Bits Bucket And Craigslist Finds For October 29, 2007
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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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Dude commits suicide rather than be evicted from house that was foreclosed.
http://www.chron.com/disp/story.mpl/front/5244051.html
Stand by. More to come.
I smell a business opportunity for a software house. Next Christmas’ hit video game… Foreclosure War! (XBox and PS3). You’ll manage a crack SWAT unit tasked with roaming the city and evicting the city’s most diehard, bunkered down FB’s. As the papers get served, the body count racks up! Special mortgage lender office hostage rescue mode!
This was already tried with Postal and Postal 2. Both titles not only bombed hard, but also got the company that made them sued by multiple parties.
You’ve got the right idea, but the wrong concept. I believe the title should be “Joshua Tree Justice”. You begin the game by choosing from a list of ass-assassins, ie “Ryan the Reamer”. You then hunt down villans such as Watts, Husing, Greenspan, LAY, Mozilo and Chamberlain with your prickly tool of destruction.
Definately rated “M”.
Don’t forget David Lereah
Bad form to mock those so driven to desperation that they take their own lives. Show some simple human decency, please.
I can assure you that the subprime debacle is contained to suicidal chemists.
bad news … I would rather see that contained to Wall Street crooks, RE mobsters, cheerleading economists, FED governors and similar criminals.
RE: I can assure you that the subprime debacle is contained to suicidal chemists
The Haz-Mat suit in his stand-off gear was pretty impressive.
This dude was goin’ down hard.
Bet his ex-wife reappears to sue everybody connected with his death.
sure, looking at the gold price (new all time high getting very close both in US$ and Euro) everybody is betting on a clownsact that sets a new low in responsibility and honesty. How low can the FED go?
sorry, this comment belongs to the clowns item below …
Well, the resale value on that place just plummeted. You have to disclose if people died in a house, and who wants to live in Suicidy the crack-head-chemist-clown’s old house?
Clowns…
http://www.321gold.com/editorials/schiff/schiff102907.html
Clowns are scarey…
John Wayne Gacy
http://www.prairieghosts.com/gacy.html
Clowns ARE scary! When I was a wee lass nothing in the world scared me, except for clowns. I’d go shrieking away at the sight. Them and zombies with axes.
“…nothing in the world scared me, except for clowns…Them and zombies with axes.”
There’s a difference?
Do you know why cannibals won’t eat clowns?
They taste funny!
“no one will make a mortgage payment until their loan is reduced to an amount more consistent with the actual value of their home”
– well, duh. Whenever lenders lent out amounts exceeding the rental-parity value of a property, lenders were gambling. In fact, I was gambling — in that the properties I have lent on would NOT rent out for enough to cover the sum of expenses plus the interest on the 2002 purchase, yet the 2002 prices were my basis for deciding how much I would lend in 2004-2006. The loans I make do amortize. So my gamble is that the prices won’t come down so fast as to intersect the amortization curve of the 2002 price. Three quarters of my loan portfolio matures in the next 15 years. The long-term portion consists of properties I’d be willing to live in if it came to that. Oh well - maybe not really - I just remembered the one in Superior, AZ! Today, none of my mortgage clientele is even one day late. I admit that’s because it’s the end of the month; most of my clientele are due to pay on the 1st-4th or the 15th. Lucky for me, the client in Superior is actually a month AHEAD of the mortgage.
I like Superior.
On these toxic loans that don’t amortize, the lender is taking a bigger risk and the neg amortization loans are a total joke in a down market . What where these lenders thinking? I think these loans were criminal in how they were rated in the secondary market .If the rating agencies didn’t have a model of “real estate always goes up” ,(which would of been false ),than there was no reason to rate these loans amything other than pure junk paper IMHO.
“the economists scrambled to avoid any discussion of the dollar by claiming that only the President and the Secretary of the Treasury were allowed to comment.”
Bwahahaha, that’s toooooo funny. Only dubya and pat paulson are allowed to comment. Tooooooooooooooo Funny
Good one….
“Pat” Paulson, is apt
That’s not funny. That’s scarier than clowns and zombies with axes.
I feel a little silly for buying gold at an all time high, but I decided to buy some gold every month from now ’til I retire as a little hedge, based on the comments from a lot of the “gold bugs” here.
I just went to the dealer to buy my second month’s purchase. (Fortunately, CA has a sales tax exemption).
I guess the only “danger” is if the dollar ever gets stronger the price will drop, but a slow/steady dollar cost averaging is probably a good idea. It’s not going to be my primary way of saving money, but a little safety net should all hell break loose or (as I suspect) when I retire will be deemed “too rich” to qualify for Social Security or Medicare.
(Also, let Hillary try to tax private gold holdings with her proposed “wealth tax” on bank accounts and other liquid assets)
Think of it this way: In the early 1970s gold was $35 per ounce. In 1980 it was $800 per ounce, all time high. Did gold fall back down to $35? No. It fell to about $270 over the next 20 years.
Next item: most commodity bull markets last 20 years. Gold was illegal to own prior to the early 1970s (since 1933). Short-lived bull in gold in the 1970s.
I’m against putting all your eggs in one basket. I would not do that with metals, bonds, stocks, real estate, or money markets. But I’m also buying a little bit of metals periodically. If you buy other assets outside of commodities, you might not win the jackpot, but you won’t end up in the poorhouse. Moderation is the best investment approach. Most posters here are that way toward real estate. However many do not apply that to other assets (go figure!). Some are only into gold. Others are only into money market funds.
One thing that doesn’t seem to get much attention is this stat:
http://tinyurl.com/2z9nsp
Specifically the right side - homeowner vacancy rates.
That is a hugely important stat, because it represents the supply portion of the demand-supply curve. IMO it’s the single most important stat of the housing bubble, and is the root cause of price declines. That number started upward in 2005, right when prices stopped their meteoric rise, and has been extremely high the last several quarters as prices are declining. As long as that number remains high (above about 1.8-1.9), then prices will continue declining.
The number started decreasing someone in Q2 this year. However when the Q3 stats came out it started back up again, which to me indicates that prices will continue to come down hard for some time still.
If people were paying attention to the important things like this, when this stat came out last Friday the stock market should have dropped 10%. Instead it was up 1%.
http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=auGPZJsHk6_s
“Oct. 26 (Bloomberg) — A record 17.9 million U.S. homes stood empty in the third quarter as lenders took possession of a growing number of properties in foreclosure.
The figure is a 7.8 percent gain from a year ago, when 16.6 million properties were vacant, the U.S. Census Bureau said in a report today. About 2.07 million empty homes were for sale, compared with 1.94 million a year earlier, the report said.”
