A Sea Change Almost Overnight In California
The San Francisco Chronicle reports from California. “Sales of existing homes in the Bay Area and California plummeted in September and prices sank, a state real estate trade group reported Wednesday. In the Bay Area, sales of existing, stand-alone homes plunged 45.6 percent between September 2006 and September 2007, while the median sales price slid 5 percent to $702,240. September’s median was a whopping 17.7 percent below May’s peak of $853,910.”
“‘We see a sea change almost overnight in the Bay Area,’ said Robert Kleinhenz, economist with the California Association of Realtors.”
“Analysts said the current downturn is already more severe than the housing slump of the 1990s, and they predicted that before it is resolved it will rival the 1980-82 slump.”
The Independent Journal. “The slump in Marin home sales has boosted the number of homeowners asking the county to reduce their property taxes. County Assessor-Recorder Joan Thayer says her office has already received 150 requests for assessment reviews this year, up from 90 in 2006.”
“Local homes sales dropped 77 percent last month, Thayer said. ‘The housing market has slowed down,’ she said.”
“Thayer said likely candidates could be those homes purchased in the past year or two. ‘They would have to be very recent buyers and they would have to be in areas where homes are declining,’ she said.”
“The county recently reduced the tax value of a home in Novato’s Atherton Ranch neighborhood that sold in 2006 for $1,159,900. Recent sales have been for less, and the county lowered its tax value to $1,065,000.”
The Contra Costa Times. “This week’s implosion of Diablo Funding Group has forced its employees to scramble for work amid speculation about the circumstances that doomed the veteran East Bay mortgage company.”
“Some Diablo Funding workers said the company has not provided them with commission checks they are owed and is three to four months in arrears. ‘We were told that we won’t be paid at all by Diablo,’ said Tony Frerking, manager of a former Diablo Funding branch in Modesto. ‘There is no more money coming from Diablo.’”
“‘We were given a song and dance that Diablo was not going anywhere. They were strong since 1992, but that was not correct,’ said Amanda Wold, a senior loan officer who worked in Diablo’s former Modesto branch. ‘We were promised checks last Saturday. The checks never came.’”
The Press Democrat. “Petaluma lender Homecomings Financial is cutting 40 jobs because of a deep decline in home sales, delivering another blow to the North Bay’s battered mortgage sector. In the North Bay, upwards of a dozen lenders have laid off hundreds of loan officers, processors and other workers.”
“‘It’s due to the overall turmoil going on in the housing and mortgage industry. Fewer housing sales mean fewer loans. It’s been very dramatic this year,’ said Stephen Dupont, spokesman for the parent company.”
“The Kennedy Wilson auction of San Pablo townhouses at the Doubletree Hotel & Executive Meeting Center Berkeley Marina started last weekend with a ‘practice auction’ to get people familiar with the experience, the auctioneer said.”
“Cecily Tippery, an agent in Brentwood who deals with bank-owned homes, said that only three of her 18 listings sold at a private auction in July.”
“‘It’s better to buy in presale because then you get a real feel for what the bank wants and you’re not competing against bidders,’ she said. ‘A lot of the time, the houses are bid on successfully but don’t sell because the bank doesn’t approve the price.’”
“Earlier this month, the Sacramento Business Journal reported that Irwin Union Bank of Columbus refused to transfer title on 20 homes to the winning bidders at a private auction because the bids were an average of $88,000 less than their reserve price, about $275,000 to $355,000 for the initially listed $409,000 to $465,000 homes.”
“Public auctions taking place near city halls or county courthouses are dull affairs. There are no slide shows, no glossy brochures, no stage, no charismatic auctioneer or floor staff and no frenzied bidding.”
“‘Now it’s not unusual to be the only bidder right now or have no bidding going on,’ said Sean O’Toole, a home investor. ‘Right now, a lot of properties selling are a bit upside down.’”
“Joy and Janey Madamba came to the Doubletree on Sunday to find a place to escape their $1,370-a-month rent for an antiquated apartment in Oakland. Joy Madamba said they both hoped to get a ’sweet deal.’ They started bidding on Lot No. 19, the third-to-last property.”
“Joy Madamba raised their yellow card quickly as the auctioneer’s fast-talking mumble jumped in $5,000 increments from $275,000, then $1,000 increments as the price climbed to $305,000, $306,000, $307,000. At $309,000 it slowed to only two bidders.”
“‘Sold at $310,000!’ The Madambas became owners of a three-bedroom, two-and-a-half-bath, 1,500-square-foot townhouse with a garage in Devon Square, a Pulte townhouse development.”
“‘We didn’t even think we’d do it,’ Janey Madamba. ‘But we just kind of went for it.’”
“Both wanted to hear what the last lot sold was and for how much. When they heard it was $293,000 for their same model, they both took it well. ‘Oh, good,’ Janey Madamba said. ‘We didn’t want that one anyway.’”
The Recordnet. “Central Valley sales figures weren’t available for the Wednesday state Realtors association report. In San Joaquin County, real-estate agents and brokers say foreclosure homes have been a logjam in the sales market for existing homes.”
“Nobody is saying that the stoppage is being flushed out, but agents and brokers are reporting that just within the past couple of weeks, there appears to be some movement with foreclosure properties.”
“Some asset managers, who are handling foreclosed houses for the entities repossessing homes, are more open to negotiation to reach deals, he said, though it’s not across the board.”
“‘I wouldn’t call it a lot more (sales),’ he said. ‘We’re beating them into submission is what it is - every day it’s ‘You’re priced too high, you’re priced too high, you’re priced too high.’”
“Real-estate agent Kevin Moran said that just within the past few weeks, asset managers are starting to reduce prices on overpriced houses and also are bringing new foreclosures onto the market at more reasonable introductory prices.”
“They also have started telling him that they’re getting instructions from higher-ups to get more aggressive on moving foreclosure properties through better prices and negotiating, he said. ‘I think they’ve sat on their inventory long enough.’”
The Daily News. “San Fernando Valley home sales plunged an annual 55.5 percent in September - a record low - as the market slide accelerated across the region, state and nation, reports showed.”
“‘It’s pretty dismal, isn’t it,’ said Nima Nattagh, a principal at market tracker Geostat Advisory. ‘And it’s not going to get any better anytime soon.’”
“In the San Fernando Valley market, from Toluca Lake to Calabasas, 362 previously-owned single-family houses changed owners, 452 fewer than in September a year ago, said the Southland Regional Association of Realtors. That’s the fewest monthly sales in the association’s database, which dates back to April 1984.”
“‘There are plenty of sellers out there who understand the market, have already listed their house at a highly competitive price and are prepared to do whatever it takes to complete a sale,’ said Jim Link, the executive VP with the association. ‘But sellers need offers to make it happen.’”
“Last month condo sales plunged 48.2 percent with 155 transactions. That’s the fewest sales since 155 condos sold in May of 1995.”
“The association speculates that many prospective buyers are waiting for more foreclosures to come on the market and push down prices. Others are likely locked out of the market for now because lenders have tightened credit standards.”
“Slower sales pushed the inventory to 7,772 properties at the end of September, up an annual 13.6 percent. But new listings fell 17.9 percent. That number of properties equals a 14.4-month supply, the highest level since March 1993. The record is a 23-month supply in February, 1993.”
“In the Santa Clarita Valley home sales fell an annual 51.8 percent to 105 transactions and the median price fell 4.3 percent to $560,000. Condo sales fell 52.3 percent to 52 transactions and the median price fell 3.9 percent to $370,000.”
