The Great Money Party’s Over
It’s Friday desk clearing time for this blogger. “When presidential candidates John McCain and Barack Obama used ‘Joe the Plumber’ as a symbol of working-class Americans during Wednesday’s debate…they might as well have been talking about…Joe Torres. He’s worried that if banks don’t open up lines of credit for people to remodel their homes, he won’t have enough income to survive. But he also knows that many people have no equity left to tap in their homes. Already, his house is worth less than his mortgage, and he’s in danger of foreclosure.”
“Torres was grateful to have a job at a Los Gatos remodel project Thursday. Two months ago, ‘I was sitting in my house; there were no jobs.’”
“Mortgage woes were among the top causes for concern, according to the professionals assembled for the call-in by the San Joaquin County chapter of the Financial Planning Association. Hank Klor, a Stockton-based tax and financial adviser, spoke to a 49-year-old single mother who owes nearly $250,000 on two mortgage loans, recently had her income drop by a third and can’t make her paycheck stretch over all the necessities anymore. With her home worth only $140,000 to $150,000 because of falling prices, refinancing seems impossible.”
“She might seek to have her loans modified, get the lender to agree take a loss on a short sale or, Klor said he told her, ‘You need to look at the possibility you may have to walk away from your home.’”
“Facing debilitating health problems, Joey Goldner refinanced his Highland Park home repeatedly only to wind up with a $729,000 mortgage on a house that eventually sold for $450,000. ‘I kept refinancing it to pay the mortgage,’ he said. ‘I kept hoping the market would level off. I never imagined this would happen.’”
“Matt Bender and Susan Flynn of Chicago’s West Ridge neighborhood are expecting a baby in January, but Bender’s nicely rehabbed third-floor condo is too small and the stairs are too numerous to regularly cart a newborn—and the equipment he or she will require—up and down. They need a house, desperately, but to get one they must first sell the condo. It has been on the market for a while at $6,000 less than what Bender paid for it three years ago. They’ve had nary a nibble.”
“If and when they sell the place, Bender will have to tap into his savings to pay off the rest of his mortgage. ‘You’ve got to feel lucky to have a place to live and a job, I suppose,’ said Bender. ‘But this is pretty humbling. And we’re kind of stuck.’”
“‘We just never thought we’d be faced with this,’ Flynn said. ‘Real estate was supposed to be the one investment you could really count on.’”
“That’s certainly what Goldner believed. Now at 55, he wonders if he’ll ever own a piece of property again. ‘I loved property,’ he said, wistfully. ‘Wicker Park. Bucktown. Logan Square. Wrigleyville. I had property everywhere. Now I just want to survive.’”
“Almost two years ago, Tracy and Michelle Miller were among the first families to move into Yorkville’s Grande Reserve. Now the Millers want out. They put their house up for sale seven months ago at the same price they paid to have it built. But they are competing with discounted models in their own subdivision as well as others offered at reduced prices after foreclosures. Only two people viewed the Miller property in the first six months.”
“‘We pictured it would be almost filled [by now],’ said Tracy Miller, who occasionally mows weeds on nearby lots. ‘No one’s really come out and told us anything. No one knows what’s going on.’”
“The total number of single-family sales in North Idaho during the last six-month period has nearly dropped to 1999 levels during the same six months, according to statistics released by the Coeur d’Alene MLS.”
“Joel Pearl, a real estate agent with Century 21 Beutler & Associates, said some potential buyers aren’t getting in the game even though there are some great bargains. ‘It appears to me people would rather buy on the upswing than on the downswing,’ Pearl said. ‘They don’t want to gamble.’”
“The spiraling crunch is threatening to curb access to a popular state-sponsored first-time homebuyer program. The Minnesota Housing Finance Agency said the deepening freeze in the credit markets forced it to scrap a $100 million bond issue late last month.”
“Minnesota Housing’s bonds are highly rated — AA1 by Moody’s and AA+ by Standard & Poor’s — meaning there is very little chance of default. That makes little difference these days, says Gerry Kraut, CEO of a Minneapolis investment bank. ‘Now nobody trusts the ratings anymore,’ he said.”
“Business is bad. Prices are up. Houses aren’t selling. Retirement savings are up in smoke. And last month, the entire city of Nashville ran out of gas. ‘I guess we’re going to be working for a while,’ said Harold Skelton of Franklin, who bought a new home last year, just before the crash, when housing prices and values were at their peak.”
“The only thing more depressing than thinking about the mortgage is thinking about the stock portfolio. ‘My stocks haven’t done anything in the last 10 years, and everything I’ve put in this year is gone,’ Skelton said.”
“Bob and Wanda O’Donoghue, retirees from Lafayette, are finding it’s no easy thing to live on a fixed income, when the price of everything from groceries to gasoline keeps rising. ‘The hard part for us is the increasing cost of everything. You feel it in your cash flow,’ Bob O’Donoghue said. ‘We had a great money party in this country, and now the party’s over.’”
