Bits Bucket And Craigslist Finds For October 22, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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40%…
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awTwHUdj2wM0
Wow! They actually admit 40%? What is it really? 60%?
Roidy
50% at peak seemed to be the right number for CA on average. I noted in the article the CAR reports they expect a 4% drop next year. At that rate it will take a decade to reach bottom.
The CAR, needless to say, is putting forth an impossibly rosy scenario, as always. Anyone who believes their self-serving and utterly discredited “economists” and analysis deserves to be an impaled knife-catcher.
Actually, it’s probably AT LEAST 40%. I didn’t realize how high it was myself until I did some math. The last house to sell on my block (in Sunnyvale) went for 1.4 Million. That’s 1.1 Million *MORE* than I paied for my nearly-identical house 17 years ago.
If I take the 300K I paid for my house and just assume 4% increase a year for 17 years, it gets to about 590K. That’s about what my house is probably worth. It accounts for wage inflation, and the fact that this area has expanded a bit in terms of job opportunities, etc. (I’m just a couple of miles from Google, Apple, Intel, Yahoo, etc).
The house across the street is currently for sale at 1.1 million. The “true value” of our homes should be about 580K. That’s your 50% drop right there (assuming this house sells!)
BTW: This is SUNNYVALE! For cesspools like Sacremento or Stockton or Fremont, prices can drop 70% easily!
As goes for inland areas of So Cal which is also massively overpriced. I could see 60%++ for Riverside County for example, which has seen 300%+ increases just since 2000 in many areas and more in some. Homes that were going for $109K in Lake Elsinore, CA in 1999 are currently in the 400K range or higher, and that is down from the peak in early 2006.
“Homes that were going for $109K in Lake Elsinore, CA in 1999 are currently in the 400K range or higher, and that is down from the peak in early 2006.”
LE is rapidly declining in prices. A new KB develpment along the south lake rim is advertising homes in the $200,000’s. Don’t know if they are townhouses/condos or small sfunits. LE is an IE pit area-i rode my bike around the lake early october and saw plenty of signs of depression/poverty among the Hispanic immigrant population and lots of ragged trashed out trailer hovels right at the lake shorefront.
The newly-built tracts up in the elevated parts northwest of the lake were priced over $500,000-600,000 at peak 2005-06. They are certainly way below that now. Lots of speculator buying and overbuilding means massive price drops/high foreclosures rates in this pit area of SW riverside county.
They say OVER VALUED. What they really mean is OVER PRICED.
Same report, different reporter:
Delinquencies on prime and subprime adjustable-rate mortgages in California soared by 78% and 60% respectively, vs. 33% and 24% across the U.S., the bank added, citing recent data from the Mortgage Bankers Association.
http://tinyurl.com/ytrcmm
Will mortgage companies will avoid California like Insurance companies avoid Florida?
Seem to me that Goldman Sachs is reporting the right numbers, albeit a little late (after they sold all the crap securitizations). If they had reported this in 2004 rather than profiting from it, things might have been different.
A 40% drop is a soft landing. There is the possibility, however remote, of an over-correction on the downside.
40% a soft landing? In the economics world you’re a tough guy.
At my barber shop yesterday I told a small crowd how I predicted a 45% drop in home prices in the area. Everyone in the shop was excited; note that I made it clear that this was buying in 2010. They’ll be cutting back their spending to save a down payment.
Getting this overpriced will have its consequences.
Got popcorn?
Neil
I dislike how they did the numbers there.
They should have said 70% overvalued, predicting a 40% decline in prices.
589/350 = 1.68 which means 70% overvalued.
350/589 = .59 which means 40% decline.
But instead they decided to say 40% overvalued, which is very misleading.
I’d say 60% overvalued. Many places in Hermosa Beach in December 2003 were valued under $400,000 and are now valued above $900,000. Incomes in the South Bay did not go up 130% since 2003.
After driving to our new home in Virginia from Texas we were amazed at the thousands of new homes built in the middle of nowhere, 30-40 miles from any major city. This seemed to be especially prevalent in the Carolinas (western side). I can’t believe these builders though that this was going to work. Who was supposed to live in these ghost towns? Most of these developments appeared to be empty or only half occupied.
where at in VA? I’m in 22151 near the capital beltway
Illegal immigrants (and their sympathetic legal family and friends) are migrating out of exurban -D.C. Prince William County, Virginia. Link to Washington Post article. I’ve looked up hundreds of tax records this year, and Prince William County shows the worst price declines from prior sales, in the 30-40% range (and if you look up the tax records, you can guess who’s leaving). Interestingly enough, some of the younger immigrants are finding shelter in the closer-in D.C. suburbs (Alexandria and Arlington) and in Maryland counties. It seems those who worked in construction (and who can’t find work) are heading home to their former countries.
This is a continuing development in the housing bubble story. I’ve felt all along that our population explosion here in NOVA was tied in large part to the construction (and thus immigrant) economy.
I’m in Stafford 22554.
23510… Norfolk, VA here … shhhhh, the nickname is an old leftover from f’edcompany. I lived in Virginia Beach when I chose it.
We are bubbleriffic! Huge new condo tower for the wealthy keeps popping up in the news. They can’t seem to get financing. 50% sold.
They had a couple of these ‘buyers” on the local news when they talked about the story and they all seemed to me to be local flippers who had no intention of actually living in these ‘luxury’ condos.
Where was the Plunge Protection Committee on Friday? They must have been asleep, let’s hope they wake up today.
Who says they weren’t there? Maybe it could of been a lot worse. And who wants them to wake up? Intervention in markets is why we’re in such a f-ed up mess.
Gold has reversed 3% in past 12 hours…. stock market opening impact?
Before the bell…………….
http://money.cnn.com/data/markets/index.html
We’ll probably see a meltdown in metals prices for a couple days. Profit taking basically. Remember Wall Street is hoping for an interest rate cut October 31. That will make precious metals spike again.
Gee, a cynical person might think this move down in the market is rater auspiciously timed. The fed would be less likely to deliver another rate cut with the indicies at yearly highs and everyone happy again.
Another cynic would point to the selloff occuring after the quarterly mutual fund statements went out. The FIs wont’ see the damage until January, giving others a chance to get out.
Right, hence my January and later put positions. That was the theory when I got into them. This is the hard part of trading, trying to decide whether to let them go pre fed meeting and trying to get them back in November and December which you know are the clown’s favorite months. You don’t want to give doubles and triples back but you also don’t want to sell them and see them become 20 baggers either.
Gold’s decline could be due to margin calls and the USD spike due to flight to quality into Treasuries as the USD is the admission ticket.
I like TXChick’s thoughts about a “staged” decline ahead of the Fed’s meeting. The boyzz are jonesing for more viagra.
Euro down nearly two percent already (that’s a big dive) and the gold bashing continues. Sure looks like cover for the FED sleazebags from the G7 / other central banks
This time it’s different.
Gold appeared to be overbought technically, I’m glad to see the selloff. I hope it goes to 675 but I’m realistically expecting 720ish.
