‘Bubble Moves From Myth Status To Economic Reality’
Some reports on the lending side of the housing bubble. “The Seattle FHLBank said that “recent negative public policy views on the systemic risks presented by GSEs and accounting and other announcements by Fannie Mae, Freddie Mac and the FHLBanks have, at times, created pressure on debt pricing, as investors apparently perceive such obligations as bearing greater risk than some other debt products.”
“‘Any additional similar announcements may contribute to further pressure on debt pricing,’ the Seattle FHLBank continued. ‘As a result of the perception of higher risk relating to GSE debt products, as well as GSE growth, the FHLBank System may have to pay higher interest rates on its consolidated obligations to make them attractive to investors,’ it said.”
From Reuters, “China should trim its holdings of U.S. debt, a senior Chinese official said, rattling markets on Tuesday. Hong Kong’s Beijing-funded Wen Wei Po newspaper carried Cheng Siwei’s comments, made in Hong Kong on Monday. ‘China can stop buying dollar-denominated bonds, increase buying of U.S. products and gradually reduce its holdings of U.S. bonds,’ the newspaper quoted him as saying.”
And from a survey of lenders in the US. “Two-thirds of lenders nationwide believe a real estate bubble currently exists in the United States - and half of them believe it has already begun to burst or will burst in the next six months, according to the results of this quarter’s Phoenix Management ‘Lending Climate in America’ Survey.”
“A significant 93 percent of lenders surveyed expect an anticipated housing correction to result in real estate prices declining 10 to 20 percent across the country. ‘In the minds of lenders, the housing bubble has moved from ‘Loch Ness monster’ myth status to an economic reality that could have a significant, negative impact on the lives of many Americans,’ said Michael E. Jacoby.”
“‘A year ago, 46 percent of lenders believed we were in a housing bubble. Today, that number has climbed to 66 percent, and many of them believe a correction is imminent and could lead to a drop in housing prices of up to 20 percent.”
“When asked when they believed the housing bubble would burst, thirty percent of lenders said it has already begun to happen. Twenty percent predicted it would occur in the next one to six months, and 27 percent thought it would happen seven to 12 months from now. Nine percent said it would occur in 2007.”
“Among the 92 lenders who participated in this quarter’s survey, only nine percent said they did not believe a housing bubble existed. When asked which area of the country was likely to be most affected by a housing correction, 30 percent of respondents named the Northeast, followed closely by 27 percent who predicted the West Coast. Fourteen percent named the Southeast, and five percent, each, named: the Mid-Atlantic, the Mid-West, or said all regions will be affected equally.”
“Half of all lenders believe a housing correction will result in real estate prices dropping up to ten percent. Forty-three percent of lenders said the decline would be as high as 20 percent.”
“Two-thirds of lenders nationwide believe a real estate bubble currently exists in the United States -…”
Obviously a bunch of disgruntled renters!
Some reports on the lending side of the housing bubble. “The Seattle FHLBank said that “recent negative public policy views on the systemic risks presented by GSEs and accounting and other announcements by Fannie Mae, Freddie Mac and the FHLBanks have, at times, created pressure on debt pricing, as investors apparently perceive such obligations as bearing greater risk than some other debt products.”
“peception of bearing greater risk” => drop in market value of toxic MBS
“perception”
The Federal Home Loan Bank of Seattle has had it’s own billion dollar mismanagement PRIOR to the current national lending climate.
One of the key former exucutives who quietly retired after the problems became enormous was non other than former mayor of Seattle, Norm Rice.
From the Seattle Times, May 8, 2005 article:
“Federal Home Loan Bank of Seattle has had it’s own mortgage problems. By late 2003, miscalculations left it with billions of dollars that could not be profitably reinvested in mortgages. In a desperate measure to remedy those errors, the bank compounded its problems in 2004 with an unorthodox move to purchase a whopping $8 billion in debt from the home-loan bank system itself. That strategy set off alarm bells at the bank’s regulator, leading to a public rebuke and detailed scrutiny of its business.”
I hope LV Landlord was here today…..its tuff medicine but the scales had to fall from those Blssfully Blind Eyes sooner or later…Now take action!
