The Housing Bubble

nice gain if you bought under $5 i bet the offer goes higher
trading over 9 in the pm

This really gives you an idea on how Wall Street is playing with the Fed. They got the Feds buy the “balls”.

Some New Yorkers said their neighbors seemed to be in denial.

“I was at a benefit last week, and a major well-known chief executive told me that ‘Everything will be just fine. People will start buying houses again,’ ” said David Patrick Columbia, who runs the New York Social Diary, a Web site that chronicles Manhattan social life. “Another one blamed everything on the media. He went on about how the media is creating a recession.”

yes the denial is thick here in nyc but not everyone is so delusional

well yesterday i was talking with my cousin who is in finance and was looking for a place to purchase in the 1.8-2m range (he can afford it) and he is not pulling the trigger and will stay renting

another person who was at the gathering works in private equity and m&a at citi and he was telling me they are fine although he did say that no deals are getting done at all (none)

that alot of guys have nothing to do as all the liquidity has dried up. how long will they stay doing nothing getting paid alot of $$?

i just kind of let a few things out and he did get defensive

i told him i would send him an email with a link to this blog

he has been at citi for 9 years and is a major player there as he sits with the ceo quite regularly

Denial? We will fix that

Wall Street Firms Cut 34,000 Jobs, Most Since 2001 Dot-Com Bust

Wall Street banks hit by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months, the most since the dot-com boom fizzled in 2001.

Citigroup Inc., Lehman Brothers Holdings Inc. and Morgan Stanley are among the firms that have disclosed headcount reductions so far. After the Internet bubble burst, 39,800 jobs were eliminated during the same period; the number climbed to 90,000 in the next two years, according to the Securities Industry and Financial Markets Association.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTARUhP3w5xE&refer=home

I just saw a new listing in my hometown. It is obviously bank owned. The price is just insane. It is listed at $156,000 but my as well be $10,000,000. It should be selling for $90,000 at best, based upon condition. And then at the end of the listing I see, “priced to sell”. It is amazing that people think if they type it then it must be true.

It is another season of wishes and denial in the Land of 10,000 Lakes.

A couple weeks ago I picked up the little Real Estate book for hoity-toity Vail Valley CO. Several of the pictures had a little banner over the corner which said “Price Improved!” I found that pretty funny.

btw I have no idea how to price these properties (it appears to depend a LOT on location).

I’m just seeing some new realtor signs to go along with all the ones that have sat there all winter.

In NW Bexar County (San Antonio area), there are 30 houses in a 4 street area where my home is located. Eleven are for sale and nothing is moving. Many on the market for over a year. About 1/2 resales, 1/2 new. And yet, another is being built down the street from me. Price range is from $206K to $425K. I don’t get it…yet I get it. I wish I could wipe this perpetually puzzled look off my face, though.

I agree with you that it’s hard to tell. Properties are listed, relisted w/someone else, relisted again as a short sale, unlisted, then relisted as a foreclosure. It’s hard to get a grip on numbers.

–
In the sparsely populated neighborhood I heard of news of a rental that fell thru today and yesterday I heard of a purchase that fell thru few days ago just before the close of escrow. The seller had already bought a house to move into.

Lot of people changing minds at the last minutes, it seems.

Jas

Visiting the tinyurl website always makes me feel poor.

Well who is smarter. A guy who chooses to live in a doublewide banking $1000 a week and earning 5% interest and zero debt with mobility or the 60kMcMillionare anchored to the banks house and wage servitude who needs affirmation of his pseudo prestige and pays the bank $1000/week ($500 or better in interest)? Our culture is warped and twisted.

No

Hm. This article doesn’t seem to fit denial, anger, bargaining, depression, or acceptance.

Maybe it’s one of the twelve steps?…
…Hm, I just wikipedia’d the 12 steps. The closest match is Step ~1.5. We have a long way to go.

i have no problem “looking poor”

i drive an old car completewly paid for and have zero debt and the mobility factor in these times is priceless

who gives a crap about “luxury items”?

does luxury even mean anything anymore?

by “looking poor” no one will come to you for money

Now, if you’re blue
And you don’t know where to go to
Why don’t you go where fashion sits
Puttin’ on the ritz
Different types who wear a daycoat
Pants with stripes and cutaway coat
Perfect fits
Puttin’ on the ritz

–Irving Berlin–

Does wearing cheap clothes make you queasy? … You would swear that everyone can smell it when you spend $9.99 on a shirt.

