The Hell That Can Unfold After House-Price Booms
It’s Friday desk clearing time for this blogger. “Orlando’s existing-home market ended 2007 with a nine-year low in annual sales and a record decline in December’s median price compared with a year earlier. Local Realtors, hammered by months of slumping sales, cheered the dramatic decline in median price as a long-awaited sign that sellers are sobering up after years of booming sales and fast-rising prices. The Realtors still had a staggering 24,298 homes listed at the end of December in their core market.”
“Mike Okaty, who lives in pricey Baldwin Park in northeast Orlando, expect prices and sales to fall even further before buyers return to the market. ‘It’s a long way from over,’ he said of the slowdown.”
“Okaty said he is canceling a home-purchase contract today because the two offers he received for his existing home were too low. They were the only bites he got in seven months. The offer he had made on another home in Baldwin Park was contingent upon him selling his current dwelling, but now that’s not going to happen — at least not for a while.”
“‘I guess I’m still a little in denial,’ Okaty said.”
“The number of homes sold in Anne Arundel County dropped nearly 17 percent last year from 2006, a less drastic decline than the previous year.”
“Greg McBride, chief financial analyst for Bankrate.com, recalled when Treasury Secretary Henry Paulson recently said a correction in the housing market was ‘inevitable.’ ‘After the run-up in prices and the record number of homes sales that took place early in the decade, the past couple of years have been payback time,’ he said.”
“Santa Fe’s real estate market experienced a major slowdown in the fourth quarter of 2007, according to information from the Santa Fe Association of Realtors. The biggest drop was in the number of homes sold in the city in the fourth quarter. That number fell from 221 in the fourth quarter of 2006 to just 141 — down 36 percent — in the same period of 2007.”
“The city’s median sales price also took a tumble, dropping to $350,000 from $375,000, a decline of almost 7 percent.”
“Baro Shalizi, president of the SFAR, said the slowdown in sales isn’t unexpected. ‘The real estate market is cyclical,’ he said. ‘It always has been. The market is doing what a healthy market does to correct itself.’”
“The New Year’s housing market in Ho Chi Minh City was off to a strong start Monday as around 3,000 prospective buyers scrambled to Nha Be District register for units in a new apartment block.”
“From October to November last year, at least three property frenzies were reported in HCMC. Le Hoang Chau, vice chairman of the HCMC Real Estate Association, attributed the city’s ongoing property fever to…speculators stepping in to buy apartments, hoping to resell them to foreigners and rake in huge profits.”
“Finally, Chau attributed the galloping price hike of construction materials to the property frenzy.”
“While South African house prices rose by more than 10 percent year-on-year in nominal terms, the inflation-adjusted figures were substantially lower, according to the Global Property Guide.”
“The review said annual house price growth peaked at 33 percent in 2004. Since then, growth had been decelerating. ‘South Africa is rapidly cooling, after more than five years of double-digit house price increases,’ said the review.”
“‘I don’t think house prices have taken a slump or that we are anywhere close to a halt,’ said property agent Bruce Mostert. ‘However, it has slowed down somewhat over the past few months.’”
“Agents are keen on the soft-landing theory. But not everyone believes them. Pessimists such as economist Rodney Dickens are talking more of ‘the hell that can unfold after house-price booms,’ referring to the need for a 40 per cent drop to get some balance back in the market.”
“‘Scoff at this if you will, but it is an interesting coincidence that this roughly matches how much the New Zealand median house price would have to fall to get the gross rental yield on the average rented dwelling back up to the historical average level,’ said the former ASB research chief.”
“Anecdotal evidence of a flattening market includes the sheer volume of For Sale signs and honest but anonymous responses to the BNZ’s monthly confidence surveys where agents admitted some open homes did not get a single visitor.”
“A change has taken place in recent months in the market for luxury apartments, says Eljas Repo, editor in chief of a specialist publication for real estate investors. ‘Price levels have come down, and buyers have become more cautious.’”
“Eljas Repo says that the unsold apartments in Eiranranta are clearly speak of a change in the market for high-priced homes. NCC’s regional director Juhani Korkiamäki nevertheless remains confident that the dwellings in the building, which is scheduled for completion in the summer, will find buyers.”
“However, 25 of the 57 apartments built by NCC remain unsold. ‘It is somehow related to economic uncertainty,’ he says, making reference to the problems linked with the subprime loan crisis in the United States. The cyclical turnaround in Finland is also being discussed more than before.”
“Once upon a time, a former storage room the size of a walk-in closet went on the market in London’s exclusive Knightsbridge neighborhood for $335,000. With only 77 square feet of space and no electricity, the dilapidated ‘home’ drew multiple offers.”
“Those were the heady days of 2006, when property sellers and their agents could pretty much name their price. But now, home prices are slumping and fears of a recession in Britain are rising.”
“Interest rates on the conventional 30-year fixed rate mortgage are at their lowest in more than two years. But would-be buyers in the Twin Cities are skittish about falling values and are sitting on their hands until the market strikes rock bottom, they say.”