Here is some interesting reading on gold.
http://news.goldseek.com/GATA/1193065440.php
the money shot excerpt:
Central banking controls the value of all labor, services, and real goods, and yet it is conducted almost entirely in secret — because, in choosing winners and losers in the economy, administering the ultimate patronage, modern central banking cannot stand scrutiny. Yet the secrecy of central banking now is taken for granted even in nominally democratic countries. What a hundred years ago in the United States was called the Money Power is so ascendant today that it boasts of its privilege. What other agency of a democratic government could get away with the principle that was articulated on national television in 1994 by the vice chairman of the Federal Reserve, Alan Blinder? Blinder declared: “The last duty of a central banker is to tell the public the truth.”
The truth as GATA sees it is this:
First, gold is the secret knowledge of the financial universe, but it is coming to be an open secret. Indeed, GATA announces here today that it has retained a prominent Washington-area law firm, William J. Olson PC of McLean, Virginia, to work with our consultant, the monetary historian Edwin Vieira, to demand from the U.S. government, under the federal Freedom of Information Act, a full accounting of U.S. gold reserves. That demand will be filed in a few days.
Second, while you will hear at this conference much technical analysis of the markets, all of it will be compromised if it fails to account for government intervention.
And third, that intervention is failing because of overuse, exposure, exhaustion of Western central bank gold reserves, and the resentment of the developing world, which is starting to figure out how it has been exploited by the dollar system. The Western central banks are attempting a controlled retreat with gold. But GATA believes that they may have to retreat farther than anyone dreams — that when the central banks are overrun in the gold market, as they were overrun in 1968, and the market begins to reflect the ratio between gold suppply and the explosion of the world money supply of the last few decades, there may not be enough zeroes to put behind the gold price.
Gold may become nationalized and thus confiscated by the US government if it deems it an emergency. 1934 can happen again. Owning gold may once again become criminal.
Gold was neither nationalized or confiscated in 1934.
Turning in your heavy metal for greenback Dollars was strictly voluntary.
Not many americans own gold thus the risk/reward for the gov’t outlawing it is quite a bit different then back in 33′ when the constitution was more closely followed and gold was the backing for the paper currency. Plus the major reason for the outlawing was to allow unfettered currency printing, which they obviously can still do.
I also would add that China has recently (05 I believe) allowed for personal gold ownership. Now, what do you feel the ramifications of having “red” china allowing their citizens the freedom to own gold and “The liberty Bell of the world” USA outlawing it? The internet has changed quite a bit of the game plan going forward for the asshats running this show and while it is just my opinion, I feel that the US citizenship is going to start understanding the role the FED has played in this mess and the fallacy that gold is the hobgoblin of a strong US dollar.
Unfortunately, the citizenship of the US is probably going to wake up one day and find that the idiots that occupied the white house the past decade or so have traded away all “our” gold. What do you feel would be the options for the US if we wake up with no gold, a piece of sh*t dollar, vastly smaller manufacturing base, 6 trillion in foreign debt and 60 trillion in unfunded promises to an aging population just getting ready to retire? Not to mention Peak Oil, an unfunded war costing a half Trillion or so a year and an infrastructure that needs a trillion or so to bring it up to snuff? Outlawing gold will be the last thing they have to worry about. The whole bunch of them will be holding a lottery to get a seat on a fully fueled Air Force One, IMO.
Shirley Bassey had a few words about you Goldbugs…
http://tinyurl.com/2ta5y7
“Not to mention Peak Oil, an unfunded war costing a half Trillion or so a year and an infrastructure that needs a trillion or so to bring it up to snuff? Outlawing gold will be the last thing they have to worry about. The whole bunch of them will be holding a lottery to get a seat on a fully fueled Air Force One, IMO.”
Time to crank up the printing presses. Sounds like late 60’s hyperinflation when the cost of funding the vietnam war plus great society spending programs drove inflation thru the roof. Weimar Germany a bit extreme example but not out of the realm of possibilities.
“Turning in your heavy metal for greenback Dollars was strictly voluntary.”
No - it was mandatory. Just not enforced.
Hang Seng was down 1091.42 points (3.7%)this am. Course, they had it to spare.
Central bank intervention here; they are smashing gold and the dollar is rocketing, after plunging last week. It was to be expected after the G7 meeting but it won’t last.
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s
I was looking at bonds on Schwab last night. Most bonds (BBB and up) are paying less than 5%. Countrywide bonds have an effective interest rate of 9~10%.
So, who thinks Countrywide will last until Christmas, 2008?
That’s not the only scenario. How about C files chapter 11 and reorganizes but your bonds become worthless in the process.
Happened to people in Worldcom.
“your bonds become worthless in the process.”
And then Warren Buffett buys them.
or the vultures do. It’s a great way to make money if you know what you’re doing.
Yep, didn’t Warren buy some Enron droppings?
I don’t remember. I do recall reading earlier this year that vulture funds are staffing up. This is another nice career avenue for bankruptcy attorneys with some big case experience.
Countrywide FSB is offering Jumbo CD 1 yr term 5.40%.
Per the NY Times, investors not first time homebuyers heading to auctions.
http://www.nytimes.com/2007/10/22/us/22auction.html?_r=1&hp&oref=slogin
However, the article is about Minnsesota, where it could be the prices are low enough to rent out at a positive carry. Or it could be the investors will cure any defects from the foreclosure process, and then sell to first time homebuyers at affordable prices.
Those people are really jumping the gun. We haven’t begun to see bottom yet.
A local builder in Pullman, WA has been sitting on new construction for a year, then suddenly all five homes sold two weeks ago. Then this weekend two of the five popped back up on the MLS with a different agent. Clearly some folks bought the homes at a “discount” of 10% or so, and are now trying a quick flip. Yeh, that is a SURE money maker (esp after 6% realtor fees and 3% state transfer tax).
The kicker is that the builder is already ramping up construction again to replace the five homes he sold!
A local builder in Pullman, WA has been sitting on new construction for a year, then suddenly all five homes sold two weeks ago. Then this weekend two of the five popped back up on the MLS with a different agent. Clearly some folks bought the homes at a “discount” of 10% or so, and are now trying a quick flip. Yeh, that is a SURE money maker (esp after 6% realtor fees and 3% state transfer tax).
Even homes selling for cash take about 2 weeks with title search etc. My bet is the contracts tanked and they’re being relisted.
Interesting thought, but I think the contracts actually closed a couple of weeks ago. This builder/developer’s realtor isn’t listing these homes either, though there have been rumours that he might be dumping his realtor due to slow sales.
Positive carry may look okay on paper, but ever try to rent out and manage rentals to the public? Get long enough rentals and you’ll really wonder whether the alligator is the property or the tenant and the more rentals you have, the more alligators that will be snapping at your heels. Wouldn’t want to go there either way on a bet.
“The market’s really low right now, so you can get a good price,” said Lori Crook, a food server at Keys Cafe who said she was looking for a place she could fix up and sell. “Even if you can’t sell it right away, if you just sit on it and sit on it, it will go up.”
Folks, we really do have an endless supply of complete dumbasses. This one justs blows my mind.
Perhaps she ought to take a trip to Las Vegas and lose her money in big chunk, rather than in a slow dribble over time. She sounds like the type who would hit on 18…
“Even if you can’t sell it right away, if you just sit on it and sit on it, it will go up.”
If this is the case we’re going to have a lot of people with tired a$$e$.
I like her last name, too. Very appropriate.
This must be the same type of “investor” that caused the bubble in the first place.
