When The Lions Are Eating Zebras
It’s Friday desk clearing time for this blogger. “Kenion Grove had everything for Albert Mealer. The tiny subdivision was close to his new job in Chapel Hill. His wife liked what she’d read about the schools. The builder, KB Home, was offering good prices. And he couldn’t get over the quaintness of the Orange County town that surrounds it. ‘The little town was amazing,’ said Mealer, who paid $246,500 for his home in August. But as the housing market has fallen, so too have sales and prices at Kenion Grove. ‘The deals are even better now,’ he said.”
“So good, that if Mealer wants to sell, he’d compete with new homes that cost less than what he paid — a dilemma that led to a neighborhood protest. The first Kenion Grove home sold in August 2006 for $360,000, or $128 per square foot. In the year that followed, only eight more homes sold. Almost every sale carried a lower price than the one before. By June 2007, M/I was feeling pain from losses in harder-hit parts of the country. It unloaded its 34 remaining Kenion Grove lots to KB for $1.5 million, taking a 30 percent hit on each lot.”
“M/I sold its last home in Kenion Grove in August for $230,000, or $80 per square foot. ‘The balloon was deflating. It hadn’t burst yet, but it was deflating,’ Kenion Grove resident Ronald Thomas said. ‘M/I Homes seems to have panicked.’”
“It was a great ride when home prices were taking off, but with 2009’s assessed home values in a free-fall some people are wishing they never got on. ‘We should have waited a year,’ said Rachelle Christensen, a Meridian mother and homeowner. Christensen and her husband bought a home a few years after her friend Emily Hoge, from Boise.”
“‘We bought it when everyone said, you need to hurry and buy it right now,’ Hoge said. ‘Everyone was flipping their houses and so excited to buy, buy, buy.’”
“‘If we can just hold on to it for the next couple of years, then hopefully it will come back up,’ Christensen said.”
“Once upon a time not so long ago, developers seeking magic money poured $4 million into a ‘Lord of the Rings’ subdivision here complete with hobbit holes and thatch-roof houses. This month Umpqua Bank, which foreclosed on The Shire, unloaded the moribund development for just $750,000.”
“Some Bend homeowners say they’re victims of scams. Dottie Robertson, a human-resources recruiter, says she and her husband, Jack, borrowed about $350,000 to build a house in south Bend. The couple had made money before with local developer Don Loyd of Aspen Tree Homes, building or buying houses to rent out before selling. This time, the Robertsons planned to build a house and move into it.”
“Now the house sits unfinished and empty. ‘Initially it was disbelief, and then it turned to absolute devastation,’ Robertson says. ‘We not only saw our bank accounts going away, but we saw our credit being ruined.’”
“Fredi Cohen expected the hand-carved sinks and tubs in her East Hampton, New York, home to stand out in the real estate market and help sell her three- bedroom house for $1.25 million. Almost two years later she’s still waiting. ‘People have stopped buying real estate,’ said Cohen. ‘Now I would sell it for $999,000.’”
“Vacant land sales have also declined. In the first quarter, 29 residential parcels sold for a total of $19 million, 56 percent fewer properties than a year earlier and 88 percent fewer than the same quarter in 2005, according to Suffolk Research Service Inc. in Hampton Bays. ‘It’s a strong indicator for the fact that there’s no market for houses,’ said George Simpson, president of Suffolk Research, a real estate data service. ‘There are enough of them around you’d be crazy to build one.’”
“Black Rock has cut the prices on its Bellerive project in Riverstone by about 40 percent and it is already paying off with sales, said Marshall Chesrown, CEO of the development company. Prices have been reduced by $200,000 on the least expensive condos. The penthouses have taken an even steeper cut to $895,000 from the original asking price of nearly $1.5 million.”
“It is not an opportunity that is likely to come around again, Chesrown said — they couldn’t be built again for the asking price and until there is a significant turnaround in the market he won’t be building any more on speculation, even though he has the waterfront property available. ‘I don’t anticipate any more building at this point,’ he said. ‘Based on the current market there is plenty of inventory.’”
