Bits Bucket And Craigslist Finds For May 24, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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John Mauldin has an interesting piece this week on how pension funds etc have started “investing” heavily in commodity index funds, feeding the rise in the price of everything real. This accords with the predictions by some HBBer’s that commodities are in Bubble mode. Who knows how long.
That was in my mailbox this morning too. Makes me wonder, if the hot money ditches the commodity indexes, where is it likely to go next? What haven’t we piled in on yet, space travel?
where is it likely to go next?
Back to technology.
right. see the story on yahoo finance home page. I spec we get a good correction this fall and then it would probably be time to load up
precious metals and non-US currencies.
Non-US currencies may have a big correction when the housing bubbles in the rest of the world pop. US is early but hardly alone in this misallocation of resources.
Housing bubble in the Euro area is small compared to the total size of the economy. Serious bubbles only in Spain, Ireland, and Holland. No bubble in Germany, its biggest member.
Also the ECB has a legal mandate to manage the Euro to control inflation. No other goal.
Is the Alternative Energy Bubble Next? What about the “Clean Water” bubble where we all get screwed into paying higher prices for water even if we want to take a bath?
I agree, this is where the next bubble is.
Lehman’s latest report - Is it a Bubble? - says commodity index funds have exploded from $70bn (£36bn) to $235bn since early 2006. This includes $90bn of fresh money. Energy takes the lion’s share. Every $100m flow of investment money into oil lifts crude prices by 1.6pc, it said.
“We see many of the ingredients for a classic asset bubble,” said Edward Morse, Lehman’s oil expert.
I saw debates housing being in a bubble. You had people for and against it. Well it turned out to be a bubble. Commodities were a very smart invesment has the FED ditched the dollar. People chalked it up to demand. Well all the demand is coming from investors now. The smart money said they are finally starting to get out and look to other value plays. Many will be burned.
Speaking of Lehman - anyone sensing a Bear Stearns-like debacle in the future for Lehman Bros?
IMHO they are starting to circle the drain.
Their stock is down 50% YOY.
Puts, and shorts, and bears oh my!
One small problem is that we’re on schedule to have zero worldwide exports of oil by about 2025 (based on Jeffrey Browne’s Export Land Model work at theoildrum.com). Combination of depleting fields and increased domestic consumption in the major exporting countries. The decline in exports will be much steeper than the decline in overall production, which will slam suburbia like a freight train.
The true bubble was the lifestyle we lived for the past 50 or 100 years. Not sustainable in any way, shape, or form.
Oil a bubble? Not a chance. It was literally a once-in-a-millenium gift of condensed energy that we have squandered. No combination of alternative energies will ever give us anything close to the lifestyle we enjoy today, in which each of us uses the equivalent of about 300-700 full-time energy slaves.
As Professor Ken Deffeyes says, the stuff is too valuable to be burned.
You forget that if we had just spent the money used in Iraq on Fusion research oil’s roll could be relagated to lubricants, plastics, ships and jet fuel.
Yes, increasing domestic consumption is a well known response to steadily increasing prices. Not.
Don’t think of it as no more oil. Think of it as a cure for the obesity epidemic.
Think PLUG-IN Electric cars. They use virtually NO oil.
Coming soon. Get the equivalent of over 100 mpg based
on power costs. If the batteries hold up, problem solved.
Maybe the arabs have decided that the next few years is
their last chance to stick it to us.
Think “cars run on coal.” 75% of the grid is coal generated electricity. While you sleep, your fuel for tomorrow’s commute will be burned in some steam plant in Nevada or Ohio. Always wondered how the “clean” label got stuck onto electric propelled transportation with virtually not a peep from the ecosheriffs.
–
“This accords with the predictions by some HBBer’s that commodities are in Bubble mode.”
Guilty as charged. Every bubble has gone longer than I thought, so looks like this wouldn’t be any different.
During 1931 price of crude oil fell from $1 to 2.5c (yes, by 97.5%), but it was supply driven (new discovery). We shall see how this bubble turns out.
Jas
How much could U.S. supply increase if environmentalist-mandated constraints on drilling ANWR and coastal waters were lifted?
Well, it takes almost a decade to bring it on-line. So, no short-term effect on prices. Big effect on oil company share price as soon as they get the green light, tho.
I had dinner with a bunch of oil quants last week. No one is sure of the long term situation: the Saudis might have severly poisoned their wells, we don’t know; shale oil is doable, but a possible environmental disaster; corn ethanol is a joke; and coal is cheap and nasty. Add in increased global energy demands (China, etc) and we have a few possible (non-mutually exclusive) outcomes:
1. Business as usual with oil at $250/bbl. New fields come on-line, inflation as we adjust to high energy prices.
2. Major environmental damage from global warming/classic pollution. Reduced grain, fish, etc production from the change.
