Weekend Topic Suggestions And Housing Bubble Photos
Post your weekend topic suggestions here! Also, don’t forget to email digital housing bubble photos to: photos@thehousingbubbleblog.com
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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Name:Ben Jones
Location:Northern Arizona, United States
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View the HBB Photo Gallery *updated 4/13/2008
1989 vs 2006
we’ve learned that the % of investment and 2nd homes is higher this time around- also more risky loans- any other tidbits ?
Can someone tell me how to view the picture slideshow? Every time I click on it, I can only see one picture.
Thanks.
click on the photo to see the next one. that’s what works for me. I wish these could be posted as thumbnails somehow.
Why not put them on Flickr? I just searched for housing bubble and found only the bubble man. We could have people the world over adding to our photo collection!
Can anyone see signs that consumers are tightening their belts. Is it happening yet where you can see it anecdotally?
Simmsays…
http://www.AmericanInventorSpot.com
AmericanInventorSpot.com
As I mentioned the other day, we in dog rescue are seeing an increase of expensive purebred dogs being handed over to rescue or taken to shelters (we’re talking a breed that sells for in excess of $1-2K). It bothers me a lot because there really isn’t much economic stress yet. What will happen when there is?
bothers me as well. Many people don’t place much priority on pets..my wife and I used to go around the neighborhood and “borrow” peoples pet cats and take them down to get fixed. most never noticed fluffy had a shaved belly when we returned them.
Hey, I’d lie to do that! Can you tell us more about the details of your plan? There are kittens galore where I live.
My neighbor’s cat, Miffy, used to use my kid’s sandbox as a litterbox, despite my repeated complaints to the couple that owned it. It was a beautiful Persian cat with one blue and one green eye, and luxuriant white fur. That is, until I caught it, rolled it up in a carpet, shaved its flanks, spiked the fur along its back with axl grease, and dyed it the colors of the rainbow (most, anyway, with the food coloring in the pantry). The neighbors called the cops, but when the officer showed up at my door — holding Miffy — he was having extreme difficulty keeping a straight face and accepted my utterly unconvincing explanation that a gang of roving punk-rock juvenile delinquents had targeted the felines of our tranquil neighborhood to make some kind of twisted statement. Oddly enough, Miffy never again visted my yard or fouled my sandbox after that “extreme makeover.”
Yes, I know, I’m going to hell for that one.
Sammy,
That’s mean, but it sure is funny! I hope the cat didn’t mind too much.
I moved from a very high income area to a low income area in the midwest (although not exactly “poor” since the cost of living is also very low). One of the many things that has surprised me about the new area is the large proportion of purebreds over mutts (that is for the dogs that have “homes”; there a many more strays and unwanted animals). In Silicon Valley lots of people adopt rescues from the animal shelters — about 1/3 in the shelters there are purebreds but the mutts also get adopted. Of my 4 dogs 3 are mutts and 1 is a purebred (3 adopted, 1 a stray). However, here in the Ozarks people own many more purebreds. Why is this? Just guess. It’s because everyone not only has 2-3 jobs to make ends meet but their dog also has a job — churning out puppies that they can sell for $100 each. It’s shocking how many people are “breeding” dogs at home (of course the dogs are usually left outside no matter what the weather). These people will pay thousands of dollars for a purebred dog as a breeder but easily get rid of her (usually a female) when she can’t produce or they tire of the puppy mill grind.
Please contact me offline. I am very active in puppy mill rescue for several breeds. I also give money to rescue groups to buy (rescue) the ones they auction in those horrible auctions in the midwest. I would like to give you my name and contact info so if you see any of my breeds, you can get in touch with me asap. We take them all in our group.
gymnastgal32@yahoo.com
I just knew you were cool!
Chic,
As a result of your posts on this issue, I’ve pretty much decided to rescue another dog. Good job. Now, since you’re so visible on this blog, please go here:
http://www.financialsense.com/fsu/editorials/willie/2006/0329.html
For the benefit of those reading this blog, you could start framing this “little” housing bubble problem as a symptom and result of a much more serious range of issues.
You might want to have a stiff drink first.
Have a great day…
My dog told me housing was going to crash .
I’m a regular of 10+ years on SI too. I follow all that stuff. Total permabear. LOL
Hooper;…Cut & pasted…Will read it at a later date but did go through cursory….CHINA !!!…Thanks for the link…
txchic
Here in Phoenix we have a big adopt a Greyhound group. I have one that came off the “B” track about 6 years ago. Her name is Heather and she is a great dog. If you get Greyhounds in your dog rescue the Arizona group will usually take them. There is also a group in Tucson. They adopt out several hundred dogs a year. They also have events at the Greyhound park like Holloween costume parties and other events.
AZgolfer;….I have such fond memories of Tucson…I played for the Cleveland Indians in the early 70’s so we trained @ Hi-Corbett field…That was my first experience with Greyhound race tracks…I went EVERY NIGHT…We are also BIG TIME dog lovers and rescue….I always wondered what the race dog owners do with the retired or injured dogs..They don’t put them down do they ??