BULLSEYE ChrisO. It is this very insane idea that real estate goes up that got us where we are. Sure…. it will go up. In 20, 40 or 60 years? In the meantime you’ll lose 3% to inflation, year after year.
Stocks are going to get hammered today. Black Monday everyone. I am moving out of a lot of positions as soon as 9:30 hits.
just 2% down in Europe; move on, nothing to see here. For a real Black Monday it should be 20% down.
And as far as gold/euro is concerned: the G7 did their expected bit of China-bashing (why don’t they ever threaten Japan that they should let the yen appreciate???) and to top things off and demonstrate their manhood they do some gold/euro bashing. Of course policy will remain as loose and reckless as ever. Nothing unusual up to now either …
AS usual, Europe will follow Wall ST……….tomorrow could be the big test for Europe if Wall ST falls today………
why don’t they ever threaten Japan that they should let the yen appreciate
You know that the yen is not pegged like the yuan, right?
yeah I know - but the Yen/dollar exchange rate is not exactly determined by normal market forces, but mostly by the interventionist strategies (low rates policy) of the BOJ. The influence of that on the finance economy is many times bigger than the dollar/yuan exchange rate (which is hardly relevant IMHO).
Gosh!! Let’s put this falacy to rest. Yuan/dollar is NOT pegged.
http://finance.yahoo.com/currency/convert?from=USD&to=CNY&amt=1&t=2y
You should not have stopped at 2 years. Go to 5y:
http://finance.yahoo.com/currency/convert?from=USD&to=CNY&amt=1&t=5y
nhz
They don’t threaten Japan partly because they are members of the insider club. But mainly because Japan also exports capital to the economies of the other G7 nations, not just goods.
obviously, Japan is the biggest provider of cheap credit in the world, no banker or politician is going to complain about that
I am all cash right now. This market is gamed; I have no IDEA how in the heck we have been showing gains in the market while the RE market is crashing… But, frankly, I don’t think that it is possible for this charade to continue…
Anyone want to make predictions for the day? Where does the market close this afternoon?
the point is that those gains are NOT real, they are just nominal …
I just raised my stops to ensure if panic takes a hold that I will be quickly out of the game. Remember, The baby will get thrown out with the bath water and a sinking tide will lower all boats and finally leverage is a bitch when things are sinking
Im thinking maybe you have to approach the August lows to get the Fed’s attention.
Market finishes flat to slightly up today.
“Market finishes flat to slightly up today”
So far you are on mark. The PPT must have been busy as hell- so far at 11am PST the Dow up +46. Am not the stock market expert as others on this blog are but am convinced that the FED Poicymakers/Wall street will do anything to prevent a stock market collapse as this will result in a more rapid recessionary collapse.
The Gov’t fears unemploymemt and a slowing ecomony more than inflation and i am convinced dthat they will comtinue to fudge the real inflation rate to keep unemployemnt below 5.5 %-6% nationwide. This is also the best political soft option-They would rather screw the diminishing no of savers and fixed income retirees and favor Wall street, your regular Joe6pac debtor, homedebtors, big corporations, minorities(who overall benfit from hi inflation despite paying more for goods),ect.
The falling dollar means shit to the US fed policymakers and big wall street-they just transfer their investments $’s overseas and the hell with the US consumer.
Market finishes flat to slightly up today.
After hours: Apple reports good 3Q.
Made my AT&T after hours bounce back up. I expect a 14,700 Dow before the year end if the Fed cuts the rates on October 31. I’m getting ready to dump my AT&T but have an 8% trailing stop on it.
I’m thinking that a lot of Friday’s action was OPEX related with the boyzz taking advantage of the situation to push shares lower to reduce call option payout. I’m going with PBB on today’s movement unless some major news hits.
I don’t think they will let stocks get hammered. I expect months of ups and downs, while the real value continues to wither away thanks to out of control inflation. So, next year we may make 14,000 again on the DOW, but the dollar will be worth even less by then, so who cares? At least it makes for good headlines and keeps the sheeple happy and ready to be sheered.
Now Greenspan says that the mortgage crisis was an “accident waiting to happen”. I wish he would just go away!
http://www.cnbc.com/id/21409489
hjALmar Greenspan=
“accident waiting to happen”
What…….easy Al?………….not likely.
Mortgage Security Bondholders Facing a Cutoff of Interest Payments
For all the pain in the mortgage market, investors who hold bonds backed by risky home loans have continued to receive their monthly interest payments — until now.
Collateralized debt obligations — made up of bonds backed by thousands of subprime home loans — are starting to shut off cash payments to investors in lower-rated bonds as credit-rating agencies downgrade the securities they own, according to analysts and industry executives.
http://www.nytimes.com/2007/10/22/business/22market.html
“It’s still the early stages of a very significant stress.”
Looks like the first inning is finally over, and the economy is down 6 to 0.
Cutting off the cash flow will make it a lot harder to whistle past the graveyard. The lower rated tranches of most CDOs need to simply evaporate. Until now, the multi-layer debt pyramid has served to insulate the end buyer from the consequences of higher defaults - at least in cash terms. The results are now pushing their way through the buffering and filtering mechanisms and the leverage used at each step will magnify the impact. Look at the number of steps a typical loan might go through to reach the final buyer now - God only knows what the total system leverage is on the initial $1 of debt:
Loan
MBS/ABS
CDO
SIV
Hedge Fund
Fund of Funds
Pension Fund
Repost #3:
For those seeking safety:
Vanguard Treasury MMF, Fund #50
Ultra short term loans to the US Treasury only.
NOT “Treasuries” (which are Notes or Bonds)
Liquid, $1.00 for $1.00
$3k to get in.
No CDOs, No MBOs, No SIVs, No CP.
I have part of my portfolio in this Fund.
~Misstrial
“Vanguard Treasury MMF, Fund #50″
sounds good to me. Have VG prime MM 30, STCorp fund, Interm term treasury #35, and Star balanced #56.
Have done OK with this Vang layout for 7 years but have reservations with the first 3. Will consider rebalancing and putting 3K into a US Treasury short term MM and cut back on other funds. Basically same as the Prime MM but as you say no risky bond investments.
Will today be the day Zillow updates its SoCal properties? All the ones I follow were last updated on 9/11/07…
If you need a morning laugh, read this article. There is still a lot of nonsense out there from those quoting the less than reliable Lawrence Yun and friends.
Does the Drop in Housing Prices Mean It’s Time to Buy?
http://tinyurl.com/3y6qyc
”Take advantage,” Nguyen said. ”Jump into what you really want. Buy for the long run. It’s a good time for buyers. I don’t think there’s been a better time in the last few years.”
I’ll bet that he will be saying the same thing next year.
”I’ve been showing houses almost seven days a week,” he said.
But he didn’t mention if he was selling any.
Well, this at least is certainly true:
“With all the bad news about housing sales these days, it’s tough to know when is the right time to buy.”
The bubble was obvious to those on this board. When it is safe to buy a home will be a more difficult call. But we’re not there yet, that’s for sure.
it will be safe when nobody is interested in housing anymore.
“As far as the mortgage industry goes, conditions are getting better…”
Did I miss something?
They are of course talking about the rate cut. Forget about the fact that rate spreads are increasing, gasoline and food prices shot up as the result, but oh boy, the 0.5% cut will make people buy houses again.