“Redesigned Greenwich Place, the largest residential development to be built in West Hollywood in decades, has been placed on hold due to the financial crisis and economic crisis, says Turberry, its developers. WeHo News inquired with project manager Matthew Jacobs, who replied, ‘Given the current worldwide financial mess, now is not the time to start construction.’”
“‘Turnberry continues to believe in West Hollywood,’ he said, ‘and we look forward to starting construction just as soon as our banking system stabilizes.’”
“He declined to say whether the project’s funders, the ugly real estate market or both contributed to the decision to delay groundbreaking, saying only ‘We are holding off until conditions stabilize on a broader level.’”
“New-home starts in Wichita linger at about a third of historical norms and will likely remain down until at least late this year, according to industry officials. Starts are running on a pace between 1,000 and 1,500 for the year, a third to half of historic norms, officials say.”
“‘It’s just way down,” said Star Lumber president Chris Goebel. ‘To be honest, right now is probably the best time in your and my lifetime to buy a new home for a multitude of reasons — price, quality and interest rates. But folks aren’t buying because of confidence. They’re listening to the news and not liking what they’re hearing about their jobs.’”
“John Stumpf may not have realized that he was taking on one of the toughest jobs in corporate America when he agreed to become Wells Fargo’s new CEO in June 2007. On a trip to Minneapolis this week, Stumpf, a 27-year veteran of Wells Fargo and a native of Pierz, Minn, sat down with reporter Chris Serres to share his views on challenges facing Wells Fargo and the banking industry.”
“Q: So is it your view that we won’t come out of the recession until we reach a bottom in housing? A: I don’t think it’s that simple. I do think we need to find a bottom. But I also believe you can’t restructure enough loans to fix this economy on the housing side. This is still about jobs. It’s all about jobs. I think you need to find the bottom in housing, but you also need to find the bottom on job loss, and I think those two are actually related to one another…You’ve gotta reach the bottom of housing, get a sense that your job is secure, and then we’ll start to see ourselves pull out of this.’”
“Q: I have to ask about your March meeting with President Obama. You were with some other bank executives. Tell me about that meeting and your impression of Obama. A: ‘He clearly wants us to help the economy going again. He told us he’s there to help us. He also said, ‘I’m the only thing between you and the pitchforks.’”
“Q: What did Obama mean by that ‘pitchforks’ comment? A: ‘I don’t know exactly. I didn’t have the guts to ask him.’”
“When the lions are eating too many zebras, you don’t ask the lions to stop — you build a fence. That is how Rep. Mike Foley, a Democrat from Cleveland, summed up why Ohio needs a six-month moratorium on foreclosures, which would apply as long as borrowers continue to make at least half of their monthly payment.”
“Foley said the moratorium would give borrowers more time to remedy their financial situations and perhaps to work out new loan terms. It also gives more time, he said, to potentially take advantage of new federal foreclosure support. ‘We are trying to put some hurdles up to make this crazy system saner,’ he said.”
“During a two-hour debate, Republicans argued that the new $750 fee was unconstitutional and the moratorium encroached on a lender’s ability to enforce its contract. ‘I don’t know what we’re thinking here,’ said Rep. Bill Coley, R-West Chester. ‘What is going to happen during that six-month period? Do you really believe people are suddenly going to find themselves in a better financial situation? Of course not.’”
“A typical home is worth a little over four times the average household’s annual after-tax income, down from almost six times five years ago, Reserve Bank figures show. Strong growth in incomes and a period of more sluggish median house price growth are working in the interests of would-be home buyers. ‘This is a dramatically better picture on Australia’s housing affordability,’ the chief economist at UBS, Scott Haslem, said.”
“But housing still remains expensive by historic standards. In the 1980s, it took just three times the average annual disposable income to afford a median priced home. Australia remains one of the least affordable countries in the world.”
