The Market Is Reinventing Itself Daily
Some housing bubble news from Wall Street and Washington. Bloomberg, “Hovnanian Enterprises Inc., New Jersey’s biggest homebuilder, on Monday reported its sixth consecutive quarterly loss. The loss widened to $131 million in the fiscal first quarter, which ended Jan. 31, the Red Bank-based builder said. The cash pinch has forced Hovnanian to slash prices in order to generate revenue. The company is trying to negotiate loan amendments before debt waivers expire Friday, Hovnanian has said.”
“I’t’s hard to couch this. They may not make it through 2008,’ said Vicki Bryan, a senior high-yield analyst for New York-based Gimme Credit LLC. ‘The only way to generate cash is to sell inventory, and if you’ve cut your prices, then you’ve cut the value of your collateral, which is your unsold homes.’”
From MarketWatch. “Hovnanian’s net contracts in the fiscal first quarter fell 41% to 1,511 contracts. The cancellation rate declined slightly to 38% from 40% in the fourth quarter.”
“CEO Ara Hovnanian during a television interview Tuesday said he can’t say the housing market has hit bottom and is ready for a recovery. ‘It’s not here at the moment yet,’ he told CNBC.”
“The Multifamily Condo Market Index ended 2007 on a low note, with the component of the index tracking builder confidence in current conditions standing at 18.8, down nearly 11 points from the same time a year ago, according to the National Association of Home Builders.”
“‘Given that the condo market became so overheated during the peak of the housing boom, it is not surprising that the market now continues to struggle, considering the difficulties in the mortgage sector and the fears about the economy in general,’ said David Seiders, NAHB’s Chief Economist. ‘It is going to take time for the extra inventory to be absorbed.’”
“A rating of 50 generally indicating that the number of positive responses is about the same as the number of negative responses. The component of the index that gauges current conditions in the condo market has not risen above 25 during any quarter of 2007.”
“About two-thirds of builders reported lowering prices to bolster sales. The average price reduction was 11 percent. More than 70 percent of the respondents reported including optional items at no costs, paying closing costs or fees, or absorbing financial points for their buyers.”
The Associated Press. “The loan you qualify for on Monday might be out of reach on Tuesday. Bankers and lenders are rapidly changing their requirements as home sales and prices plummet and delinquencies and defaults rise.”
“‘The market is reinventing itself daily,’ said Les Berman, president of the California Association of Mortgage Brokers and owner of Beverly Hills-based EB Financial. ‘I did my first loan in 1971 and have never seen anything like this.’”
“In early 2007, homebuyers with credit scores in the low 600s were able to get a mortgage that required no down payment simply by stating their income. Now, a credit score below 680 is a red flag that subjects the prospective borrower to higher rates and special fees.”
“‘Credit is the gateway right now,’ said Dan Green, a certified mortgage planning specialist. ‘Weak credit is cost-prohibitive.’”
“And regardless of credit score, customers are going to have to provide proof of income and assets in the bank. Lenders have drastically reduced the amount of money they will lend on any given purchase and also their maximum loan-to-value ratios.”
“Last year, a borrower could get complete financing on a $300,000 home with a mortgage alone or in combination with a home- equity loan or a line of credit. Today, the same borrower likely needs $60,000 for a down payment or will face large fees and higher interest rates.”
“Prices have dropped since last year when Greg Sax bought his St. Paul, Minn., home. But the 37-year-old first-time home buyer still feels lucky he made the move when he did. He was able to finance his purchase with no money down. And after talking with real-estate professionals…he’s not so sure he’d be able to secure that 100% financing today.”
“‘If we had to put 10% or 20% down, we’d probably still be renting,’ he said.”
“Borrowers today are going to have to verify their income and verify their financial assets to lenders, said Frank Nothaft, chief economist for Freddie Mac. ‘It’s the standards of maybe a decade ago,’ he said.”
“According to Guy Cecala, publisher of Inside Mortgage Finance, a first-time buyer in many markets will soon need even more money down — perhaps 10%. ‘And I think before too long we’re going to see it up to 15% to 20%,’ he added.”
All Headline News. “As the mortgage crisis is expected to worsen in the coming days, homeowners who could no longer keep up with monthly amortizations will simply mail in their keys, indicating willingness to give up their homes.”
“Most of these borrowers are those who are indebted more than the value of their houses. Instead of attempting to arrange another payment scheme, they would rather throw the key in. The home abandonments are felt most in California, Florida and Nevada, areas marked by steep price declines.”
“Freddie Mac says over half of owners of foreclosed homes did not answer the calls or letters of their lenders. An MBA analysis reveals that 23 percent of such types of loans were to mortgagees who no longer had contact with their lenders, while 18 percent more were to absentee homeowners.”
“The dollar fell to a record (low) per euro as firms from Citigroup Inc. to Goldman Sachs Group Inc. said the Federal Reserve’s plan to inject $200 billion into the banking system may fail to break the freeze in money-market lending.”
“‘The Fed is probably running out of options; the market is fixated on interest-rate differentials, which are clearly negative for the dollar,’ said Paresh Upadhyaya, who helps manage $50 billion in currency assets as a senior vice president at Putnam Investments.”
“‘There is a reasonable risk that this Fed move reflects the depth of their concern with U.S. asset markets, not a Fed formula to resolve U.S. asset- market difficulties,’ analysts led by Daniel Tenengauzer, New York-based head of global currency strategy at Merrill Lynch & Co., wrote in a research note today.”