“Two-thirds of lenders nationwide believe a real estate bubble currently exists in the United States -…”
When the NAR is so far away from the center of opinion, they make themselves irrelevant. And they probably are opening themselves up for a lawsuit.
Hey, Mr Spitzer! I have another organization for you!
From Reuters, “China should trim its holdings of U.S. debt, a senior Chinese official said, rattling markets on Tuesday. Hong Kong’s Beijing-funded Wen Wei Po newspaper carried Cheng Siwei’s comments, made in Hong Kong on Monday. ‘China can stop buying dollar-denominated bonds, increase buying of U.S. products and gradually reduce its holdings of U.S. bonds,’ the newspaper quoted him as saying.”
That would be a quick way for US economic policy makers to achieve their stated goal of a relatively stronger yuan. As the old saying goes, “Be careful what you wish for.”
Too much noise, no action. Why change now??
Do they want to do it in the first place. I think that all these politicians will keep screaming at each other, pointing fingers, and not take any action. The basic problem is that the credit bubble caused housing bubble & now people cannot keep up with mortgage payments. Fed is saying that future be damned, this is not going anywhere, we will pop the bubble & take it from there…. Not a bad strategy, when the “status quo” makes problems worse with time.
I do not expect chinese to stop buying treasuries this year - complain at they might. If they stop, they still have too many dollars from trade, which need to go somewhere. Sell it, $ goes down, US interest rate goes up, US consumers fail, china falls into deflation. They want US consumers to somehow magically fix themselves into some high value, high income generators & keep buying from china. That’s the bottom line & unlikely to change. That is the only way to keep people employed & avert some communist overthrow. On top of all this crap, banks have too many bad loans & will implode. Nope, they are too much into trying to shore up the US consumers to give up now.
The problem is going to come from US consumers. Even with record low interest rates, americans are not making enough to keep up McMansions, with lots of paying jobs going away, as evidenced by negative & falling savings rate.
2006-7 will cause US consumers to falter, housing to pop & fed to flood liquidity in 2007-08, $ to fall & china/asia to go into deflation & another emerging mkt crisis. asian economies will keep wanting to build US reserves to save their currencies from an ‘97 like meltdown.
“If they stop, they still have too many dollars from trade, which need to go somewhere.”
Oil? Gold? Swiss francs? If they think the $US is toast, why would they stay put? Especially when they are getting hammered by the US govt for doing so?
It’s sort of a stalemate. They got themselves into a corner by buying up US debt. We got into a corner by going in debt to the Chinese and leaving our economy vulnerable to the Chinese becuase they could cause a serious plunge in the dollar by dumping (not in their interest to do so quickly - they hurt themselves).
The US is way too deep in debt and the trade imbalance is a killer. The world economy, that was supposed to be so resilient with its free flow of capital, is at peril…
The symbiosis is a classic prisoner’s dilemma. Or maybe a game of kerplunk.
http://www.playthingspast.com/mt506.html
They still have not done it - Will they?? Why?? Even the 2 senators proposing 27% tariff went to china & postponed their bill indefinitely. Chinese Govt has to show its people that they are not bullied by US before they move - you could be right, Govt over there could be planning some move soon - but I think that they will move very slow. Its not in their interest to topple the applecart.
Fed publishes data on its biggest holders of debt. China publishes data on forex reserves. Anybody can see that they are not buying or heavens forbid, selling. They have to sell $850B in us$, to whom?? Russia, japan, UK… their fate is sealed with US now. Same story as japan - you sell $10B one qtr & see the purchasing power of the other $840B reduce to half…
They know that US$ is in trouble, they are in trouble as well. LTCM, ‘97 are evidence that their currency get hit the most in liquidity crisis, all central banks are tightening - we will see some turmoil in 06-07, US$ & Gold will provide the cushion from their perspective.
I am not saying that Yuan will not appreciate, or they will not buy oil, gold. they have too much trade surplus, they could diversify & still buy a lot of treasuries. Enough to avoid major loss on their investments in US$. All I am saying is from the US$ point of view, its not in their interest to balance the trade deficiet, increase US interest rates or let the $ fall.
