‘Bracing For The Great Unwinding’
The Washington Post looks at that areas reliance on the housing bubble. “The U.S. economy is more dependent on housing than it has been in a half-century, as the sector fuels consumer spending and has accounted for nearly three-quarters of the nation’s job growth in the past five years.”
“As a result, economists worry that the housing slowdown that began late last year could hurt the broader economy more than past real estate downturns. Now the companies that have benefited from this expansion are bracing for the great unwinding.”
“‘People know they can always refinance or flip their houses, so they are willing to spend more,’ said Matt Ross, sales manager in Falls Church, who figures that at least 20 percent of his sales of motorcycles, motor boats, and jet skis are to people who pay for their purchase using home equity.”
“Economy.com figures that mortgage refinancing put money in Washington area residents’ pockets equivalent to 14.5 percent of personal disposable income. That’s the 14th-highest rate among major metropolitan areas, behind mostly cities in California and Florida.”
“‘Those economies where housing has gone skyward are most vulnerable as housing comes back down to earth,’ said Mark Zandi, the Moody’s chief economist.”
“By almost any measure, the U.S. economy is built on housing more than in the past. In 2005, investment in housing constituted a higher proportion of the goods and services the nation produced than it has since 1950, when the nation was experiencing a massive postwar housing boom. The proportion of jobs in real-estate-related fields is the highest it has been since at least 1970.”
“Case Design/Remodeling Inc., in Bethesda, has doubled to 300 employees since 2001, fueled in part by homeowners’ confidence in investing in their homes and cheap money available through mortgage refinancing and home equity loans. President Mark Richardson said he is confident that business will keep growing strongly even with the housing slump.”
“So what happened in 1989, the last time the housing market entered a slump? ‘Oh, that was painful,’ said Richardson, who had to cut his staff as sales of remodeling services declined. ‘The market dropped off so dramatically and so quickly. People became very gun-shy. But then during that era, you had home appreciations that were double-digit in the 1980s, and all of a sudden, it went into negative territory. It made people say ‘time out’ and not want to do anything.’”
Deflationary death spiral
The only people who made out on this whole roller coaster ride are those that bought in the late 90’s for low, sold in ‘04 for high and then went on to RENT, not BUY ANOTHER HIGH PRICED HOME. Unfortunately, not many people did that. So basically only a very small percentage of people acutally made out on this whole thing. Those who sold high and then bought an overpriced home will loose out in the end.
My parents built their current home exactly they way they wanted it in 2000 for 160 grand. It was appraised for 400 grand in July 05. I was living 2.5 hours away at that time when they told me of the appraisal. They then said they were seriously considering selling the house and buying a “real nice” house in a new subdivision that costs $350 grand. I told them not to do a thing until I saw them that weekend. I drove all the way to their house that weekend and had them show me this great new house. (Yes, it was very lovely.) We then went back to their house and I pointed out all of the features that they had specifically built into their home that was missing in the new home. Then I mentioned the fact that just last month we all discussed the eventual bust in the current housing insanity. Finally, the housing fog that had caputured so many people, including my usually practical parents, was lifted. They saw the light of day and decided not to sell. Last week they went back to the new housing development and found out that the price of the house they wanted was down to $325 grand. They were surprised and at the same time not. We had all talked about this day coming, but it doesn’t really hit you until you actually see the decline with your own eyes. When I come home next month they promised me a lobster dinner for saving their financial hides.
We did exactly what you described…bought in 1997 in Davis CA, sold in 12/04 for a very nice profit, $300K+, and have been renting since. Moved to Reno for semi-retirement and lower cost of living.
The discouraging thing is we have been looking for something to buy here. We found one house we liked, and the comps indicated it was about $100K overpriced. BUT our agent called the other day and said that someone made a full-price offer. We didn’t even have the opportunity to lowball it, based on good data. I declined to get into a bidding war. The agent is on our side. It is discouraging…
Just hang in there and be patient. Enjoy the carefree lifestyle of renting for now. I would like my own place as well, but now is not the time to make decisions based on emotions. I do believe that things will get worse before they get better. I’d hate to see you loose the 300K! I’ve heard that precious metals are the way to invest for the time being. I’m no stock market expert at all, but you may want to investigate that and perhaps invest there (among other places) rather than buy a house and potentially loose money.
Not to mention the realtor fee, mortgage fees on the new mortgage and moving costs.
Thanks to the readers who sent in this link.
‘People know they can always refinance or flip their houses, so they are willing to spend more,’ said Matt Ross’
Assuming current credit conditions will exist in the future is one of the biggest mistakes being made. The new lending guidelines haven’t even been finalized, yet we read last week that regulators ‘aren’t waiting’ and are ‘walking into lenders offices’ insisting on changes.
Here comes the seller carry back 2nd’s…….REMEMBER
Yep - I remember and I agree that this will increase in popularity. I suppose it will go through a stage of the seller taking the paper, not getting the payments or sufficient payments, the property’s value continued down and the seller is stuck renegotiating value out of the paper. Once the value of the property is waaay down into the amount covered by the first, the seller is toast for the second.