I like to brag about getting a bargain on clothing.

Are you embarrassed to use coupons? … It screams cheapskate.

Are you kidding me?

Do you feel judged by your décor?

Simple solution - get new friends if the ones you have judge you by your furniture.

Did you buy your house, car, stereo or personal digital assistant to impress friends or family?

Try this fun experiment - get a mind of your own. Really, it’s kind of nice to think for yourself.

Picking up a check I couldn’t really afford.

Ooooh…take me to dinner! Please!!!

Taking a trip because I didn’t want others to think I couldn’t afford to do so.

Wow. Some people’s kids.

Wanting to appear rich and being afraid to look poor may sound like the same thing, but they’re not.

One is racing to keep ahead of the Joneses, the other desperately trying to keep up. One is rooted in pride, the other in fear.

No, both are rooted in stupidity.

I have a friend back home that doesn’t have a pot to urinate in but he told me last week he bought a used Lexus for $24,000 and financed it for 72 months. I almost ripped his throat out through the telephone wires. But it’s okay, he said, “it’s certified”. The car isn’t the only thing that was certifiable.

We? There is no we.
There’s one group: FB’s, F’d bankers and F’d investors;
and the other group: people who used sound judgment and chose not to take part in this mess.

notice that instead of “me,me,me” it’s now “we,we,we” - another form of abdication of responsibility

We leverage cuz we hate our kids and grandchilden and want them to suffer at our doing!

“The (association of used house sellers) Chief Economist Lawrence Yun has been named among the top 10 economic forecasters by USA Today. Yun is ranked fifth on the list and is responsible for NAR’s real estate statistics and economic forecasting. The annual list recognizes accuracy in forecasting.”

ROFL!

Jo Ann Bauer is ranked number 4 on the list of of the top 10 economic forecasters, recognizing accuracy in foreshadowing.

NAR is running a ton of commercials during the NCAA basketball tournament. Their hook is that, “family conditions often outweigh market conditions”. That means you should cave into that insufferable husband or wife and eat a 30% drop in your home price. It’s always a great time to buy a realtor a pair of fake t*ts.

payday loans are a surefire way to destroy you financial life

they are used by the most desperate people

$325 loan @ 800% sign me up

“A national 36 percent cap on pay day loans to members of the military came into effect last October. The cap was proposed by Republican Senator Jim Talent and Democratic Senator Bill Nelson — citing APR of up to 800 percent as harmful to the battle readiness and morale of the U.S. Armed Forces.”

Apparently members of our armed forces were amongst the best customers, at payday loan places…

Many g.i.’s couldn’t go to the middle east, as a result of their indebtedness.

Morale & readiness doesn’t mean very much though, if you aren’t in the military, so 800% is still ok, in many states.

Why are UK stories about the housing bust always by-lined in Cleveland? This gives them a severely distorted picture of what is happening nationwide. As far as I can tell, Cleveland has never in my life had a healthy economy, so of course their busts are going to be ugly. I find it very hard to believe that payday loans have been resorted to on a broad scale in the US. Yet.

That sh*t is disgusting. Nothing but legalized loan sharking.

Wouldn’t that be the re-inflater that we dread?

Bill Gross is working very hard to solidify his bid for Scumbag of the Year. Pimpco sounds like another company that has no business on the American landscape. The whole system is broken. Too bad Bill Gross’ jaw isn’t.

Interesting article, proposing that an RTC-like entity should be created for the CLOs CMOs, not the underlying real-estate assets.

As a bailout, it would be a lot more plausible than going after the RE. It doesn’t sound very politically plausible though.

RC,
just the tightening of lending standards anone will insure that home prices continue to decline. The pool of “greater fools/prices always goes up” has just shrunk dramatically. The FED can buy all the MBS’s they want, but going forward, who will buy over inflated houses. The models are broken. Confidence is gone. The myth of ever increasing home values have been proven to be false.

not just the Fed:

Central banks and governments in advanced economies will be forced to buy mortgage-backed securities within the next few months to stop the credit crisis, according to a former chief economist of the European Bank for Reconstruction and Development.

“Central banks will be managers for years to come of rather interesting portfolios,” predicted Professor Willem Buiter of the London School of Economics, as the Federal Reserve and the Bank of England sought to play down conversations officials have had regarding purchases of mortgagerelated assets.

http://tinyurl.com/2odkxk

Evidence that portrays cash as king.

