The Housing Bubble

“Yesterday, I took advantage of this (hopefully) quiet week to share some things I have come across that affected how I view the world.

I can’t recommend strongly enough that you view the four-part 2002 BBC documentary, The Century of the Self. Creator Adam Curtis said, “This series is about how those in power have used Freud’s theories to try and control the dangerous crowd in an age of mass democracy.” It focuses on how Freud’s ideas were used by business and government, far more deliberately and extensively than one might imagine, during the 20th century to achieve what Curtis calls “the engineering of consent.” This term was first used by Edward Bernays, the father of the public relations industry and nephew of Sigmund Freud. In Bernay’s words:

The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society,…Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. . . . In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons . . . who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.

This series describes how this “invisible government” came into being and operates.

“Yesterday, we encouraged readers to watch the first segment, “Happiness Machines.” Part 2 is “The Engineering of Consent.” I encourage you to watch a few minutes here, and then go over to Google Video, since you will see it in a larger scale format there.”

http://tinyurl.com/2g59aj

Local bank failure in Leesburg VA, due to credit problems:

http://tinyurl.com/yoa42k

“Charlottesville-based bank to take over Founders lease in Leesburg”

The banking center in the downtown historic district dates back to the 1800s. The banking floor has been completely renovated and Sonabank will open a branch there as soon as its branch application is approved by its regulator, the Office of the Comptroller of the Currency.

Founders had received both Federal Deposit Insurance Corporation and Federal Reserve approval, as well as a Conditional Charter from the OCC to open a bank subject to conditions including the raising of $29 million in net capital, according to a press release from Sonabank.

Given the current turmoil in the financial markets, Founders was unable to raise the minimum amount of capital it was expecting from institutional investors, the release said. As a consequence, it has returned to its local investors the funds that were in escrow.

Question for the blog:

Do HOA’s in gated communities ever have veto rights on resales?

It would surely be the ultimate irony if you bought into such a community to get away from “them”, and then see prices fall to the point where “they” can buy next door.

Refi apps down from 2879.8 to 1915,3 in two weeks! Purchase index down from 472 to 394.5 in the same period. The numbers are seasonally adjusted.

Jas

-x-x-x-x-x-x-x-x-x-

http://www.mortgagebankers.org/NewsandMedia/PressCenter/59045.htm

WASHINGTON, D.C. (December 27, 2007) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 21, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 603.8, a decrease of 7.6 percent on a seasonally adjusted basis from 653.8 one week earlier. On an unadjusted basis, the Index decreased 8.2 percent compared with the previous week and was up 9.9 percent compared with the same week one year earlier.
The Refinance Index decreased 8.5 percent to 1915.3 from 2093.6 the previous week and the seasonally adjusted Purchase Index decreased 6.6 percent to 394.5 from 422.2 one week earlier. On an unadjusted basis, the Purchase Index decreased 7.8 percent to 292.3 from 317.1 the previous week. The seasonally adjusted Conventional Index decreased 7.9 percent to 859.1 from 932.8 the previous week, and the seasonally adjusted Government Index decreased 5.5 percent to 178.3 from 188.7 the previous week.

The four week moving average for the seasonally adjusted Market Index is down 1.5 percent to 715.3 from 725.9. The four week moving average is down 0.5 percent to 438.2 from 440.4 for the Purchase Index, while this average is down 1.8 percent to 2412.5 from 2456.9 for the Refinance Index.
The refinance share of mortgage activity decreased to 53.0 percent of total applications from 53.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 10.4 from 9.9 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.10 percent from 6.18 percent, with points decreasing to 1.05 from 1.12 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.66 percent from 5.78 percent, with points decreasing to 1.09 from 1.10 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.03 percent from 6.48 percent, with points increasing to 1.01 from 0.95 (including the origination fee) for 80 percent LTV loans.

World Bank

http://www.economist.com/world/international/displaystory.cfm?story_id=10329022

The whole bubble started with debt creation. Debt=Money. Money=Spending. Spending=Growth. Lend money to lots of people and you get lots of spending. The economy booms and everyone gets drunk. Really drunk. People feel rich and spend. Business make lots of money and spend. Government gets lots of money and spends and borrows even more.

The problem with borrowing a lot, spending a lot, and getting really drunk, when you have to pay it back the next day, there is usually a really bad hangover.