Phase two — after all that shakes out and the bottom is reached, seller-held seconds will be a good option as one means of getting the market going again. For that matter, at that point, a lot of sellers who own outright might consider holding the first.
Tell me about it - everyone I know with an ARM (OK, that means everyone I know with a mortgage) just waves the back of their hand in the air and says, “I’ll just refinance,” as if this fog-a-mirror-get-a-mortgage climate is normal? Geeze, Louise, there are a lot of spankings on the way…
“The new lending guidelines haven’t even been finalized,…”
Well said Ben. It never ceases to amaze me how quickly a large population of people assume that whenever they get into trouble, all they have to do is run to the bank and refinance.
People are now treating their mortgage like one big credit card “oh well, couldn’t get it done on my modest salary… guess I’ll bump up the debt- and “pay for it with my equity” WOW!
The money tree forest will die of thirst in the coming credit drought.
“‘People know they can always refinance or flip their houses, so they are willing to spend more,’ said Matt Ross, sales creature in Falls Church”
Always ?
President Mark Richardson said he is confident that business will keep growing strongly even with the housing slump.”
“So what happened in 1989, the last time the housing market entered a slump? ‘Oh, that was painful,’ said Richardson
Isn’t this statement contradictory ??
The writer must have thought it was too.
“So what happened in 1989, the last time the housing market entered a slump? ‘Oh, that was painful,’ said Richardson, who had to cut his staff as sales of remodeling services declined. ‘The market dropped off so dramatically and so quickly. People became very gun-shy. But then during that era, you had home appreciations that were double-digit in the 1980s, and all of a sudden, it went into negative territory. It made people say ‘time out’ and not want to do anything.’”
AND…. what makes it DIFFERENT this time, Mr. Richardson????????????????????????????????????????
Because wer NOT going to let the terrorists win!
You’re not one of them are you? Are you?
What the ….. ?????????
No Audet, I am not a terrorist. Truly, SB BB
and why were your employees gunshy? Were you so freaked out by the lack of business that you had an office “Lunch with Uzi day”? How many did you have to whack last time? Any guesses for this time?
“It’s different this time.” the quote of the century
Corollary: “Our area will not be affected because of our superior [weather | culture | diverse economic base | etc...]
‘Oh, that was painful.’
You bet it was. And that’s why I thought people had learned their lesson, and that kind of run up of housing relative to income would never happen again. Instead it spread to more areas of the country!
Wanted to create a “Ownership Society”….Well, you did a good job achieving that Dr. Greenspan….Problem is, its going to be the lenders that own them….
“Ownership society” is a GWB economic concept; don’t blame that one on AG.
http://tinyurl.com/zvyyp
What the idiot really means to say is, “You will continue to earn less money, we will continue to bleed you dry and when you’ve shriveled to nothing, we’re gonna watch you sink”.
Neo-con policies are mindnumblingly ignorant and oppressive.
Stucco…Guns & Butter…keep the tribe quiet with easy money while I run my aggenda in the middle east…
“People know they can always refinance or flip their houses, so they are willing to spend more,’ said Matt Ross, sales manager in Falls Church, who figures that at least 20 percent of his sales of motorcycles, motor boats, and jet skis are to people who pay for their purchase using home equity.”
Money for nothing, and chicks for free! -Dire Straits
Silly me, I thought you were supposed to use those to remodel the kitchen. What was I thinking?
I know someone who has been blowing their retirement equity on nothing but crap thinking the equity would continue to go up .What knid of a retirement is this person going to have now?
Housing Wizard,
Hopefully they took lots of photos, so they can reminisce about ‘the good old days’… when the going gets rough, down the road a bit.
One of the things this person bought was a 5k bed of all things .Maybe a good purchase because this person will be flat on their back for a long time .
Insure it to the hilt, and have Jewish lightning hit it. Double win.
Ahhh Jewish lightening. I can remember back in college in the early 80s when my roommates and I dubbed the Boston news channels “Boston fire news” So many fires, it seemed to take up the whole opening minutes of the news for months on end.
No offense meant by that term.
An excellent question. Lots of people lost retirement money in the stock market bust. Then when their remaining valuable asset increases in price, they pull out the money and buy crap or speculate with it in RE.
When this goes belly up, there will be a lot of people working until they’re 80. That will take care of the Social Security problem. The laws will be changed to eliminate withdrawls is someone is working. Many will HAVE to work or eat dog food.
End of retirement for many.
By almost any measure, the U.S. economy is built on housing more than in the past. In 2005, investment in housing constituted a higher proportion of the goods and services the nation produced than it has since 1950, when the nation was experiencing a massive postwar housing boom.
And the 1950s was a time of massive population growth, not to mention making up for nearly 2 decades of pent-up demand due to the Great Depression and WWII, when relatively little housing stock got built. This should give anyone hoping for a “soft landing” pause for thought. More like “gentle implosion”, or “mild ass-pounding”.
