could, the psychology behind the market has totally changed from two years ago. If there is a race anytime soon, it will be down and not up.
You can stick a fork in the consumer Americano…
Those that have savings are savvy, those that don’t are sorry.
Sadly, the ratio is probably 2/98
the financials or other fundamentals are not an important factor IMHO: in 2001 price gains in countries like Netherlands and UK (or price to income ratios etc.) were already bigger than they were last year in the US. The whole EU housing market detached from fundamentals many years ago.
The psychology could be a deciding factor but I’m cautious as this blog is clearly not representative for that. In 2001 many financially wise people guessed that the EU housing market was going to crash, but they were all wrong. As long as the general public keeps drinking the Kool Aid that is served by politicians and central banks, the bubble will keep growing - with some hiccups caused by drinking to fast along the way.
In 2001 many financially wise people guessed that the EU housing market was going to crash, but they were all wrong. As long as the general public keeps drinking the Kool Aid that is served by politicians and central banks, the bubble will keep growing - with some hiccups caused by drinking to fast along the way.
That is my fear. The spiked Kool Aid is so popular that every effort possible is being made to return to 15%+ year over year price appreciation. They could very well get there. The demand for prices to go up far far far exceeds the demand for lower prices.
The deciding factor in areas like yours (bubbliest of the bubbles) will be when affordability has been stretched to the breaking point. I know, we all have called that “bottom” many times, but I truly think that you guys must be approaching it. Even at an artifically low IR, can there be much more that can be done to shoehorn people into homes in your area (besides inflate away the problem)?
In the US, we seem to have hit a wall at 10X incomes for the absolulte breaking point of affordability. I would anticipate that you’re market may go a bit higher… But, again, I know nothing of the NHZ market, so I am just adding my experinces from here in bubbly FL.
to Michael Fink:
in Netherlands the median home currently costs about 8.5x median personal income (probably about 6.5x family income) instead of 2.5x in the early nineties; that’s average for the whole country, I’m sure that is higher than the current average for the whole USA and probably similar to the most bubbelicious states. Price gains on individual homes in Netherlands wee 600-1100% from the start of the bubble around 1991.
to RoundSparrow:
in most of ‘old’ Europe the double-digit gains slowed to single digit (5-10% yoy) after 2001. If they can keep this going (and it seems pretty easy in the EU, despite nearly stagnant incomes) everyone standing on the sidelines will loose, and the FB’s are the BIG winners in the game. Everyone who purchased within the first 5-10 years of our bubble is pretty safe now, even if they purchased far over their heads. I cannot imagine all the gains will be erased, because the Dutch government and most homeowners would be totally bankrupt long before that.
At least in Europe we are looking forward to even more loose lending, lower rates and more stupid government ideas to help new players on the housing ladder using other peoples money. And if the bubble really crashes, I have no doubt savers will be the first group our politicians are looking at to help bail out the reckless and the stupid.
One factor Europe had that we don’t (at least to nearly the same degree) is the massive influx of “New Russians” who, flush with loot from state enterprises they scooped up for a fraction of their value and then sold for huge fortunes, brought all that dirty lucre with them as they relocated to London or Paris to avoid any future accounting for their misdeeds back in Russia.
All we had was Rush Ins…
Rush ‘N’ Attack.
the Russians: yes, they keep the top end of the market going in some of the big EU cities. And the mob from other countries like Romania is keeping house prices in countries like Spain up. Don’t underestimate the influence of organized crime in general on the housing market: in Netherlands it is clear that many of the high profile developers and RE brokers/investors work directly for the mob, or mostly invest criminal money (a large part of that is drug money of course).
The first case is in court, but because of the massive scale and the involvement of politicians we will probably never hear the details. These top level gangsters own many prestigious investment properties and luxury homes in the Dutch cities, plus vacation resorts, harbours and all kinds of other big projects all over Europe. Once the Dutch bubble pops, drive-by shootings of real estate tycoons and lawyers in Amsterdam will be weekly instead of monthly news.
Good morning from that Yankee paradise known as “The Carolinas”. Just as I expected, the moment we pulled off the highway yesterday we saw all kinds of signs. “For sale”. “For rent”. “Open House”. “Lease to own”. “KB Homes”. “Lennar”. I wish I owned the sign making company.
It seems like the world is on sale. They are still building like mad. Across the street from where we are staying they are putting up more monstrous McMansions. I said to our host, “those places across the street are pretty big.” He replied, “they’re starting at $500,000 but they’re not that big. If you take a right when leaving here, that’s when you will see the big houses. They start at $600,000.” I’m going to have to see who is building those. My first guess is Toll Brothers.
Charlotte is obviously living under 2 major assumptions. 1) All 40,000 Bank of America employees make enough to afford $500,000 homes. 2) The influx of Yankees will continue to push all prices ever higher. Well, we know that number one is just insane. I wonder how number two is working out now that nothing much is moving in Yankeeland. Something tells me Charlotte, the last bastion of price increases, may have really stepped in number two this time.
Have a great Sunday. I will be enjoying football and Bar-B-Q.
‘Doug Schock shook his head in disbelief while gazing at the empty bank of elevators, typically full as they shuttle thousands of buyers between dozens of showrooms filled with the latest styles in sofas, bedroom sets, and dining room tables and chairs.’
‘More than 85,000 industry insiders typically descend on North Carolina for the market, at which thousands of vendors fill 188 buildings and 12 million square feet of showroom space with thousands of new products. While the High Point Market Authority wouldn’t release attendance figures for this fall’s gathering, it was clear from a walk through the market’s winding corridors that the industry is the latest casualty of the ongoing housing and mortgage lending bust.’
What will happen to High Point, Greensboro, Hickory, etc. if the furniture biz gets sent to China? Is this the North Carolina textile industry all over again? Good thing Chik Fil-A is hiring. And you get Sundays off. I would love a Chick Fil-A sandwich right now.
I once had a discussion with a guy who closed his textile plant in North Carolina and moved it to Mexico. He had the new operation ready to go and the locals refused to turn the electricity on unless he gave them a $20k plus bribe. Of course, he had to do it. He told me that in the end, he saved no money by going to Mexico, but still made money on the deal because he was able to lease his NC plant out to some defense firm.
Great post. The guy should have just stayed here and bribed some politicians, hired illegal immigrants and saved himself the trouble.
With the dollar falling and gas prices rising, I wonder if shipping costs will start to cut into off-shored textile and furniture businesses. A lot of the furniture biz is already gone to China–does anyone know if shipping costs are denominated in dollars or in other currencies?
As for Ben’s acquaintance in Mexico, he’s pretty much a hostage with his factory there–they could squeeze him anytime for bribes.
happened to my cousin .. looking for some property.
I forget who hinted at the necessary payoff.. an inspector or RE agent?.. But he didn’t care much, being already familiar with how they do business down there and accepted it as just another cost to factor in.
The day is coming, probably next decade, where the dollar will have fallen enough that manufacturing and services for American consumption will need to be located in the US again.
That as well as with increasing real and nominal prices of fuel which will drive manufacturing back here for use here.
Of course, this will then be a more like a 19th century type environment (living standard distribution across the population from poor to rich)…many more than today won’t be able to afford to heat and cool their homes nor afford to drive a car (internal combustion engine powered). Bikes and public transit will get a lot more use.
Britney and O J will be less important (or perhaps more important…kind of a drug to immerse oneself in …oh wait, we are there already).
Paying bribes for electricity, water, etc… in Mexico is very common. When I was in Guadalajara a few years back the locals told me this is why Volkswagen closed one of its production facilities in Mexico.
Better get used to paying bribes here, too, as the Reconquista marches on.
US companies break the law when they pay bribes. I think a couple of smart execs doing some hard time might just make other companies reevaluate those cost savings.
In Dallas, politicians and friends taking bribes => soliciting bribes => extortion
Amen! I hate the fact that for half the weekend I can’t get a sandwich.
sly devil, you
High Point has some of the most beautiful Arts and Crafts era mansions in beautiful neighborhoods, going for peanuts. Water seeks its lowest level, so don’t count the area out yet. Fedex and Dell Computer didn’t.
Please post a link to an example from Realtor.com or ZipRealty.