“In other words, declining rates haven’t been enough to kick buyers off the fence yet. ‘I met with a loan officer yesterday, and he said, ‘Where is everybody?’ said Realtor Katie Draz.”
“RealtyTrac listed 683 properties in Lincoln that as of Wednesday were either in the foreclosure process or already had been foreclosed upon. Foreclosures were up 84 percent in Nebraska through the first six months of last year.”
“‘In my 22 years of doing foreclosures, I would say this is the peak of foreclosure activity,’ said Eric Lindquist, an Omaha attorney who represents lenders in foreclosure cases.”
“Several readers have asked what caused the last housing slump longer than the current one, when the market declined for 11 straight quarters from 1956 into 1958.”
“The answer has some surprising resonances with our present predicament.”
“Housing slumped in 1956 after the federal government tightened mortgage lending standards, according to a 1960 book by the late UCLA professor Leo Grebler, ‘Housing Issues in Economic Stabilization Policy.’”
“The government was concerned that ‘easy credit’ was fueling a housing bubble, driving up prices and encouraging builders to flood the market with new homes. Grebler found that 45 percent of home buyers who used a mortgage insured by the Veterans Administration…made no down payment. Often, their closing costs also were rolled into the loan.”
“They were buying homes without paying any money. Ah, history. It just keeps repeating itself.”
“Back then, the government cracked down. Hitting the brakes certainly stopped the car. New construction, sales and prices all crashed. The result was a housing slump that lasted almost three years.”
“It is probably anti-climactic to say there are problems in the housing industry, but when it comes home to roost it is much more troublesome. There are people out of work or having to travel to find work, which affects how much they can spend.”
“Of course, this is a problem around the country as the impact of overbuilding, badly planned loans, foreclosures and wild speculative investment come back to haunt everyone.”
“Until the housing bubble burst, there were still ‘experts’ telling us that homes were not overvalued. Now we know that was self-serving, a way to keep the gravy train running.”
“As was reported Tuesday, there were some poor homeowners who bought at the height of prices who are now stuck with overvalued homes worth less than they’ve agreed to pay. It should come as no surprise if some of them decide it is worth it to abandon the properties to foreclosure.”
“Of course, when they do abandon their homes they just make the situation worse.”
“It would have been better if private industry nationwide had made better decisions. Unfortunately, there was an atmosphere of grabbing profits as fast as possible. The good news is that this is just another example of the cycle of business. Taking profits without regard to the future is nothing new.”
“In the meantime, the country and the county are stuck with too many overpriced homes as developers overbuilt. Construction workers have to find other jobs, and the rest of us have to tighten our belts.”
“Given all of the above, and the outrageous cost of living today, pundits should not be so surprised at what is happening in the stock market or in retail sales. What did they expect to happen?”
What a week! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Wait Ben..this is only the beginning of a very very interesting year…
“The city’s median sales price also took a tumble, dropping to $350,000 from $375,000, a decline of almost 7 percent.”
Holy cow, are median prices in Santa Fe really above $100,000? Why?
“Baro Shalizi, president of the SFAR, said the slowdown in sales isn’t unexpected. ‘The real estate market is cyclical,’ he said. ‘It always has been. The market is doing what a healthy market does to correct itself.’”
———————
You have got to be kidding me Shalizi! Show me ONE quote from this guy in 2005 where he says ANYTHING about the market being cyclical, where it was “unhealthy” and would need to eventually “correct itself”. These words should be tattooed on this guy’s forehead, so that if there is EVER another property bubble his clients will ask “What does that mean - ‘cyclical’?” while pointing at his disfigured face.
Oh, just like Lawrence Yun and David Lereah kept callling the bottom but when the market headed lower they said, “there is no surprise as we expected this to happen.”
“There’s never been a better time to lie - I mean buy”
To buy today, you will have to qualalie for a loan.
I have to admit, ther have been times over the past couple of years where I thought that perhaps I was wrong about there being a bubble and that all the people who posted on this fabulous blog really did wear tin foil hats.
This week was the ultimate in affirmations for me.
PS Thanks Ben!
Here’s another guy who proved to be quite prophetic:
http://www.dissidentvoice.org/July05/Whitney0727.htm
Note the date of the post.
Wow, I bet he got a good price..
The irony is that Washington state hasn’t experienced much, if any, decline to date. He might have been a tad early for his home town.
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“I have to admit, ther have been times over the past couple of years where I thought that perhaps I was wrong about there being a bubble…”
Well, Danni, Ben and I are early but we don’t suffer fools gladly. We can smell a bubble from the other side of the globe. I have been early in spotting all three recent bubbles – the Scam Market, the Housing Bubble, and the Commodities Bubble – by some two years. In the meanwhile lot of people take shots.