“Elon faculty financial experts gathered to discuss the origins, implications and issues surrounding the credit crunch Wednesday night. Kevin Kelly, former analyst and trader for Bear Stearns, was critical of regulators for not taking action sooner, citing many indicators of an upcoming problem.”
“He said the issue first became apparent with Bear Sterns and that the market did not pay attention to the impact derivatives – a transfer of risk in which companies buy protection – would have on the economy. ‘The colossal error was falling under political pressure and letting Lehman Brothers go,’ he said. ‘The regulators were asleep at the switch and I lost my firm because of it.’”
“Kelly said while there is plenty of blame to go around for this crisis, he believes the worst of it is over. All the panelists agreed that what was most important at this point is that housing prices stop declining.”
“Speaking to 400 Crye-Leike agents, National Association of Realtors’ chief economist Lawrence Yun said the nation will be in an economic recession for the next three quarters; however, the current climate will not translate into a further downturn in home sales and values.”
“‘While the economy will be sluggish for the next three quarters, we can already see recovery out west in California, Nevada and Arizona and we’re also starting to see an increase in home buying in South Florida,’ he said.”
“He said the $7,500 first-time homebuyer tax credit doesn’t go far enough to spur more buying. ‘Myself and the NAR leadership are strongly encouraging the U.S. Congress and the President to support the homebuyer tax credit with no repayment,’ he said, according to the statement. ‘In its present form, a first-time buyer must repay the tax credit over a 15-year period. While in its current form it is a tremendous benefit, I believe if the repayment feature was removed many more first-time buyers would jump into the market.’”
“Leigh Sogoloff, who spends her evenings lap-dancing at Rick’s Cabaret Vegas, says she’s making half her income of a year ago. She has postponed buying a house and is reading Deepak Chopra. ‘I know how to save money. I’m not a dumb stripper.’”
“Sogoloff’s put her plans to buy a house on hold while she watches her money. ‘That’s why I don’t own a home right now.”’
“Vegas workers may see their pay continue to shrink as tourists, turned off by the casino-style wagers they placed on their homes and retirement funds, stay away, said Faith Popcorn, who tracks cultural trends and spending habits. ‘When we talk about gambling, that’s a word we don’t want in our vocabulary.”’
“The Buffalo Niagara Realtors Association reported Wednesday that 963 homes were sold last month, down two percent from the 985 residences sold in September 2007. Realty USA President Merle Whitehead has already seen fallout from the national economic upheaval. ‘We have had buyers who have called to say ‘Hey, we’ve decided to sit tight for a while.’ I don’t think it’s surprising given Wall Street’s extreme swings,’ Whitehead said.”
“However, he’s not concerned buyers and sellers will stay on the sidelines for long given Buffalo’s relatively steady economy. ‘I’ve always always been jealous of real estate people in California and Las Vegas doing big deals for big dollars, but now they’re jealous of me,’ Whitehead said.”
Another great week! My thanks to those who support this blog. Please check back this weekend.
“…spoke to a 49-year-old single mother who owes nearly $250,000 on two mortgage loans, recently had her income drop by a third and can’t make her paycheck stretch over all the necessities anymore. With her home worth only $140,000 to $150,000 because of falling prices, refinancing seems impossible.”
It is politically correct in California to extol the virtues of single motherhood. This story points out a potential downside to such a lifestyle choice.
Bear, it isn’t always a lifestyle choice.
There are women who become single mothers because their husband dies. Or the husband leaves them for another woman. Or a man. That happens too.
Yes, I’ll grant you that “single mother” often means “women who neglected to get married before she started having children,” but it’s too easy to make generalizations.
I realize it is not always a lifestyle choice, and that people end up in difficult circumstances due to no fault of their own. However, I am troubled by a culture that glosses over the challenges of living as a single parent, and goes so far as to glorify a situation which is, by its nature, a hardship. There is a risk that some young ladies will underestimate the difficulties if single parenthood is set up as a desirable social norm.
I completely agree, I would love to see some statistics on how many single parents became that due to circumstances (death of a spouse, for example) and how many chose it (pregnancy without marriage, divorce, etc.). My own experience is that the deliberate choice far, far exceeds the situation due to circumstances.
I think it illustrates the stupidity of two mortgage loans more than it illustrates the point which you are trying to make.
Let me restate my point to eliminate the appearance of cultural bias:
It is far wiser to have two adult partners with one mortgage loan running the household than to have one adult with two mortgage loans running the household. Zero mortgage loans isn’t half bad in a falling knife real estate market, either.
I would just argue that kids cost money, and how you come up with that money is your problem, and leave it at that.
Not doing idiotic things would be a splendiferous step in the right direction.
That being said there are far too many stoopid people popping out sprogs without any financial acumen of how to pay for them.