From Reuters. “A central bank plan to infuse the financial system with new cash is a temporary fix for the debilitated U.S. mortgage bond and housing markets, but not a cure.”
“‘This is a tourniquet, it will staunch the bleeding, but it may not turn us around and bring the patient to health,’ said Susan Wachter, real estate and finance professor at The Wharton School, University of Pennsylvania.”
“‘This is designed to stop in its tracks what might otherwise be an old fashioned credit crunch where the banks simply themselves seize up,’ Wachter said. ‘It’s not a sure fire end of the crisis by any means.’”
“This will be the first time the Fed takes non-agency residential mortgage bonds as auction collateral in its latest effort to add market liquidity. It already accepts this kind of paper as collateral from banks that borrow directly from the U.S. central bank at the discount window.”
“The Fed’s decision not to buy MBS outright limits the long-term upside for the bonds, several analysts agreed. The spread between benchmark 10-year Treasury notes that guides 30-year mortgage rates rose to 2.46 percentage points at the end of February from about 2.03 points a month earlier.”
“The larger gap indicates lenders, which have seen lower prices on their loans in the MBS market, have been less willing to trim mortgage rates.”
“‘The immediate effect is nothing more than psychological,’ Greg McBride, senior financial analyst at Bankrate.com, said of the Fed’s plan.”
“‘The success of today’s Fed announcement is something that will be judged over the next several months and it will perhaps be best judged by looking at the spread between Treasury yields and rates for both conforming, as well as jumbo mortgages,’ he added. ‘Both spreads have grown to the widest levels in decades just in recent weeks.’”
“Glarushiah Davis is afraid she’ll lose her home because of an alleged predatory lending scheme. The 62-year-old retired social worker refinanced her $122,000 four-bedroom home in Minnesota four years ago, after a call from a lender.”
“Since then, interests rates on her mortgage have ballooned, doubling her monthly payment of $750 to nearly $1,500, which she said she can’t make much longer.”
“‘It is society’s problem when you have families on the street,’ she said. ‘I’ve worked. I’ve paid taxes. I vote. Yet we’re the ones getting shafted.’”
“Davis was one of nearly one hundred protesters with the Association of Community Organizations for Reform Now, or ACORN, who stormed a Mortgage Bankers Association convention at a downtown Chicago hotel on Tuesday afternoon.”
“The activists, wearing red T-shirts, chanting with megaphones and carrying signs, disrupted a PowerPoint presentation and presented a list of demands, including a foreclosure prevention bill.”
“‘Save our homes!’ the protesters, who were from Illinois, Ohio, Minnesota and Michigan, yelled while circling dozens of bankers in suits.”
“‘If we had to put 10% or 20% down, we’d probably still be renting,’ he said.”
Hey Greg…that’s still kinda what you’re doing.
If he couldn’t do that, he probably should be renting.
He has improved his status from home renter to money renter…
Yea but the bulk of American society still holds “money renter” on a higher pedestal than “renter.” I have to admit, it was a bit of my feeling before I started reading this blog.
People like to dog on renters, because for some reason it’s supposed to be of lower class of what have you. But it’s OKAY to lease that crappy Benz… so in the future, I’m going to refer to my apartment as a leased house. That will make it all better, and I can move up a class in the eyes of the unwise.
I have to admit, it is still my feeling, unless they are giving away money to anyone who can breath.
Attaining “status” in America is just too darned expensive for me –I choose to remain a house renter, depsite the damage it does to my social standing. I’ll have to console myself with some (paid cash) champagne and a new (paid cash) big-screen TV, and maybe a (paid cash) vacation or two.
Golly… I guess I’m “missing out” on all those Homedebtor perks, like gettin’ that reset notice in the mail, or pulling money from my 401k to cover it, or stayin’ up nights worrying about whether I should walk or keep feedin’ the ‘gator.
It sucks being a JBR, but I’ll cope… somehow…
don’t forget the constant and continuous maintenance on the house.
That’s always a joy.
Whose business is it if you rent or own - since when do we broadcast our housing status? And I could care less what anyone else thinks about my finances - they’re guessing anyway based on housing status and it’s none of their business. I’m in way better shape than I would appear and probably in much better shape then most - I have low overhead - only a small car payment and day-to-day living expenses.
Your position is sound theoretically.
Unfortunately, we are talking about “social perception” which is anything but rational.
While I agree with you (duh!) there’s a level at which it does matter. Not that I care about this but I do notice the play of perceptions.
I recently moved 35 miles down the San Francisco peninsula in order to maintain a short commute after a recent job change. Good luck doing that as an owner! One of my co-workers (homeowner) commutes from Sausalito to San Jose - that’s gotta hurt.
“According to Guy Cecala, publisher of Inside Mortgage Finance, a first-time buyer in many markets will soon need even more money down — perhaps 10%. ‘And I think before too long we’re going to see it up to 15% to 20%,’ he added.”
the nerve of these people! wanting a down payment
“‘If we had to put 10% or 20% down,we’dshouldprobablystill be renting,’ he said.”There, all fixed!
Classic!