In this case, it could be really really bad. Houses getting foreclosed. Businesses shutting down. Cities running out of money. Bankruptcies all over the place.

What’s that light at the end of the tunnel?

Back from a trip to Tuscon for xmas…

My 1st trip there was in 1977, and it bears no resemblance to the city it was, back then.

Phoenix seems even more of a basket case, just doing a drive-by of it.

And there are casinos everywhere, along interstate 10.

Report from Best Buy Clarksville, Indiana.

I was shopping at Best Buy yesterday , it was packed. I was talking to the LCD/Plasma TV sales person. He mentioned that they were busy on Dec 26 that was surprising for them and he mentioned that people were buying traditional tube TV (another surprise) and they had only four left.
At the end of the conversation he added that they had sold lot of LCD/Plasma TVs., 10 times what they had sold last year, did not believe him on this part.

I went checked the aisle for the regular tube TV and it was nearly empty and did not see the empty aisles for LCD /Plasma TV.

Here is a little news from Utah. Last month I commented that there was
a group of high living would be real estate moguls who had come to the
end of the line. They were starting to get rid of their luxury cars
and a couple had moved out of their fancy houses. They have just taken
the next step down. The ring leader of Atlas Capital, Wade Sleater,
moved out of his house in the middle of the night. The Ferrari 430 he
bought for $260K disappeared last month. The Porsche GT (about $500K)
is parked in the back of a neighbor’s garage. Whether it was handed over
to settle debts or is an asset being hidden is a good question.

One of his employees moved out of a another house in the same neighborhood
because it was owned under Sleater’s name. His wife was scared by all
the phone threats from people who assumed Sleater lived in the house.

And the house that Sleater moved out of turns out not to have been owned
by him. It’s owned by a sucker in New York. Sleater, without
permission, had a pool put in along with some landscaping. He somehow
forgot to pay for the work and now there is a $100K lien on the house,
which has prevented the house from being sold to a buyer who is very
interested in the house.

Link to a site with info about Sleater and Co. in the comments about a
news story on another group of Utah scammers:

http://www.ksl.com/index.php?nid=316&sid=2315625&comments=true

It looks like it is only a matter of time before the mothership, Franklin
Squires, goes down. Check out http://www.franklinsquires.com for a good laugh.
One of Sleater’s neighborhood friends who works for Franklin has not been
paid in seven months. He still working there, thinking that everything
will be okay. It reminds me of the dot-com era when employees would work
without pay as their companies foundered; some were even stupid enough to
lend the companies their credit cards to pay company expenses.

Here is another site with interesting gossip about what is going on with
Sleater and Franklin Squires. Tons of interesing stuff here.

http://activerain.com/blogsview/106839/Fraud-Alert

That page has the following conjecture about how Franklin Squires works:

Marvin, that sounds the closest to the things I have heard from friends over the years. Interestingly enough tens of millions of dollars seem to have been raised without a stitch of printed marketing material leaving a great deal of plausible deniability for anyone but the “downline investor” whose left holding the bag (the exorbitant loans taken out to fund all this). Here’s a little conjecure (and bad spelling) as things MAY have occurred, in part. I’m sure the actual events were much more complicated and may not have happened at all as I’ve imagined below, this estimate is therefore hypothetical.

I imagine an investment company, let’s call it HardMoney Company, as a hard money lender charging above market rates to borrowers who are in need of alternative funding (non-bank) for time sensitive projects like land development and are willing to pay extra for it in the form of high “points” and interest rates. A good business to be in, but to make such loans you need lots of unencumbered cash. So below HardMoney Company I imagine a bunch of Holding Companies put together to gather up funds to be sent to HardMoney Company (or another investment), each Holding Company being “owned” by an individual who largely subscribes to the idea that real estate equity is useless until it’s removed (through loans) and invested someplace (HardMoney Company would be one such place). The owners of the Holding Companies go out to family, friends, acquintances, referals, seminar attendies, whatever, and find people willing to give them money to invest by extracting equity from their existing properties and/or proactively buying properties, having them appraised as high as possible, take out additional cash loans based on new appraisal, send these new loan proceeds to Holding Company, Holding Company sends it to an investment, perhaps like HardMoney Company, investment like HardMoney Company in turn pays money from it’s legitimate projects back down-the-line to Holding Company, Holding Company pays money down-the-line to “investors”, each level skims a little off the top from the actual investment proceeds being paid by HardMoney Company or other investment. Even though the investment money in such a scenario is all encumbered at the investor level (is loaned by a bank against personal colateral), by the time it makes its way all the way to HardMoney Company THEY have no encumberances and can invest it however they want with no expectations of collateral or transparency, just agreements with the Holding Companies.