Some things are more important than money. For instance, if you’re married to someone who is abusive or cheats on you, and that person thinks he can get away with it because he controls the purse strings, then being poor might be a better option.
Just saying.
Poverty is a much better option than abuse. One can get better with a little effort, the other only gets worse.
I think the media is a little too free with the word “single mother.” The friends I know who call themselves a single mother are really, in fact, divorced mothers.
bayparkwatcher,
A distinction we should make more often. Technically… Ivan Trump would qualify as a “single mother” right? ( Like she’s ever wanted for anything in her life? )
I’ll bet there are plenty of gals that have toughed out raising kids (truly) on their own that are equally insulted by the casual use of that term.
It shouldn’t mean squat. If my ex- hadn’t remarried, she could call herself a single mother too. But both my daughters live with me.
“Single mother” is shorthand for “A woman who, as saintly and caring as she is, was abandoned by her loser drunk/drug addict/cheater/STD-infested/non-Christian/non-alimony or child support paying deadbeat husband, and since she is so saintly, has dedicated her life to raising her kids and being the perfect mom and sole family breadwinner, in a way that would make Oprah proud to call her a sister…”
Semi-bitter, divorced guy rant off……
That wasn’t too bitter; we’ve seen worse here on the HBB.
My thing about these articles is that we are all supposed to assume that the woman is not receiving any income from the father of her children. IMO, if that were the case, then the journalists would have explicated it.
If you are divorced with a couple kids from a guy who makes a million a year, then you are probably getting $300k/year or something like that. Wouldn’t that be great? $300k/year and you’re free to do whatever you please? Most single moms don’t have that situation, but I still wish journalists would acknowledge the income from dad.
I think the writers should try to accurately describe the situation, rather than using shorthand. Let me help:
Single mom = Unmarried mother
Divorced Single mom = Formerly married mother who has not remarried
Widowed mom = Mom whose husband is deceased
But since they don’t want to socially stigmatize anyone, and/or journalists being basically kind of lazy, they use a single catchphrase to cover all the possibilites.
At 2am when your child is sick and you are sick and there is no one to turn to but yourself, and you are entirely alone, it does not matter how some stranger wants to label you - you are a mother and you are by yourself.
I would do just fine without any financial support from my ex-husband; it’s not just about the money.
Hey, marriage is overrated anyway.
Sometimes it’s better to know for sure that you can count only on yourself, than to think you can rely on support of your dear husband who instead will bail on you and the kid at the most crucial moment.
“Single mother” is shorthand for “A woman who, as saintly and caring as she is, was abandoned by her loser drunk/drug addict/cheater/STD-infested/non-Christian/non-alimony or child support paying deadbeat husband, and since she is so saintly, has dedicated her life to raising her kids and being the perfect mom and sole family breadwinner, in a way that would make Oprah proud to call her a sister…”
Not always. My husband passed away in June from cancer - I’am expecting our first baby any day now. He was very healthy, active, etc and diagosed out of the blue. He had six weeks to live. We were very frugal, had plenty of health insurance, had some life insurance, and I have a very good job. I definately won’t be running out for two mortgages any time soon and don’t expect any special handouts/do overs.
Sorry to hear about the loss of your husband at what is most likely a very early age. Cancer sucks.
“National Association of Realtors’ chief economist Lawrence Yun said the nation will be in an economic recession for the next three quarters; however, the current climate will not translate into a further downturn in home sales and values.”
“‘While the economy will be sluggish for the next three quarters, we can already see recovery out west in California, Nevada and Arizona and we’re also starting to see an increase in home buying in South Florida,’ he said.”
FPSS — there is your cue. Take it, bro!
Wow, that guy really is turning into Baghdad Bob, isn’t he?
Do you suppose he really believes all that? The power of delusion, I guess.
I am perpetually amazed at the number of ‘experts’ who have continuously made outlandish and implausible statements throughout the denial stage of the housing bust. As usual, I find myself unable to determine whether he is deliberately lying, or if he is so thoroughly wrapped up in a make believe world view that he believes these statements.
I would lean more towards self-delusion. I think these guys are so invested in the “real estate always goes up in the long run” nonsense that they view everything through that prism.
I lean towards thinking he has to say it and doesn’t care if it’s true or not. Not quite the same as either (a) deliberately lying or (b) believing his own BS. He just knows that “real estate will continue depreciating” is likely to be a self-fulfilling prophecy.
I seriously doubt anyone listens to him not except maybe his grandmother
I’m a big fan of Lawrence Yun. He extends hope to those whose plight is hopeless (what a great guy!).
His messages of hope encourages FBs to hang on to their overpriced McMansions, encourages them to keep up with the payments whatever the cost, pursuades them that the bottom is near. This makes him my best buddy…
Because …
Every FB that gives up and decides to walk away from his mortgage produces one more mortgage the bank - and ultimately we taxpayers - will have to eat.
So learn to love Lawrence Yun, and the NAR, and the entire REIC.