”Jump into what you really want. Buy for the long run. It’s a good time for buyers. I don’t think there’s been a better time in the last few years.”
This “buy for the long run” crap really upsets me. I don’t care who you are, you could have to sell tomorrow for job transfer, job loss, illness, divorce, etc. No one can ever guarantee they’re going to be in it for the long run. Life happens, when we least expect it.
Black Monday…
In addition to stock market declines, San Diego is on fire. Literally, fires are all around SD. Very much like the 2003 fires which burned through much of SD County.
Fires all over the place, and they are evacuating the area near Get Stucco’s (rented) place, I believe. Let’s hope they’re okay.
They clocked 101 mph winds yesterday and more of the same today. Don’t forget the very inactive earthquake activity for the last 15 years will inevitably lead to some heavy grinding in the future.
It really is different in Southern California.
These fires were oh so predictable, and as usual, nobody did any pre
conflagration clearing of wild plant life near buildings, as everything in the ground was 90 to 95% dry, and hadn’t seen water in nearly a year.
This coming after 2005 and 2006 were monster water years and allowed those plants, shrubs and trees to grow to the sky.
This drought is a witch, slowly she strangles the population of 17 million people, and vis a vis this series of fires, the limited amount of freshwater, is diminished even more…
maybe the fires were also very convenient for some FB’s ?
I’m thinking that all that insurance money could be good for the economy out there. I just hope nobody gets hurt.
Don’t wildfires count as an act of God out here? In the areas I’m more familiar with back East you would need a special rider/policy for coverage.
Insurance money is never good for the economy. See
http://en.wikipedia.org/wiki/Parable_of_the_broken_window
Nature never seems content to let economic disaster play alone.
Got Steinbeck?
Excellent point, Blue Skye.
Don’t forget, the ‘89 earthquake in Northern California was the unofficial beginning of the decline in the state.
Yes it was Chic…..It was a 5 year downhill slide after that….
Most of San Diego did not go to work today. It seems like the fires are on the outskirts and rapidly racing toward the main part of the city.
This is much worse than the 2003 fires we had. God help us all!
There are currently 250,000 people evacuated from their homes in San Diego and the only thing we see on TV are the expensive homes in Malibu.
Not true - they are covering all of the fires, but because they’re based in Atlanta Georgia, no one knows the difference between Malibu, San Diego, Canyon Country and Lake Arrowhead.
Take care SoCalers
They are not covering the fires equally. SD has many more fires and the “Malibu Fires” take the headlines.
Mark my words, these SD fires are baaaad. They said they are zero percent contained. In 4S ranch where Pro Bear lives, it’s pretty bad. Hoepfully his house will be sparred, even though he just rents.
It’s bad guys. Now have friends in Rancho Bernardo, Poway and Escondido who have been evacuated and I haven’t heard about their houses yet. 7 fires burning all over the county and it’s truly not safe anywhere as the wind can shift embers instantly and the burn area just keeps growing.
Some of the large animal facilities such as Del Mar Fairgrounds (now the San Diego Fairgrounds) have closed to more animals. There’s still places to go (including Qualcomm Stadium) where people can go with horses and other big animals but it’s getting tough. Wild Animal Park is in danger. Helen Woodward Center has been evacuated. Just a horrifying situation for people and animal lovers.
Me and my six monsters are ready to go at a moment’s notice (with extra leashes for the neighbors dogs) and we have plenty of places to go, but please send your best positive energies out to a lot of good people who are going through hell right now. Thanks.
Be Safe!
I just got a report on am 640 radio that the Irvine fire originated in the silverado canyon area and arson is suspected.
Could it be an enraged FB or just some demented sick teens doing this? There are some really enraged demented idiots these days all over SCal, driven by rage over the tumbling economy, job loss, financial problems(Fb’ers), rage over one thing or another, and it would not take much effort for these idiots to take a short drive up into the dry windy hills outside your recent tract development and simply light a match/lighter to some dry bush.
Lots of places all over the Scal hills where brand new home tracts abut absolutely dried-out tinder brush, expecialy out in the IE and Santa clarita hills. Add drought conditions last two years and you have the conditions for the perfect firestorm.
Peter, I know you’re driving all around SCal, take care.
Everybody: take a look at your auto insurance coverage, have more than the minimums.
~Misstrial
This is a repost from late sunday oct 21st:
Orange County has some major fires going on now, too. I can’t precisely tell where they’re from”
The location of the OC fire appears to be in the hills along the 241 tollroad which runs jusrt east of Santiago canyon area and north of Irvine. The most threatened homes are the newly sprung Portola Community of new tract homes which is in the far north edge of Irvine right on the edge of the burning hills.
The canyon Country fire(Santa Clarita region), which appears to be the largest most serious so far, appears to be in the area between Soledand canyon-white canyon, north of Sierra highway in Canyon country. This fire will threaten and burn the most homes as there has been put up literally 1000’s of new tracts in CC, Castaic, Bouquet Canyon, ect. Plus the wind realy whips up big in this area.
Update oct 22nd: the Santa clarita/canyon country Fire, officially called the buckwheat fire, has grown to almost 30,000 acres and appears to be spreading west/northwest toward San francisquito canyon. This is a real big big out-of control raging firestorm which has resulted in thousands of evacuations and probably dozen’s of remote ranch homes already burn’t down. Some new stucco tracts also threatened.
Peter:
The old homes in Bouquet Cyn & San Francisquito Cyn were built in the 1920’s as vacation homes. A number of them in Bouquet Cyn were built above Bouquet Cyn Rd across from the stream. Sad. Hope it doesn’t burn. I used to play there (both cyns) as a child.
~Misstrial
We just got our first “reverse 911″ call to prepare for a possible evacuation.
Sometimes, it’s nice to be a renter…
Most times, it’s nice to be a renter…
Our place is near a fire. My wife is on vacation with her sister and I did a weekend side trip of my own; so neither of us was personally in danger. The only concern is the closet of wedding presents. But wait a second… we bought renters insurance.
There are times to own, but not for a few years.
Got popcorn?
Neil
The only concern is the closet of wedding presents. But wait a second… we bought renters insurance.
This may be a way to get rid of the “weird” wedding presents no one wants.
Stay safe, CA Renter.
Thank you, CarrieAnn!
We got the second evacuation call & were packed & ready to go (was up all night packing & watching the news). We’re in LA now at my MIL’s.
Take care!
A very good day to be a renter in San Diego.
I’m out of harm’s way for the moment, but waiting to see if I get the call to leave. Putting the essentials together. Just watching the news.
CA Renter - where are you? (I’m in El Cajon so safe for now.) And do you need anything?
Thank you, SD RE Bear!!!!
We live in south CBD — close to Olivenhain (Rancho Bernardo fire likely coming through) & had the San Marcos fire on the other side.
Heard El Cajon has it’s own fire issues. Hope you’re okay as well!
We all need to have a SD get-together some time when the smoke clears.
Take good care of yourself!
You know there’s got to be a lot of FBs right now with their fingers crossed praying that the fires make it to their house…
yeah, and not watering the lawn for months can help
This is going to be worse than the Cedar fire of a few years ago. That event had less than one day of the strongest winds. This event will have 2 to 3 days of winds that are stronger. Some of these fires could burn all the way to the coast. The evacuations seem to have been smoother, but may involve many tens of thousands. Hopefully the death toll will be less, only one so far. There are going to be many homes that are destroyed, perhaps conveniently for a few, as well as a lot of prized possessions that are irreplaceable. New fires continue to break out and spread rapidly. This is not even close to being done.