17.9 Million!?! Zillow only has ~75 million homes in its database total. I wonder how many of these are condos?
What’s also interesting is seeing that rental vacancy rates shot up during the same period. No shortage of rentals here…
“What’s also interesing is seeing that rental vacancy rates shot up diring the same period. No shortage of rentals here …”
I see signs in my neighborhood of families doubling up, of offspring that left the nest coming back because they couldn’t make it on their own.
If this is indeed a trend and it becomes widespread (and I expect it is and it will) then it will add to the vacancy statistics and put furthur pressure on rents.
Deflation is at hand.
“Deflation is at hand.”
The survival of the government and Fed now depends on an inflationary cycle. As a country we are now so deeply in debt that were inflation so cease, we would shortly default on our debt.
Not saying certain things won’t temporarily decrease in price (i.e. housing), but don’t lose sight of the fact that the Fed is desperately trying to pump inflation in contradiction to all their claims otherwise. There’s a reason inflation is double digit, while being reported as 2~3%. The reason this government scheme will ultimately fail is because with all the outsourcing, American’s wages are stagnant or decreasing. So trying to inflate away the government’s debt will not enable the common citizens to actually afford the necessities of life.
inflation so cease = inflation to cease
Thank you for reiterating that there will be no appreciable wage inflation in this cycle. Offshoring, HB 1 visas, automation, weak unions, etc. Anyone waiting for the cavalry of wage inflation to rescue them will never live to hear the bugle sound charge.
Sadly, I agree with you 100%. There is no way Corporate America is going to raise wages.
“…There is no way Corporate America is going to raise wages”
A US CEO of a “global” company…not getting a raise?…that’s inconceivable!
“Sadly, I agree with you 100%. There is no way Corporate America is going to raise wages.”
Sadly - I’m glad you qualified that. Our local paper just printed salaries for most of the city and county employees - sure enough they all got 5-6% raises. While the private sector is generally getting 2-3% if that.
Try 0%. I work at a highly successful Dow Index firm that is making record profits. We have been told that cost of living raises are history. The bottom line is that the only people who will be getting raises are the walk on water folks.
My wife works for the local city, and she gets 4-5% raises every year.
Also, FWIW, our local city does not provide pensions, except to cops and firefighters. All my wife gets is a 401K type plan where she is forced to contribute 5% and and the city contributes 8%. Still better than what I get at my private sector job.
I am becoming increasingly certain with each passing day that the “no cost of living pay increases” combined with the real world double digit inflation and the collapsing dollar is a scheme to lower our wages to 3rd world levels.
I suppose that the silver lining to this cloud is that illegals will eventually no longer have a reason to come here anymore.
Wage inflation is a pipe dream. Wage and job destruction, on the other hand, is reality. A family member and his wife both work as programmers in Seattle, for the same company. The next round of layoffs, thanks to outsourcing, will eliminate her job. His is on the line down the road. These are jobs that are never coming back. With each round of layoffs, more workers are competing for fewer jobs, with some not finding anymore work in their field, thus taking a completely different job, with much lower pay. Hello lower standard of living. Seattle sure is *special*.
These are jobs that are never coming back.
Back in 2001 I was laid off by a large mega corp. To bring in some extra cash while I hunted for a new job I started a PC fixit business (this was before the Geek Squad arrived). One day I was helping an elderly gentleman with his PC, and we got around to talking about how I was laid off recently. “So when do you expect to be called back” he asked. When I replied “Never” and explained to him that our jobs were gone for good he looked very, very shocked. The moral of the story is that a lot of people still have no clue as to what is happening. They think that all the fancy cars, etc., are actually paid for.
” 5-6% raises. While the private sector is generally getting 2-3% if that.”
problem: Im actually goin gthrough this at work, sold 3% raises for the workers. 5% for the managers, and a paultry 14% for the owners….
go figure..
course bonus is gettin paid, but only 10% over last year, and Im throwing in Jackets, Sweatwhirts, hats, and hams for thanksgiving…
the message works, you just gotta massage the delivery…
ya, see I had to pass along a 60% reduction in benefits on the medical side earlier in the year…
people, its tough out there…
It is not just that the offspring are coming back because they are in trouble.
A close friend of my mom, was in so much trouble (on what should have been 20+ years on a 30yr mortgage), that their newly working son offered to move back home and got the entire finished basement (including pooltable and wetbar) to help out his parents by contributing to the payments.
How could they f**k up with less than 10 years to go?
How about parents who left the nest and couldn’t make it on their own, and come back? I expect to see some of those, too.
Like the nursing home wasn’t working out? ;o)
It is the hidden inventory that never shows up on the stats: Singles get roomates, adult children move back in with mom & dad, extended families take in their cousins……
Could expand supply by 10% and is doing just that now.
Anything solid to back up the 10% or is it mostly a hunch? No problem with hunches, but if you have numbers on that, even just historical comparisons with past economic downturns, I would love to hear it.
Just a hunch. No empirical evidence. I would like to see some if any one has any.
This is usually referred to as elasticity of demand because the extent of the contraction depends on the severety of the economic conditions that induce it.
I’m not sure that kind of data is captured empirically, but it’s certainly going to be a factor in the future.
wow, last bubble pop 91-92 was 1.8% now 2.8%
it’s differrent this time !
That’s why whenever anyone compares the last housing “bubble” to this one I have to laugh - it’s not even close.
I agree with you. Mister arroyogrande commented the other day that the housing debacles of the 80’s and 90’s had been quickly forgotten, leading him to expect that this one could also be repeated within a generation. I don’t think so. I think this bust-heard-round-the-world will prevent another housing bubble from happening until 2060 or later.
Considering the level of overbuilding, bank losses, foreclosures, etc., this mother of all housing bubbles may NEVER be repeated. At times I’m still blown away by the sea of vacant houses covering this country.
Sadly, it IS “different” this time, just in a much, MUCH worse way! Oh, well!
IMO the rise in the stock market just represents most Americans’ simplest strategy for shorting the US dollar. Decline of the US dollar index in the past 12 months has been very close to the percentage “gained” by the US stock market. Net gain, zero. Why it’s not worse, though, is a good question.
also it is strange that the EU stockmarket is still doing well despite all the dire predictions for fallout from a high euro/dollar exchange rate. My guess is that both the US and EU stockmarket rally mark the start of a hyperinflation.
I’d want to see more local numbers on this — doesn’t it depend on *where* these vacant home are? Aren’t there certain markets that had a ton of new building? If many of the vacant houses are in Las Vegas, or the central valley of CA, or 90 minutes outside of phoenix or 2 hours outside of L.A in the desert, does it really affect the market in , for example, Washington DC?
Are seasonal second homes part of the “empty home” statistic?
Why can’t owners of vacant homes just hold them vacant forever? (That appears to be their strategy, at any rate…)
In other news - dollar is down *again*. Gold is now above $790/oz.