Anyone watch the segment with Peter Schiff and Lawrence Yun? The second Peter started quoting “facts” and saying home prices have much farther to fall LY kept giving the deer in the headlights look and quoting some irrelevant figure that was equivalent to “buy now, its always a good time to buy” Classic…
“Anyone watch the segment with Peter Schiff and Lawrence Yun?”
LINK!!!!!!
+1!!!!!!!!!!
http://www.europac.net/Schiff-Bloomberg-9-29-08_lg.asp
enjoy…
OMG, that is a HBB classic post! Schiff and Thornberg double teaming Yun is quite the sport. The most amazing part is that this three-way interview is from Sept 29, 2008 — the date the first bailout vote failed in the House of Representatives, which led to a massive stock market selloff. It is heartening to have recent evidence that shows the selloff only crescendoed after the bailout eventually passed. I guess the stock market does not much care for bailouts, nor view them as some kind of panacea for a really ugly economic situation which cannot be magically avoided with the stroke of a pen.
Here it is:
http://www.europac.net/Schiff-Bloomberg-9-29-08_lg.asp
Chris Thornburg as well…two-for
Here you go:
http://www.europac.net/Schiff-Bloomberg-9-29-08_lg.asp
You think thats good check out this great Schiff Interview.
http://www.europac.net/Schiff-CNBC-10-14-08_lg.asp
Here you go:
http://www.europac.net/Schiff-Bloomberg-9-29-08_lg.asp
The other guess is Chris Thornburg…that’s a two-for
one more time…
Here you go:
http://www.europac.net/Schiff-Bloomberg-9-29-08_lg.asp
Chris Thornburg…two-for
Maybe Yun and the stripper can switch jobs.
She can be the speaker and he can be the entertainment.
No one could do a worse job.
I don’t think there is any amount of gay that would allow me to get a lap dance from Lawrence Yun.
Or mabye the stripper and Faith Popcorn could switch names!
Stripper Popcorn?!?
How exactly does that work?
Lots of butter.
I’m back from a hard day of work. But I’d like you all to notice that I STILL came up with that in about 1 second. And now I’m going to make a giant dinner and then watch stupid B movies on the teevee. I’d like to see a giant spider eat someone, or a giant alien eat someone, or a giant alien spider eat someone. That’s all I want right now.
Oh, and by the way, I got the mail and I see from the Thurston County property assessors postcard that I lost a projected 25K in value. That’s not enough, to my mind. I shall appeal by the deadline, and show how I lost wayyyy more.
Hahaha! Isn’t this all pretty fun?!
I think stripper chicks must be quite clued in. Even with the income they are citing, no house ownership. Think they are banking it?
She probably wouldn’t lower herself to that- her job is far more legitimate than LY’s.
B-b-but Fun Yun has always been spot on in his predictions before!
He can’t possibly be wrong…he’s the Chief Economist for the National Association of Realtors™!
Just like his fellow economist Greenspan said: rising home prices and increasing home ownership are always good for the economy, right???
You would think that they would quit interviewing and quoting someone whose forcasts/predictions/guesstimates have been as consistently wrong as some of these guys are.
I guess it’s too much trouble to remove their card from the Rolodex. Or else they figure an incorrect, self-serving, biased quote is better than no quote at all.
“However, he’s not concerned buyers and sellers will stay on the sidelines for long given Buffalo’s relatively steady economy. ‘I’ve always always been jealous of real estate people in California and Las Vegas doing big deals for big dollars, but now they’re jealous of me,’ Whitehead said.”
========================================
First-adapter fallen cities like Buffalo, Cleveland and Detroit with plenty of homes in the $10k range or less, only have so far to fall in a downward spiral, compared to western states where everybody tried to keep up with the Icaruses…
Buffalo’s economy is “relatively steady” in the same way that a dead guy has a “relatively steady” pulse.
ChrisO,
Yes, and call me if there’s any change in the patient’s condition!
Laughs aside, I think there’s something to be said for these hardy folk and their economy, such as it is. True, as the realtor notes they never knoecked down the big bucks, but to their credit ( they’re still keeping afloat )
I imagine another factor is that it doesn’t take $10k a month to live in Buffalo so they can weather downturns a lot better. God love ‘em.
Buffalo is proof that hell is full and the dead are walking around in Buffalo. A third of the population is on the Govmint cheese. When in buffalo the best thing any one can do is leave. The same is generally true for the rest of the state. This state of NY punishes people for being successful. A 400K home will run you about 20K in taxes. Lots of Moldy crack shacks. Btw when the scientific community releases the data that Mold makes people fat there will be another stigma attached to buying Moldy houses. 95 percent of the companies can not remove it properly from homes. I should know I wrote the book on it.
Relatively steady means, no deviation from the long term economic decline. Nice play on words.
“Kelly said while there is plenty of blame to go around for this crisis, he believes the worst of it is over. All the panelists agreed that what was most important at this point is that housing prices stop declining.”
