Cinderella, Your Pumpkin Is Ready
Some housing bubble news from Wall Street and Washington. “Existing-home sales fell 2.6 percent to a seasonally adjusted annual rate1 of 4.86 million units in June, 15.5 percent lower than the 5.75 million-unit rate in June 2007. Total housing inventory at the end of June rose to 4.49 million existing homes available for sale, which represents an 11.1. month supply at the current sales pace.”
“The national median existing-home price3 for all housing types was $215,100 in June, down 6.1 percent from a year ago when the median was $229,000. Lawrence Yun, NAR chief economist, said there is a downward distortion in the price data.”
“‘With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market,’ he said.”
From Reuters. “Pulte Homes Inc posted a smaller quarterly loss on Wednesday, but said buyer confidence remained shaky. The second-quarter loss narrowed to $158.4 million, from $507.6 million a year earlier. Pulte’s loss included $220.1 million in pretax charges related to inventory impairments and other land-related charges.”
“Revenue from homebuilding fell 18 percent to $1.6 billion as closings declined 8 percent to 5,438, and the average selling price dropped 11 percent to $268,000. New orders slid 32 percent to 5,133 homes.”
“‘The operating environment for homebuilding continued to deteriorate during the second quarter of 2008,’ said CEO Richard Dugas Jr.”
“Ryland Group Inc posted a second-quarter net loss (of) $241.6 million, from $52.4 million a year earlier. Home-building revenue for Ryland, the No. 9 U.S. home builder, fell 35 percent to $472.3 million, as closings dropped 26 percent to 1,828 homes and the average selling price declined 13 percent to $254,000.”
“New orders in the quarter fell 19 percent to 2,045. Ryland’s quarterly results included $180.4 million in such impairments and write-offs. Housing gross profit margins for Ryland, based in Calabasas, California, averaged 12.5 percent before inventory and joint venture valuation adjustments and write-offs, compared with 19 percent for the same period in 2007.”
From Bloomberg. “National City Corp., Ohio’s largest bank, reported a $1.76 billion second-quarter loss as it set aside more money to cover bad loans and took a $1.1 billion after-tax charge related to acquisitions.”
“National City bought in 2006 and early 2007 Harbor Florida Bancshares Inc. for $1.1 billion and Fidelity Bancshares Inc. for $1 billion. Both are headquartered in Florida, the state that along with Arizona and California accounted for 89 percent of the rise in new-home foreclosures during the first quarter.”
“National City was forced to raise $7 billion after the housing bust torpedoed its Florida expansion strategy. Loans National City doesn’t expect to be repaid rose more than seven times to $740 million from $98 million this period a year earlier as more builders defaulted on loans. Debts for which the lender is no longer collecting interest increased to $3.13 billion from $848 million.”
The Charlotte Observer. “Amid ballooning loan losses, Wachovia Corp. is taking more steps to unwind its troubled $122 billion Pick-A-Payment mortgage portfolio. But it’s not going to be a quick fix - or a cheap one.”
“Wachovia last month said it would stop offering a minimum payment option that causes a borrower’s loan balance to increase, essentially eliminating the Pick-A-Payment product.”
“One step Wachovia is not taking now: an outright sale of the Pick-A-Payment portfolio. Chief executive Bob Steel said it didn’t make sense to sell the loans into a ‘distressed market.’ The bank’s models have it setting aside $8.7 billion in 2008 to cover Pick-A-Payment losses and expected losses, followed by another $5.6 billion in 2009. The bank’s calculations are based on housing declines bottoming out in 2010.”
“Anybody remember when we were hot stuff? Sweet Charlotte, darling of the Sun Belt, belle of the New South. Booming business, exponential growth, civic pride, soaring skyline, surging real estate. Cinderella, your pumpkin is ready.”
“At Bank of America, our corporate flagship, earnings tank 40 percent. Next comes the Wachovia punch. It manages to lose nearly $9 billion in one quarter. Three months. That makes General Motors look like a growth opportunity.”
“Our banks fell into a giddy spending spree that seems reckless in hindsight. They blundered into the credit crisis, blinded by easy money. They snatched for the honey and ignored the bees.”
“When the stinging is over, they’ll be stronger for it. Their days of competing with Fast Al’s Car Loan, ‘no credit, no problem,’ are done. Financial sanity shall regain its throne.”
The Courier. “Perth company Stephen Homes and the troubled Stewart Milne Group-who announced 289 job losses- are developing a site at West Churchfields. A series of large, luxury family homes have already been created with price tags in excess of £200,000. However, such is the market that buyers have proved harder to find than anticipated.”
“An Errol resident contacted The Courier to say she feared the development would drag on. ‘There are real concerns within the community that the problems the housing market is experiencing will mean we are left with empty houses,’ said the resident, who asked not to be named.”
“‘About seven or eight homes on the site have been bought, but about 11 remain vacant, and these are large, luxury homes. Nobody could have predicted the housing market struggling as it has, but the villagers are concerned that the empty houses will attract unwanted attention. Residents are concerned that this could become something of a ghost town for a time.’”
The Telegraph. “Lawyers specialising in real estate report a surge in the number of British buyers contacting them for advice after the developers they bought from have gone under. Thousands of buyers who have not yet taken ownership of their properties on what has become known as the ‘Costa del Crash’ could lose everything.”
“Ben and Kate Byrne, newlyweds from Warrington in Cheshire, have just taken possession of their three-bedroom ‘townhouse.’ The couple, who paid 230,000 euros (£180,000) for their property, hoped to use it as a holiday retreat and to rent it out for the rest of the year.”
“‘It’s an eye sore and not exactly what we thought we were buying into,’ said Mrs Byrne. ‘Unfortunately, its rental potential isn’t much at the moment.’”
The Liverpool Echo. “The luxury £50m Baltic Triangle residential scheme on the key Wapping approach to the city centre was halted after a wrangle between Windsor Developments and builder Laing O’Rourke.”
“The fall in property values since the credit crunch meant it failed to attract any acceptable offers. The development was originally valued at £48m, but is now believed to be worth only around £10m. Documents at Companies House show the scheme collapsed owing £25.5m to Barclays and £19.8m to Laing.”
“Riverside Labour Cllr Steve Munby, whose ward includes the Baltic Triangle, said: ‘I am not surprised they have not found a purchaser for the site. This case perfectly captures the hysteria which gripped Liverpool at the peak of the property boom. I hate to say ‘I told you so.’”
The Indystar. “Indianapolis-based Davis Homes on Wednesday became the latest casualty of a national downturn in new home construction that’s seen housing starts in the metro area plummet by more than 40 percent since 2005. Many builders expect no more than 5,000 new houses to be constructed in the metro area this year, down from a peak of more than 15,000 in 2001.”