“In Los Angeles County sales fell an annual 38.4 percent. In Ventura County sales fell an annual 47.3 percent. In the High Desert, which includes the Antelope Valley, sales plunged 62.7 percent.”
“‘I think over the next month or so we will see more of the same thing,’ said Leslie Appleton-Young, chief economist at CAR. ‘There is no urgency in the housing market now for buyers.
The Daily Bulletin. “‘It’s clear that too many unqualified people got into the housing market the last few years,’ said Jack Kyser, chief economist with the L.A. County Economic Development Corp. ‘But to listen to the electronic media, you would think everyone who owns a home is in danger of losing it. They’re panicking. It’s a small percentage of people in trouble - maybe 5 percent.’”
“In the Inland Empire, the news wasn’t good. Prices in Riverside/San Bernardino were off 12.5 percent to a median of $356,510 and those in the High Desert dropped 17.4 percent to $271,940.”
“Sales locally were among the weakest in California, with Riverside/San Bernardino off 47.7 percent and the High Desert off 62.7 percent. ‘September was the month that the more stringent lending standards hit,’ Kyser said.”
‘A swelling tide of foreclosures could take a $2.6 billion economic bite out of Los Angeles and Orange counties, where thousands of homeowners are forecast to default on high-interest loans, a community group warned Wednesday.’
‘The Antelope Valley is expected to be among the hardest-hit areas in Los Angeles County, the group said, because 20 census tracts had the region’s highest percentage of subprime loans.’
‘But Los Angeles officials said the problem is hitting neighborhoods citywide, with clusters of foreclosures in the northeast San Fernando Valley, East Los Angeles and South Los Angeles. ‘We could lose entire neighborhoods because of foreclosures,’ said City Councilwoman Jan Perry.’
“Sales of existing homes in the Bay Area and California plummeted in September and prices sank, a state real estate trade group reported Wednesday. In the Bay Area, sales of existing, stand-alone homes plunged 45.6 percent between September 2006 and September 2007, while the median sales price slid 5 percent to $702,240. September’s median was a whopping 17.7 percent below May’s peak of $853,910.”
it is always amazing to me what psychology can do the people. people in SF area always thought of the RE there as isolated from the rest of the country. now just look at them. it’s fascinating. if tell people enough times, you can get them to drink poison koolaid. Jones town anyone?
If you drink the Kool-Aid, you have to eat the Ramen!
“We could lose entire neighborhoods because of foreclosures”. We should be so lucky to lose East L.A and South Central. Here in Cali it’s the wrong places that are burning down.
In the late 70s there were many enormous fires in Newark NJ. We called it “urban renewal”.
Didn’t work — Newark is still a hell-hole.
They must not have used enough kerosene.
“We could lose entire neighborhoods because of foreclosures”. We should be so lucky to lose East L.A and South Central. Here in Cali it’s the wrong places that are burning down. :
if 1200 homes burned to the ground in SCentral that would save LA City the expensive process of eminent domaining a lot of 80-100 yr old ratshacks. Villarigosa always wanted to build more affordable hi-rises to house his beloved constituents(ilegals). Presto, 1200 burned -down crapshacks become cheap gov’t subsidized section 8 gated tenement projects to house the ilegal masses.
Actually seen quite a few of these down Figuora ave near USC. Also the city has been with difficulty eminent domaining the area west of the harbor fwy(central city west), slowly eradicating the derelict slums of pico -union, a tortuous process because there are still stubborn residents, mostly minorities/illegals, who refuse to give up their beloved hovels in the seedy pico district.
Slum clearance is a nasty displacement process but often necessary in the name of progress.
Sarcasm off!
Yes, Mr. Kyser, but that 5% in trouble will set the prices, just like a small number willing to be stupid set the prices on the way up.
Does anyone know when the next Case-Shiller Home Price Index update will be reported?
“‘We see a sea change almost overnight in the Bay Area,’ said Robert Kleinhenz, economist with the California Association of Realtors.”
Brick alert! Sea change? Try a simple, straight forward sales-mix change. That ‘rising’ median price as sales volume fell is now biting back hard, as I would guess the sales of over-median homes has finally run its course exposing the lie. Really guys, this is a souffle - and somebody just slammed the door.
We see a sea change almost overnight
Tsunami’s do tend to have that effect.
In Santa Clara, the median skew is still on. Volume down, median up.
Median price is more than 900K.
Wow….$900K for a home in Santa Clara….and over $500K for Santa Clarita….what a bunch of R E T A R D S.
–
The following applies to most parts of CA in % terms, i.e., 0.7% drop a month:
http://www.burbed.com/2007/10/25/bay-area-an-average-los-of-5000-per-month-for-current-listings/
I expect it to get worse to 1.0-1.5% a month.
Jas
$5,000 per month pays for a lot of hookers and tequila. I know what my choice would be if I owned a house in California. Me and the wife would have one hell of a party.
Your wife likes hookers and tequila? Wow, that would be one hell of a party!
Indeed, NYCs comic instincts cannot be taught! LMAO!
In the Bay Area, sales of existing, stand-alone homes plunged 45.6 percent between September 2006 and September 2007, while the median sales price slid 5 percent to $702,240. September’s median was a whopping 17.7 percent below May’s peak of $853,910.”
Can Manhattan be far behind?
–
Manhattan will get far ahead!
Jas
Is this what a soufflé looks like? (Wasn’t that LAYs metaphor?)
http://sacramentolanding.blogspot.com/2007/06/snaith-souffl.html
Spike, my old man, I’m starting to see it. I was talking to an older gentlemen that works with us 1 day a week. He has a house in Tarrytown. When we discussed housing a few months ago he thought I was mad when I told him prices would go down substantially. We talked about the housing situation today and he now sees eye-to-eye with me. He compared it to his lending days when he was forced to make a ton of bad car loans. Those loans crippled the bank he was working for. He now sees very clearly that this is the same type of situation.
NYCityBoy has a new line to use for all of the disbelievers. “Once you realize the housing bubble had nothing to do with houses then you can begin to understand where we are at.” I have copyrighted that line but I give all HBBers the right to use it.
You would not believe how effective that line has been. There is no comeback against it. I then tell them the boom could have been in Beanie Babies, tech stocks or even dirty underwear. “The Boys” just wanted to inflate an asset class, create debt and take their cut. “It had nothing to do with houses but people were fooled into believing it did.” This line of argument has no defense.
NYCityBoy,
Brilliant observation. Now, I’m sure most men (or at least the ones I know) are waiting for the stripper boom . . . can one invest in strippers, anyway? Securities backed by stripper tips, anyone?
Oh, you wrote “tips”. My mistake. I already had my checkbook out.
I like your line, NYCB. Just a tiny bit of editing for grammar, though. Should be:
“Once you realize that the housing bubble had nothing to do with houses, then you can begin to understand where we are.”
Sorry, just want to polish it if we are all going to start copy/pasting it and e-mailing it around and stuff.
NYCB,
I have to echo that sentiment by watchingthebubble, that remark is brilliant. If forces people to step away from housing for a moment and rethink the situation. Wall Street employment is close to pre 9/11 levels, about 190,000. I just don’t see us getting to Christmas without layoffs starting. Bloomberg is circumspect, but he has adjusted the city’s budget to expect far lower tax revenues in 2008 and onward. We gonna take our licks on this.
Smart, very smart. I like it and copyrighting it is also very smart.
Ranks right up there with txchick’s “broke is the new black.”
By the way, from marketwatch tonight…
SAN FRANCISCO (MarketWatch) — American International Group could take a $9.8 billion hit from its exposure to subprime mortgages, Friedman, Billings, Ramsey analyst Bijan Moazami estimated on Thursday.