1. The worst is over.
2. What is most important is that housing prices stop declining.
3. All the recent evidence suggests housing prices are falling faster than ever in history, with no end in sight.
Does anyone see a slight bit of inconsistency here?
Follow up question: When will the denial stage of the housing bubble stages of grief finally end?
I think the only people who are still in denial are those who are paid to be.
It pays well too…at least until the PTB decides it needs to bring in a new crew of fresh faces to shill for “the next big thing”. Then you’re S.O.L.
They’re lying. It’s the CYA stage for them.
Why would you want to stop the house price decline?
I mean, they are not complaining that oil prices have fallen so much, have they?
If oil prices being too high was bad for the world economy, does it not follow that the same applies for housing prices?
Or are they afraid of further writedowns on the rest of the non-subprime loans?
House and stock price declines — bad.
Gold and oil price declines — good.
Who thinks this makes sense? If you do, please enlighten me.
Don’t forget…
Credit expansion - good.
Laugh if you will, SMF, but I just got out of my car where I was listening to an NPR segment explaining that too much oil price decline would be bad for us, because some of the money we give OPEC countries has the effect of keeping the lid on civil unrest, and therefore keeping the spigot open. Also they made the argument that prices need to stay high to motivate exploration blah blah blah.
Completely agree w/ you that house prices being too high is not and was not a good thing for the world economy. It was just a way of temporarily disguising the fact that Americans are no longer producing the same share they’ve been consuming.
Oil is an expense, and like all expenses, the lower the better.
This is news now?!?
This country has totally lost sight of the two sides of the balance sheet.
Word is that little Dewitt, Nebraska is losing the famous vice-grip plant where it was invented 80 years, ago 300 more half-ass paying jobs, gone. Now Rubbermaid owned. Why am not surprised?
Instead of nationalizing the FREI sectors, should we instead be nationalizing Vice Grip type companies?
Lower oil prices will, like in the 80’s, be detrimental to alternate energy research and adoption of non-oil based energy solutions.
Should help to bolster sagging SUV sales, though…
Does Nevada have a housing shortage? Maybe not. From the Bloomberg article…
Empty Houses
All this in a state that led the U.S. housing boom with an estimated 275,000 new homes built from 2000 to 2007, a 33 percent increase that was the highest of any state, according to the Census Bureau. Now, many of those homes are empty and worth less than when they were built.
“All this in a state that led the U.S. housing boom with an estimated 275,000 new homes built from 2000 to 2007, a 33 percent increase that was the highest of any state, according to the Census Bureau. Now, many of those homes are empty and worth less than when they were built.”
Not a problem. Just declared it an economic free zone and bring in the foreign workers in place of sending the work overseas and back again.
“‘We just never thought we’d be faced with this,’ Flynn said. ‘Real estate was supposed to be the one investment you could really count on.’”
For heavens sakes get a damn clue you dumb assed people. I keep thinking of that mortgage commercial… “People are smart” No, hell no they are not, but if you tell them they are they are, they’re sure to believe it. This sucker is going down!
‘Real estate was supposed to be the one investment you could really count on.’”
Yes, tell that to the oldsters that lived in Watts before it became Watts. I declare, common sense is being bred out of the American populace.
Paging Jas Jain… Paging Jas Jain…
Speaking of the end of the great money party…
HEDGE FUNDS
Hedge funds’ assets off $210 billion in third quarter
Poor returns spur record $31 billion redemptions, industry researcher says
By Alistair Barr, MarketWatch
Last update: 11:36 a.m. EDT Oct. 17, 2008
SAN FRANCISCO (MarketWatch) — Hedge funds saw a record $210 billion drop in assets under management during the third quarter as investors redeemed an unprecedented amount of money from the industry after poor performance, according to a survey released Friday.
“With losses continuing through October, it appears that 2008 will be the worst year on record for both hedge-fund performance and industry asset flows,” said Kenneth Heinz, president of Hedge Fund Research, which produced the report.
Hedge funds oversaw $1.72 trillion at the end of September, down from $1.93 trillion at the end of the second quarter, Hedge Fund Research said. That’s the largest quarterly decline on record, according to the firm.
Net capital redemptions totaled $31 billion in the quarter, also a record, the firm added.
the realtors are like the perpetual party goers who are still on yer couch the next day, and when you mention the party is long over they have a shocked expression & volunteer to go on a beer run to keep it going . . .
you try to boot em out but they kneel on the ground ;
” Don’t D.O.R. me, don’t you do it !!
I got nowhere else to go, I GOT
… NO WHERE .. ELSE ..
to go …
(sob) “
nice Richard Gere.
Where have you been, aqius? Now that I consider it, you’ve been gone a long time.
‘In its present form, a first-time buyer must repay the tax credit over a 15-year period. While in its current form it is a tremendous benefit, I believe if the repayment feature was removed many more first-time buyers would jump into the market.’