“The governor of the Reserve Bank, Glenn Stevens, said yesterday that the gradual improvement in affordability suggested Australian house prices were not heading for the same large price falls witnessed in other countries. “In Australia’s case, the ratio of the median dwelling price to average household income has declined quite noticeably since 2003, without a very large absolute decline in housing prices.”
“‘This is evidence for at least the possibility that these adjustments can take place over reasonably lengthy periods and without being terribly disruptive to the economy,’ Stevens said.”
“Although there are some promising signs in the housing market for San Diego and Southwest Riverside Counties, more pain is coming. Foreclosures and general economic malaise will continue to take their toll. Consequently, potential homebuyers don’t need to be in a hurry to find that first home or move up into a larger one: Once the market hits bottom, it won’t be bouncing back anytime soon.”
“And though none of us likes watching our home values drop, lower prices will actually be a boon for the economy. During the bubble, California was effectively priced out of the national labor market, and businesses struggled to stay competitive as housing affordability for employees disappeared. The return of affordability will make the state attractive to employers and employees once again. Patience is the name of the game, and in the long run, the outlook for the local housing market is bright.”
This was a fun week. FYI, everyone who ordered a shirt should have it by now, except for JG in NY and OG in WA. If you haven’t gotten yours or got the wrong size or color, just let me know.
Also, I’ve got some inside info on the foreclosure biz up on the forum:
http://forum.thehousingbubbleblog.com/index.php?topic=339.0
My thanks to those who support this blog. Please check back this weekend.
Ben, you called: job, jobs, jobs.
Thanks Muggy, but like the walk-away phenomenon, I was simply recalling what had happened in Texas in the 80’s. All this stuff is just post-bubble economics which is there for any one to see. If the housing bubble was driving (and distorting) the economy, then the most important questions of the day must involve how we act in a post-bubble economy.
“…what’s different right now is it isn’t one group or a handful; it’s everybody, small firms, large ones and loan servicers. And it is across the spectrum of loan types. FHA/HUD loans are in a different universe from conventional loan foreclosure markets, yet this sudden change in initial secures happened at the same time in both.
What can this mean? Is it possible that all these organizations simultaneously made these decisions? IMO, that isn’t remotely possilbe. Then what can we suppose has happened? That at some level, joint inaction was agreed upon? And who or what organizations could have facilitated such agreements?
What are the implications? Even though we are seeing near record notices of default, how can it be in the best interest of the mortgage holders for these companies to arbitrarily put off what is considered the best course of action? I can tell you from experience, these houses are almost always vacant. And vacant means not being maintained. That’s why the lenders act; to preserve the value and minimize their liability. Simply avoiding taking the prudent action doesn’t stop ongoing vandalism, water damege or neighborhood blight, for instance, from occurring.”
My hunches:
1) Some top level (quasi-)government agency is coordinating stealth action to short circuit the free market in order to meet some special interest group’s pet policy objective.
2) All Americans are either implicitly or explicitly collectively paying the cost.
3) A huge part of the cost is allowing a substantial part of the US housing stock crumble into desuetude.
These are just hunches, though…
From one of the posters on Piggington’s:
I went down to the courthouse today to check out the trustee sale. Wow a heck of alot different then when I was there a few months ago. There were about 40 people this time. The first HOUR minutes were filled with nothing but postponements due to br, bk, and even a few cancellations. Then they had bidding. I would say I was there for about 30-40 properties and 5 were sold to private parties and the rest went back to the bank. There were still properties to go when I left.
He continues…
I “think” they had a total of 280 properties to start with today. So the first hour or so he blew through them…Maybe it took 10-15 seconds per property. He would read the address, then the reason it was not going to sale today. Example
“1313 Mockingbird Way, San Diego (he would not even do the zip cod) postponed 6/22 BR. (beneficiary request)”
So he slammed them. I would say he got about 3-4 per minute and then he would take a break and chug some water after about 10 minutes. He knew most of the bidders there by name and visa verse.
http://piggington.com/visit_to_the_courthouse_steps
“Q: What did Obama mean by that ‘pitchforks’ comment? A: ‘I don’t know exactly. I didn’t have the guts to ask him.’”