This is gonna leave a mark.
“American International Group could take a $9.8 billion hit from its exposure to subprime mortgages, Friedman, Billings, Ramsey analyst Bijan Moazami estimated on Thursday.”
Is that all? Anyone got $20B…can I hear $20B? How about $30B? Anyone got $30B?!
And I had Ben Stein-believing Bushbots telling me the total damage was only go to be $40B or less. Morons, all of ‘em.
The slump in Marin home sales has boosted the number of homeowners asking the county to reduce their property taxes. County Assessor-Recorder Joan Thayer says her office has already received 150 requests for assessment reviews this year, up from 90 in 2006.”
“Local homes sales dropped 77 percent last month, Thayer said. ‘The housing market has slowed down,’ she said.”
How can this happen in Marin, one of the wealthest counties in the USA? Check the numbers again, this can’t be right!!! If Marin gets hit, the Bay Area is going on a big downhill slide. Fasten your seat belts.
Like I said, there are no high-paying jobs in Marin. Another poster on this blog replied that there are high-paying jobs in San Francisco, and that one may commute to SF from Marin. My counter is that one may commute to SF from China too, but it’s not very practical.
I hope Marin crashes and burns right along with all of its stuck-up, superficial, naive, temporarily wealthy, soon-to-be-”ex” residents.
As one that has commuted, in the past, from Marin (Novato) to the outskirts of San Francisco (didn’t have to go over the bridge) I can tell you it was an awful experience. I can’t imagine what it would be like to commute, by car, to and from Marin to San Francisco during rush hour. Anybody that does it needs to have their head examined.
Ferry or swim?
The commute down 101 in Marin is notorious for having Priuses (or suchlike cars) sitting in the left lane doing one mph under the speed limit - for 30 miles.
LOL, San Francisco…
I had a meeting in SF this summer and had the pleasure of “Escape from SF” via Marin. God awful! I just don’t see the allure.
This is it, when SF and Marin start importing Joshua Trees we know the parties going to get really nasty….
I know they have public commuter buses that run from Marin to S.F.
I suppose it’s about time they had some kind of monorail system that ran from Marin to S.F., perhaps along the Golden Gate Bridge.
Well, there are very few high paying jobs up north in Humboldt county, but somehow prices have so far managed only a paltry 5% loss, and the Realtors are still very insistent there will be no further declines because every retiree “wants to live here” and we “are different.” I have even heard comments from people that have said that pot sales will keep housing prices high here, since they make up for the low wages. Housing inventory, predictably, has been falling the last several months, and Realtors refuse to show properties as REO or foreclosures on the local MLS.
Forget San Francisco, in the people’s minds here, Eureka is the new special city on a hill. Instead of fine wines and good restaurants, we have pot and rednecks driving monster trucks.
Can’t wait until the market collapses here and all the smugness is erased.
No offense, I drove through there in September and got anything but a Eureka feeling. It looked kind of ugly.
Big V where are you ? Marin is a SF suburb. Plenty commute to the city.
I live in San Jose. I’ve been to Marin a few times. I also lived near Berkeley for about a year and a half, and I stayed in SF proper for about a month. The traffic in the area is H-E-L-L, and there are tolls on the bridges. ugh.
“Like I said, there are no high-paying jobs in Marin. Another poster on this blog replied that there are high-paying jobs in San Francisco, and that one may commute to SF from Marin. My counter is that one may commute to SF from China too, but it’s not very practical.”
Big V:
I live in Marin. Towns in Southern Marin are 10 minutes to the Golden Gate Bridge, so believe me, it’s not like commuting to China. Tops, the Northern parts of the County are about 45 minutes to the bridge.
And yes, this county is due for a fall, big time.
45 minutes just to get to the bridge? Yuck. After you get to the bridge, you still have to cross it, then make your way to your destination within SF.
“I live in Marin…And yes, this county is due for a fall, big time.”
I love Marin. Not the people by any means, just the geographical location. I’d love to pick up 5 acres of ocean view property for $100k. Hey, it’s fun to dream!
I thought the liberal Marin County liked high taxes?
Only if it is their neighbor paying those high taxes.
But I thought San Fran was a ’super city’ and as such impervious to any price declines! The horror…
The humanity!
You guys laugh, but there are still tons of folks here (city of SF) who refuse to believe/admit that prices are falling, despite numerical evidence to the contrary. A lot of them seriously believe that the entire bay area may lose value, but San Francisco will somehow be impervious (at least the nicer areas).
But to the bulls’ credit, there are still plenty of clowns around here plopping down $1MM+ for 3 bedroom, 1,200 sq. ft. homes. No idea who these people are - maybe illiterate lottery winners who don’t read the papers? More likely they’re the ones who have cashed in $500K of bubble equity and don’t want to go back to renting.
In any case, it’s supporting part of our market for the time being. Annoying the hell out of me, but it’s what I see happening. May take until 2008 to see a noteworthy drop across the entire city of San Francisco. The bubble lives on in parts of NorCal….
Hey, it’s the same here in LA. House near me listed at 1.4 and sold in a day. B
But as P.T. Barnum said…
These are more the exception now, while is was the rule two years ago
Exact same situation in the “nicer” parts of the city of LA…
Well, we know these things start in the fringes and spread into the nicer areas slowly. Inland Empire values are getting crushed right now, as is the east Bay and southern neighborhoods of San Fran. Guess we just wait patiently for the bubble to exhaust its supply of millionaires…
The bubble will not just exhaust its supply of millionaires, it will eat them alive. By the time a person ammasses a million dollars, I imagine that person may have developed a bit of an ego. If so, then he/she may be embarrassed to becom a renter. Such a mentality is bound to take back whatever $$ it once bestowed on our blessed SF millionaires.
The bubble will not just exhaust its supply of millionaires, it will eat them alive
If your talking about “fake” millionares, then yes, real millionairs then no.
By the time a person ammasses a million dollars, I imagine that person may have developed a bit of an ego.
money doesn’t change a person .. if you have an ego problem, you have an ego problem. If not, you don’t, and money won’t give you one.
Thank you. I was going to comment on that. Real money prefers to be understated and not make yourself a target. It’s the nouveau idiots who go around flashing and trashing.
Really? I’ve never seen that here in New York. People are much more down-to-earth here than they are in California.
Check out the “crib” of any NBA player with a signing bonus or new contract.
I rest my case.
Did you ever notice how fitting that word “crib” is? They strike me as overgrown babies. Living like a pimp isn’t cheap.
I love how you can now rent designer handbags in this city. I do believe the girls in this city are even more phony than the guys and the guys are pretty damn phony. I can’t wait until all of these little boys and girls get their wakeup call.
If your talking about “fake” millionares, then yes, real millionairs then no.
You mean borrowing a million dollars doesn’t make one a millionaire?
I love how you can now rent designer handbags in this city.
Better than buying one, given how fast they seem to go out of style and “need” to be replaced. I guess we can add it to the list as a fourth F: “If it flies, floats, f*cks, or flaunts, rent it, don’t buy it!”
Bunch of millionaire renters right here on this blog. It’s a tax problem, not an embarrassment.
Gotta have the new buyers coming in at the bottom for this to work. All that’s going on right now is swaps.
That means half of them are trading down?!
The stages of real estate denial:
1. Real estate never goes down.
2. Real estate in California never goes down.
3. Real estate in the Bay Area never goes down.
4. Real estate in the West Bay never goes down.
5. Real estate in San Francisco never goes down.
6. Real estate in good neighborhoods of San Francisco never goes down.
7. Real estate in Pacific Heights never goes down.
8. The real estate market has bottomed out…
You missed one stage.
