Something Strange Was Going On
It’s Friday desk clearing time for this blogger. “With summer approaching, San Francisco real estate agents say the housing market is warming up. It’s not a seller’s market, though. The median home price in San Francisco was $617,000 in March, an 18.3 percent drop from the same month last year, according to the California Association of Realtors. San Francisco prices are not nearly as low, however, as what is being offered in other Bay Area cities, where sales are occurring at half the listing price in some cases, said Dale Boutiette, a broker associate with Paragon Real Estate Group. ‘I have to educate my buyers who are looking for 25 to 30 percent off the listing price, that that’s generally not going to happen,’ he said.”
“The real estate losses on the Peninsula are still rolling in at a steady pace. While Palo Alto — among other areas — was supposed to weather storm somewhat better than other towns, there are still plenty of houses around the Peninsula selling at a loss. Even in Palo Alto proper, a two-bedroom condo on California Avenue sold for $488,000 last month, but the previous sales price on the property was $600,000.”
“Rincon Hill developer Turnberry Associates has canceled its 40-story deluxe condo tower at 45 Lansing St., and asked the city to refund an $8.4 million affordable housing fee it paid when the building permit application was filed in 2007. At the time Turnberry President Bruce Weiner told the Business Times that the project would be the most upscale development Rincon Hill has seen, with ‘exotic marble baths, Italian Snaidero cabinetry, Gaggenau cooking appliances, Jacuzzi hydrotherapy tubs with built-in TVs, individual security systems and 12-foot penthouse ceilings.’”
“Since then housing values have plummeted an estimated 30 to 40 percent in San Francisco and downtown developments like Tishman Speyer’s Infinity and Lennar’s Blu have slashed prices in an effort to move inventory.”
“Designer Delia Seaman is fashionable, successful and regretful. Sales at her West Hollywood boutique are suffering amid the recession. Eager for rainy-day funds, Seaman has put her 1920s Spanish-style bungalow up for sale at an asking price of $999,000. After Realtor fees and closing costs, she’ll clear little or nothing beyond the $922,000 she paid for the property four years ago–and that assumes, optimistically, that she will get something close to the asking price.”
“Even more sobering, Seaman did some math showing that the $60,000 in yearly mortgage payments, insurance and property taxes she’s been shelling out exceeded what she would have spent renting a similar home at $36,000 annually. The tax deductions she got for mortgage interest and property taxes don’t come close to making up the $96,000 difference in cost over the four years, she says. ‘I feel like the whole housing dream is kind of a joke,’ Seaman says. ‘I paid in for four years and got nothing. I wish I’d never bought.’”
“Kelley Alexander is appearing on a new reality television series with something unusual at stake: her Sherman Oaks house. If she and her sister can beat four other neighborhood families on HGTV’s new reality show, Alexander gets a quarter-million-dollar windfall, which she says is enough to save her from a looming foreclosure. But if she loses the contest, the home will likely be gone.”
“‘We have a bad mortgage,’ said Alexander. ‘On the first day of [the show], they put foreclosure papers on my door.’”
“During the frothy years of the real-estate bubble, as ordinary homeowners sought a slice of the good life, interior designers were toasted like rock stars on reality series such as Bravo’s (since-canceled) ‘Top Design’ and HGTV’s ‘Design Star.’ The seductions of real-estate investing — a sleek, go-go world in which property values would supposedly never halt their vertiginous climb — have been covered on TLC’s ‘Property Ladder,’ A&E’s ‘Flip This House’ and Bravo’s ‘Flipping Out.’ And the careers of young agents angling to sell posh Beverly Hills estates have been lavishly detailed on Bravo’s ‘Million Dollar Listing.’”
“A few houses down, Jeff and Elizabell Marquez, are in somewhat better financial shape. They paid $740,000 for their modest home in early 2008 and have watched its value ebb ever since. ‘It’s lost $100,000,’ Elizabell said with a pained expression.”
“‘More than that,’ pointed out her husband.”
“With white tin ceilings, original woodwork, bay windows, and a $699,000 price tag, the two-bedroom apartment n Brooklyn would have been snatched up in a New York minute a couple of years ago. Instead, it’s been on the market for more than two months. On a recent spring weekend 14 buyers came through, and still no bids.”
“Suzanne Allred, a Salt Lake City real estate agent, blamed the weak foot traffic last Sunday to spring weather and the Utah Jazz playoff game happening at the same time. The 2,300-square-foot house with designer colors and French doors she was showing was listed for $485,000.”
“‘It’s not the same market it was two years ago when this house would have sold in about two seconds,’ she said.”
“Standing on the concrete stoop with the sun in her face and a plate of barely touched cookies just inside, Allred figures the market will rebound given time and patience. ‘I’m hopeful,’ she said. ‘Everything’s just taking longer than it used to.’”
“During March, Norfolk County single-family home sales fell 9 percent from March 2008 and the median price declined 22 percent to $315,000. Plymouth County single-family home sales were off 7 percent and the median price fell 9 percent to $260,000, making Plymouth County the most affordable area of any suburban Boston region. Rick Coughlin, president of Weymouth real estate company Coughlin & Co., said more buyers are discovering that the South Shore offers real estate bargains.”
“‘They’re seeing the prices, and it’s amazing to see how much is on the market for under $300,000,’ he said.”
“The Lehigh Valley housing market began deteriorating in 2007, with prices dipping on sluggish sales following years of strong sales and double-digit gains earlier in the decade. The trend continued in March. Loren Keim, president of Century 21 Keim Realtors in Allentown, said there remains a disconnect between buyers and sellers that has hamstrung the market. Many sellers still think their homes are worth a fortune, and many buyers think they can get them for half the listing price, he said.”
“Also hurting the market are prospective buyers who are reluctant to enter a deteriorating market, he said. ‘Buyers are on the sidelines waiting for the right time to buy, but there are a lot of reasons to buy right now,’ Keim said.”
“Mary Lorah, a mortgage broker, said distressed sales will reduce values in neighborhoods. Newly built homes where buyers paid a premium are most likely to see a steep price slide, she said, similar to buying a new car that depreciates when you drive it off the lot.”
“‘People haven’t even moved into the house, and we’re telling them it’s not worth what they built it for,’ Lorah said.”
“Kosciusko County Board of Realtors has begun a campaign aimed at boosting the public’s confidence in the local housing market. The effort is called the ‘Surround Sound Campaign.’ It involves local radio and newspaper ads, billboards and online marketing with messages like, ‘Eight out of 10 economists believe home prices will rise in the next five years. The other two are life-long pessimists.’”
“‘We’re just trying to tell the real state of real estate,’ said KBOR member Bev Ganshorn, ‘not what people have heard.’”
“Home-buyers sued KB Home in Phoenix federal court Thursday, claiming the builder conspired with Countrywide Financial to inflate appraisals for home sales in Arizona and Nevada. The class-action suit focuses on home sales in the two states since 2006, alleging Los Angeles-based KB Home steered home buyers to Countrywide, which then steered them to LandSafe Appraisal Services, a wholly owned subsidiary of Countrywide. LandSafe then used appraisers who would ‘come in at whatever number was necessary to close the deal at the price desired by Countrywide-KB,’ the lawsuit says.”
“The lawsuit was filed on behalf of a handful of Buckeye and Surprise residents who bought homes from KB in 2006. KB Home has seven communities in the Tucson area, and the builder recently launched a line of homes priced as low as $90,000 to $100,000 in an attempt to compete with foreclosures.”
“‘People were deprived of their ability to make an accurate assessment of their purchase,’ said Rob Carey, managing partner of Hagens Berman Sobol Shapiro’s Phoenix office, which filed the suit. ‘This is an explicit agreement to try to rip off borrowers, between the lender and appraisers.’”
“Brian Tuttle’s plan was to build 15,000 homes and 4.2 million square feet of retail and office space on a 5,800-acre tract of land in the extreme northeast corner of North Port. Now it looks as if market forces will kill the project long before a single home or supermarket rises.”
“Some market watchers were not surprised by Tuttle’s default. George Kelce, whose family owned the land for 32 years before selling it in 2000, said Tuttle greatly overpaid. ‘These guys paid $10,600 per acre just one or two years after South Florida Sod paid $2,000 per acre,’ Kelce said. ‘Doesn’t that make you think something strange was going on?’”
“Dennis Black, a Port Charlotte real estate consultant, agreed: ‘Some of these guys had stupid money behind them and were chasing anything they could get.’”
“Being rich during a recession can almost be as bad as being poor. The only difference is that the rich have more to lose. RealtyTrak recently reported that the foreclosure rate on homes valued at more than $729,750, also known as the jumbo-mortgage limit, rose 127% in the first ten weeks of this year compared to the same period a year ago.”
“The fact the rich are now losing their homes is a signal that the real estate market has further to fall. The new foreclosure data shows that many high-end homeowners are running out of resources for keeping their homes. That means the portion of the home market with the most expensive houses is beginning to collapse. If it follows the pattern of the rest of the sector, prices will correct downward quickly and brutally.”