“mild ass-pounding” LOL!
“I swear”, said Bubba the banker, “prison sex is much nicer than a home price decline!”
This should give anyone hoping for a “soft landing” pause for thought. More like “gentle implosion”, or “mild ass-pounding”.
Thank you HARM, you made me laugh out loud!
Don’t forget the establishment of the freeway system which gave rise to suburbia in the 1950s, with successive waves of outmigration from the city center to new suburban tracts. This economic viability of urban sprawl depended heavily on cheap gas; last time I checked, oil prices were through the roof, which reduces the equilibrium value of housing far away from jobs.
Here comes that $4 gasoline
$3.89 a gallon for premium, here in SB, CA. Ouch, I go for the $3.49 regular.
$5/gallon fuel is not a matter of “if”…. only when. And the sooner, the better.
agreed.
Why better? It certainly won’t be for lower and middle class families.
People with lots of money will keep driving as much as ever. People without much or with none will simply experience more hardship.
There’s a certain meanness to some of the posts here that I find alarming. Certainly, The_Lingus has made his (or her) radical, bitter views clear enough, and well as his (or her) irrational, abject hatred of Republicans, “neocons,” and almost anyone with money. If you all are hoping for a worldwide disaster so you can gloat over the suffering of your imagined enemies, you are every bit as bad as those bible-thumpers waiting breathlessly for Armageddon.
I see you have some deep seated resentment toward us “bible thumpers”, and that is ok. I encourage you to cut loose on us.
But I have just some questions about your rant…. Why are you so defensive of a failed political administration? Why would you defend failure? Why all the resentment toward labels that just happen to fit?
Please proceed.
On this site most people assert that housing prices will fall because they’re detached from fundamentals. Yet at the same time many here assert that the price of oil is justified and will skyrocket. Over the past few years the price has roughly tripled. Demand hasn’t grown anywhere near that much. I know little about the oil market but it sounds like a pretty clear case of prices detached from the underlying fundamentals.
Ever since I was a little kid I remember hearing about dwindling oil supplies. I had an environmentalist teacher who brought in a scientist to speak to our class about how we were going to run out of oil. 1990 and we were all out of oil, he said; gloom and doom would follow. It only served to scare the daylights out of us. My father told me his geology professor in the 1960’s asserted as an absolute fact that we would run out of oil by 1980 at the very latest. Nowadays Peak Oil is the trendy theory, but people have been preaching variants of it for a while. Same shit, different century.
I’m hoping that oil plummets with housing to cushion the sting. Oil booms and oil busts, just like every other asset. Unless “this time is different”.
“But I have just some questions about your rant…. Why are you so defensive of a failed political administration? Why would you defend failure? Why all the resentment toward labels that just happen to fit?
“Please proceed”
Gladly.
Do you always jump to conclusions, or do your ever consider the evidence before you? In my posting above, I never mentioned the administration, pro or con, nor did I defend failure (and whether this administration is a failure or not is a matter of opinion and history books). All I said was that you have made your radical political opinions very evident; you drag them into everything on this blog, and make endless cracks about neocons and Republicans and other alleged enemies for whom you express hatred. I find this boorish. I don’t hate anybody, rich or poor. And I did not vote for Bush. I think Bush is stupid. He’s a hunter. I’m an animal advocate. The two are not compatible. However, I do not hate him. And I certainly don’t hate people who have more money than I.
The real estate bubble is worldwide, not local, so you cannot blame it on Bush. Yes, he’s said really stupid things about more people owning homes now than ever before, but he isn’t bright, and other people write these thing for him.
Bill Clinton gushed on and on about tech stocks and the Internet in the ’90s, and bragged about all the tax revenues THAT bubble created (”I’ve balanced the budget!!” No, the dot-com BUBBLE balanced the budget). That was also stupid. And he DID write his speeches. He should have known better. I don’t hate him, either.
Repeatedly on this site, you have made comments about how you can’t wait for disaster to befall flippers, investors, stupid home buyers, and everyone else. You and others do this over and over. This is called malice. To wish harm on others, to talk about how you hope they crash and burn, etc. is unbelievable. And you claim to be a liberal? So much for compassion. Such meanness is telling, but what is says is not flattering.
Go back and read my original post. Is it a rant, or is this your misinterpretation? I have openly criticized Bush on this blog. For you to infer from my posting above a defense of him is ridiculous.
If you enjoy saying nasty things, fine, but don’t be shocked if someone ask to you to knock it off. It’s become tedious and obnoxious, and is offensive to many people who don’t share your paranoia or your blanket hatreds, and who do not relish the idea of millions of people suffering horribly so you can feel avenged.
The above is directed at The_Lingus
It sure looks like demand continues to trend upward according to this chart. In fact demand flattened 1 out of 12 years. http://www.worldoil.com/WO_MAG/Feb-2005/05-02_Outlook_Crude_fig1.gif
Rove/Bush need to increase the AMT deduction back to 58k. Thankfully cap gains are at 15% until 2010. Thankfully the top 1% pay 34.27% of the taxes.