I can put 20% or more down and i still rent
wtf is wrong with these morons
“wtf is wrong with these morons”
He’s from Minnesota, you idiot.
oh yaaaaaaaaa
nyc boy ot- watch seinfeld tonight @ 7:30 part 2 of the cadilac- fox 5
Just because you are from MN doesn’t make you an idiot, being an idiot makes you an idiot.
I know a lot of people from the midwest, who are Engineers, Doctors, JPL Managers…When we compared educations (So Ca in the 60’s) to their education, they won hands up. What a stereotype.
NYCityBoy is from Minnesota.
if Midwesterners have a stereotype, it is being friendly and hard-working. I am very unfamiliar with any stereotype of Midwesterners as being stupid.
Well, I guess you’ve never lived in the Midwest! We did, and never saw such stupid people!!
So glad to be back in California.
Surely, the smiley indicates that you’re being sarcastic, right? I grew up in MN, went to college in MN (undergrad) and CA (grad), and lived in the SillyCon valley for 4 years, and, on average, I find Minnesotans to be much more sensible, level-headed, progressive, and at least as bright, if not more so, than your average Californian. Of course, there are plenty of smart folks in California (including many of the posters here), but, in my experience, your generalizations are 180 out…
I’m from Minnesota, and I agree, he’s (the money-renter) is a moron.
So he is 37, and is a first time home buyer, and he can’t put down a decent down payment… guess what, he shouldn’t be buying!
First time buyers have all sorts of programs to help with the down payment, that’s no reason not to buy. The reason not to buy is the insane price!
Sometimes I wonder…is it “can’t” or “won’t” put down money. Foregoing the downpayment is kind of like a pre-emptive MEW - use the money for crap instead of building equity.
The pigmen best wise up fast - 25% (or more) down!
“‘If we had to put 10% or 20% down, we’d probably still be renting,’ he said.”
bought at the peak.. zero down. Considering that the home’s value is falling, how long before that payment begins to build equity and he can distinguish himself from a renter.. 10 years or so. My guess is jingle mail will preceed the happy day.
I just wonder if he manged to at least get himself a fixed rate that he could afford. Buying now is a bad idea. Zero down is a bad idea. But an arm/teaser/option would be the cherry on top of that tasty sundae.
Yep, until prices are afforable, and banks are not giving money to idiots by REQUIRING a significant down payment I’ll be watching the show with my big brown bag of buttery corn…
So the street wants the Federal Reserve to buy the private mortgage bonds at par, eh? At least when the revenues from the mortgage bonds are inadequate, the public now has a claim on the future profits of the financial institutions. If there are any, after executive bonsues and stock options.
“At least when the revenues from the mortgage bonds are inadequate, the public now has a claim on the future profits of the financial institutions.”
Ahahahaha! Like that will ever be allowed to happen by the financial masters! Good one, WTE.
Oh wait, you were joking, weren’t you?
” … the public now has a claim on the future profits of the financial institutions. If there are any …”
I see Hollywood Accounting in their future, where a movie can gross a half billion dollars and not show a profit.
“‘Save our homes!’ the protesters, who were from Illinois, Ohio, Minnesota and Michigan, yelled while circling dozens of bankers in suits.”
Bankers are too busy saving themselves.
We have “Save Our Homes” here in Florida. It doesn’t work.
An easy retort to the “Save Our Homes” chant, would be “Pay Your Mortgage”. Enough with this blaming a bank for your mortgage payment going up, if you do not have sense to read the documents that state your mortgage is going up then there is a cost of being stupid.
Why stop at homes?
How about chanting “Buy me a flat screen TV!”,
“I want an SUV but I don’t want to pay for gas”
‘I’ve worked. I’ve paid taxes. I vote. Yet we’re the ones getting shafted.’
Renters work, pay taxes, and vote too - what’s her point?
Homeowners are renters as well. It is just that they rent money from the bank rather than a home from a landlord.
and the rates they pay for that money are skyrockting!
yea that comment screams socialism…
i work and pay taxes, i am entitled to everything out there. where’s my million dollars?
No — it screams favoritism (We deserve special treatment since we are homemoaners)…
‘I’ve worked. I’ve paid taxes. I vote.’
Me too. And I’ve lived modestly, saved, given money to charity, and paid off my mortgage. Got no AC, no cable, etc.
‘Yet we’re the ones getting shafted.’
As to which of us will ge shafted, that is apparently up for debate.
wt- if i move i will have 2 brand new thru the wall a/c’s that are energy efficent for sale soon are you interested?
still under warranty
“Psssst, buddy, you wanna buy a couple air conditioners?”
sorry it is the salesmen in me but the thought of going thru a nyc summer wth no ac is downright brutal
Is having no AC a redeeming asset?
Just crazy in the summer here. C-R-A-Z-E-E.
‘I’ve worked. I’ve paid taxes. I vote. Yet we’re the ones getting shafted.’
—————————————————————————-
Shafted? You got all that extra money from the refinance! What did you do with it, spend it all?
yeah, I think so.
Thats the part that really gets me about these borrowers claiming they were shafted . This women no doubt took out equity and bought something ,or stashed it ,or increased her lifestyle by the loan,and now she is crying the blues .
This logic that foreclosures are a “Society Problem “, is a attempt to take the heat of the homeowners own responsibility to not buy sh-t they can’t afford .No question that some commissioned sales person talked this person into a time-bomb loan, that she is claiming she can’t afford ,but come on ,she would not of done it had she not thought she would gain something .