“The merger of two of Denver’s largest real estate brokerages is expected to have major implications for the South Metro area. Leeann Iacino, CEO for Prestige Real Estate Group, said merging enables the companies to reshuffle and spread costs around to keep up with the sluggish housing market. ‘The world is changing dramatically as we speak, and if you’re not adapting by decreasing costs and gaining momentum, you’re behind,’ she said.”
“Despite foreclosures all over the country, Plainview — and most all of Texas, for that matter — have not seen a significant drop in home sales. While there has been a slow down, real estate agents are still extremely busy, said Lynn Goddard, president of the Plainview Association of Realtors. ‘The media has made this out to be a problem for the whole country when it really isn’t,’ Goddard said.”
“‘For the most part, everybody is on the same page about getting houses priced right,’ she said. “Now we’re comfortably busy. It’s not as fast-paced as it once was.’”
“Goddard doesn’t think it’s a ‘doom and gloom’ housing market for Plainview. ‘People are always moving to Plainview,’ she said.”
“Having spent 20 years down the human mineshaft that is financial counselling, Tony Devlin thought he had seen it all. But this time, he says, it’s worse. Devlin describes his clients as being ‘under significant strain’ or ‘quite distressed’ or ‘highly agitated.’ For instance, the couple who both lost their jobs in the space of 24 hours. The construction subcontractor who hadn’t had any work in months and was trying to pay a $1500-a-month mortgage with his credit cards. And the middle-aged professional woman who found herself owing more on her house than it was worth was ‘highly agitated.’”
“Stress has also spread east, infecting previously inviolable suburbs like Leichhardt, where local paper The Glebe reported 19 home repossessions early this year. ‘Paradoxically, most of the big borrowing was done by the higher earners,’ explains Mike Rafferty, senior analyst at Sydney University’s Workplace Research Centre. ‘Now that those people have lost their bonuses or been sacked, you’re seeing forced sales.’”
“Those forced sales are sending property prices south in some of the most blue-ribbon boroughs. According to Australian Property Monitors, Mosman prices are down 21 per cent on last year, Woollahra is down 24 per cent and Bronte is down 30 per cent. In Melbourne, Toorak dropped by 14 per cent, Kew by 8 per cent and East Melbourne by 35 per cent.”
“‘Despite the Government’s assurance that Australia is well placed to weather the storm, the fact remains that Australians are, per capita, two to three times more leveraged into property than the US or Britain.”
“‘In the US they had cheaper houses on higher incomes than us,’ Martin North, managing consulting director at Fujitsu Consulting, says. ‘In other words, we had to borrow more to buy our houses. To make matters worse, the first home owners’ grant is enticing buyers into the market at precisely the wrong time, at the end of a bubble and when interest rates are artificially low. That’s how the sub-prime crisis started in America. People must remember that the recession has only begun.’”
“The late 1990s and early 2000s were an era of abnormally high returns and soaring asset values, all of which was fuelled by debt. ‘Debt went up astronomically, thanks to low interest rates and money supply growth and the proliferation of financial instruments like collateralised debt obligations, which made it faster for money to get about the economy,’ says Satyajit Das, a risk consultant and author. ‘This made it seem like there was a lot of money out there, which fuelled the asset bubble. But it wasn’t real. It was a false multiplier. We were living in an age of ponzi prosperity.’”
“‘I feel like the whole housing dream is kind of a joke,’ Seaman says. ‘I paid in for four years and got nothing. I wish I’d never bought.’”
It’s nice to see some light bulbs finally turned on. One should try to run the numbers before the purchase, but to the extent she tells this to her family and friends hopefully the wheels will finally start churning for more people. Mindsets are finally changing.
Tim,
Delia on crack. The Housing Dream is alive & well! You q-u-a-l-i-f-y for the loan, make the payments and stay on top of the maint. ( screw the “upgrades” just take care of the damn place ) and in exchange you don’t have to sleep on a park bench.
Guys, guys, guys,
wrong approach. We learned in this morning’s bitsbucket that our gal just needs to not worry about today, and just fill her head with happier thoughts.
and what is a happier thought you ask?
Boston Cream Pie sez I
cereal,
Right, now she “has the time to focus on what’s ‘really’ important like friends and family”
The REIC Retreat Philosophy
And read Virgil!
We have been pointing out for quite some time here that owning is just throwing money down the drain.
What we need is the people buying places as rentals to wake up and realize that rents are falling, they have to give away free rent to get tenants, the tenants are likely to not pay, tenants trash the place, etc.
We still have, in my opinion, (at least in PHX) a market being driven by investors NOT end users.
Market in Tucson appears to be driven by “investors” (and yes, the quotes are deliberate) as well.
And it looks like quite a few of their predecessors are starting to buckle. I’m seeing quite a few houses that were purchased 3-5 years ago, then rented out, and, lookie-lookie, they didn’t appreciate to the moon. Now they’re sporting “For Sale” signs.
I agree. I was looking at the standpoint of purchasing for one’s own home. If you are purchasing as a rental, most forget about many things, including non-payment, prolonged vacancy, damage, etc. Even in good markets, many ppl that decide to become a landlord on-the-side regret it. During a declining market, it is suicide.
I’ve been a landlord on the side for close to 20 years (3 SFH and a duplex). In that time I have had to do 2 evictions and 1 “trashed” house. My last vacancy was 2 years ago. And I run my properties from 3000 miles away.
This January I cut all my residental rents by 10%. If your not greedy, treat people with respect, and are willing to do the legwork, things most of the time work out well.
When looking to purchace a rental there are many factors besides price to rent. Demographics, growth patterns, zoning, climate, schools, bla bla bla the list goes on.
The more time you put into it the better off you will be. I am betting in a few years landlording will pencil out again.
“The more time you put into it the better off you will be.”
Only if you value your time at $0. I don’t.
test
In Washington State as well. Sure sign: our rental market here in Eastern WA has gone from “tight” to explosion in just a couple of years. Rents are falling like a rock, but more and more homes show up on the rental market every month.
A rental property is not an investment; it’s a job. I’ve already got one of those and don’t need another, thank you.
Well put! Or maybe being a landlord could be considered a “hobby”, one that takes up a great deal of time and money. For those who are interested and suited for it, landlording may be great. It’s never been my thing, though.
We’ve landlorded for 7 years and have only had one bad tenant. That one caused some serious damage, but landlording can be profitable if you do it right.
I always thought owning rental properties would be more like a job. Therefore, I preferred to rent out the money and let someone have the headache of “owning” the property. I do like to verify the “owners” have insurance, if there’s a structure involved; other than that I don’t pay much attention to how they treat the property.
I’m glad you’re all talking about how rents are falling. This might stop me from making a second loan to those Florida Flippers I financed last fall. Their latest scheme is to buy two duplexes and rent out the units. Maybe 80% LTV is too high ! — my offer to finance them again will expire after a while, and perhaps I won’t renew it.
Ahh, it’s been a while since I’ve seen you mention that, az_lender. So they’re still making payments? It sounded like that might have the potential to become trouble for you. Glad it’s working out so far (it appears).
Forbes has gone un-American. Doing the math on housing? Don’t they realize that will hurt the sheeple’s little heads?
Quick, a story on a pop-tart party. The people prefer to be distracted. Oh… and replay that Remax commercial where peopel are kicking themselves for not buying in this market.*
* I see people who buy kicking themselves. A coworker who just bought is finding out how quickly a mortgage saps the funds. The grand expansion plans have been cut back. He is still adding the square feet, just the furnishings won’t quite be as fancy…
Got Popcorn?
Neil
Doing the math would cause most of the Bay Area to die of heart attacks.
Some of my home owning friends who are yammering about us joining them are a little taken aback whenever I bring up the math. And when I ask them “Would you rebuy your house at it’s current price?” and they realize they couldn’t afford it, it’s always a fun moment. And doing the “here’s what I can rent for x dollars a month” and comparing it to the “here’s what I can buy for x dollars a month (using a real loan)” always quiets them down.
2 bedroom shack vs. 4 bedroom palace is the ‘howmuchamonth’ argument.
Neil,
Forbes has had a lot of anti-REbubble stories for quite a long time. Don’t forget Gary Schilling was a regular columnist there, maybe he still is. Before I ever ran into HBB in early 2006, it was Forbes The Actual Print Magazine that alerted me to the possibility that the HB would be popping corn, er, I mean, popping soon.
You know it’s a sad day in America when the Utah Jazz get blamed for part of this mess.
Seriously though, who’s gonna buy up all these “rich” people’s houses?
“RealtyTrak recently reported that the foreclosure rate on homes valued at more than $729,750, also known as the jumbo-mortgage limit, rose 127% in the first ten weeks of this year compared to the same period a year ago.”
Yes, blame the Jazz game, but you know what, Suzanne? Perhaps a more perceptive realtor would not have scheduled the open house on the same day at the same time as the Jazz game.
Looks like Suzanne didn’t research this.