It’s a good thing the top1% pay a mere 34% of govt revenue. Where does the bottom 1% have the means to?
SB;….Your not realy serious that your gas is $3.89 are you ??
yup. Is it cheaper, or more expensive in Santa Clara?
SB…$2.80 for top shelf…
Ok. I reread your post.
You say “If you all are hoping for a worldwide disaster so you can gloat over the suffering of your imagined enemies, you are every bit as bad as those bible-thumpers waiting breathlessly for Armageddon”…
Now that really seems like a presumptuous soapbox response to my prediction of $5/gallon fuel. Is seeing the good in $5/gal fuel sound so malicious to you that you have to go off the deep end making accusastions?
Not only that, you clearly view those of faith with contempt. That is sad.
Cheapest gas today in Santa Clara / Sunnyvale / San Jose is $2.65 at Arco. It ticks up 2-3 cents every couple of days though.
My comment wasn’t restricted to you gasoline prediction, but covered many of your postings over a period of time. The same theme comes us over and over.
Yes, I view people with a malicious faith as contemptible, whether they’re Christians, Jews, Muslims, or pagans. If they’re praying for plagues, famines, hurricanes, earthquakes, the end of the world and the destruction of billions of people, or if they’re hoping to cash in on a worldwide depression, they are malicious. To call them people of “faith” doesn’t mean anything. Faith in what? Faith that God will spare them, but really stick it to everyone else? Is this the group you identify with?
If a depression comes, or if the bird flu mutates, or if, if, if, do you think you are going to be untouched, immune, unscathed, divinely protected? Do you have any loved ones. What if they’re wiped out? Boo hoo, or ha ha?
Thoughts are things, and vicious thoughts are vicious things. What enough people think about, they bring about. Obviously you WANT a depression, and you may get your wish. But, not necessarily with the exhilarating results you imagined.
Sorry for you but your statement is rife with generalizations and you really are quite presumptive. Like the old bait and switch routine. “My comment wasn’t restricted to you gasoline prediction” yet you rail on here, “Obviously you WANT a depression”.
Are you really that naive to think $5/gallon fuel is depression material?
Further, implying that I “pray for natural destruction to profit from it” (paraphrased) is more paranoid silliness from your mouth, not mine.
Clearly, unbridled consumerism and economic lies repackaged and sold as truth by the likes of Larry Kudlow is something you embrace. Again….. proceed at your own peril.
“Clearly, unbridled consumerism and economic lies repackaged and sold as truth by the likes of Larry Kudlow is something you embrace. Again….. proceed at your own peril.”
Dude, you need to rotate the aluminum pyramid 32 degrees east, and put down the damn joint. Your freakish leaping to conclusions having nothing to do with anything is A SYMPTOM that needs attention.
If you can find a single statement by me on this Web site or anywhere else in which I’ve embraced or defended ANY consumerism, much less the unbridled sort, I will send you a million dollars.
“Proceed at your own perile?”
Obviously, you are paranoid and irrational. If you can’t admit that you’ve made hateful cracks for many weeks on this Web site, then you are also in denial. I’ve gone back and read several since last night. You are a nasty, mean little twit, apparently with a God complex.
IF THE RECEPTION IS BREAKING UP, TRYING TILTING YOUR HEAD SLIGHTLY BACKWARD. Oh, look! Is that Jesus in the clouds holding the keys to your new, foreclosure-sale condo, or are you just happy to read me?
Your rage toward anyone or anything associated with faith and truth is going to kill you. The first step is admitting defeat.
I have no rage toward anyone or anything associated with faith. Only toward nasty people who use faith as a weapon, and something to hide behind when called to account.
Hitler had faith; so did Torquemada. It doesn’t shield you from anything, especially the consequences of your own spiteful thoughts, statements, actions, and inactions. See, I do have faith! I believe in Karma, not scapegoats.
Angry statements, yet you have no rage. Is your life offline full of contradictions too?
Absolutely. I smile at Rapture-astronaut wannabes, and thank the Scientologists who hand me their tracts.
If you hear a beeping, that’s the HIDDEN IMAM trying to reach you.
Why is this not a surprise. It’s no wonder you have problems with those of faith. Sad.