7b. My living room may be going down but I’m sure my kitchen is still appreciating.
LOL. Score one for diemos.
Hey Big V,
Kind of an out there question but do you work in web design?
MRK
My theory is that a good number of wealthy people can’t concern themselves with staying up to date with current economics and news. They have “people” who take care of that for them and these “people” such as accountants, investment advisors, RE brokers, etc. are often self serving and may advise their wealthy clients to make financial decisions that enrich themselves and their cronies.
well said brandon
dont kill the golden goose; just bleed it to death with a million cuts.
what’s with all the angst about wealthy people lately..
Characters such as you describe have almost no chance of becoming wealthy in the first place, and in the event they did, would not remain wealthy for long.
I have nothing against wealthy people, but do know of some people who can be described as doing well for themselves, but do not have good financial sense. For example, a doctor or lawyer may be excellent within their profession, but know little about finances and thus trust the advice of professionals whose advice may be more self-serving. Based on this “theory”, there is still misguided money that is going to jump on home prices that we may judge as over-inflated.
Brandon, Doctors and dentists are notorious for getting into bad investments. Obviously, not all of them do, but certainly quite a few; likewise, they aren’t the only ones, it just seems that you hear about them more than others.
Does either a burger-flipper or a rich doctor count his change at the grocery store? Do either or both leave it up to the expert behind the cash register?
The answer depends on the person’s character, not on his profession or degree of wealth. Wealth does not make one careless with money, nor does the lack of it.
“You guys laugh, but there are still tons of folks here (city of SF) who refuse to believe/admit that prices are falling, despite numerical evidence to the contrary.”
Sounds like psychotherapy will be a growth industry in SF over the next few years…
May take until 2008 to see a noteworthy drop across the entire city of San Francisco.
The number of for sale signs has significantly increased in SF proper in the last few weeks. Some pretty high end neighborhoods, too. One block of Dolores Street has 3 homes for sale. Haven’t seen that for year!
“‘Sold at $310,000!’ The Madambas became owners of a three-bedroom, two-and-a-half-bath, 1,500-square-foot townhouse with a garage in Devon Square, a Pulte townhouse development.”
“‘We didn’t even think we’d do it,’ Janey Madamba. ‘But we just kind of went for it.’”
“Both wanted to hear what the last lot sold was and for how much. When they heard it was $293,000 for their same model, they both took it well. ‘Oh, good,’ Janey Madamba said. ‘We didn’t want that one anyway.’”
Well good for you Janey Dear, the developer is glad you “went” for it… You are now going to get what you “deserve”. The never ending amount of willing retards never ceases to amaze me.
“the developer is glad you “went” for it”
They didn’t go for it, they fell for it. There’s a difference.
Instant equity … loss of 17,000 in a minute.
What can you buy with 17K?
Auctioner:’
SoldCaught by the bidder for 310 thousand. . .“Local homes sales dropped 77 percent last month, Thayer said. ‘The housing market has slowed down,’ she said.”
Good thing it just slowed down, and did not crash. BTW, what one-month percentage drop in sales would qualify as a crash?
“County Assessor-Recorder Joan Thayer says her office has already received 150 requests for assessment reviews this year, up from 90 in 2006.
She said the increase is a reflection of a sharp drop in local real estate sales and a leveling of Marin home prices.”
Does she mean ‘leveling’ in the same sense as ‘300 homes in Rancho Bernardo were leveled by the Witch Creek Fire’?
http://www.kpbs.org/news/local;id=9912
If prices were “leveling”, then there would be no justification for an assessment review, now would there, hmmm?
Unless she meant “leveling” as in “leveling to the ground.”
Just got off the phone with a colleague in Bozeman, MT. When I asked him how he felt about the RE crash in Bozeman, they guy responded “it’s just slowed, there is no crash.” 4+ years of standing inventory? 8+ years of lots? 14 total sales in July? Record numbers of leins on home builders, big development went belly up? Not a crash? Nope, just slowed… that is what they’ve been saying in the Bozeman Chronicle anyhow.
The interesting thing about crashes is that they are only visible (to the unobservant) through historical retrospect. By analogy, if you drive down a steep mountain road from the mountain top to the base, it never seems as though your car is going downhill that quickly. By contrast, the drop looks very steep once you are miles away from the base and looking at the mountain through your rear view mirror.
Did you ask your colleague how bad the situation would need to get (by the same metrics you mentioned) for him to concede the market had crashed?
Once he sold out of all of his real estate possessions then he could admit it was a crash. Until then, “it’s just a slowdown”. Possession is 9/10ths of denial.
This guy has no retirement savings whatsoever and is nearing retirement. He has been counting on his house equity for retirement and is in serious denial about that big nest egg evaporating. My guess is that most of his friends are in a similar situation, so that have a little group denial reinforement thing going on. La La La La, I can’t hear you, La La La La….
I’m sure things will pick up in the winter home buying rush! All of the Californians will be rushing to Bozeman in the dead of winter to pick out their dream home. Freezing temps, snow, and ice add charm to properties!
Do you think the REIC will do a commercial like the Lexus commercial? They will show a house with a big red bow on top of it and some dumba$$ with her blindfolded husband. They won’t show the next scene where he hits her.
“Do you think the REIC will do a commercial like the Lexus commercial? They will show a house with a big red bow on top of it and some dumba$$ with her blindfolded husband. They won’t show the next scene where he hits her. ”
Good one. (-:
Or, he keeps his cool, takes her for a nice country drive–but not before stopping by home depot for a shovel and bag of lime.
DOC
ok doc’
THAT one made me laugh loud n long. thanks !!
When I was up in Missoula a couple of months ago, I could not believe how expensive it was. No offense, but the prices were similar to those in Eureka, CA and other northern California coastal cities. And what did I see? Well, very little, as usual in Montana in the summer, it was burning.
Obviously, those median $300K homes in Missoula were snapped up by Cali equity locusts and “investors.” The fall ain’t gonna be pretty.
I’m very happy to hear about wealth transfers from my neighbors here in Cali to folks in Missoula. It’s less money for them to spend here, and hence less competition, once the market finally reverts to some semblance of normalcy.
I live in Bozeman, and renting a large from an FB. Last year we have 900 realtors in Gallatin County of ~65000 people, thats 1 realtor for every 70 people. People in the Bay Area thinks they have a “real” housing bubble. You may beat Bozeman in numbers, but we beat you in stupidity especially when you compare our wages to house price.
Q: How high can a dead cat bounce?
A: If you drop it from high enough, it goes through the floor. We’re talkin’ terminal velocity, here. Maybe it’ll bounce when it gets to the basement.
If cats are dropped from high enough, they neither bounce nor go through the floor. They just level off, like Marin County housing prices.
HA!
That would be a “sail kitty”
OOOH how high can a dead dog bounce…? Or how many notches on that SUV do you have for road dog kill……
Sorry guys i have 3 cats….
“‘I think over the next month or so we will see more of the same thing,’ said Leslie Appleton-Young, chief economist at CAR. ‘There is no urgency in the housing market now for buyers.”
Yep - “Buy now or be priced out forever” just doesn’t have the same ring now, does it? I guess you’ll have to come up with another slogan to get the suckers back in.
The next urgency I anticipate will come on the sale side, as sellers begin to wonder exactly how long the run is in the saying, “Real estate always goes up in the long run.”
Sell now or be priced in forever!
Buy now and be bummed out forever.
Buy now and be a bum forever.