3. Reduced per-capital energy consumption. Smaller houses and cars, changed diets, more urbanization.
4. More alternative energy. Wind, solar, etc, become more competitive. But still a niche at current consumption levels.
The next decade is going to be interesting. 2 billion people want to be middle class, and we don’t have the resources to achieve that in a sustainable way.
“2 billion people want to be middle class”
Heck, perhaps 4 billion! …well, anyway, we can be sure that all 300 million US Americans feel completely entitled to middle-class status or better. And most feel entitled to live at least as well as their parents did. This is of course impossible, unless 24-hour Internet access is valued as the equal of a lot of actual transportation, for example.
better than, actually.
az_lender,
Interesting. One of the ’soft landing’ scenarios proposed was ’studio apartments and 24/7 warcraft.’ Weirdly, it might be the most feasible outcome.
“So, no short-term effect on prices.”
Wrong. Never heard of rational expectations, I guess?
PB,
Hard to see how RE predicts a drop in short-term prices given relatively inelastic demand, low substitutability, and low inventories. Perhaps the govt draws down the SPR (35 days supply) in anticipation, perhaps production is boosted in anticipation of future, cheaper oil. Or perhaps RE means various other extraction projects are put on hold or cancelled in the face of lower cost future oil.
but is this not the making for a damaging consequence, get everyone piling into a one-way bet?
After last August meltdown, panic selling shifted the “what is so” to become: energy is a one way bet, specifically oil. However, the peanut gallery is not just going to sit idly by and watch it go to 200 a barrell (as was the case with the housing bubble). Many efforts will try to solve the “crisis”, but the crisis of high oil prices will ultimately solve itself, in its own time.
The high oil price solution: when the candy-ass fat cats drag in all the dumb money they can find: capital controls start, windfall profits kick in, higher interest rates,higher margin requirements, higher standards for MPG accelerated, values of SUV’s/Trucks evaporate, behaviors change significantly…the list just goes on and on…as the price caps are lifted in the emerging markets, the higher prices themselves will ultimatley solve the problem.
I stepped off 100% of all oil speculation, and 30% of the natgas on friday…I like playing with fire, but dynamite…not so much. A correction is coming, and it will be sharp and painful for the speculators, and a much needed relief for the “real” economy. The indicator for me was chick talking about a new horse, named DUG, and the volume spike on that pro-share may be significant. This ETF went from a million shares a day in January, to trading 30 million on Friday (topping 40 million shares a day in the WED/TH sessions)…..this leads me to believe many speculators are jumping off the oil tankers: iceberg dead ahead.
Mexico booming…. Great! Now shouldn’t all the illegal aliens want to rush back south of the boarder to get in on the boom? I guess we sneezed and no one else is catching a cold.
http://www.latimes.com/business/la-fi-mexgdp23-2008may23,0,6944412.story
FWIW, we are still Mexico’s #1 customer.
It’s Not An Oil Crisis, It’s A Dollar Crisis…
http://www.321gold.com/editorials/schiff/schiff052308.html
The one small benefit to a recession is that traffic is much lighter on the freeways and a the airports. Oh, wait, there is no recession. And no inflation. It sure seems like the gubment can’t find it’s own data with both hands. Housing sales had a little boost in the spring, but lately it seems the bloom is off the rose and the slide is continuing. It will be interesting to see what the sales numbers will be in May and June.
In the midwest by mid June housing sales fall off because kids are out of school and summer vacation.
I often check Camden RE, an outfit that sells all along midcoast Maine…the inventory pile-up since March is amazing. And a lot of places under 200k, heck, even under 150k that aren’t doublewides with acreage. Many look like second homes that folks are trying to unload.
And this is supposed to be the start of the vacation season.
“Many look like second homes that folks are trying to unload.”
Vindication is sweet. Where is our resident Maine troll?
Half of Colorado will tank if this happens, since there are lots of second homes.
You mean the Western Slope?
I’m in downeast Maine now, and I do see more for sale signs. The more exact data you cite may be closely related to this spring’s spike in Morro Bay (CA) inventory of smaller homes. Finally the owners who were not really making any money on their rent-it-out schemes are noticing that the recovery in prices is not just around the corner.
“$248800 Highly Incentivized Investments. !!!!! Guaranteed Monthly Income !!!!! (miami)”
http://miami.craigslist.org/rfs/692762726.html
LOL, “flagged for removal.”
They must have spammed craigslist. Here’s one of about 30 more postings.
http://losangeles.craigslist.org/lac/rfs/692761366.html
http://www.google.com/search?hl=en&rlz=1T4ADBF_enUS274US275&q=%22Highly+Incentivized+Investments%22+craigslist&btnG=Search
A note from my 80 year old father…
We’re collecting the Reverse Mortgage advertising flyers promoters are sending us. Got two in yesterday’s mail, one of which never even used the words Reverse Mortgage.