‘I’ve worked. I’ve paid taxes. I vote. Yet we’re the ones getting shafted.’
What does voting have to do with it? In fact, it’s natural in this country for the voters to get shafted.
“Renters work, pay taxes, and vote too - what’s her point?”
True, but, as a renter, I pay considerably LESS taxes.
“The activists, wearing red T-shirts, chanting with megaphones and carrying signs, disrupted a PowerPoint presentation and presented a list of demands, including a foreclosure prevention bill.”
The peasants are revolting.
yeah, they stink on ice.
Wait until they put away the plastic sharks and bring out a rope!
“bring out a rope!”
Preferably to be used by these whining FBs to tie a gag over their mouths and STFU already.
I don’t know why they want a bill, most foreclosures now are voluntary. If congress was in charge of a tornado siren, they would turn it on the week after the storm.
According to wikipedia, an ACORN is categorized as a nut.
‘The only way to generate cash is to sell inventory, and if you’ve cut your prices, then you’ve cut the value of your collateral, which is your unsold homes.’
Was it months ago, or years ago already when we discussed this issue? (I think it was years, but I don’t remember the exact timing…)
Not true PB, the Federal Reserve can accept your BILs promissory note from 1987 and loan you 92.5% against it! (Even if he said he would never pay you back.) Then they can nationalize it and subsequently forgive your BIL his debt (to keep the economy moving of course). You get moneys, the economy keeps rolling and your BIL has a tax payment. All good things.
that does not support a strong dollar policy.
Hanky Panky is gonna talk some boys down tommorow. market sells off all day….BACK UP THE TRUCK ON THE SHOE DROPPERS…we got a banks gettin FDIC default.com pages.
all rights reserved to default.com
“Borrowers today are going to have to verify their income and verify their financial assets to lenders, said Frank Nothaft, chief economist for Freddie Mac. ‘It’s the standards of maybe a decade ago,’ he said.”
And amazingly, my wife and I have friends and coworkers who believe that housing prices will soon continue their rise into infinity and beyond. What can we do except give them a pitying glance, similar to those we gave mostly the same people during the tech bubble collapse?
P.S. Dear Mr. Bernanke: You totally suck. Please do the U.S. fiat currency a favor and resign. — Sincerely, Your most ardent despiser, FRB
Seconded.
RE: .S. Dear Mr. Bernanke: You totally suck. Please do the U.S. fiat currency a favor and resign. — Sincerely, Your most ardent despiser, FRB
Thirded
Where do I sign?
I suspect that the 1913-201? period will be called in economic history books the “Keynesian Heresy”.
I’ve mentioned before with some disbelief as to how exactly these public builders are still allowed to even operate? There’ve been scores of MB’s going belly up yet these guys seem to stay one step ahead of their creditors?
Since it was the builders in many ways driving the bubble, why weren’t they the first to go under? They have no assets (to speak of) and only access to lines of credit/worthless land options. Most of them don’t even actually “build” anything. It’s all subbed out. Why didn’t we liquidate them earlier on and apply what little they had left toward funding the bail-outs? I’m still struggling w/ that.
The reason they are still around is because they owe someone (banks, usually) big money. The very last thing that the banks want on their books right now is MORE losses. If they close these guys down on the first missed payments, they need to recognize the (new) losses.
So the bankers defer and delay, and hope that “something will turn up”.
“A rolling loan gathers no loss.”
And…
“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”
–J. Paul Getty
Speaking of “A rolling loan..” I hear a rolling thunder approaching, and that usually in the midwest at least, means trouble.
Again, as mentioned before, a “perfect storm”.
…and if millions of people owe the banks trillions of dollars its the whole fracking worlds problem.
at least that’s what they think.
I have a co-worker - flat broke 100% of the time. He knows my outlook on the housing market, but his logical conclusion is “buy now before I need a down payment.”
He figures once down payment requriements are in place, he’ll never afford a place, so he’s better off paying an extra $200 a month on an overpriced house for 30 years as opposed to coming up with $20,000 extra for 10% down.
Just shocked I haven’t seen an NAR advertisement. “Buy now before you need a down payment.”
PS: If the NAR reads this and uses that slogan, please send the royalty checks to Ben.
“Buy now before you need a down payment.”
This may be your last chance. Zero down and zero per month! Squat on the property, absolutely cost free for a year or more. Sheriff departments across the country are backlogged for at least 6 to 9 months.
One of my in-laws told me how lucky they were to get their 100% financed condo(in the bay area) 2 years ago because they could never qualify for one today. My head internally exploded and wanted to ask how is it lucky that your condo is -7% (zillow) since you bought it? But I didn’t because I knew the answer would be “1.It is different here. 2. People will always want to live where we live. 3.We are at the bottom.” America needs a good ass kicking recession.
Thank you, Chile. I feel dumber after having read your post. Please kick this guy in the groin as hard as you can so he is never able to reproduce.
Damn, now I have to take the blame for stupidifing one of the many upstanding repeat contributors to this blog. Damn that coworker!
(And too late - already spawned).
A few months ago there were ads that advised home owners to hurry up and borrow against their equity while they still have some.
Hmmmm… Maybe that’s why I’m not seeing those juice and popcorn promo tables over at the credit union. Guess the HELOC business wasn’t the bee’s knees after all.