Army No Va, your wish is my command.
http://homes.realtor.com/search/listingdetail.aspx?ctid=92806&ml=3&mnp=18&mxp=20&typ=1&pfbm=1000240&sid=5bd94fbc9bcb477bbfde4c312d070ff0&lid=1082922944&lsn=8&srcnt=341#Detail
http://homes.realtor.com/search/listingdetail.aspx?ctid=92806&ml=3&mnp=18&mxp=20&typ=1&pfbm=240&sid=1246159b1b594a499892322c8f389d6d&lid=1083221732&lsn=5&srcnt=341
http://homes.realtor.com/prop/1080932457
Nice for the money, though a bit small. If in a good neighborhood that holds up, they should be one of the better things to buy if you are going to buy in that range.
Furniture Mass Action layoffs in the last 12 months
Workers gone
Alan White Company, Inc. January 18, 2007 300
Bassett Furniture Industries Inc. March 5, 2007 280
Bush Industries Inc. December 21, 2006 90
Child Craft Industries September 25, 2007 80
Chromcraft Revington, Inc. October 9, 2006 58
Culp Inc. December 14, 2006 185
Dorel Industries Inc. May 18, 2007 170
Durham Furniture Inc. June 15, 2007 84
Dutailier Inc. March 9, 2007 45
Flexsteel Industries, Inc. October 11, 2006 20 (10%)
Furniture Brands International Inc. December 2, 2006 390
Furniture Brands International Inc. April 27, 2007 80 exec
Furniture Brands International, Inc. September 21, 2007 400
Hooker Furniture Corporation January 18, 2007 280(27%)
J Squared Inc. May 1, 2007 40
La-Z-Boy Inc. March 9, 2007 500
Leggett & Platt Inc. November 28, 2006 91
Leggett Platt Inc. January 1, 2007 125
Moosehead Manufacturing Company February 8, 2007 120
O’Sullivan Industries, Inc. April 17, 2007 735
Omni Futon Furniture, Inc. May 22, 2007 33
Pulaski Furniture Corporation October 21, 2006 119
Shermag Inc. February 13, 2007 250
Shermag Inc. June 15, 2007 1200
Stanley Furniture Company December 12, 2006 200
Unaka Company May 1, 2007 115
Vassallo Industries Inc. June 19, 2007 371 (workers showed up to find they no longer had jobs)
as an example:
Omni Futon Furniture, Inc.
Spring Green, WI
Omni Futon Furniture of Spring Green, which makes futon covers and soft household goods, plans to lay off 33 employees and close by July 10. The cutting and sewing industry has moved many operations to China, making it difficult for domestic companies like Omni to compete. The company might have survived by moving more quickly into soft home furnishings like decorative pillows and window treatments.
I would like to stand at the gate of every “outsourced” factory in America, reminding the jobless workers that with their votes for Wall Street’s DNC or RNC marionettes - or failure to vote at all - they sealed their own fate.
Ron Paul on American sovereignty - you can see why our elitist masters are squirming as his campaign picks up momentum:
“So called free trade deals and world governmental organizations like the International Criminal Court (ICC), NAFTA, GATT, WTO, and CAFTA are a threat to our independence as a nation. They transfer power from our government to unelected foreign elites.
The ICC wants to try our soldiers as war criminals. Both the WTO and CAFTA could force Americans to get a doctor’s prescription to take herbs and vitamins. Alternative treatments could be banned.
The WTO has forced Congress to change our laws, yet we still face trade wars. Today, France is threatening to have U.S. goods taxed throughout Europe. If anything, the WTO makes trade relations worse by giving foreign competitors a new way to attack U.S. jobs.
NAFTA’s superhighway is just one part of a plan to erase the borders between the U.S. and Mexico, called the North American Union. This spawn of powerful special interests, would create a single nation out of Canada, the U.S. and Mexico, with a new unelected bureaucracy and money system. Forget about controlling immigration under this scheme.
And a free America, with limited, constitutional government, would be gone forever.
Let’s not forget the UN. It wants to impose a direct tax on us. I successfully fought this move in Congress last year, but if we are going to stop ongoing attempts of this world government body to tax us, we will need leadership from the White House.
We must withdraw from any organizations and trade deals that infringe upon the freedom and independence of the United States of America.”
I know…love that sweet tea!
Good thing Chik Fil-A is hiring. And you get Sundays off.
If you stop by Chik Fil-A, be sure to wave to the ex-realtor out front in the chicken suit.
I know I know…its CS! Apparently this is a epidemic that is affecting thousands of retailers, auto dealerships, suppliers and such across the country…problem is that the cure is years away…
(CS=”Contained” Syndrome)
So Carolina is late to the party huh?
That’s OK, we still have some Joshua Trees that we kept covered with foil we can serve you. The flies had at it for 3 hours before you got here, but they’ll still do the job.
The one thing about Charlotte is that $600,000 will get you a 5,000 square foot house with a lot of custom work in it. That $600,000 in NYC will get you a studio apartment. It was 100+ degrees for more than 50 days in Charlotte this summer. They are under severe drought conditions. I think of two things when I hear that. 1) Holy air-conditioning bill. 2) Wear and tear on that house and lawn. McMansions are hungry beasts.
North Carolina is presently the most drought stricken state in the country…
But who needs water?
http://droughtreporter.unl.edu/map.jsp?&src=&daterange=month&c_ot=on&c_wa=on&year2=2007&year1=2007&c_ag=on&day2=7&scn=nv&day1=7&c_fi=on&c_en=on&month2=10&month1=9&c_so=on&Cmd=sv&st=North%20Carolina
I’m in Charlotte. I’ve really sensed a change in the market. I’m looking at homes in the 175k-220k range in the University area, on the north side of town.
Back in June, well priced properties in good condition went under contract in a week.
In July, those same properties took about 3-4 weeks to get under contract.
Now I’m seeing price reductions. Small ones in dribs and drabs (3k, 5k, 8k).
I made an offer on a house last week, but the relocation company did not get back before my deadline.
This may be a good time to wait.
I’m in Mint Hill this morning. It is beyond insane over here.
hey Bubba,
where does Charlotte get its water? The farmers in the southeast have been having a hard time with drought conditions for a couple of years now. Has there been much discussion about it in the Charlotte area?
Charlotte gets most of its water from the Catawba River basin. The power company built some dams and created “lakes”, Lake Norman and Lake Wylie.
About 2 or 3 weeks ago they put in water restrictions - no watering of lawns or residential car washing. The local paper, the Charlotte Observer, has been running graphic maps of the southeastern United States over the past several weeks showing the extent of the drought.
Normally, the rainfall in this area is uniformly distributed throughout the year, averaging about 3-4 inches a month. In August, we had only a trace of rain.
I believe almost everyone is aware. I don’t think everyone is conserving, though.
Not sure how entrenched the HOAs are in Charlotte, but several of the ones in Raleigh are harassing their members to keep the grass green, as the city has banned watering lawns.
Hard to conserve when the Homeowner’s Association cares more about the color of your grass than having drinking water in two months.
Gotta prioritize, grass or glass?
“Ass, grass, or cash… nobody rides for free!”
It is a good time to wait. Austin did not tank with oil like Houston, Dallas and other parts of Texas did in 1983. It was “different”. Yeah, 200 builders from other parts of Texas converged on Austin to serve the high tech speculative bubble there…1985 was like 2005 (minus some of the crazy money and interest rates were higher). 1987 was like today in a typical US market. 1989 was like Florida today.
Those $600K McMansions in NC, if over built and being bought as speculative investments, will be $300K-$400K by 2010. Won’t be as bad as FL, NV, CA, AZ…but still will get hit pretty good.
“I made an offer on a house last week, but the relocation company did not get back before my deadline.”
I don’t think a relocation has EVER gotten back to anyone before a deadline stated in a contract. Been there, done that. I just wound up walking.
WAMU imposing new rules on brokers:
http://tinyurl.com/2w7qdh
“Washington Mutual, of Seattle, said starting Tuesday, brokers who do business with the company must show evidence that they explained to borrowers key terms of the loans they are recommending – such as the amount, whether the interest rate or the payments may change, and if the loan has a fee for prepayments.”
“In addition, the company said brokers should also disclose the amount of their compensation, adding that it would try to call every borrower represented by a broker before closing to review the loan terms.”