In its present form, a first-time swimmer must wear a life jacket. While in its current form it is a tremendous benefit, I believe if the costly flotation feature was removed many more first-time swimmers would jump into the sea.
“I believe if the costly flotation feature was removed many more first-time swimmers would jump into the sea.”
More like:
If only a costly flotation feature was surgically sewn onto their skins, a lot more first-time swimmers would take to the oceans.
No they wouldn’t because house prices would immediately rise by $15k. Thank you, Mr. Taxpayer.
Is student loan debt also sewn onto your skin (or tattooed onto your forehead)?
I have SL debt and it is life-altering. I hope that anyone getting fed funds in this debacle is equally altered. This means you can’t bankrupt it and you’ll be administratively garnished if you don’t pay up. No lawsuit required.
‘We have had buyers who have called to say ‘Hey, we’ve decided to sit tight for a while.’
Ah the old sphincter muscle syndrome. “Upon inspection, the internal anal sphincter muscle appeared normal. However there was an acute disconnection syndrome in premotor neurons related to significant brain reconnection with reality.”
‘We have had buyers who have called to say ‘Hey, we’ve decided to
sitshit tight for a while.’Said reconnection happens more readily with the cranium removed from the sphincter muscle….
“However, he’s not concerned buyers and sellers will stay on the sidelines for long given Buffalo’s relatively steady economy. ‘I’ve always always been jealous of real estate people in California and Las Vegas doing big deals for big dollars, but now they’re jealous of me,’ Whitehead said.”
Better get that real estate investment in Buffalo while there’s still time…they’re not making any more land there!!!
Thanks, Ben for including those quotes from the Chicago Tribune article earlier this week.
The young couple that suddenly want to trade a “nicely rehabbed third floor condo” for a SFH fittingly represent what we have observed in Chicago during the boom.
In nearly every corner of this city yups bought up condos for increasingly outrageous prices - but lots here suspected the day would come when they’d want to get a SFH. For many that day has arrived but there’s no one willing to pay $250k, $350k, $450k for their apartments so they can go and get their SFH.
These stories are a dime a dozen know around me. Condo owning couples that can’t get married, can’t relocate for work, can’t have more kids, etc.
This past week was Chicago week on “House Hunters” on HGTV.
Everyone seemed totally excited about paying $300k for an 800ft2 condo with a view of downtown.
What’s the big deal about having a kid in a condo? We had ours while living in a one bathroom walkup flat. Babies don’t need space. I’m so f-ing sick of these entitled youngsters. On second thought, don’t reproduce. Ever.
In nearly every corner of this city yups bought up condos for increasingly outrageous prices - but lots here suspected the day would come when they’d want to get a SFH.
Yep. I almost fell into that trap myself (though I hope to Gawd I ain’t no “yup”). I got out, thankfully, but I’ve tried to warn friends about this with varying degrees of success. I have an acquaintance who tried to talk me into buying his Lincoln Square condo in ‘06 — he got married shortly thereafter to another condo owner. His condo remains unsold to this day.
My conception of a decent single family home is much more modest than most people’s, though — a lot of people who bought into the Condo Ponzi Scheme wouldn’t be satisfied with older or smaller homes.
Someone posted a while ago about historical condo prices in Chicago. If I remember correctly, it was 100k for 1BR, 200k for 2BRs, etc.
I grew up in the area and it never felt super rich. Comfortable, but never rich. Especially for kids buying their first pad.
Walking up a couple of flights isn’t a problem. Live in Asia for a bit and you’ll rejoice at the space, ability to push a stroller around on real sidewalks and the parks to let the kids run.
“……critical of the regulators for not acting sooner….”
Anyone who has paid any attention at all to what happens in Washington would know that nobody there is interested in solving ANYTHING, unless it becomes a full scale meltdown, at which point action will be too little (or too much), and way too late. It is more profitable for elected officials to play lobbying groups against each other as long as possible, to keep the cash coming. Why should this fiasco be any different?
He worked there……if he was so concerned about what he was seeing, why didn’t he drop a dime and talk to the SEC, Justice Department, his Congressman, etc.
This is true of all countries. It’s the nature of politics.
Being proactive gets you crucified as a “naysayer”.
It’s the same in the business world.
Gulfstreamfixer,
Normally I’d have no problems with your assessment, excpet that this time the “fiasco” really IS different. But you’re right, they’ve played patty-cake with problems for so long, this is how things “get done” in DC.
This time they have screwed up in regal fashion. They’re turning to all the usual outlets and the cupboards are bare. Good observation.
Mervyn’s to cease operations, hold liquidation sales at stores
http://www.mercurynews.com/ci_10746947
Another indication that Retail is screwed…..These guys have been around forever.
Retail operations are dropping like flies, as the economic fly-swatter hits them…
Say, where will we shop when all of corporate America goes bankrupt?