“perceptive realtor”
oxymoronica
“A moron, to be moronical”
( Never go full retard )
Notice that the good weather was also blamed. And if the weather was bad, that would certainly explain a lack of interest as well.
“Don’t knock rationalization. Where would we be without it? I don’t know anyone who’d get through the day without two or three juicy rationalizations. They’re more important than sex. Have you ever gone a week without a rationalization?”
Jeff Goldblum as Michael in THE BIG CHILL
“I paid in for four years and got nothing. I wish I’d never bought”
And what exactly were you expecting? That you’d be able to find a GF to fund your early and opulent retirement one-payment-at-a-time? Would ‘that’ have been o.k with you?
You got a roof over your head. That was the deal. Any appreciation is just so much gravy. Start liking it!
I like this one because person ran the numbers and finally understood it was cheaper than rent albeit way too late (they may have actually ran the numbers before they purchased assuming 10% or more appreciation per year, but you are right, that would have just been silly - if it’s not a better deal for you than renting on day one assuming rentals and home prices will inflate/deflate in unison during your projected time frame, move on). Media focus on the fact at these prices owning rather than renting may be throwing money down the drain, out the window, whatever, is welcomed.
If it’s not a better deal for you to buy than to rent, then it’s not a better deal for your tenant either, in which case the tenants of the world have no incentive to buy your house when you want to sell it. That’s what so many FB are being hit over the head with now. It’s against my religion to feel sorry for them, though. We all have to resist that.
heh…I don’t have to resist that hard. We all have to go to the school of hard knocks sometime, and it’s pretty expensive. That’s when we each graduate from Fool (our natural state). What’s to feel sorry for? Pain is a natural part of life.
My husband feels sorry for any number of these folks. Me, I reckon that if they have a media outlet to cry to and a bunch of sympathetic ears, they’re already doing better than many going through their own hard times…
Tim,
It is rather welcome. Hard to imagine 2005 ( when Delia took the plunge before being priced out forever ) was that long ago? My problem is that her -entire- decision was predicated on an infestment basis!
Who wants to live next door to an “investor”? Not me. I’m sure ‘we’ wouldn’t have anything to talk about. The other aspect that is maddening with RE infestors is their complete and utter lack of ability to discuss virtually any topic that doesn’t involve a trip to Home Despot or spending money on their “precious castles”.
There isn’t one aspect of human history you can’t introduce that won’t wind up back on cabinets or flooring etc. within FIVE minutes! Oh and what V said.
For me, it’s about increasing my net worth. There’s nowhere I can buy for anywhere near rent. I save the difference and call it equity.
Don’t get me wrong - I would like to own at some point, when the numbers get back in line. But now? A slight dip and the knifecatchers rush in.
Turning my cash into an illiquid, depreciating asset with high carrying and transaction costs is not my idea of a good investment.
All the grandest truths of HBB well reduced to six lines.
agreed. +6
“And what exactly were you expecting? That you’d be able to find a GF to fund your early and opulent retirement one-payment-at-a-time? Would ‘that’ have been o.k with you?”
LOL, had a funny Freudian slip in my reading. Yes, as a “fashionable” single woman in West Hollywood, (scene of The L Word) she probably was looking for a girlfriend to fund her early retirement. (I hear Jodie Foster is single now) Then I realized that on the HBB, GF means greater fool.
If you got the money, honey, I got the time…
Please fill me in on what a GF is. I’m guessin it’s a Get-F—– ?
Thanks.
Hey Silver
GF is “Greater Fool” (you prolly already knew that being a old poster here)
GF is also “GirlFriend” in internetspeak. (Outside of the HBB, which has its own jargon!)
hahaha - happy to help. I’ll bill ya later.
Hey Ren, thanks. I have seen the “Greater Fool” phrase used but am not so good at deciphering the acronyms sometimes. My definition of Get-F—– is apropos given the the times also, sorry to say.
Actually, it [Get...rer, "stuffed"] seems kinda accurate to me…
I don’t have a problem with your repackaging…
I paid in for 17 years and got the farm -
“San Francisco prices are not nearly as low, however, as what is being offered in other Bay Area cities … ‘I have to educate my buyers who are looking for 25 to 30 percent off the listing price, that that’s generally not going to happen,’ he said.”
“Since then housing values have plummeted an estimated 30 to 40 percent in San Francisco…”
One of these things is not like the other.
It only makes sense if listing prices in SF have come down much closer to reality than they have in “outer” markets, such as east San Jose. I wonder if that’s the case? Lavi, are you seeing a lot of cookies and cupcakes at the open houses in Vegas?
…are you seeing a lot of cookies and cupcakes at the open houses in Vegas?
The only “cookies” and “cupcakes” I’m interested in seeing are the single ones I might meet in the bars and casinos near my aging/boomer rental house.
That piece with Realtor(tm) hack Ganshorn is disgusting. Can these Realtor ™ clowns not come up with any new material?
Standing on the concrete stoop with the sun in her face enjoying the ‘peekaboo view’ and a plate of barely touched cookies just inside…
Where are those cookies! Do tell, because Slim needs a mid-morning snack…
“The fact the rich are now losing their homes is a signal that the real estate market has further to fall. The new foreclosure data shows that many high-end homeowners are running out of resources for keeping their homes. That means the portion of the home market with the most expensive houses is beginning to collapse. If it follows the pattern of the rest of the sector, prices will correct downward quickly and brutally.”
The rich are different than you and I. They have more money to lose.
The luxury market has finally turned in Denver. It used to be just the low end stuff in foreclosure. While the mid market (250-500k) has only gone down 5-15%, the million plus dollar inventory is rising the fastest, and people need to slash their prices 20% or more from peak to get such inventory moved. Total inventory is down 20% from the last few years, mainly because many flippers and builders have left the market and ppl don’t want to sell right now unless they have too, but in million dollar plus neighborhoods it is up 25%. Hilltop, Cherry Creek, Bonnie Brae, Cherry Hills Village and Greenwood Village all have record inventories and falling prices.
“They have more money to lose.”
And that is why they are the last to fall.
Those with 100% loans had an easier time letting go, as the loss did not represent real, earned money.
But for those who plunked their hard earned money, well, that is harder. A $100K loss is a real loss of $$ for them.
And I bet that even in foreclosure, the banks will attempt to recover their losses when the person DOES have some money.
And because when there is a supply greater than demand, the nicest homes will be sold for SOMETHING, and crapboxes in Compton and the IE will COLLAPSE completely in value.
“the nicest homes will be sold for SOMETHING, and crapboxes in Compton and the IE will COLLAPSE completely in value.”
SHHHHH….. don’t talk about price structure compression too loudy. The believers may awaken from their delusional slumber.
That’s why you have gold… untraceable and you can bury it deep in the desert (don’t lose the coordinates LOL). And when its price quadruples no IRS will seek you out for “capital gains”.
If possession is made illegal then the black market will mutiply your gains a hundred fold then, as it will be a clear signal the fiat money it is supposed to promote is toilet paper…
They *will* seek you out for capital gains…what makes you think they won’t?
Here, you have to register your name whenever you buy gold or silver. If they were to shoot up in price, I’ll bet you a year’s wages (in gold!) the government will be very well-organised with those particular lists.
I would like to see what earnest money paid down to the mortgage is being lost by these high end property moguls. How many will rob IRA’S etc to make payments before going down?
salinasron,
That’s how many ‘have’ Ron, not ‘will’. As far as I can tell by looking at the stk market, evidently ‘quite’ a few?
You know it’s hand in glove with the “Our bank/const. co./mortgage/realty/flipping firm was doing FINE ( until the economy that’s ‘affected everyone’ TURNED on us!”
Those statements are done for (2) reasons:
1. Don’t even bother to sue me ’cause I’m broke as hell and am out of the game ( as far as ‘you’ know? ) and:
2. Just another REIC Cartel distraction technique to get you focused on how much -your- employment situation/finances/home equity/ life has deteriorated so that you ( hopefully ) empathize with them rather than wrangle a noose which is what they deserve and full well know it.
It just gets so old.
hahaha - it’s funny ’cause it’s TRUE!
OK…I know you aren’t joking.
In fact I’ve noticed this too…in the propaganda battle, suddenly ‘we’re all in the same boat’ works a lot better in a Depression, than the old 2005-style propaganda: “You, poor person! Put your money where I say, pay me a nice fee, and someday maybe you can be rich like me!”
These people sink or swim on the success of their spin, and for that they have to be nimble when the wind changes.
Q: How do you make a small fortune in real estate?
A: Start with a large fortune.
// here all the week
// try the veal
// etc
//
“The rich are different than you and I. They have more money to lose.”
PB, the rich ARE you and I … at least, we are rich compared to those whose “money” is tied up in illiquid, depreciating assets with high carrying costs.
I keep hearing all these stories about cookies at open houses. When am I going to find an open house with a cookie in it? These people need to advertise more, IMO. I’d go if I knew there would be something good there.
Chicken wings and I would so be there.
I want chips and salsa, dadgummit!