All the debt being taken out by the downline investors to generate investment funds has to be paid by somebody and although that appears to have often been worked out by agreement so that the investor didn’t always service their own loans to begin with, the downline investors are the names on the loans — and as agreements disolve and interest payments stop the lowest guy on the totem pole is left with near all the liability and no longer is getting the interest payments to service the debts that (s)he incurred for the money they invested. As it falls apart, if it falls apart, the investment company (like HardMoney Company) can say they didn’t raise any funds, go talk to the Holding Company. The Holding Company can say they didn’t tell anybody to be aggressive on their valuations or their loans or to be less-than-honest on loan apps (there’s no paper trail of how they solicited money), go talk to the investor. The investor is dying a slow death as the leinholders get nastier and nastier in hopes of not having to foreclose on the collateral.

Just an idea from what I’m seeing and hearing and it may be WAY off. I’d love to hear it told by someone with real experience if there is such a person (again, I may be wrong), no need for names if you’re not comfortable with them, but I really have no dealings with any of these entities and am just hypothesising.

I love how these MSM-quoted bottom callers pull future dates out of their @$$es without ever bothering to offer a so much as a single reason their crystal ball is to be trusted. We are currently at the maximum rate of house price decline since 1991, with no evidence the rate of decline has bottomed out yet.

Prices did not stop bottoming out during the last bust for until five years later — 1996. And home prices are still wildly out of line with incomes in local markets formerly known as ‘a bit frothy.’ Unless this time is different, no bottom will be reached until at least 2007 + 5 = 2012.

Pace of Decline In Home Prices Sets a Record
By JAMES R. HAGERTY and KELLY EVANS
December 27, 2007

A closely watched gauge of U.S. home prices shows they are falling sharply across most of the nation, as a deepening slump in the housing market threatens to damp consumer spending.

Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released yesterday by credit-rating firm Standard & Poor’s. That exceeded the previous record year-to-year decline of 6.3% in April 1991, when the economy was emerging from a recession. (See a PDF summary of the report.)

New statistics from the Census Bureau, meanwhile, indicate a slowdown in the number of Americans moving to states that led the housing boom, including Nevada, Florida and Arizona. (See related article.)

The silver lining behind the latest home-price data is that they signal the market is making what most economists see as a necessary adjustment, dragging home prices back into closer alignment with Americans’ ability to pay. The market is working its way “back to reality,” says David Seiders, chief economist of the National Association of Home Builders. He thinks house prices will bottom out by early 2009.

http://online.wsj.com/article/SB119867779499850669.html?mod=hpp_us_pageone

Could this be the “black swan”?

Pakistan’s Bhutto assassinated
Suicide bomber kills opposition leader, at least 20 others at rally

Durable-Goods Orders Rose 0.1% Last Month, Weaker Than Expected
By Jeff Bater
Word Count: 566

WASHINGTON — Demand for expensive goods barely grew during November in a surprisingly weak performance, while a barometer for capital spending by businesses fell again.

Orders for durable goods increased by 0.1% last month to a seasonally adjusted $214.67 billion, the Commerce Department said Thursday. Durables, which are goods designed to last at least three years, dropped by 0.4% in October, revised from a previously estimated 0.2% decrease. Durables also retreated in September and August.