HSN silly
‘Say, where will we shop when all of corporate America goes bankrupt?’
In the closets of our rich friends. That’s what I do. I don’t see a single point in the whole world in paying retail. Today I had lunch with a hottie and as I prepared my pretty I noticed that I hadn’t actually paid any money for a single thing I applied to my person. Oh, wait–I paid one buck from the DollarTree for the dangly silver earrings (sparkly and dangly: boys like that). Other than the earrings; long black skirt, bleached cream-colored linen blouse, black leather Mary Janes (all charming and coy: boys like that), and a muted green jacket, and ALL of it came from friends with too much money and too much stuff. Jeezily, I ain’t been to the mall on purpose in years, unless it’s with friends, so I can make suggestions about what they should buy. Stuff that I know will look good on ME.
You have inspired me to examine my present garb even though I’m sitting in a motel lobby on my way to FL to examine a house i might lend on.
Of the stuff I am wearing, I bought the shoes, socks and underwear in retail stores. The teeshirt from LL Bean catalog in 1988. The corduroy pants and the outer shirt from a $2/bag thrift shop. The earrings for $3 in Kenya. The eyeglasses from 99c Only. Now come on OG, surely you do buy your underwear retail?
You sound very nice, AZ, especially the ‘outer shirt from a thrift shop’. I bet cute boys are looking at you covertly right this minute.
The underwear question shows that you pay attention to unmentioned details, which will probably come in handy, especially when negotiating loans in Florida.
I have an extensive underwear collection, and I got most of it retail from ‘Ross Dress For Less’ at about $1.99 per panty. The Seattle ‘Ross’, on Pine St., because they have an extensive selection of nice trashy stuff, with garish lace and ribbons and flimsy ornaments. Why would I buy anything else? Is what I ask myself. I often wear it with my cowboy hat.
Mervyn’s was always pretty bad, but they recently started carrying some of the ugliest clothes I have ever seen. It was like Little India in there.
“The going-out-of-business sales will be held during the upcoming holiday season, Mervyn’s said.”
Now if somehow they could fake shortages on merchandise like Sony did with the Playstations and Nintendo with it’s Wii’s we’d see Mervyns brand t-shirts on eBay at 3 for $399.00
More trouble for the Chicago condo market.
Calatrava has stopped work on the Spire and has filed an $11.34 lien.
http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=31452
Oooooooh, now that’s serious.
Open up, Chicago, it’s BOHICA-time.
BWAHAHAHAHHAHAHAHAHHAHAHHHHHHHHHHHHHHH!!!
Oops. Make that an $11.34 million lien.
“has filed an $11.34 lien.”
What, someone got stiffed on the last round of beer??
Wow, that’s crazy. That’s been one of the most well-documented construction sites in the US, and it’s clear that the developer has already spent more than $100 million, mostly of his own personal money.
Something big will be built someday - it’s got a state of the art “foundation” that will support a building of almost any size. Anything taller than what was planned would actually have required a waiver from the Federal Aviation Administration!
Wow, who would have thought this would happen????
The government’s effort to boost bank lending to end the credit crisis is hurting one of the areas critical to the nation’s recovery: mortgage rates. In the past week, the average mortgage rate on a 30-year fixed home loan has jumped more than one half a percentage point to 6.74%, according to Bankrate.com. That might not sound like much, but it is the biggest one-week rise in the normally stable lending rate in 21 years. Some economists say mortgage rates could soon top 7%, a level they have not seen in more than six years.
Rising mortgage rates could also put downward pressure on housing prices, which have already dropped 20% since their peak in July of 2006, according to the S&P/Case-Shiller Home Price index. The increase in mortgage rates means that the average borrower will pay $1,296 a month in mortgage payment for a $200,000 loan. That’s $100 more a month, and $1,200 more a year, than the same loan would have cost them a few weeks ago. For buyers on a budget, that means they can afford less house for the same amount of money. Conversely, sellers would have to drop their prices to attract that same buyer.
What’s more, a new “Adverse Market Fee” recently instituted by lenders for borrowers with less than perfect credit (regardless of the market) could raise the cost of a loan another half a percentage point - or an additional $70 a month on that same $200,000 loan - for nearly 20% of Americans. “For individuals looking to buy a home this is going to be just one more obstacle in their way,” says Barry Ziggus, who tracks housing issues for the Consumer Federation of America.
The story is worse for people in areas of the country, such as Scottsdale, AZ, or Glen Ellyn in suburban Chicago, where even modest houses can be in the $500,000 range. A $600,000 mortgage will now cost $4,319 a month, or nearly $500 more a month, and $6,000 more a year, than it did six months ago.
Sarc off
Yahoo
Andrew Lahde, who bet big against subprimes, quits hedge funds.
Here is the guy who must have been reading HHB back in ‘06 and made a big bet and made 870% return. Please read his farewell letter.
http://www.portfolio.com/views/blogs/daily-brief/2008/10/17/hedge-fund-manager-goodbye-and-f-you
PS: He thinks this thing has years to go before any recovery.