A few news stories over the years here: 10-20 greyhound carcasses found in the desert.
No one should pay money to have pets created for them when you can always get a perfectly good mutt puppy or dog or cat free from an animal shelter. (except maybe if you’ve got unusual allergies to regular animals)
So much excessiveness these days!
I’ll keep driving my old little car and walking my big old mutt.
That doesn’t make much sense! Does it really cost more to maintain an expensive dog than a “cheap one”? (All my beloved pets have been “mutts” and “strays” from the animal shelter?) I can’t imagine why economic stress would cause owners to give up their expensive dogs!
Expensive dogs often have genetic problems with attendant very high vet bills. That’s the reason. Or they are too cheap to pay for training to avoid the traditional behavior problems. Or the dog is just another toy and when it becomes inconvenient, out it goes.
it didn’t make sense to me either, but then I thought, perhaps there is a correlation between people who stretch their finances and people who buy designer pets. Thus, while it is not more expensive to own a $2000 dog than a mutt, people who own a $2000 dog may be less able to pay the $25/month for dogfood than people who own mutts. Yes, that would be bass-ackwards, but somehow nowadays it actually seems possible.
They BREED these animals. They see them as another investment. But when the investment causes trouble (vet bills, have to move) the so-called pet becomes just another unwanted piece of baggage.
txchick,
Place your mouse over the right side of the first pic, and wait until you see a black plus sign. Clicking that will forward the show
We should see alot more of this, later this year.
http://delaware.craigslist.org/rfs/149422469.html
Nice. Sure they have $30-40k in each of three properties. That’s why they can’t get a loan, have such a low credit score and need to seek funding on Craigslist. This is a bankruptcy waiting for the filing.
For the past year and a half, debtors have been refinancing or selling their ways out of Chapter 11 or Chapter 13. I see that ending very soon now.
I don’t doubt there are people in the situation this guy claims to be in, but this has scam written all over it.
No he called a couple lenders and found out that with a 470 score he’s only going to get a 60 70 percent LTV while he’s probably in each property 90 to 95 percent. He’s probably in foreclosure.
Is this scenario possible:
Granite countertops in low-income housing? Who would have thunk it?
Dateline 2010, Miami, Florida - Four years into Miami’s severe property slump, city officials have found a way to make use of the tens of thousands of vacant residential buildings that were originally built as condos during the housing bubble in the first half of the decade.
The city recently signed a lease on several of these buildings and plans to use them as low income housing. One building will be used as a temporary shelter for the city’s homeless.
Interestingly, the buildings new residents, despite their low-income or even homeless status, will enjoy luxery amenities such as granite countertops, stainless steel appliances, and state of the art workout facilities. Worried that the city has gone bonkers for providing these features in low-income housing? Don’t be. Because of the enormous amount of unsold condo properties from the housing bubble, the city was able to lease these properties for less than the cost to build similar sized facilities without the luxury amenities.
Jack Forray, Miami city treasurer said, “The lease rates on these empty buildings were so low that we are basically getting granite and stainless for free. I think the homeless will really love it. Finally they get a taste of the sweet life!”
I remember during the last real estate downturn a piece on the news where a local government had to get a special exemption from HUD rules so they didn’t have to rip out ameneties that were in some condos that a developer was donating for low income housing to take the tax writeoff.
How about some talk of how the sign making business has been booming?
Are equity nomads more loose with the checkbook when making offers on houses in their destination markets because prices are so much less expensive than in the markets where they are selling their homes?
IMO - YES!
I saw it firsthand in Portland, OR.
In my rolling bubble town I have heard anecdotes of CA equity nomads bidding 30k or more over asking price, despite there being no competing offers. I guess they got trained in California that overbidding is the only way to get theiroffer accepted.
Where do you live now and what are your market’s most common destination markets for equity nomads?
Good topic .
Have you noticed any effect on home prices that can be attributed to telecommuting or the establishment of small businesses in nontraditional areas enabled by the Internet? Similarly, laptops and cellphones may make longer commutes on mass transit more acceptable. Has this expanded commutation ranges?
What are the tell-tale sign of a visible tipping market in your neighborhood? For example, I’m renting in Sacramento in one of the many, many new mega-neighborhoods complete with Club House and HOA dues, etc.
I’m seeing lots more homes for rent and actually being occupied. What I see happening (slowly) is the people who are moving into the rentals are 1) More people per house and 2) Cars noticeably not in the same price range as other owner/occupants: BMW, MB, Volvos vs older mini-vans, beater commuter type cars
Not passing judgement because I drive an old(er) Nissan pick-up just wondering if this is the beginning of renters outnumbering owners.
I saw this happen once before in Palmdale during the mid-90s. Tumbleweeds across front yards of empty homes were a common sight. Neighborhoods became checkerboarded–beautiful lawn next to dirt lawn. Empty or rented house next to owner-occupied.
We’ll Monday is tax day, so I’d like to see a discussion on how the current tax structure subsidizes the real estate industry and what impact a national sales tax or so-called “fair tax” would have on the housing buble.