“While family-owned Davis Homes wasn’t a national powerhouse, it was a major contributor to the area’s housing stock, having built more than 12,000 homes in Central Indiana since its start in 1985. Many were in fast-growing suburban communities where homebuilders could normally bank on strong housing demand by buyers.”
“But that demand began drying up in 2006, squeezing Davis Homes out of business, CEO Brad Davis said. ‘We had to either drop prices substantially or just not sell anything,’ he said. The falloff in new home demand ‘really took a toll and just kept getting worse and worse, and it continues to get worse right up to today,’ Davis said.”
“Davis exits the market leaving about 10 of its subdivisions only partially built. Marcus Shaw, who last year moved into the first home built in Davis’ Bay Creek East development in McCordsville, said his subdivision is full of empty, overgrown lots.”
“‘What I am concerned about is the type of houses that will be built in our area (by the replacement homebuilder),’ Shaw said. ‘Will it decrease our property value, or will they be too elaborate and make our houses look like nothing?’”
“Jim Morgan, sales manager of locally based Gunstra Builders, said he thinks homebuilders overbuilt for the Indianapolis market during the period of 1998 to 2005, when new-home permits soared above 12,000 for each year.”
“‘The market was crazy. I was watching people get homes I wouldn’t have loaned lunch money,’ he said. ‘These builders (that arranged easy-to-get subprime mortgages on marginally qualified buyers) have done it to themselves. Those guys are taking a hit.’”
“Until the housing market reaches a bottom and U.S. home prices are headed higher, investors should stay in high quality assets, wrote Bill Gross, who manages the $130 billion Pimco Total Return Fund.”
“U.S. homes purchased in or after 2004 are now at risk of their mortgages turning ‘upside down’ otherwise known as ‘negative equity,’ Gross noted. Some 25 million U.S. homes are at risk of falling into negative equity, which in many cases results in foreclosures, Gross wrote.”
“‘For now, investors should remain in high quality assets until — until, well — until the prospect for home prices points skyward or until the cows come home, whichever one’s first,’ Gross wrote.”
“A major problem the housing market now faces, Gross wrote, is that 30-year fixed mortgage rates are now higher than when the Federal Reserve began to cut the funds rate in September 2007.”
“Once factoring in both the total costs of buying a home and the fact that U.S. house prices, which peaked in 2006, are still falling, ‘it is obvious that homes are not the bargains that starving realtors claim they might be,’ Gross wrote.”
The Arizona Republic. “A federal housing bill poised to become law this week is likely to help ease Arizona’s housing-market pain, but a variety of local voices in the industry said it won’t heal the deeper wounds.”
“Too many residents are neck-deep in unaffordable mortgages for Arizona’s cut of the proposed $300 billion in federal refinancing aid to save them all, government and business leaders said Wednesday.”
“‘We’ve got a huge problem here,’ said Fred Karnas, state Department of Housing director. ‘It’s obviously not going to solve the problem.’”
“‘Overall, we’re really positive about it,’ Karnas said. ‘I’ve been joking . . . that every housing bill we’ve wanted to get passed in the last 18 years somehow wound up in this bill.’”
“But Karnas said some Arizona borrowers are so deep in negative equity that no realistic refinancing deal would allow them to keep their homes. ‘I think there are some markets in which the bottom has completely fallen out,’ he said.”
“The housing bill also will provide $3.9 billion in community-development block grants for local governments nationwide to buy and rehabilitate foreclosed properties. Still, Karnas said, the amount is not significant enough to take on a large percentage of foreclosures.”
“Karnas said Arizona officials expect to receive about $100 million of the bill’s grant money. ‘A hundred-million dollars maybe buys you 500 homes,’ Karnas said. ‘It’ll make a dent, but it won’t solve the problem.’”
“Foreclosures across metro Phoenix numbered 16,647 for the first half of the year, up from 9,966 during all of 2007 and 1,070 in 2006.”
“Margie O’Campo de Castillo of Arizona Dream Realty said she doesn’t understand why lenders aren’t already trying to help homeowners refinance into fixed-rate loans to avoid foreclosure.”
“‘The housing package will help some,’ she said, ‘but we shouldn’t kid ourselves. Housing is just one failing pillar of our economy, and I’m not sure we the taxpayers have enough money to fix our housing crisis.’”
“Wachovia last month said it would stop offering a minimum payment option that causes a borrower’s loan balance to increase, essentially eliminating the Pick-A-Payment product.”
Question: Did everyone’s loan payments just go up, or is this only new loans?
Got Popcorn?
Neil
Just new loans and refinances.
Pick-A-Payment turns to pick a foreclosure as fb’s choose zero payments.
The article seems to imply existing loans.
I seriously doubt Wachovia could materially and adversely change the contract on existing loans.
Just new loans. All of the already issued ones are already in default.
The fact that the housing bailout bill seems poised and ready to get passed, especially now that Bush has changed his mind on vetoing it simply blows me away. 300 billion dollars that will be coming out of our tax dollars to essentially bail people out of situations they got themselves into. Nobody wants to admit the stark simple solution to all of this, which is to let it ride, let it correct, and return the housing market back to a level of stability. I’m thoroughly disgusted with the schmucks on capital hill.
“Nobody wants to admit the stark simple solution to all of this, which is to let it ride, let it correct, and return the housing market back to a level of stability.”
But that would be the common-sense way; not the cowboy way!
Again, though, the bill really doesn’t “do” a whole lot for homeowners and banks. Let’s go through the major points.
1) The bank must be willing to rework the loan at current market value minus 10%, plus pay a 3% fee to the government. We’ve already dropped a lot this year, and more drops will take place before the program gets rolling. By no means will the bottom be in, but it’s not like the government is insuring payments on properties bought at the top of the bubble. The banks take a big hit.
2) The borrower of a reworked loan STILL has to qualify based on the standard income requirements of no more than 33% of their (gross, I think) salary. So, given that people were using these funny-money loans to push the boundaries of affordability, even with the writedowns the amortizing payment might not be affordable. So, the government isn’t bailing out people who truly can’t afford the house in the long run.
3) Investment properties don’t qualify.
4) 300B is the amount of mortgages they are willing to insure, not the amount they will spend. 300B is like 3% of all the mortgages out there.
I was irked to start, but reading the details makes me rest easier that this is just another move to seem like they are doing something without doing a whole lot.
What I AM really irked about is that buried in the bill is an extension of the debt cap by another $0.8T. And that congress is going to let the treasury get in the securities trading business.