These things are coming in at the rate of one or two a week, ranging from cheap single-sheets with no graphics, to glitzy multi-fold brochures chock full of arguments why old people ought to mortgage their houses.
We struggled a long time to get out of hock. Doesn’t make much sense to take on a mortgage just so we can “enjoy that cruise you’ve always wanted” or buy a new car which loses value the second we drive it off the lot.
It’s an interesting sign of the times when senior citizens are urged to hock their property just to go on a spending spree.
In a related note. I am being inundated with calls over the last several weeks. Like many other people I have alway gotten a multitude of credit card offers in the mail. However lately I’ve also been getting phone calls from not only my own bank but other institutions as well practically begging me to either accept the latest credit card offer or HELOC.
It’s an interesting sign of the times when senior citizens are urged to hock their property just to go on a spending spree.
It’s no surprise. They’re getting a house that’s totally paid up and they don’t lend more than 75-80% of the value.
I think it was Charles Townshend who was pushing an early plan for social insurance, during the depression, and his theory was that if the govt gave money to old people it would hlep revive the economy. They had to spend it, though. I guess it was more typical for them to hoard anything they got.
The kids took the checks and spent them, threatening to throw granny out in the woods with the wolves if she didn’t comply.
Rev mortgage biz just getting legs under it. This scam will dwarf the rest.
I believe that it is regulated. Not that there won’t be plenty of problems. I have no idea if the regulations are adequate, who enforeces them and if they have the people to do the enforcing, but I think there is at least some structure in place that recognizes that this could be a problem.
And if old people are getting screwed, you can bet the AARP will scream. Especially if they have a competing product that is getting under cut.
But where has AARP been when the Fed has been cutting rates to 1 and 2%? No screaming, even though many of their clients are getting creamed by inflation and the fake CPI numbers.
Very sad.
Happy bust everyone. Another party-going weekend for me and the wife pretending that we don’t know. We’ll be seeing friends who just bought a new home before selling their first. Apparently they’re freaking out. I’m practicing, “Yeah, that’s crazy, man, the market changed so fast. Don’t feel bad, nobody could have seen this coming. It doesn’t help with all of the negative news stories either.”
BEER ME.
Got a six pack I can split with you..after a couple of hours of the “I told u so..why didn’t you listen to me a year ago and blah blah blah”… the buddy I told you about with the Joneses mentality..well after $3Mill in loans on properties, foreclosure looming like a shark, and a business going south…advised him to sell/dump the McMansion..typical answer back..”So long as the spouse has that everything is ok..”
Did these people ever watch the Titanic?..always say there are two types of personalities in a disaster..the ones who run and try to save themselves and the others who watch as the building collaspses on them!..
My SiL was over for my son’s 8th grade “promotion” to high school (jr high graduation). Coincidentally, same day her old (2001 construction year) house was schedueld for foreclosure.
Reminder… She bought for $140K, then did 3 cash-out refi’s ending at $240K. Then used fraud lease papers to buy a new house just before stopping making payments on the old house and letting it go back. And thanks to congress, she won’t even have to pay income tax on that money she took out of the old house.
After the graduation, we went to dinner. I made sure I sat at the FAR, FAR end of the table so I wouldn’t have to bite my tongue trying to keep myself from saying something about what a scum sucking pee head she is.
OTOH, it’s doubtful that she’ll suddenly turn into a well-budgeted, financially conservative person. So the karma will eventually run over her dogma, but it may take a while.
At some point in time it will come back to her..nothing says that the bank cannot attach a deficency judgement to her new home…
The buddy I was refering to before is trying to find a way to protect the McMansion..I heard that the lenders are getting ticked off with the “buy another house and screw the lender with the first”..my understanding is that if they have legal recourse on that judgement..they are coming to get ya…especially if the amount is sufficent, like 100K or more..
Right Ann,…….makes you wonder how many current sales are from people dumping one house and buying another . Would not be surprised if the wonderful industry out there is promoting this practice .
I think my ex-neighbors (who were speculators )dumped 2 properties and picked up new ones before they went into default .
When the media attempts to paint the FB’s as this poor group of borrowers that need taxpayers bail-outs I want to scream .
The houses that I see going into foreclosure in the subdivision that I live in were speculators that got funny money during the boom .
How many homeowners had a 2 year investment plan who needed to sell or refinance within that time or go bust ? Most of the FB’s were gamblers who could not afford the adjusted up payment . How hard can it be to sell a over-priced product ,based on a teaser rate ,with no money into the deal, based on the premise that you will make money on the deal while you pay the low teaser rate for a couple of years ?This is how homes were sold during the boom to every Tom, Dick ,and Harry and it explains why people bought houses they could not afford .
When will the media/government expose the housing mess for what it was and stop trying to con the public .The housing boom was a Ponzi- Scheme . While it is true that some homeowners had long term ownership intent ,or they just bought because they thought they would be priced out forever ,a huge % of the purchases was for a short term investment, or to get into the property ladder game for appreciation . The cheerleaders for real estate had the Corporations, Government ,the Lenders , Advertisers, and even main stream media ,backing this absurd real estate investment scheme , or bubble of the century .