Jas
Speaking of the other side of the globe? This is making me a little miserable. We can list a number of legislative, regulatory and enforcement failures in the bubble. And the Boston Globe link makes the point that the government really did know what was going on and how to handle it. But, what about all these foreign countries? Why did they have a simultaneous housing bubble? How do pervasive no-money-down interest-only liar loans and a capital gains rebate in the US drive real property prices in Spain, New Zealand and South Africa? There’s not a link that I find compelling, but there obviously has to be one.
When I found this Blog early in 2005, I realized I wasn’t crazy. Other people saw the same insanity.
I was living in FL at the time, getting ready to buy a house. Good thing I googled housing bubble before I did.
“Once upon a time, a former storage room the size of a walk-in closet went on the market in London’s exclusive Knightsbridge neighborhood for $335,000. With only 77 square feet of space and no electricity, the dilapidated ‘home’ drew multiple offers.”
——————
I think HBB’s should buy this closet and set it up as a kind of “shrine” to the housing bubble madness, maybe to make pilgrimages to whenever they feel tempted to make foolish investments, or to remember that such evil once existed, like a medieval torture chamber.
I think that closet is fast attaining Canary in the Coal Mine status as a housing bubble indicator. I remember reading about it selling for some ridiculous (inflation adjusted) amount back in the 1989 crash too.
That million dollar mobile home in California did it for me.
was that the one that didn’t include the land under it?
Was that the one I posted out at Paradise Cove?
Well, it *was* a doublewide…
Hey! I remember it too.
I’m in!
Let’s all chip in when it goes back down to $5K.
I don’t appreciate the snide comments about this charming, cozy 77sf walk-up. It is a special listing. Suzanne researched it.
And the lack of electricity only means that it was “green” before being green was cool.
Call it a Unabomber-style dwelling….
‘And the lack of electricity’
-Thanks Sara. LMAOROF!
It’s green alright.
I think I’ve stayed there. It has power, but you have to keep putting 1-pound coins in the meter.
Ill sell you a bigger closet for half that price.
Santa Fe’s real estate market experienced a major slowdown in the fourth quarter
But, everybody wants to live here. It’s the new Hollywood. All of the celebrities are buying all of the homes here. No concern that the majority of the residents are poor and minorities. No concern that you get panhandled when you stop at the gas station. No concern that it is double the price of the Albuquerque area about 50 miles away. No concern that most of the jobs are in Albuquerque except for the state government (after all, it is the capital) and the artsy-fartsy gallery and high end shop jobs are here. And some tourist jobs. Move along folks, nothing to see here. Go and blow your wad ‘15 winning minutes’ north at the Cities of Gold, or Camel Rock casino. Or stop off at Hollywood Casino half way between ABQ and SF. Or Santa Ana Star, or Sandia. They provide lots of jobs for all of the rich New Mexicans.
My daughter has a sister campus to her Annapolis college in Santa Fe, but she heard it’s way isolated there and that it’s much more stoner in tone. She heard unless you are an artist or way into outdoor recreation, there’s not much there. I told her that what one wants in a community at 19 is different than when one is settling down and raising a family. Is it a good place to live? I can’t tell from your description - sounds sort of depressing.
I’m way into art and outdoor recreation. I just can’t afford to buy there.
But I can’t picture you as the stoner type, or even having patience with the “stoner tone”. I remember Santa Fe as the place that my nutcase ex-GF wanted to go for the “harmonic convergence”, if you remember that period.
“I remember Santa Fe as the place that my nutcase ex-GF wanted to go for the “harmonic convergence””
Her name’s not Michele, is it?
Ruidoso.
But shhh, keep it nice and quiet. : )
When I was in college way back when, I was paying $12.50 a month for the half of the house I lived in (that’s right, $12.50 — no typo). At the time I felt perfectly safe there (the ten-feet-tall and bulletproof thing). Now the house is for sale for over $100,000. There’s no way in hell I would live there again — I’d be scared s**tless to live there now.
I just got back form SFNM and sent ben some amusing pictures form there. One is a piece of graffiti that was spray painted in several places. Written in German it basically says that the good time are over. If ben posts them they are good for a laugh. Half that town is for sale and what is not a gallery or tourist restaurant seems to be a real estate office
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“Anecdotal evidence of a flattening market includes the sheer volume of For Sale signs and honest but anonymous responses to the BNZ’s monthly confidence surveys where agents admitted some open homes did not get a single visitor.”
Are you confusing a soon to be falling market with “a flattening market?” It is an easy mistake to make if one is a bubble-meister.
Rapidly rising “volume of For Sale signs” in the best leading indicator of fall in prices is coming. You can learn from the American Experience. There was lot of denial here too.
Jas
I think they mean “flattening” in a similar vein to “flattened by a steamroller.”
Ben, thanks for the NE update. We’re moving there in May, not to buy, but to rent. Well, to retire, actually. Stay in San Diego and work, or move to NE and retire. A no-brainer.