You used “fair” and “tax” in the same sentence. Thuss no productive discussion is possible. Taxes “distort” the real estate sector and we could have a thread about that if you can get past this “fair” stuff.
I’m not hung up on the “fair” word since it is mearly a marketing tool to sell the idea of a national sales tax. NST appeals to me since I think it would capture tax revenue from sectors that were not previously taxed i.e. black market, illegals. Also it would simplify compliance which would free up some very smart people to think about better things than tax avoidance. Finally, business decisions would be made based on factors other than taxes, hence create efficiencies in our overall economy.
Well, if there was no interest tax dedection for homes, home prices would be lower. Imagine if the government had never started the deduction. A few people benefited at first, but then the housing prices rose to the point that it was a wash because everyone took the deduction into consideration in the price they were willing to pay for a home, just like they do now. Every time the government does something to “increase” home ownership the result is that home prices go up and certain people profit from the change and then others from the rise in price.
In the last 15 years the change in capitol gains tax and later the super low interest rates have kept housing prices rising at a faster rate than general inflation and encouraged speculation.
The tax problem is a pet peeve of mine. National sales tax (consumption tax) is the only “fair” way to impose taxation. Those who consume pay more. Those who grow their own food, economize, don’t buy monster plasma televisions and McMansions, and are otherwise conscientious, responsible, rational citizens pay less. Beauty.
I would very much like to see the national sales tax. Of course it would put so many IRS people out of work and lower government expenditures so we will never see it happen.
The only fair tax is the one that taxes somebody else. Youare just projecting your value system on the entire nation. Plasma screen TVsare bad and thus should be taxed. Indeed you went so far as to call us plasma owners unprincipled, irresponsible and irrational. Were I as judgemental I might suggest a Luddite tax on people who didn’t particpate fully in the modern economy. But I won’t because I’m not as quick to condemn other peoples’ actions lest they try the same.
In principle, I like the idea of a NST. However, I have already paid taxes on a good chunk of money I have saved. A NST would tax that money *again* when I spend it. Haven’t heard a good solution to that-
On the local level, I would like to see tax reform that separates property tax from home valuations. For example, have a set property tax rate that is based on lot size or some other static feature, which increases with inflation (or another set formula) rather than property values. Then impose a local capital gains tax upon sale of the property.
This way, homeowners won’t get taxed out of their homes due to forces beyond their control, but the local governments would still benefit from increasing property values. As a side benefit, it would also discourage flipping.
Sounds like some interesting ideas you’ve got there, opt unarmed…
I have two comments about taxes. First off California Income taxes are particularly onerous as they disallow deductions for charity. Dividends and capital gains are taxed at full rate. The tax bite from California is almost 50% of my federal taxes. It makes other states like NV WA and TX start to look more appealing; especially combined with lower house prices.
I am hit with the AMT tax for the first time. This disallows deductions for state taxes paid, but allows deductions for charitable deductions. A big advantage to places like TX and FL over CA. They donate alot to churches instead of paying high state taxes. I believe the republicans are secretly (or not so secretly) letting the AMT replace the regular tax code. It is flatter, lower rates; lower rate for cap gains and dividents. Deductions for churches, but not for tax and spend blue states.
I think the problem we really have is too much government spending and waste. I know we won’t be going back to smaller government without a major social upheaval, which I don’t want, but the fact is; when we had a smaller government we had less taxes. It doesn’t do any good to continue with more and more deficit spending to continue social programs and wars without raising taxes, because all that does is create a hidden tax that many people are not fully aware of and taxes people without representation because they cannot vote on the hidden tax. It is a hidden tax because the deficit spending causes inflation that steals the value from everyone who is holding dollars. Anyone notice any inflation since the war started?
“Anyone notice any inflation since the war started?”
Nah, most people are busily consuming and watching American Idol and that celebrity crap like ET.. Inflation?? CPI is only 3%. No problem, trust the government, they have things under control. Your savings are safe. Do not worry. Spend spend spend. Thanks.
If illegal aliens were kept out of the country, the cost of say hiring an American born landscaper to put in your stone patio might double. The effect would be felt most by the wealthy as many in the middle class would do their own landscaping anyway.
At the same time, it would cost far less to run our schools because we wouldn’t have these huge families paying small taxes but sending five kids to school. So in this respect, we’d be able to afford a more expensive stone patio.
Or better still, we could take a lot of the money that funds the educations of these illegal aliens’ kids including their ESL expenses and redirect it to equipping the smaller remaining student populace to better compete in the world.
Would such an approach or something like it be wise and would it help wean us off our real estate company?
Unfortunately our agriculture is so dependant on illegal immigrants picking fruit at $2.00 HR that our food would most likely skyrocket. So would most of the janitorial services performed by illegals. Some of the services we are so used to being cheap, i.e Mc Donalds, et al, would double or even triple in cost because US legal labor tends to be much more expensive.
OTOH, you would require much less money to deal with the shortcomings of illegal immigrants like ESL, and Health care.