Thanks for saying this. I’m used to the hostility on this board, but people making fun of what’s going on here…that’s really crossing the line. We aren’t all FBs in this county.
It’s called “gallows humor”, baypark, a grim form of “humor” where people make dark jokes, but don’t really think they’re funny. I don’t think it is funny at all. I’ve been through hurricanes here in FLA and it is horrible. However, people might make cracks about Florida’s overbuilding and judgments from God and water shortages and that sort of thing. None of us are immune. I really feel for Cali right now, especially the decent folk who are being affected by Cali’s horrendous development, water and illegal immigration policies.
My sis lives in Rancho Bernardo and they got the order to evacuate, and have headed to Qualcomm stadium…
“Qualcomm stadium…”
I don’t know much about it, but I get nervous when I hear about people going to stadiums or convention center, after Katrina. Hope everyone will get along inside the stadium.
I was talking to my mom, and I thought it was a strange ’staging’ area…
As smoke is the real problem, and to the east of it, sub-prime combustibles are everywhere.
After a mostly-sleepless night against a backdrop of the sound of thirty MPH wind gusts rattling our windows, we left our home at 6am, ahead of any evacuation order. Once I heard the news that homes in Rancho Bernardo were already burning (5am), we mobilized the troops. With a forecast of high winds (gusts up to 80 mph) and fires already burning in parts of San Marcos and Rancho Santa Fe, plus live footage already on TV of homes in Rancho Bernardo burning to the ground with no fire truck in view, it is quite hard to imagine an uglier scenario. I am starting to believe that NOLA has nothing on SoCal when it comes to natural disaster risk.
Comment by palmetto
2007-10-22 08:41:41
“Qualcomm stadium…”
‘I don’t know much about it, but I get nervous when I hear about people going to stadiums or convention center, after Katrina. Hope everyone will get along inside the stadium.’
Gosh, no kidding. As for me, there’s no way I’d be going. Let’s see: I’ll take myself and the valuables I can carry and go hang out in a giant enclosed space with a bunch of panicked, freaked-out, and un-policed humans.
Hmmm. That would be a ‘no’.
Sis update…
She left @ 5 am, ixnayed on Qualcomm and went to stay with friends elsewhere.
San Diego Evacuation
9:51:49 AM October 22nd, 2007 Permalink | Comments (0)
This is remarkable. They’ve just evacuated a major part of San Diego: Everywhere East of the I-5, North of the 56 and South of Lake Hodges. If you know San Diego, this is, well, half the area. My area, Carmel Valley, is included. This is JUST east of Del Mar. Total track home city, but also includes Rancho Santa Fe.
http://blogs.marketwatch.com/greenberg/2007/10/san-diego-evacuation/
Best of luck to you, GS!
We’re out of here as well, going to LA until it blows over. Very thick smoke and high winds all around.
Good luck to all San Diegans & others involved in the fires.
Son’s 17 year old girlfriend is out in that mess, trying to get somewhere safe. She has breathing problems and no medicine with her. Obviously I’m very concerned.
CA Renter –
Good to hear you found refuge, and best of luck to you and anyone else involved who reads here! By current indications, this will be the worst fire in SoCal history (eclipsing the 2003 Cedar Fire).
Glad to hear you’re safe, GS. I was beginning to worry.
My sis says that houses on the street Azucar in RB, have burned down, just a couple streets away from them…
yikes~
“Qualcomm stadium…”
‘I don’t know much about it, but I get nervous when I hear about people going to stadiums or convention center, after Katrina. Hope everyone will get along inside the stadium.’
I’m not expecting this to be a problem. It was also used during the Cedar fire. It has the plus of not yet being under one of the major smoke plumes. The air quality isn’t good, but a lot better than some areas. Given that the areas being evacuated include some of the more affluent areas of San Diego, I’m guessing you’re not dealing with the “gang element” here. Probably a better group of people than you’d find there during a Chargers-Raiders game and a good deal more sober. Latest reports have 10,000 at the stadium. That’s less than during a pre-game tailgate. Not trying to minimize what’s happening, just add perspective.
No doubt, the demographic difference between this and Katrina is enormous. I was part of the 03 evacuations and people actually helped each other out, not a single act of violence.
For those whose homes were destroyed in the Cedar fire, rebuilding in the midst of the boom was very difficult and very expensive. Those who thought they had enough insurance (replacement cost plus) often found they didn’t because material costs had skyrocketed and labor was expensive and scarce during the boom.
One possible blessing of the bust for those whose homes are destroyed this time is it now may be be cheaper, faster, and easier to rebuild.
“One possible blessing of the bust for those whose homes are destroyed this time is it now may be be cheaper, faster, and easier to rebuild.”
My home insurance premium did go down this year, amazing but it may as be due to cheaper costs of materials for rebuilding. I was really pissed as rates kept going up last 3-5 yrs at 20-25% per year but this year for ist time they stablized. I have Farmers.
It is darn scary when disasters happen. We had tornados here in Ohio that leveled houses. One that went 500 feet behind our house, leveled probably 30-50 houses. It takes forever to pick up the pieces. I worked in the red cross center in town for 3 weeks after and the stories were unbelieveable. However there were some humorous ones too. Someone’s cat got sucked out of their arms as they were heading to a ditch, since they lived in a mobile home. Two weeks later he showed up and no one knows where he’d been. Remember the cow in twister. One got sucked up here and ended up 3 miles away, farther out in the country. One house of friend’s of ours had the whole house gone but the chimney and little section of kitchen counter along with his thermos. People had to laugh at the small funny stuff or everyone would have gone crazy with the devastation. One blessing, no one was killed. The pulling together of people at times like this is a miracle to see. Everyone keep safe and don’t take any chances. Things are just that, things.
May 30, 1985?
The bad part is the areas hardest hit by these raging SCal fires(Malibu is exception) were already in decline RE pricewise. Santa Clarita and IE were already tumblimg neg 10% YOY before the wirefires hit.. Homes price declines in these areas will really accelerate now.
Malibu prices will be unaffected by fire. Malibu is so appealing that it will always be attractive to the rich, who have the ample funds to rebuild quickly.
Malibu prices are determined solely by supply-demand, building constaints, borrow rates, Overall Economy, and other economic determnants. Fires which are a regular occurance in Malibu have little effect on home prices. Rich overseas investors and mega movie moguls will keep Malibu prices from collapsing completely, though they got too high during recent RE bubble mania as did all SCal homes.
Malibu Smug wouldn’t be complete without a license plate frame (for both ends of your car, please. What if the valet didn’t see it?) that proclaims!
Malibu, A Way Of Life
“Malibu is so appealing that it will always be attractive to the rich, who have the ample funds to rebuild quickly.”
What is determined to be of value today is tomorrow’s garbage. Value is never constant. Malibu suffers from the same ills that befall all of southern California. Lack of adaquate water, transportation and jobs. There are nicer beaches, better surfing conditions and more amenities for the wealthy in other places. Malibu is no longer a desirable place for the wealthy. It is already upper middle class.