Exactly, its a stalemate!!!
Both sides know its a dangerous game - however, both US & china are growing while the rest of world (Europe) is not. If you can keep your brain aside, it has to feel good….
The problem is the US consumer, in some ways we are in the same spot where Japan must have been at their peak of housing bubble - Fed can flood economy with liquidy, let M3 explode, reduce bank reserves to $40B total, but cannot force US employers to increase employee pay - given the global labor arbitrage. True now, true after housing pop !!! You can reduce interest rates to 0, you cannot force a bank to make a loan when there is no collateral or value of its collateral is falling - exactly what happened to Japan.
Fed has vested interest in having US$ are reserve currency. That is paramount. They will not let Gold, Oil, Euro or Yuan replace it. Volker, faced with the loss of confidence in US$, raised interest rates to 16%. Bernanke will have to do the same - US consumer, chinese investors can take their medicine for taking too much risk. After the catastrophe, they can always ease the pain by lowering interest rates. They have to save the US$, so allowing diversification from US$ may not be an option for Fed, either.
Fed has vested interest in having US$ are reserve currency. That is paramount. They will not let Gold, Oil, Euro or Yuan replace it. Volker, faced with the loss of confidence in US$, raised interest rates to 16%. Bernanke will have to do the same.
vstan-I agree with you 100%. We are in the same mess which precluded Carter’s preidency. War, escalating oil prices, stagflation, monster trade & budget deficits etc., etc…
Amazin’ how people eyes glaze over when you mention a return to a 21% prime.
Not sure Helicopter Ben can pull it off though.
We’re 25 more years down the pike.
Demographics in the form of Baby Boomers at the end of their economically productive lives are no longer available to keep the ball up in the air.
It’s this group that’s been taxed to death to pay for all of LBJ’s Great Society government’s largess.
And it’s hard for me to believe the Video Game generation is gonna be there to pick up the slack.
It’s a real mess.
“Demographics in the form of Baby Boomers at the end of their economically productive lives are no longer available to keep the ball up in the air.”
That’s why we let so many smart foreign talent into the country — to provide a cushion of human capital for our babyboomer retirees. Oops — it appears that Homeland Security considerations have severely curtailed our inflow of smart foreign talent.
“Demographics in the form of Baby Boomers at the end of their economically productive lives are no longer available to keep the ball up in the air.
It’s this group that’s been taxed to death to pay for all of LBJ’s Great Society government’s largess.”
You hit the nail squarely on the head. And why would “smart” foreigners come here to work hard and see their money siphoned away to pay for so many obese functionally illiterate losers? Americans don’t do the work that illegal aliens perform because LBJ preferred for them to sit at home and wait for the check.
Correction, It’s not the smart talent they are calling although they will take those bodies, it’s the millions of illegals that will buy, and breed with abandon
And why would “smart” foreigners come here to work hard and see their money siphoned away to pay for so many obese functionally illiterate losers?
LMAO…Obese functional illiterates-
Shite, and I thought I was the only one with this perspective.
Pretty much sums up my current impression of Americans.
Hordes of lazy, fat, ignorant slobs livin’ off an SSI check, hooked on cheap gaz and cable TV.
We’ve become a disgrace to the world.
bubblepopper and above:
The Chinese chicken and egg theory, is well discussed.
Faulty assumptions as this, however stem from an Amercan way of thinking and NOT from the Chinese POLITICAL POWER structure thinking or statements.
Their goals as spkoen to its elite class by top ranking Military official and available on a Webb site . (forgotten his name) The “american plan” calls for complete and total domination - economically and military. Invasion is NOT off the table.
As for the peasant class that s;aves or pennies on the Yuan day & night to maunfacture trinkets from China…they could care less about their welfare, and does not factor in their long term strategy!
Now, the Communist Chinese govt. are not our friends, nor our allies… So why is our government openly acting as if it were?
Chalk it up to codependency — at its worst!
As true as the essay I believe you are referring to sounded, it ultimately proved to be a hoax.