They should have an open bar….maybe they might get some offers that way.
OPEN HOUSE - FREE WHISKEY!
Hey! Cookies only in Utah, thank you. And no coffee, either.
Actually, no coffee is probably a good idea, given it’s carpet-staining capabilities.
Ya think that herbal tea doesn’t stain carpet?
‘When am I going to find an open house with a cookie in it?’
Apparently in SLC, Utah. The ‘barely touched cookies’ line is funny and a bit sad. The UHS could at least eat a couple herself.
I wonder if they were chocolate chip?
Three weeks ago i was in an open house with fresh baked cookies (Nestle chocolate chip, not homemade, but better than other alternatives). Upon taking the second bite, I discovered a hair. Not seeing a trash can, I put the remnants in the entertainment center. I felt bad for a few minutes about the whole thing. About 6% of Denver open houses have free cookies available. I remember a year or so ago an ad for free hot dogs at an open house. The house was listed at $1.6 million so I am not sure they understand their target audience. I did not attend so I do not know the success of the bold move.
Have you ever found a hair in a hot dog?
I assume that a hot dog consists of whatever could not be sold as meat if not ground. Thus, I do not eat them.
I assume that a hot dog consists of whatever could not be sold as meat if not ground. Thus, I do not eat them.
Got a tip for ya. In case you really like hot dogs, Hebrew National. Rabbi inspected, real beef kosher dogs.
Yum!
For all I know, hot dogs may be completely made of mouse feces–but then I say to you, Tim, mouse feces tastes darned good. Especially with mustard, celery salt, tomatoes, onions and a few sport peppers. On a poppy seed bun.
Tim -
two words:
Tofu Pups
Now, Big, that’s just nasty.
We’re coming up on the lunch hour in the West.
Have you ever found a hotdog in your hair?
Not that I remember, but I digress.
Not that I remember, but I digress.
well, next time you make it to San Francisco..
“Have you ever found a hotdog in your hair?”
LOL!! Thats too funny!
Thank you for helping me clear out my lungs laughing. I’ve had a terrible cold all week.
Upon taking the second bite, I discovered a hair.
I’ll never understand people freaking out about a hair - especially in a baked good. Do you think you’ll get cooties or something? Just pull the thing out, drop it on the ground, and finish eating.
Have you ever thought about all the stuff you inhale when you breathe? Or what the cow you’re eating ate? Or what might be mixed in with the soup?
It’s just a hair. It happens. So long as it’s not raw found, and as long as it’s not short and curly, what’s the big deal?
grr, raw FOOD, not “found”.
(man, waiting 60 seconds to correct your post is frustrating….dee de dee…)
“Have you ever thought about all the stuff … the cow you’re eating ate?”
And at that, cows got nuthin’ on catfish or Maryland Blue Crabs. I bet even they could be topped in the garbage category.
Last time I ever had lunch at an Olive Garden there was a curly hair right on top of my pasta.
It probably fell there AFTER the food was cooked.
Needless to say, Olive Garden is no longer an option. Food was always overpriced and blan anyway.
blan like flan? -
I wonder if they were chocolate chip?
The only real cookie, in my opinion.
(At least, of the baked-dough variety)
I concur.
Don’t you sleep on buttery shortbread! Don’t you do it!
So, nobody got Ben’s subtle reference to the delicious irony (if it were true) of TOLLhouse cookies, at an open house that’s not doing well?
At least I bet that’s what he was getting at.
Delicious homebaked irony with chocolate chips.
“‘It’s not the same market it was two years ago when this house would have sold in about two seconds,’ she said.”
Let me rephrase that….would have sold in about two seconds to an unqualified buyer, thanks to exotic financing and group think that RE only goes up.
Duly noted. Can’t think of a decision -yet- that I made in “two seconds” I didn’t later regret. And ‘no’ we are ‘not’ discussing them here.
O.K, since everyone twisted my arm! NEVER take a Texan up on “going out drinking”! The “two second decision” you’ll regret almost instantly!
Let me rephrase it even further. How about THREE years ago. Maybe even four.
“With white tin ceilings, original woodwork, bay windows, and a $699,000 price tag, the two-bedroom apartment n Brooklyn would have been snatched up in a New York minute a couple of years ago. Instead, it’s been on the market for more than two months. On a recent spring weekend 14 buyers came through, and still no bids.”
Ha. After buying our rowhouse in Brooklyn for a fraction of that cost in 1994, we had to gut rehab the kitchen. I actually considered a tin ceiling, along with granite and Corian for the countertop, ceramics for the floors, etc.
Looked at rationally, none of it made sense compared with plain old sheetrock, vinyl flooring, and formica on the counters. Fifteen years later its all still good, but the wife is starting to get bored with it. It can be redone in five years, and twice more in the next 40, for what the more expensive alternative would have cost.
The original woodwork is great, but that’s the thing, it’s 100 years old. It would cost too much today.
“would have been snatched up”
Ooooh, looky, looky! They’re now saying “snatched up” instead of “snapped up”. Thank God! Because that “snapped up” business was so 2008.
And, they’re making the same misstatement of facts as I noted vis-a-vis some other commentator above: by “a couple of years ago” the snatching-up in a NY minute had already ended. Nationally, volume peaked in September 2005, though prices not till mid-06.
Rincon Hill developer Turnberry Associates has canceled its 40-story deluxe condo tower at 45 Lansing St., and asked the city to refund an $8.4 million affordable housing fee it paid when the building permit application was filed in 2007.
I wonder if this is the same developer that built “Turnberry Towers” in Rosslyn, VA? Or as I like to call it, Turdberry Tower.
They originally wanted $7 million for the penthouse in office tower hell (with private elevator!). Now I’m hearing ads for condos between $600k-$3m. I keep expecting it to go rental.
Millions for a place Deep Throat chose precisely because it was devoid of life outside of 9-5.
bink,
I think it is the same. You may remember the bus driver in Vegas said the whole condo mania there started with Turnberry.
Judging from their website it does appear to be the same developer.
Turnberry Towers Arlington
Turnberry Towers Vegas
Though they use different registrars, email hosts, and DNS providers for some reason.. They both use obnoxious flash music.
It almost looks like they’re trying to hide the Rosslyn development from their primary customers.
Yeah, and those sites have some major validation problems. Both the XHTML and the CSS flunk on the Vegas site. And only the CSS passes on the DC site.
The music doesn’t do anything for me either.
Also, Turnberry Sunny Isles, Aventura (north of Miami Beach) and Fairmont Turnberry. The father of the guy built Aventura Mall. The son went crazy all over the place, and in a very short time too. Also bought the Fontainebleau. The name is Soffer, I think.
There is also a Turnberry Towers Las Vegas. You can pick up a foreclosure or two for 60% off peak.
“Despite foreclosures all over the country, Plainview — and most all of Texas, for that matter — have not seen a significant drop in home sales. While there has been a slow down, real estate agents are still extremely busy, said Lynn Goddard, president of the Plainview Association of Realtors. ‘The media has made this out to be a problem for the whole country when it really isn’t,’ Goddard said.”
A friend of mine just told me that he had sold his parents house in Tyler Texas. He was very surprised how quickly it went as he has still not emptied it out. He didn’t tell me how he priced it, but evidently, some areas in Texas are still selling.
I mentioned last week (I think) my friend in Austin who’s now a realtor and was representing someone in a multiple-offer situation. So yeah, people are still buying in the area, for whatever reason.
Probably because the ask was below market. I don’t get all the hoopla, frankly. If they offer it for a buck, then yeah, they will get multiple offers. It’s called an auction.
When a house sells, it always sells at market. The market might be below what the other houses are priced at, but its still a comp and should be included in future appraisals.
“When a house sells, it always sells at market.”
That sounds a bit circular.
Plainview TX is between Lubbock and Amarillo (approximately nowhere), population 22,000. The only people that live there are the people who really want to live there, and the people too poor to move elsewhere. I’m not sure i’d hold it up as a pargon of real estate. Maybe of cotton farming, but not real estate.
“…..living in an age of ponzi prosperity.”
Sums it up perfectly.
Rob,
You’re not crazy. Not at all. Ponzi Prosperity works… and in many cases, surely applies. Still, I prefer to think of it as the “MEW Lifestyle”. They should have had their own glossy magazine! Informative articles like:
Are you milking your properties for ALL they’re worth?
Juggling plastic. How to play, and WIN!
The (5) things you can say to get an Appraiser to see things ‘your’ way!
hehe….those are some funny ones DinOR.
How did you stop at three, the posibilities are endless?
Comp Pumping, is it for you?
What your mortgage broker doesn’t know (won’t hurt him)
Finding the ‘right’ appraiser
Hitting the number, the difference between vacationing in Cabo ( and being stuck in Branson! )
Does your House ATM need a boost?
Its Amway living! Everyone gets to be a diamond!
MEW Lifestyle May 2005 Edition
The UPgrade Special Issue!
Does your “driveway” need an UPgrade? Check inside as we review the latest SUV’s!