“‘It is society’s problem when you have families on the street,’ she said. ‘I’ve worked. I’ve paid taxes. I vote. Yet we’re the ones getting shafted.’”
You’re an idiot, so, we have to deal with her. Good thing that she lives in such a cold state; two weeks on the streets in the winter and all we have to do is dispose of the body.
“P.S. Dear Mr. Bernanke: You totally suck.”
You are a very kind person to put it that way, but I’ll go along with you. I don’t think I can write what I feel about Senor Bernanke. And Alan Greedscam is in a class all by himself. He should be doing life at hard labor.
“You are a very kind person to put it that way”
Actually, I toned my comment down as I figured Ben probably wouldn’t post what I really wanted to say.
Unfortunately historians get to write that judgement - right now, we simply don’t know how this will turn out. Bernanke is trying to stop Great Depression 2, aka the complete collapse of the international banking system. Nobody really knows what caused the first one, Bernanke has a theory, in 2-3 years time we’ll know if he was right. If he’s wrong - well at least he tried - and next time round we’ll know that it wasn’t liquidity either.
You are correct. It’s not a housing price issue anymore. If the liquidity crisis is not handled correctly there will be dire consquences for our entire economy. Greenspan could have prevented it if he gave a damn, but Bernanke was named captain of a shinking ship. Now its just a question of how many survivors will there be.
1929=overcapacity, an extended consumer and banks gambling with opm. Fast forward to 2008…when do the bank runs start?
Nobody really knows what caused the first one
Wrong. About a million historians & economists have concluded that puppy was caused by rampant, unchecked speculation and buying speculative assets on margin. In other words, too-easy credit and gambling with OPM… just like today.
The only histiorians or economists that “can’t” understand that basic fact are the ones being paid *not* to understand it, as “understanding” it would invite unwelcome comparisons between then and now.
Don’t forget the explosion of consumer credit with the ‘buy on time’ for stuff like radios, washers, cars and other goodies. (The 1920’s version of credit cards and HELOCs.) Then there was the flat or declining real incomes of the masses.
Flat incomes + more debt for ’stuff’ than they could pay = drop in consumption = drop in employment = (1929 and the next year is ?) All of that had begun to set in during 1927-28 and well over a year before the stock market crash.
Declining demand and production and the stock market went flying up higher in 1928 and 1929 (And the next year is ?)
Dear AnnScott,
I just don’t see where you’re going with all this. Any similarities between then and now are purely cooincidental. The American consumer is standing on solid swampground and has *plenty* of dry powder left.
Warmest regards,
The PTB
We were at a CA Home Depot in the spring of last year near Monterey Bay and everything on the display floor had loan-payment options more prominently displayed then the prices.
There was a simple barbecue grill, not the elaborate gourmet-gas kind, with a payment plan of $11 a month! I thought who in the world buys a grill like this on credit?! How do they even get enough gas to get there?
The stock market crash was caused by easy fiat money. The prolonged depression was caused by government regulations! The government passed all kinds of laws that attempted to *force* people to spend/invest and outlaw hoarding or taking company profits. The government destroyed trust and caused businesses to hold back until the playing field was predictable again.
World War II only got us out of the depression because foreign factories were destroyed while we maintained our production capability.
Don’t forget Hoover started a trade war. HMM which party wants to revisit that idea??
“The Great Crash 1929″ by Galbraith
Is recommended reading…
Everything parallels the housing crash, with one key difference.
In the 1930’s the USA was owed a great deal of money by the rest of the world.
Completely opposite, today.
We are gathered here…
Here’s a clue for you. It’ called Insolvency.
The paper-games played for the past 10 years of I.O.U’s that no one ever intended to have to pay, have now come home to roost. It’s not a liquidity problem, it’s a matter of TRUST. As more “bets” get defaulted on, more people will NOT TRUST the borrowers of money, i.e., Banks and finance companies. All the “liquidity” in the world will not get the bad bets to turn into good bets. The defaults will continue. In the meantime, we get a worthless currency, and higher costs of food, fuel, taxes and insurance. B. Bernanke will lead us INTO depression 2, because he won’t defend the currency.
“right now, we simply don’t know how this will turn out.”
We most certainly do: Hyperinflation in the U.S. economy caused by extreme devaluation of its fiat currency.
“He should be doing life at hard labor.”
What do you call banging Andrea Mitchell?
You must be pretty good at Jeopardy.
I’ll take fun condiments for $200 Alex:
The Answer: Tartar Sauce
NYCityBoy: What is a polish lubricant?
Correct!!!
LMAO
It’s precise historical origin is unclear, but it was first used in the American colonies in the 17th century. Later it was used to camouflage the repellent flavor of the 21st century’s U.S. real estate market.
The answer: What is barbecue sauce?
Correct!!
“The dollar fell to a record (low) per euro as firms from Citigroup Inc. to Goldman Sachs Group Inc. said the Federal Reserve’s plan to inject $200 billion into the banking system may fail to break the freeze in money-market lending.”
“‘The Fed is probably running out of options; the market is fixated on interest-rate differentials, which are clearly negative for the dollar,’…”
Only 2 days and the FED action is already viewed as impotent.
Impotent? At this point in time a 100 year old geezer is a stud compared to the Fed. Just look at all the fumbling since last August. 7 months of fumbling for goodness sake! I am shocked that the lady is still waiting.