Ben, sorry if this would be better posted in the bits bucket, but here’s Mozilo’s “final” message to the troops:
A Message to all CFC Employees from Angelo Mozilo, Chairman and CEO
As you know, the unprecedented and worldwide dislocation of the credit markets combined with actions taken by regulators, rating agencies, legislators, the media and others have strained the housing and housing finance sectors as never seen since the Great Depression. Almost without exception, every financial institution, both large and small, has been negatively impacted by the events that drained liquidity from all sectors of the financial services industry. Countrywide has been weathering this storm through the dedication and hard work of our management and employees. However, we have come to recognize that those companies with reliable sources of capital and liquidity and significant scale will be the ultimate winners in this environment and in the longer term as the mortgage markets normalize. We also recognize that, as the industry changes and consolidates, we must embrace these changes.
In order to enhance what we have all worked so hard to build over the past 40 years, we have taken a decisive step to ensure our continued industry leadership. Today, we have announced that Bank of America, which has been an important financial partner of Countrywide for many years, will be acquiring our Company. BofA is one of the largest and most influential financial institutions in the U.S. and internationally, and we firmly believe that the combination of Countrywide and BofA will create the most powerful mortgage franchise in the world. I, as well as many of our senior managers, have worked closely with Bank of America for many years and in fact it was Bank of America that provided me with the necessary funds to start the operations of Countrywide in 1968.
As you will see in the attached press release announcing this transaction, BofA has announced that it plans to operate Countrywide separately under the Countrywide brand, with integration occurring no sooner than 2009. We are confident that both our servicing and origination businesses, as well as other aspects of our operations, will be substantially enhanced as a result of this transaction.
Most importantly, I want to express my deep and sincere appreciation to all who have labored so hard for so many years to build the most important mortgage franchise in the history of America. We have provided over 25 million families with an opportunity to have a home of their own, to build equity and to utilize that equity to educate their children and to have the best life possible in our great country. I have always been proud of the fact that we have made such a positive difference in the lives of millions of families through three generations of homebuyers. The fact that we are now financing homes for the grandchildren of our first generation of mortgagors is not only a testimony to customer satisfaction but to our ability to be the lender of choice for over 40 years. We have accomplished what many thought could never be done, and all of you should be proud of the part that you have played and will continue to play as we move forward into the next stage of Countrywide’s history.
We are already commencing the process of developing a detailed and well-organized integration plan, and we will be updating you as this process moves forward. Dave Sambol will be working closely with me and the entire senior management team to ensure an efficient and effective transition. Dave will be spearheading all of these initiatives to ensure not only a smooth transition but, as importantly, the continuation of Countrywide’s leadership in mortgage finance.
Finally, I want to thank everyone who has stood by my side during the past four decades to make the dream that Dave Loeb and I had 40 years ago become a reality. When we join together with Bank of America, I am counting on your commitment and dedication to continue to realize this dream.
“I am counting on your commitment and dedication to continue to realize this dream. ” Translation: Get ready for big layoffs.
Between stock sales and the deal today, he made over $250 million in the last year. But hey, he earned it right???
“Translation: Get ready for big layoffs.”
But they’re still hiring! Have a look at this insipid web site:
http://www.countrywidecareers.com/
REagent gets him coming and going…
A younger friend stopped by last night to borrow some tools. He and his hotshot business friends have been into house flipping and aquiring apartments for their “early retirements”.
Both he and his buddies are hardcore morons that won’t listen to anyone that even mentions we are into a major housing recession. I think one of them brainwashed the rest of the grouop a couple of years ago with Carton Sheets vidios that one of their wives found at some rummage sale.
Anyhow, after listening to the usual woe is me situaution with his financially bleeeding properties, I noticed he had done something with what is left of his prematurely grey hair. I figured that he had been working late and doing some more sweat equity (hee hee) on one of their moneypits. His hair looked like an aging college student after sleeping off a 3 day lost weekend drinking binge in a sleepingbag.
He said that his wheeler dealer RE Agent now worked part time as a Men’s Hair Stylist and she gave him this wonderful style/dye job and offered me her salon business card.
I almost choked on my beer and pizza laughing at this poetic justice. This is the same RE Wizard woman had ruined hs LIFE was now ruining his HAIR…and he was STILL paying her.
These guys are college educated professional ad normally SANE…
Spare Us
Dang, I was hoping to lease some cheap office space in Westlake when they folded up and abandoned their building. Now it looks like they will zombie on for another year or two while BofA consolidates them.
“The combination of Countrywide and BofA will create the most powerful mortgage franchise in the world.”
Well, here’s what the least powerful mortgage franchise in the world has to say about it: Nyaah nyah nyah NYAAH nyah. My borrowers pay and yours don’t.
The bigger they are, the harder they fall.
Let the world melts down to today 0 then come out as the savior of the system and then it melts down too nothing of real worth.OOOOOOO GIVE ME A BRAKE!!!!!!!!