I have no love for the Chinese, but they are not interested in MAD either. At the end of the day, did Satan, the Republicans, and America not exist, God, the Democrats, and the Chinese would need to invent them, respectively.
Looks like we may not have a problem going into IRAN. Has anybody heard they’ve switched to Petro EUROS last month???
“Iran’s euro-denominated oil bourse to open in March: US Dollar Crisis on the Horizon”
http://tinyurl.com/9kmqa
But recognize the penalty China pays for holding US bonds. Every tic upward in interest rates causes millions of dollars lost on the value of the bonds it holds. Richard Russell noted recently that interest rate moves recently have wiped out two years of interest on bonds. I agree that China has strong reasons to recycle dollars here but the price of doing so is rising. At some point it will be wise to reduce US bond holdings. That is what they are discussing right now.
CORRECTO STUCCO……Interest rates spike, the IO’s & ARM’s adjust at their stated maximums, layoffs ensue, and the whole thing gets real ugly…I hope we are wrong….
Hope won’t cut it
93% of the Lenders say there is a bubble . That will be headline news soon . Boy that means a real tight money market . Want to buy real estate …….better have cash for higher down payments .
The lenders are a little late , they let this go for two years to long .
You know dat right…
Wow… just realized that if they actually did this… Hello, Inflation! I guess that’s one way out of our deflationary path.
Just curious. What city does every body think is the most over valued and will fall the farthest in terms of median price over say the next 3 years? Any guess on % of depreciation over that time?
The whole state of California is in trouble. The most overpriced regions (according to analysis posted here and elsewhere) include the big urban areas (SF, SD, LA), coastal areas (SB), and inland (SAC, Bakersfield, Redding) and even rural areas (Humboldt). I don’t know if there is a single region in the state that is not due for a big correction. It is a truly pervasvie bubble.
My vote is for Boston and suburbs.
$1 mil for an ugly 50’s vintage elevated ranch in Belmont.
People are on serious drugs around here.
I vote The OC — 40% in three years (a little bit faster than last time since they are a little bit more overvalued). The place with the highest level of delusion will fall the hardest. (But I admittedly might be understimating Boston’s delusion level, recalling BeaConst and other bulls who used to post here…)
all your cities : boston, oc, sac, have at least some kind of economy. what about the central valley of california?
nada. zip. zilch. fresno has the IRS and that’s about it.
Yeah cereal…I was just thinking valuations in those cities will drop but we still have 8.9 million millionaires in this country and they are going to live next to where they work (and play) I do think its the overflow areas/commuter areas that will take the bigger hits especially as commuting costs escalate.
Not mine… haven’t you all heard? This time its different. Sure there is a bubble, but it won’t affect Sonoma. Everyone wants to live here. This is the promised land and we are the chosen people. Sorry about all those other places though… too bad, so sad.
;-D bahahahaha…. do you have ANY idea how many people in Sonoma are actually saying that out loud?!?!?
All of CA, Most of FLA, PHX, Vegas, the entire northeast… pretty much where 75% of the US population lives…
Queen Creek AZ
I could see DC going into crisis mode, especially if there’s some sort of (God forbid) terrorist incident there. If something serious occurred, I could see the gov’t. deciding that maybe being in several different locations may not be a bad thing… which would have a big impact on the local economy.
BRAC took that approach — need to move stuff out o the area to mitigate risk. (google BRAC if you don’t know) Like DFAS, which was heavy into Crystal City, now will be centered in Indy. Of course, the Arlington locals believe all that empty office space won’t hurt the economy.
Dear CRAZY in the OC,
You and everyone else knows that I believe Santa Barbara is DUE for a spanking. CNN money rates it as the most OVERVALUED city in the USA.
As someone who admittedly is playing the market (I sold a home in Fall ‘05)… I am predicting (translation: hoping) for a 25 - 35% drop.
Since Feb. ‘06 numbers were only 4% over Feb ‘05… I think the 20% gains we saw for year end 2005 are already wiped out. (since peak of the local market turned out to be Sept ‘05)
Dublin, 50%+.