Most Illegals that I know work 2 or 3 jobs at menial wages, live in cramped conditions, and send money to their families south of the border religiously every month. They are hard workers, if somewhat difficult to manage as they show up on a sporadic nature…
America’s high end, manufactoring and technical jobs are being exported oversea’s. GM and Ford are on the brink of collapse. Then you take the low end jobs and give them too illegals who in turn take there booty from breaking the law and feed their families in there home countries and enhance their countries economy. While you have people living in their cars and on the streets unable to find employment. I would pay 5.00 for an orange if it meant keeping an american employed making a decent living and housed.
Whether it’s housing or the big corporate machine the greed has got to stop somewhere or bubble or no bubble america is going to get the ass end of the stick.
Some jobs can only exist at a certain wage. How many $5 oranges will people buy? How many people will decide that they cannot afford to put in a patio? Some believe you can replace illegals one for one with a higher paid legitimate worker, but the prices for those goods produced will go up and the market for them will shrink. The only hope would be that there is a wealth effect from eliminating the social problems brought on by illegal immigration that would allow people to buy $5 oranges in same number that they do today.
I don’t necessarily agree with that. You can pay legitimate workers a decent wage. Yes cost of products will go up. But not too the point the market will no longer exist.
Ex: Oil companies despite the increased cost of raw product to historical levels had record breaking profits last year much to chargrin of anybody who drove a car. Yes some folks decreased their use but I don’t see any of the oil companies going bankrupt.
What your putting out is the stuff big corporate companies say to justify slave wages and labor to people who can’t really complain. IMO it’s BS. No illegal alien should be employed in this country untill unemployent is zero period
“No illegal alien should be employed in this country untill unemployent is zero period.”
“I would pay 5.00 for an orange if it meant keeping an american employed making a decent living and housed.”
__________________
mrincomestream,
In 100% agreement with you on that!!!
I’m not an apologist for Big Business, but a student of Economics. Gas has become like food, inelastic in that an uptick in price does not decrease demand. Luxury purchases like new kitchens, eating out, etc. will decrease.
What kills me is that builders use cheap day labor, and the price of a new home is still high. They’re keeping the difference and not passing it on to the consumer. There would be room for increased wages, if the builders are willing to give up some profit. You can apply this to any industry that uses cheap labor, but still keeps their profit margins high.
On topic - off thread.
A few macro comments.
1) The listings are way up and sales down-BUT-there has been no major break in home prices. The housing bubble is still intact. We are on the cusp, edge of cliff, or right shoulder of a bell shaped curve. However you want to say it.
2)This is as much a debt bubble as housing bubble. As a group, home owners have too much debt to carry period. Incomes are static at best, local taxes & insurance costs up. There is no way out of the trap.
3) Ben Bernanke’s plan is to flood the economy with $$(no more M3 data) while raising rates to protect the US$ & provide a “soft landing” for real estate. It will not work! The Fed is in a box, the minute they stop raising rates to save RE, the US$ will slump/crash. No country will buy our debt which we have humongous amount of.
“+ The housing boom is over. Seriously over. There’s a glut of homes for sale. This will hurt the economy. Fred Hickey”
Thank you Ben and all of the sharp posters on this blog. Have a good weekend.
Chris
There was a chart on CNBC, that total US debt is 300% of GDP (personal, corporate, and government debt). A record high, the previous high was 250% in the 1930s. The US has become a record debtor like Argentina; its just the world percieves us as being rich and responsible.
Think about this. US GDP is $12e12
The federal debt is $8e12
Total debt is about $36e12
At 6% interest, the interest service cost is $2e12.
Thus, almost 20% of our country’s entire GDP going to just paying interest. Of course we arent even working on paying it down, we are borrowing more. Did anyone ever watch Evita?
The U.S. is different, for now, because of the dollar hegemony. Henry Liu at atimes.com offers some enlightening commentary on the subject.
Two suggestions:
1. Examples of surging inventories leading to louder yelps from Madison Ave –i.e. more hawking and squawking about homes for sale. I just rode in over Manhattan Bridge and saw a huuuuuuuuge sign on a buildng hawking Dumbo condos -you would never have seen that a million years ago — Also this Century 21 ad is a sure sign of realtors realizing they have to push to sell. And you simply can’t listen to the radio anymore without someone barking about mortgages/loans. Any other local/national examples?
2. How we have talked our partners/spouses/friends — even ourselves — out of buying in the bubble — what strategies have worked for us.
ha - typo again “you would never have seen that last year or year before”
Just a thought:
Do the number of arsons increase in correlation with past real estate downturns? Would desperate people set their homes on fire (”accidentally” of course) to get out of a bad mortgage?
Why would having the home burn down get you out of the mortgage? You would still be liable to pay; that’s why people have home insurance.
the thought is, if you cant sell the home, you may “sell” it to the insurance company…but maybe the insurance coverage still wouldnt pay off the debt.
How about the outrageous pay the CEO of some of these homebuilder took home in 2005. Talk about burning down the rain forest and flying off with your profits!