“As you know, the unprecedented and worldwide dislocation of the credit markets combined with actions taken by regulators, rating agencies, legislators, the media and others have strained the housing and housing finance sectors as never seen since the Great Depression.”
Blames everyone but himself for what happened to the company. I had a few loans with CW when I owned rental property. I doubt I will consider using them again.
Oh , and may I add that I had never seen a picture of this guy before, and holy shiate is he ever fsckin ~CREEPY~
He’s an escapee from Madame Trousseau’s Wax Museum.
Yeah, and someone messed with the orange nozzle, before he went into the spray paint room…
Him and George Hamilton got done with the same batch of paint.
Oops, I guess it was too long or something. Maybe just a link would be better. I give you, Mozila’s message to the “troops”:
http://www.reuters.com/article/gc06/idUSN1132319220080111
Translation: If you’re not looking for another job by now, you’d better start. And do yourself a favor and seek employment in another industry. Preferably one that actually creates something of value.
Good call! I’m generally not one to stoop to Ad Hominem attacks, but now I know what every meant about the guy being all Orange-like. That’s just damn weird. I don’t think he’s from this planet. Certainly his business practices were straight out of Pluto(still a planet dammit).
Orange ? maybe this can help explain his color ?
http://www.youtube.com/watch?v=t2NBn6Eg2AM
“Certainly his business practices were straight out of Pluto(still a planet dammit).”
I actually thought they came from Uranus, who planitude was never in question.
Oops - every=everyone
He makes it sound like Countrywide was an innocent victim while other evil forces conspired against them. Welcome to Bank of Americawide Country.
Bank of Americawide Foreclosures
What a tool. Notice how he also “credits” the media for part of the “dislocation”?
Anyone think it might be worthwhile to see what Prez candidates received contributions from Mozilo and Countrywide?
Definitely. Toss in Congressional candidates too while you’re at it.
The real playas give to everyone. About 60% to those in power or those they think will win - and 40% to the opposition or minority power. They simply shift the mix as they MSM telegraphs the winners with plenty of notice.
http://www.opensecrets.org
Let’s see here - in 2007…
Bill Richardson $2300
Mitt Romney $2300
Rudy Guiliani $2300
Rudy Guiliani $1200
Rudy Guiliani $200
Democratic Senatorial Campaign Committee $2500
I was thinking he bet it all on Red, but it looks like he bought a hedge on Blue as well.
I wonder how things will be at the Countrywide hq. after the big takeover? How large will be the adjustments to personnel?
RE: The result was a housing slump that lasted almost three years.”
No global economy in 1956.
US as an industrial power had it made in the shade as the rest of world lie in ruin after WW II.
It really is different this time.
We are Wal-Mart Nation.
How many FBs can last three years this time around? Pesky bills, they come every month!
The Motley Fool investing site is free again. Check out the Real Estate Investing board. All kool-aid drinkers except a poster named Namkato who keeps linking articles about the RE bubble, and then they jump in and attack him. Kinda like the SDCIA site (home of Taco Bell Jeff) used to be. Liberal application of large trout and Joshua trees recommended:
http://boards.fool.com/Messages.asp?bid=113590
txchick57
After this current Prez and his big bad Harvard Mba, any MINOR crook with a machine gun and a little class just might work for me
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With little luck you may get a “MINOR crook with a machine gun,” that shoots from the mouth, and No class. As someone here said few weeks ago, “We are screwed.”
Elections are not the way to get rid of the crooks. Mostly, they allow for replacing one crook with another. But, it makes people feel good and keep the hope alive.
Jas
“Meet the New Boss, Same as the Old Boss.”
– The Who; We Won’t Get Fooled Again
Hillary’s on the Rebate Game already, wants to “stop the slide toward recession”. OK lady, just stand there on the beach and wait for the tsunami to roll in.
” Jan. 11 (Bloomberg) — Democratic presidential candidate Hillary Clinton today unveiled a $70 billion plan to bolster the economy amid growing fears of a recession.
Along with spending and emergency assistance to cover rising energy costs and to help avoid foreclosures on homes, the New York senator called on Congress to be prepared to enact a $40 billion tax rebate for middle-income families if the economy continues to weaken.”
LOL…was watching a rep of hers on msnbc get slaughtered by Tucker…funny stuff…not going over well
Just let a recession happen, raise rates, and that will curb the cost of oil. Bam, problem solved. All the commodity people participating in the commodity bubble will get creamed.
That is how you get the latest created money (fiat and credit) out of commodities and into the banks. However, it will worsen the current problem. That is the dilemma that the Fed, and our politicians, find themselves.
What is the solution? There isn’t one that won’t require serious turmoil. The options are twofold.
1) Continue to move towards total collectivism.
2) Attempt to revert back to a market economy.
The former will lead to massive inflation, and the latter will lead to massive defaltion. At this point, the misallocation of resources has been so extreme (based on past attempts to solve misallocations by more and more collectivism-central planning for the production and distribution of goods and services), that the solution won’t be palatable for many, if any.