Thanks for this post, not all is lost it seems. They aren’t just printing up the 5 trillion and sending it in lump sum payments to people more than 3 months behind in mortgage payments, for example.
Thanks for the post CCC. Can you expand on your last sentence.
“What I AM really irked about is that buried in the bill is an extension of the debt cap by another $0.8T. And that congress is going to let the treasury get in the securities trading business.”
Sure. Congress sets the amount of debt that the government can go into. Right now it’s like slightly under $10T. They have been deficit spending so much that they need to keep giving themselves credit line increases. What’s another $0.8T?! At some point people in other countries are going to stop lending to us. Then things will get interesting.
I am also bummed out that Hank Paulson will get what he asked for for the Treasury Dept. He wanted permission to buy FNM and FRE stocks–for God knows what reason. Frankly if they are willing to do that, I should buy some and sell when the Treasury buys at high prices.
Sounds more like window dressing to prop up the cheerleaders on Wall Street. They’ll spend the next 2 weeks gushing about how the worst is over, blah blah blah.
Seems to me the one provision in the bill that should get housing bears the most excited - the elimination of seller-assisted down payments (from the Phoenix article) - isn’t getting any love. Many people here believe the bubble stole x number of years of future first time buyers - if that is true, logically the first time buyer market is now largely being supported by these seller-assists. An immediate drop in transactions will occur - 50% less in Phoenix to start if the article is correct. With inventory already to the moon, can capitulation be far behind?
300 billion dollars that will be coming out of our tax dollars to essentially bail people out of situations they got themselves into.
300 billion dollars for a housing bailout, a trillion for the war, Billions for pork spending, keep this up and the USA itself will go into foreclosure. Perhaps it’s time the american voters make their votes count and get this crap out of Washington! Then again, most are sheeple and cannot see through the political leaders BS.
I think the government should have bailed me out yesterday and bought me a tank of gas when I ran out and had to hoof it to the gas station. It wasn’t my fault that I chose to ignore that light that came on, warning me that I was about out of gas!
And if you had to sell your ring to get some gas (if you didn’t have anything in your wallet )than that would be that for your stupidity .
But oh no ,Wall Street and the financial and real estate sectors can foster a short sited greedy ponzi -scheme on the public by faulty and fraudulent lending on inflated real estate to make a commission ,and they deserve assistance .
The public got suckered into this sort of scheme with margin buying on stocks leading up to the 1929 stock market crash and the same entity “Wall Street” and loose lending was behind it .
You need to keep more liquidity in your gas tank.
think the government should have bailed me out yesterday and bought me a tank of gas when I ran out and had to hoof it to the gas station. It wasn’t my fault that I chose to ignore that light that came on, warning me that I was about out of gas!
I’d prefer that this government bought me a small airplane, $5,000,000 bailout money in platinum bullion, and enough fuel to get me to Costa Rica to cool off until the libertarian revolution to reassert the Constitution.
Start writing to you congress critters. I use congress.org - it has a convenient interface for emailing them all at once, and it’s free. They’ll even mail out a hard copy to them if you like(small fee for that I think).
Tell them it’s not OK to bail out irresponsible and even criminal borrowers and lenders.
Tell them lower housing prices is the only way to get people like me into the market.
Telll them before it’s too late.
and above all, if you congresscritter votes for this reprehensible bailout VOTE AGAINST THEM NEXT ELECTION - no matter who the other person is.
Yes, by all means contact them and express yourself.
At the same time, sleep tight tonight, comforted by the fact that the vast and corrupted machinations of gov’t will ensure that this effort too…will be a failure.
Hey, I’m under no illusions here - you will get a form letter back. They do COUNT the number of letters for and against various issues though.
The machinations of our government may indeed be corrupted, and that is why it is more important than ever for every citizen to get involved and make their voices heard.
Yes, and please don’t take my post the wrong way.
I just like to throw out a knock against the idea of an omnipotent gov’t now and again. Mystification of the state is the root cause behind these FBs even asking for help in the first place.
Folks who aren’t mystified by the state take action themselves - whether that’s writing letters, staying out of the stores, or making shrewd investments - that’s the individual’s choice.
Nope - didn’t take your post the wrong way!
In fact I agree completely. If I sound angry it’s because I am - not at you, but because you are RIGHT. It boils my blood to see them trashing this country and our currency.
And never any consideration for the idea that maybe RE prices dropping would be a GOOD thing, and may be what is desperately needed to get the market going again.
More funny money isn’t the answer, and these clowns need to know that we know that.
/rant
In frustating events like watching this $300 billion bailout passed handily, I return to the comfort of “How I Found Freedom in an Unfree World” by Harry Browne.
First take the direct approach and avoid taxes as much as you can.
You don’t really have to move outside of America to keep your wealth from the theiving feds.
“The machinations of our government may indeed be corrupted, and that is why it is more important than ever for every citizen to get involved and make their voices heard”.
It is indeed corrupted IMO, and I hammer away at our Representatives as much as I can. I just wonder why we as a Nation keep voting for the same program over and over. When it should be obvious that the direction our ship of State has long been on, is heading right to the rocks.
you’d be amazed how few letters and emails local pols get…..
Haven’t posted for a while, and as some of you know I used to work on Capitol Hill in a position that let me interact directly with dozens of Members of the House and be a fly-on-the-wall during many closed-door meetings.
Oh, they read your mail allright. Joseph Crowley’s (D. New York) staff actually took GREAT pleasure in mocking those that bothered writing. In their Capitol Hill office’s kitchenette, they hung all the “funny” letters: you know, the ones with grammatical errors, misspelling, etc, all circled in red ink. I am not making this up (circa 2000).
Let that sink in. Try to imagine the tiny fraction of citizens who care enough to physically mail an envelope with a handwritten letter. Imagine the problems facing someone barely literate in the first place, to provoke them to write their Representative requesting help. Now imagine a Congressional staffer opening that letter and hanging it on the wall for ridicule.
This was 7 years ago, and I can only imagine how much worse it is now that the gap between the Have’s and Have-nots widened further.
Joseph Crowley’s (D. New York) staff actually took GREAT pleasure in mocking those that bothered writing.
I can imagine all the politicos and their snot-nosed staffers (the only ones who actually read constituent letters) ridiculing the Proules who were foolish enough to think their Republicrat overlords gave a damn about their opinions. If you’re not a lobbyist with a generous check in hand, you have no voice in this system.