PPS: Even with a 700 billion fund to buy up toxic mortgages the ABX index that tracks these pools of mortgages is still only worth pennies on the dollar. Some made a new low today @ $4.63 (was = $100.00 back in early 2007)
http://www.markit.com/information/products/category/indices/abx.html
Do you guys think the stock market has bottomed out?
no
You all have heard of the fire cycle, right? If you can understand that, then you can understand the money cycle too. Recessions are like fires.
Remember all that volatility (always leaning toward the negative on a week-by-week basis) right before the market started to plummet? Now we have a lot of volatility again, but it seems to leaning towards the positive. I am not jumping back in right now, but I am beginning to think that stocks are cheap.
Maybe, but stocks are not likely to rise until somebody is willing to buy bonds. Current yields on 65% of the listed companies bonds are 17% apr. Better to buy the bonds and short the stocks.
Big V, I hear what you’re saying, but I think you need to review history. It was more like 3.5yrs for the bottom to occur the last time we had a major de-leveraging event (GD I).
I expect this will be long and slow, with many bear-rallies to pull in the unwary.
How to recognize when it is actually a good time to get back in?? I wish I knew—-but I have this sense that I have a couple of years in which to figure that out.
“stocks are cheap”
- nope. I go by the standard of the under-600 Dow bottom in 1974. Inflation adjusted I believe that would be less than 4000 now. I believe the inflation of stocks has much less to do with productivity gains or any of that, rather with the mass marketing of stocks to J6P via mutual fund BS industry, CNBC, etc etc.
Still a long way to zero……..
Do you think the market will go to zero? I kinda doubt it. We’ll see, though.
Big V,
Have you heard from sfbayqt? I haven’t seen her posting in quite some time.
No, I think I’ll e-mail her. I want to organize another get-together anyway, since East Bay Renter has been swamped with work lately. Thanks for reminding me.
Hey, wait for me! I’ll be in CA starting December 10. Well, I guess that’s a long time from now. Anyway, hope you have one during the winter.
A stripper who watches her money and has postponed buying a house in consequence?
I think Ms Sogoloff has just trumped the old Aussie standby (nymphomaniac daughter of a pub owner) in the perfect girlfriend stakes.
I think I’m more impressed by the fact that she’s 36, and can still make a living at it.
Gotta admire someone that dedicated to her work.
They keep it dark in those places for a reason, not that I’d know or anything……
My first (and so far only) experience with “beer goggles” (actually, more like “kamikaze goggles”
)
was in one of those fine establishments.
Famous last words: “Hey, you need to lay off the beer and try one of these before you leave….”
I’m conflicted. My nymphomaniac GF’s dad owns 6 houses in L.A.
and I think the fact that I talked her into not buying one of them from him two years ago is what drove her to nymphomania.
Maybe she is just getting back at her dad by hooking up with a housing bubble blogger.
(first post eaten?)
It could be that she is getting back at Dad, by getting with a Housing Bubble Blogger.
Menage a six?
You wish!
Ben, if I were just one of the masses, after reading through your posted thread I be depressed as hell. Instead, I look at the present as a time to work on me (go to the gym, read more books, make list of investments, enjoy life more by getting out in nature more, avoid negative people, stupid people, etc) and life is good.
Well put, Ron. I actually expect the downturn to be MUCH MUCH easier on some people than others. Those who are already used to living within their means and paying cash for the things they want are already well suited to living in a credit-crunched era.
I’m waiting to hear the first round of layoffs at my work, but thinking it wouldn’t be so bad to have a couple of years off work to pursue other interests. As long as hyper-inflation doesn’t destroy my nestegg, it actually sounds like it could be a good time!
Pay us or die Yankee
http://www.msnbc.msn.com/id/27243059/
Hi All:
Let’s meet up at LJ Quinn’s Lighthouse Pub in Oakland on Saturday, November at 7 PM. I will make reservations if you guys RSVP to BigVHBB at gmail dot com.
Address:
51 Embarcadero Cv
Oakland, CA 94606
Phone Number:
(510) 536-2050
Website:
quinnslighthouse.com
Which Saturday?
anyone else noticed or heard of people getting their credit card limits reduced lately? Last week Sears notified us that our credit limit would be reduced 5,300 dollars from 13,800 to 8,500. Reason given: we weren’t using it, so obviously we didn’t need it. Interesting that this was the month we decided to pay all of what we owed off (around 2600). We have a couple of 30K limit cards from chase and BoA that we hardly ever use and they haven’t reduced the credit limits yet.
“While the economy will be sluggish for the next three quarters, we can already see recovery out west in California…”
This guy must have a different definition of “California” than the usual one.
Maybe he secretly meant Baja California…although that probably wouldn’t apply either.
Violent crime and kidnapping in noerthen Baja has driven tourism way down.