Everyone keeps talking about this bubble in commodities. Do any of you realize before 1990, that commodities were flat or negative for almost 20 years? Gold at its peak in 1980 was 875.00 as an intraday high. We just got back to that peak, but in todays dollars gold is worth much more than that. You can buy all the gold and silver above ground for around 1 trillion dollars. How much is the U.S. on the hook for? Just 9 trillion alone in mortgages and what another 50 trillion outstanding debt. Then add in the derivative market well over 100 trillion and you see how undervalued gold and silver really are.
Trust me when I tell you this so called bubble in commodities is going alot higher than anyone, including myself can imagine.
“Okaty said he is canceling a home-purchase contract today because the two offers he received for his existing home were too low. They were the only bites he got in seven months. The offer he had made on another home in Baldwin Park was contingent upon him selling his current dwelling, but now that’s not going to happen — at least not for a while.”
“‘I guess I’m still a little in denial,’ Okaty said.”
Yet he probably says his home is worth $250k more than he asked for!
But in the article was the best quote:
“There is still a 24-month supply, but within three months, I think we’ll start to see much better numbers,” said Steven Moreira, president of the Orlando Regional Realtor Association. “The news is going to get better.”
A 24 month supply reduced to negligible in three months? Steve, let me know how that goes. The news will get better. For buyers.
Got popcorn?
Neil
silly rabbit…I would suggest anyone right now, after watching Countrywide be purchased for pennies on the dollar by a Bank that I’m not so sure should be buying anything if the offer clears the loan balance you better pull your head out your rear and cross your fingers and do everything you can to close it…
The recovery will always be 3 months away. 5 years from now the recovery will be 3 months away.
And it won’t in either case.
A stopped clock is correct twice a day
Smart move, but that’s about it.
Another subprime lender dead:
http://money.cnn.com/2008/01/11/news/companies/novastar.ap/index.htm
Don’t miss the video interview of Hatzius. I like how he presents himself — shoots from the hip with no BS, and what he says sounds reasonable, if a bit on the optimistic side. If his 30 percent total decline prediction is on a national and nominal (not real dollar) basis, then that sounds as reasonable as any MSM-quoted economist I have hear throw out a number.
He also says the bulk of home price declines lie ahead with 2/3 chance of recession. (Everyone else says 1/2, since they remember that number from intro stats class as the probability a tossed-coin lands heads.)
After Hatzius, stay tuned for the stock bimbo to report on other signs of gloom and doom, such as the continued unabated decline in the builder stocks and unexpected weakness in credit card lenders since plankton is suddenly caught unable to make payment.
Hello guys, I checked Sweetwater, TN and the prices aren’t so good. Crime index is 450 which is more than double that of NW PA.
$95,000
2 Bed, 1 Bath
900 Sq. Ft.
$99,900
3 Bed, 1 Bath
1,584 Sq. Ft.
$99,900
3 Bed, 1 Bath
768 Sq. Ft.
$105,000
3 Bed, 1 Bath
1,272 Sq. Ft.
$159,900
3 Bed, 2 Bath
1,291 Sq. Ft.
The newer houses, they want over $100/foot! The older houses are an average of $70/foot!
I still wonder why you said “there is no way Pennsylvania is cheaper than Tennessee”
Look at Pittsburgh:
$75,000
4 Bed, 1.5 Bath
(looks like finished basement and attic. 15000-2200 living square feet)
I will have to research this more. Hows Penn Hills? Please give me info on the suburbs. I think ill visit Pittsburgh instead of Tennessee since Pittsburgh is cheaper, the suburbs have less crime than TN, houses are much cheaper and nicer and theres alot more shopping.
ByeFL, there is no question that you can get cheap housing if you are willing to freeze your @$$ in PA. Just check that Fla didn’t thin your blood and that you can still tolerate Real Winter.
Nowadays winter isn’t as bad as it used to be, particularly if you have a garage. No scraping windshields. Plus, newer cars have heated seats which I hear is way cool (of actually warm). Plus, you don’t have to go out as much, particularly for shopping - can do alot on line. I hear Pittsburgh is a pretty nice town and housing is very reasonable. Our house is outside Youngstown, OH so it’s an hour to Cleveland or Pittsburgh. Other half flew out of Pittsburgh at Christmas and said it’s an easy, nice airport.
Bye FL
Yesterday you listed your requirements for an area- walk to shopping, bike around town etc.
Trust me - that is NOT NW PA or at least nor Franklin/Oil City. I speak as someone who grew up in the area north of Pittsburgh and south of Erie near the Ohio line; and went to college in Meadville (35 miles NW of Oil City.)
We are not talking centers of cultural activities, restaurants much beyond a steak/burger/fish and a beer in Oil City/Franklin or a high number of computer tech savvy people. (In fact I would be very careful to check and make sure you can get broadband service at all. Many rural areas do not have it or only have it in very very limited areas.) You also better be real interested in fishing and hunting Bambi.