You mean fools who worship Hillary Clinton, and think her “managed” (not universal) HMO “healthcare” program was a good one? Obviously, you haven’t looked into it at all. It it would have made her and Bill fabulously wealthy; she had heavy investments in the main HMO involved. Also, she told the healthcare commission set up to put a program together that could not even consider a single-payer plan (as in Canada). Had she tried to promote real socialized medicine instead of her own stock value, she might have been successful. Virtually every group in America that had promoting universal health for decades before she jumped on the bandwagon, opposed her plan as awful.
http://www.sourcewatch.org/index.php?title=Talk:Coalition_for_Health_Insurance_Choices
http://www.nlpc.org/hctf/tfl-09.htm
From “The First Lady: A Comprehensive View of Hillary Rodham Clinton” by Peter Flaherty (1996):
“What Hillary did not mention is that her plan had the strong support of the nation’s largest insurance companies, who had helped develop it in the first place. The HIAA is made up of mostly small and medium size insurance companies, who stood to be squeezed out under Hillary’s plan. The hypocrisy of the assault on the insurance industry was largely ignored by the media. It took the low circulation, left-wing magazine Nation to accuse Hillary of ‘pseudo-populism.’ The Nation quoted Patrick Woodall of Public Citizen, a liberal advocacy group founded by Ralph Nader, ‘The managed competition-style plan the Clinton’s have chosen virtually guarantees that the five largest health insurance companies- Aetna, Prudential, Met Life, Cigna, and The Travellers- will run the show in health care.’
“Another booster of the Clinton plan was the big drug companies, which had also come under rhetorical attack from the Clintons. Shortly after the task force was announced, Hillary had accused drug companies of ‘price-gouging’ and ‘profiteering.’ Bill visited a health clinic in Arlington, Virginia and asserted that pharmaceutical firms pursued ‘profits at the expense of our children.’ But once the plan came into being, it contained new prescription coverage for 72 million people, translating into additional revenues of $10 billion annually. Pharmaceutical firms had not only been on the inside of the task force, but insured their access by hiring top Clinton associates as lobbyists. Johnson and Johnson utilized the Wexler Group, which included Betsey Wright, the keeper of Clinton’s deepest secrets, and Bruce Fried, who headed the Clinton campaign’s health advisory group.”
Note that universal coverage and universal healthcare are two different matters. Hillary’s program would have mandated universal coverage (everyone would have to have bought HMO, or have one provided), but the HMO would not have covered everything (universal care).
Several letters down you call people who opposed her plan “lunatics,” again proving my point. Not only were they not lunatics, many (including Ralph Nader) were wise geniuses compared to you: a fanatic who consistently leaps to conclusions based on little or knowledge , hurling accusations and names at everyone who doesn’t conform to your imagined truth. I don’t need to proceed with caution, because I’m not the sanctimonious twit with his swelled head up his ass.
A neo-con coward claiming to be apolitical. Should have known.
Actually, I’m an Independent. I voted for Ralph Nader. My relatives call me a left-wing Socialist.
We’re proud of ya.
OC premium $2.89 if you shop (and NOT ARCO).
I may have mentioned this before, but, GF works in building-related retail. Her boss of 30 years experience told her six months ago to tighten up on credit extended to contractors and go easy on inventory build up. “Why?” she asked. The old man’s answer: “Out of town contractors are waltzing in here, loading up on materials and not even asking how much anything costs. That is exactly what happened at the very end of the last boom. Cover our backside.”
I really like these kinds of stories. I can visualize that guy.
Lessons learned from experience - very valuable.
“Out of town contractors are waltzing in here, loading up on materials and not even asking how much anything costs. That is exactly what happened at the very end of the last boom. Cover our backside.”
Oh, does that bring back bad, sad memories. The company I worked for back then came thisclose to going bankrupt for the same reason. These guys came in and bought everything on credit, then filed bankruptcy - and we were left holding a bagful of bad debt. We tightened our belts and rode it out. A few years later, when some of those same guys came back to buy again, we’d shame them in front of the other customers by refusing to take their checks or give them credit. Cash on the barrelhead, you won’t burn us twice.
Cool story, smart guy.
“The U.S. economy is more dependent on housing than it has been in a half-century, as the sector fuels consumer spending and has accounted for nearly three-quarters of the nation’s job growth in the past five years.”
Yes, you idiots, we’ve mortgaged our future for years to come!
Can someone with mortgage skills help me out? If Flipper X’s mortgage principal due is $100,000, but his house is worth only $80,000, what banker would refinance his existing loan in the event he can’t cough up the $20,000 deficit? I’m sure I’m missing something…
GLV, That’s an easy one. Turn on the tv. Write down the phone # of any co. offering 125% financing (about 6X an hour on the scifi channel). Easy as that!
I especially like the SF Bay Area drive time radio ads where the guy gives the number to call for his liar loans - and then says “getting a home loan should be as easy as ordering a pizza!”
Yep, hear those all the time. Making money off the uninformed is as easy as ordering pizza.
Get Long….over the past few years the same lender will refi without a appraisal….With the market changing like it is that underwritting policy will change and a appraisal will be required……
Don’t you think they will back off from the 125% refiance coming up ?
Those days are over HW…
and a appraisal will be required
Won’t those FB’s scream like stuck pigs when they find out they’re now $100k underwater on their mortgage…
Ureeeeeeeeeeeeeeeeeeeeeee!!!!!!!!!!!!!!!!!!!!
nuthin’ like fryin’ up some bacon…
squeal like a pig, baby…yeah!
you sur got a perty mouth…
This reporter did an online chat today about Housing Economics in the DC Area:
http://www.washingtonpost.com/wp-dyn/content/discussion/2006/03/31/DI2006033101410.html
David
http://bubblemeter.blogspot.com
NAHB is calling for Congress to “reform” their FHA guidelines to allow for 100% - $0 down financing, raise the loan dollar cap, extend FHA loans to 40 year terms, and make it easier for FHA loanholders to “extract their equity”… this is rediculous. If our congress bows down to these morons then we are in big trouble….