Refinance?

Who is your lender? my servicer is citimortgage and I owe 65,000. I have been daydreaming about offering payoff in return for a discount.
I don’t know if my loan was securitized or not.

I guess you have a nice 5.5% fixed that they would like to get back now. If they’re offering 5% off the principal balance, they obviously think it’s worth more to them. I like my fixed loan as a decent inflation and dollar-devaluation hedge, at least.

Don’t believe anything said during campaigns. Clinton is just name-dropping and playing on the nostalgic sympathies of the electorate, who feel that the economy was so much better when Greenspan was at the Fed. This will go nowhere, slowly.

Not that I disagree with your assessment of what Clinton said. But before you jump to McCain, you should read Paul Krugman’s column today. McCain’s economic people are so much worse than anyone Hilary or Barak might have. Phil the banker Graham and Dow 36,000 Hasert. Bad news.

Don’t think you need to worry about it. She has about as much chance of being elected as I do.

Check out the Charlie Rose interview with Paul Volcker, on PBS website. Volcker is backing Obama.

Volker has endorsed Obama.

http://blogs.wsj.com/washwire/2008/01/31/volcker-joins-list-of-obama-backers/

Ralph Nader.

At least he’s honest about what’s been going on in the credit & housing markets. He’s not talking about any bailouts that I can see.

I thought Wall Street likes it when people are laid off, as other workers are frightened into working harder for less and profits go up.

Only 3 nypd cars? The BS people must not be in good physical shape.

Ooooh! Keep us updated, mgnyc99!

So nice that these parasites have found themselves some new hosts.

A partnership between Countrywide and Blackrock. Yech. They’ll make a lot of money from both housedebtors and sucker investors for a few years, run up their stock, cashout, then go under under a cloud of scandal.

Obviously true since he is still on the air.

Where does Jimbo get his insider information? Is it legal?

Scenario G: include Prime

Scenario H: include commercial

Correct.

They are also NOT seasonally adjusted, so it is almost always the case that the months-of-inventory measure falls each month between January and April.

(Doesn’t stop the NAR trumpeting the “improvement”, however.)

I don’t believe there is at present any available means to account for latent inventory = homes the sellers would gladly be selling at last year’s price, but which they have taken off the market until some hoped-for day in the future when real estate goes back up to where it was. If you understand the economic concept of short term supply, then you can think of this latent inventory as representing a portion of the supply curve that lies between last year’s and this year’s market values. The long-term supply curve is flatter, as some of these homes will eventually need to be sold regardless due to life-cycle factors (retirements, deaths, bankruptcies, etc).

Yeah, but they are cutting prices to increase sales. Keep it up and we might get this bust over with by early 2009.

The increase in sales is being taken by the REIC as yet another sign that a bottom is at hand. My thought is that a faster rate of sales coupled with broadening awareness of big price declines could be somewhat akin to the increase in earth movement that occurs as an avalanche starts really moving downhill, but I admit to having a somewhat bearish point of view.

is this sales up 2.9% yoy or from last month?

“Only the West saw sales decrease, with sales down 1.1 percent, while the other regions saw sales rise. Home sales were up 11.3 percent in the Northeast, 2.5 percent in the Midwest and 2.1 percent in the South.”

This makes sense in a cash-strapped environment. Necessities are bid up in price by the scant amount of cash available. Since there is is little cash left over to bid up the prices of frivolous items - of bling - the price of bling declines.

Thank goodness, for moi, that the writers strike was so long.
It got me over my ‘ad diction’.

BE CAREFUL…… The security deposit, you might lose it in her BK, even if you have a years lease. Best to file a claim for it, unless you think you can con her into letting you live out the security.

And BE CAREFUL, landlords have been known to sink into the gutter when desperate, and after you move sue you for the unpaid rent on your lease. Especially if you move hundreds of miles away. So always get a signed notarized copy stating the lease has been terminated by both parties,and all monies have been paid….at least you could send that to the court as a defense. And save you from driving hours and showing up.

Most tenants don’t know this , but a Lease works BOTH WAYS, if a landlord wants you to break the lease they have to pay you to move.

“It’s only because you don’t watch TV.”

Precious.

“It’s only because you don’t watch TV.”

Aha! Neither do I…

I can buy physical, but things are a bit pricey…

On the basis of $924 Gold, old 1 oz ae’s cost me around $965, 1 oz kr’s are around $945, both on a wholesale basis.