If you want change, REAL change not slogan-spouting, there’s only one way to get it: stop voting for the usual Republicrat Duolopoly-approved candidates. Americans had a chance, with Ron Paul, to send an unequivical “no confidence” message to their “leadership” and vote for the only candidate in the race who stood for the Constitution, limited government, an end to imperial misadventures, and sound money policies. Instead, like the herd creatures they are, they voted to perpetuate the status quo. Now they bleat about how unhappy they are with the business-as-usual policies coming out of Washington, while failing to recognize their own role in voting for Establishment hollow men.
Don’t blame me, Sheeple. I voted for Ron Paul. Anyone who voted for the other flim-flam men loses all right to complain about the mess we’re in.
That’s horrendous! Wish that could be exposed to the public somehow . . .
You have to choose your battles in life. That anecdote is small-fry. I eventually chose mine and lost badly. Was, and always be a blue-pill/red-pill paradox for me however. Be careful what you wish for…
“All people have the government they deserve” -John Stuart Mill
In the meantime ,I heard on the Business TV channel that
McCain is blasting the F&F bail out bill .Go to Larry Kudlows blog and the details are there . I’m just saying ,President hopeful McCain is a pretty big voice to be coming out in a critical manner .
Another lesson I learned about politicians is that their stance on any issue oly matters if they speak up BEFORE the matter is decided…
You know a stat that I’d LOVE to know: what percentage of the few who’ll actually be helped by this disgracefull legislation actually even bother to vote… On second thought, I’d really rather not know.
Hey Housing Wizard, In March McSame was againat any RE bailout. 3 weeks later in favor of aid to RE. Now you are saying he’s flipped again?
Not sure about sleeping tight. The other part of that inevitability is that it will leave destruction (of the dollar?) it its wake.
on it fax em too
socialized housing arrives friday
Socialized housing arrived when the GSEs were set up, IMO. That’s one reason we’re in this mess.
‘Housing is just one failing pillar of our economy’
DC better wake up and realize we’ve had a housing bubble and it’s time to figure out what we are going to do for a living in the future.
‘Some 2.8% of homes, excluding rental properties, were empty and on the market from April through June, according to Census Bureau figures released Thursday. The vacancy rate hit a record high of 2.9% in the first quarter of 2008. It was 2.6% a year ago.’
‘Just under 2.2 million empty homes were for sale in the most recent quarter. The vacancy rates for homes built in April 2000 or later was 9.8%, more than triple that of houses constructed earlier.’
‘Builders capitalized on the boom in home prices and demand earlier this decade, Menegatti said. Many of those houses now are standing empty. ‘There was a lot of reckless construction exploiting the fact that prices were going up,’ he said. “Suburban areas were flooded with new construction in locations that were commuter-unfriendly. Now those are suffering the most.’
‘The country’s economic woes are slowing any revival in the housing sector, said Asha Bangalore, economist at Northern Trust Co. She said it’s tough for Americans to buy or keep their homes if they don’t have jobs. ‘The employment situation has to turn around for the housing market to turn around,’ Bangalore said. ‘You can’t have the unemployment rate going up and have this market turn around.’
All of which is given so much more weight when it’s also considered that the BLS unemployment #’s are crap.
Can they even guesstimate the housing activity generated by the self-employed, illegal, and other shadow incomes during this boom?
We’re up to our eyebrows here in white Econolines driven by “Stashu” and “Janik” - who think “1040″ only applies to motor oil weight. Those dudes were going gangbusters - they were the cats buying up many of the condos/houses here to flip.
Those dudes were going gangbusters - they were the cats buying up many of the condos/houses here to flip.
Yup.
Some of them are (were?) developers, too — like the Romanian clown who gutted and rehabbed my old condo. He was a total weasel, but his Romanian construction crew did pretty good work.
I’ve long thought that guys like that are fully prepared to exploit US law when it comes to unpaid bills, declaring bankruptcy, and hiding assets … they learned a few tricks living under corrupt Communist regimes.
‘Just under 2.2 million empty homes were for sale in the most recent quarter. The vacancy rates for homes built in April 2000 or later was 9.8%, more than triple that of houses constructed earlier.’
San Diego certainly is a mirror of this national phenomenon. The vast majority of the used homes on the market in our zip code (92127) were built since April 2000, and we also have quite a few never-lived-in recently built homes that don’t show up on the MLS.
Not like writing them does any good. The angryrenter.com site sent in over 60,000 signatures alone over this and got zero results. Not even the little issue with Dodd or any of the other politicians who accepted handouts from mortgage companies phased it either.
This thing is made simply to give money to the mortgage and banking companies, and that’s it. One other thing, to the best of my understanding, anyone who partakes in this handout will ultimately owe 50% of their future appreciation to the government, so you’re essentially leasing your home from the Government. I wonder how many will accept once they realize that glaring aspect?
No way did they think it that far through - and the MSM will work over that pissant $7,500 buyer’s credit like a hungry dog on a ham bone.
the $7,500 is not a real credit.. it’s a loan and has to be repaid over 15 years.
“The angryrenter.com site sent in over 60,000 signatures alone over this and got zero results”
i read some of the comments on that site and it blew my mind that most of the signers thought they were the only ones in the world who thinking what the government was doing was wrong. they were keeping their mouths shut in fear of an attack from others in society. i kinda agree with what they were saying, because you dont really know (when you talk to people about this issue) who was in on it and who wasent. you cant tell by looking at them. LOL
People will figure out a way to sell to a new buyer for the cost of the loan - and then that buyer sells the property at market price and kicks back more of the appreciation to the original seller.
I shouldn’t get to exorcised, though — significant appreciation is a long while away. Of course, by then, the govt. will have forgiven the shared appreciation component by then.
“The angryrenter.com site sent in over 60,000 signatures alone over this and got zero results.”
I wonder why 60,000 signatures from a fake web site would not capture more attention?
People who think petitions are going to change policies in Washington are drolling idiots. The only thing the politicos understand is payola of the sort disbursed by their favorite K Street lobbyists.
At least we have one Senator from S.C. that has been standing up, won’t do any good, I know.
Congress to raise debt ceiling to $10.6 trillion!!
S.C. Senator Jim DeMint wants to change the bill to prevent Fannie/Freddie from lobbying Congress but Senate Majority Leader Harry Reid won’t let the Senate vote on DeMint’s amendment. DeMint threatens to filibuster. (Do it, Jim!) DeMint’s proposal wouldn’t save taxpayers, but it would signal a big step in the right direction.
lets set a line on how many senators will vote for it.. i’m gonna guess .. 82.. that seems low.. i’ll say 87.
“Lawrence Yun, NAR chief economist, said there is a downward distortion in the price data.”
“‘With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market,’ he said.”