Discussing MEW-funded elective surgery with your husband, BE… the girl he married!
PLUS: Doing UPgrade shortcuts sure to wow those pesky appraisers!
Amway is the ultimate Ponzi scheme.
Jesus sponsored twelve.
“‘People were deprived of their ability to make an accurate assessment of their purchase,’ said Rob Carey, managing partner of Hagens Berman Sobol Shapiro’s Phoenix office, which filed the suit. ‘This is an explicit agreement to try to rip off borrowers, between the lender and appraisers.’”
Umm…. no. People could have gone out and hired their own appraisers. They were deprived of nothing. Yes, they may have been fraudulent induced, but it is a pretty good assumption that buyers didn’t pay more than they thought the house was worth.
But aren’t appraisers supposed to, like, not make stuff up and stuff? My thing is that the buyer isn’t really the one being ripped off if it’s a nonrecourse loan. The person being ripped off is the one putting up the money. In this case, that person would be an investor who probably holds this mortgage in a retirement account somewhere.
Voila. That’s why all my appraisals are my own drive-bys, if I don’t already know the property. Or I have an impartial personal acquaintance do the drive-by. Because the mortgage notes ARE my “retirement account.”
So I looked at a new apartment yesterday. Looking to cut my costs a bit and hopefully “settle down” for a little while (would rather rent a house, but too much uncertainty right now).
The place I looked at appears to be a failed condo conversion, or at least it’s planned to be sold as condos in the future. The guy I met with appears to be one of the owners/investors.
The place is done up nice - they gutted it and put down bamboo flooring, maple cabinets, solid wood doors, and of course granite countertops. Oh yeah, travertine tile in the bathrooms, with most of the units having radiant heated floors (nice touch). Obviously quite fancy for an apartment.
The rents are actually reasonable compared to what I’m paying now, so I’m seriously considering it. However, the guy made a comment about the construction loan - I guess they still have a construction loan on the property (for the renovations), and somehow having more units rented (or all of them) will allow them to roll it into a different kind of loan? I didn’t probe for details - really not my place to be asking - but is this something I should be concerned about as a tenant?
Sure, it’s your place to be asking. You need to know if this building is going to be repossessed. You should get the name of entity that owns the place and try to find out if they’re in default. Better yet, find out how much they borrowed, then multiply the rent by the number of units in the building and add 20%. If the “owners” aren’t making a profit, then you will be moving in 6 months to a year.
On the other hand, you might end up with free rent out of it. Just saying.
Well, I’m not looking for a multi-year lease. Just six months or so. Not too concerned with the long-term viability. I’ve never thought about/worried about the financial health of the owner of an apartment complex before. I suppose it’s no different from a house, though.
I would think that for an apt complex, if the bank were to take over they’d want to keep the tenants…Obviously that’s the whole point of the complex - to rent it out. A house, on the otherhand..the new owner might actually want to live there.
Sounds like you could have a blabbermouth for a landlord.
Possibly…or I just happen to get people talking about the details of such things because I’m interested. We were talking about the renovation work, some of the materials they used and all that. I asked up front about the condo thing, so I think that might have set the stage.
Good on getting people to talk about the details. It’s amazing how easy it is to get them to spill the beans.
Personally, I simply find that good for ‘business’. I’d rather have a personal rapport with someone rather than have it a strict business relationship with people hiding behind contracts.
I did follow up and ask about the financing. Sounds like they have a year and a half on the construction loan. Weird thing to talk about - I feel like it’s not my business - but overall not my concern as I don’t expect to be there that long. It sounds like they have a large # of the units rented at this point, so I can’t imagine they’re having difficulty servicing the debt anyhow.
20% of homeowners ‘underwater’
Study finds more than 20% of U.S. homeowners - about 20 million residences - owe more than their homes are worth.
http://money.cnn.com/2009/05/05/real_estate/underwater_homeowners/index.htm?section=money_realestate
These stories never give a good description of their statistics. When they say “20% of homeowners are underwater”, does that include only people with mortgages, or does that include people who have paid off houses?
IIRC about 30% of homeowners own their house free and clear.
“The fact the rich are now losing their homes is a signal that the real estate market has further to fall.”
Foreclosures are growing like weeds in the tony Hamptons, playgound of the not as rich anymore and famous. This area in particular is in for severe price declines because the decline there was delayed and when it finallt started setting in, they got whacked a second time with the mass firings and bonus cuts on Wall Street.
Now, many folks are in desperation mode and trying to rent their places out, but they are way behind. From the May 6, 2009 Easthampton Star:
“More people are hoping to make a buck by renting their houses this year, and brokers have reported a flood of rentals on the market. The ultra-high end has been hit especially hard: What happened to those European renters who were seeking luxury houses in the Hamptons last summer, before the global recession hit?
“They’re gone,” said Judi Desiderio, a chief operating officer at Town and Country Real Estate in East Hampton. “And we’ve written less high-end leases. Most of our people come from Wall Street. It goes beyond Wall Street, but that’s 50 percent of our audience,” she said.”
Many renters are expecting good deals because of the bad economy, and, finally, after months of inactivity, “people are making offers,” she said.
But “the majority of them, the owners, are digging in their heels and they’re just saying no. There’s a ton of inventory, and owners have gotten so spoiled with what they’ve gotten in the past five, six, or seven years, they think, ‘Oh no, my house is definitely worth that.’ ”
Meanwhile, some renters are “waiting until the last possible minute. People are even saying, ‘I’ll come out after Memorial Day and I’ll get a really good deal.’ In some ways they may be right. But for the moment, owners are really holding on,” Ms. Gill said”.
“For the first time it’s May and we still have oceanfront properties,” she said. “Normally at this time of year there’s maybe 20 percent left. I’d say this year you’re probably looking at a little over 50 percent” of rentals still on the market.
Back before it got way too expensive, my family would take vacations on Nantucket Island. I don’t recall hearing my mother saying that there was a problem with finding a place to rent for a week. Ever.
Mind you, I’m talking about the period stretching from the late 1950s to the mid-1970s, but there was quite a bit of rental property to choose from.
No, but as you said, the rental rates went up and up. I remember in the 80’s being interested in a vacation on Martha’s Vineyard and finding that the prices were like $8K per month. I grant you Cayucos fetches that in summer now, but there’s a difference between early-80s dollars and 2009 dollars.
Vacation areas do always have plenty for rent (because people want to “own” and then defray some expense), but it’s also true that the oceanfront stuff gets booked up early, and that this particular year is showing vacancies much later than usual. (Now I’m describing what’s happening Down East.)
‘I’ll come out after Memorial Day and I’ll get a really good deal.’ In some ways they may be right. But for the moment, owners are really holding on,” Ms. Gill said”.
Why does Custer’s last stand suddenly come to mind?
In the Hamptons, inventory eat you!
We made reservations for a few days up in Traverse Ctiy for the July 4th weekend. A few years ago you had to beg them to rent you a room at under $200 a night, so we would only stay for two nights. Now we’re in a nice hotel for under $ 90 a night with a king-sized bed, jacuzzi in the room, and gas fireplace. Okay, I’ll take 3 nights….for sure. We’re getting emails from tonier resorts but tough poo-doos.
“Even more sobering, Seaman did some math showing that the $60,000 in yearly mortgage payments, insurance and property taxes she’s been shelling out exceeded what she would have spent renting a similar home at $36,000 annually.”
Did some math, eh? Math is hard. Wouldn’t it have been better to do “some math” BEFORE you shell out $1 million for a bungalow?
I mean it’s only a million but still…
And indeed small bungalow type places were going for close to a million not too long ago. There were run down ranch houses in lower rung blue collar places like Shinnecock Hills near the crime ridden Shinnecock reservation which in 2000 were inhabited by night watchmen and sanitation workers that were being bought by NYC DINC’s for $800,000 to $900,000. When the dust setlles, they’ll be back down to $200,000 and the DINC’s won’t recover for a decade.
I just came upon an beaut of an article, which exposes the ridiculousness of policies to stop falling prices after years of policies to provide affordable housing.
http://washington.bizjournals.com/washington/stories/2009/05/11/story1.html?b=1242014400^1824572
“Thanks to the recession, prices have plummeted on their own in Ward 4, and its neighborhoods face the prospect of an increase in foreclosures. “Researchers at the D.C.-based Urban Institute reported May 5 that housing prices in Ward 4 saw the city’s steepest decline from the fourth quarter of 2007 to the same period in 2008, a 26 percent fall.”
“City officials say they are doing everything they can to shore up neighborhoods, prevent further drops and keep families from losing their homes. Thus the recession has put D.C. in the odd position of paying to lower housing prices for some residents, while simultaneously paying to maintain prices for others — sometimes in the same neighborhoods.”
Another gem from this article…..
“In theory, if you just allowed everything to go without any intervention you could make things more affordable, but I just don’t think that’s good public policy,” Pohlman said. “No one is going to stand by and watch that happen.”
Tell me what he’s saying? Does he mean no one will stand by and watch things become more affordable?