If the market maintains it’s goldilocks plateau, and the fed lowers rates this week, I look for gold to exceed its all-time highs, and start approaching the will-be-talked-about $1000.
Don’t forget oil; now over $93 as Mexico shuts in production.
http://www.forbes.com/markets/feeds/afx/2007/10/29/afx4271685.html
And the gold/oil ratio is actually at a low, implying either that oil is too expensive or gold is too cheap. Personally, I think oil is much more valuable than gold (we can’t eat gold, but we can and do eat oil), but this is a ratio that has proven useful over time.
Actually, you can eat gold. I recall seeing something on TV where a very thin layer of gold is put over some sort of dessert.
Jägermeister.
Goldschlager. I remember a girl hanging her head out the window and giving my truck a metallic paint job.
Your…’truck’?
Did your ‘truck’ enjoy it?
He definitely means “truck.” The Porcelain Goddess only accepts one worshipper at a time.
A “racing stripe……” down the side….
A fancy downtown hotel in Dallas used to have a rich chocolate dessert with gold foil sprinkled on top.
This is very true. It’d be nice if you could buy oil in significant quantities like gold; though at this point it’s probably somewhat too late. Unlike gold, oil is something we simply cannot do without, and has a fairly constant demand, and the supply is of course very risky; at least as long as we’re dependent on the middle east.
And you can’t eat paper currencies either.
…hmmm edible currency. you may be on to something there.
“Grain is the currency of currencies.” Lenin
quote from “Merchants of Grain” by Dan Morgan
and just imagine what happens if Turkey is forced by US non-cooperation to invade Iraq, and GWB and his cronies decide this is the time to arrange some distraction for the general public and bomb Iran
Can you “imagine” what “clutch plates” are burning in the mind of “Dickey Boy” Cheney & “The Decider” these days.
Got Mission “almost” Accomplished ?
Oct. 29 (Bloomberg) — Bargaining while buying some trinkets in the Maldivian capital, Male, recently, I heard most unexpected words: “You can keep your dollars.”
…
Why does it matter what happens in the Maldives? … While it’s an amazingly beautiful place, the Maldives is a rounding error on the global economic pie chart. Yet it may be a microcosm of a tectonic shift in finance: the demise of the dollar.
These things start out slowly, and in recent months I have had similar experiences from Mexico to Vietnam. In markets, restaurants, taxis and tourist shops that long accepted dollars, many are opting for local currency. The reason: concerns the dollar plunge that analysts have predicted for years is afoot and that the U.S. is uninterested in halting it.
http://www.bloomberg.com/apps/news?pid=20601039&sid=ahcvx7iJ4tXM&refer=home
A live webcast last week by Martin Weise and his team brought up similar anecdotal evidence being experienced by travelers. Either you have to pay higher exchange rates (to compensate for risk of holding dollars) or sometimes not taking them at all. The point being, if you think Joe Schmoe taxi driver doesn’t want to take your dollars, do you think a central bank is going to want them?
RE: Either you have to pay higher exchange rates (to compensate for risk of holding dollars) or sometimes not taking them at
Greenback vs. the Canadian Loonie back in the mid-70’s.
Run out of funny money buyin’ a round at Winter Carnival in Quebec City and offer the bar waitress a $50.00 US-and you’d get with a sneer, Non, non, Monseiur…no accept le American dollar…Canadiene only pour favour.
We are Wal-Mart Nation.
“It also hasn’t escaped Asians that Treasury Secretary Henry Paulson is talking out of both sides of his mouth. He supports a strong dollar while the U.S. stands to gain from its decline through more-competitive exports and repayment of international debts with cheaper dollars. That’s the problem with beggar-thy- neighbor policies — the neighbors realize what’s going on. ‘It’s the official policy of the central bank and the U.S. to debase the currency.’”
I wonder if buying my theatre tickets for the Stratford Festival in Canada this month even though the trip isn’t scheduled until next September will turn out to be a “wise” financial decision. I did it to take advantage of the good seat selection, but I might have been priced out if I waited.
I really feel for the new artistic director. They depend on Americans to fill their seats. Next season (April-November 2008) may be less successful than in the past.
Polly: They depend on Americans to fill their seats. and Torontonians.
Yup. But a guy working at the theatre store told me that 70% of the tickets were bought by Americans. I found the number barely credible at the time, but he had no reason to lie to me. Even if it is only that much for their “high season” (July and August) it could have a big impact.
That really is too bad, but I would say we have much BIGGER problems here now and in the future. There is bound to be alot of secondary casualties to this debacle.
Much bigger problems. Much bigger. Therefore, that little theater gets my “too bad, so sad” comment and does not register on my pity meter.
This July while touring China, my extended family and I spent a week at an obscenely expensive– even by US standards– Shangra La (literally,) in Sichuan, PRC. When we attempted to exchange physical USD to yuan so we could attend local attractions we were told that our “dollars are too dirty,” and they would not accept them. They literally required uncirculated banded hundreds. (This at the only bank within 200 miles that accepted USD.) One would think that a resort that charged $1,000 USD per night would be more amenable. Maybe they knew something we did not.
Bwah. Were they renters dollars?
RE: $1,000 USD per night
In China?
WTF?
Oct. 29 (Bloomberg) — U.K. house prices fell for the first time in two years in October, led by declines in central London, a survey by Hometrack Ltd. showed.
…
The report adds to evidence a decade-long property boom is petering out.
http://www.bloomberg.com/apps/news?pid=20601010&sid=aT8zwemxNjBM&refer=news
down just 0.1%, that’s a rounding error IMHO…
Dutch homeprices declined by 2% in september (but still up +4.6% yoy, similar to UK), that was the first significant decline in nearly 20 years as far as I can check (there were strong local price declines around 2001, but because of bubble gains in other regions the national average did not decline significantly).
“down just 0.1%, that’s a rounding error IMHO…”
It starts where it starts and down is down.
Location, location, location.
Prices in central London and the financial district fell 0.5 percent, the most of any part of the country.
Fed acted ‘like a bartender’
The U.S. Federal Reserve Board acted “like a bartender” in lowering interest rates and its actions are contributing to a stock market bubble in the U.S., Marc Faber, the Hong Kong-based publisher of The Gloom, Boom & Doom Report, said.
“Each time you bail out, it becomes bigger and bigger, and the credit problems become much, much larger,” said Faber, managing director of Marc Faber Ltd. The Fed “feeds its customers with booze, and when they get totally drunk and are about to fall off their chairs, the bartender gives them more booze to keep them going. One day, it will lead to the ultimate breakdown.”
http://www.iht.com/articles/2007/10/24/bloomberg/sxfaber.php
An oldie but a goodie:
Waiter! A round of counterparty default with just a HINT of systemic risk for my banker friends.