I had trouble posting the link…. not sure how to do it…
Here is the url:
http://www.nahb.org/news_details.aspx?newsID=2331
Actually, it says in the article that the NAHB is simply supporting the “Bush Administration’s efforts to reform and revitalize the Federal Housing Administration’s single-family mortgage insurance programs”… Good ‘ol George must want this bubble to last. I wonder what Big Ben Bernanke thinks about all this…
GWB doesn’t want the crash on his watch. But 3 years is a long time to put this baby off.
Delay is gone (soon), so we have a good chance this might not pass.
BIG BIG BIG!!!! Trouble…. Do I see 1929 in the head lights. Was it not the banking industry that brought the markets down? They have to have the degrees in PHD DUMB! to let this happen.
Dennis, the stock market crash of 1929 was preceded by a real estate collapse in Florida circa 1927. Oddly enough, back then they weren’t making any more land. Luckily for us A) It’s different this time and B) History doesn’t repeat itself!
Exactly. We are repeating history. Although I think we are going to get a massive RE collapse before a stock crash. I don’t think the stock market is as nuts as it was in the late 1920s. I think the whole mess is going to implode when GM goes bankrupt. That or when the hedge funds, that are heavily leveraged in the mortgages, fail.
Yes, the stock market is nuts. 1929 would have returned after the .com bust if AG had not managed to blow the housing bubble to monumental proportions just in the nick of time.
If you want to look into the crystal ball, check out this “all data” view of the DJIA stock chart, which shows we are forming the giant right shoulder of a classic “headless-and-shoulders” pattern (even more feared than the dreaded “head-and-shoulders” pattern):
http://tinyurl.com/9prkq
Seriously, the flattening out of that right hump in the chart cannot be good — suggests that the stock market has run into a giant conundrum (low returns / high risk) and is not likely to do as well as, say, Treasury bonds yielding 5% or so. The very flat capital gains on stocks, coupled with low dividend yields, and various rumors of big problems in the banking, automotive, and housing sectors, high correlation across traditionally diverse market sectors, and a very low level of volatility all point to a very low equity risk premium relative to market fundamentals.
It could be that the equity premium puzzle which academics love to endlessly discuss is on the brink of resolution, in the form of a correction to the accumulated macroeconomic imbalances built up over 60+ years of Keynesian medicine.
“History has not dealt kindly with the aftermath of low risk premiums.”
Alan Greenspan, discussing the conundrum…
Don’t forget we have all sorts of stopgaps in the system that would prevent a crash.
I was taking change from my pants this morning when I noticed a very old and worn dime. Upon further examination I read the date…1929. I think its a sign
A ‘29 dime is made of silver, not the crap they pass off these days. It’s worth at least a dollar. Hang on to it.
hehehe…WTF not…I can’t even fathom the enormous amount of POS garbage housing stock FHA/HUD has insured in this boom.
And all appraised by Tony Soporon’s Vic the Appraiser.
Let it all go down in flames…idiot f*ckin’ FEDS.
Anybody watching the stock market today? Home builder stocks are having a HUGE rally. Guess we’re all wrong, huh? LOL
DenverKen –
Why are those HBs rallying like crazy? It seems like this happens every time there is bad news on the housing front. Not too many years ago, a shocking story like the NAR data that 40% of last years used-home buyers were fools buying second homes at record high prices would have resulted in a selloff. It seems like up is down and down is up anymore with respect to market reactions to bad news.
Cheers,
GS
I haven’t done any research, but more than likely it is stock buybacks by the homebuilders themselves. Just a thought of course.
It’s been done before, as you know… Santa Cruz
Massachusetts mandated health care, what’s your take? I think some of CA’s poor will be headed that way to take advantage of the free care. They should have plenty of vacant housing to place them in. Trust me, socialized medicine is not something you’d want. If it goes through border property values will be higher for the medical communities that relocate across the US borders.
People who can afford private insurance will be penalized on their state income taxes if they don’t have health coverage. Businesses with more than 10 employees that don’t provide health insurance will be assessed up to $295 per worker per year.
“This is probably about as close as you can get to universal,” Paul B. Ginsburg, president of the nonpartisan Center for Studying Health System Change, told the Tim
The Washington Post said it best; they’re treating health insurance like car insurance. Life is better all around when people have them.
People who are pro-big business and pro-free market and no regulation and all that jazz would be better served if they were a bit more circumspect in posts like yours. If the government should stay out of health care because business can do it faster, cheaper, and more efficiently, don’t imply businesses will leave at the first sign that *gasp* they have to be decent human beings/corporations.