Beazer Homes USA - Ian J. McCarthy - $10,239,300
Horton (D.R.) - Donald J. Tomnitz - $18,182,600
KB Home - Bruce Karatz - $155,903,200
Hovnanian Enterprises - Ara K. Hovnanian - $45,915,900
Lennar - Stuart A. Miller -$28,851,100
Toll Brothers - Robert I. Toll - $40,889,800
These number came from the 2005 CEO compensation report:
http://online.wsj.com/public/resources/documents/Execpay_ceocomp06.pdf
For a good explanation of realized income read this:
http://biz.yahoo.com/special/ceo06_article1.html
These so called ‘holy cow’ sheets are enlightening directors and stock holder to just how much the CEO are raping their companies for!
Here is a good business model for corporate rape:
1) Grant lots of stock options to top management
2) Borrow lots of money
3) Use it for share buybacks that pump up the stock price
4) Cash out options after price gets bid up
5) Let company go belly up after the bubble pops
Does that sound like a plan?
Disco!
I bet they print this on the walls in the bathrooms of CEO University.
These companies had record profits. While CEO pay maybe high at all companies, these salaries aren’t out of line with how their companies did. If there are lots of people willing to buy new houses for double their cost to be built; blame those idiots; not the home building companies.
We don’t have enough hours in the day for me to tell you all the ways your thinking on this is just plain wrong.
Private company hurray for your thinking… publicly traded… I don’t think so.
Exactly, Euphonism!!!
Corporate laws protect the executives from personal liability, but permits them to take all the profits.
IMO, if a business owner is willing to be **personally liable** for the liabilities of his/her company, then he/she can be compensated however they like. However, if public shareholders (without insiders’ knowledge), vendors, bondholders, etc. are liable for defaults/losses, I can see no reson for corporate executives to receive these extreme compensation packages.
You could start your homework lesson here
http://www.ceo-journal.com/articles/hcm/mercer.htm
Bond prices. Both the 10 yr and 30 yr are above 5% and the Feds will raise the short term funds rate in May to 5%. To keep things from inversion the Feds should push the long term bonds yet higher.Question, how many agree with the following statement (it refers to the 10yr note):
“one analyst noted that at least a part of the increase in Treasury yields during the last couple of weeks may prove to be a temporary phenomenon. The yield on Treasury notes have consistently risen in the weeks before the April 15 tax deadline, presumably because Americans are selling notes and bonds to pay off their tax bill, according to an analysis of 40 years of data by Carl D. Steen, a market analyst at MFR Inc., a research firm based in New York.
“There is clearly propensity over the past 40 years for Treasuries to sell off throughout the month of April,” Mr. Steen said.”
The following sorts % population growth by state based on % change between the 2000 census and the 1980 census. The density data is based on dividing population by land area.
Obviously each real estate market is local, so state level data should only be used directionally. And obviously population doesn’t account for many factors such as incomes and amount of home supply.
Neverthless, of the two metrics listed below - % population change and population density, which has the bigger effect on home prices?
Chg vs Pop
1980 Sq Mi
149.6% 18.2 Nevada
88.9% 45.2 Arizona
64.0% 296.4 Florida
56.0% 1.1 Alaska
52.8% 27.2 Utah
49.9% 141.4 Georgia
48.8% 41.5 Colorado
46.6% 79.6 Texas
43.1% 217.2 California
42.6% 88.6 Washington
39.6% 15.0 New Mexico
37.1% 15.6 Idaho
36.9% 165.2 North Carolina
34.2% 137.8 New Hampshire
32.4% 178.8 Virginia
31.8% 401.1 Delaware
29.9% 35.6 Oregon
28.6% 133.2 South Carolina
25.6% 541.9 Maryland
25.6% 188.6 Hawaii
23.9% 138.0 Tennessee
20.7% 61.8 Minnesota
19.0% 65.8 Vermont
16.9% 51.3 Arkansas
14.7% 6.2 Montana
14.2% 1,134.4 New Jersey
14.2% 87.6 Alabama
14.1% 50.3 Oklahoma
14.0% 98.8 Wisconsin
13.8% 81.2 Missouri
13.7% 32.9 Kansas
13.3% 41.3 Maine
12.8% 60.6 Mississippi
10.8% 169.5 Indiana
10.7% 1,003.2 Rhode Island
10.7% 809.8 Massachusetts
10.4% 101.7 Kentucky
9.6% 702.9 Connecticut
9.3% 9.9 South Dakota
9.0% 22.3 Nebraska
8.7% 223.4 Illinois
8.1% 401.9 New York
7.3% 175.0 Michigan
6.2% 102.6 Louisiana
5.2% 5.1 Wyoming
5.1% 277.3 Ohio
3.5% 274.0 Pennsylvania
0.4% 52.4 Iowa
-1.6% 9.3 North Dakota
-7.3% 75.1 West Virginia
-10.4% 9,316.9 District of Columbia
24.2% 79.6 Grand Total
see i told you alaska was getting crowded…
Is retail sales up or down in the different locals ?