Why should the public pay for this fraudulent lending and the public has already gotten screwed by excess taxes that were based on a crime wave and countless foreclosures destroying neighborhoods.
Thank God there were a bunch of borrowers that got priced out of the market, who now have a chance to buy a property that is even under market . Borrowers that refused to buy something by loan fraud and just thought they could never buy will now be rewarded with getting cheaper property .
I feel fortunate to amoung bloggers here, in this little corner of the sphere.
When it’s all said and done, many of us sleep well at night.
Moral compass and honest debate, and sharing our successes and experiences together keep me sane.
May we lead the future with innovation and decency.
Best Always,
Leigh
P.S. “clink” : To all my brothers and sisters who(m) serve, and those same ones who(m) are praying fo those they (do/have) know(n).
Cheers!
I had to keep a look of concern glued to my face last weekend while listening to the sad tale of a neighbor who cannot refinance the mortgage on his AZ rental property because it is worth less than the principle balance on his existing loan.
That’s so sad. I remember growing up in the 80’s and all of my dad’s friends were able to refinance their rental properties in Arizona.
I don’t understand the problem. You just take money out of savings, pay the loan down to under the banks limit and refinance the remainder.
(Sometimes I crack myself up…)
I didn’t see yesterday’s thread about airline baggage fees until it was far too late to add anything, but I’ve heard another explanation. Adding a fee allows American to start collecting money from today’s travellers that already locked in the cost of their ticket weeks or even months ago. Hiding it by just upping the price of the ticket means they loose out on the extra cash from those buyers.
Unless the ticket contract specifically includes the terms of baggage and the new fee is just announced but not implemented yet? I wasn’t sure if the person who offered this explanation knew what she was talking about….
Expect things like the baggage fee, to help Southwest. It is amazing that Southwest has remained so consistently profitable while the rest of their industry has done so badly.
http://www.nytimes.com/2008/05/24/business/24nocera.html?ref=business
Southwest bought a TON of fuel futures over a year ago. So, they are still paying last years fuel costs, and will be for the next year. They have been buying all the way up, so will be atleast 2 years before they are at “current market”.
If prices go back down, that is when Southwest is TOAST!
No, it’s a hedge. What they lose on the futures they make up with lower fuel prices. They have simply locked in the cost of fuel for two years. If the airline can be profitable on the locked-in cost of fuel then there’s no problem.
For my part, I think the charge should be on the number and size of carryon bags. I am amazed at what the airlines allow as carryon now.
I know they need more money but the checked bag charge is going to make the carryon problem much worse!
Maybe the plan is to crack down on EXISTING carryon limits and force bags back in to being checked where a charge can be made.
Carry on is cheaper becasue they don’t have to pay the handlers. People wihout carryons are FAR more likely to use the computer kiosk check-in or just print their tickets themselves (like Southwest offers) at home.
Airlines would LOVE it if everyone did self-check-in and just carried all their bags on.
The change that really needs to happen for airlines is to start charging by the pound (for passengers AND luggage). I’ve been crammed in between sweating, wheezing, bloated land whales far too often during my air travels.
The AA fee will apply to tickets purchased after June 15, so they will not be able to stick it to people who bought tickets before-hand.
Thanks. Guess the explanation was as lame as it sounded. I thought the terms of the luggage portion of the contract were included in the fine print on the ticket.
If and when the airlines are able to charge a fare that truly reflects te high cost of fuel, ticket prices will be double what we are all used 20c per mile. Next year expect to pay $500 or more each way to fly cross country, and $1000 each way across the ocean. The days of cheap air travel for the masses are over. Expect to see half as many flights, and double the fare on the remaining flights. While this may mean some reduction in air congestion, it also means the removal of many direct flights between secondary cities, and these trips will require going through a hub.
If you want to visit Europe, Asia, or somewhere exotic do it now, next year the cost will be double; but there will be less fellow tourists next year. And 2010 it will be triple. The end of cheap airtravel is finished.
Good, I’m getting tired of hearing all the crying babies on planes and all the “home equity” people on flights.
Wife and I took a short road trip across northwest CT over through Litchfield, Torrington, Canton, Winsted and the number of for sale signs was mindboggling. As many lots for sale as houses. Not sure of prices nor do I care. Saw alot of people who clearly don’t belong there… Eurotrash driving fools with NY, NJ plates, etc.
GOP strategists mull McCain ‘blowout’
http://thehousingbubbleblog.com/?p=4548#comments
Sorry folks, politics is looking much more interesting than the state of economy or the housing fiasco. it looks like McCain could preside over a Congress that’s run by Nancy Pelosi and Harry Reid.