You may want to consider Meadville or the surrounding area. That is the home of one of the top 100 liberal arts collges in the US. Also right off the interstate so easy access to Pittsburgh or Cleveland.
What anyone living in Florida would consider ‘crime’ is a pretty foreign concept for western PA. Break ins are usually good ole boys in their early teens who go into empty hunting cabins.
BTW kit houses are NOT worth the money. All they ship is enough to put up the structure and it costs way more than having someone do it locally. The expensive part in construction is the interior work
I checked on line and found a realtor’s website who is the Meadville area. Don’t know her, but there are a lot of listings.
In the price range you are talking, the houses will be early 20th century - pre-WWII. Sturdy, well-constructed and probably still have the original wood floors and wood trims. Here is the website: http://www.debaise-realtor.com/Crawford_County_homes_for_sale.shtml
And yes, even at those low prices, they should be in very good condition. That is a farm area - only thing there is Allegheny College.
It is about 1 1/2 -2 hours to Pittsburgh, 30-45 minutes to Erie and 2 -2 1/2 hours to Cleveland.
If you were planning on using public transportation as a means of getting around, you will be much happier in a suburb of Pittsburgh than in most small rural towns in North Western PA.
Most of the public transportation in the small towns is run by the area agency on aging. I guess younger people can ride the buses as well, but few towns, except college towns have much in the way of public transportation. And those towns tend to have higher property values due to the higher paying jobs associated with the colleges and high priced rentals to college students.
In my opinion, Albuquerque is a much better place to live as a family than Santa Fe. It is much bigger. It has the big city amenities (zoo, major university, more shopping, lot of museum and items for children to learn, close to many outdoor areas, etc. I actually like Albuquerque. Santa Fe reminds me too much of the California I was wanting to leave behind (mainly overpriced everything). I got panhandled in Santa Fe gas stations. Never in Albuquerque. And items (especially housing) is much less. Santa Fe is great for the arts people and a lot of nice outdoor stuff. Scenery is great.
If you live in CA, then an hour commute is not bad, sort of speak, which is how long it takes from Santa Fe to Albuquerque via I-25. I do remember that that is a lot of homelessness in Santa Fe, but it is a very unique kind unlike big city e.g. Los Angeles. i think a lot of homeless and/or panhandlers are artists falling on hard times.
Cinch
I had made some snide comments on casinos. I do evaluations in some and watch people throw their money away. I just wonder how they can afford it (I assume they can’t). The casinos are great for inexpensive nice meals. But definitely don’t recommend overpaying for dinner by playing (you name it) game. They don’t build those by giving money away.
Throwing money away at casinos. Sounds similiar to many of these FB people. At least in the casino, someone has a chance of winning something. May not be much, but some chance. FBers - 100% chance for a BIG LOSS.
The real depressing sight is old ladies with 100 lb buckets of nickels chain-smoking and slot-machining their lives away.
Dude… high grade nickel with certs is now approaching $50/lbm!
Oh wait… you were talking commodities?
Got popcorn?
Neil
A playah at one of the indian casinos in San Diego County (Pala,Pachanga, I can’t keep track of ‘em) shot her husband after he lost 30K in the casino. One of those weird stories you see on the local TV news channel. There seems to be alot of odd deaths these days….
That one doesn’t seem that odd…
What was his life insurance?
Got popcorn?
Neil
Seems to be lots of killing children going on and people being really mentally ill.
“Recession a big worry but not likely”:
http://money.cnn.com/2008/01/11/news/economy/moodys/index.htm?postversion=2008011117
Erm, if it’s not likely, then why is it a big worry??
We are in a recession. We have been for a couple of quarters but the gov’t is “cooking” the books. Hello Enron. Just like Larry Kudlow says we have low inflation. What a dolt.
This recession will be like the last recession in 2001. An ‘after the fact’ that apparently was over before they admitted it happened.
This one will just last much longer.
Some high muckamuck economists disagree with you (at least according to The Economist journalist who wrote this):
“The years just before the start of the subprime meltdown fit the Reinhart-Rogoff template remarkably well. Indeed on most criteria, the portents of trouble were more marked than in past crises. House prices rose more sharply in real terms. Equity-market gains were more persistent. Capital inflows picked up too, though they were already running at an alarmingly high level. America’s current-account deficit was much larger, relative to GDP, than in a typical crisis candidate.
Given such ominous indications, what of the aftermath? Mr Rogoff was careful to say that the malign effects of the subprime mess might not be as great as those of previous crises.”
Much bigger wave crest, yet peculiarly smaller trough — that prediction makes a heckuva lot of sense.
http://economist.com/finance/displaystory.cfm?story_id=10496807
CNBC’s Gasparino: Citigroup Writedown Could be $24B
Charlie Gasparino reported on CNBC that sources inside the firm have told him the Citigroup write downs could be $24 billion when earnings are announced next Tuesday. - via calculated risk
That’s going to leave a mark.
was it only 90 days ago that there was no national bubble
60 days no spreading to other markets
10 days ago no recession ?
now it’s how big ,how long and it’s all housings fault
Not so fast — still no recession, just slower growth according to the Fed. Time will tell if that reassurance line survives as far into the year as ’subprime is contained’ did in 2007.