Plus it stinks to high heaven after a rain (inadequate sewers)
I hear those new SIV vehicles maneuver really well in Off-Load conditions…
They are prone to rollovers, though.
Please no jokes. The clown we have running the Fed is bad enough…
Clowns (plural). Greenspan won’t seem to go away. It’s like he wants his old job back.
An opening for a has-been Octogenarian eCONomist?
[clapping]
And they don’t sell well with a $3+/gallon gas.
By the time gets done inflating (since a weak dollar has no effect upon inflation, if you believe them), we’ll be luck if gas stops at $3.something - I expect $4.00 a gallon and up in the not too distance future.
At 8 am 10/22/07 Japan’s stock market is down. The dollar is up. And GOLD is off big time. An analysis might be that investors are scared so they are moving out of stocks and into treasuries. The movement into treasuries strenthens the dollar and thus gold goes down. This is the conundrum that I have tried to think through for a long time. What to do? When they had the bank runs on Countrywide Bank in California, and then Northern Rock in England; it occured to me that it might be a good idea to diversify into gold in case the system locks up and your paper money gets tied up or lost. If you’re going to do the gold thing you just have to accept the volatility and believe. Because it might come down to: where do you lose the least amount of money.
Gold still near 750, and fundamentals are unchanged. I’m a buyer under 700 but we may not get there.
be patient. Gold’s 200dma is only $675. Last year’s spike to $750 (from below $500) corrected to $575. If you are looking for a long term security blanket, you might end up ahead if you buy when the hot money is off somewhere else.
“you just have to accept the volatility and believe. Because it might come down to: where do you lost the least amont of money.” ………. Man, i think you have really nailed it. Not only that, but having a good long term (physical) gold position does give one some sense of peace and serenity in these volatile times.
jawdropper! Fed opens discount window to foreign banks:
LONDON (Reuters) - Barclays (BARC.L: Quote, Profile, Research) and Royal Bank of Scotland (RBS.L: Quote, Profile, Research) have lined up emergency funds of up to $30 billion from the U.S. Federal Reserve to bail out American clients caught up in the global credit crunch, a paper said.
Barclays has been given permission to borrow up to $20 billion through the facility, while RBS can borrow up to $10 billion, the Sunday Telegraph quoted banking sources as saying.
http://tinyurl.com/2cvrbu
not really, as far as I understand this only applies to operations in the US mortgage market. Besides, why wouldn’t they borrow from the ECB at the far lower ECB rate? maybe the FED is even less strict about the collateral for those loans, or maybe these UK banks don’t have any offices in the euro zone?
The ECB can only loan them Euros but many of them need US dollars to repay dollar-denominated debt. They have to come to the dollar lender of last resort for that. It could change if we see a credit swap facility between the Fed and ECB or BoE like after 9/11.
OMG. WTF??? Can I borrow at the FED discount Window? I will happily pay 4.75% interest.
Tax law change will drive home prices down even more:
Currently, if you sell an investment property and have a $500,000 gain, you pay 15% LTCG tax, or $75,000. If you trade into a house, then live in it for 2 years, bingo, $500,000 is excluded from the tax if the sale is a primary residence.
This is why you see so many investors own vacant houses. They call them 2nd homes, know they gain $75,000 from the government, so why bother renting.
The new proposal says you can only get the $500,000 exclusion (for married couples) prorated on how long you actually lived in the house, vs how long you held the total investment (includes prior properties used for exchange).
You will see an end to: 1) 2nd home appreciation, 2) overpriced rental properties, 3) unrented vacant inventory.
This is all designed to offset the revenue lost from letting FB’s walk from loans without paying taxes on the phantom gains, since they are still allowing the banks to decuct the losses.
Perfect. Now the mortgage interest deduction needs to be culled as well. The reason for this deduction is social in nature - encourage strong community participation by getting people into homes as some psychologist has presented a study showing that owners are more likely to be civically involved.
A better method to encourage home ownership is to have reasonable property taxes and efficient local government. Then people will buy houses because it’s in their best interest. Another method, matching downpayments, would have a similar effect, and both would be better than the silly interest rate deduction.
The reason for this deduction is social in nature - bankers and real estate brokers made campaign contributions to politicians, and citizens illiterate in finance approved. State and local governments, dependent on increasing property tax revenues, did not object.
it can be easily shown from the real world that HMD does NOT help homeownership; the Netherlands - with the most favourable HMD tax system in the world - has one of the lowest rates of homeownership in the developed world (55%, used to be around 60% about 30 years ago when the HMD was less important). Countries with the highest homeownership in Europe usually have no HMD at all. Not even talking about the stupidity of investing billions of tax money every year in nicer homes, instead of investing it in education and healthcare that are seriously lagging.
just my 2 cts, from the country where tax on gains from home sales is zero, mortgage payments and all other home/garden etc. improvements/maintenance can be fully deducted from the income tax and politics is in bed with the RE mob. A proposal to introduce a more honest system instead of the current HMD was shot down in parliament last week with just a few minutes of discussion
They call them 2nd homes, know they gain $75,000 from the government, so why bother renting ??
You better have “At Least” tried to rent it…..Its all about intent as far as the IRS is concerned….Any tax consultant would likely tell you to rent it for awhile and then “Change Your Mind” and move into it as a personal residence…
If you think about it however, is it realy worth the $75,000. savings to move for two years into a house with all the hassel that comes with it ?? I would argue that just pay the tax and re-invest the after tax $425,000. for two years and you probably recapture the $75,000.
Tax policies should be rewritten on an urgent basis to discourage unoccupied dwellings. Imagine the impact of slapping flippers and speculators with a “contributing to the decline of neighborhoods and communities” tax equal to annual property tax - a double whammy if you will - for their vacant properties. I’d also hit them with a Nuisance Tax of $100 a day for properties they fail to keep up, with automatic forfeiture after 90 days. Those properties could then be sold at a deep discount to deserving moderate-income families (especially of policemen, firemen, teachers, etc.) who will enter into a signed commitment to rehabilitate them and maintain them in tip-top condition.
Last but not least, all realtors, mortgage brokers, and FBs involved in transactions where the house goes back to the bank, would collectively be press-ganged into clean-up crews that would be responsible for keeping abandoned houses in presentable condition.
Why the people haven’t risen up and clammored for me to be President for Life, I’ll never know….
I will gladly nominate you; unfortunately I’m not a registered US voter
My goodness that sounds like urban planning! What are you a commie socialist or something ?!
sammy
ive forwarded yer remarks to ron paul. expect to hear back soon with an offer for “grand poobah of housing” position, complete with foot powered govt car.
rock-on !
While I revere Ron Paul, I’m not sure he’s down with my “President for Life” aspirations.
Alternative minimum tax takes another huge bite out of your mortgage tax deduction. Another hit to higher priced homes.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aINY0sfPcE2Q&refer=home
Bear Stearns and China’s Citic investing $1 billion in each other - sort of like two drunks propping eachother up.
–
It is called Tango!
Jas
I doubt that much if any cash will change hands. It’s not as if BSC has $1 billion in spare change sitting around. Probably take the form of a stock swap. $1 billion of nominally valued paper will change hands.