Is this just belated butt covering for the sake of appearances or will there be actual teeth if it isn’t followed?
I just marvel that it took until October 2007 for these buttholes to do this. Could anybody imagine running a business the way these banks and lenders have operated the past 10 years? “Here you go, Wimpy. Take these ten hamburgers. Oh yeah I supersized them, added 4 apple pies, a shamrock shake and my wife’s chastity. I know you are good for it. Take care and tell all your friends about us.” Shopkeeper smiles as Wimpy hauls a$$ and hamburgers.
What’s gonna happen when Tuesday gets here and Wimpy’s a bit short?
I receive my golden parachute and hand the mess over to the taxpayers to worry about.
Which means that cheesy brokers have yet another form provided by the lender that they can practice their cut-and-paste or flat out forgery skills to. My guess is that very few borrowers will actually ever see the form.
Doesn’t matter. The WAMU will call the phone number that the broker filled in and check with the borrower, so everything will be fine.
Speaking of banks, Ocrenter ran a copy of the US Bank add that just kind of sums up why we’re so screwed -
http://bp3.blogger.com/_QMoXJ8fOgo4/Rwj-lq5v2ZI/AAAAAAAABV4/uI8v8GofBXg/s1600-h/why+not.JPG
“Why not? It’s your money.” ……..no, no it’s not.
That is obscene. It’s HELOC porno. I cannot believe that was really run!
Jeez!
Roidy
Agreed.
The equivalent would be “Why not use heroin? Why not make those screaming kids fade away with a good ‘ol dose? Why not go on a vacation in your own living room with a needle full of goodness? Why not make the workday fly by while floating in an opiated haze?”
Personally, I think credit junkies are more pathetic than the real deal.
More on the DR Horton auction last weekend:
http://tinyurl.com/2tvzwh
“Real estate agent Steven Moran, whose clients purchased three units at the auction, said he thought some homes would return to the market. He said some people had paid too much.”
“I think they are overestimating how many they sold,” he said. “Some have fallen out of escrow. There is a three-day buyer right of recision.”
“Broker Ramsey Su said the condos and townhomes sold for an average of about 70 percent of the “previously valued-to” price. Moran concurred.”
Ha. Ramsey Su was a regular on the SI credit bubble board. He may still be for all I know; I don’t read it anymore.
Tijuana-adjacent now only has several 10,000’s of homes and condos to get rid of, thanks to D.B. Cooper’s auction disappearing act…
Knife catchers! They will complain six months from now.
I see debt people.
Jeez, that story is sickening. I’d say to all three of these sets of idiots - it’s the kids and your inability to say no to them that’s causing 90% of your problems.
Hater!
An inability to say no to the kids is just a symptom of a bigger problem, IMHO. People that have so little self confidence that they spend themselves into oblivion just to fit in will follow that set of choices whether kids are part of the picture or not.
With noted exceptions, we as a culture no longer put any value on personal character. Too many have no idea how to stand up to social pressures anymore.
Simply put…people have to grow up..That kind of mentality of being the “cool kid” on the block was ok up thru high school but now its time to be an adult.. and to not hand down that “I must have it mentality” to our kids…an example my daughter has homecoming in 2 weeks..she wants a new dress..however I just bought her a beautiful dress for her 8th grade dance..only used once and of course for a few hours we have relocated so no one in this area has even seen the dress before..do I say ok honey and run out and get her another dress to sit in the closet or tell her to use the dress again…it isnt a matter of money..of course I could get her another one…BUT WHY???? We are dropping of the dress tomorrow to shorten the hem for the length she wants and its getting used again…that is the value you have to teach your kids not “just run out and charge it up.”
This one is great. My wife and I talk about this kind of stuff all the time. We don’t try to keep up with anybody but ourselves.
First off, I think the intro of this clip is perfect for all of these people. http://www.youtube.com/watch?v=XYd6mCAcQw8 Something tells me they would be yelling, “yeaaahhhhh”.
- “Marni learned the couple were going to need help to get pregnant.” Doesn’t this guy have any friends. Give them some beer and a bucket of KFC and they would probably be glad to help.
- “Their other big expenditure: $26,000 a year for a full-time nanny for their three children, Eva, 3, and twins Neve and Lila, 2.” Their total income was only $132,000. One of them had an income that did not possibly justify a $26,000 nanny. And those names? I dislike those kids already.
- “Still, Marni’s plan to solve her family’s financial problems is not to cut spending and pay down the debt. Her idea involves going further into debt so that she and her husband can get additional training to help boost their income.” The first thing to do when you find yourself in a hole is to put down the shovel. Not Marni! She will be in Beijing in two years. She can feel it.
- “Their five-bedroom colonial cost $100,000 more than the house they sold in nearby Broomall when they moved to Willow Lane two years ago. And their taxes have quintupled to $20,000 a year.” Good for you! At least they’re not throwing money away on rent.
- “The Mendells would also like to finish their basement ($30,000), and Emily wants to trade in the family’s minivan for a Mercedes M-Class ($40,000).” Hey, you’ve earned it, Emily.
- “That still leaves $600 a month unaccounted for. Emily, who says she has a problem saying no to her kids, admits some of it is spent on impulse purchases for the boys, who regularly return from trips to Target with a new toy.” It’s fun raising monsters. Easy, too!
- “Just as the Steins’ debt doesn’t bother them, so the Mendells don’t seem concerned about how little they’ve saved for retirement.” Fancy Feast in retirement will be great. Our cats love it. So will the Mendells. They might have to lick themselves to stay clean since bathing might be out of their price range.
- “Then there are the incidentals of life on Willow Lane. Landscaping cost $1,500. Remodeling the 20-year-old kitchen cost $25,000. They’ve upgraded to a Subaru Outback from a Volkswagen Jetta.” A Subaru? Be careful. That wife may be coming out of the closet any day now (old Minnesota joke).
” And next year they’ll spend $13,000 to send Jillian to kindergarten at a private school in the more exclusive part of town - even though the town’s highly rated public schools are a major draw for Wallingford.” Because you just know “our little Jillian is worth it”.
This is just a great article and is a microcosm of the stupidity in society. They will all seek to strip from others when they are in retirement and in need. Almost without exception I hate these people.
Oh my god.
I almost vomited on myself about 1/2 way through that.. On a 130K combined income? With a bunch of kids? Are they insane? I don’t even know how they can pay the interest on all that debt; it’s just shocking…..
20K a year on taxes.. Holy crap..
Ok, after re-reading it, now I am going to go vomit.
This lifestyle should be AT LEAST a 250K income. AT LEAST. I wouldn’t feel comfortable at 250, but at what they are making?? It’s just suicide…
$13K for kindergarten? I missed that one!
Yes, it’s very important to send little Snotleigh to the best possible schools so that she can get sufficient training to assume the debt slave/ poseur mantle when she graduates. Of course that sends me off on another tangent - the large numbers of these little girls who go to law school (taking seats away from guys) and then quit after a year or two to have kids. I don’t know why the firms even hire them.
Snotleigh… that made me laugh out loud.
26k for a nanny ..and 13k for private kindergarten, all after-tax income.
If they put 13k each in starter funds for each kid, they might actually have something to hand them when they start college.
And 20k for prop. taxes including excellent public schools, which they choose to ignore, after paying for them?
These parents need an education…and life will probably hand it to them.
130k for a family of 5 in NYC is barely middle class–and a pretty bare existence at that.
TX,
I know just such a girl; went to a good law school, passed the bar, and has NEVER worked a day in her life as a lawyer (or anything else for that matter).
The sad fact is that many women are looking to meet guys who are well off/rich. And where better to meet someone who either:
Comes from money
or
Will be relatively wealthy in a few years
Then in a law school. This women, I can tell you from first hand conversations, say law school as a place to marry, nothing more, nothing less. I am sure, had she not found “Mr. Right/Rich” there, she would have entered a law firm and continued to look to marry.
Wives of powerful/wealthy people need to have good schooling today, that’s just the fact of the situation. However, should their “dream” come true (not having to work anymore because of wealthy hubby) they seem 100% content sitting home and watching soaps all day instead of using their skills (which they obviously have to make it through law school/bar exams) in the professional world.