Wall Street expected a much bigger gain in durable goods orders during November, with economists forecasting an increase of 3%.

http://online.wsj.com/article/SB119876201103952607.html?mod=hpp_us_whats_news

For shakes (from yesterday’s BB) a continuation:
Re: An online broker. I use Scottrade. They’re reputable, insist on having a local branch for you to use in addition to all the online stuff, and are cheap and consistent on the online side of things $7/simple trade +% for stocks under a buck. +$0.xx per contract on options. All-in-all I recommend them. They even give you interest on a balance, which is pretty rare. Granted, it’s minimal, but hey, pennies count.
As for the mutual-fund vs. self direction debate.
I have owned mutual funds for many years. My personal favorite of the lot, the one that I put -cash- into, as opposed to my 401K options is DODGX. It’s performed very well for me, despite obviously following the market more than I’d like during the downturns. I like the mutual funds I own because they quickly divirsify me, whereas the -cash- stocks I invest in with my Scottrade account are limited in their divirsity. In about two and a half years of investing I’ve owned four stocks. All high risk plays because it was my ‘mad money’. Basically tax refunds plus a little extra. After all that time I’ve about broken even. Definitely didn’t beat the market. So that’s why I’m wary of self-directing, even if I had the option. My results have gotten better (all my losses came in the first year), but I’m playing around with that mad money at about a 1:20 ratio compared to my total mutual fund holdings.

http://www.usagold.com/gold/coins/pics/gold-bullion-kim-thanh.jpeg

Passports are usually made out of paper, traditionally…

The graven images above were a fleeing Vietnamese National’s Papers, in the guise of thin 24K Gold Taels (about 1.25 troy oz) that allowed safe passage to the wilds of Westminster and beyond.

How do I know this?

A company I worked for, loaded up a 747 with as much cash as they could carry, as there was going to be an unusual bit of bullion business going on, for they were strictly buyers~

Guam, 1975.

They ran out of cash real early in the venture…

More demeaning pap for the masses

http://money.cnn.com/2007/12/21/magazines/fortune/thedeal_recession.fortune/index.htm?postversion=2007122703

My nieces came up from TX (Waco & DFW) for the holiday.

The eldest reports animal shelters taking mounting number of pets from FBs who had to go into motels or apts where pets aren’t welcome.

The younger reports a major TX state agency is abruptly cancelling contracts - very unusual like - there’s worries about funding all of a sudden.

They both know something is up and they don’t follow this at all, so as the crazy uncle I took it upon myself to urge them to build their reserves ASAP.

2008 will not be a good year.

Bribed Regulators Deceiving FBI Roil U.S. Insurance Customers
Dec. 27 (Bloomberg) — Zelphoe Maloney, who owns three hair salons in Albuquerque, New Mexico, knew she faced a battle when a doctor said in May 2004 she had a 50 percent chance of dying soon afterward unless she had a bone marrow transplant.
What she didn’t expect was a fight with her health insurer- -and then with the state insurance department.
Lovelace Sandia Health System Inc., Maloney’s insurance company, told her the transplant procedure wasn’t covered against a life-threatening form of lupus, a disease in which the immune system backfires and attacks the body.
Maloney, 42, appealed Lovelace’s decision to the New Mexico Insurance Division, which is supposed to help consumers get fair treatment from insurance companies. A panel appointed by then Insurance Superintendent Eric Serna recommended rejecting her appeal in September 2004, and Serna affirmed the panel’s decision.
What Maloney didn’t know at the time was that Serna wasn’t just a state regulator: He was also a founder and president of a nonprofit corporation, Con Alma Health Foundation, which had received $60,300 in contributions from Albuquerque-based Lovelace from 2002 to 2004, according to Con Alma’s tax returns.”

How depressing is this? More corruption, apparently everywhere.

Christmas Returns

http://www.stockmania.com/index.php?showimage=121

From the Times Online:

Villains aplenty . . . in sad tale of debt tragedy

Goldman Sachs Suggests Citi Could Cut Its Dividend 40 Pct, Sees Larger Writedowns for Merrill

NEW YORK (AP) — Citigroup Inc. could cut its dividend by 40 percent and write down billions of dollars more than expected in the fourth quarter, Goldman Sachs analysts said, forcing it to raise even more capital than it already has.

http://biz.yahoo.com/ap/071227/apfn_citigroup_ahead_of_the_bell.html

Goldman Sachs Suggests Citi Could Cut Its Dividend 40 Pct, Sees Larger Writedowns for Merrill
http://biz.yahoo.com/ap/071227/apfn_citigroup_ahead_of_the_bell.html

I managed to not say 1 word about my 2 sisters 5 houses, during xmas…

I scare myself.