Time to open your history book, John. Or else check out this bankers and pitchforks history timeline on Google.
If Obama really said that, it’s the first thing he’s done that has really pleased me. Note, I’m not pleased that he’s standing between them and the pitchforks. Of course, standing in between them might turn out to have been a very bad idea.
He said it, and I posted this a couple weeks back. The bankers were explaining to Obama why they needed big bonuses and he cut them off in mid sentence, telling them that he was the only thing between them and the pitchforks.
Obama is one of the good guys. He’s in a very tough situation, surrounded by enemies and assholes, but still a decent guy in my book. If I could pick anyone to clean up Bush’s mess, Obama is the guy.
But honestly, I don’t think anyone is going to stop this thing from crashing down, Obama included. It’s just too big.
Personally, I think I’d do a better job of cleaning up the Bush/Obama/Congresscritter controlled mess than any member of either the Republocrat party.
But that is why I’m a registered Libertarian.
I’d have more faith in Obama if I thought he’d be cutting deep into pensions for gov workers and applying ‘trust busting’ to unions.
Why it’s not okay for one company to monopolize a business but it’s fine for a union to do so is beyond me.
Exactly what is it about federal employee pensions that you think is so worng? I bet half the things you think they are getting are terms from state and local governement pensions and have nothing to do with federal workers at all….
Polly:
Gov workers make out like bandits you know that. When you add in all the non working days, short workweeks, FREE health dental care. Its a big chunk of change.
Its the only place to balance the budget anymore…make it 30 years to retire and collect at 65 or even 70 ..or a pittance amount before that.
I’m sorry but I am cheap, and i could easily live on $30K in nyc…so anything over that is Gravy money
I asked specifically about federal worker retirement benefits. We do not get 90% of our salary. After 30 years the defined benefit pension amount will be 30% of my last year’s base pay. That is it. If it were after 25 years, it would only be 25% of the last year’s base pay. The max you can get to is 40% no matter how many years you work. It is better than no defined benefit pension plan, but it isn’t like a state cop or a teacher.
I don’t get free dental insurance. There is a dental plan available (just in the last two years), but you pay 100% of the premiums and no dentist you would want to see will take it. I don’t get free health insurance - I pay about 30% of the premiums. The 401k plan has only 6 choices plus the target year plans that are combos of those 6.
For the first three years, vacation was 13 days a year. Better than most Americans in regular jobs, but worse than any other attorney job I have ever had. Yeah, I get Columbus Day off which I didn’t get at the law firms, but I don’t get the day after Thanksgiving which the law firms always gave us. I’m up to 20 days of vacation a year now, but that is what I had from day one at the law firms I worked for in NYC.
Oh, and I get a free flu shot every year. Is that what is so extravagent?
Yeah. I think the California government and municipal pensions have been the most out of control. Most of the government wonks I know get a more modest pension and have to pay for health care. Holidays are pretty good but salaries are moderate to low.
Most of the government guys I know have to work to 65 to get a good pension pay out at all.
Fireman, police exc have been the guys breaking everyones back. Those jobs have been fricking outrageous.
Nice of you to get paid to do nothing on the taxpayer’s dime.
That’s the problem I have with it. When you quit working you quit getting money.
Now, if pensions were fully funded (with max benefits) so the costs were paid up front, I would have less of a problem with them. But they aren’t. And even the ones that ‘claim’ they are typically do so by banking on 7%+ returns on their investments. Whenever there is a budget shortfall, they juggle their pension assumptions and get ‘free’ money. The stock market tanks and AAA rated securities lose half their values, and everybody without a pension has to make up for their retirement shortfalls by working more. But not government guarenteed pensioners. No, we get to work more for THEIR retirements as well as our own.
When I retire I get SS. Except I won’t even get that because it’ll be broke by then. And means tested.
So you object to pensions as a philosophical idea? OK. But it has a long history in this country. Good luck convincing everyone else that it is a generally terrible idea for people to have some amount of guaranteed income when they are too old to work and not sick enough to die.