Yep - “Buy now or be priced out forever” just doesn’t have the same ring now, does it? I guess you’ll have to come up with another slogan to get the suckers back in.
Snicker. I love to quote that to the REIC.
Reminds me of Florida 1925.
Got popcorn?
Neil
How long after 1925 did it take Wall Street to collapse? Was it maybe four years or so?
“How long after 1925 did it take Wall Street to collapse? Was it maybe four years or so?”
4 years. 1929
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
BayQT~
No, the next slogan will be get in before interest rates go up to 20%. Lowering of the fed rate, bolstering inflation, and a sell off of US Treasuries will force the issue. Unfortunately, at the rate things are going I see that these houses might be worth their current value in USD. . . once the USD is worth 1/4th of its current valuation.
20 percent interest rates are not in the Fed’s play book. The Fed can fool everyone into thinking inflation is contained forever. Higher interest rates are thus not warranted.
Don’t fight the Fed.
I wasn’t talking about the Fed’s play book. I was referring to the fact that long term rates have gone up since the fed lowered the rate, and the inflationary pressures that drive those long term rates will be exacerbated, not be eased, by the lowering of the Fed rate.
Its probably bad when I say real estate prices never go down to everyone who asks. Then I next say its amazing that now I can buy a little house for less than a sucky condo a year ago. And they ask am I looking? And I say just watching how fast prices will drop 50% because it makes me want to short everything related to this. No one argues with me and thinks its smart.
Which now makes me worried this is not the right thinking if others agree.
LOL!!!!
You are funny!
Stocks maybe! People I know still think investing in stocks is not good. I am getting ready for next bubble.
Solar stocks… cleantech! Any thoughts?
Well, if dollar continues to do what it is doing now then the next industry will be whoever sells machinery to small-time manufacturing companies.
Agriculture and wheat are the next boom areas!
I heard from a friend this morning that rumors are already circulating about the anticipated “broken window” stimulation the SoCal fires will have on the housing market. I guess 1500 displaced San Diego homeowners are supposed to reflate the local real estate economy? Never mind the potential dampening effect the prospect of your most valuable possession burning to the ground might have on your desire to be a house-proud San Diego homeowner.
It’s going to provide work for the locals. I’m OK with that. I can’t see any other real economic up or downside to this event.
Maybe you missed my point. 1500 missing homes is not going to be enough to reflate a real-estate dependent economy of 3m residents.
precisely my point
300 burnt homes in So Lake Tahoe last June has done nothing for our local economy.
Did the prez declare a disaster zone and drop helicopter-loads of money?
waitress at Denny’s on the main drag told me business was very slow.. casinos laid off people.
From what i see, rents haven’t gone up, and RE prices are still falling as they have since around mid 2006.
tourism, the life blood of Tahoe, declined post-fire so it may not translate to San Diego’s likely aftermath.
Hey, I know that Denny’s. Except in Tahoe, I prefer the Red Hut for breakfast.
I was in Tahoe a couple weekends back. The tables were the least crowded I had ever seen on a weekend. EVERY casino had a $5 craps table, which I had never seen before, either; usually they all raise them to at least $10.
The Indian Casinos out here in Coachella Valley are really slowing down also. Used to be on a Friday night you couldn’t get near a slot machine. Last Friday night I could get to any machine I wanted. I have noticed busloads of asians being brought in to gamble and none of them speak English - must be tourists. Yes, Yes, I know all about gambling, but I’m one of those that nearly always wins and knows when to walk away.
Which Red Hut? CA orNV? I prefer CA, Iknew the original owner when I was a tyke.
The rental market will probably get tighter because the fire victims will need to rent something out while they wait for their houses to be rebuilt. They will NOT, I repeat NOT be buying second homes during this period.
The fires killed a stagnant economy - the RE just got toasted as San Diego and environs go into recession.
“Wildfires in Southern California are exacerbating a difficult retail environment in a state already hit by declining home sales and mortgage woes that have cut into consumer spending.
With about 500,000 people evacuated, 1,600 homes destroyed, and roads closed as some 20 fires blazed at the height of this week’s catastrophe, Southern California has certainly not been focused this week on shopping at the mall.
Liz Pierce, a Newport Beach-based analyst at Roth Capital Partners, said that with California making up as much as 10 percent of the total store base at certain national retailers, even a short-term sales drop can hurt.
“For lot of companies, California is a big state. It can’t be a good thing,” Pierce said. “People will say, ‘I don’t feel like buying, if anything I should be donating money.”‘…
http://tinyurl.com/yr9q28
The companies were as close to BK as the home owners and the fire has pushed many over the edge.
its really easy to compare the 1500 homes to rebuild. Say they each are $1million house and who knows what the land is worth if thats true (work with me even if this is an extreme high number). Now thats $1.5 billion worth of property. I could have sworn Merill Lynch just cooked their books to show a not so bad $8bil loss. I know I know, this kind of logic makes no sense and $1.5bil of rebuilding far outweighs these other losses of 10x.
Poverty sucks!!
http://tinyurl.com/2fe74v
I wouldn’t touch that Star Treck era monstrosity with a 10-foot pole. And what are those aerial photos OF, anyway? I can’t even tell which lot (if any) is the one for sale. dumb
Star Trek or The Jetsons?
There’s a movie theater in one photo.. probably the lobby. I think this is a hotel/condo/time share..
The Jetsons meets Logan’s Run.
From the listing: “Locations of this uniqueness not available anywhere.” So, does this mean that this location does not exist? And a $75M list price? Is he crazy?
Only on the holodeck.
that big house and that tiny little 4:3 TV? What will the neighboars think?
Hesperia / Victorville Crashing - CHECK
Antelope Valley Crashing - CHECK
Santa Clarita Valley Crashing - CHECK
San Fernando Valley Crashing - CHECK
San Berdoo / Riverside Crashing - CHECK
Inland Empire Crashing - CHECK
Orange County Crashing - CHECK
Metropolitan Los Angeles Crashing - IN PROGRESS
Hesperia / Victorville Crashing - Cheque please
Antelope Valley Crashing - Cheque please
Santa Clarita Valley Crashing - Cheque please
San Fernando Valley Crashing - Cheque please
San Berdoo / Riverside Crashing - Cheque please
Inland Empire Crashing - Cheque please
Orange County Crashing - Cheque please
Metropolitan Los Angeles Crashing - Put it on my tab.
Metro L.A. is crashing. The restaurants tell the story - not the nice ones, but those that have been around for years and thus, have local followings. A survey of a dozen restaurants I frequent around L.A. tell the tale - the economy is going at half the speed it was last year and it is all due to the decline/inactivity in the housing market.
“Earlier this month, the Sacramento Business Journal reported that Irwin Union Bank of Columbus refused to transfer title on 20 homes to the winning bidders at a private auction because the bids were an average of $88,000 less than their reserve price, about $275,000 to $355,000 for the initially listed $409,000 to $465,000 homes.”
The flood gates are going to open up here real soon. What I mean is, these lenders holding these properties are going to finally have to capitulate and let ‘em go for whatever they go for. This such a damned if we do, and damned if we don’t situation for the lenders. They know if they start letting these properties go dirt cheap it’s just going to accelerate the problem by causing more people to walk. Also, it’s gauranteed that the neighborhoods in which lenders own properties that they need to get rid of, they are also negotiating short-sales with hosed borrowers. They let a few properties go cheap and bam!….there goes the neighborhood. We also know that these very same lenders are currently holding back on properties they currently own to keep from flooding the market. But, you see, all the problems associated with each case are unavoidable. Sooner or later it’s capitulation time, and I believe it’s coming sooner. The dam is about to break, bigtime. There is no way for them to hold the market up any longer.