To funny…. Just had a conversation with a RE koolade drinker in upstate. He’s also a Christian…. a decent guy for the most part but suffering from the ongoing manufacturing decline. Here’s what he said;

“I suspect this whole housing crisis will end soon, that the depressed market will be an opportunity for foreigners to invade our country, to escape their oppressive economies/gov. Sound stupid, but things have a way of working in our in a free market paradise, at least as compared to other countries situations.”

I mean…. where do you start with this kind of delusion? Broke penniless Ugandans will save the housing market? And the housing market is “depressed”? I’d say it’s going back to normal. Also, this is the same guy who speculates that there will be another 9/11 event which will create another “run for the hills” scare a’la 2001. Anyways, I respect this guy but when he says stuff like this, I just don’t know what to think.

ACA Cedes Control…

http://www.bloomberg.com/apps/news?pid=20601103&sid=aByLsWfS_bnM&refer=us

Let the culling begin!

Housing bust claims Re/Max 2000
The Denver Post
Article Last Updated: 12/26/2007 11:10:55 PM MST

Re/Max 2000, one of the Phoenix area’s largest real-estate brokerages, shut down its 13 offices this week as the housing bust hits a city that was once one of the nation’s hottest markets. The franchise is part of Re/Max International, based in Greenwood Village.

Robert Kline, who started the franchise in 2000 and grew the business through acquisitions, said his decision to close was made after a particularly rough patch in December, when it became clear he no longer could afford to pay overhead expenses.

http://www.denverpost.com/business/ci_7816059

To LostControl: Re: That link you posted titled, “The Century Of The Self.” I watched the whole four segments in one sitting yesterday. Possibly one of the best documentaries I have ever seen. Amazing stuff which explained so many things. Thanks very much for the link.

US real estate outlook
Published: December 26 2007 15:25 | Last updated: December 26 2007 18:54

In a grim year, nowhere have things seemed bleaker than in US residential property. But might its woes be replicated in the commercial property sector in 2008?

Median home prices sank in 2007 for the first year since the Great Depression. Things are widely expected to get worse in the next 12 months, as the leverage boom that was fuelled by inflated home values unwinds painfully, driving prices down further. Mortgage loan defaults are likely to increase sharply, while even aspiring homeowners with good credit are struggling to secure mortgages. With little sign so far that the Federal Reserve’s interest rate cuts are easing the credit squeeze, potential buyers may not find much relief in the near term, which will keep sales activity paralysed.

http://www.ft.com/cms/s/e7413542-b3c3-11dc-a6df-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F1%2Fe7413542-b3c3-11dc-a6df-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

Bugs Bunny…Soylent Green…Maslow’s hierarchy of needs…Freud’s nephew…

I must have a bit of undigested genetically modified corn in my belly…have I missed Christmas yet?

Hope you all had a nice Christmas. I was doing some rather quick data analysis (CPI-U Inflation data and the U.S. Census Bureau estimated U.S. retail and food services sales for November 2007). Could you take a look at my analysis and please share your thoughts & observations?

I looked at the reported “Change in Sales $” for November 2007 compared to November 2006 and compared those to the CPI-U report for 2007 (Consumer Price Index- ie inflation rate). I then subtracted the CPI number from the Change in Sales $ percentage to hopefully determine a quick “snapshot” of an updated Change in Sales adjusted for inflation.

I used the corresponding category CPI number if available, otherwise the composite.

11/2007 vs 11/2006
Category CPI Change in Sales Inflation adjusted
ALL Items 4.3% 6.3% 2.0%
Food/Bev 4.7% 6.2% 1.5%
Apparel -0.40% 6.6% 2.3%
Transportation 9.6% 1.9% -7.7%
Energy/Gas 21.40% 25.0% 3.6%
Food (groceries) 4.8% 6.2% 1.4%

Understand that this listing is not all the categories, I abbreviated them. Now, I calculated the “average” of the inflation adjusted change in sales and came up with 0.25%. If you factor in some sort of an acceptable margin of error, you could have a range somewhere between -1.25 and 1.25%. This “indicator” I calculated leads me to believe that even using the Govt.’s own numbers that we are likely experiencing a recession now and 1Q08 will probably show progressively worse numbers.

Anyone have any other comments on my analysis?

Thanks!

Credit loss could hit $US1trillion
David Nason, New York correspondent | December 27, 2007

THE US economy could be heading into its blackest year since the Great Depression as estimates of losses from the housing slump and sub-prime mortgage implosion reach unprecedented levels.