A sad relic from the 1930’s.. One I hope disappears soon. However, I am also concerned with the fact that the wealthy/educated don’t seem to have children anymore (and certainly not as many as the uneducated); perhaps this trend (professional wives quitting to stay home with the brats) is a positive for this distrurbing trend.
I am certainly no supporter of eugenics, however, I think everyone will agree, if the educated are not having as many children, over a long period of time, the entire race will get less smart/educated. Something I am happy I will never have to see first hand.
” I think everyone will agree, if the educated are not having as many children, over a long period of time, the entire race will get less smart/educated.”
I know what you are trying to say but I have a problem with the ‘educated’ part of it. Some assume that just because someone went to college that they are ‘educated’. It’s what you do with what you have (intelligence) that’s the key. I have advanced degrees in Chemistry and married a Hispanic girl who only went through HS. When she moved to CA in 1961 from El Paso she could only speak Spanish. She wasn’t in one of these stupid immersion programs you see today and has no accent. She has worked her was up in a large national company, runs a large operation and earns over $100K. She often laments that she wishes that she had had the opportunity to attend college (in her family women were supposed to marry and have babies) as those that she manages all have degrees. I have to tell her that college is only a key to get one in the door and from that point on it’s what you do that counts. We have 4 college educated kids.
A sad relic from the 1930’s.. ??????
I’m assuming you mean that women staying home with their kids is a sad relic?
Then…you go on about how “intelligent” women don’t have kids.
So, which one is it? Most women have figured out by now that you CANNOT “have it all.” Either you have kids OR you have a successful career. There are very few who get to do both.
BTW, you obviously have never spent even a day watching kids. Your comment that these women “sit around and watch soap operas” is entirely offensive (as you meant it to be) to those of us who WORK at home.
Seriously, try it before you mock it. You’ll get an entirely new perspective.
“I don’t know why the firms even hire them”
Well I’m glad they do since in our relatives’ case, the wife made partner and circumnavigates the globe for work while her lawyer husband quit and stays home with the boys.
Hey Tx: There can be some rational reasons to pay for private school - my daughter was way smart, but way shy and prone to over stimulation. My reasoning was to pay for private school in hopes of college scholarship. I knew by the time she was in college I didn’t want to have to work that hard or saddle either of us with huge student loans. In my case it worked - she did her part and she gets $30K scholarship leaving me only $6K/year to pay. She has a good head on her shoulders and would come home to vent about 7th graders having $600 purses and kids of diplomats being picked up in limos with armed guards.
My SIL fits that description to a T. Ugh.
“Marni learned the couple were going to need help to get pregnant.”
There’s never been a time in human history where it’s been so hard for women to get pregnant. It used to be (see Peyton Place) that if a woman did the deed just once, she was instantly knocked up. No question. Now, half my married friends “cannot get pregnant.” To make up for it they lead the wonderful life of DINKdom. Fun SCUBA vacations in Cozumel every year, timeshares, RVs, the works. “We have tried everything and can’t have kids. Our dogs are our kids.” How come so many poor women have kids, but so many upper-middle class women can’t? It’s very strange.
I would venture an odd guess that most poor women are not spending hours in a gym or pilates or running, and are more interested spending that time with their MAN!
========================
How come so many poor women have kids, but so many upper-middle class women can’t? It’s very strange.
They tend to have kids earlier
Sterilzation by lattes?
Good one, bravo!
Nah. Jeffrey the shower head has a low sperm count.
Can’t speak for all women, but I know that I and one of my friends waited until finishing college, getting married and having suffieicent income to try starting a family,…..too late for us both.
Stars End
This crap amazes me. Sometimes, it makes me think that I must be totally out of touch with the reality of people’s finances. Sometimes I think, “it must be me living way below my means”, when in reality, I guess it’s that other people just live way outside of their means.
I wonder how much of this factors in to the 50% divorce rate?
RE: I wonder how much of this factors in to the 50% divorce rate?
That’s what was goin’ thru my mind Penn.
One discovered act of adultery with a subsequent divorce in any of those dual income economic units-and the whole thing crashes and burns like the Hindenburg.
I was on horror readin’ about the 4th grade teacher guy with the big income venture capital wife.
YIKES!
Man, takin’ about walkin’ on hot coals!
But the finances of those around you affect more than just the perceived value of your property. They also, like it or not, help shape how much you spend and save and color your perceptions of your own financial well-being.
..speak for yourself.
How many on this blog have ever been yelled at for saving too much money? It happened to me two summers ago at a party. I mentioned what we put away for retirement and was yelled at and told, “you need to live more”. Hello, I live in New York City. Is that not good enough?
A Subaru? Be careful. That wife may be coming out of the closet any day now (old Minnesota joke).
since when is a subaru an upgrage over a vw? nobody couldignore subaru was directly marketing their forresterto lesbians. those commercials made me laugh.. as far as i know, they backfired - my boss made a comment that she hoped people didn’t think she was gay for driving an outback. not even the same model! and she was married!
whoever yells at you for saving better be your mother because i would spit on anyone else and walk away.
We saved 63% of our take-home in September.
Some idiots are behind the financial eight ball (debt, debt, and more debt) and always will be, but they have given me financial advice that I would never seek from them. (Actually, they do not TELL you, they YELL it at you.)
Misery loves company.
LOL tcm & nycboy,
I suppose your yeller friends think responsibility is a real downer.
“Dave and Emily Mendell……..Together their annual income is $250,000″
250K per year year is a good chunck of income. The wife is a VP at a VC Association. Shouldn’t she have some business/finance skills?
No sympathy for these morons.
The wife is a VP at a VC Association. Shouldn’t she have some business/finance skills?
Apparently not. She’s working with OPM…with so many people working in “financial services” you’ve got a lot of folks with minimal financial skills in the biz. And getting paid a lot for what little they know.
er….pardon my ignorance, I only make 50K a year. What is OPM?
It’s Other People laying with your hard earned $50k (Money).
Er, playing - playing with your hard earned $50k.
Other Peoples Money….shesh, do I feel dumb.
Spike, your comment is truly frightening. (i.e. financial services workers with minimal skills).
Recently, my CFP at the local credit union asked me what I did for fun. Told him about my interest in target shooting and reloading. About how many guns I keep. Maybe that will encourage him to stay smart or get smart?
Btw….I’ve never made more than 65K a year and have more money in just savings (not counting the 401K) than the Mendell family. And I’ve thrown money away on rent all my life (never owned).
WHAT’S WRONG WITH THESE PEOPLE?
I live in a neighborhood just like this. The neighbors are something else to watch and observe. Most of them don’t seem to know what money is, will spend on trivia (couple of K) at the drop of a hat. All drive the latest whatever, constantly taking vacations where ever.
I’m viewed as the poor one, drive a 7 year old Ford Focus - no SUV or Mercedes (like my next door friend). Take care of the yard myself instead of spending thousands for the landscaping companies. I never tell them my total yearly mortgage payments are around $5k. And never, ever mention personal savings or investments with them.
There are a few like me around here but not many.
I take care of my own yard as well and I drive a six year old vehicle. (But I have foolishly spent my entire life throwing money away on rent.) I recently got over the $antilog6 hump; my neighbors don’t have a clue.
Life is good!
recently i read of a study (sorry, no link) that proved the jones of “keeping up with the jones” by showing that people would rather have HALF the buying power as long they felt wealthier than their neighbors, rather than TWICE the buying power if they still felt less wealthy than their neighbors.
if that ain’t a ‘jones’, i don’t know is……
Biggest rule I taught the daughters is don’t pay to give someone else free advertising. I refused to buy any clothes that had any commercial names or designs, particularly disney. With older daughter, she learned she could buy 3 pairs of jeans for the price of one with someone’s name on the butt. I sewed all the cool clothes, formals and costumes. They were taught that showing your money was gauche and lead to people only valuing you for your money. I said show the world what you want them to think of you. The worse is all the women that are spending so much on plastic surgery and fashion - terrible example for their children.
We’re going through interesting times here at southern North Carolina’s beaches. In June of 2005, one beach town showed unit sales of 63 with an average price of $422,000. Flash foreward to June, 2007 and there were 8 units sold with an average price of $270,000 in that town. Lots of vacant units are being occupied by some pretty marginal characters. The violent crime rate here is now higher than that of Jacksonville, NC, home of Camp Lejeune, and right on par with Durham, NC (highest violent crime rate in the state). Life here is no longer just another day at the beach.