If you have cash 18 months from now, and we aren’t living in caves, it’s gonna be a sweet time to be an investor.
“If you have cash 18 months from now, and we aren’t living in caves, it’s gonna be a sweet time to be an investor.”
Either that or your cash will be severely devalued.
will be devalued for everyone, so still will have some value
The top 1 percent have salaries that go up by more than inflation. The rest of us get to pay those salaries one way or another.
I’m moving 200k into Swiss francs tomorrow at Everbank.
“If you have cash 18 months from now, and we aren’t living in caves, it’s gonna be a sweet time to be an investor.”
Either that or your cash will be severely devalued.
Hmmm…if the median salary today is $50K and the median CA house is $500K…then in 18 months we’ve got $350K houses and inflated $55K median incomes then where’s the problem?
Inflation is built into the economic model of this era–government and businesses *want* you to take risks on diversified investments to pound efficiency into the economy. Those things that must rise in price will rise while those that need not rise (e.g. houses and non-growing assets) tend to stagnate.
Find a way to jump on the inflation wagon or tilt at windmills.
“Inflation is built into the economic model of this era–government and businesses *want* you to take risks on diversified investments to pound efficiency into the economy.”
I believe it has precious little with pounding in efficiency and much to do with pounding in Wall Street bonuses which can easily become a source of political contributions.
Just make sure that cash isn’t USD and you should be fine.
I hope you’re right. I know you’re right about what will happen, my hope is that you’re right about the timing. I’ve been waiting a long time to buy my first house, and I’m looking forward to doing so when it makes sense. I always figured that at some point the bank regulators would start forcing the banks to dump their REO, I just don’t know how long the regulators let the banks hold the properties before they clamp down. Once the floodgates open, I figure it will free fall for 18-24 months.
How can it be otherwise? The market forces currently at work cannot be stopped now. Our problem is that patience is a bitch!
The most troubling thing for me as a renter is that in 18 months, I may not have enough time in the day to sort through all of the rental listings.
*sigh*
VB
Does anyone have that graph of ARM resets or ARM data in San Diego? Can you please post the link? Thanks!
“‘We were given a song and dance that Diablo was not going anywhere. They were strong since 1992, but that was not correct,’ said Amanda Wold, a senior loan officer who worked in Diablo’s former Modesto branch. ‘We were promised checks last Saturday. The checks never came.’”
Diablo’s upper management responed to the bewildered former employees:
Pleased to meet you
Hope you guessed my name,
But whats confusing you
Is just the nature of my game
Just as every FB is an idiot
And all the brokers saints
As heads is tails
Just call me CEO
cause I’m in need of some more pay
So if you meet me
Have some courtesy
Have some sympathy, and some taste
Use all your well-learned politesse
Or I’ll lay your mortgage to waste.
In honor of that, I recommend everyone watch “Gimme Shelter,” the documentary about the Stones ‘69 tour that culminated at Altamont in the stabbing death of Meredith Hunter by a Hells Angel.
Great film footage of Stones in 1969 singing Jumping Jack Flash at Madison Square Garden is pretty hard to top. And Tina Turner does the most lewd and lacivious things to a microphone I’ve ever seen. The Altamont scenes are classic in their own way. Mick getting punched upon arrival by a guy who says “I hate you.”,; a fat naked chick tries to barrel her way to the stage; Marty Balin of Jefferson Airplane is knocked unconsciousness by an Angel.
Ah, those were the days.
It’s just a click away ~
http://www.youtube.com/watch?v=tsFKbKk22SU
… just a click away.
LMAO
“Gimme Shelter,” the documentary about the Stones ‘69 tour that culminated at Altamont in the stabbing death of Meredith Hunter by a Hells Angel.
Nice metaphor for our times - “Gimme Shelter” might well have been the mantra of the past 7 years. And based on the latest price figures, I bet the FB’s are getting pretty surly and agitated out in the Altamont Pass region!
BTW, my wife noticed a home in 4S Ranch that is currently listed at $800K and change, down from $1.2m and change when originally listed ten months ago. Sell now or ride a falling knife all the way down to the level ground below.
BTW, a drop in value of $400,000 over ten months (assuming 4 weeks per month) amounts to a paper loss of $10,000 per week. Thanks for the chance to catch this falling knife at a discounted sale price of only $800,000, but I think I would prefer to keep on throwing away my $2,500/mo on rent.
anecdotally, i meet with a commercial broker in my office from time to time. Today we were BS’ing as usual and things came around to our favorite topic. A SFR in Beverlywood sat for 6 months at $1.8 mil and just closed for $1.1 mil. His predictions:
1) We will see the SHTF in the coming six months with resets
2) Beverly Hills will be an absolute bloodbath
If it’s good enuf for Bev Hills it can happen anywhere
That’s my kinda anecdote! Seriously, nice to hear “insider” perspective. All I see is new listings at peak prices or above, and the anecdotes I hear are “the house next to mine on the West Side had 6 offers as soon as it was listed
This is big news. I remember looking back a year ago, and two years ago and you would never see this kind of article in the SF Chron. People in the bay area are still in denial mode right now but the reality is starting to sink in as surrounding areas facing price declines get closer and closer. You can practically smell the fear on some of these people posting in the comments about how “prices will never fall” in the bay area even those it’s happening NOW.
Same thing happened here in OC. We’re behind SD, Central Valley, etc., but ahead of SF and LA as far as the timeline. People here don’t seem to have given up denying that prices have dropped; now they just deny that they’ll drop much further. It takes time, but we’re making progress here.
Hey Prof Bear,
How good it must feel to be a buyer in San Diego, sitting on the side line watching the next house they will buy coming down in price by something like $2,000.00 a week. Wheeeeeee.
Yum yum, I’m already salivating.
Which seems smarter — throwing away $2500 a month on rent, or watching your newly purchased McMansion drop in value by $2000 a week?
Or watching your property burn to the ground!
Ya have to admit, there has never been a better time to buy in SoCal at fire sale prices!
Throwing away $2500 a month on rent is more than losing $2000 a week. You don’t need an income to lose $8000/month on a mortgage. So you are actually saving $2500 a month and don’t have to have a job if you buy now.
Can I work for the FED now since I can manipulate stupidity?
wonder if the little ” detail ” of final bank approval of all sales was disclosed in noticable print in the auction listing, or buried in 6 point fine print on page 49 ?
bet the bank contacts everyone of the rejected bidders later and offers em a deal if they just agree to a smaller increase in price. cant GIVE EM away, ya know. and besides, president banker mcbucks in in thailand on vacation w/orders not to be disturbed ( no cell service in the XXX areas ), so jr asst to the asst wont dare make an independent judgement call to accept the bids.
nature of the beast, ya know. static inertia. no one in finances does anything until the all clear is given from above. cya or else see ya in the drive-thru window.
I love these agents that think this thing is going to turn around anytime soon. I hate to tell them but that pent up demand for housing that is waiting for more foreclosures and lower prices, isn’t going to materialize. Owning RE is no longer the cool thing to do. It’s got the “bad investment stink” that the stock market developed in the early 2000’s. RE has become nothing more than a place to live. Dah, that’s all it’s ever been.
Good point and I’m glad you brought it up. Just a few months ago, it was often mentioned that the bubble had stolen buyers from future months and years. You don’t hear it much now, but it is still true. And, with all the defaults, many people who would otherwise be homeowners will probably be renting for a while.
So, how do you describe the opposite of “pent-up”?