The latest bank estimate of $US700 billion in losses made this week by Rob McAdie, the UK-based head of credit at Barclays Capital, is $US300 billion more than a headline-grabbing Golden Sachs estimate that jolted US markets just last month.

And it is light years from the $US50-100 billion in losses predicted by US Federal Reserve chairman Ben Bernanke to Congress in July. Expressed another way, the International Monetary Fund and World Bank say only 15 countries have a GDP higher than $US700 billion. Australia was 15th on both lists.

But even estimates of a $US700 billion sub-prime bloodbath may be conservative, with respected finance and economic blog sites like Calculated Risk predicting losses as high as $US1 trillion. The implications for global credit markets of losses of this magnitude would be horrendous, forcing banks and other institutions to slash lending by several trillion dollars.

http://www.theaustralian.news.com.au/story/0,25197,22973589-643,00.html

Top real estate stories of 2007
Downturn, downturn, downturn
Thursday, December 27, 2007
Inman News

“Downturn,” “subprime,” “foreclosures” and “credit crunch” are the top phrases that come to mind when looking back at the year in real estate news. 2007 will be remembered as the year the subprime mortgage market collapsed, causing a credit crunch whose effect on the broader economy is still to be determined. The credit crunch has caused everyone to wonder whether the housing market will now play a role in tipping the economy into recession in 2008. But even while housing markets were slowing substantially in some parts, a boom in online activity and innovation in real estate was happening this year. 2007 was marked by an explosion in real estate blogging along with some major media interest in a few newer online business models.

Here are our picks for the most memorable real estate stories of 2007:

http://www.inman.com/inmannews.aspx?ID=65604

Spaces and Places: Home builders’ solution for state’s housing slump
By Katherine Conrad
Mercury News
Article Launched: 12/25/2007 01:33:38 AM PST

As head of the Northern California Home Builders Association, Joseph Perkins has a plan to jump-start the state’s ailing housing market, but he’ll need federal action to succeed.

Perkins, executive director of the San Ramon-based, 1,000-member trade group, said he will work in 2008 to raise the so-called “conforming” loan limit from $417,000 to $600,000. That refers to loans eligible to be purchased by either Fannie Mae or Freddie Mac. Loans above that level are considered jumbo mortgages and typically have a higher interest rate.

“The conforming loan ceiling of $417,000 is totally inadequate,” Perkins said in an interview Friday. “If we can get an exemption for Californians, that will do more good than the governor jawboning lenders to extend the adjustable rate mortgages another year.”

http://www.mercurynews.com/realestatenews/ci_7804716?nclick_check=1

“ALONG CAME NORMA”

Article in today’s WSJ about how “Wall street wizardry” fueled Credit Mess

http://online.wsj.com/article/SB119871820846351717-email.html

I am not a seer, however, a philosopher by the name of of Morris Berman, has produced two books, “The Twilight of American Culture” and “Dark Ages America, The Final Phase of Empire” has an opinion of America’s future. Again, I not sure of his politics, however he does provide a window into a possible future for us.

Again, I do not support this author, just putting his works out there for those who may be interested.

Best wishes,

And they say Houston doesn’t have a real estate problem.

I checked foreclosure.com for my ZIP code and came up with only one foreclosure, about 1/2 mile away. I cross-referenced to ZipRealty for the same street and asking price, and found this gem:

On Market: 167 days
38
ZipRealty Price Track:

Price Reduced: 08/03/07 — $863,900 to $850,900

Price Reduced: 08/24/07 — $850,900 to $837,900

Price Reduced: 09/13/07 — $837,900 to $824,900

Price Reduced: 10/04/07 — $824,900 to $812,900

Price Reduced: 10/25/07 — $812,900 to $800,900

Price Reduced: 11/15/07 — $800,900 to $719,900

Price Reduced: 12/06/07 — $719,900 to $708,900

18% haircut. Dive, dive, dive!