I’m reasonably sure the federal employee pension plan is supposed to be fully funded. Money certainly comes out of my paycheck every two weeks and I’m sure that the government allocates/puts in some sort of matching payment. I have no idea if it is any better funded than private ones. And I don’t know if it is an obligation of the federal government to pay it if the funding mechanism breaks or if we have to take the same chance with the PBGC that every one else does. Hosnestly have no idea. But the old timers around my office don’t seem to be worried about their pensions, so I would guess it is a little safer than being dependent on a car company or a state on the verge of bankruptcy.
There is one boondogle portion of it that I will relate. The base pay on which the calculation is based includes a location adjustment, so if you live in certain metro areas, your pay scale is higher. The pension is based on your location adjusted scale, not the pure base. That allows people to bring the loacation adjustment they earned while working in a more expensive area to a lower cost location in retirement. But most people get to do that if they have a pension at all, so it isn’t all that big a deal.
Polly,
I also live in California, with one of the worst run pension systems for government workers. And yes, as a taxpayer I have to make up for shortfalls on the bad investments CalPers has made. Hence I am probably more annoyed by pensions than when I lived in Montana.
There have been several of examples of people retiring from their job when they qualify for their pension, rehiring into the exact same job (like bus driver), and getting paid their first pension, their second salary, and they start accruing a second pension.
Obama is making his own huge mess, completely independent of whatever you think Bush was/is responsible for.
It’s time the ObamaNation defenders stepped up and admitted - the current administration is damaging and breaking a heck of a lot more than it’s fixing.
My report card for Obama so far - F Minus, just like in the comics.
Oh I’m not there at all. Let’s look at the positives. I got up this morning and there actually ‘was’ an open to the stock market. ( Good stuff )
The sun rose in the east, as it should, so that’s another plus.
My wife’s paychecks have all been honored by our bank, so far? ( Things are looking up! )
I was totally onboard w/ bananarepublic’s comment until… it took that all-to-familiar dark turn? RL is pleading w/ KO to “take the pledge” not to talk about ‘him’ for a full 30 days. ( Frankly, I’m curious just to see what the outcome might be? ) Sans RL, whatever shall they talk about?
“Kenion Grove had everything for Albert Mealer… who paid $246,500 for his home in August. But as the housing market has fallen, so too have sales and prices at Kenion Grove…if Mealer wants to sell, he’d compete with new homes that cost less than what he paid — a dilemma that led to a neighborhood protest.”
Okay, this REALLY annoys me. The guy and his wife swear that they love the neighborhood and were thrilled to get in at the price they paid. Then, suddenly, someone else gets a better deal and now the whole neighborhood is rubbish and he wants to sell.
Either this guy is a complete idiot, or there’s a racial issue not being reported (or something like that). If he loves his home as much as he says, why does he care so much what his neighbors paid?
Dude, just live your life.
Especially since he got in WELL below the peak. It’s not like he bought into a rising price neighborhood. He bought on the way down. Did he think his purchase would magically signal the bottom? He gave the middle finger to everybody who bought before him and is suddenly surprised to be getting the middle finger from somebody who bought after him? HAH!
True story from the Arizona Slim file: A couple of former neighbors were, shall we say, of “the neighborhood as community” persuasion. To hear it from them, it was all about building community and coming together to improve things around here.
Well, truth be told, they bought their house on a rough street. And, unfortunately, they bought right next to an elderly couple with gangbanger grandchildren. And, believe it or not, they tried to be nice to everyone in that family. (Word to the wise: If there are gangbangers in the family, be polite. That’s all. And watch carefully what goes on next door.)
After a couple of years of dealing/coping with the creeps next door, they decided to put the house up for sale and move to one of those up and coming, oh-so-cool neighborhoods near Downtown. Once they decided to sell, they were, shall we say, rather subdued on the “neighborhood as community” front. They were outta here, and that was all that mattered.
Arizona Slim,
Pretty much the plot to “Gran Torino” no? Sounds as if they were sincere… enough, but it may have been just the age old flipper angle of bringing the block ‘up’?