Ohhh. That was good, jim A. I’m even cheering up, now.
“déjà vu” :
“Economic implosion derived from illiquid assets alchemized by the credit expansion of global central banks using irrational exuberance to sustain a financial catastrophe of their own creation.”
Is it different this time? According to the Journal’s Justin Lahart:
Rising commodity prices and the Fed cutting rates seem incongruous. When commodities prices are rising, it typically signals strong demand — and therefore a strong economy — often with a whiff of inflation. When the Fed cuts rates, it usually is an attempt to strengthen a slowing economy. The confluence of a slowing U.S. economy and rising commodity costs is something new.
Indeed, in an earnings conference call Thursday, Whirlpool Chief Executive Jeff Fettig said 2007 “is the first year ever where we have seen a significant decline in demand in the U.S. and significant raw material inflation.”
WSJ: http://tinyurl.com/2d68ok
500 million newly middle class people in India and China want refrigerators, cars, meat, coffee, etc. Bring on the commodities inflation.
This is kind of a weird spin but …..
I was looking for a spare part on a jeep and called a junk yard that specializes in jeeps and other 4×4’s. They were closing tot eh public b/c the owner told me that it was more profitable to sell the scrap metal to repossessing plants than spare parts. Apparently China / India are giant vacuums for metal both new and scrap. Their economies are booming and they need all the raw material they can get (including old Jeeps).
I see scrap metal dealers all over Craigslist trying to get people to give it to them for free.
http://dallas.craigslist.org/wan/462632113.html
http://dallas.craigslist.org/wan/462454832.html
Here’s a little game you can play in your spare time. It’s called “Grill Be Gone”. Every spring, FB’s everywhere flock to Home Repo to upgrade their barbeque grill.
Naturally, the old one ends up on the sidewalk on the next trash day. If this person lives on any street with a reasonable amount of traffic, within HOURS the steel lid and iron cooking grates are picked off, leaving only the frame.
Eerily, you never actually see the person/thing/ghost that makes off with these grill parts. They’re just gone, leaving a sad headless grill on the sidewalk. Kind of weird.
They get $10-20 per air conditioner…. i think there is 7-10 pound of copper in them
There are lots of people in Chicago who make a living picking scrap out of alleys and garbage bins. (Grills included.)
There sure are ET, and those trucks are bulging as of late too. Makes me glad my cooling units are on the roof!
On the positive side… at least they’re being recycled.
I’m glad, there is way too many cars sitting in junkyards rusting away. I would love to see them all recycled and turned into new goods.
BTW, that was me who swiped your old grill. I’ve made some $$ picking up someone else’s trash and turning it into cash.
5 of the worlds top 10 companies are now Chinese;
Oct. 29 (Bloomberg) — China Life Insurance Co. surpassed AT&T Inc. in market value, giving China five of the world’s 10 largest companies, compared to three for the U.S.
http://tinyurl.com/2guvl5
LOL. I’d just love to read the exclusions for a Chinese life insurance policy:
a) political dissadents,
b) executives and government hacks who get caught carrying out government policy to poison the American Capitalist Dogs,
c) prisoners used to harvest organs,
d) as a result of government created environmental disasters
etc, and so forth. I’m sure the list would be endless.
Here’s the key paragraph in that article:
“China Life, PetroChina Co., China Mobile Ltd., Industrial and Commercial Bank of China Ltd. and China Petroleum and Chemical Corp. are now in the list of the world’s 10 biggest companies by market value. Only two of those are in the top 50 by sales.”
Emphasis on the last sentence is mine. I’m willing to bet that at least two of those five companies is out of business within 10 years. The Chinese stock market is more corrupt and overvalued than anything we’ve seen in the States. When that house of cards falls (and it will), the destruction of wealth throughout Asia and the the world will eclipse the housing market bubble. I don’t have much faith in the US economy, but I have even less in the Chinese.
Not to mention the civil strife that may possibly break out if the Chinese stock market goes South.
Got dynastic change?
Profit from it while you can. Meanwhile, demand in the West is supported by super easy credit and an artificial Chinese US dollar peg. As the weight of debt and lack of income gains push more and more American families below middle class status, Chinese manufacturing capacity continues to expand. Enjoy your dollar store trinkets. The wrath of the impending depression will be painful for everyone.
How is that for doom and gloom?
I used to own quite a bit of stock in 99 Cent Store (ndn) and you’d think it would be bulletproof, in a down economy…
Not really, it’s a dog.
My Octomom and I went to a stockholders meeting a couple of years ago, and the ceo related that there was 9 times as much product being offered to them, vs their first few years of being in business…
“it’s a dog” — is it because there are so many others now? (Family Dollar, Dollar General, various local “98c” stores, &c) Not to mention the elephant in the living room: WalMart.
There were three of those kind of stores in a shopping center just down the road from me, one went out of business. What is really strange is that this is an area where they are trying to sell beach front homes for up to 2 million and off beach front for $750,000
Is it a dog because they sell candy with maggots in it? In case any of you missed this story:
http://www.turnto23.com/news/14252768/detail.html?rss=bak&psp=news
The link provided to the video is pretty funny, too…
http://www.youtube.com/watch?v=aDQM20nL39I
It’s a dog because most people have wised up to know that almost all items in those stores is absolute junk. I’d rather spend a couple extra dollars and get something of quality and durability.
I guess you should have owned shares of the 1 million dollar store, I’m sure sales in that niche are still surging.
The latest I heard from a maker of luxury yachts in my area (with prices starting around 10M euros) is that they are fully booked until far into 2012 … and I’m sure these yachts require significant downpayments before they start building.
Most expensive cars and other luxury items, same story … they cannot meet demand. And just like in the US, stores that specialize in low prices for the general public, like Aldi, are not doing well this year.
“The confluence of a slowing U.S. economy and rising commodity costs is something new.”
Not so new. Remember the 1970s? I had hoped not to relive that decade.
A little of those 1970’s mortgage rates would liven up this party.
Now that would make a large downpayment valuable.
I was there….
WT, yes I do. Graduated college and started my first job as a new chump engineer in SoCal defense industry, 1977. Also started grad school at the same time.
Ahhh, the alternate days of lines at the gas station.
“Ahhh, the alternate days of lines at the gas station.”
lol. A buddy of mine likes to tell about the time when he was in line at a gas station that had a limit of $10.00 (maybe even $5.00) per car. So someone came down the line asking for payment in advance, “in order to speed things up”. Everyone just handed him a payment, including my buddy, only to find, when they reached the head of the line, they’d been scammed. He just laughed it off, he said the guy got him good and deserved the money if only because he’d been a dumbass to give it to him without questioning.