“sucked drier than a keg at a frat convention”
“desolate wasteland stretching as far as the eye can see”
“black hole destined to swallow anything unlucky enough to chance near it”
The ‘pent up demand’ is not from buyers its on the sell side as sellers pull listings and rent them out or wait to sell. Think about it.
Or builders sitting on lots, just itching to build. Developers sitting on land just itching to develop. I certainly see a lot of frustrated developers and builders in my neck of the woods who want to go, go, go–but can’t because their existing spec homes or lots aren’t selling.
I wondered why they hadn’t just unloaded the condos in West Sacramento. The bankers are in Ohio. They should come and view the location. The condos are located next to the Sacramento River, but those with views of the river don’t have attractive views. The units are crammed onto a smallish lot. They have balconies the size of fire escapes and no other outdoor space. And they’re located right next to the onramp for a bridge that crosses the river to Sacramento and is busy almost all the time.
DH works near there are I remember seeing them when they were first constructed and wondering why anyone would pay money to live there.
Are they near the I street bridge?
You know there is a huge legalfest going on over anti-gang injunctions? That’s also the area where the hodlums stopped the Amtrak and beat the conductor almost to death just for fun.
I had a woman call me, panicked (she called 3 between 6 and 7am from NY and left no messages) trying to get me to rent her victorian across from the zigarat. This is right down the street from those condos. When I mentioned I wasn’t comfortable with the gang issue, she starts screaming “There are no gangs!”. Within seconds she goes off and tells me why she shouldn’t rent to us because we aren’t the people she wants, blah, blah blah. The only real answer to crap like that is a dial tone.
In retrospect, I should have recorded the hold thing and put it on youtube. I’d be famous.
Gwynster–
Right next to the I Street Bridge. DH works at the Zig, so I cross the bridge every day to drop him off and collect him. At one time we looked at the neighborhood around the Zig, but even I, old hippie that I am, was dissuaded from renting across from the Zig by the semi-collapsed house a couple of blocks away.
Gywnster–
My first attempt at response didn’t take, so I’ll try again. The condos are right next to the I Street Bridge. I see them every day as I drop off and collect the DH from the Zig. When I mentioned to him how much they wanted for the condos, DH responded that they couldn’t pay HIM to live there.
And we checked out the neighborhood at one point. Even were there no gang problem, we were dissuaded by the semi-collapsed house a few blocks over.
Ya’ll see this? Sorry if I’m a little behind:
http://www.dallasnews.com/sharedcontent/dws/bus/stories/102507dnbusbofajobcuts.b2aaec.html
The best part:
As of Sept. 30, Bank of America held a residential mortgage portfolio of $274 billion and has a stated aim of doubling its current 5 percent share of the direct-to-consumer mortgages in the next three years.
I call this the cleansing of those who poisoned the securitization stream. Don’t mess with Wall Street; mortgage brokers are being shown the door. Now about those Realtors…
Email from Peter Schiff
Dear Investor,
Today Merrill Lynch announced a massive 8 billion dollar loss, and S&P downgraded their debt. This is just the beginning, as trillions of dollars that Wall Street loaned to American homeowners will never be repaid.
Watch this video clip from Fox News “Cavuto on Business” that originally aired Aug 17, 2007. The exchange is amazing in view of what has just happened. See how I tried to explain to a panel of delusional “experts” why earnings in the financial sector were about to turn into losses. Ben Stein even recommended Merrill Lynch as his favorite stock and lost his cool as I tried to enlighten him and Fox viewers regarding what was about to happen. You just have to see the exchange for yourself to believe it!
http://www.youtube.com/watch?v=6XtQoZAqjc8
On a similar line, this video (originally aired on Dec 29, 2006) of a similar exchange I had on Fox “Bulls & Bears” regarding the impending collapse in the housing/mortgage market must also be seen to be believed.
http://www.youtube.com/watch?v=yoZV5jt9puc
It is important that the public understand just how bad the advice main stream “experts” are peddling. Please forward this email, or the YouTube links to as many people in your contact list as possible and ask them to forward the email to their contacts as well, and so on.
Let’s get the word out and hold these clowns accountable for their lousy forecasts.
Sincerely,
Peter Schiff
President and Chief Global Strategist
Euro Pacific Capital
Wow, I like that! My kind of guy! Wonder if he needs an in-house short seller?????
Mike Norman deserves the world’s strongest kick to the balls. He is just a complete over-tanned baboon.
I liked the Fabio wannabe and WHO WAS THAT BIMBO on the first clip? Did someone fail to tell her that wasn’t the Dallas Cowboy cheerleader tryouts?
You’d love the commentary from Jeremy Grantham, who runs a firm that manages something like $48 billion so his opinions mean something.
I looked at his website. He wants brokers, don’t see anything about traders.
I’d love to go to work every day for a dedicated short selling firm. Anyone reading this want a good trader? If ya’ll are nasty enough, we could get along
Hey txchick57……Love ya style Gal.
What is your track record like on the short side, long and hedged (pairs etc.). If you can show me a track record documented going back at least two years that SIGNIFICANTLY outpaces SPY or similar ETF, let’s talk.
But be serious cause I am.
If you have a two year (at least) documented trading NET return SIGNIFICANTLY better than benchmark (SPY or similar ETF) and are serious, there is money and opportunity available.
Cavuto@foxnews.com
That’s just awesome. I would love to see a reporter show those clowns these videos and ask them to explain why they were so wrong despite being so very, very cocksure.
Peter is definitely getting the last laugh here.
I really like that Fox has started a finaincial news network. The viewers will be given the same propaganda that they get on the news channel and will be made poorer for listening to it.
Ben Stein lies when he exhales. I suspect he knows what is going on but is more than willing to write collumns convincing mainstreet investors to donate more money to his masters.
Here a section from one of Ben Steins recent articles
http://finance.yahoo.com/expert/article/yourlife/38424
Subprime is a small sector of the mortgage market, as I’ve said before. It might be 15 percent at most. The defaults and delinquencies in this sector might be roughly 15 percent, which makes for a total problem rate of about 2.25 percent of the whole mortgage market.
If all this goes into foreclosure (which is unlikely), it will realize about 60 percent upon liquidation at the very least. That means the real loss might be about .9 percent, or less than 1 percent. That’s a large number, but tiny in the context of the economy.
How the Economy Rates
As to the resistance of lenders to lend at low rates on some LBOs, this shows that the loan market is not completely insane. That’s a good sign, not a bad one. It would be much more worrisome for the future if lenders wanted to sign up for every deal.
Besides, again, the effect is tiny in the context of the whole economy. It’s a misuse of time and energy for individual investors to worry about private equity players having to pay a small amount more for loans.
The rise in interest rates is a real worry, if it continues in a big way. If interest rates go up by another two percentage points, the net present value of stock market earnings and dividends would be cruelly cut, and would dent the market seriously.
But there’s no sign of that happening. Domestic interest rates are rising to equilibrate U.S. rates with European rates, and they reflect a strong economy. So these aren’t worrisome signs at this point.
I’ve read his articles on Yahoo! from time to time. Ben Stein is a smart guy with elephant sized blind spots. From one of his article, I gather Ben owns several houses and tracks their worth, which may explain his rather bullish outlook.
He wrote speeches for Tricky Dick, and his dad was a famous economist. The guy must be a master propagandist — perfectly cut out for a Wall Street analyst career in the era of financial opacity.
http://www.benstein.com/bio.html
I remember clear as day Ben Stein ridiculing everyone for overreacting to the mortgage meltdown, saying it’s nothing, 1%of the economy, it’s already bottomed out, a buying opportunity, blah blah blah.