Heck, if it will work without effort, then no tax dollars need to be spent on creating affordable housing.
Idiots at all levels of govt must be sitting in their offices chanting “Keep Prices High, Keep Prices High, Keep…..”. They’re no doubt thinking of their own property values.
Keep the scam going. Good grief it makes me sooooooo… mad!
“In theory, if you just allowed everything to go without any intervention you could make things more affordable, but I just don’t think that’s good public policy…”
Given that this guy just described a Free Market, I guess you could say at least he’s being honest that he’s against them.
I’d ask him if he favours the Fixed Market in that case.
“Home-buyers sued KB Home in Phoenix federal court Thursday, claiming the builder conspired with Countrywide Financial to inflate appraisals for home sales in Arizona and Nevada..”
“The lawsuit was filed on behalf of a handful of Buckeye and Surprise residents who bought homes from KB in 2006. KB Home has seven communities in the Tucson area, and the builder recently launched a line of homes priced as low as $90,000 to $100,000 in an attempt to compete with foreclosures.”
“People were deprived of their ability to make an accurate assessment of their purchase,’ said Rob Carey, managing partner of Hagens Berman Sobol Shapiro’s Phoenix office, which filed the suit. ‘This is an explicit agreement to try to rip off borrowers, between the lender and appraisers.”
File under: GREED, REMORSE, and REVENGE
And people wonder how to make money over the next few years!
Commercial litigation and restructuring/insolvency. Even here in Oz, those departments in our law firm are beginning to *boom*…
We’ll have several years of Breaker Morant style court decisions to exonerate the top hats before you’ll ever see a decision handed to a jury of hard working folks who have been fleeced of their home equity and retirement plans.
“The late 1990s and early 2000s were an era of abnormally high returns and soaring asset values, all of which was fuelled by debt. ‘Debt went up astronomically, thanks to low interest rates and money supply growth and the proliferation of financial instruments like collateralised debt obligations, which made it faster for money to get about the economy,’ says Satyajit Das, a risk consultant and author. ‘This made it seem like there was a lot of money out there, which fuelled the asset bubble. But it wasn’t real. It was a false multiplier. We were living in an age of ponzi prosperity.’”
I have been telling everyone I know this for years. Very few believed me, and many thought I was crazy. One by one they are realizing it is true.
That’s the easy part. The HARD part is…what’s going to replace it?
For 20 points, multiple choice:
1) Deflation for the next several years, worldwide;
2) Deflation for the next several years, in over-indebted Western nations only;
3) Inflation for the next several years, worldwide;
4) Scrapping of collapsing Bretton Woods currency system and replacement with another…
And so on, and so forth. I can think of quite a few more options…so much depends on choosing the right one, when several seem likely!!
Doesn’t take a genius to call the inevitable collapse happening now. What takes a genius is calling what comes next.
Why is this zombie securitizer making so many bad loans, especially given that they are taxpayer (or debt-monitizer) guaranteed? Why should the taxpayer (debt monitizer) be held liable for loans made by a private corporation to help people buy houses they cannot afford?
Mortgage Morass
Fannie Helps, And Losses Grow
Maurna Desmond, 05.08.09, 04:10 PM EDT
As foreclosure relief efforts kick into high gear, the mortgage giant grabs for billions in aid.
Fannie Mae’s $23 billion first-quarter loss means it needs another big infusion from the government to stay alive.
On Friday, John Lockhart, the director of the Federal Housing Finance Agency, asked the Treasury for another $19 billion, bringing Fannie’s total aid so far to $35 billion. It got $15 billion as recently as March, but warned Friday even with new government funds it might not be able to hold on. Fannie says it expects to keep losing money for the foreseeable future.
Unlike like the last few quarterly losses, which mostly related to lost future tax benefits, this one came from losses on Fannie’s loan portfolio. Out of the $3.1 trillion mortgages it owns or guarantees, up only slightly from a year ago, $145 billion are 60 or more days delinquent. That compares to just $11 billion one year ago. The number is much higher, in part, because Fannie now includes loans that are 60 days delinquent, while before it was 90.
Loans deemed “seriously delinquent” made up 3.15% of loans, up from 1.1% in the first quarter last year.
Remember when we were assured by both the GSE’s and government officials that Fannie and Freddie would never actually have to USE that lifeline? It was just there to reassure the markets?
Thank God the banks passed their stress tests *before* these data were reported!
Follow the money I suppose. As Dick Durbin essentially said, Congress is in the thrall of the FIRE industries (Finance, Insurance, Real Estate).
This made me think of Professor Bear.
http://www.google.com/hostednews/afp/article/ALeqM5j-VEuX0azzE8Ut4pWgYXjWjVhFFg
Economy puts US orchestras in the pits
17 hours ago
NEW YORK (AFP) — “Cash-strapped orchestras across the United States are under threat, as the economic crisis forces drastic austerity measures to avoid closure.
The global economic downturn that has savaged financial institutions and wrecked marquee manufacturing brands is also being felt in brass sections and on conductor’s podiums across the country.
The depth of the crisis last month forced the Boston Symphony Orchestra — one of the five most important in the United States — to cancel a European tour, but smaller philharmonics face the real prospect of a painful diminuendo into extinction.”
**************
Hope you’re able to keep doing what you love to your hearts content, Professor.
I want to do a little shout out here to CA renter who is always nice enough to ask how I’m doing when I pop in with a quick comment. If you’re in the mood, please contact me via missgredenko@hotmail.com.
Now back to lurker/learner mode.
“Hope you’re able to keep doing what you love to your hearts content, Professor.”
I am trying to figure out how to persuade my wife to let me buy an expensive violin at some point over the next two years (rather than pouring hard-earned money into purchasing a domiciliary money pit), as I sense a historic buying opportunity emerging. As to doing what I want, I play music seldom enough to still enjoy it, but often enough to stay in shape and to even get paid for my efforts. I don’t believe I would enjoy music as much as I do if I had to depend on a professional symphony orchestra position to pay living expenses, especially given that the sector has been more-or-less continuously downsizing throughout the course of my lifetime, while the playing skills of professional musicians seem as high as ever.
Cool, Professor Bear. I hope you get the violin of your dreams. I’d love to hear you play.
A few years ago, my daughter & I went to see the world’s greatest living violinist, Itzak Perlman, when he appeared with the Detroit Symphony Orchestra. My husband couldn’t go because he was still in pharmacy school and had some big tests coming up. My daughter had never heard of Itzak Perlman, but really wanted to go. We waited with great anticipation with the rest of the crowd in the new addition to Orchestra Hall called “The Max”, and had a drink. Suddenly the doors opened, and we all streamed in. I had paid extra for some really good seats, because I knew this was a once-in-a-lifetime opportunity, and I wanted to see him play as well as hear him.
The orchestra went through its obligatory first number, and then the house quieted as Perlman came out. He uses Canadian crutches, and to my surprise, carried his own violin and bow in one of his hands while simultaneously pushing down on the crutch. I’m not sure how he did it, but I figure that about $2m of violin and $100K of bow was going along there in his hands. No one made a sound. The conductor bowed to him. He inclined his head. He sat down very dignifiedly and carefully put his crutches down on the stage beside him. No one helped him in any way. Then, and then, he began to play. Sublime. People were crying. It was amazing. I’m so glad that we took the time and money and turned it into a precious experience. He was about 61 at the time.
I will always feel jealous of artists who love music as much and play it as well as Itzak Perlman or Yo Yo Ma. Like so many artists below the top echelon, I myself am doomed to a life of self doubt about the merits of my talents and skills.
Do you enjoy playing, GS? Then it’s worthwhile.
Is it as good as you can do– and do you improve with time? Then it’s worthwhile.
Have you ever made somebody happy with your playing? Then it’s worthwhile.
Has anyone ever heard you play who thinks of you as just an ordinary person, rather than an untouchable god?
That’s worthwhile.
Please don’t think that your skills are worthless merely because they are not at the pinnacle. That’s a pretty tall pinnacle, and even halfway up is pretty darned impressive.
And we need artists and musicians in the world.
I haven’t heard you play, but all I need to know is that you want a good violin because you’ll love it and appreciate it. And that tells me that you’re plenty good enough.
I agree Bear, you should get a violin and live at the school.
It’s Friday. Which banks failed today??
“Stress has also spread east, infecting previously inviolable suburbs like Leichhardt, where local paper The Glebe reported 19 home repossessions early this year. ‘Paradoxically, most of the big borrowing was done by the higher earners,’ explains Mike Rafferty, senior analyst at Sydney University’s Workplace Research Centre. ‘Now that those people have lost their bonuses or been sacked, you’re seeing forced sales.’”