Oh, I get it. Because we have soooo many short sales and foreclosures, what this means it that everything else (that didn’t get foreclosed or short sold) is more valuable.
Short sales couldn’t possibly indicate the direction of market value.
“downward distortion in the price data”
Yun doesn’t have a lot of room to discuss ‘distortions’ as it’s hard to find a statement of his that doesn’t contain one. His job ( and I know some of you will find this laughable ) is to distance the NAR from the … mess.
Not the MB’s, banks etc. NAR.
Truthfully there’s not a damn thing he or anyone else can do at this point to support prices, stop foreclosures etc. Not_ a _ thing. But what he can do is nurture a campaign of blame that lands on everyone’s doorstep with the glaring exception of their own. It’s his only function at this point.
Preach it brother! I want to see the NAR hauled in front of a congressional inquiry. They knew this crap was coming. If they didn’t, they’re completely incompetent and should have their monopoly systematically dismantled.
If they did know all this was coming and they still fanned the flames, then they are corrupt and should have their monopoly systematically dismantled.
Either way, they should have their monopoly systematically dismantled.
Seattle Renter,
I think in a fashion we will all get what we want here. NAR has had the distinct advantage of watching travel agents, stockbrokers and other industries fall one by one first, to the advance of the internet. I will give them credit, they managed to maintain a stranglehold on their commissions all throughout the boom.
That is about to change and it’s a large part of what makes Yun’s job hopeless. No question, NAR is a powerful lobby and thus far they’ve had their way. Given today’s realities it’s going to be awfully difficult for them to cheer for the status quo.
As the wholesale distribution channel gets shut down for the MB’s and salaried bank employees take over that function along with disintermediation of the Holy 6%, there won’t be much of an incentive to even be a realtor?
I love the NAR. You should love them too.
The NAR can convince knifecatchers to buy and the NAR can convince FBs they should keep making their house payments. Money from both groups, the knifecatchers and the FBs, is what is going to save the system.
Plus, the more money knifecatchers and FBs commit the less taxpayers will have to.
Kick back, relax, and learn to love the NAR.
Kick back, relax, and learn to love the NAR.
Ok, but you get to free fall waiving the cowboy hat.
Got Popcorn?
Neil
I despise the NAR, but see some realtors as potential future allies. The ones who want to eat will refuse to deal with greedheads and their wish prices - refusing to take those listings will help bring at some some greedheads to a more realistic appraisal of the market.
When realtors get REALLY hungry, they’ll want to close deals, and that means playing the opposite role they did during the run-up. No, they won’t suddenly become ethical and virtuous - they’re still NARsters - but they’ll start using lines like, “Better to sell now and get out while you can, before the bottom drops out” and “real estate only goes down.” Instead of screwing the buyers, they’ll be trying to screw to sellers or at least force them to do what they have to do to close the sale and generate a commission - which will benefit the few, the proud, the creditworthy buyers.
Thanks for the great insights. Learn to love the NAR….hmmm…. that’s a tough one.
I smell a movie title.
“Dr. ForecloseLove” or “How I Learned to Stop Worrying and Love the NAR.”
Yun could play the whacked out real estate broker obsessed with bodily fluids.
“Gentlemen! You can’t haggle in here - this is the negotiating room!”
Or maybe since their acronym is only one letterswap away from the NRA: “You can have my downpayment when you pry it from my cold dead bank account!”
The possibilities are endless….
: )
Gosh, that’s funny - I don’t remember the NAR complaining about how hard it was to do apples-to-apples comparisons back when prices were zooming because everyone was using exotic and nothing-down loans even though prior to the last five years those products barely existed….
“‘What I am concerned about is the type of houses that will be built in our area (by the replacement homebuilder),’ Shaw said. ‘Will it decrease our property value, or will they be too elaborate and make our houses look like nothing?’”
Alright, this guy is a knob. What Mr. Shaw is gonna get build there is whatever the market thinks is the best use of capital. It could be a McMansion, a Section 8 townhouse, or a dirt lot - but the market decides now.
Maybe congress can enact something to reassure tools like this of their individual claim to “the dream”?
“Lawyers specialising in real estate report a surge in the number of British buyers contacting them for advice after the developers they bought from have gone under. Thousands of buyers who have not yet taken ownership of their properties on what has become known as the ‘Costa del Crash’ could lose everything.”
Perhaps the growing economic downturn in Europe will distract our former allies from how much damage our real estate market has done to them.
I have always belived in watching the local ground level economic indicators for an area trends besides listening to the MSM Talking Parrots. Some quotes from a recent Milwaukee Journal Sentinel article
Bankruptcy filings in Wisconsin rose more than 38% in the first half of the year as mortgage debt and other financial obligations pushed hundreds of consumers into insolvency
Milwaukee bankruptcy attorney James Miller said he is seeing more affluent households — those with about $75,000 in income — in trouble with mortgage debt than in past years. Some are willing to give up their home because they have no equity in it and their payments have become overwhelming.
“Two or three years ago people would come to me and say, ‘What can I do to save my house?’” said Miller, of the firm Miller & Miller. “Now they’re saying, ‘What can I do to get out from underneath this problem?’ ”
http://www.jsonline.com/story/index.aspx?id=775365
This is and will be Main Street, Anywhere USA.
Their entire problem(aka House Mess) was all totally UNNECESSARY, but anyhow …Welcome to OUR new “Ownership Society” Mr and Ms US TAXPAYER
Something tells me this $300 billion a) won’t work b) won’t get fully spent.
If you are a buyer today, are you really interested in some complex government program or in SIMPLY getting what you want at the lowest price?
Yeah, they’re will be plenty who will rationalize their purchase by pointing to the favors found in the bill but, at this point, the only people who can buy are pretty conservative, financially sound, people.
And we know how many of those kinds of people are out there, no? And aren’t these QUALIFIED buyers much more likely to drive a bargain, be skeptical and patient?
No, there won’t be much of any surge in buying. Those that are helped by the refinancing opportunities will likely be similarly, relatively strong, homeowners….probably ones who could have worked out things without government assistence. Those who REALLY need serious help probably won’t even bother. Why? Aren’t these kinds of people (ones who emotionally jumped into a “deal”) more than likely the types to simply bail out when things get difficult?
So you still have ever fewer, qualified, motivated, buyers. You still have many, unmotivated, mortgage holders who are not into “complex” stuff like government programs. This means more supply, less demand. Prices fall. Even dopes can “see” what this means and no government program will change this process from unfolding.
b) won’t get spent
…or to be clear…won’t get spent as intended. Heck they’ll blow through most of it just staffing up!
whatever the donkies on capital do i know one fracking thing.
i will not buy a home as long as it is cheaper to rent.
they can try to prop up prices all they want but that simple fact will not change.