The cool part about this is that they’ll probably each declare themselves $1 billion richer, and then hide the cost in some off balance-sheet SIV vehicle in the hopes nobody notices.
I am off to write a billion dollar check to myself so I can be richer, and I’ll pretend the cost doesn’t exist. I am learning from example! Maybe I’ll use the money to buy some McMansions, too! Haha…
Lipstick on a Pigman
http://www.stockmania.com/index.php?showimage=74
Nice. Keep up the good work!
Obviously the braintrust still feels it’s safe to buy Google and other Nasdaq stocks in this evironment. If they EVER get punished for this knee jerk stuff, the market will really buckle.
Sorry if this has been posted before. I drive by this, what I can only describe as, mess every day on my way to work. I have been following it since it started a couple of years ago.
http://www.urbanreserve.net/
Here are some of the homes going up now.
http://www.urbanreserve.net/forum/forumdisplay.php?f=8
This is Diane Cheathem’s project. I actually admire her work very much but this one is unlikely to be a winner financially. I live near there too and would be all over this at real world prices.
There are also three or for so called “Case Study” lots around White Rock, one on Peavy and two on Peninsula that are sitting unsold for months now. Again, a good idea whose time has passed, although the developers concept of “affordable” leaves me shaking my head.
Zelman on Housing and Consumer Debt..
“Builders are desperate now and blowing through inventory,” says (Ivy) Zelman of homebuilders who are doing anything they can to sell homes. “Their revenues are shrinking so fast, they can’t keep up.”
The mass psychology that amplifies and spreads the angst of home sellers will put a brake on overall consumer spending, Zelman predicts.
“Some 74 percent of consumer expenditures are correlated to housing. I don’t think the consumer will hold up. They will cut back on things like buying cars and vacations.”
While Zelman forecasts that sales will drop for the next two years, she isn’t as optimistic on home prices, which she says may continue falling until 2010 or 2011.”
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_wasik&sid=aOaXXjyhYd4c
Zelman’s words carry some weight because she was one of the few major Wall Street analysts to warn of a housing decline months before it began late last year.
It started declining big time the summer of ‘05, when sales started dropping off. Where was she then?
US loan default problems widen
Banks are adding to reserves not just for defaults on mortgages, but also on home equity loans, car loans and credit cards.
FT: http://tinyurl.com/yoc9el
Atlanta Fed working paper tries to quantify the impact of demographic changes versus mortgage innovations that reduced the need for downpayments.
http://www.frbatlanta.org/filelegacydocs/wp0721.pdf
Lower downpayments won.
Thanks!
tough to go lower than closing costs….
Mexico is Running Out of Oil
By Valerie Rota and Patrick Harrington
Oct. 22 (Bloomberg) — Mexican President Felipe Calderon is delivering a grim message: The largest oil producer in Latin America is running out of crude.
”Our oil reserves have been consistently falling,” and the decline is ‘’severely threatening” government finances, Calderon told a nationwide television audience in an address last month at the National Palace. That’s the same place where seven decades earlier Lazaro Cardenas cemented the anti-American legacy of his presidency by nationalizing the petroleum industry.
Good. Maybe we won’t have to kiss Mexi’s butt anymore and take all their illegals. Maybe we can start developing our alternative energy. Interestingly, Chevron is now touting its geothermal technology.
When their economy vanishes (oil is half of it) the whole country will move up here.
“the whole country will move up here.”
And do what? Eff each other silly and plop kids until they drop to suck off more US welfare and Social Security?
Testify, brothah!!!
And do what? Eff each other silly and plop kids until they drop to suck off more US welfare and Social Security?
Yup, in every state except in Arizona. There are a lot of illegals leaving the state due to the new law against knowingly hiring non-citizens.
The buyers of the SIV-issued commercial paper, including the $67 billion Columbia Cash Reserves, a money-market fund run by Bank of America, face potential losses on paper that yielded little more than debt of top-notch financial institutions like Goldman Sachs.
…
On Friday, Citigroup said it has no equity exposure to its SIVs and that it will not bring the SIV assets onto its balance sheet.
…
Wall Street fears Citigroup could suffer a multibillion dollar loss. The SIV market, meanwhile, probably is on its way out.
Barron’s: http://tinyurl.com/366f3g
“On Friday, Citigroup said it has no equity exposure to its SIVs and that it will not bring the SIV assets onto its balance sheet.”
—————
Parse this statement carefully. It’s likely to be technically accurate. They probably don’t have EQUITY exposure to the SIV but they are on the hook for a guaranteed credit line so they have big LOAN LOSS exposure, which is nearly as bad. They won’t take the assets on their balance sheet but they will get hammered when the SIV defaults anyway and the really poor-quality loan collateral can’t be sold for nearly enough to cover the loans.
Remember that Citi is run by a lawyer.
“Opportunity makes a thief.”
Francis Bacon
Does anyone else feel like we’re watching a sort of “controlled crash” of the market? I really don’t know a whole lot about it, but watching the market run up over 14,000, it seems to me that we’ve lost, what, about 600 off the peak, or close to it, in a matter of days, when you think about it. But not all in one day, of course. Anyway, I feel like what I’m watching is someone dropping a rock on a string. It drops, then gets pulled back up a little, then another substantial drop, then another pull up a little, etc., etc. Overall, however, it is going down.
As a cliff gradually gets undermined by erosion underfoot, everything on the top appears well…
Until it suddenly gives way~
–
Yes, “controlled crash” is a good description.
Jas
Thanks, Jas, I needed a reality check.
and I always thought that in a crash prices go down…
its reflecting a slowing economy and meager growth. My guess is
Question about GNMA funds. I have a few bucks in a Vanguard GNMA fund. (It’s part of a complete “conservative” portfolio suggested by a major investment newsletter.)
I’m nervous about it, but it seems to be holding up. Is there any reason to dump it, or is it sufficiently propped up by the Government not to worry too much about it?
I’m in the same boat.. I’m not sure what would do any better than it has.
I’d love to hear some input as well.
FWIW: I just dumped my position in a vanguard GNMA fund today. It was holding up, and returning 5.something% yield, but I just found it too troubling to hold on to. Not sure what I’ll use in its place.
Thanks for the update Reuven. I wish I had a better idea..
How anyone can claim the DFW market is anything other than on life support is beyond me
http://dallas.craigslist.org/wan/456160661.html
That’s sad.
“it is Christmas time and I dont make enough money…”
What happened to Halloween and Thanksgiving?
and “I do not get any help from the father; cant find him.”
She sounds like someone who like to dig her own holes and then fall into them.
Already has a 10 year old as a single mother and she hatches another !!! How much do birth control pills cost ?? Surely much cheaper than raising that new child…Just stupid IMO…
And she’s saying “Help, not handouts”
Fact it, is she’s not paying $21K in federal income tax she’s already been getting a handout! (If you divide the annual US budget by the total population - taxes paid by corporations, you get to around 7K/person. Anyone who pays less than this is what the WSJ likes to call “a lucky duck”)
Call me crazy, but if I was down to three hours a day and desperate for cash, I’d go find a second job. If not in my industry, a part time job at the mall, providing daycare, waitressing, at Starbucks, whereever. I hate these kinds of pleas for “help”. They are just hoping for a few people to hand over $100 and know that asking for money doesn’t usually appeal like asking for a job does.