Have you considered old Liberty $5 or $10 on eBay, VF-AU? They will definitely follow the market down - in fact, the weaker the market is, the closer to spot you can generally buy - and you have the downside scarcity value protection.

why would anyone do that. that’s insane.

There is no deal until the shareholders vote on the issue/

It just defied common sense. I read $2 and I bid 25% above that in the premarket. Nobody would sell to me. I bid 33% higher and no one would sell to me.

IMO, the LTCM deal was a one-shot. This time around, there naturally are too many too-big-to-fail entities to strike deals with all of them. I will defer to the way this unraveling plays out for evidence on whether my conjecture is correct.

they’ve got to loosen up money first

Can someone please elucidate me about how record used home price declines are a bullish signal for the builder shares?

They want their fair share of the $30 billion in taxpayer dollars, funded by higher taxes, higher inflation, and benefit cuts for the poor.

Matt: US and Canada need to switch priority from highways to rail. Housing bubble is just an example of dysfunction. The days of “see the USA in your Chevrolet” are ending.
http://www.youtube.com/watch?v=KGZvQoPxhNs

“Gentlemen who prefer bonds don’t know what they are missing.”
Peter Principle #2

CA renter, what did you lose money on?
When I want to lose money, I invest in small increments.

lol

Short traders are never protected. Fact of life. You are anti American going against the great society. A despised creature that is trying to profit off of other peoples misery. (As an aside, Yes I got very long, so long that All I could envision in my dreams was a bank failure this morning to cost me much of this years profit. I could not sleep last night.)

Yes I am still long one US bank stock and now short half a dozen US bank stocks. I will sleep a lot better.

Ever had the displeasure of watching yourself, in the rear view mirror, about to be rear-ended on the freeway? You take the hit and there’s nothing you can do to avoid it. My point is, however, that it doesn’t work out so well for the driver of the “forward-viewing mechanism” if he isn’t paying any attention to the past/present.

DISREGARD THE ABOVE POST, PLEASE!

Analyst: Wachovia facing future writedowns, lower earnings
By Riley McDermid
Last update: 8:19 a.m. EDT March 24, 2008

Sure, looks like a recovery to me. They fished the car out of the swamp with the body in the trunk.
Roidy

Isn’t it somewhat amusing that $30 billion, is the same exact number that was needed to bail out Bear Stearns, last week?

Tx, when do you short it?
Hell, I just want my money back.

Yay! About time. I still don’t want to have to admit how much I’ve lost holding the SIRI bag. But at least I’m making a bit of it back now.

Part of the group I never trade. Have fun! Maybe I’ll be reincarnated as a tech trader. I’ll just stick with my 4% rule. Buy for $1, sell for $4 = 4%

“The Federal Reserve has been put in an awkward position…”

The Federal Reserve put themselves into an awkward position. The Federal Reserve came up with a plan that guaranteed $8B in unsecured bonds from Bear Stearns. It will be no surprise for Congress to veto the Federal Reserve actions and let Bear go into BK.

Normally unsecured debt is the first to go bye bye, then goes the shareholder equity, then preferred stock and finally the secured bonds.

Now the public is being asked to pick up the tab for the unsecured, preferred stock and corporate secured debt. A few members of congress will regard this unfavorably.

RE: The Federal Reserve
“We might as well put a hammer and sickle on the flag.”
Rick Santelli CNBC

“…have we hit a point of real money contraction regardless of how much is pumped in by the fed?”

IMO the real money hasn’t contracted at all; The contraction has been in the thin-air money created by thin-air borrowing using thin-air collaterial.
The real money is still out there and is waiting to snap up, for pennies-on-the-dollar, the assets that were purchased by the thin-air money.

Dow 36,000 according to this guy

“32 used & new available from $0.76
Also Available in: List Price: Our Price: Other Offers:
Hardcover (1st) 104 used & new from $0.01
Audio Cassette (Abridged) 20 used & new from $0.01″

I liked the 91 day better when it was 4.75

“This extended period of difficulty is going to bring about a new economic régime, different in many aspects from the experience of most people alive today. ”

Yea thats right the future will be different without easy credit.
John Mauldin must think we are idiots to not have figured that out? And peter is right wages have not grown as fast as expenses so a bunch of morons borrowed against their house to finance their standard of living. So what is going to happen….. it will be different in the future in ways we can’t comprehend, uh huh OK. Sorry I’m just too dumb I need some details.