What might be interesting is a “then and now” segment contrasting the tone of the market 12 months ago with today’s market tone. Ben- perhaps you can dig up some articles from your archives that epitomized the height of the frenzy a year ago with the more sober mood today???
Since “Realtor(tm)” is a special breed because they take “Ethics courses” why aren’t they pushing to have up front disclosure of all fees to the prospective buyer. Not just PMI but property taxes and HOA fees (both the latter not just at time of purchase but projected rise),Mello-Roos fees and other property bond fees. I guess, for me, the best alternative would be that you had to license as either a seller’s agent or a buyer’s agent, but not both.
The simple answer to that is because they have no control over what your H.O.A., Mello Roos, property taxes does or does not do after you buy the property and have no reliable way to predict it.
OT: Ben (or anyone who knows)
What is the software used to generate this photo album? I like it…
probably Lightbox: http://www.huddletogether.com/projects/lightbox2/
I want two new posts every morning:
“The Daily Bit Bucket” where everyone can put their OT comments without disrupting the flow of threads.
“Hey Look at What I found on Craigslist!” where everyone can put their OT comments without disrupting the flow of threads.
excerpt from a previous posting by moqui
“I’ve been playing around with my county assessors’ web site
and my local newspapers sold homes section.
For homes 700K to 1.8M sold in the last 12 months,
6% have not paid their December tax bills and 38%
missed their 4-10-06 deadline as of yesterday.
(It was updated on 4-11-06)”
This stat was for California.
What about other states?
Does the accessor start immediate foreclosure
proceedings or is there a grace period?
How are cash short owners coming up with
cash to pay 10K+ property taxes? Stories?
Other folks on this forum have mentioned and it’s a topic well worth discussing - how do you keep your spouse from dragging you to the marriage counselor because she’s threatening divorce because you don’t want to buy an overpriced house and she does (I am assuming that is the typical case - maybe in some unions the female is the bearish one)? The marriage counselor is probably also a homeowner and very biased. Any relationship counselors out there who are also renters? I think you are very needed!
No couselor here, just observation. I find a high correlation between people (both men and women) who have poor spending habits and those who are not paying the bills. If your spouse understands math, then make sure that they are involved in the family finances.
My wife is excellent in math, but I ended up with the finances in the division of labor. I find that a monthly plot of net worth and a discussion of what it would take to retire early is quite effective.
Now if your spouse doesn’t understand math, then you have quite a problem.
it takes two to sign loan papers. the fight should last but a few months longer when silent spring gives way to summer slide. then it will be a lot easier to be the bear in your household.
Summer Slide? I like it but was holding off before introducing “Summer Bummer.” You beat me to it.
The husband and I talk about RE a lot and both read this blog, and we are very much in agreement that we don’t want to buy an overpriced house. One thing I would really appreciate is a more gender-neutral approach to this discussion. I’m getting a little tired of seeing women get cracked on for making irrational housing decisions. Is there any hard data to indicate that this is, in fact, frequently the case?
Actually the only research I have seen about gender and investing suggests that men are more prone to make stupid investing mistakes (and my wife would probably concur!). You may be misled by real estate industry propaganda which stereotypes the smart wife who knows now is the right time to buy a home and the dumb husband she is trying to convince. My wife and I had no trouble agreeing that 1996 was the right time to buy a home in CA, and that now is not.
I’m not buying that propaganda, but I see that attitude reflected a fair bit here and elsewhere. I’m sure it’s just a reflection of the old stereotype that women are irresponsible with money and like to shop. For some reason that persists even though women are often, now as in the past, the ones who end up managing family finances. Still, as cereal pointed out, both the mister and the missus have to sign the loan papers, and I have a hard time believing that there are that many henpecked hubbies out there.
“both the mister and the missus have to sign the loan papers”
I’m not sure why that assumption is here. The only time the spouse HAS to sign is when 2 incomes are needed to make the mortgage payment. Otherwise it has more to do with ownership (divorce, inheritance) issues.
Believe it.
I think the housing crash is right around the corner- in the car section of the online paper here in Reno - more cars and gas guzzling SUVs for sale all of a sudden, saw one, where the guy is desperate to sell his truck in a hurry-and taxes due next week. Gas hitting $3 a gal soon. I think this thing is going to blow up before summer.
I have suggestion. can we have a place where we can have a scorecard of certain areas month by month. like we could have sales, inventory and median prices in a few states. sometimes it’s tough to put the number toghether. we could pick 5 states, california, texas, florida, Virginia and somewhere else. we track 2 or 3 cities/counties in each state?
how about a link to oc’s site?
Topic for Discussion: Realtors marketing the heck out of their town
I’d like to know whether it is a new phenomenon for realtors in be actively putting out propaganda designed to lure new residents to their town. Where I live, the realty establishment publishes a lot of materials and websites promoting the benefits of moving here. They make it sound trendier and lovelier than it really is. All in hopes of getting the equity cashout buyers. (since the locals can’t really afford to buy here anymore).