Indeed. Actually that makes me wonder if the one public policy to stimulate the housing market might be to impose a rent floor. I’m just throwing it out there for an academic discussion.
The immediate impact would be to make a lot of renters on the lower-end of the income spectrum homeless. But, if set high enough, it could induce some of us “fence sitters” to take action and buy. So by constricting renters on both ends of the income spectrum, a rent floor would almost certainly lead to higher vacancies and therefore a lot of ticked off landlords. As vacancies rise, expected ROI for investors decline which would probably prolong and ultimately deepen the housing correction.
Absolutely no chance of it actually being implemented, but I’m sure some REIC shill will suggest it before this thing is over. It’s not that much more farfetched than what they’ve already proposed and even implemented.
What’s the over/under for the date when our first “… indicted on fraud charges…” article emerges from the rescue bill. If there’s one thing I’m supremely confident of, it is that $300bln buys a lot of corruption but not many motgages.
“The housing bill also will provide $3.9 billion in community-development block grants for local governments nationwide to buy and rehabilitate foreclosed properties. ”
Mr. Bank takes Mr. City to lunch.
Bank: I have a foreclosure for you to flip.
City: Fine, just name your price, I have the money.
Bank: You can flip it for a loss easily. Hire your NAR friends to
do the fixing and selling. Hire more friends to do the paperwork.
City: Good idea, how about my re-election fund?
Bank: No problem there, I’ll just increase the foreclosure price.
….
Don’t know about when, but I’m putting my money on Florida for where, experience helps in these matters.
Once bitten, twice shy. Think of all the FBs who took the bait on affordable housing incentives through 2005 who are now stewing in their juices, and project from that how many potential new FBs will want to jump into the stew, against the backdrop of a steady drumbeat of thinly suppressed economic doom, increasing foreclosures and falling home prices. Real estate is sure beginning to look like the worst possible investment, but nobody I know is saying so yet.
Prof…
I don’t know. 20K trailers can rent for $900 in the Valley.
if that’s your thing.
Nothing else pencils out, though declines on duplexes and tris seem to be accelerating here.
If unwise fed bailout excludes investors, I would suppose some apartments could collapse in price. Won’t be helped,anyway.
“Amid ballooning loan losses, Wachovia Corp. is taking more steps to unwind its troubled $122 billion Pick-A-Payment mortgage portfolio. But it’s not going to be a quick fix - or a cheap one.”
The bank’s models have it setting aside $8.7 billion in 2008 to cover Pick-A-Payment losses and expected losses, followed by another $5.6 billion in 2009. The bank’s calculations are based on housing declines bottoming out in 2010.”
So they are saying that only $14.3B loss from the $122B pick-a-pay loans?
These are California loans, and many California areas have price drop of 25% or more already.
For an eventual loss of 30%, the portfolio loss shoud be $36.6B, not the $14.3B the bank is hoping.
Together with the $27B cost to acquire Golden West, total loss now is almost $60B …
They don’t have the capital on hand to afford realistic write-downs at this point, so most likely they picked a number that would satisfy a cursory inspection from the SEC while not alarming the FDIC anymore than they already are.
But yeah: effectively, Wachovia is insolvent. Only a matter of time before it fails, IMHO.
Financial sanity shall regain its throne
While financial sanity is a good thing, I think the writer paints too rosy a picture about it. To get to fiscal sanity there is much pain to be endured. Buyers will need to save for down payments. Home sellers will get less for their houses. Banks will need to recoup losses. Out of work bankers will slave at Walmart. People will leave in search of better opportunities.
It will take years for Charlotte to get back to where it was in 2005.
Bill Gross: “Some 25 million U.S. homes are at risk of falling into negative equity…”
I wonder how much of a price decline this 25M number is based on. With median price at 215,000 and median income at 48,000 (yeah, right), the median price needs to drop to 144,000 for a 3X ratio. This is an additional 33% drop from here.
With the cost of breathing where it is, I think even 3X is pushing it as for as affordability.
Yeah, way too low. 25M could be just in CA.
What makes this housing correction so much worse than previous ones is the level to which people refinanced “equity” for frivolous purposes. There are a LOT of Boomers who should have paid off, or nearly paid off, their homes who upside-down on houses that they’ve lived in for decades.
That’s why every neighborhood in a Bubble Zone is potentially suspect, even seemingly well-established ones. Even if a majority of homes in a particular subdivision have been owned for 10+ years, at least half of them have likely refinanced in the past five years. And the other half are being hounded day-and-night to do a reverse mortgage (if they’re old enough).
For me, the thing holding me back from buying isn’t just the knowledge that home prices will decline further, but that even the nicest neighborhood could turn out to be Section 8 housing or worse within the next few years. Until I know what the neighbors will be like, I’m sticking to my month-to-month rental.
Very good points Wallt526. The other day I was talking to a friend that I would of never thought would of taken out a equity loan on
a house he only owed 35k on, but he did in 2006. Now the house value has gone below the new loan note he took out . This guy is 71 years old . This guy probably won’t go into foreclosure ,but there are many that could .
When you think about how the fraud and the unable buyers drove up
house and rental and tax values artificially beyond what that would of been in a stable market ,no neighborhood is safe from changing because of this .
Speculators were investing everywhere and it got to the point where
even paupers were trying to flip million dollar homes .
Yeah, way too low. 25M could be just in CA.
No, it can’t be that high. There aren’t even that many housing units in California.
It’s interesting, though, to try to estimate how bad the numbers actually ARE in California. Here’s my best stab at it.
There were about 12 million housing units in California 2000, so perhaps 15 million by now. At least 40% of those residences are rentals, so there are maybe 9 million owned dwellings.
At least one third of those don’t have a mortgage, so they can’t have negative equity.
That leaves 6 million residences with (primary) mortgages. Not all of those were initiated or refinanced during the bubble. Perhaps half (3 million) were - Californians do move more often than the rest of the nation, and there was a lot of stupid refinancing going on.
I’m betting that all 3 million of those will be underwater by the time this thing hits bottom.
How many of these will eventually end in foreclosure is anyone’s guess, but I would guess at least half will fail, yielding 1.5 million foreclosures statewide.
I’m not sure how many foreclosures have occurred already - DataQuick says that there were 63,000 in Q2 of 2008, and that is the fastest pace so far - so maybe 150,000 since the bubble popped. If my numbers aren’t too far off, then we’re only 10% of the way there. That light at the end of the tunnel seen by Yun and Appleton-Young looks more like a freight train to me!