–
From always trustworthy gang at Goldchain Silverknife:
“Californian home prices are over-valued by 35-40% — House prices are significantly over-valued in California Our house price model indicates that Californian homes are 35-40% above the price range implied by current and forecast economic conditions (compared to 13-14% over-valuation nationally). As of August the median house price in California was $589K, but economic conditions support prices between $350-380K; material price declines are likely, in our view. From 1985 to 2003, 82% of quarterly variation in the OFHEO index for Californian home prices could be explained by two factors (state-level disposable income and interest rates); but this relationship broke down in 2004. We believe that sales of “affordability products” (e.g., subprime, option ARMs) – which spiked in 2004 – drove Californian home prices above levels supported by economic conditions; now that the secondary market for these products has evaporated, we expect home prices to return to normalized levels (as prices fall and disposable incomes grow).”
Jas
My HBB RSS feed has been out for 2 days - anyone else having this problem?
No, the bad sad and scary news is rolling in on schedule here
Love it.
This just in from Tucson: It’s a GREAT time to buy a new home!
http://www.azstarnet.com/dailystar/207396
Story comments include gems like this:
“This transparent article is a desperate attempt by the building trades to push folks to buy their surplus of homes. Too many were built with no thoughts of the future availability of water. Compound that with the destruction of the desert. With persistence we can continue fill it with concrete. Why did folks move here in the first place? You can’t even see the stars in the city anymore.”
Enjoy this comment — and many more like it — at:
http://regulus2.azstarnet.com/comments/index.php?id=207396
Slim, can you send me an e-mail at the address listed on my page? Did you ever get a HBB’er meetup going? I’ll be in your ‘hood in November and would like to meet if you’re up for it. I’d like your take on the TUS market which seems to be getting interesting, and I can bring some news from the great cold north.
Consider it done, Tango.
And, for the rest of the HBB community, be on notice that planning for the first-ever meetup in Tucson is underway. This fun-filled event will take place in November. We’ll keep you posted!
BTW: Let me know how this meetup goes! I’d love to do an Orlando and/or Silicon Valley meet-up!
We could meet some Celebration restaurant on a Sunday morning, and then go look at open houses!
(Or meet at Buck’s in Los Altos, and then look at open houses!)
Buck’s is in Woodside, where all the local VCs and techno-wealthy used to go (often driving their big trucks) trying to pretend they were roughing it in the the country in Montana, or something.
We could meet some Celebration restaurant on a Sunday morning, and then go look at open houses!
You mean Celebration FL? The town that’s still $100-250sf overpriced.
Could these people be any more tone deaf>
http://blogs.abcnews.com/politicalradar/2007/10/rob-reiner-sing.html
Txchick57…my singing was on key. What a shock to hear a politician speak correct grammer. Better get used to it.
Was it a good party David or more about posing? Anybody get drunk and fall in the pool?
So, did she bring her Chinese dishwashers with her?
Too bad you can’t spell “grammar.” Does this reflect on your candidate?
“Rep. John Dingell (D-Mi) wants to discourage the building of McMansions by disallowing the mortgage deduction for homes over 3000 sq. ft.” - quote from All That jazz.com.
I’d like to know what everyone here thinks about this. If I’m understanding it correctly, anyone with a house 3000+ wouldn’t be able to write off their mortgage? Does anyone know where this is in terms of being approved?
My guess is it would apply only to new houses built and thus, would create a bull market in currently existing houses of that size.
The mortgage deduction should be eliminated across the board! Even though I had personally benefited it for a few years, I never thought it was a good idea. It simply causes house prices to rise.
But I can’t support eliminating it for just a certain class of people based on house size. (And there will be many ways around it. Build 2999 sq/ft houses with unfinished but full-height “attics” that get finished off under-the-table after the house is built.)
There’s already a gross injustice with the mortgage interest deduction. The nation’s highest wage earners, who pay the bulk of the taxes in the US, don’t get the deduction. In case you didn’t know, the mortgage deduction starts to phase out if your income exceeds $150K, and doesn’t exist at all for high wage earners. So “Dingell’s” proposal would only affect the middle.
I’d oppose any attempt to try to control house purchasing behavior with taxes. There are some who may want a 3000 sq/foot house because they want to have grandma and grandpa living there, too! These people shouldn’t be punished for their efficiency. (Knowing the democrats, they’ll probably add language to give zillions of exemptions and ways around this proposed tax change.)
This sounds like a wonderful idea. Would potentially tackle many problems, like less energy usage (global warming/energy dependency on middle east), maybe a bigger yard (good for gardening/exercise). I would be in favor of this. America might be headed for the realization that a 3000+ sq ft Mcmansion filled with disposable crap from China is no longer feasible, nor is it the path to happiness.
There are too many ways around the size issue. However, they could lower the current mortgage deduction limit from 1M down to, say, 250K. That would put downward pressure on prices and thus keep houses affordable.
Thanks for your responses, much appreicated. Whenever I hear any news regarding anything lately, I find myself saying “I wonder what (insert HBB member here) thinks about that” :).
The Panama City News Herald, long a cheerleader for development interests, is now beginning to suspect that maybe we are in a bit of trouble.
Gee, ya think?
Here are two articles. They do take comments, so be sure to send some of that Housingbubbleblog love their way–they need it.
http://www.newsherald.com/headlines/article.display.php?a=4021
http://www.newsherald.com/headlines/article.display.php?a=4028
More on the Bail out schemes. It is all about “rewarding” those who created this mess. They promote the excuse that to do nohting will be worse. Ya sure
http://money.cnn.com/2007/10/22/real_estate/bailout_cost/index.htm?postversion=2007102212
From tiny acorns great oaks are made…
An auction will be held on Tuesday to determine the value of loan derivatives on Movie Gallery Inc, which triggered the payout of credit default swaps written on the debt by failing to pay interest due on the loans.
Movie Gallery Inc (MOVI.O: Quote, Profile, Research), the second-biggest U.S. video rental chain, on Tuesday filed for Chapter 11 bankruptcy protection to slash debt and reorganize as it faces competition from lower-cost rivals like online DVD rental company Netflix Inc (NFLX.O: Quote, Profile, Research) and others. For details, see [ID:nN16406035]
The auction of the credit default swaps on Movie Gallery’s loan will be the first to take place in the loan derivative market, Markit and Creditex, the administrators of the loan derivative index, said in a release on Friday.”
Reuters
http://tinyurl.com/338hhy
Prof Bear (GS) and all in SD area, be safe, our prayers are with you all.
Ditto, Lost .
San Diegans, please stay safe.
Same for our affluent brethren in Malibu and Lake Arrowhead, and our less afluent brethern in Canyon Country
Even being far, far away in Van Nuys, I have to admit that today is turning out to be a bit of a head$uck. I’m finding it hard to concentrate on schadenfreude today, what with everything aflame.
The winds have been increasing all day here, huge fire fighting helicopters are landing at Van Nuys Airport every 20 minutes or so, and the regular transcontinental traffic out of LAX is taking off inland, rather than gaining height over the ocean and turning back inland over Malibu.
Its noisy and windy here in The Valley, but fortunately not smokey yet.
It’s also quite windy in southern Arizona. Red flag fire warnings are up.
Our prayers for everyone in the SD area. Many of us have friends or relatives there. Ask for help if need be.