Also, neither the medicine nor care is socialized; just the coverage. And Mass freely admits, “we aren’t sure it’ll work but the situation is too grim to NOT try something.”
I’m sorry about the intrusion of politics and my bad spelling.
This is nothing more but another tax hike on folks if they meet A, B, C, D, or E, etc. etc.. Mass. is broke and illegal and poor healthcare is killing the country. This is just like any other tax hike. You have to pay $/employee is nothing more than another healthcare tax. It is likley those employees, if they don’t have insurance, head right for the country health center. This actually ends the practice of those companies who hire illegals at cheaper wages and point them to the country ER to use as their primary care physican. It might actually be what is needed around the rest of the country. I disagree with forcing people who have money to buy healthcare. If they get sick and need it, the law should allow for the taking of assets if the person doesn’t pay.
That is if you will be able to find a job. Look at Europe for a measure of the nightmare that socialization brings. In europe it is extremely difficult, and very expensive, to lay employees off. It is so expensive, that the first ones to go, are generally the CEO’s and upper executives, because it is their responsability to maintain adequate amounts of employees according to revenue.
Because it is so difficult to fire/lay off employees, they do not hire. When you do not hire, you get massive amounts of unemployment in the mid 20 to 40 year old segment. Just look at france, where a trivial change (for us) in the hiring/firing laws triggered 2 weeks of riots and vandalism.
But then again, welcome to the People’s republic of MA!.
Actually, I think that socialized health insurance will help the employment market run much more like a free market than it does now. Companies will need to compete for their employees on the basis of actual compensation, without including insurance. I think it would level the playing field for competition if it was done nationally.
Next thing to get rid of is corporate tax breaks that encourage companies to move to places where no one really wants to live.
MA has placed a $300 surcharge on every small business who cannot afford to pay for health insurance for their employees to pay for the estimated 500,000 people who are deemed to lack health insurance coverage.
Interestingly, MA is the only state in the country which lost census counted population last year. However, an influx of “immigrants” has been noted by the media to have offset the this largely middle class exodus.
So what one can logically assume is that a substantial portion of that 500,000 non-covered group are the new arrivals which are now being provided state mandated health insurance by another tax on businesses.
And the idiots in the legistlature wonder why MA ranked 40th in job creation last year.
No free lunch for cheap labor.
Will the last business leaving please turn off the lights.
This health insurance freebie will attract dregs from all over the place. They’re claiming that it will only cost $1 billion in three years. It will probably baloon to at least twice that.
That $300 a head tax on companies that don’t provide insurance is going to be brutal. As if MA wasn’t already an expensive place to do business! NIMBY’ists in MA sure are fond of mom and pop stores when Wal-Mart wants to move into the neighborhood, but when it comes to health care it seems they are not so sympathetic.
1)I will first have my workers draw straws to see who will get fired 2) I will provide insurance for my 10 remaining workers with a $2000 deductable per visit and co-pay. I can buy it for less than the minimum. Don’t laugh. Maybe I should fire 2 employees. Better yet, I think I will sell out and go to work for some else. I’ll be able to play golf once a week again with no worries.
I would never laugh at an employer firing someone over $300 ($25/month or $5.76/week). You must be on the brink of shutting down or incredibly cheap.
those opposing a universal health insurance should consider that a big part of medical insurance cost right now is spent on administering the insurance itself and not for health care at all. and what happens to the patient who need emergency care? either dies or somebody else takes care of the cost (like, you and i). well, since this health cost will be covered by a bottomless pit, subtly tucking in some other cost in the billing is perfect. that is how *efficient* these businesses operate.
Oddly enough…. HillaryCare is now being suggested by the very lunatics that rejected it as socialized medicine back in 1993.
MA’s new insurance plan has gotta be cheaper than allowing the uninsured to treat their minor issues at ERs. At our local Medical Health building which we go to on those Fri nights when doctor’s office is closed you need to present license to prove your medical insurance card is yours now. Preventative is cheaper than treating an illness that’s been allowed to fester. If we’re not going to turn away the uninsured (and I’m not saying we should) than it only makes sense to treat them in a preventative way which will save us taxpayers money in the long run. $295/yr per person is also incredibly cheap. When contract co cancelled my h’s insurance our family of four was paying $1350/month w/incredibly high deductibles. I think the state is shoring up its medical infrastructure by reducing the strain on our ERs. Pretty smart with Bird Flu potential. Can’t say my state has or ever would consider….in fact they’ve been taking away money from our local hospitals. That hurts all income groups.
It’s also interesting to hear people comment that only “dregs” don’t have insurance.
My h is an electrical engineer with a very nice degree, ongoing education, and receives excellent reviews. Sometimes how your employer wants to look on paper to its investors is more important though. The company enjoyed keeping its workers as contract instead of hiring them sometimes as long as 10 years. They didn’t have to accumulate vacation, 401k contributions, or handle any medical payment plans for a very large portion of their workforce. They hired separate contract companies to oversee the workers in different states and it was up to these companies to decide benefits.