For me, the thing holding me back from buying isn’t just the knowledge that home prices will decline further, but that even the nicest neighborhood could turn out to be Section 8 housing or worse within the next few years. Until I know what the neighbors will be like, I’m sticking to my month-to-month rental.
Renting is fine for the next 5 years. It will take that long to get the riff raff out of the houses they could not afford as prices fall to their proper values.
I know one person who drives a fancy car and lost her house. She probably overstated her income. No college education. Beautiful woman. Works underground. You know…But would I want to live next door to someone like that? No. She survives by lying. I don’t want to live among liars (except those who lie to the government to save what properly belongs to them within Constitutional law). Minimum leases are great. My neighbors in my corporate apartments are great. Probably a fraction the crime rate as the FB neighborhoods.
Conditions like these make me laugh because I get the best of what is out there by being free. That’s the “Harry Browne - How I Found Freedom in an Unfree World” way. No one owns me.
“Once factoring in both the total costs of buying a home and the fact that U.S. house prices, which peaked in 2006, are still falling, ‘it is obvious that homes are not the bargains that starving realtors claim they might be,’ Gross wrote.”
I am sure the realtwhores and the NAR love reading this.
Note to starving realtwhores the USDA just stated that food costs will be rising another 5% or so next year, better stock up. Or run down a get a food stamp card.
“Or run down a get a food stamp card.”
Note to lurking agents: Do not, repeat do not, go down to your local social services office wearing all your jewelry - this is not a good idea and it will not get you faster service.
On second thought, do take that classy rolex for bartering purposes….
Ride a bus downtown, too.
And sound smarter than you typically do, ironically enough.
“‘With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market,’ he said.”
In other words, he is saying it’s getting harder and harder to BS the public. Short sales and foreclosures will be about 3/4 of overall transactions in the near future. Just think, had you bought back in May, you now just lost about 6.1% by listening to the NAR.
Is that 6.1% adjusted for inflation?
One foot on the boat and one foot on the dock.
“When the stinging is over, they’ll be stronger for it. Their days of competing with Fast Al’s Car Loan, ‘no credit, no problem,’ are done. Financial sanity shall regain its throne.”
I don’t know about that. Since our government seems intent on propping up the banks, investments banks, and GSE’s regardless of the cost - why should they stop competing with Fast Al’s Car Loan. They have no downside risk, we as the taxpayers do…..
sure they have a downside risk.. if one of my banks chooses to risk my money by lending to people who can’t repay it, i’ll sell however much of their stock i own, withdraw my money and close my accounts.. and I won’t be alone.
Lets see them try to make stupid loans when they don’t have any money to lend.
Unfortunately, our Congress voted yesterday to give Fannie & Freddie unlimited funds to continue buying loans from the banks…….
new topic
years to 2005 peak- in early 2005 I thought by 2009 nominal/2011 w inflation
I was way off
now ?
2012/2015 ???………………
I don’t know. It’s still not clear to me whether the net impact will be inflation or deflation. Right now it’s in the banks’ interests to prevent deflation at all costs. But after all the losses are recognized, deflation may be inevitable. In which case, who knows what prices will look like in 10 years.
A major correction is certain, the only question is whether it will last 2-3 years or a decade plus. If governments would get out of the way and let the process work itself out, then 2011-12 might be the start of the recovery. But continued interference could push this back until 2015 or later.
Right now, work on opportunities that yield a decent return but are liquid so that you can adjust as circumstances warrant (ie, probably not real estate, at this point).
Who could have predicted as of 2005 how whole-heartedly the Bushies would embrace bailout efforts?
Even the most mindless moron.
They are politicians. The goal is to get reelected not to do the “right thing”.
Like DUH!!!! How old are you, twelve?
Who could have predicted as of 2005 how whole-heartedly the Bushies would embrace bailout efforts?
Anyone with one brain synapse talking to another. This Administration has shown itself to be completely devoid of any real principles or convictions, beyond a fervent desire to shovel as much money at the military-industrial complex and Wall Steet oligarchs as they can possibly get away with in anticipation of padding their post-gov’t service careers. And getting McCain elected, so the Bush III Presidency continue with business as usual.
And lest anyone think I’m endorsing Obama and the Democrats, they’re just as bad in their own way, although it’s hard to see how they could be more incompetent and deceitful than this Administration has been.
Nominal bottom in 2011-12 timeframe. By then, it will be clear to everyone - the market isn’t coming back and RE is the worst investment ever.
80x monthly rent in average suburb with new building/developments within 3-4 miles will be the typical price.
120x-150x monthly rent for the highest quality, rare, best schools, close-in (close-in means less than 5 miles to major employment/cultural centers - downtown, midtown, uptown) stuff is a likely bottom (most will fall below this).
Is the US housing market a bottomless pit? If not, then how many times can home sales tumble before a bottom is reached?
US existing home sales tumble
By James Politi in Washington
Published: July 24 2008 16:35 | Last updated: July 24 2008 19:35
Sales of previously-owned homes in the US tumbled by 2.6 per cent in June, much more than forecast by economists, spreading more gloom across the damaged US housing industry.
According to the National Association of Realtors, existing home sales dropped from an annual rate of 4.99m units in May to 4.86m units last month – the lowest in a decade and 15.5 per cent below its pace in June 2007.
The measure of the time needed to sell the inventory of unsold homes rose to an 11.1 month supply from a 10.8 month supply in May.
“The list of reasons for the weakness is long,” says Mike Larson, real estate and interest rate analyst at Weiss Research. “Consumer confidence is down; unemployment is up. Mortgages are harder to get now that lenders have found religion, and the broader economy has been decelerating.”
Goldman Sachs economists said the data pointed “towards continued home price declines”.
US home owners cut back refinancing
By Michael Mackenzie and Nicole Bullock in New York
Published: July 23 2008 16:27 | Last updated: July 23 2008 16:27
The rise in US mortgage rates has prompted a sharp decline in the number of refinancings according to data released yesterday by the Mortgage Bankers Association.
Last week. the MBA’s refinancing index fell 5.6 per cent, while the 30-year fixed mortgage rate jumped 37 basis points to 6.59 per cent.
High rates come at a time when homeowners are struggling to refinance mortgages because home values have fallen and banks have tightened their lending standards. According to RBS Greenwich Capital, just 3 per cent of the mortgage universe currently qualifies for refinancing. Two months ago that figure was 35 per cent.
Wow, if only 3% QUALIFY for refinancing, then things might be even worse than I thought. My guess is that the percentage of people who don’t currently own who qualify isn’t much better (perhaps 10% of the ~30% who rent, so 3% of the population as a whole)?