I remember waiting in a 1/2 mile long gas line, as a freshly minted driver, in 1979…
I recall being appalled that I had to pay 59 cents a gallon and swore I’d cut back on driving.
I was 16 though, so we all know how that turned out.
I remember my parents making my sister get up at the crack of dawn and wait in line at the corner gas station . It seems like it was earlier than ‘79, though.
Our neighborhood gas station simply put out a “no gas” sign and parked extra cars on the out side of the pumps. All of his regulars were told to pull up on the inside of the pumps for gas. If he didn’t know you, no gas! I never waited in line for gas, but I aways bought there until he retired in the late eighties.
What is amazing about all these gas line comments is that there is a large subset of Americans who have no memory of this.
Nor do they have any inkling of its occurrence - either through education or by having a rudimentary level of inquisitiveness.
If this kind of thing comes again, it will be an enormous shock.
I remember when we reached an initial turning point (2 years ago? 3 years ago?), when for the first time in maybe two decades (or 1.5 or so) there were auto advertisements touting the benefits of high MPG.
Many had never seen that before!
Jack - you are right. Many of us remember the lines. Our plate endedin a 5 - odd.
Younger kids are clueless. And coddled. I wonder how they would react if the “good life” was completely pulled out from under them as they have never even entertained the thought of deprivation.
Welcome to the third world
If UBS is expecting to take further write-downs in future quarters as a result of mortgage securites ratings downgrades, you can be sure other financial firms will be forced to do the same.
UBS has become the latest investment bank to warn the effects of the credit crunch will get worse before they get better by saying that it could be forced to make further write-downs.
…
[I]t uggested that there were further problems to come, saying in the statement that it remained “exposed to further deterioration in the US housing and mortgage markets as well as rating downgrades for mortgage-related securities, which could lead to further write-downs on the positions.
Telegraph: http://tinyurl.com/24q2of
“Global economy can survive perfectly without USA?”
http://english.pravda.ru/business/finance/29-10-2007/99704-global_economy-0
“…Because many of these countries tie their currencies to the dollar, US interest rate cuts prevent emerging market central banks from tightening monetary policy very much, even if their economies are overheating. In other words, a weaker US economy leaves monetary conditions too loose in the emerging world, pointing to heightened inflationary pressures….”
IMHO Mr. Stephen King has the inflation correct, but I am not so sure there is enough decoupling to prevent world wide ill effects. Mr. Kings analysis is based on the IMF showing US growth of 0.2% next year. Canada is tied into the US economy as is Mexico. As we enter this recession, those countries will be directly impacted. I suspect that Japan and as a result China will be impacted. South America (due to the lack of US interference over the last 8 years) is tied to Asia and should be impacted.
What happens when the growth in the US goes into negative numbers?
The central planners will make up the difference with volume.
The US is the largest market in the world. If you lose demand from your biggest customer, what happens to your excess capacity?
I too am interested in the “decoupling” of the emerging/asains markets if/when the US goes recession/depression..
quite frankly we need a recession, if for no other reason than to test the asians.
We already tested ourselves against Asian rates of pay…
Can’t compete
we did not need Ross Perot to tell us that. I’ve said it before: we only had one way to go if we were going to compete directly with those countries: DOWN. If we were the richest country, how could we have expected otherwise?
I don’t want to be 3rd world, but I can already see that our “shrinking pains” as we dumb it down are going to be horrendous. Anything less than what we had will suck.
First, there were ARMs..
http://www.stockmania.com/index.php?showimage=79
The pigmen, (including the one with orange pigment) have to be more than a little squirmy about goings on, eh?
Good one, kahunabear!
Dunno, they all seem to be in the catbird’s seat. Money for nothing and all. I am pretty squirmy though.
kahuna -
These Toons are great.
I don’t see them everyday, but the last three are hilarious… as Mozilo is now into gasoline lending (today), congenital liar Heli-Ben (Friday) has eye and hair problems and the Sheeple guy goes to the beach on Thursday (market has “BOTTOMED” - just a typical southern California reaction… go to the beach).
They really capture the current environment.
Thanks for the kind words sf jack. You too aladinsane!
Thanks for the kind words aladinsane and sf jack!
That John Berry article on Bloomberg I posted yesterday intrigued me enough to play with a little house money and buy some November index puts in case the Fed does not accommodate the crackheads. Money I could lose 100% and it would be okay. Happy to see a gap up this a.m., that will make the prices better for this.
You caused me to dig up the implied probability for outcomes of the next fed meeting (from futures)
70% prob of 0.25% cut
20% prob of 0.50% cut
~10% prob of no cut.
A no-cut outcome will indeed be a big payoff for your bet.
I got them. At least I’m gambling with my own money, and not much of it.
hey - I thought you said you were backing off for the rest of the year!!!
I took this gamble last go around and got killed. But I’m a glutton for punishment, and I’m doing it again. Sometimes the lottery ticket form of investing is more fun.
WOW…is this a repost?
http://www.bloomberg.com/apps/news?pid=20601109&sid=af3wCbWHvK4w&refer=home
Private Firefighters in San Diego!! The Terminator was put on the hotseat yesterday with his spinning that the commision investigating to 2003 San Diego fire recommended the state buy 109 fire trucks. Again, 4 year old report recommends 109 additional fire trucks. Guess how many the state had avaiable for the 2007 fire?? How about ZERO! None! Nada! Gotta keep those taxes low.
Yes, i posted this a few days ago…my interest is that protection is available for those with the money to pay, but the misallocation of public resources means that less protection is available for the general public. I expect that this trend will continue.
San Diego kept taxes low, and handed out rich pensions to public employees. To bridge the gap it borrowed, cut pay for those actually working, and cut services. I heard San Diego cops and firefighters were leaving for decent paying jobs elsewhere.
It’s scorched earth by those “at or over 55″ when Bush said the words. Soon there will be no state and local services, just debt service and pensions. Republicans screw the future with tax cuts funded by debt, Democrats with public employee pensions. It’s a bi-partisan generational war.
WT, any idea what states, munis will have the smallest (unfunded) pension obligations?
IIRC, IL is supposed to be one of the states that has least funded its obligations (largest unfunded).
Sorry I don’t know how to make a tinyurl, but I googled “unfunded pensions state by state” and the third entry included an easy-to-read table. States that have funded their pension liabilities by 97% or more include Delaware, Fla, Georgia, N Y, SoDak, Tenn, and Wisconsin. Several others in the 90’s. It did look as if IL were the lowest, somewhere below 60%. Louisiana bad too.
Many states, like Texas refuse to release that information.
Excellent points WT….
Its not just republicans or democrats. Its more of a sickness where people do not want to work or make the hard choices.
They give in to the tax cuts and they give in to the public employee unions.