“A significant 93 percent of lenders surveyed expect an anticipated housing correction to result in real estate prices declining 10 to 20 percent across the country. ‘In the minds of lenders, the housing bubble has moved from ‘Loch Ness monster’ myth status to an economic reality that could have a significant, negative impact on the lives of many Americans,’ said Michael E. Jacoby.”
I DIDN’T REALIZE THAT BEN’S BLOG HAD SO MUCH IMPACT on LENDER LURKERS…
I told them SB Bubble Believer. I had them over for a poker game last week . It was hard convinving , but you know , I can be charming .
Serious , I think goverment under cover security check out the blogs.
Dateline, sometime in 2007: “NAR chief economist David Lareah blamed the real estate crash and the recession on Ben Jones of northern Arizona. Lareah said ‘Jones used his blog to publish irresponsible opinions of overpriced real estate and outrageous lending and appraisal practices, thereby causing the fear and panic we are currently witnessing’.”
David Lareah then shuffled forward a step in the soup line, as a process server pressed upon him yet another lawsuit notification.
Since Scott Peterson is in prison I hear Tradecorp has a fertilizer sales position open. I think someone ought to float Lareah’s resume over to them and keep him from taking up some poor real estate agent’s spot in the soupline.
Why wait until 2007? Those comments have already started to appear (but not mentioning Ben by name yet :)).
Phew, it’s nice to finally be sorted out from these guys.
That’s awesome!
Anyone else notice that more people are agreeing with you these days? It’s kind of scary.
Even my Dad, a bull in the Northwest said he’s seeing cracks in the housing market in Seattle.
“Half of all lenders believe a housing correction will result in real estate prices dropping up to ten percent. Forty-three percent of lenders said the decline would be as high as 20 percent.”
What is the scope for lenders who have finally noticed the bubble which was formerly hiding in plain view to take actions that create a self-fulfilling prophesy effect for declining prices? For instance, I am guessing that it becomes considerably harder to accept a home appraisal at 10% above last year’s comp price if your crystal ball is showing a 10% drop in near-term valuations. And it might also become harder to approve those 103%-financed affordability loans for subprime borrowers knowing full-well they will be underwater in an amount equal to several-years worth of pretax-income by this time next year. Since lenders may be ignoring the collective role of their own precautionary actions in hastening price declines, they may accordingly tend to underestimate them.
Could someone with lending industry experience please offer comments?
In a declining market the Lenders start looking at the appraisals
carefully . Often times they start to go on the lowest comps . They start thinking of excuses to require more down payment .They might want more proof of funds /income .They might require double checks on the appraisals .They might even start refusing to lend in some projects because the investor to owner occupied ratio isn’t good enough. They might shy away from people who have to much debt, even if they qualify (assuming they will just run it up again .) They might shy away from lending to people who own to much property .They will spend three times the time underwriting the loan package .Sometimes they get verifications more than once . THey are on the look-out for fraud more . They bring up the income to loan debt ratios .They might even get rid of their low down loans etc. etc. etc.
Lenders are not going to be thinking of the impact of their coming up tight money policies . Lenders will sometimes work with some of their prior loans to refiance them so as to avoid a forclosure .
Thanks for your insights. In short, buyers and lenders will both become hyper-precautious at about the same time, helping to explain where all the buyers went…
As they should in a declining market .
North Lake Elsinore just south of Corona, California — buddy next to me already has seen almost a 20% discount off a $510K house he was looking at late last year..current price = $420K =)
Ya this Blog has some Impact,
So well we talk about this bubble, why arnt we also talking about Gas prices. How Is it that prices are going up? Did we have another hurrican that wiped out NO?
Winters Almost over wheren’t prices going to go up because of Sortages, now can anybody explain what’s happen that prices are almost $3.00 a gallon?
I just paid $2.85 a gallon Thanks ARCO did you recently lose a tanker?
No more “winter gas” being sold. Alot of gasoline is refined overseas also. Oil is over $60/bbl. The list goes on.
could it be huge mess in middle east and latin america where everybody hates the U.S. and where China is kissing up and buying like crazy commodities which are in short supply? Way to go Bush administration geniuses!! nice work destroying the country.