Glarushiah Davis, how do you even pronounce that name?
“The larger gap indicates lenders, which have seen lower prices on their loans in the MBS market, have been less willing to trim mortgage rates.”
Now we know exactly why BB’s infusions have NOT been working.
It’s those greedy bankers.
Glah - roo - shee - yah?
I tried googling it to see if I could come up with a meaning/language of origin for the name. It doesn’t quite sound eastern european to me, but it does a little. As near as I can tell, the only stuff that came up on the search was about our Ms. Davis.
nearest i could find.. a Swiss city
..Glarus lies on the Linth River at the foot of the Glärnisch foothills..
http://en.wikipedia.org/wiki/Glarus
Brobdingnagian in origin is my guess
The Swiss just got “Swift-Boated”
If Spitzer is busted for prostitution why isn’t he also a prostitute?
Sorry Ben.
If just ONE politician with power would step in and stop Bernanke in this maddening devaluation of the dollar, he could have as many hookers as he wants as far as I’m concerned.
“Selling’s legal. F#cking’s legal. Why isn’t selling f#cking legal?” –Carlin
“Freddie Mac says over half of owners of foreclosed homes did not answer the calls or letters of their lenders. An MBA analysis reveals that 23 percent of such types of loans were to mortgagees who no longer had contact with their lenders, while 18 percent more were to absentee homeowners.”
This foreclosure flood brings to mind Katrina storm surge lapping up against the top of the NOLA levees. I wonder how much longer those levees can hold up?
“The spread between benchmark 10-year Treasury notes that guides 30-year mortgage rates rose to 2.46 percentage points at the end of February from about 2.03 points a month earlier.”
The spread between the 10-Treasury note (actually bond) and the who?
I believe the term bond is reserved for anything longer than 10 years.
Treasury notes are government securities that are issued with maturities of 2, 5, and 10 years and pay interest every six months.
http://www.treasurydirect.gov/indiv/products/products.htm
The who is the market’s 30yr fixed mortgage rate. There’s always been a spread, historically about 1.5%, in recent years the spread fell ahistorically below 1%. Presently, using this 2.5% spread, you can determine 30yr mortgage rates by simply taking the current 10yr yield and adding in the spread. The ^TNX closed today at 3.48%, so 30yr mortgages are now priced at around 6%. In fact, Wells Fargo’s web site says that the current FHA 30yr fixed mortgage rate is exactly 6%.
Thanks for the clarification (clarity was lacking from the original version)…
Speaking of the 10 year, i wonder how the auction (10B) will go tomorrow?
Looks like buyers were steadily increasing demand for the 10yr all day and driving down the yield. I don’t get why that happened given inflation expectations from yesterday’s FED move unless money is simply coming out of the market and getting into bonds - seems there is little trust in this rally. I think tomorrow’s auction may go well given today’s 10yr market - but I’m a software engineer not a bond trader so what do I know.
Bond investors have issues coming to maturity all the time - they need to roll over their investments into something that is safe and generates interest income. A lot of non-Treasury debt is looking very risky, including even agency bonds. So they are all piling into the limited pool of Treasury bonds. Which is lowering Treasury yields. Investors who used to consider high-quality corporates or agency bonds as alternative investments are probably staying away until they’re sure the risk has subsided.
Thanks. That makes sense - mystery solved.
Hey, VABeyatch in VB:
My girlfriend is listing her condo with an agent hoping to sell it this spring. She isn’t very aware of what’s going on in the housing market, and she’s selling because she wants to move out of the area.
She seems to think that condo prices in VB are relatively stable. Is that true?
TIA,
Jauk
more like as stable as home life of x governor spitzer.
Why is VB more stable than other areas? Is it different there?
The Spitzer family life will match the housing market when Mrs. Spitzer is burning Mr. Spitzers clothes on the front lawn and inviting the news crews to tape the event. (so wait a week)
Would this be the place to say something about going down? As in, what the housing market is doing?
Headline:
“Spitzer resigns on “Hump Day”….”
If Mr. Spitzer is Mrs. Spitzer’s meal ticket (if she has no assets of her own), she’ll take whatever he dishes out and like it. Most women in this situation do the same…they always have.
Spitzer’s political enemies can afford to get rid of him. Whether or not Mrs. Spitzer can remains to be seen.
Interesting question……
does x guv spitzer have to move all their stuff out of the state capitol by Monday too?
OT… Traders stop to watch Elliot Shitzer fall on the sword.
http://biz.yahoo.com/rb/080312/spitzer_traders.html
Spitzer Swallows the Sword.
wiretapping client nine. Get this to Bernanke……look for my blog postings.
Sorry Ben. just tryin to help.
To be honest, I haven’t really been following the story, but while I don’t agree with what he did, shouldn’t we be more concerned with the fact that Wall Street is happy, nay, ecstatic that he is out of the picture.
Isn’t what he did, prosecuting and going after crime on WS a good thing? For them to be upset means they were doing something wrong, right? Being excited about him leaving, does that mean they feel they can go back to doing wrong again?
Who gives a crap what this guy does in his private life? I’m more concerned about the people (like WS) who get excited when people (maybe not specifically Spitzer, but those like him) who want to do the right thing and go after evil-doers “go away”.
I agree with you that it’s odd that Wall Street is so gleeful about the fall of Spitzer. Apparently some of his prosecutions were warranted .