Leichhardt is one of our ‘wealthy’ suburbs. Aussies are entering the ‘waking-up’ stage of this Depression. At my firm - full of partners and wanna-be solicitors who stretch to live in the wealthiest suburbs they can, no-one I know is buying and even the secretaries are trying to sell. I personally know one senior associate who is in trouble on his mortgage and is now trying to rent a room in his downtown condo (asking price $265/week, good luck with that, for a ‘large’ room on the third floor). I know two other senior associates who are stressed over their mortgages, desperate for billable work (one is still trying to refinance - he might be able to, but that’s just rearranging the deck chairs). One of them told me I didn’t understand, we could all lose our jobs and he had just ‘bought’ a Ferrari.
“Those forced sales are sending property prices south in some of the most blue-ribbon boroughs. According to Australian Property Monitors, Mosman prices are down 21 per cent on last year, Woollahra is down 24 per cent and Bronte is down 30 per cent. In Melbourne, Toorak dropped by 14 per cent, Kew by 8 per cent and East Melbourne by 35 per cent.”
Mosman is a very prestigious Sydney suburb, and many of the partners in my firm live there.
“‘Despite the Government’s assurance that Australia is well placed to weather the storm, the fact remains that Australians are, per capita, two to three times more leveraged into property than the US or Britain.”
“‘In the US they had cheaper houses on higher incomes than us,’ Martin North, managing consulting director at Fujitsu Consulting, says. ‘In other words, we had to borrow more to buy our houses. To make matters worse, the first home owners’ grant is enticing buyers into the market at precisely the wrong time, at the end of a bubble and when interest rates are artificially low. That’s how the sub-prime crisis started in America. People must remember that the recession has only begun.’”
BINGO. Anyone thinking It’s Different Here (Down Undah)…DO SOME FLAMING RESEARCH. It isn’t different - we are just about a year behind. It’s WORSE here b/c people are more in debt, and the banking cartel is much smaller, and runs virtually everything. (The federal government is very co-operative with them, hence the short-selling complete ban in place on the ASX for about 9 months? now, at the behest of Macquarie Bank who was getting KILLED by the shorts. And the State governments are hopelessly, notoriously corrupt, especially New South Wales where Sydney is located.)
“Anyone thinking It’s Different Here (Down Undah)…DO SOME FLAMING RESEARCH. It isn’t different - we are just about a year behind. It’s WORSE here”
Bingo indeed!
+100
Aw, darn, Renfield. I was thinking about exercising my passport and taking a trip to Australia. I have family there (who I’d like to get back in touch with).
Seeing the family would be nice (if I can locate them again), but daggonit, does Australia have to have a housing bubble too? I was hoping to escape ours for awhile.
If I tell you we don’t, will you still come?
Lots of good biking trails here so you’ll feel right at home…
Alas, according to Dr Steve Keen (UNSW) our bubble is worse than the US.
BUT…you can still come for a visit. Don’t HAVE to buy a house!
If it’s during State of Origin you can coould even go out to the pub one night with me and my Blues-loyal bloke husband and enjoy the footy over a schooner of Victoria Bitter. I’d love to meet some of you HBB regulars if you’re ever over Sydney way. I’m not getting my hopes up knowing the economy but if you’re here on a trip, my husband knows all the best pubs and a good HBB-style conversation pointing and laughing at housing wish prices in REAL time would be a treat! It gets lonely being one of the few AWAKE souls in sheeple-land! 
Renfield, you’ve got me going. Now, there’s that MINOR detail of getting myself and bicycle to Australia.
Let’s keep talking about this idea. How can we stay in touch?
“‘Despite the Government’s assurance that Australia is well placed to weather the storm, the fact remains that Australians are, per capita, two to three times more leveraged into property than the US or Britain.”
Indeed. Most New Zealanders have no assets of note other than real estate. Commercial property and even farm land is part of the same bubble.
When people were paying > 10k per acre for barely improved farm land with no reliable water source and thin eroded topsoil - there is no happy ending to this story. No way that one can service the debt on such properties with farm profits. People were buying farms on speculation in hopes of capital gains. Madness. Hard to see where this could end except the bankruptcy of the entire country.
I wish I knew more about national finance, as to what would happen next if that occurred. Do you think that’s likely?
New Zealand is SO beautiful. I am in love with it…my Aussie husband would never leave Aus, but man, I’d love to live in NZ. One of the few ‘unspoilt’ places from the little I’ve seen on my few visits there (only been to Wellington and Christchurch area).
I can’t see what the economy is based on, though. When I ask my DH, he laughs and says “sheep”. Then he says it’s mostly tourism and services.
What could NZ base a strong economy on? Is there any way of bringing back the past…? In Aus the only real future I see is resources via China. But I’m no economist and don’t even play one on the internet.
Here’s to both of you!
In the same time zone (+- 3 zones.)
Back atcha Muir…only it’s still just after brekky so I can’t hoist one to you yet. (Well I could but my husband takes a dim view of wine at 10.00am - he’s so old fashioned!
I tell him it’s 8.00pm somewhere but he don’t buy that.)
I’ll do you a return toast…tonight! If you don’t count the time zones and the distance, it’ll be almost like clinking glasses.
What NZ has going for it is low population pressure. It would be interesting to see how population influences bubble prices. NZ has roughly 4 million people living in 100K square miles - about the same stats as the state of Oregon. I suppose DinOR would argue the point but OR didn’t see anywhere near as much bubble craziness as the overpopulated areas in the US like California (38 million people living in 160 square miles - sheesh).
Make that 160K square miles for CA.
Have any of you denizens of blog land ever taken a test where you could negotiate the grade if it turned out too low? If the stress tests were rigged to enable members of Megabank, Inc to paint over their unclean patooties with lipstick, this would have the effect of destroying trust rather than rekindling it.
Wall Street Journal
* MAY 9, 2009
Banks Won Concessions on Tests
Fed Cut Billions Off Some Initial Capital-Shortfall Estimates; Tempers Flare at Wells
By DAVID ENRICH, DAN FITZPATRICK and MARSHALL ECKBLAD
The Federal Reserve at the last minute significantly scaled back the size of the capital hole facing some of the nation’s biggest banks, following days of intense bargaining over the stringency of the stress tests.
In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.
Even though the overall reaction to the stress tests is generally positive, the haggling between the government and the banks shows the sometimes-tense nature of the negotiations that occurred before the final results were announced Thursday.
When the Fed last month informed banks of its preliminary stress-test findings, executives at banks including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. were furious with what they viewed as the Fed’s exaggerated capital holes. A senior executive at one bank fumed that the Fed’s initial estimate was “mind-numbingly” large.
Over the next two weeks, at least half of the banks pushed back, according to people with direct knowledge of the process. Some argued the Fed was underestimating the banks’ ability to cover anticipated losses with revenue growth and aggressive cost-cutting. Others urged regulators to give them more credit for pending transactions that would thicken their capital cushions.
George Stigler
From Wikipedia, the free encyclopedia
Born January 17, 1911
Seattle, Washington, U.S.
Died December 1, 1991
Chicago, Illinois, U.S.
Nationality United States
Fields Economics
Institutions University of Chicago
Alma mater Northwestern University, University of Chicago
Doctoral advisor Frank Knight
Notable students Thomas Sowell
Known for Capture theory
Notable awards Nobel Memorial Prize in Economic Sciences (1982)
National Medal of Science (1987)
George Joseph Stigler (January 17, 1911 – December 1, 1991) was a U.S. economist. He won the Nobel Memorial Prize in Economic Sciences in 1982, and was a key leader of the Chicago School of Economics, along with his close friend Milton Friedman.
While at Chicago, he was greatly influenced by Frank Knight, his dissertation supervisor. Milton Friedman, a friend for over sixty years, comments it as a remarkable feat since only three or four students ever managed to complete their PhD dissertation under Knight in 28 years of his service at Chicago. Jacob Viner and Henry Simons also had great influence on him. Among his students, Allen Wallis and Milton Friedman also had great impact on his economic thinking.
Stigler is best known for developing the Economic Theory of Regulation, also known as capture, which says that interest groups and other political participants will use the regulatory and coercive powers of government to shape laws and regulations in a way that is beneficial to them.
FPSS — Did you know Stigler?
Finance & Economics
America’s banks
Stresses and strains
May 8th 2009 | NEW YORK
From Economist dot com
Stress tests on America’s banks have set the bar for minimum capital too low
…
The stress tests have worked in one sense. They have produced a credible estimate of the likely losses banks will face. But the second part of the test—establishing a buffer big enough to allow banks to absorb those losses and command confidence without state support—looks to have been fudged. It is still hard to imagine the banking system being able to stand on its own two feet without explicit state guarantees of debt issuance and the implicit understanding that the government would step in again. As Mr Geithner admitted, we are only in the “early stages of repair.” The mechanics should keep their spanners at the ready.
Believing in the explicit state guarantees of debt issuance, I have bought bonds in a number of these outfits. But I would like to ask someone, where are those explicit guarantees? I got them from some talking head on TV, and am not sufficiently reassured. Mostly I am greedy, enjoying the 8%-12% yield prospect. The high yield shows the world is not finding the guarantees very convincing, either.
The stress test results sound like they are as tainted as mark-to-fantasy accounting.
Finance and economics
American banks
Who’s in charge here?