Head south to South Carolina, and the crime rate in Myrtle Beach makes the top five list of US cities, according to Sperling’s ratings, with the highest crime rates. It appears as if these overbuilt beach towns are not attracting the best and the brightest.
The final lag of our trip takes us to Nags Head. I will have a report in a few days. I am guessing there is “pain” in the forecast.
Words not spoken, speak volumes…
“Merrill executives, who are not authorized to speak to the media, say Mr. Fakahany, a crucial member of Mr. O’Neal’s inner circle, had taken a larger role in the day-to- day running of the bank, even though he has not run trading, investment banking or wealth management.”
“A Merrill spokesman declined to comment.”
http://www.nytimes.com/2007/10/06/business/06walls.html?ei=5065&en=afbcb5c4ace7d97e&ex=1192334400&partner=MYWAY&pagewanted=print
Take my buying power, please!
http://www.safehaven.com/article-8555.htm
Great link, watcher. This guy is singing my song.
Fiat currency bites the big one.
I feel truly sad for those that believe that because they’ve worked hard, saved like the dickens and have cash in the bank, they’ll be a-ok…
They deserve a better fate
I love the fact that he is brutally honest that Bernanke is a moron. He has the stereotypical look of the out of touch “ivory tower” dork.
Did anyone go to the Hudson and Marshall auction that was held yesterday and is being held today at Tysons? I would appreciate it if you could provide some info on the kind of discounts that people got?
I’d appreciate an earful of info about Tysons…
I remember when Tyson had a mouthful of an ear.
I think Jim Rome said it best, “….this guys not fit to pump gas, the only thing he is fit to do is fight.”
When I was a kid, we’d go to San Diego once in awhile and i’d always wondered why it wasn’t built up more?
Geologically, is the rest of it as big of a mess as La Jolla?
Here’s a parting gift, for homeowners…
“County Assessor Greg Smith said owners whose homes were damaged or destroyed would be eligible for an immediate property tax reassessment.”
http://www.latimes.com/news/printedition/california/la-me-slide5oct05,0,2067627.story?coll=la-headlines-pe-california
“We’ve reassessed your property and determined that you are indeed fuuked.”
“Geologically, is the rest of it as big of a mess as La Jolla?”
The short answer: YES.
See my links to Sunday SD Union Tribune articles below for the long answer.
Yee gads…
Most of Tijuana-adjacent looks a little slippery
“The limbo was not always a dance. In fact it originates from the slave trade. When the slaves were being moved on the ships they were bolted to a bar and to stay supple and strong they used to “limbo” under it.”
Just replace “ships” with “homes” and there you have it…
http://en.wikipedia.org/wiki/Limbo_(dance)
Deceit Down Under…
“Banks and real estate agents have been hit by a $15 million Auckland property valuation scam which insiders say is “becoming an epidemic”.”
http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10468373
the tide has just turned and the first surprises are already appearing above water
Last Monday I liquidated all of my shares of Citigroup (C) in both my Roth IRA and my regular brokerage account. The string of consecutive quarterly loan loss provisions has begun:
http://tinyurl.com/2sr2hl
(Better to SLOWLY turn up the heat on the
frogsinvestors.)This 60% drop in earnings in the third ¼ is only the tip of the iceberg for C. The tsunami wave of foreclosures in 2008 is just around the corner, and the smaller follow-up wave in 2009 will score the TKO on RE. There will be many other losses in future fiscal ¼s in the next few years for most banks, and certainly for ALL BIG BANKS.
C’s attractive div yield helped me get over the hump on lackluster cap gains for the time I held these shares. My calculated total annualized return is 9.3%. I’m ok with this. I have done far better, but I have done far worse as well.
I think the banking stocks have been played out and I won’t be looking at this sector again until around 2009/2010.
For clarity, the sentence above should read:
(Better to SLOWLY turn up the heat on the
frogsshareholders.)It’s a Great Time to Panic…
After taxes, 60% of Something beats the hell out of 100% of Nothing
I agree. This is especially true about long term capital gains and qualified dividends. After taxes, 80% or 85% of Something beats the hell out of 100% of Nothing.
“I think the banking stocks have been played out and I won’t be looking at this sector again until around 2009/2010.”
If the stock price can rally on the news of a $5.5b write down, what could possibly stop it going forward? I would think this would be the time to buy C, not sell it…
If your timing was bulletproof, perhaps…
Good morning all. I just sent Ben a heads-up regarding 3 seperate articles in the Boston Sunday Globe. Hopefully he’ll do his thing. Lots of great content. Highlights below.
Front page has dire foreclosure story in Lawrence. Story has somewhat dated stats. I subscribe to foreclosuresmass.com and a huge % (guessing 30%) of the weekly updates are from Lawrence. Large number of multi family dwellings. One of the bigger problems is that not only is the owner being ecivted but the tenants as well.
Business section has a story (financial makeover) about a school teacher in trouble. An absolute classic. I’d be really worried if my child was in that school sysem. The makeover persons answer to her troubles was for her to retire and collect her 80% pension and then find another job. I’ll let you all go to work on that one as I already lost my breakfast. The picture of her with her cat in her arms will surely get the banks sympathy.
The third article is in the RE section showing overall Ma housing down circa 4.79% and sections of the South Shore down from 7-17%.
I was going to provide a link but it apears they require registration (free).
“…about a school teacher in trouble.”
Is it just me or do school teachers represent a disproportionate number of the people in financial trouble? It sure seems that way - the MSM is very fond of interviewing school teachers regarding personal finances.
Whenever the Chicago Tribune runs one of these “cost of living” human interest stories - they invaribly interview a school teacher. We should all know why they do this…school teachers are sacrosanct in this culture.
Having teachers as friends, and having had them as coworkers, my firsthand experience is that they are the single worst profession when it comes to money matters. Sure, there are always singular exceptions, but as a group teachers seem incapable of handling money - and it is not because they don’t make enough.
Furthermore, if the MSM fixates on teachers as a means to enhance sympathy on the part of their readers - they are obviously overlooking the very inconvenient fact that raising teachers’ salaries inevitably leads to increases in property taxes. Considering the conservative readership of some of these MSM outlets - one would think those same readers would tire of these educator sob stories once and for all.
From Ron Paul HQ:
October 6, 2007
Take note of what you have done.
“Jaw-dropping.” “Impressive.” “Stunning.”
Paul’s “$5 million fundraising haul in the last three months…is forcing campaign observers to sit up and take notice.”
“Paul’s newfound clout was on full display Thursday afternoon, when he sat down with CNN’s Wolf Blitzer for an interview on the Situation Room.”
Paul “emerges from quasi-anonymity to shock the political world with a $5 million quarterly fund-raising haul — a figure the other GOP candidates ignore at their own peril.”
These are just a few of the many such reactions by the media to the $5 million you raised for the Paul campaign last quarter. Note your accomplishment. Enjoy your success. Take a breath — but not for long. Because our new goal for the fourth quarter is $12 million, and six days have already passed.
Remember at the end of last quarter how much publicity we received when we had more cash in the bank than John McCain? That $2.4 million got us $10 million worth of national publicity. But this quarter was even better. The $5 million you raised has already generated $20 million worth of publicity nationwide these last few days. And the news stories and interviews with Dr. Paul keep coming.
Our communications director Jesse Benton reported yesterday on the high number of television, radio and newspaper interviews there have been since we reported the $5 million quarter a few days ago. His list was long and extensive. Afterwards, he summed up by saying, “It’s been our biggest day — no question.”
We’ve moved up a couple of steps. Not by luck, but by hard work. We’ve proven that Ron Paul’s “just the Internet” support is real, and that we are doing what is necessary to win the Republican nomination. But we cannot let our recent success quiet our energy, focus or effort.
We are not finished. We have just started.
Ron is knocking on the door of Rudy, Mitt, John and Fred. Our job is to push that door open. And we have only 87 days to do it.