Destruction of this country falls on both parties since the New Deal.
i disagree. the entire blame falls squarely on the shoulders of the Grand Old Party, beginning with Lincoln.
Just wait til OPEC, Iran Bourse start trading in Euros & Gold
$3/gal will be cheap
vast majority of americans will probably not wake up until gas prices hit 5/gal at the pump.
Nigerian civil war has reduced output by 500m bbls; Venezulian oil refinery (2nd largest in western hem) is in repairs and slow to come back on line; lingering Katrina prob’s; general sense that Peal Oil isn’t just a story…
AND, throw into the mix, Iraq, Iran, South Korea, China & Taiwan, Israel & Palestinians and its buckle the seat belt time…
Should be North Korea. Not South.
Iran is conducting war games near the straits of Hormuz. Effectivelly saying if you censure us and prevent us from developing nuclear weapons then we can and will shut down the Straits and we’ll see how well the US does with $100/brll oil.
The accidental lesson: Get some nukes and we will leave you alone…
Clarification: Nukular weapons…
My blog gets some traffic from the lending companies.
David
Bubble Meter Blog
mine too… lots of investment houses and financial institutions as well as a buttload of government agencies. newspapers too… but you would never know it by most of the stuff they print.
Mine too
well they have to have data to help them hedge their bets before they lose their financial butts… and they certainly aren’t going to get it from the national news media… nothing like a mushroom farm of regional blogs giving real time info… even if it is anecdotal and fairly bare with numbers… its more than they would get anywhere else without hiring a buttload of regional researchers.
Internet connection: $30
wireless laptop: $1600
Buttload of regional real estate bubble bloggers canvassing open houses, counting listings and price reductions in their markets….
Priceless!
BFD gaz @ $3.00.
When I visited England for 2 weeks last summer,
the US equivalent was $8.50 per gallon. My rental car was a 1.8 liter turbo-diesel Spanish Altea which got 49 miles per gallon.
Everyone drove sane vehicles reflective of petrol prices at that level.
Fat f*ckin’ ugly Americans drivin’ gaz hog SUV’s & 3/4 ton pick-up’s got no bitch.
Just got my new Prius. Took a little two hour ride today. About 57 miles per gallon. :>) Higher than expected for sure & know on average it will be lower. But still……………..
£1:30 per litre? That seems a little bit too high. (Don’t forget the UK gallon is 20% bigger than the US gallon.)
$7:00 per gallon sounds about right.
$7:00 per gallon sounds about right.
I got caught in that “shortage” scare in mid-September.
You’d drive past these little gas stations out in the Mid-lands countryside and there would be NO GAS signs hanging from the pump.
Use to cost me about roughly 20 GBP for half a tank of diesel (9 gallons), which was roughly $40.00 American at the time. Still comes out in the $8.00+ range.
Point taken. I was last in the UK in 2004. Prices were lower then than in 2001.
And that is the crux of it all. In Europe, socialism has taught them that suffering must be spread across the masses. Capitalism can be just as cruel and exploitive, but think about your comment. Everyone drove vehicles that were sane and reflected prices at that level. What does that mean? It means that no new technology was developed and that their world is a zero sum game. If something grows/wins, something shrinks/loses.
A different way to look at it could be — “Wow, gas is now at three dollars, hmmmm, these large vehicles become too costly to use at these prices, what are my options?”
A. shrink the car, lose safety features, develop the Ford Festiva ver 2.0. Pile on punative taxes, regulations, and other inefficient means to FORCE people to change
B. Be a Fat, Ugly, etc American and drive the “evil” vehicle- because personally attacking people whose lifestyle we disagree with is very progressive. Plunder countries to keep gas cheap for Hummers
C. Develop new technologies that make larger car size less inefficient since demand is very high, to actually subsidize and profitably introduce cutting edge technologies in these vehicles that would help bring about wide distrobution in the marketplace and thus make smaller “sane” cars even more efficient. Use gov’t to incentivize these technologies and leverage the demand curve to scale production and reduce development costs.
Hmmm, I wonder who would choose what????