I haven’t watched Ben Stein in awhile, but about a year ago, he was the only person out of 4-5 (Fox panel) that was saying there was going to be declines in RE prices.
Here’s another Ben stein attempt to put lipstick on a pig.
http://finance.yahoo.com/expert/article/yourlife/47180
Now contrast that with record profits and firm evidence of price fixing
http://biz.yahoo.com/ap/071025/bp_settlement.html
Ben’s dad must not only be rolling over in his grave, but he must be outright ashamed that his son has stooped to stock market shillery. Is it possible for the deceased to feel shame?
“This is just the beginning, as trillions of dollars that Wall Street loaned to American homeowners will never be repaid.”
WHAT A BUNCH OF DUMBSH!TS
That youtube video shows that Ben Stein is more actor and less economist. His dad must be rolling over in his grave.
Cavuto is a robotic moron.
Or should I say “bionic moron”?
I am almost giddy over the ‘earnings’ announcement by CFC tommorrow morning. It should be a watershed moment in the unravelling of this mess.
Is the Orange guy going to make appearance on CNBC to tell ‘em he ain’t a crook and he was as much a victim of bad loans as the FB.
What’s the pool on CFC’s losses? Street says 1.08B. But how much higher will it be? What would freak out wall street?
Munch munch munch!
That is going to be a popcorn moment!
Neil
This is like Christmas Eve when I was a kid.
What time are they making he annoucement? Since Im PST, I might get up early to watch the cliff diving.
My options broker said earnings was supposed to be before the opening bell, but that it got moved to 12 p.m. Eastern. I also heard that there was a 3-hour management meeting for after the announcement for employees. That can’t be good!
I’m also feeling giddy. But I recognize that all the crap might already be priced in. CFC has dropped like a rock in the last couple weeks and I’ve enjoyed the ride. There’s got to be a bounce at some point. I stuck with my puts today after another bump up, because I’m betting that it’s so abysmal that everyone is shocked. They might fool me, but I’m good through Jan09, so they can’t fool me forever. That said, I’d love to see the stock drop a good bit below my strike price soon so I can sell ASAP. The time value is still high.
I think WM is going to be my next long-term bet.
Already pretty beat up, I’m waiting for a bounce b4 buying Jan or later puts.
I can’t imagine that ‘Tangelo’ was blasting out stock every day for the past several months because he thought that they were going to report a great quareter, do ya?
On the other hand, he may have a little surprise for everyone - should be interesting.
From Yahoo Fiance:
“When Ken talks about a top-to-bottom review in five days time, you can’t make that happen. These cuts were in the works, and expect more,” said Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte. “Don’t underestimate the depth of Lewis’ disappointment in earnings. This guy is pissed.”
Bank of America confirmed on Thursday that its co-head of equities, Peter Forlenza, had left the bank. Forlenza, who joined the bank in August 2002, left on his own accord, Bank of America spokeswoman Melissa Kitlowski said.
Forlenza is the latest in a string of top unit executives to leave amid a shake-up at the Charlotte-based bank. Chris Hentemann, head of global structured products, left the company Friday. On Wedensday, the company said Gene Taylor, head of the bank’s global corporate and investment banking unit, will retire by 2008 after a 38-year career.
Bank of America employees involved in its wholesale mortgages business in several consumer real estate locations — including Dallas, Richmond, Va., and Brea and Rancho Cordova, Calif. — will have the opportunity to apply for open positions within the company, bank spokesman Terry Francisco said.
The language is unbelievable, how can people trust BofA with money when VERY SENIOR executives are clueless what is happening in the economy. That’s why they thought giving credit cards to illegals was a good buisness practice.
Is this what is meant by “Goldilocks” ?
http://goldprice.org/gold-price.html
Gold prices always go up.
“‘It’s clear that too many unqualified people got into the housing market the last few years,’ said Jack Kyser, chief economist with the L.A. County Economic Development Corp. ‘But to listen to the electronic media, you would think everyone who owns a home is in danger of losing it. They’re panicking. It’s a small percentage of people in trouble - maybe 5 percent.’”
Okay, who wants to break the news to Jack that house prices are set at the margin?? So that 5% that has to sell over the next few years sets the comps for the 95% who don’t have to sell.
“It’s a small percentage of people in trouble - maybe 5 percent.’”
It is that 5 percent who will screw up the comps for the other 95 percent.
it’s 5% PER YEAR for the next ~5 years. How long can the home debtors hold The Burning Match?
Who payed $18.00 a share for this pig?
http://money.cnn.com/quote/quote.html?symb=CFC
Click on “all data” below the chart to capture the beauty of the moment.
P.S. Don’t mistakenly click “Add CFC to portfolio”
P.P.S. Who paid $45.26 a share for this pig?
P.P.P.S. Don’t try and catch yourself a falling knife.
Here’s a great explanation of why we have reached the Point of No Return. Seriously.
The link goes to a Diary at Daily Kos which has some really outstanding diaries on the real estate upcoming collapse.
http://www.dailykos.com/storyonly/2007/10/24/1413/4237
Look at this quote:
“Between 2009 and 2011, $229 Billion in option ARMs will be adjusted to higher market rates. People that have been making minimum payments on their mortgages have not actually been keeping up with the interest on their mortgages, a condition known as “negative amortization.”
So while they aren’t in default, their mortgages are growing over time.
Can you imagine anything so crazy? These pretend “home owners” are making their mortgage payments, but their mortgage is GROWING OVER TIME. How does that even happen? Can you imagine, at the end of the year. You’ve been paying around $2,000 / month. So instead of your balance going down by $24,000, it WENT UP. OMG….these people need to lose their homes. For their own good.
“So while they aren’t in default, their mortgages are growing over time.”
Works just great so long as real estate always goes up.
Keep paying that $2,500 rent GS, you new home is getting cheaper by the moment. And BTW, I want an invite to your house warming party when you dive in…………….it should be a hum dinger. And yes, I’ll fly all the way from Australia just to be there.
housing hanky panky,
If you ever have a party I would fly all the way to Australia.
You’re on. I promise you there will be no “hanky panky”
A friend of mine lost her house a couple of years ago this way, had a neg am loan that she didn’t understand and, by the time she sold (short sale), her outstanding loan was way more than she started with. I think there needs to be some sort of fiduciary duty between these loan people and the borrowers, many borrowers are like my friend, an emergency room nurse, very intelligent, but clueless about financial matters, not cool to mislead them like that, not that she’s relieved of blame, of course.
That 2009-2011 cohort should just seal their key bearing envelopes and call U-Haul - why bother?
This is just great…very OT to Calif…but just spectacular.
http://www.thedevoeteam.com/
That was worth staying up for.
Reminds me of Phil Hartman’s Ed McMahon with Dana Carvey’s “Carsineo” (sp?). “Tonight, Bel Biv Devoe…Yes!”
Adding to the list of former celebrities… now real estate agents:
http://www.zmls.com/DisplayAgent.asp?id=32658
Brian Bosworth doesn’t have any listing. I think he would be a great buyer’s agent, because he can intimidate sellers to lower their prices. Wasn’t he involve with steroid in Oklahoma?
Cinch
Bwhahahahaha…………..
http://money.cnn.com/magazines/fortune/mostadmired/2007/snapshots/10418.html
Just a thought, but with the fires in southern California, do you think that many will take the insurance money and leave the state and not rebuild? California is such a mess and with their settlements, moving out of state could be a real possibility.
do you think that many will take the insurance money and leave the state and not rebuild?
The ones with mortgages larger than the insurance payout (which only covers the structure and not the land) can’t do that, at least not legally.