Has this sort of practice always been going on, or is it new now that we have a national housing bubble that rolls around into peripheral markets? (My bubble town happens to be a resort area/second home market with a pretty flat local economy, low incomes, and lots of realtors.)
Always been going on. Just heightened because of the bubble. Here in L.A. I have seen an increase in Arizona and Neveda Realtors advertising
If option ARMS help households with subprime credit ratings stretch their family budget to keep petrol in the Hummer’s gas tank, then maybe they would work just as well for city governments in similar situations…
http://www.signonsandiego.com/news/metro/20060410-1711-financeplan.html
Interest rates, interest rates, interest rates
CNN’s Business Section is starting to catch on
Interest rates are on the rise. The yield on the 10-year Treasury-bond yield zoomed past the 5 percent mark Thursday — its highest level in four years.
It’s not just bond traders who should care. Rising rates will have an effect on your finances. Especially if you own a home or are shopping for one. Or if you use a credit card. Or are just paying one off.
Interest rates are simply the cost of borrowing money; the prices paid by institutions trickle down to the consumer. So if you’re in the market for a home, the mortgage rates offered you are a reflection of the terms the banks can secure from institutional lenders. As their rates rise, so do yours.
For home shoppers, a jump in interest rates from 6 percent to 7 percent on a 30-year loan adds about 10 percent to a monthly mortgage bill. A homeowner who financed a loan of $200,000 at 6 percent would pay about $1,200 a month. At 7 percent, the bill would come to $1,330.
What are the chances of the Fed tightening lending regulations on home loans (IO,neg am etc.)? Article in the print edition of the L.A. Times in biz section about 100 lending institutions led by the behemoths (C-wide, BofA) writing letters saying don’t do it , will hurt our biz and all those poor people who can’t afford houses will be shut out of the market. Since most of our elected reps. are bought and paid for by corp. America I doubt any tough measures will be enacted unless people who have these loans start feeling some pain from lower house prices and rsing interest rates.
The chances are slim now, because the new mortgages haven’t been proven yet to be bad (as the lenders rightly point out) - reform will have to wait until the data show that those loans lead to more foreclosures and depress the housing market even more than strict mortgage regulations.
(I am trying this suggestion again because it did not go through last time…)
New condos online for everyone, and why you should get one yourself:
“People to watch: Brent Gleesen
http://www.signonsandiego.com/uniontrib/20060414/news_1b14person.html
April 14, 2006
Company: NewCondosOnline.com
Title: Founder and president
Age: 29
Brent Gleesen served four years as a Navy SEAL and participated in more than 100 combat missions in Iraq and Africa. After being honorably discharged, he went to graduate school at the University of San Diego, where he received a master’s in real estate. Gleesen, 29, met his business partner, 25-year-old Brandon Fishman, while in the master’s program and together they created NewCondosOnline.com. Their Web site is meant to be a convenient place for home buyers to find new condos as well as an advertising forum for developers. Just before graduating in June 2005, they launched their Web site and have since signed on nearly 300 projects nationwide, including about 80 projects in San Diego.
What do you make of all the condo bubble talk?
Frankly, I think there’s a lot of negative buzz out there that might not be accurate. Especially with San Diego, I don’t really think we’re overbuilt yet. The bottom line is there’s still too much demand. People keep moving here and people want to stay in San Diego. I think honestly in reference to the bubble bursting, I think the bubble has burst, and this is as bad as it’s going to get. Markets all over the country, some are going down, some are picking up. Our business model can follow the trends in the markets, but also when the market slows, builders still need a good source of inexpensive advertising because they still have to sell the units and the projects.
P.S. His last point seems right to me. I would invest in his business before I would invest in a condo…
Interesting Newsweek article about Spurlock’s new film on how credit is driving people into poverty, suicide, etc.
http://www.msnbc.msn.com/id/12306509/site/newsweek/
Cool — but note that is Scurlock, not Spurlock of “Super Size Me” fame, although I am guessing they are soulmates…
Anyways, seems as though Scurlock is maybe three years early if he wants to really capture the sensational effect of a credit crunch on maxed-out borrowers.
OTOH, pity he didn’t do this 5-10 years earlier - would’ve been nice if so many people hadn’t allowed themselves to get crushed by credit in the first place.
Whoops! My bad, you’re right. I just assumed it was the same guy.
LA Condos for Everyone!
Ben;…GM, Ford & Delphi are all scheduled for large plant closings….I wonder what the housing markets are doing in these communities in anticipation of these closures ??
Detroit is going down, not because of a bubble, because it had none, but because of the bad news from automotive - a crash different from other areas. Any news from other areas?
I’ve heard that banking regulators will be issuing “firm guidance” some time this spring to regulate exotic loans. Does anyone know:
-when this is set to happen?
-what, exactly, “firm guidance” means? Does it mean binding rules?
-whether it’s true that the anticipated guidance will require lenders to qualify borrowers based on their ability to pay the fully-amortized amount due after the loan re-sets, not just based on their ability to pay the “teaser” rate?