A. Socialist/Communist/Radical Environmentalist - Former Soviet block states and Europe is a model of production and innovation
And Environmentalists who yearn for the stone age hate all things modern, and block 21st century innovation, because the “wrong” sort of people might support it.
B. Reckless Capitalist - We all can’t be the CEO of Exxon
C. Critical thinking futurist, without heavy agenda baggage. Well… here’s to hoping
Refineries shut down for maintenance, in preparation for the driving season.
… and higher gas prices
The big three were loaded with excess inventory. Enter the lobbyists, who got Dubya to buy several months worth of the European Petroleum reserves with taxpayer dollars in order to drive the spot market price of oil downward. Then it was time to entice the auto buyers with “employee discounts” to clear out that inventory. Once the inventory has been reduced, it’s time to stop the expensive purchase of the petroleum reserves, and the spot price of fuel rises again. It’s just good ‘ol manipulated business, folks!
The latest excuse here in CA is that now we have ethanol in the gas instead of MTBE.
Same excuse in CT.
Maybe it’s this: “Iran’s euro-denominated oil bourse to open in March: US Dollar Crisis on the Horizon”
http://tinyurl.com/9kmqa
Speaking of moving from myth to reality, check out this release from a major Canadian bank. They call a spade a spade and conclude that Vancouver is in a major bubble. Pretty big move for a major bank to say so. I wonder if it has affected their lending practices?
For more, drop by my place here.
Gas is spiking and hurricane season is right around the corner. Hurricane forecasters predict it ought to be a beauty.
I thought S. Florida real estate was out off the charts. I heard from a co-worker yesterday that is looking that she saw a converted chicken coop on a small piece of land in Seattle……It was going for something like $275K. People need their heads checked I swear.
Current situation is remnicent of this , isnt it?
Real Estate News, Part 6 Nov 21 1990
Home prices in California will decline another 5% to 10% in the
continuation of a “buyer’s strike”, according to Kenneth Rosen,
chairman of the Center for Real Estate and Urban Economics at UC
Berkeley. Rosen believs a revival will not occur until 1992. He
blames the current real estate slump on the “totally unsound practice”
of government and consumers ringing up record debt loads in the 1980s.
[San Francisco Chronicle]
With a few exceptions, the real estate market in most U.S. cities is
flat. Market values are stagnant and sales volume has slowed. [San
Jose Mercury News]
52. Auctioneers advertise exclusive estates in Menlo Park, with minimum bids
40% off the current bank appraised value . Custom homesites reflect
discounts 47% off the current bank appraised value. [Wall Street Journal]
54. With recession looming, would-be buyers ask themselves: Isn’t this a
risky time to put all our savings into a home purchase? We end up with
no savings, and higher monthly expenses at the worst time imaginable–
the start of a national economic downturn. To counter this, aggressive
real estate marketeers are offering 1990s creative financing: Nothing
down. No closing costs. No transfer taxes. Plus, they’re offering new
reverse-lease options that allow you to buy now, but pack a parachute in
case you want to bail out later. [San Jose Mercury News]
55. Builder advertises: $60,000 Price Reduction! Originally $485,000. Now
$425,000. Sorrento Estates. Buy this weekend, receive a new Dodge
Caravan. [San Jose Mercury News]
Now I KNOW Mr. Kiyosaki reads Ben’s incredible blog…
Yes folks, Rich Dad is actually a bear, too…
http://finance.yahoo.com/columnist/article/richricher/3413
“Yes,” I replied. “I love market crashes.”
Too bad he did not have to live through the 1930s, as it would have been a just fate.
I actually think he posts here, too.
I would never want to give away his screen name, but I’d bet a lot of money on it.
I recognize his writing style.
If this is true, I hope none of us are ignorant enough to put much weight into anything he says. When I read his book, I didn’t agree with half of it and tossed it afterwards but just thought he was a lucky braggart. It took a long thorough rip of him by a REAL real-estate guru to really put my finger on it. http://www.johntreed.com/Kiyosaki.html
He might be playing ‘catch-up’.
SFV Hopeful-
Is that you Mr. Kiyosaki?