“I just can’t believe we’re going to give him his dream shot”
RE wise here in north Phoenix the home sales are jumping, two time the monthly norm for the last three years, but those numbers include so many repos that they IMO they show things are just starting to open up with over a year of inventory left to blow through.
Your car can’t run on Congress’ hot air
“It shall be illegal and a violation of this Act,” declared the House of Representatives, “to limit the production or distribution of oil, natural gas, or any other petroleum product … or to otherwise take any action in restraint of trade for oil, natural gas or any petroleum product when such action, combination, or collective action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price or distribution of oil, natural gas or other petroleum product in the United States.”
Er, OK. But, before we start suing distant sheikhs in exotic lands for violating the NOPEC act, why don’t we start by suing Congress?
The whole article. I get a kick out of this columnist
http://www.ocregister.com/articles/oil-change-nopec-2050717-government-production
term limits,
limit up.
margin call.
its a play on naked shorting.
The usual housing spin is sales are up a whopping 20% this year , but never will add the whole increase in sales was in repo’d homes.
—————————
but those numbers include so many repos
I just read that. Totally agree. I think I predicted that here about 2 months ago.
“YES HE CAN”
Red,
Probably since Romney dropped out, long before I thought it was possible.
It’s pretty amazing that a guy can almost bolt to the Dems and then all of a sudden he’s the nominee and he actually has a chance to be the President. He’s gonna need that ability to walk across the aisle because its looking like the Dems are going to hold the Congress.
Lip
If McCain has a blowout, it will be of an artery. I cannot imagine any circumstance in which he could actually win a general election, unless the Dems somehow nominate the moral equivalent of Hitler. And it doesn’t look like she has much of a chance.
On further thought, I guess voters in a country that almost elected W twice, and has fallen for the most absurd propaganda about many issues, including Iraq and the real estate bubble, could be stupid and/or insane enough to vote for an obvious lunatic like McCain.
Depressingly true. The electorate that gave us “W” not just once but twice, after the mind-freezing blunders and ineptitude of his first four years, can hardly be counted on to show better judgement this time around.
Don’t worry the Limbaugh republicans will vote for Obama in november, Its called operation “double chaos”. It will confuse the heck out of everyone…
I can: Hillary somehow gets the D nomination. That’s when people like me (middle of the road types) register R and vote McCain.
Remember, you can’t vote for McCain in November if you’re not registered Republican.
LOL
Yes, I said unless the Dems nominate the moral equivalent of Hitler, didn’t I?
Link?
I met with the elected officials in my city to go over the upcoming years budget that begins July 1. Nobody took issue with any of my line items. In fact, they were concerned that I was not spending enough. I tried to explain how development is dropping off, revenues are down, but I was told our area is immune to slowdowns so don’t worry about it. I saluted and exited the room. On another note, the same budget includes an across the board 2.85 percent COLA for all employees. Infation is what, 5-10 percent or so (if you use real data)?
My husband’s municipal employer also sent out a “feel-good” e-mail that they are “different” there and will not suffer any of the effects other municipalities are dealing with right now.
I had sent the council members an e-mail maybe two years ago, suggesting that they cut back on any unnecessary spending (including pay raises). They continued to spend. We’ll see how “different” it is here…
I’m thinking that the REAL pin prick for prices in the Northeast could come this fall\winter when the weather turns colder and those 250 gallon oil tanks need to be filled every month. Folks think they have issues today with gasoline prices, wait till the oil bills see the effect of $4/5 heating oil.
I believe the pin-prick has already happened. It just takes time for for those who were duped into believing “RE is the bestest investment evar” to fully wrap their empty skulls around the reality that they were in fact duped. Denial of that reality hasn’t fully consummated yet and I believe that is what you’re talking about.
I now look a large houses as money pits. Interest, property taxes, heating and cooling, general maintenance. When we buy it’s definitely going to be a small house. We like to have money left over, at the end of the month for savings, investments and a nice vacation every year. There’s more to life than being chained to a house.
The McMansions are the Escalades of houses.
My Younger brother has a knack of dumb lucking into the perfect timing to do something.
in 1990 the family which rented our 2 family went to buy a house, so instead of re renting he said to sell it…well someone offered $250K then backed out, so we sold for $225 K and the new people who bought it went bankrupt in less the 3 years finally sold for $68K in 1995…..But it required $30K+ of work to be legally livable, major water damage from sitting empty for over 2 years with a roof leak.
Fast forward 2 years ago, put Grandma in nursing home started to renovate apartment and then my father passes decides to use insurance money to replace 40 year old oil burners and those 250 gal tanks in the basement…..with gas
amazing how much room they took up now they are gone…
——————————————————————
and those 250 gallon oil tanks need to be filled
My parents 95 year old house has overlapping storage from the ex-coal bunker (now yard implement room), next to the space for the missing oil tank. The coal/oil furnace is still there taking up space though… burning a tiny gas flame heating the water radiators.