Kent Snyder
Chairman
Ron Paul 2008
P.S. See our new fundraising graphic and donate today. Also, take a look at the national primary/caucus schedule, the deadlines for changing party affiliation in New Hampshire, New York and Delaware, and the new supporter spotlight. Go to http://www.ronpaul2008.com
Was in Pacific Grove yesterday talking to some of the merchants. All said that business has been way, way, down. They say that the motel/hotel business and some restaurant business is normal but no one is shopping. Some suggest that Monterey has something to do with it. Monterey apparently wanted $80K a year to promote them and when the city said they couldn’t afford that they stopped getting a lot of downtown traffic. I don’t know if it’s really that because Monterey shop owners on Cannery Row are complaining too and they are represented in Monterey’s PR push. Yesterday is was easy to get an afternoon parking space in Carmel which means foot traffic was down too. Moved on to Seaside and went into Costco. The parking lot area in the strip mall was jam packed, but what was strange was that only 4 registers were in operation and I only had one person in line in front of me. Food court was doing a great business though.
Am in Glenwood Springs, Colorado. Yest. went to their new and fancy mall - nobody there- beautiful day, a Saturday. Ghost town. Went to Aspen for the afternoon and it seemed busy, but lots of sales in the stores. Lots of fereners. Fortunately, not any furreners (saw a woman wearing a fur coat get spray painted there once). Most Glenwoodies rarely go to Aspen, unless they work there, so not much of a chance they were there instead of the G. Mall. Anecdotal, but this is one of the weekends people come here to see the fall colors. Would be interesting to talk to the shopkeepers.
Just saw a tv commercial for this auctioneer, during Meet The Press…
Musta cost a few pennies, eh?
The usual scammy flavor of reserved auction, from the looks of it.
http://www.paxcentralcal.com/
San Diego housing slide… (BTW, I was prophetically conjecturing to my daughter just yesterday that many other residential areas of SD besides Mt. Soledad most likely are landslide hazard areas.)
Lessons from the landslide
Home buyers not checking fine print, maps that might reveal danger zones
By Roger Showley
STAFF WRITER
October 7, 2007
* Officials estimate damage at $48 million
* Slides not new to Mt. Soledad
The residents on landslide-prone Mount Soledad are not alone.
Much of the urbanized area of San Diego County lies within landslide danger zones, state maps show.
http://www.signonsandiego.com/uniontrib/20071007/news_1n7disclose.html
whoops.
Interestingly enough…
5 landslides happened in 2005, after the last one had occurred in 2000.
They definitely built where they shouldn’t have~
A predictable Black Swan, that nobody saw coming
There is a moral hazard issue here: If City, State and Federal disaster relief is funneled in to La Jolla to make home owners whose homes slide down hill financially whole again, then why not take the risk of paying $2m for an uninsurable home in the path of a future disaster?
Worry not…
You local government is 2nd to none, literally.
I am curious whether city, state and federal money will be used to reimburse La Jolla homeowners who lost a bundle of home equity thanks to the land slide? Part of me feels sympathetic with people who fell victim to an unforeseen act of nature, and another part of me wonders about people who buy homes valued over $1m and don’t bother to purchase insurance.
Insurance was not available, you say? That should be a hint about the risk these people were taking! The situation sounds much like yet another illustration of the guiding financial principle for life in Richistan, U.S.A.: Privatize profits, socialize risks.
Officials estimate damage at $48 million
By Roger Showley and Brooke Williams
STAFF WRITERS
October 7, 2007
San Diego officials released an initial damage estimate yesterday – $48 million – for destruction caused by last week’s Mount Soledad landslide, as owners of four red-tagged homes retrieved cherished possessions and city crews worked on sewer and water service near the site.
The total includes $26 million for public works – broken sewer and water mains and a sunken section of Soledad Mountain Road – and $22 million for private property losses.
The city is seeking emergency declarations from the state and federal governments, which Mayor Jerry Sanders said he hopes will be forthcoming in the next few days.
http://www.signonsandiego.com/uniontrib/20071007/news_1n7slide.html
Not sure how you get to that conclusion. If they weren’t insured there were no insurance premiums to profit from. Not to say the home owners aren’t getting a free pass for their stupidity on Mr/Mrs Taxpayer’s back. I’m completely sick of government payouts to people who build in high risk areas which include:
a) Floodplains
b) Hurricane Zones (without proper codes that would minimize wind damage)
c) Coastal Areas (especially in aforementioned Hurricane Zones)
d) Geologically instable areas
e) Anywhere they have a yearly “Wild Fire Season”
f) Anywhere not a few hundred miles from the sea that is below sea level.
Slides not new to Mt. Soledad
Possible causes to take geologists time to figure out
By Scott LaFee
STAFF WRITER
October 7, 2007
It may be months, perhaps years, before investigators and geologists figure out exactly what caused Wednesday’s landslide on Mount Soledad.
A conclusive answer might never be found.
But this much is known: Landslides aren’t new, either on Mount Soledad, which has a history of them dating back thousands of years, or in San Diego County.
Indeed, because of its seismically active, geologically varied terrain, the region boasts plenty of exposed hillsides and cliff faces where collapsing soil isn’t just possible, but probably inevitable.
“Wherever you’ve got the right conditions – and that’s plenty of places around here – you’re going to see material moving downward,” said Thomas Rockwell, a professor of geology at San Diego State University.
http://www.signonsandiego.com/uniontrib/20071007/news_1n7geology.html#hillsides
A blast from the recent past- Suszanne researched this: http://www.youtube.com/watch?v=Ubsd-tWYmZw
A commenter said: “If i were Suzanne I would be in the witness protection program.”
Como se dice “We’re Number 72″ en espanol?
DEAN CALBREATH
From No. 1, region falls in economic standings
October 7, 2007
There are a lot of ways to rank the “best-performing” metropolitan region in America.
If your criteria included, say, finest surfing, nicest weather or quirkiest politicians, San Diego County would certainly be at or near the top.
But based on the county’s job creation, wage increases and the growth of its high-tech businesses, it is not even among the top 70 best-performing regions, according to a report issued last month by the Milken Institute, a think tank in Santa Monica.
According to the Milken report, the county ranks 72nd among the 200 largest metropolitan areas in the United States. That’s quite a comedown for an area that, just five years ago, was ranked Numero Uno.
…
For San Diego County, it has been a steady downhill slide since 2002. Our region has gone from first place in 2002 to fifth in 2003, 16th in 2004 and 29th in 2005. Our latest ranking places us firmly between Hagerstown, Md., and Little Rock, Ark.
“It’s not that the economy in San Diego is going south,” said Perry Wong, a researcher at the Milken Institute. “It’s just that the momentum for creating jobs is gone. Job growth has been almost standing still.”
In 2006, San Diego added 17,800 jobs. That’s a growth rate of 1.4 percent, 123rd on the Milken list. This year, job growth is even less robust. Alan Gin, an economist at the University of San Diego, estimates that the county’s job base will grow by only 8,600 this year, or 0.7 percent.
Gin said high housing prices make it harder for companies to attract employees.
“The Milken study really shows the impact of our high cost of living,” he said. “Look at the top 10 places on their list. Most of them are in Florida or the Carolinas, where home prices are much cheaper. Property prices have risen in most of those areas, but not to the extent they’ve risen here.”
http://www.signonsandiego.com/uniontrib/20071007/news_1b7dean.html
As if Tijuana-adjacent didn’t have enough problems chasing the ever elusive Dream Americano…
“But did they notice this virtual red flag as they eyeballed reams of paper necessary to close escrow on their American Dream? And did they explore other information available to them if they were concerned?”
Simply stated, SD’s housing prices have priced the region out of the labor market.
Have a good friend visitng, she sold her little family house at the peak in Palo Alto (I’m guessing for around 1.5 mil) and invested most of it in municipal bonds with Merril-Lynch. Given the news about that company, she’s asked me to ask all the financial savvies on this blog if she’d be wise to move her money - and to where?? Thanks in advance - she’s a very nice person, worked hard all her life as a vet tech. Would hate to see her lose any of her retirement.
In my opinion, the least risky option is to put her money in U.S. Treasury bills through the Treasury Direct program. She deals directly with the U.S. Treasury (no broker risk or fees) and the interest is exempt from state tax (no small issue in CA). She still needs a bank account to receive withdrawals, of course.
“In my opinion, the least risky option is to put her money in U.S. Treasury bills through the Treasury Direct program.”
That would protect her against default risk, but not against inflation risk.
Inflation risk is default risk, just in slo-mo.