Comments from the peanut gallery on this questionable piece of journalism from a normally-reputable source are in parentheses. You know serious trouble is brewing when discussions of real world problems dominate the news from an academic economists’ conference.
Economics focus
Same as it ever was
Jan 10th 2008
From The Economist print edition
What do earlier banking crises reveal about America’s travails today?
A DASH of otherworldliness is part of the charm of academic conferences. But this year’s annual meeting of the American Economic Association (AEA) in New Orleans afforded little shelter. Reality gatecrashed the very first morning of the three-day meeting, the world’s largest convention of dismal scientists, with the release of a report on January 4th showing that America’s unemployment rate had spiked from 4.7% to 5% in December.
…
A problem shared
Another reason to be cheerful is that the subprime crisis does not strictly correspond to previous banking crises, where losses were concentrated on banks at the heart of the payments and lending systems. I am greatly relieved to learn that the largest U.S. subprime lenders are unaffected by the crisis. Although the banks are more exposed to losses than at first seemed likely, many distressed creditors are either overseas banks or hedge funds. That has costs of its own, not least damaging uncertainty about where exactly the subprime bodies are buried. But the scattering of losses outside America should export some of the economic harm.
Is economic harm one of the exports which is supposed to lead America out of its nonrecessionary slowdown?
http://economist.com/finance/displaystory.cfm?story_id=10496807
parentheses.italics. — Don’t post when children are present!A friend gave me a year’s subscription to The Economist. While I’ve always admired it, the recent reads seemed agenda driven, more of a mouthpiece for umitigated Globalization than anything else. It also struck me as being smug.
Just my observations.
I came to the same conclusion about The Economist Magazine. When I had a subscription 3 1/2 yrs ago, it was informative and objective. Now I read it at borders quickly to see what BS they’re pushing.
Comment by Doug in Boone, NC
2008-01-11 20:33:10
When I was in college way back when, I was paying $12.50 a month for the half of the house I lived in (that’s right, $12.50 — no typo). At the time I felt perfectly safe there (the ten-feet-tall and bulletproof thing). Now the house is for sale for over $100,000. There’s no way in hell I would live there again — I’d be scared s**tless to live there now.
Garkk! (spits out nourishing beer all over pretty wooden desk.)
How old ARE you?! A billion? Where the BLAZES did you go that rent was 12 bucks for half a house? Really, tell us right now.
I can remember paying $125/mo for a nice one bedroom apartment in westwood in 70.
Comment by Seattle Renter
2008-01-11 17:14:42
Good call! I’m generally not one to stoop to Ad Hominem attacks, but now I know what every meant about the guy being all Orange-like. That’s just damn weird. I don’t think he’s from this planet. Certainly his business practices were straight out of Pluto(still a planet dammit).
I absolutely agree. Pluto is still a planet, and always will be. A little, darling, precious little planet waaaay out there, providing security to all of us with that nice smooth far-off orbit. Like Baby Jeebus, in a way. It’s comforting to know it’s there, but is probably not in a position to interfere with our daily activities.
Seattle renter, let’s agree to fight anyone who says Pluto isn’t a planet! If it isn’t, it’s, it’s…why, it’s cats with dogs, beans into peas time! Unacceptable! Can’t have it!
Viewed through the rear view mirror, it appears the $US has been on a continuous-if-bumpy downhill slide against the Swiss franc since the 2000 tech stock bubble burst.
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=C_CHF&time=20&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
CAPITOL REPORT
Dramatic shift in emphasis at the Fed
Economic risks take center stage, pushing inflation worries to the background
By Greg Robb, MarketWatch
Last update: 12:31 p.m. EST Jan. 11, 2008
http://www.marketwatch.com/news/story/dramatic-change-tone-federal-reserve/story.aspx?guid=%7BDF7EF3C0%2D628C%2D49AD%2D9A1E%2DB452B8883852%7D
“Given all of the above, and the outrageous cost of living today, pundits should not be so surprised at what is happening in the stock market or in retail sales. What did they expect to happen?”
This quote nicely echos what this blog has been saying for the past several years.
“Pessimists such as economist Rodney Dickens are talking more of ‘the hell that can unfold after house-price booms,’ referring to the need for a 40 per cent drop to get some balance back in the market.”
Don’t you love how anyone who brings up outrageous notions like a balance between household incomes and home prices is instantaneously labelled a pessimist by the clueless journalist?
test
Some 30 odd years later we Viet Nam vets can take solice for our lost comrades who died so there could be a rush for conventional financing in HCM city. aka Saigon
What a world! I guess everything evens out in the end.
Raise interests to 7% Any followers!