The fact that Spitzer went after the conflict of interest of the Wall Street firms was a good thing ,but apparently Spitzer wasn’t effective enough because of what happened with the housing boom lending . While I believe his own acts have disqualified him from public service , I am wondering if he was taken out and by whom .
Hey all,
I want to do a little experiment - if you’re interested submit your guess for the following data points, as of the market close on March 31st:
Fed funds rate (currently 3.0%)
Dollars per Euro (1.5512)
Crude futures ($110.10)
Gold ($980 oz)
If I get enough participants, on April 1 I’ll explain what I was trying to deduce.
Thanks…
Fed funds rate (currently 2.25%)
Dollars per Euro (1.5900)
Crude futures ($116)
Gold ($1020 oz)
Fed funds 2.25
USD / Eur 1.58
USD / Yen 98.4
Oil 115.25
GLD 1036.5
USD 69.7
2.5% / 1.58 / $105 / $970
Fed funds rate 2.5
Dollars per Euro (1.48)
Crude futures ($92)
Gold (880)
Fed funds rate - 2.5
Dollars per Euro (1.48)
Crude futures ($92)
Gold (880)
FFR 2.25
EUR/USD 1.61
crude 117
gold 1030
FFR 2.25
D/E 1.4
OIL 115
GOLD 1050
Fed funds rate (2.50%)
Dollars per Euro (1.4655)
Crude futures ($98.00)
Gold ($930 oz)
Fed Funds: 2.75
US Dollars per Euro: 1.56
Crude Futures: USD 108.00
Gold: USD 980.00
Fed funds rate 2.50%
Dollars per Euro 1.5842
Crude futures $117.50
Gold $1,113 oz
Fed funds rate 2.50%
Dollars per Euro 1.5
Crude futures $114.00
Gold $1001/oz
Fed funds rate (2.25%)
Dollars per Euro (1.5825)
Crude futures ($101.32)
Gold ($1017 oz)
FFR 2.75
$/EU 1.48
Crude Futures $98
spot gold $890
Im changing my FRR
FFR 2.63
make the game different
too many people are shaving coins.
Wisdom of blog crowds estimation?
my wife spoke to her girlfriend today- she and her husband and their 2 kids live in a modest home on lawng island with 10k a year in taxes (ouch). she is stay at home mom and he is an attorney (trademark i believe) and apparently the economy is having an adverse effect on his business and money is tight
this is the same woman who was telling my wfe we should buy a house close to them for 400k or so that need a complete overhaul
misery does without a doubt love company
my wife actually said today there is no way we are buying anything
she has been converted to the other side
“Yes Luke, use the Force!”
Repentance is good for the soul.
Thank God we have saved another poor lost soul out there in the Real Estate wilderness.
Praise the Lord.
If it gets any worse the Fed will accept pigs, chicken, goats and used Hummers as auction collateral. The fed is clearly smoking some high quality BC bud to make them think becoming the nation’s largest de facto landlord is a good idea…
Now, now, Happy Renter. Let’s be kind to those pigs, chickens, and goats. They have feelings too.
Hell, chickens, pigs, and goats are REAL assets!
Hahahaha… Good one !
the illegals will take the pigs, chickens and goats. the feds will have all these houses to supply to their new power constituency group the VF group….the vicente fox group and GWB is his bitch.
Ok, instead of this bailout, why not have the recipients buy stocks in banks, monolines, and heath care.
That would save the economy and turn clinton fans into stock owners. Hello BB?
The govt. will soon have a lot of hanger space in AREA 51 filled with pickup trucks, power tools, plywood and all kinds of other “good” collateral from the failed lenders.
“Hovnanian’s net contracts in the fiscal first quarter fell 41% to 1,511 contracts. The cancellation rate declined slightly to 38% from 40% in the fourth quarter.”
______________________________________________________
No. When will they ever learn. The cancellation rate declined 5% in the fourth quarter. Come on guys, put a positive spin on things. It’s almost as if they are resigned to the fact that a V-shaped recovery isn’t going to happen in the next couple of months. Shameful.
I noticed today that the spread between TIPS and the equivalent bond is only 1 %age pt:
http://www.bloomberg.com/markets/rates/
E.g., 5 year bond is 2.750, 5 year TIPS is 2.00.
So it looks like the market is predicting 0.75% inflation over the next 5 years. This seems outrageously low. I don’t really believe the 10%+ that is cited here, (as my personal inflation rate is about 0% from 06 to 07) but 4% seems reasonable. And that’s a lot more than 0.75%.
So, given this, why would anyone buy the 5 year bond over the TIPS? Even if CPI is 2%, the TIPS would pay off better. Or am I misunderstanding how TIPS work?
You are paying a premium for the tips. If inflation stays at 2.5%, then the TIPS has a negative yield to maturity.
Is the 2% for TIPS assuming 2.5% (current core) inflation? So, if CPI goes up, wouldn’t the TIPS rate go up too? And the converse?
Does a TIPS index off of core CPI or headline CPI (including food & energy)?
thank you
TIPS are a scam, they manipulate the cpi to get a cheap loan.
Thank you very much Ben Jones, because of this very informative website I decided to short REITS several months back and got out before the DOW jumped 400 points with $10,000 net profit. Making money in the bear market just feels a heck lot sweeter.