The Winner’s Curse strikes again:
Brokers, builders take notice of San Diego condo auction
By Emmet Pierce
STAFF WRITER
October 7, 2007
It took him three tries, but Shukdev Tantod finally emerged as a winning bidder at the recent auction held in San Diego of new condominiums and townhomes built by D.R. Horton Inc.
A general manager at Teledyne KW Microwave in Poway, Tantod was outbid twice before coming away with a two-bedroom unit at the La Boheme development in North Park. The 1,472-square-foot condo cost him his entire $365,000 budget.
He called it a fair price that was “possibly below market value.”
“This is an investment,” Tantod said. “I think it is reasonable, looking through the neighborhood.”
http://www.signonsandiego.com/uniontrib/20071007/news_1h07auctio.html
I thought 100% financing for low income households was a pillar of U.S. federal housing policy. This short (and vague) article suggests the FHA is currently trying to distance itself from this policy, which foolishly encouraged low income households to buy homes they could not afford.
SORRY, FOLKS, THE BARN DOOR IS WIDE OPEN AND ALL THE HORSES ALREADY FLED YEARS AGO!
Risky down payments banned
REUTERS
October 7, 2007
WASHINGTON – The Federal Housing Administration’s assistance program will ban a popular form of down payment under new rules, the chief of the program said recently.
Under current rules, the FHA permits home buyers to accept some down payment help from the seller or private firms that specialize in such assistance including AmeriDream of Maryland and Nehemiah Corp. of Sacramento.
http://www.signonsandiego.com/uniontrib/20071007/news_1h07curb.html
http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/
Here is some questionable financial advice: A suggestion to offer seller financing of jumbo loan home purchases.
Wouldn’t a bank or mortgage lender be able to offer financing more cheaply to a buyer bringing a 20 percent down payment than a seller would? After all, even after the credit crunch, lenders have just a “slight” comparative advantage over individual households when it comes to making and servicing mortgage loans. My scam risk meter flashes bright red when I even think about seller-financed home sales — sounds like a certain avenue to adversely select scam artists into the prospective buyer pool.
REAL ESTATE MAILBAG ROBERT J. BRUSS
Seller financing will make listing stand out
Foreclosure info
By Robert J. Bruss
October 7, 2007
This will be the final column in the Home section by Robert Bruss, who recently passed away.p> QUESTION: Next spring I plan to sell my home. With jumbo mortgages (over $417,000) so hard to get, I am thinking seller financing would make my home sell faster and for top dollar. To protect me, a decent cash down payment would be mandatory. What pitfalls do you see?
ANSWER: Presuming you own the house free and clear with no mortgage, easy seller financing is a great way to make your listing stand out from the competition. Also, you will be creating a safe investment for yourself, secured by a mortgage or deed of trust recorded against the home’s title.
However, for your safety you should insist on a cash down payment of 20 percent or more. But don’t make it too high or you will discourage buyers.
http://www.signonsandiego.com/uniontrib/20071007/news_1h07bruss.html
IMHO, only owned property is eligible, I do not believe there are many assumable home loans. For an owned property (no mortgage), it makes some sense in a stagnant market. e.g. a person with a low FICO, but good job ala TXChick, could put down the 20%, but financing may be 8% or more. To sell the house with owner financing, 20% down 7 yr balloon at 5.5%. TX or equivalent gets a house and the seller gets a deal done. The entire deal does make less sense if you use a Realtor. I do not know if there are taxes to pay on the sale, I do not believe so - just never looked at the percentage of sale price received to make it taxable.
Obviously, taxes are going to go up and you are better off paying taxes now than in future years (maybe 1 yr). The other consideration is present value of moneys against future value of moneys.
The markets are estimating future monetary value discount of 7- 10% per year. That is a lot of moneys to lose when locked in at 5.5% for 7 years.
Hi. A RE flipper in trouble ? From today’s Washington Post print edition:
Cathedral Heights $499,000
Open By Appointment
Classic Doorman Building
Great value in this classic doorman building, 24-hour front desk, outdoor pool, indoor garage space and storage space. This spacious two bedroom two bath is just waiting for your touch, easy to renovate. Come see the light in this unit, large windows throughout! Three HUGE walk-in closets provide excellent storage. Also for rent at $2500/mo. Section 8 applicants accepted.
Nancy Itteilag
202-321-0110
Long & Foster
202-363-1800
Oh the neighbors are going to like that agent. Section 8 welcome !
How in hell can a Section 8 tenant come up with $2500 a month for rent? Oh, right - by using my tax dollars, how else?
I hope the neighbor-owners are all card-carrying Democrats who helped perpetuate the Nanny State and will now reap their just desserts.
With regards to the ongoing inflation debate, are people arguing for the plain vanilla type or the hyper type? With a doubling and tripling of commodity prices, I suspect most are arguing for hyperinflation. Please correct me if I’m wrong.
With deflationary asset prices, coupled with monetary growth in the double digits….
I think that a debate is pointless. Clearly the federal montary policy tools are exacerbating the cyclical nature of the economy which will result in “knowing the unknowns” at a point that will reward the few who know the truth, and punish those who believed the lies.
We need to ask ourselves, why am I having difficulties believing in a government that is manipulating the uneducated in a fashion that serves the needs of the few?
Why is the DOW/S&P essentially flatlined over the course of the aggresive rate cuts?
What behavioral changes occured during the third quarter as a result of the systemic fears?
The unmasking of the FED has begun, and history will be the judge of BB’s academic hypothesis regarding the failure to stave off the greatest depression through unending and relentless liquidity injections as policy to defeat deflationary forces.
Won’t this move tend to exacerbate the housing price free fall currently in progress, as tax forgiveness makes short sales a more attractive option?
NATION’S HOUSING
KENNETH HARNEY
Tax proposals are a mixed bag
October 7, 2007
WASHINGTON – In a tax-Peter-to-pay-Paul move, the House Ways and Means Committee voted to permanently remove the so-called “phantom income” tax penalty that haunts financially distressed homeowners whose debt is partially forgiven by a lender after a foreclosure or a “short sale” to avoid foreclosure.
The committee also voted to extend the deductibility of mortgage insurance premiums through 2014 – an important benefit for many borrowers who pay either private mortgage insurance or Federal Housing Administration (FHA) premiums on their loans.
But to make up the lost tax revenue for these two consumer-friendly changes, the committee approved new restrictions on capital gains tax benefits available to people who buy a second home and later convert it to their principal residence. Under current rules, homeowners can exclude up to $500,000 (married joint-filers) or $250,000 (single filers) on a property used as a principal residence for two out of five years.
http://www.signonsandiego.com/uniontrib/20071007/news_1h07harney.html
In reality, home prices could not only go up. Trees do not grow to the sky. If prices can only go up, all sellers are fools and only buyers are wise. People who are certain that they know everybody else’s intentions will always end up in the ditch. A moment had to arrive when buyers would balk, sellers would bargain, and builders would flood the market with new houses.
THAT moment arrived in the second quarter of 2006, as prices finally topped out. Prices have fallen every month since.
As of June, home prices were down 5.2 percent from their peak — and the data for July and August are not yet available. There were risks after all.
The danger we may now face is the spreading belief that home prices “can only go down.” If such is the case, the fun has just begun.
Trees don’t grow to the sky, unless Federal bailouts are used to excessively water them and fertilize them.
This article is a must-read examination of bubble euphoria psychology. The critical factor the columnist does not address is that creating the illusion that investing in big ticket high risk assets is a ’sure thing’ became a key component of Federal Reserve policy during the Greenspan era. Irrational exuberance and the asset price ‘wealth effect’ were both natural and direct consequences thereof.
We are currently seeing the latest manifestation of such policy in stock prices that somehow never correct no matter how bad the news, giving sheeple the impression that ’stock prices always go up’ even as they learn in experience’s dear school that home prices some times go down by large percentages off the bubble peak, and as they are rapidly forget how far the NASDAQ crashed in the wake of the early 2000s tech stock bust.
Market View
If Everyone Knows It, Someone Is Wrong
By PETER L. BERNSTEIN
Published: October 7, 2007
…
THE subprime disaster is a classic example. It may even turn out to be the paradigm against which all other episodes of near-unanimity will be measured. The fallout from the high degree of agreement about the outlook for stock prices and economic growth in the dot-com boom of the 1990s was child’s play when compared with what is happening to the global economy as the subprime boom slowly unwinds itself.