May 7th 2009 | NEW YORK
From The Economist print edition
Stress tests will gauge the government’s resolve to take on Wall Street
TOO cosy with Wall Street during the boom, too soft on it in the bust. This week brought an opportunity for the American government to prove this characterisation wrong with the release of the results of stress tests on 19 large banks, after The Economist had gone to press.
…
The test results come amid a wave of criticism that policymakers have not been as tough on Wall Street as they should have been. Accuser-in-chief is Simon Johnson, a former IMF chief economist, who has portrayed Wall Street as an oligarchy that has left a generation of politicians and regulators “mesmerised” and loth to upset it.
This capture is partly financial: the top 25 subprime-mortgage originators, many with ties to big banks, have spent close to $380m on lobbying and campaign contributions over the past ten years, according to the Centre for Public Integrity, a non-profit organisation. It is also cognitive: senior economic officials have spent so much time in and around Wall Street over the years that they can no longer distinguish between the interests of big banks and those of the public. Officialdom “can’t envisage a world without big, powerful dealers”, says Christopher Whalen of Institutional Risk Analytics, a research firm.
Indeed, for all the fretting over banks that are “too big to fail”, the big have got even bigger. Banks have been “subsidised in becoming more economically and political powerful”, writes Thomas Hoenig, president of the Federal Reserve Bank of Kansas City. This influence extends into the Fed itself. Stephen Friedman, chairman of the New York Fed and a Goldman director, received a waiver that let him keep his Goldman shares, and buy more, after it became a bank holding company.
Moreover, the government has so far been reluctant to wipe out shareholders, penalise creditors or kick out tainted bosses, such as BofA’s Ken Lewis—though it says sackings may yet be in order. Asset guarantees have been offered at below-market rates, and the administration’s toxic-asset plan was largely shaped by the financial sector. Banks were even given a chance to challenge the findings of the stress tests.
What does the Federal Open Market Committee do?
AP Sources: Obama wants Fed to be finance supercop
By ANNE FLAHERTY – 55 minutes ago
WASHINGTON (AP) — The White House told industry officials on Friday that it is leaning toward recommending that the Federal Reserve become the supercop for “too big to fail” companies capable of causing another financial meltdown.
According to officials who attended a private one-hour meeting between President Barack Obama’s economic advisers and representatives from about a dozen banks, hedge funds and other financial groups, the administration made it clear it was not inclined to divide the job among various regulators as has been suggested by industry and some federal regulators.
“The idea of having a council of regulators was pretty much vetoed,” said one participant.
Treasury Secretary Timothy Geithner, who briefly attended the meeting but did not identify the Fed specifically as his top choice, told the group that one organization needs to be held responsible for monitoring systemwide risk. He said such a regulator should be given better visibility into all institutions that pose a risk to the financial system, regardless of what business they are in.
“Committees don’t make decisions,” Geithner told the group, according to another participant.
Holy cow. This sounds like a recipe for corruption, on a grand scale. ONE “supercop”?????
Only if NONE of that group are or ever have been from Goldman Sachs, or JPMorgan. Or from any bank. But that would simply be handing the big stick to someone else wouldn’t it.
PBear, this honestly sounds to me like a step toward fascism, given that who controls the economy controls policy…”Committees don’t make decisions”??? Then WHO does?
It’s scary b/c in Aus, we are definitely a “Western” nation and so far the “West” has tended to follow the US in policy. Who’s going to be the “supercop” here? Is this like handing the car keys to the Big Banks?
(The idea of Macquarie Bank having any more power than they already do, after they’ve changed the face of Aus so much already, is quite frightening.)
‘Holy cow. This sounds like a recipe for corruption, on a grand scale. ONE “supercop”?????’
It may be even worse than you realize. Bernanke was already at the Fed back in the early 2000s when a virtual abolishment of lending standards enabled the housing bubble to go parabolically vertical. After this he will get awarded the Supercop job?
OK mate. Do you feel no sense of responsibility when giving a mere Australian secretary nightmares?
Well, I’m half-kidding. I honestly think that this step (allowing the US banking cartel to govern via democratically-elected proxy) is a death knoll for the American empire.
China as the next de facto global “supercop” is a chilling prospect, but increasingly likely (seen from my secretary’s POV). Damn but the US needs to sweep house to keep that from happening.
I hate to be a downer on Ben’s optimistic
blog, but I really, really wish the US would step up and clean house before someone else takes over the baton from them.
The world has, and will, assign the American democratically elected government a role as “supercop”. But they will never submit to the rule of Goldman Sachs per se. I fear that due to this corruption, the American empire is passing, and the Chinese empire rising to take its place, due to the obvious corruption of American government via the banking cartel. (It’s the same for the rest of the world I think, but not admitted - the rise of the central banks.)
FPSS, you are welcome to ad-hominem insult me six ways to Sunday and tell me that I’m wrong. In this case I would welcome it. Go right ahead.
Renfield, I agree that American ascendancy is ending, and that the Chinese will soon rule the world, but I don’t believe it’s because of Goldman Sachs. It’s because nobody here wants to work, and all are too accustomed to a very high living standard.
Gas prices in Toronto, Ontario have risen from .65 in March 2009 to .95 per litre. Nice 50% increase almost - didn’t the world become unglued when oil hit 142 and gas hit 1.42/litre here. We’re 2/3 of the way there any barrels of oil are less than 1/2 what they were.
Either way, consumers are paying more now than 3 months ago.
mabby:
I’m wondering if our deflationary stage (not for houses and other “bubble” assets like art, discretionary items) is almost over.
Aus has barely seen deflation so far. Our grocery bill (me and DH) has DOUBLED in two years and we haven’t eaten more.
We never drive if we can help it but the public transit is now overcrowded to cracking, and there are a lot more bicycles. Deflation in discretionary, once-in-awhile items, heavy inflation in necessities.
THIS personal experience is what gives me reservations when reading the (very well constructed) deflation articles on Shedlock, Denninger, Oracle and other blogs. And each of us secretaries at my firm got a ‘no wage increase’ letter this year too - while several solicitors have been laid off for no other reason than to reduce headcount for budget.
I think inflation is a bigger problem already than bloggers who weight housing prices with food budget increases, appreciate.
PS: I gave you a reply before, which will show up soon…in the meantime, I’m just saying that when one goes OUTSIDE the US, to the rest of the world, and to day-to-day expenses outside of discretionary items like housing and art, the inflation/deflation argument gets a lot murkier.
“A few houses down, Jeff and Elizabell Marquez, are in somewhat better financial shape. They paid $740,000 for their modest home in early 2008 and have watched its value ebb ever since. ‘It’s lost $100,000,’ Elizabell said with a pained expression.”
“‘More than that,’ pointed out her husband.”
Anyone who would pay $740,000 ( plus closing costs ) for a “modest” house is out of their minds, and pathetic. It should set off warning bells that if you’re paying that much for a “modest” house that something’s wrong. Evidently not in the real estate haze that beset so many, though. They’ll never see that money again.
+1
Especially when you consider that it wasn’t them so much as the bank that in fact ‘paid’ for the house.
(They didn’t ‘pay’…the bank paid and they went into debt to the bank. Which won’t get discharged.)
In effect, this has become the bank’s problem (after the inevitable foreclosure), hence the government’s problem. (Since they bail out the banks.)
The US will never see that money again.
$740k for a modest home.
Sorry didn’t finish… $740k for a modest home means either: (1) a fantastic bubble and/or (2) an abuse of the word “modest.”
“San Francisco prices are not nearly as low, however, as what is being offered in other Bay Area cities, where sales are occurring at half the listing price in some cases, said Dale Boutiette, a broker associate with Paragon Real Estate Group. ‘I have to educate my buyers who are looking for 25 to 30 percent off the listing price, that that’s generally not going to happen,’ he said.”
I saw this shortly after Ben posted it, and I have been scratching my head all day trying to figure it out. Is it that buyers are generally not going to get 25 to 30 percent off the listing price, as sales are actually occurring at half (50 percent) off the listing price? There is something extremely incoherent about this passage. Perhaps the journalist should take a remedial writing course.
Or is the journalist’s background deficiency in mathematics (50 pct is a bigger price decline than 20 to 30 percent)?
Outside SF you can get 50% off. In SF don’t even expect 25% off. It’s different there.
I read this as the 50% discounts were happening in “other Bay Area cities”, not SF - where the buyers were looking for 25-30%.
It’s the writing, not the math.
50% off sales in SF will have to wait until next year…
news.google.com/news?pz=1&ned=us&topic=b
Banks in much worse shape than stress test reports. Read the first article in Google News.
Southern California house prices are still too high for buyers.
Salaries still don’t meet the cost of homes.
Cannot qualify for a loan.
Patience! We are getting there, and fast…
‘We need to slow down the sale of foreclosures. That’s what this is all about. The question is ‘how long before this whole thing starts to correct?’
Mr Economist, The housing market is correcting. I’m no Econ PHD, but it seems a better question would be “how long before this whole thing stops correcting?”