Its the easy way.
It will take us a generation or two to work through all the debt problems.
Tijuana-adjacent’s government is 2nd to none, literally.
Having worked for 2 state and UC, I have a different understanding of public pensions. It used to be that in order to attract quality employees to public service, which paid much less than private sector, public entities provided better pensions in trade off. I don’t think it’s fair to blame the employees because the public entities didn’t fund the pensions. Just like the feds raided all the SS funds, public entities didn’t provide for what they had promised. The other problem for boomers is that in what are for most supposed to be final years before retirement, many corps have played bait and switch and gotten rid of their pensions and switched to 401Ks supposedly to save $. Of course, CEO and upper management have separate pensions and make way more money, but crying poor and blaming the workers is the scam du jour.
“Crays doesn’t work for a local fire department or the California Department of Forestry. He works for American International Group Inc., the world’s largest insurer. If you’re a client with a home threatened by California’s worst wildfires in four years, you’re getting service your next-door neighbor may envy.”
Actually, private firefighters are nothing new. In fact, firefighting started out as a function of the insurance industry, even centuries ago. If homeowners had fire insurance, they had a cast iron “firemark” affixed to the front of their residence, which gave arriving firefighters a green light to try to protect the property or put out the fire, because they would then be reimbursed by the insurance company. Firemarks, even the reproductions, are very collectible.
CA will have another chance in about 5-10 years to do the same thing.
RE: Guess how many the state had avaiable for the 2007 fire?
All the firetruck dough went down the double-digit health insurance rate increase rat-hole.
Can’t have everything in life, ya know (snicker)
Perhaps those who follow the stock market can explain something to me. I remember a discussion of “rotation” after the tech bubble bust, with money staying in the U.S. stock market but moving from the NASDAQ to the Dow for nearly a year before the whole thing tanked. I mentioned earlier that I saw the same thing now, with money making the sensible move from consumer, finance and housing to export-oriented companies.
In today’s WSJ, there is a large article that basically says the stock market is in trouble based on technical indicators, including the index being held up by price gains in fewer and fewer large companies. Was that true in 2000 also, say between March and November?
as mentioned Friday, the nasdaq gain ytd is 50 percent in three companies: google, rimm and apple.
GS just hit a new high. Hank has to be happy man today.
Hankster the Prankster…
I’ll laugh when Ben Stein’s money is gone…
http://finance.yahoo.com/expert/article/yourlife/50659;_ylt=AnKtI8QcWYNICRnRJfzWoQK7YWsA
Yes, GW is still breaking windows in the Muslim world, so it has to be good for the economy. So is running up the federal debt on a war we refuse to pay for …
He used to give reasonable advice, but has become an idealogue.
I found this article rather disgusting, frankly.
–
The guy is a clown. Riding his father’s fame?
Jas
Some say he has better Visine than most, but he can’t see the forest for the trees, can he?
LOL!
“If I had an adjustable rate mortgage (ARM) and I didn’t know when or how my mortgage would adjust — or how that would affect my monthly payment — I might be a little worried. After all, the media is now littered with nightmarish tales of mortgages gone bad. I imagine I’d be on the phone with my mortgage company to clarify a few “minor” details, since those details could determine whether I would remain in my home or should be packing my bags.”
“One would expect the vast majority of such homeowners to be preparing for battle. Not so, according to a study recently released by the AFL-CIO. It found that nearly half of homeowners with ARMs don’t know how their loans adjust or reset, and nearly three-quarters don’t know by how much their monthly mortgage payments will increase when they do readjust.”
http://finance.yahoo.com/expert/article/moneyhappy/50656;_ylt=Ao_q4EDVFRj9JuNdDokzRWe7YWsA
Bankruptcy or foreclosure? The new subject of financial adivce.
http://www.msnbc.msn.com/id/21478416/
Of course if the lender goes for a deficiency judgement, you get bankruptcy AND foreclosure. Has anyone heard of this happening? I think the lenders may be afraid of a political backlash.
What great advice in that article!
Before you accept that foreclosure is a foregone conclusion, consider trying to avoid it.
The article was written by a banker.
“Based on our mail, the financial squeeze that’s left millions of Americans falling behind on their mortgage payments doesn’t seem to be letting up.”
That has got to be one of the dumbest/most obvious opening lines of an article I have ever seen.
For many FB’s I suspect that the question is: “Bankrupcy then foreclosure or foreclosure then bankrupcy?”
You think part of the market wanting a rate cut is because they can invest on anything that is affected based on rates being cut;like oil. It seemd like they need to invest on a sure thing and when rates get cut they can be short on the dollar, long on oil.
I think we may be having a mania. Think about it. It looks like an easy way to skim money from the market if you play long. I say easy in the sense that me and J6p only see the market ratcheting up.
Kind of reminds of what the mafia does so well. If you have an insider making things happen, you can make a profit big time. EX: an athlete purposely losing the game, or the bribed ref calling the shots.
In this case, you got so many Wall Street Insiders controlling the economy that you are golden.
Found in the Washington Post’s Outlook section yesterday:
Is Bailing Out Reckless Investors Wise? Don’t Bank on It.
By William R. Bonner and Lila Rajiva
Sunday, October 28, 2007; B04
Last summer, the bill started to come due on our debt-fueled economy. We should have let it — and let reckless speculators, subprime lenders and banks finally get what they had coming. But instead, the financial authorities let them off the hook. Rather than simply letting markets be markets, they bailed out both the fools and the knaves. We’ll all live to regret it.
————–
It’s just interesting to me that there is support for this concept of fiscal responsibility in the MSM. Remains to be seen if it gets any traction though.
I posted the printable link, so I think it should work without registration on the Post website.
I appreciate their disgust for BB and our candy*ss fed in general.
Good read. Thanks.
O’Neal Ousted at Merrill, More Writedowns to Come….
“Merrill may have to cut the value of its holdings by an additional $4 billion in the fourth quarter, according to estimates by analysts at CIBC World Markets. Goldman, UBS AG, Wachovia and Sanford C. Bernstein & Co. analysts cut their recommendations on Merrill from the equivalent of buy to hold.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aap3.z0pzEIc&refer=
I think it is funny that the person most likely to replace him is Mr. Laurence D. Fink, of BlackRock investment. The only draw back to Mr. Fink ‘has made a tremendous amount of money for shareholders, but nobody would call him a pioneer of emerging markets,” Meredith A. Whitney, a financial services analyst, said. “With that, you need to be a calculated risk taker; he is risk averse.”
Merrill does not want some one risk averse? I think it is riskier being in the US markets than in any emerging market. Merrill did not lose $7.9B overseas. LOL
http://www.dqnews.com/ZIPCAR.shtm
IS LA county DataQuick figures skewed to maintain fiction of still steady or rising prices in select areas, or is it just a case of plain geographic ignorance?