“The one small benefit to a recession is that traffic is much lighter on the freeways and a the airports.”
more than one from where I am. People are driving less, taking mass transit, walking more. many are buying smaller cars, some are trying to sell SUV’s. there is also a steep rise in SUV burnings across the nation, trying to collect insurance on those worthless global warming behemoths.
Go to cars.com and see how many Suburbans are for sale. In the Denver area its quite staggerring.
their has been a definite pick up in home sales in Bethesda, Rockville, MD - but most other areas are still slow to go.
Yeah, yeah. If there is a pick up anywhere it’s REOs. Rockville’s a disaster. Go out and buy. Hell, buy three or four.
Ben,
I’m a strong proponent of you and this blog. How is Rockville a disaster?
Don’t go back to Rockville
http://www.youtube.com/watch?v=JtoI0_TG5kI
I’m sure I don’t have as much info as Ben, but the condo market in Rockville has completely fallen apart. The huge building at the corner of 355 and Montrose failed, was bought out and is now going to rental. The Fitz (near the town center) which was allegedly nearly sold out a year or two ago snet me a card last week touting a 20% reduction in the price of 2 bedrooms. The town center stuff, like the Fenestra and others are not doing well either - especially now that people are figuring out they have to listen to whatever band is playing in that plaza in front of the library at outrageous decibel levels. And all that is happening in the areas that are walking distance to the metro stations.
I’m sure there is a lot of clinging to wishing prices in the SFHs, but check the number of listings. I bet those are going through the roof. Not sure about Bethesda proper. There is a lot of money in Bethesda/Chevy Chase. It will hit there eventually. Patience isn’t just a virtue, it is money in the bank.
GF has a condo in Bethesda proper, but “old Bethesda” and not Bethesda Row. I think things are mixed. The county has her place appraised for over 40k less than last year, there was a lot of turn over in her building and while it looks like prices have slid ~10% people are still buying them. Her settling attorney lives in the same building and says business is holding up in Bethesda. That same day there was an older couple looking at units in the building and saying its a very convenient location relative to metro, shops,restaurants etc. There are several construction projects going strong, but I did hear that some others have been put on hold. I would not have bought a unit there, but I just do not like high rise condos and all the hustle and bustle of urban life.
So my other sister wants to buy land in santa cruz mts. She paid cash for two condos in Palo alto and santa cruz. She breaks even with those. She did luck out by selling her intel shares at 72 and bought a farm in Tuscany, but you can’t take money out of Italy and she loves her olive farm.
She wrote:
“5 miles from ocean, view of blue strip and carmel which looks like pt dume. 15 minutes from cabrillo college where i can be in the orchestra.
9 acres redwoods in the back, room for avocados in front, gullies and ravines for privacy. supe chic loft like living are plus 3 lux bedrooms.
should I push for this?”
She is a nudist and really likes to be nude in nature. I say go for it.
I wonder if I could put a double wide on her land in the redwoods?
I told her to offer 20% off list. Isn’t land a waste of mortgage payment?
She might be able to get a deal on some of the land that was just torched by the fires.
Seriously though, the SC Mountains are nice.
Mike
http://davidmorrellsc.com/PropertyDetails?show_address=yes&show_description=yes&pid=772881&ls=REIL
Nice house, Ouro.
Have prices come down there much?
Personally, I’d wait until late fall/winter to buy — IF you or your sister have to buy now.
On what Lip said above. Yesterday some guy was bragging about home prices still holding up in central PHX. So, I pulled the numbers. 4 MLS closings since Jan 1 in the zip code.
I looked through about 1/5th of yesterday’s recorded foreclosures. 2 foreclosures just yesterday in that zip code.
Where there is sales volume, it is at drastically lower prices. Where there are no price dros YET, it is becuase there is no volume of transactions.
There’s seems to be a big disparity between “asking” prices and “selling” prices. Sellers think the asking prices they see listed are what houses are selling for. At least thats what their telling themselves.
Received a notice from my property mgr that the washer/dryer company is increasing the washer cycle price by 20% and dryer cycle price by 25% due to inrease in utility costs.
Nothing to see here…inflation is under control and everything is a OK.
Here’s the free way to do it:
Take some type of container with a sturdy lid and wire it to the rear of your vehicle. Fill partway with water and detergent, add clothes. As you drive around, the clothes will be churned clean.
When you get home, rinse out with hose or in tub. Hang to dry. They say dryers are what wear your clothes out most.
(Caveat: I don’t wear clothes, so this is secondhand. :))
nothing to see here-lol
at work yesterday, people were all saying ‘if the news would stop reporting how much things cost, and how bad things are, things would get better’
ughhhh…sighhh
bury your head and all problems go away ; )
i put my headphones on to drown out there babbling
Now that GE’s out of the market, I’d suggest buyying the $200 washer we got for the house in the Philippines. Mitsubishi makes a fine plastic washer.