Still these workers were in six figure range and keep our whole communications infrastructure running so maybe you don’t want to look down your nose at how useless they are to society.
My friend who’s h is a psychiatrist working at a Mass hospital has had his own problems w/employer insurance. He has a PhD. Many local business owners have decided to go without insuring themselves or their families.
I recently heard only 60% of the American workforce has insurance coverage….if 40% were dregs we’d be in a lot bigger trouble than we are now. That’s the reality of things folks!
BTW, when employer company found out that contract company had cancelled the health insurance plan, main employer threatened to pull out the business from under them. Contract company made to pay us the $800/month difference for the individual policy until parent company hired h which meant an opening had to happen. (I said this to illustrate that uninsured are not always DREGS and are not unvalued employees as suggested in a few posts)
Just curious, but what is the possibility that localized builders say in Florida will do 1031 exchanges with someone in CA to keep moving their inventory and then write off the CA property at some later date.
Salinasron;….Builders do not qualify for IRS #1031 out of inventory in a trade or business…
Worries creep into commercial lending; from the OC Register.
http://tinyurl.com/ofvsa
Costa Mesa zones to sprout homes; from the OC Register.
http://tinyurl.com/pnwtv
For all you OC people out there…
Thanks ockurt. I have been wondering about the west side for some time. They just repaved 19th street and put in center islands, but a major grocery store needs a presence as well as a middle school. There are some very nice neighborhoods there, but there are also a lot of areas with too many apartments and some gang presence (IMHO).
to scdave,
Thanks, I wasn’t aware of that having never been in the position to make such a trade.
3/4s that’s a little high folks
I’ll buy 35% to 40%
O/T. Latest zipreality.com numbers for the PHX metro hit 40,500. Mind you this includes SFR, condo/townhomes and lots. From my records, last Thursday night was the first time that it reached 40,000. When is it going to stop?
Thats a good question, why would a sane person put a house on the market with that amount of competition unless they were forced to ?
Huh? Stop? Everyone knows that inventory always goes up.
This site really needs a review before post feature — the software here is as crappy as most new construction.
This site makes IE crash on all my PC’s.
??? I’m fine here via either Win98 or WinXP. IE 6.0 for both I believe.
Never causes my PC to crash, but sometimes I get over-written replies which render them both unreadable.
When there are a lot of comments (120+) on a thread, I have noticed that Firefox does not display all the content. (Although it does seem to still display all the headers and spacing.)
“As a result, economists worry that the housing slowdown that began late last year could hurt the broader economy more than past real estate downturns. Now the companies that have benefited from this expansion are bracing for the great unwinding.”
They talk like this is some kinda rocket science…
Wish I could snag one of these jobs prattling on about common sense…
Are you willing to get paid to lie for your constituents?
The spring is coiled, how fast will it unwind? That’s the $60,000 question.
I can add some weight to this housing sinking in DC area. Just came back from a defense budget and conference in Pentagon City. An Army general who is currently in charge of army’s budget and planning, abnormally offered to ask audience questions at the end of his presentation. “How many of you are in defense contracting business? please raise your hands…I saw about 20% of you (the audience)…Listen, I have to be honest with you: If I were you, I’ll be worried! Very worried. I will not be able to see some of contractors who are now working for me starting from FY07 and on”. Cuts are coming, my friend. And I think this time, the defense/federal cuts will be strong felt by NoVA/MD/DC region from FY07 and beyond, while at the same time mortgate rate will be much higher than now, and tens of thousands of people are in process of reset their ARMs…Storm is going to be ugly very soon.
The post 9/11 spending couldn’t last forever especially with the dismal results we are currently getting; the inflationary printing presses are going to need lots of ink to cover the last five years of Dubya’s conservative spending.
The only question I’ve been asking myself, is, how long will it take to hit bottom? I wince at the idea of the fall taking 15 years like Japan. Will our government be that stupid? I hope not.
Fear not, I have the utmost faith in governmental stupidity.
Lee in Irvine,
My intuition tells me that it should fall fairly quickly once it gets on a roll. We’re waaaaaaay to overpriced for a traditional real estate cycle of growth, then slow down, etc.
There is no housing bubble and weapons of mass destruction will be discovered in Iraq ; )
The percentage of American cars sold in this country continues to decline- why? High pension and HEALTHCARE costs. IForeign auto makers carry no such burden- most of these nations have national healthcare- so the car makers do not have to pay- along with pensions. This country has been fighting a national healthcare system for years- now with corporations not offering pensions or even healthcare- where does the worker go? Seems corporate greed is an acceptable way of life with the republicans and Bush- the same trickle down theory so long a GOP centerpiece has become a tired and selfish excuse not to care about American workers.
No offense, but American cars are crap and that’s why sales are declining.
“The percentage of American cars sold in this country continues to decline- why? High pension and HEALTHCARE costs.”
Test drive a Toyota Camry or Honda Accord and any mid-sized American car, and you’ll know why the big three are in trouble.