Southwest Los Angeles Selected Areas:
————————————
Beach Cities 96 $970,000 $910,000 6.59%
South Bay 328 $690,000 $610,000 13.11%
Palos Verdes Estates 27 $1,200,000 $1,480,000 -18.92%
Palos Verdes Peninsula Area 48 $1,117,500 $1,230,000 -9.15%
—————–
Both PV communities ARE PART OF THE SOUTH BAY!! if they were included in the South Bay stats it would lower SB yoy downward.
———-
Also,look at TWO LA County high-end beach communities(actually they should be part of the south bay)
MANHATTAN BEACH 25 $1,751,000 $1,475,000 18.71%
HERMOSA BEACH 9 $1,199,000 $1,030,000 16.41%
————————-
36 sales total in Sept of condos, new, and resale homes.
These are tiny coastal beach enclaves with combined population less than 50,000 and probably less than 20,000 total housing units which are unrepresentaive of LA County. They are in fact tiny slivers in the LA City/County housing market of 1 miilion +homes. Yet they are constantly cited along with thw again unrepresentative Miniscule Westside LA hi-End market as as reasons why LA RE ‘never goes down’ or ‘LA is Different’.
The Beach cities and Westside are less than 2 % of the total LA county populaton, land area amd housing market. 98% of LA is average middle, working class or impoverished zones and these areas will/are in fact crashing hard as we speak.
peterm, I’m trying to understand what your point is. I can’t agree that the inclusion of Palos Verdes in South Bay would necessarily cause the South Bay median to show an increase. Very likely all sales in both PV areas were far above the SB median, so wouldn’t affect it at all.
Or is it just that you are offended at a geographic division that seems inappropriate to you?
“is it just that you are offended at a geographic division that seems inappropriate to you? ”
————————————-
This is the totally all-inclusive LA County South bay list
The crapped out first six areas of SB are in YOY freefall.
———
CARSON 19 $495,000 $535,000 -7.48%
GARDENA 18 $465,000 $512,090 -9.20%
HARBOR CITY 5 $400,000 $502,500 -20.40%
HAWTHORNE 29 $474,000 $529,000 -10.40%
LAWNDALE 9 $440,000 $527,500 -16.59%
WILMINGTON 8 $430,000 $480,000 -10.42%
LOMITA 6 $632,500 $600,000 5.42%
REDONDO BEACH 66 $847,500 $785,000 7.96%
San PEDRO 32 $618,500 $521,000 18.71%
TORRANCE 73 $586,000 $590,000 -0.68%
Palos Verdes Estates 27 $1,200,000 $1,480,000 -18.92%
Palos Verdes Peninsula Area 48 $1,117,500 $1,230,000
- 9.15%
Of the last six on list-only San Pedro showed
very high yoy, an anomaly.
LOmita to small to count. Redondo beach decent +YOY.
Torrance, the large industrious middle class anchor city for SB, basically flat.
PV way down!
How they come up with 13.11% +yoy amazing but they probably excluded some of the butt-end communities listed at the top. One can jiggle stats and come up with any conclusion,
BTW i lived in SB area(torrance, Carson, Wilmington), for 6 yrs and know the geographics quite well, thank you.
NOTE: One may exclude Hawthore,lawndale, gardena, redondo beach off the list-it is a matter of what is or isn’t in the SB. For that matter what is the Westside?
thanks for the stats peter…
yeah, I don’t know what communities make up DQ’s “South Bay” group. Technically, they could lump all those cities mentioned into that category.
For what it’s worth, our house that we sold in RPV a couple years ago, still zillows for $50k more than it did way back way back when…
The Muni Market Hangs on Supreme Court Decision
“Oct. 29 (Bloomberg) — Municipal-bond investors may be owed billions of dollars, and bond funds holding $155 billion rendered obsolete, as the result of a U.S. Supreme Court fight over state tax powers.
And that might be just the beginning of upheavals in the $2.5 trillion market in debt issued by state and local governments to pay for schools, roads, sewers and other civic works.”
The justices hear arguments Nov. 5 on whether Kentucky violates the Constitution by taxing income earned on out-of- state bonds while exempting interest on ones issued by its own cities, school districts and other debt-issuing authorities. Barring such preferential treatment would force 42 states, including New York and California, to either tax their own bonds or give identical breaks to out-of-state bonds.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=a0FHxFQhpRPQ&refer=
Russ winter has an arm reset chart from GS up on his site, I am wondering if any technically savvy can overlay the Ivy Zellman/Credit Suise chart…..
anecdotally, it looks like Goldman is trying to buy time pushing the resets into 09.
little help, Im technically challenged.
I would love to see that also but I am technically challenged too…
Just for grins, I compared my stock holdings prices from my selling day in early March, to today’s quotes…
My holdings were diversified, a little of this, a little of that.
The total value i’d receive selling them today, is about 5% less than I got in the spring, despite the market nearing 14,000 points.
One stock I should have held onto, was fannie mae, which went up $5 since I sold.
From Bloomberg;
“Japan’s retail sales unexpectedly rose for a second month in September as lingering summer heat spurred demand for cold drinks”
I wonder what they drink over there.
cold sake, beer and chilled sweet coffee?
Went looking at houses in Bayside, Queens NYC yesterday. We still have a long way down to go here. Prices are still bubble-high.
Here’s an example. This was an open house for a “handy-man special”. It was more or less an abandoned house, completely empty with floors and walls that looked rotted. This place needs to be condemned, not “fixed-up”.
Take a look;
http://www.eastcoasthomes.com/Action.Lasso?-Response=details_home.html&-KeyValue=38206
Asking price……………….$795,000
That would be the price same if the house was in move-in condition in that area. And even then it’s twice what it should be. This is just insane.
Houses seemed to be priced about 4X what they were 10 years ago and double from 2004.
I can’t see anyone who would live in any house we saw being able to afford them.
I mean small semiattached houses with bad siding, that have never been upgraded for $500k. And Bayside is NOT convenient to Manhattan.
I realized the real worth of most of these houses is about 100X the property tax.
In NYC the Prop.Tax is relatively low compared to long Island and Westchester.
So a house with an asking price of $800k with taxes of $3500 is worth about $350k.
Depressing how long we might still have to wait to buy.
Yeah…I noticed the tax also….If that was a Cai sale the taxes would be $8500. + - per year….
Ben: Interesting discussion on a way inferior blog. Moderator says he’s obligated to divulge his investment activity, based on idea that folks may make investment decisions based on what they read on the blog. MSM reporters are supposed to do this, but are there any laws that require the same of a blog moderator? Personally, I think it’s your choice whether you reveal anything personal, like everyone else on the blog. Where does it end - should mortgage brokers, realtors, appraisers, inspectors, banks and the cashier at Walmart have to disclose their personal financial holdings to every customer? I understand where this started with the shills of the past but where does it end?