Economist magazine to investers: Like the housing market, the stock market does not always go up (no matter what kind of levers BB and company pull behind the scenes).
I really, truly hate to help burst stock market investers’ bubble, but trees really don’t grow to the sky, especially in the wake of credit crunches.
Buttonwood
To infinity and beyond
Oct 4th 2007
From The Economist print edition
Contrary to popular belief, stocks do not always go up
IF AMERICAN investors have learned any lesson in the last 25 years, it is to buy shares on the dips. The slide in 2000-02 may have been longer and deeper than they were used to but normal service was eventually resumed, driving the Dow Jones Industrial Average to a record high on October 1st.
Among American financial commentators, it is almost universally accepted that shares always rise over the long run. And this perception does seem to be backed up by evidence; if you take any 20-year period, Wall Street has always delivered positive real returns. In addition, one ought to expect shares (which are risky) to deliver a higher return than risk-free assets such as government bonds.
Nevertheless, investors ought also to remember the world’s second largest economy, Japan. Its most popular stockmarket average, the Nikkei 225, peaked at 38,915 on the last trading day of the 1980s; this week, nearly 18 years later, it was still only around 17,000, less than half its peak. Buying on the dips did not work either. By 1994, the Nikkei had fallen to 21,000—at which point a technical analyst, after poring over his charts, told this columnist that it had to be one of the great long-term buying opportunities.
:-) 
http://economist.com/finance/displaystory.cfm?story_id=9912566
Ron Paul on Border Security. Compare his unequivical stance to that of the meally-mouthed, disingenuous GOP ne’r-do-wells and Wall Street marionettes he’s running against:
“The talk must stop. We must secure our borders now. A nation without secure borders is no nation at all. It makes no sense to fight terrorists abroad when our own front door is left unlocked. This is my six point plan:
Physically secure our borders and coastlines. We must do whatever it takes to control entry into our country before we undertake complicated immigration reform proposals.
Enforce visa rules. Immigration officials must track visa holders and deport anyone who overstays their visa or otherwise violates U.S. law. This is especially important when we recall that a number of 9/11 terrorists had expired visas.
No amnesty. Estimates suggest that 10 to 20 million people are in our country illegally. That’s a lot of people to reward for breaking our laws.
No welfare for illegal aliens. Americans have welcomed immigrants who seek opportunity, work hard, and play by the rules. But taxpayers should not pay for illegal immigrants who use hospitals, clinics, schools, roads, and social services.
End birthright citizenship. As long as illegal immigrants know their children born here will be citizens, the incentive to enter the U.S. illegally will remain strong.
Pass true immigration reform. The current system is incoherent and unfair. But current reform proposals would allow up to 60 million more immigrants into our country, according to the Heritage Foundation. This is insanity. Legal immigrants from all countries should face the same rules and waiting periods.”
hjALmar Greenspan opens his yap again, and look what spilled out…
“Greenspan also said in an interview on CNN’s “Late Edition with Wolf Blitzer” that the turmoil caused by the subprime mortgage crisis was easing and financial markets were beginning to go back to normal.”
Greenie, you’re doing a heckova snowjob
http://www.reuters.com/article/businessNews/idUSFLE75353720071007?feedType=RSS&feedName=businessNews&rpc=23&sp=true
UNFAIR!!! Sump prime loans are unfairly blamed for housing market problems.
Subprime mortgages getting a bum rap
By Ken Payne - Special to The Bee
Published 12:00 am PDT Saturday, October 6, 2007
Story appeared in EDITORIALS section, Page B7
Print | E-Mail | Comments (8) | Digg it | del.icio.us
Not a day goes by that the subprime loan crisis fails to make headline news. What’s rarely reported, however, is that subprime mortgages — high-interest loans to lower-income borrowers — have provided the keys to homeownership for millions of Americans previously locked out of the market.
http://www.sacbee.com/110/story/417492.html
Will the Fed tighten or stand pat at their next FOMC meeting?
Rekindled credit fears hit dollar
By Neil Dennis
Published: October 5 2007 10:55 | Last updated: October 5 2007 19:46
…
“The strength of September’s payroll employment figures and the upward revisions to recent months make it less likely that the Fed will feel the need to cut interest rates again at its next meeting,” said Paul Ashworth, at Capital Economics.
Michael Woolfolk, at Bank of New York, said: “This is a big boost for the economy, and the Federal Reserve gets a big pat on the back for acting in a timely fashion to the August financial turmoil.”
http://www.ft.com/cms/s/0/f43bf9de-7328-11dc-abf0-0000779fd2ac.html
Sunday, October 7, 2007
In Response to the home mortgage crisis, should the government help out lenders and borrowers?
Let market take care of problem, not government
The foreclosure rate hardly has the potential for causing wholesale economic disaster
by Rod Blum Double Take - Right
If a parent repeatedly rewarded their child every time they behaved badly, society would deem that parent unfit. However when it’s the government handing out your hard-earned tax dollars to a group of citizens who made bad decisions, sanity somehow takes a leave of absence.
Over the last few years some people, using easy credit and adjustable-rate mortgages (ARMs), bought more home than they could afford on a bet to make easy profits from rising home prices. What nanny-state politicians don’t want to admit is that most of these people knew what they were getting into. They just thought that housing prices were going to keep going up ad infinitum.
Most of the predicament in the mortgage market is the result of ARMs, which frequently offer low introductory interest rates. Once the rate adjusts after a few years, many homeowners can’t meet their monthly payments. Nearly two million homeowners have ARMs that will adjust by the end of 2008. Of those, the Federal Housing Administration estimates that five-hundred thousand could go into foreclosure.
But don’t worry, be happy. Politicians to the rescue! Since the borrowers in question are potential voters, it can’t be their fault. Hillary Clinton is now pitching her multi-billion dollar bailout plan for the “victims” of “unscrupulous” mortgage brokers who act “dishonestly and try to take advantage of people”. And what will fix the problem? Why, more government bureaucracy and more of our money, of course.
Barack Obama calls lenders “predatory” and says the real victims in this crisis are the millions of borrowers who followed the rules, whose only crime was taking out mortgages that lenders told them they could afford. I guess if a lender says I can afford a loan, then that absolves me from THINKING.
http://www.thonline.com/article.cfm?id=175823
If Hillary Clinton thinks borrowers are victims of “unscrupulous” mortgage brokers who acted “dishonestly “,than make these dishonest mortgage brokers pay the price of a bail out . Usually when a party does something dishonest ,they become the liable party . Why should taxpayers pay for other peoples dirty deeds?
If a civil court case says that a lender is not entitled to put a borrower into a loan they can’t afford ,than let the offending party pay the price of a bail out or damages ,not the taxpayers .
The Clinton ticket is a ticket to more bad national housing policy, including a further bloating of Fannie and Freddie (a process that rolled merrily along during Bill’s terms in office).
http://tinyurl.com/36sa2g
I couldn’t believe the day had finally arrived. After 44 years of renting, my family and I were finally buying a home.
…built in 1880 by the way. Our mortgage, with real estate taxes and insurance included, was only $779 a month. Not bad, very doable. But we didn’t anticipate the struggle we were about to go through.
For the next 3 years i used my house like a gigantic piggy bank. It was easy, just sign away, and get thousands of dollars in my pocket. I had never had more than $100.00 in my bank account, so thousands seemed very nice. We made ourselves feel better, and less guilty, about taking the “free” money and using it to fix up the old house. After all, the more work I did to it, as I was told, the more it would be worth. What a fun game this was! I had money in my pocket, my house looked better every day, and nothing was going to stop me now. I even had a bank lend me $25,000.00, with just a couple of phone calls! I couldn’t get a single credit card in my name, but who needed one with all of the money being thrown at me?
Then the wild ride finally came to an end. My 2 mortgages came up to around $1,900.00 a month.
Not only was my American dream of owning a home shattered to bits, but my government was mad at me too! My family and I moved out of our dream house, and got an apartment. I was devastated, to say the least That was 13 months ago. To this day, my home sits exactly how I left it, empty and cold. We ended up moving in with some friends of ours, and 6 months later, they lost that home too