Also, anyone have any numbers on what percentage of owner-occupied homes are completely paid off?
The number I have seen bandied on this blog (with links) has been 37-40% of owner occupied homes have no mortgage; mine is one of them.
Retailers/CRE best take note of the bold faced print.
HELOC ain’t coming back anytime soon, and their customers are not getting meaningful raises. Where’s the money to support the sales growth (that they absolutely depend on) going to come from?
Wasn’t the initial estimate of the housing bailout bill’s cost (out of Barney Frank’s office) somewhere around $5 bn? On the eve of passage, the cost estimate has gone up by a factor of five. I predict further upward revisions of this cost estimate and ultimately, a higher than expected cost for carrying out the bailout.
US housing rescue ‘could cost $25bn’
By James Politi in Washington and Nicole Bullock and Michael Mackenzie in New York
Published: July 22 2008 17:58 | Last updated: July 23 2008 00:32
The US Treasury’s rescue plan for Fannie Mae and Freddie Mac could cost taxpayers $25bn, congressional researchers said on Tuesday as evidence mounted that turmoil at the two companies is helping push up interest rates for homebuyers.
US mortgage rates have hit their highest levels in about a year amid rising Treasury yields and growing fears among investors that Fannie and Freddie will cut back their purchases of home loans and mortgage securities.
EDITOR’S CHOICE
In depth: Freddie and Fannie - Jul-14
In full: Hank Paulson’s speech - Jul-22
Treasury welcomes Freddie Mac fundraising - Jul-20
Editorial comment: Bad debts mean more bank bids - Jul-20
Freddie and Fannie rescue hopes grow - Jul-18
Freddie Mac secures SEC registration - Jul-18
Hank Paulson, Treasury secretary, on Tuesday said he was “confident” Congress would complete work on approving his plan to give the Treasury authority to increase its credit line to Fannie and Freddie and invest in their equity, if necessary.
The plan has faced criticism on Capitol Hill for exposing taxpayers to potentially huge losses, but is seen by most lawmakers and administration officials as necessary to prevent mortgage rates from climbing even higher.
“I would rather not be in the position of asking for extraordinary authorities to support the GSEs, but I am playing the hand that I have been dealt,” Mr Paulson said in New York.
Please check whether my math is off:
$10.6t - $9.8t = $800 bn
PAGE ONE
Housing Bill Will Extend Federal Role In Markets
By DAMIAN PALETTA and JAMES R. HAGERTY
July 24, 2008; Page A1
WASHINGTON — A sprawling bill that reaches deep into the U.S. housing industry is close to becoming law, in what will likely stand as the federal government’s most expansive effort to stabilize the mortgage and financial markets.
…
The package could also come at a significant cost to the U.S. government, which would be authorized to invest billions of dollars in troubled mortgage giants Fannie Mae and Freddie Mac, as well as insure up to $300 billion in refinanced mortgages. As a result of the bill, Congress will raise the national debt ceiling to $10.6 trillion from $9.8 trillion. It will also give Fannie Mae and Freddie Mac a new, tougher regulator.
REVIEW & OUTLOOK
Housing Bill Hammers Taxpayers
July 24, 2008
Combine a housing meltdown with election-year politics and the results were not going to be pretty. Add a crisis in confidence in Washington’s favorite quasipublic companies and what we’re getting is a rout for taxpayers, especially those who kept their heads during the housing mania.
The House yesterday passed a housing bailout by 272-152. The White House has thrown its reservations overboard and is begging to sign this boondoggle, despite the less-than-veto-proof majority. A few brave souls in the Senate are threatening a filibuster, which is where the last hope lies for stripping the most egregious and expensive provisions from this monster.
Even conservative estimates by the Congressional Budget Office say the cost for this bailout will run to $41.7 billion, with $16.8 billion offset by higher taxes. No one has any idea of the real cost. The most expensive provision gives the Treasury temporary authority to pour money into Fannie Mae and Freddie Mac. The CBO says this could cost $100 billion, or it could cost “nothing.” So it threw a dart at the wall and assigned a $25 billion price tag to the Fan and Fred bailout.
Passage of the housing bailout measure is sure working wonders for US stock prices.
Got bonds?
‘A total $5 trillion of mortgage loans are in risky asset categories, Gross wrote, adding that “nearly 1 trillion dollars of cumulative losses will finally mark the gravestone of this housing bubble.”
“The problem with writing off 1 trillion dollars from the finance industry’s cumulative balance sheet is that if not matched by capital raising, it necessitates a sale of assets, a reduction in lending or both that in turn begins to affect economic growth, creating what Mohamed El-Erian fears as a ‘negative feedback loop,”‘ Gross wrote.’
Does $1t seem like a reasonable guesstimate for losses on $5t of risky mortgage loans? Judging from the ABX index charts, I have to suggest Gross’s estimate is a bit optimistic. These indexes appear to have dropped by over fifty percent on average, and many of the individual indexes are off by over ninety percent.
“The national median existing-home price3 for all housing types was $215,100 in June, down 6.1 percent from a year ago when the median was $229,000. Lawrence Yun, NAR chief economist, said there is a downward distortion in the price data.”
I suspect he might also refer to an avalanche as a ‘downward distortion in the skiing conditions?’
My GAWD. Would you LISTEN to these people! It’s absolutely hideous. They can’t even SAY the words.
They can’t even bring themselves to say that prices are going down.
“a downward distortion in the price data” ?!?!?!?!?!?!?!?!?!?!?!?!
W.
T.
F.
?
I’m tired of this shit.
Could someone please put all these people out of our misery
?
BULLSEYE SEATTLE! I’m so fed up with these liars. Open the paper and the lies from these business leaders and leaders in govt jump off the page. It’s mind numbing.
One upside did occur to me though -
It’s loads of fun watching them squirm!
Pass the popcorn Neil…..
Its quite entertaining.
It is fun watching this squirm.
Got Popcorn?
Neil
“Until the housing market reaches a bottom and U.S. home prices are headed higher, investors should stay in high quality assets, wrote Bill Gross, who manages the $130 billion Pimco Total Return Fund.”
SO once the home prices go up , you can shift the low quality assets. What would that be?
Can any one guess?
Houses!
I heard they are going to close down Sheila Bair, as she’s overdrawn on ideas as to who else blame, for the mess that happened on her watch.
She’s currently blaming the blogosphere for all that ails the banking industry…
The clock just struck 13…
“Anybody remember when we were hot stuff? Sweet Charlotte, darling of the Sun Belt, belle of the New South. Booming business, exponential growth, civic pride, soaring skyline, surging real estate. Cinderella, your pumpkin is ready.”