Frankly over the years I’ve grown quite suspicious of anyone that assigns their aspiration to “the good of the community”. So ‘much’ so, they’ll have to prove it to make a believer out of me. Obviously they could afford better so I’ll stick to my guns on this one.
In my neighborhood there was a lady who was the local ‘tree nut’. She when around protesting trees being cut down, educating the neighbors about energy savings of having a tree for shade on your house, doing neighborhood tree plantings, etc. We have trees in the four foot across traffic circles because of her.
When it was time for her to leave the neighborhood, she sold her large tree studded lot directly to a developer who razed the whole place and put up 2 McMansions with zero trees.
Turns out she only cared about the neighborhood trees while living there.
sfbb,
And people say renters are f’d up!? Real… common occurence in OR my friend.
To be honest, if I wasn’t a renter there is a tree on the lot I live on that I would cut down in a heartbeat. Stupid bottlebrush tree throwing little read threads everywhere. (And they stain!)
Drill holes in the root base and insert herbacide.
The landlord might let you cut it down if you planted something else in its place.
“educating the neighbors about energy savings of having a tree for shade on your house”
I have two huge Oaks that block the sun during all the right times. A hallmark of bubble development is plow and build — no incorporation of existing trees. So Stupid.
I have two huge Oaks that block the sun during all the right times. A hallmark of bubble development is plow and build — no incorporation of existing trees. So Stupid.
Yar! Trees are the answer, baybee! To everything.
Amen on the trees!
Even though we rent, we do give our neighbors grief when they cut down their trees.
“neighborhood as community”
It is commendable to be a crusador to save the neighbors from destroying the neighborhood, but it certainly is not worth the time and money.
Now they are ex-do gooders.
To have faith in families with gang bangers or other bad elements influencing the household is the high mark of blind faith and self- sacrifice. They put their own heads on the chopping block.
I see people like that all over. They somehow think they are proving themselves “hip,” “progressive,” and in the same league as Streisand/Madonna/Bono/Gore, and the rest of the elitists.
It is very fun to watch them eat humble pie.
In this neighborhood, I’ve found that the hip progressive types are the first to be chewed up and spit out. The couple I referenced further up this thread being a prime example. They fled this area, and trust me, their names are seldom mentioned now.
OTOH, those who have a tough, no-nonsense, put up with no illegal behavior approach tend to survive in this area. And flourish.
Tee Hee!!!!!
Sorry AZ, meant the… “Tee Hee!” here!
Let’s try it this way. Hey Bill, “Tee Hee”!
Its very funny to hear the guys living in the big mansions with security staffs and stucco over concrete walled in mansions talk about the community.
The Maddona/Bono/Gore/Striesand people stay far away except for photo ops. Its just us bible thumping, liberal or conservative, type people that go down there and put ourselves in harms way.
They do buy things like carbon offsets so they don’t have to do anything like sacrifice though.
Donna is maybe getting another baby. Man the poor nannies must be getting stressed.
The overpriced city in which I live has essentially frozen out young families with kids, so the school is losing students at a precipitous rate. Many teachers or friends of theirs live here and a push was made to keep up student numbers (and save teachers’ jobs) by permitting students in other cities to attend for annual tuition of $3,500 or $4,000 per year. Many problems developed, not least of which was caused by an Atlantic City politician’s proposal to take kids from AC’S schools (maybe $20,000 per student), and to save taxpayers money by busing them all down to my city. AC’s student population is truly diverse; not down here, though. Well, everyone loves diversity; but not that much! They rethunk the whole thing over and, IIRC, bagged the whole idea. Have a good Memorial Day, everyone!
JimboAC,
About a year back USAToday did their lead article on couples that plunk the old For Sale sign up in the front yard right around… oh this time of year?
Just as Missy and Jr. are graduating HS they high tail it out of high tax ( but good schools ) areas for cheaper diggs. So much for “community” eh?