How many digits made the tattoo on the “enemy combatants” in WWll?
The “Global Goal” : Every”thing” with a Gov’t “label” and a “Corporate” Sponsor. We have the… “Technology”
“…The Health Metrics Network — which is supported by the Bill & Melinda Gates Foundation and the British, U.S. and Danish governments — is helping Cambodia, Sierra Leone and Syria improve their civil registration systems.”
http://www.reuters.com/article/healthNews/idUSL2473575620071029
“In an October 5 research note, Rosenberg called rising credit- card delinquency rates as the “next skeleton in the closet.”
This is why I’m short COF (the largest bank focused on credit cards).
FB’s use credit cards to keep up with the mortgage:
http://news.yahoo.com/s/nm/20071028/us_nm/usa_creditcards_debt_dc
goodbye foreclosure, hello bankruptcy!
Okay, now this just pisses me off:
“People are stretched thin even before the holidays,” said Geoff Smith, project director at Woodstock Institute, a Chicago community development group. “If they spend a lot, about three months after Christmas when the bills and mortgages are past due, we could see a rise in delinquency and foreclosures.”
Anyone who is using plastic to cover basic living expenses because their entire paycheck is going to the mortgage who then spends ANYTHING on Xmas gifts deserves a serious beat-down. How #*%*ing stupid do you have to be to spend money you don’t have on cheap imports from China? These idiots deserve whatever they get.
Some “homemade” coffee a toasted bagel w/ cream cheese and some thoughts about taxes & the cost of war.
Soup of the Day: Hampton’s “Orgasmic” potato soup with Cheney duck
d ‘orange.
Who Pays the Dollars that Finance Bush’s War? More on a Fair Tax Burden
http://www.reuters.com/article/healthNews/idUSL2473575620071029
Apologies…wrong link:
http://robertreich.blogspot.com/
Just got off the phone with one the bigger dealers in Gold Bullion, in a public vein, in the city of angles…
He tells me sellers outnumber buyers, by a 5 to 1 ratio
But buyers outnumber sellers, overwhelmingly in terms of quantity bought.
So more metal is going out the door, than coming in.
Many sellers have told him that they needed to sell, to pay their mortgage…
Mortgage call?
Yup, I remember 3 years ago inside “one of the bigger coin dealers in Gold Bullion” in Los Angeles. Saw this woman with a big wooden box full of silver in there selling her metal. Shame shame.
Funny how many people think that gold at $800 in 2007 is going to crash because gold in 1980 was at $800. They forgot to factor in 27 years of inflation. I would be concerned about a big crash in metals if gold is above $1800 per ounce. And I’d suspect gold would drop back down to $650 or so for the next 20 years at that point.
Sold for near million, now rents for $2,500/month. Boggles the mind.
CARMEL
Sale History
05/23/2007: $995,000
$2500 / 2br - Valley Views
http://monterey.craigslist.org/apa/448332857.html
In some of the “nicest” areas of the Alt-A Bay Area (aka SF Bay), one can rent a $1 million house for $3,000 a month.
Someday, and this is years away, the rent will be a little higher and the house price will be a lot lower.
Then, provided we don’t have ZIRP or some other drastic governmental meddling, the housing market will pick up again.
S F Jack……ZIRP ??
Zero Interest R? P?
Zero Interest Rate Policy, as only the Japanese can do it.
JL’s blog, OC Register. Sorry if posted already.
UCLA sees O.C. home price reversal in ‘10
Snippet of what UCLA professors wrote in their housing slice of the 2008 O.C. forecast …
Sometime next year, housing demand is expected to rebound modestly: the forecast has the existing home sale market rising 18 percent. This is not a significant bounce in view of the freefall that began in 2006 and continues today. Sales will still remain constrained in 2008 due to:
(1) weaker labor market growth
(2) stricter lending standards that disqualify many potential buyers from obtaining conventional financing
(3) the belief that the housing correction will persist
Consequently, buyers will delay their housing purchases expecting home prices to soften in the future. As adjustable mortgage rates reset, foreclosures will rise to record levels, impacting prices. Home values will decline but not collapse in 2008. The slowdown in home price appreciation which was long overdue will persist into 2009 and reverse by 2010.
The significant risk to this forecast is a greater than anticipated slowing of local labor markets and a more pronounced weakening of the general Southern California economy than expected. Affecting housing demand psychology more than the monthly debt service, credit crunch impacted mortgage rates remaining close to or at 7.0 percent for a prolonged period would keep the demand for homes at current levels.
The Base Forecast: home values decline between 4 and 7 percent in 2008 (or 6 to 9 percent adjusted for inflation). Home prices remain soft in 2009, declining another 3 percent. A more dramatic decline in prices is not forecast because inventory levels have not climbed that high and the fall-out from the subprime mortgage crisis will be less severe in Orange County than other areas of the state.
Maybe someone can help me. We are renting a home and want to break the lease two months before it’s up. Does anyone know if this is possible without having to pay the remainder of the lease. I’m planning on staying 30 days and then losing my 1 month deposit, so it’s really short by one month. We are in Florida. Thanks!
ff,
You are kidding, right? Break your lease in the last month? If you are that short of cash flow, dialog with your landlord.
two months willing to lose one. already spoke with landlord. no deal.
I don’t know Florida laws, but if you were in California… the LL can come after you for the final month(s) if he cannot fill the vacancy. In addition to the financial hit, he will also likely inform all future landlords to whom you apply about your breaking the lease.
If I were in your shoes, I’d seriously reconsider breaking the lease. Why exactly can’t you finish out your lease? Financial hardship? Job relocation? Your best bet is probably talking to your landlord and seeing if he’s willing to let you out early. If he’s not, then you’re setting yourself to take a hit, both financially and on your rental history.
How much is your rent? If there’s anyway that you can avoid breaking a lease with just a month to go, I’d stick it out. If for no other reason than to protect your rental history. Landlords can/will check it for 2+ years, so you could give a future landlord cause for denying your application at some point down the road.
Thanks for the info. Our rent is 3500 a month. so that’s a seven thousand dollar loss. We need a larger place as my ailing mother needs to move in with us. I have since found out that according to Florida law, the landlord is obligated to help us by at least marketing the home in the same manner and trying to find a tenant to take over the lease. Landlord has agreed to do that. If a tenant can’t be found, we are obligated to the term of the lease. Not worried about my rental history. Homeowner for over twenty years and have impeccable credit.
Wave of foreclosures hits Twin Cities renters:
http://www.startribune.com/535/story/1513927.html