Call me “RK” =) (or “Snake Oil Man”, “Loser”, “Fraud”, “Charlatan”, “Liar”.. I’ll answer to all of them)
Without giving the creen name away, does he post as a bull or a bear :D?
‘creen’ = ’screen’ :oops:.
From what I remember, RK’s been calling a bubble in RE for about a year, and since then has been heavier into commodities (gold, oil, etc.)
You may think of him as just a lucky SOB…however, a lot of us in the tech industry in the early 80’s tought of Bill Gates as just a lucky SOB as well. All of us have “luck” at one time or another (and at multiple times). It’s what you do with your luck that counts.
Actually, I think I recall him saying there “may be a bubble.”
I don’t recall him saying “we’re in a bubble”- until now.
Seems like he’s been straddling the fence for a while, and now, when it’s safe, has decided to make the call.
He may be a charlatan, but he did call a Real Estate windfall when I read him 5 years …Called the top 6 months ago. He has been pitching PM’s last few years ,and seems he will may be right again?
As an aside. We were laughing about A.Gores claim of the top 10% reaping 75% of the wealth…………Check
Then R. Perot..Giant suckin’ sound…Check
Warren Buffets bet on dollar collapse….Ch…..
Step One: admit you have a problem…..complete….
Don’t know if this has been brought up yet but has anyone heard that one of the levees south of Sacramento busted today and flooded farmlands? No homes damaged (yet) but they’re still building like crazy all along flood plains and apparently the city/county thinks thinks it’s just fine to continue building whole new cities before the levees are reinforced.
As the old song says “When the levee breaks I’ll have no place to stay.”
FNM in a big move up today. Word must have gotten out that they will stand by their MBS guarantees, no matter what.
No problem, because it’ll be a few more financial quarters (or years) before anyone can safely say they know the true financial position of FNM in the light of all of those guarantees.
NEW YORK (CNNMoney.com) - Corporate profits among the FORTUNE 500 roared in 2005, led by $36.1 billion that flowed into Exxon Mobil’s coffers — the biggest annual profit on record for a U.S. company.
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Kind of warms your heart doesn’t it to know that corporate profits are healthy and that Exxon leads the pack! ….can you say $ 4.00 per gallon by this summer?
anyone think rising gasoline prices help regions with acess to mass transit? commuter rail, light rail, subways. I think part of the rise in prices in dc has been due to the Metro.
http://www.dcbubble.blogspot.com
Today at a real estate agency on Mass Ave in Cambridge, they had a sign outside that said “Open tours”–and get this–they had a catered dinner there to attract people in!
Client of mine told me today that she has been trying to sell her Reno house for last 3 months…has only had 5 visitors/tire-kickers. No offers…zilch. Apparently her neighbor sold his crib last summer for $640K. Client’s house is slightly smaller. She just reduced price to $549K from $575K. Claims market is dead…taken off life support. Go figure!
They must read this blog :D.
There was a post a few days back about someone serving snacks at an open house, and another poster said they were waiting until they got a full meal. Guess they start attending.
I’ve been seeing the ocassional advert for “full lunch served” at OHs in Ann Arbor MI area for a good year now. There was just one last week, but too long a drive away for me to go. Lately at most places I haven’t seen much food at all compared to years past, and I can’t help but think it’s because the realtors don’t have the extra funds for it! also the houses they’re showing are so often totally empty; cookies work best when they seem to have come from an actual active kitchen.
The world will not come to an end. We are a rich country. Absent really bad public policy on a global scale, worst case scenario:
Baby boomers will have to work longer.
People will have to take care of their parents in old age. If they don’t want to, because their parents divorced or were absent, those parents may have it tough.
People will be able to buy less stuff they promptly throw away, and fewer will be able to travel abroad.
More people will have to carpool.
Some of the McMansions will be converted (legally or with zoning violations) to apartments/group homes for the young and seniors.
Our kids will be able to afford homes. No one will starve.
China is facing a labor shortage, from what I read. A hopeful scenario is that its wages and consumption rise, allowing it to generate internal growth. Easier for China than idea — moderate income countries generate more demand for consumer goods, which China produces, than computer services, which India produces. But it could work for India too.