Foreclosures are affecting small towns in mexico.
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/17/AR2008041703786.html?nav=rss_world/northamerica
Took a drive yest., never seen so much traffic. Lots and lots of RVs and trailers. You would think gas just dropped to $2/gal.
Stopped in Price, Utah, NOT a tourist town (coal mining) and talked to the espresso shop owner. She says they’re getting lots and lots of ferriners. One employee said she was going to quit (jokingly) if she had to try to understand another foreigner trying to order speciality coffee.
Moab (tourist town) is crammed to the gills. And the weather is still setting records for lows - more like March weather. Cold. Got caught in a storm that left 3″ of hail on the ground, cars sliding off the road. Everyone camping looks miserable. A friend down there who has tourist rentals says she’s been packed for the last month.
So…are people thinking this may be their last chance to get out and enjoy life?
Has that feeling to it…but maybe that’s just me.
“So…are people thinking this may be their last chance to get out and enjoy life? ”
Yeah my buddy sam and I feasted on Thai food yesterday. A prelude to the big “R”. I’m going to stock up on TP, kleenix and chocolate cookies.
Maybe a lot of them fled Torrey and the high country. The hotels here are full of course, but I’m not hearing the constant drone of ATV’s. It’s been freakin’ cold for a couple days, and the forecast is for more.
The market has turned negative in Calgary, Alberta. Year over year house prices are -1.7% and inventory has ballooned. There are tons and tons of condo projects in the works or just being completed.
Yet the local real estate board is sure that house prices will keep going up 3 to 5% per year.
http://calsun.canoe.ca/Business/2008/05/24/5657171-sun.html
And not only that, people are still discounting the fact that the market could turn down. Its different there. Calgary is not like the US. Its still a good time to buy, for the right reasons.
http://calsun.canoe.ca/Business/2008/05/24/5657166-sun.html
While reading the following linked article, just remember:
1) all real estate is local
2) there is no national U.S. housing market
Home sales, median prices continue to fall; forecast dismal
By Martin Crutsinger
ASSOCIATED PRESS
WASHINGTON – Existing-home sales fell for the eighth time in nine months, a string of weakness expected to continue as the housing industry battles falling home prices, tight lending conditions and a weak economy.
The housing industry is being battered by a prolonged slump that has seen sales and prices fall sharply in many parts of the country and mortgage foreclosures soar. The slump in housing and a related credit crunch, which has resulted in multibillion-dollar losses at some of the nations’ largest financial institutions, have depressed overall economic growth and raised worries about a possible recession.
Those troubles, along with soaring gasoline prices and higher job layoffs, have sent consumer confidence plunging, making a housing recovery even more difficult.
“Credit remains tight, the economy is losing jobs and house prices are falling in more places and at an accelerated rate,” said Patrick Newport, an economist at Global Insight. “All of this adds up to a dismal house-selling season.”
Newport said he expected existing-home sales would keep falling until the end of the year, probably dropping by an additional 10 percent before starting a gradual recovery early next year.
He predicted that home prices would continue to slide, probably until next spring, because the rising tide of mortgage foreclosures meant even more homes were being dumped on an already glutted market, further depressing prices.
The drop in prices keeps more people sitting on the fence, analysts said, because prospective buyers don’t want to purchase an asset that has the potential to fall further in price if they delay making the purchase.
“With prices collapsing, the incentive not to buy a home is increasing by the week, and with inventory showing no sign of improvement, prices will keep falling,” predicted Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Ignore these pessimists. Real estate always goes up, and there has never been a better time to buy!
Here in Norfolk, VA (Hampton Roads)… condos might not be selling, there might be tons of housing for sale (some moving)… but wow are there apartments in the pipeline. I think there is some 1000+ apartments on their way.
What is the logic behind this? Retiring seniors? Or just the new place for the money to go? I can’t see newcomers to the area growing that heavily, the salaries here are quite bad and the jobs are pretty lackluster.
I cycled back from down town LA yesterday. I could not believe the number of condo/appartment buildings in progress of just finishing. Pretty much one every block, and sometimes more than that. The finished ones all had for lease signs on them.
Expect westside rental prices to be coming down fast.
The number of unsold single-family homes in April rose to a 10.7-month supply at the current sales pace, the highest level since June 1985.
“The housing market continues to slide away. The very large increase in inventories suggests that there are much larger price declines coming,” said Mark Zandi, chief economist at Moody’s Economy.com.
How can this gloomster be so pessimistic when we already have stimulus and still have a Congressional mortgage rescue plan waiting for W to sign?
Why do handwringers think consumer spending will slow? Don’t they know we have stimulus to take care of that concern?
Oil prices send Dow tumbling for week
Investors worry spending by consumers will slow
By Tim Paradis
ASSOCIATED PRESS
NEW YORK – Wall Street ended a week of big losses with more selling yesterday as rising oil prices again raised worries that strained consumers will cut back spending and hurt the overall economy. The Dow Jones industrials fell nearly 150 points in the final session before the three-day holiday weekend, bringing the total decline for the week to just over 500 points.