Lower down the price scale, in a different demographic neighborhood, is this one that I’ve been tracking on ZipRealty. It’s been listed three times; the current description says “Seller is firm on price.” Yeah, right. Of course, I’ve only been using ZipRealty for a little over a year, so it’s possible that this one has been listed more than three times:

On Market: 401 days

Listed 11/21/06 $274,900

Listing pulled

Listed 02/23/07 $274,900

Price Reduced: 05/01/07 — $274,900 to $248,000

Listing pulled

Listed 06/25/07 $248,000

Price Reduced: 08/22/07 — $248,000 to $239,900

Listing pulled

Listed 10/25/07 $239,900

Price Reduced: 10/24/07 — $239,900 to $219,000

Price Reduced: 11/28/07 — $219,000 to $209,900

Price Reduced: 12/15/07 — $209,900 to $205,000

25% haircut. Wheeeeeee!

LOL, then there’s this one in one of the yuppie cities that are completely landlocked by Houston:

Foreclosure.com says it’s 539.9K. Zestimate is 1.169M (guffaw!). HAR.com (the local realtwhore site) has it listed for 509.9K, with this precious bit in the description: “Needs a little work…Great Investment. Foreclosure,AS IS…Buyers Agents see ‘private agents remarks’ for bonus..” Likely translation: FB’s trashed the place before they disappeared.

Comment by ronin:

“Democracy is a good word to use when trying to sway public opinion. My sympathy through it all is with the poor Pakistani J6P, just trying to get by and live their lives with the political instability spurred by power hungry leaders swirling around them.”

Substitute “Americans” for “Pakistani J6P” and you could be talking about us here in the good old US of A.

Subprime crisis hits US newspapers’ revenues
By Joshua Chaffin in New York

Published: December 27 2007 20:34 | Last updated: December 27 2007 20:34

The subprime mortgage crisis is tearing through the newspaper industry as US papers suffer sharp falls in real estate advertising.

The extent of the damage was visible this month when Tribune Company, which owns the Los Angeles Times and Chicago Tribune, reported a 40 per cent decline in November for its real estate classified advertising revenues.

Gannett, the largest chain, said recently it was on track for a 27 per cent drop in real estate advertising for the fourth quarter after reporting a 23 per cent slide in the third quarter.

Edward Atorino, an analyst at Benchmark Capital, said: “It’s spiralling downward at an accelerating pace.” He predicted that the problem would “get worse before it gets better”.

The crisis is reminiscent of the bursting of the dotcom bubble in 2000, which led to a sharp pullback by internet companies after years of heavy spending on newspaper advertising.

However, this crash has come at a worse time for the US newspaper industry, which is grappling with broader challenges. These include the flight of classified advertising – one of newspapers’ largest and most lucrative categories – to low-cost competitors on the internet, and the loss of younger readers.

http://www.ft.com/cms/s/0/d88582e2-b4a9-11dc-990a-0000779fd2ac.html

Bubble trouble
Published: December 27 2007 16:01 | Last updated: December 27 2007 18:50

Many a happy hour can be whiled away pondering which historical financial bubble most resembles today’s subprime crisis. The tulip mania of 1637? Japan’s 1980s property and stock market bubble?

All share one characteristic that is easy to identify in retrospect – an inflated estimate of the value of the underlying assets, whether flowers or houses. In many cases, this exaggerated optimism is encouraged by geographical distance – fictitious Latin American gold and silver mines lay behind the UK stock market crash of 1824-25 – or by enthusiasm for new financial instruments.

http://www.ft.com/cms/s/c9be8094-afb1-11dc-b874-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F1%2Fc9be8094-afb1-11dc-b874-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

I am a long time lurker on the board and wanted to mention a recent investment opportunity that came my way.

A good friend of mine who is a contractor in Oregon approached me about joining an investment group that buys foreclosed properties directly from banks. Here is the email that I received:

I’ll try and explain this investment via email although it’s going to be difficult. Attached is the list of homes being bought from the bank.
The deal is 130 homes for $2,000,000 ($15,385 / door). The partners are going to pay back the investors with profit first before any other money is distributed. What will happen is we’ll buy the 130 homes and w/in 5 days the bank will assign the notes over to the LLC which you would be apart of – your ownership would reflect the amount invested. Toby and his group would then go out and market the homes to builders, realtors, homeowners or investors. We’ll be trying to flip the homes for the best possible value knowing that we are investing in this for the short term (17 employees working on the sales side of this)
The appraised value of the homes is $8,000,000 and the current balance to the bank is $6,200,000 we’re buying them for of course $2,000,000.