Because as long as you can borrow $1 million and have your minimum monthly payment be around $2,200 (as I saw advertised the other day, in connection with an option-ARM offer), there’s still a lot of wiggle room. There are enough idiots (still apparently a majority of the country) who believe that real estate will continue to appreciate substantially each year, and so it’s a rational conclusion (from an irrational assumption) that using an exotic loan is a good idea.
Rising interest rates won’t kill the bubble. As long as you only have to pay 1.25% each month, the interest rate can be 5% or 10% and it won’t make a major difference.
Thomas, read this for an idea how “firm guidance” works in commercial lending:
http://www.financialsense.com/fsu/editorials/mchugh/2006/0311.html
Can anyone explain the 5-Point CAMEL Rating for banks and credit unions?
Thanks!
Ben, I was trying to find a list of foreclosures in my county that did not require an expensive subscription. Can you suggest any way of finding those things out? I did get a basic list w/few details. 13 in my town; 55 in target town. I think I’ll be tracking these from month to month.
I’d like to see a discussion on inflation. Will the fed try to print its way out of this bubble? Likelihood of seeing inflation pick up steam significantly this year due to this asset bubble/war expense/national debt? Outlook on gold? How can readers prepare for and/or minimize inflationary impact?
How about a thread on how each of us, or someone we know, is specifically preparing for the housing crash, or in many of our opinions, a recession? We’re all housing bubble bears here, but who is putting their money where their mouth (typing fingers?) is?
I know that some of you have sold your home recently and are now renting for a while.
Others without houses are choosing to remain renters despite needs (such as kids) and stay fast while prices drop.
Some of us with investments have been moving them around into things like gold, foreign investments, etc.
It would also be interesting to see what outlook for the next few years each person is predicting, and thus preparing for.
Using myself as an example:
I am convinced that we are economically heading into something similar to ‘78 - ‘82 — High interest rates, recession, and much pain for many Americans, not just the flippers. Maybe not as much inflation though (not that it would be reported accurately anyway).
As for preparations, my wife and I have been downshifting into a lower consumption lifestyle as fast as two small children will allow. This was already underway, when I changed jobs (downshifting by almost $50k in salary). We’re almost to our goals (eta June) and hope to keep consumption steady at those levels while my salary rebounds.
A couple weeks ago, I sold my second car (an M5) while keeping an older car as my daily driver. I really don’t miss it and am kind of glad to not have the hassle of it.
We used some of the proceeds from the car sale to retire a little debt that we had accumulated, leaving us with our mortgage (15-yr note @ 4.875%) as the only debt we have. No credit cards (We use Amex only if possible), and we have decent savings (about 2 years salary). That gives us no direct downside exposure to rising interest rates. We’re already paying extra on the mortgage and hope to pay it off even sooner that the current target of 2016.
We’ve also put some money into making our home much more energy efficient. We are hoping to stay put until the kids are gone, so we’re playing for the long term. When we bought the house 3 years ago, we were paying ~8.25 cents a kw/hr. This month it was ~13.5 cents. Fortunately, electricity consumption is down about 40% from last year, with more improvement to come. I can’t see energy costs trending lower for the long-term, so we view this as investment.
The March Existing Home Sales numbers are due out on 25th. How are the numbers likely to compare with i) February and ii) March 2005?
The reason I ask is that the NAR’s seasonal adjustment factors assume a large increase in sales between February and March, of the order of 40%. I have suggested a couple of times now that the anecdotals indicate March sales this year weren’t that much up on February, and some of the early regional stats are supporting this.
If so we could therefore see a big fall in the seasonally adjusted numbers, and these are the headline numbers. Could this spark a sudden intensification in media coverage of the bubble hypothesis?
Is Easter normally a big selling weekend for RE in the US, and if so has it been different this year?
After seeing all of those who care about animals on this blog, I wonder what other causes are dear to us contributors other than the bubble.
I am compassionate about my mostly Craftsman Era neighborhood remaining in a preservation zone restricted by an architectural committee. I hate beauracracy as much as most on this site seem to, but, before I got involved, the city allowed mobile homes to be moved onto lots in the PZone. No longer the case due to my efforts, but still have a pink POS that was moved in next door before I got it changed.
I think there are a lot of ethical, motivated, caring people on this blog. I’d like to see a little more “face”. What yanks your chain, in either a good or bad way?
Agree that this would be a good thread, and would dovetail nicely to TJ’s suggestion (the Century-21 commercial thread) that we all give some personal info (not identifying) like age, gender, career, education, etc. Some of us have been “talking” with each other every day for over a year. I think it would be interesting to find out more about the people behind the screen names.
I agree. Because I log in as AZGolfer everyone thinks I am a guy. I guess not that many women are avid golfers.
How about a ‘Best Bubble Karaoke’ thread, for all the new sets of lyrics that people have dreamed up?
We probably have enough for a theme album, if it wasn’t for the copyright issues. I know Rainman18 has given us a fair selection already.
Why hasn’t Fannie Mae been de-listed yet?
Because the Fed is busy monetizing their bad loan portfolio and has paid off the NYSE to look the other way for awhile (that’s just my conspiracist side coming out)!