I know I should wait for the Local Observations thread, but I don’t know if I’ll be home today.
You will all say what I already know, that this is an ugly house in an odd-shapped lot right on the corner of one of the busiest avenues in LA’s Westside. Granted. But what about the haircut? It’s the first time my search turns out a house in the general vicinity of where I rent.
10595 Louisiana Ave (LA 90025)
Original Listing Price: 1,299M
Current Listing Price: 899K
Preview_Files/pow_one_client_detail_preview.cfm?se=1&header_title=no_header&chosen=07-242011&property_type=0
Well, it’s good to see significant movement. But I still think that less-desirable properties in not-such-great neighborhoods have to fall at least to the conforming loan cutoff point before they will move. And maybe farther, depending on the specific property. Houses in that area averaged about $300K in 1999. And that house fronts on the “Olympic Freeway”…
Cass-
900k is still a lot of money for that house. Plan on 11k in prop taxes and I imagine it doesn’t work out to be such a good deal.
Don’t worry, icouldbewrong, I’m not planning on buying that one. I’d rather stay at my rented condo….still, a 300K haircut is significant, even if it is still obscenely overpriced….
Oh also, here in Norfolk, VA (Hampton Roads) it seems like every commercial building in the downtown area has a for sale sign. It looks like commercial investors are trying to all bail out as well. I’m kind of surprised it is following the residential market, as early on in the residential bubble I found some people on a random forum talking about how their companies have a push to dump all of the commercial properties in the area.
This isn’t stopping the city from spending. Our new light rail line is being started. First contract was already over budget by millions, eating up half of the “overbudget reserves” that were set aside. Gotta love it.
The Local Observations thread isn’t up yet, but I feel the need to post…
West Side LA Rental Market Ingests Mind-Altering Substance
Today I see that the condo at 535 Ocean Ave #2B (3bed, 2ba) is for rent at $17,000/mo.
But this next one takes the cake. A house (no address given) in Malibu Colony is for rent in the morning’s LATimes for the low low price of only $135,000/month. But hey, it’s furnished…
A more typical 3/2 SFR, 727 22nd St., is for rent at $6250/mo. Seem like a bargain, eh?
But few blocks North, a larger SFR (5/6) at 250 23rd St. (with a “cook’s kitchen) can be leased for only $18,000/mo.
I want some what these guys are smoking.
In the summer season my brother rented out our ‘ocean cabin’ for upwards of fifteen thousand a month. The pets used our living room as a pee area and the kids practiced lighting matches. No problemo. That was in 2004 in the area of ” Producer Row”. House was purchased in ‘60 for 35k and sold for an undisclosed amount in ‘05.
In O’side where I reside those brand new oceanside lofts are renting for eight thousand a month on the top floor. Bottom floor is twenty two. Furnished of course!
Ouro,
Is anyone actually paying that rent, though?
Without a doubt, **asking prices** for rentals have moved up significantly. IMO, inventory is being kept off the market — we all hear about banks taking 6 months+ to foreclose on the FBs, also seeing a lot of vacant housing.
Maybe they’re hoping for “rich foreigners” or poor foreigners who don’t mind living 6 to a bedroom…
Turns out that our esteemed congresswoman had not one or two but three homes in foreclosure.
http://www.dailybreeze.com/ci_9366061
But the campaign fund is still solvent, right? We need more, err, non-profit business women in congress.
I sometimes wonder why the knife catchers we read about in Ben’s posts feel compelled to buy Right Now against a backdrop of gloomy economic news….the only thing I can think of is that these folks felt ready to purchase a house for quite some time, or just fell in love with the idea of home ownership a while ago, and now want to take advantage of the “Deals” that are available…..you know, these folks were so caught up on the “American Dream” B.S., that they didn’t stop to think about whether it makes sense to purchase an over-priced P.O.S. in a slowing ecomony that gets worse by the day.
So basically, there’s been a lag effect where we’ve got knife catchers who’ve been in the market for a house for a year or so and are ready to pull the trigger (or roll the dice) and buy now. I’m thinking that we’re about at the end of that lag period, and the sense among J6Packs that the country’s economy is in for a rough ride and that the housing market in particular is in deep doo-doo is quickly catching up to reality.
So, how low do you guys think the annual homesales number can go….? Why wouldn’t homesales drop to an “unthinkable” number like a million existing houses sold in a year if the inflation rate goes to say 10% and the unemployment rate to 8% or 9%….nevermind if interest rates were to rise above 9%.
No I don’t actually, because of all the properties that must sell. If a house can be rented out, it has a fundamental value based on rental income. True investors (as opposed to speculators) will step in and buy at a price that makes sense to them.
Supply and demand intersect somewhere.