Fed funds rate 2.5
Dollars per Euro (1.48)
Crude futures ($92)
Gold (880)
From the CNBC website:
NEW YORK - Shares of homebuilders mostly slipped Wednesday after the chief executive of Freddie Mac said the housing slump is only a third of the way finished.
“It’s really about the worst housing market in a century,” Richard Syron, CEO of Freddie Mac, said at a conference.
I was at an open house on Sunday and she said that the market had bottomed in DC area. I told her if she would guarantee that the house wouldn’t lose value in writing I would buy it. She looked at me and went and dropped another prozac.
Excellent. That is exactly the right response to her pitch.
After she looked at you I hope you gave her a lowball offer.
“It’s really about the worst housing market in a century,” Richard Syron, CEO of Freddie Mac, said at a conference.
Let’s see: “worst housing market”, “century”, “CEO of Freddie Mac” - it’ll be tough to put happy face on that.
lets see, how about:
“Freddie Mac Says Slump Already 1/3 Over”
“We’ve had worse housing markets in the past, Freddie Mac Says”
“Britney Off Her Meds!”
Sooooo… That’s it? A one-day, 400pt rally? $200B divided by 400 points = $500million per point.
This could get expensive..
The Mood Meter is off the charts today.
Thank you bloggers, I was alone during the tech bust, and now I have your comments to keep me company during these uncertain times.
Feeling, ‘Out There’
To Hov and to Hov not…
“Hovnanian Enterprises Inc., New Jersey’s biggest homebuilder, on Monday reported its sixth consecutive quarterly loss. The loss widened to $131 million in the fiscal first quarter, which ended Jan. 31, the Red Bank-based builder said. The cash pinch has forced Hovnanian to slash prices in order to generate revenue. The company is trying to negotiate loan amendments before debt waivers expire Friday, Hovnanian has said.”
HOV losses are now approaching their market cap. Currently, the total shares outstanding multiplied by the share price equals $563M. Projecting four more quarters of $131M losses will result in annual losses of $524M. In July 2005 their market cap was $4.5B. Don’t know how much longer this can continue; they’ve been in business for 50 years - way to go Ara.
A partial Ara K. Hovnanian Bio:
Chief Executive Officer since 1997.
Governor Kean appointed Mr. Hovnanian to The Council on Affordable Housing and he was reappointed to the Council in 1990 by Governor Florio.
In 1994, Governor Whitman appointed him as member of the Governor’s Economic Master Plan Commission.
GangGreenback looks to have a messy amputation…
Got prospecthics?
“‘This is a tourniquet, it will staunch the bleeding, but it may not turn us around and bring the patient to health,’ said Susan Wachter, real estate and finance professor at The Wharton School, University of Pennsylvania.”
Long time blog reader, sometimes poster. My opinions have evolved over the past couple of years.
1. Our government gave away our economic base of manufacturing via NAFTA and other deals.
2. Out economy morphed from manufacturing to consuming, picking up speed in the 90’s.
3. Our government, seeing that consuming was waning, allowed extremely liberal (meaning freely given, not Leftist) lending “standards”
4. The liberal lending standards made up for the lack of a real economic base by putting “free” money (HELOC, etc) into circulation.
5. The liberal lending pushed up housing prices and consumer debt to unsustainable levels - while consuming increased
6. Now that the music has stopped, there is very little left for the government to do -reducing the Fed rate may increase liquidity for a time, until the next round of foreclosures and credit defaults.
My conclusion is that although many borrowers were stupid in their credit decisions, those decisions would never have been possible if the Fed had been doing its job.
We were duped all the way around, into allowing our manufacturing to be sent all over the world and into believing that a consumer economy is viable without manufacturing as a base. We were lead to believe that our science and technology could be exported to make up for the loss of manufacturing.
I used to get angry and idiots who bought houses and SUVs they couldn’t afford. Now I see them as pawns in a giant economic chess game. They were used as a vehicle to keep us all from revolting and throwing all of Washington into the street - where they belong.
Thank you for listening.
post more often.
I second that. Post more often.
I generally agree with you, but NAFTA has very little to do with the hollowing out of America’s industrial base… Last time I checked China wasn’t part of NAFTA…
“Borrowers today are going to have to verify their income and verify their financial assets to lenders, said Frank Nothaft, chief economist for Freddie Mac. ‘It’s the standards of maybe a decade ago,’ he said.”
Given that incomes have been essentially flat for the past decade, this means that house prices should stabilize at 1998 levels, which by an interesting coincidence is what many of us on this blog have been predicting for years.
Ouch, Asia off 2%, ssec broke 4K.
“‘Save our homes!’ the protesters, who were from Illinois, Ohio, Minnesota and Michigan, yelled while circling dozens of bankers in suits.”
good for the protestors! god love em. its they that had the guts and circled the bankers with suits. Its about time someone pointed out the ones most responsible for this irresponsibility. The money lenders.
“Plastic People, oh baby, you’re such a drag”-Frank Zappa
“‘Save our homes!’ the protesters, who were from Illinois, Ohio, Minnesota and Michigan, yelled while circling dozens of bankers in suits.”
good for the protestors! circle em. yahooo!!! god love em. its they that had the guts pointing out the ones most responsible , The money lenders.the guys in the suits, robbin us with a fountain pen.
“Plastic People, oh baby, you’re such a drag”-Frank Zappa
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