Yeah DinOR, what really got me was the blatant hypocrisy of the people who balked at taking into our school students who did not look like their little Ethan or Amelia. These are the type of people who will jump at any opportunity loudly to accuse others of racism, and who babble on cheerfully about all the great benefits of “diversity.” But when the time came for them to put their proverbial money where their mouths were, they gave a slightly uncomfortable smile, said effectively, “Come on, let’s be serious. I didn’t move to this enclave so my kids could go to school with students from Atlantic City.” This town is packed with FIRE participants: Lawyers, financial advisors, realtors, and all the boot-licks who make livings catering to them. Their message to all of us peons is obvious: “Diversity for you; tokenism and sloganeering for us.”
Palo Alto is in the same boat. When I was born there was only Palo Alto “Paly” HS, then the built Cubberly HS, and then finally Gunn HS. As time went on Palo Alto gave people a choice: live here as DINKs or move and have kids. Cubberly HS was closed down years ago - the buildings are now a community center. IIUC Paly is on the block now too. Soon they will be back to only one HS.
If he loves his home as much as he says, why does he care so much what his neighbors paid?
Because he needs his home value to stay high so that he can “REFINANCE LATER.”
I say this almost every day now. It doesn’t MATTER what the value of the home is if you can afford to payments for 30 years…UNLESS…oh that’s right, you got an I/O-neg-am whatever ARM with skyrocketing payments so you could afford more house. You counted on “refinancing later” to slide out from under that skyrocketing note. But suddenly, whether you finance or foreclose depends on your neighbor’s comp.
That’s why they keep talking about Hanging On For A Few More Years. They are still hoping to Refinance Later. Nice try, folks. You’re more likely to get laid off.
There’s no racial issue in Chapel Hill. This chap is simply another example of the average Chapel Hill resident.
That little berg is full of snooty, yet entitled individuals. In other words, it’s highly elitist. The Boulder/Berkeley of the Southeast. I despise the place.
From the nctimes article: “Patience is the name of the game, and in the long run, the outlook for the local housing market is bright.”
For some reason, that line made me think of the end of one of the shorts in the movie “Creepshow”, where Leslie Nielsen is just about to drown and he screams, a bit crazily, “I can hold my breath for a long, LONG time!”
And I think it will be a long, LONG time before real estate looks bright again. Declines are still in the cards and then it’s going to be flat, flat, flat.
“in the long run, the outlook for the local housing market is bright.”
Yeah, whatever, blah blah blah, yada yada yada
As Keynes once said “in the long run, we’re all dead”
“‘If we can just hold on to it for the next couple of years, then hopefully it will come back up,’ Christensen said.”
Let us know how that worked out for ya.
This is akin to all the people who say, “I’m just going to wait until the market picks up and then sell.” Now he is at last saying directly that he expects the price to come back up, and the people who do the market pick up line imply that they thing that increasing volume will mean increasing prices. For a while, I used to say that when the market volume would pick up eventually but it would be at even lower prices. Silence. Now I don’t bother to say anything. Not worth it.
I just laugh.
A few of my loanowner friends were encouraging me to buy last weekend. Why? The market is down a whopping 10% and rates are so low!
I said “I’d rather buy when rates are at 15% than 5%”. The ensuing discussion was pretty entertaining. It turns out they didn’t realize that the more of a down payment you have, the higher you want interest rates.
Especially if you plan to have a 100% down payment. But even then, I might prefer to TAKE the 15% on my money and go on paying rent…that’s the comparison that matters.
Lions and zebras and bears, oh my!
That lions eating zebras analogy didn’t really work for me. In the wild, if a lion wants to eat a zebra, who’s gonna stop him? And in a zoo, they’d be fenced off from each other anyway.
Speaking of animals, I would like to propose a new housing market predictor based on the National Zoo. In years in which the lady panda does not get pregnant, there will not be a complete turn around, at least not inside the beltway. 2009 is officially a bust - zoo officials announced that this year it was yet another false pregnancy.
Pandas are much more interesting to listen to than NAR economists. Even when you have to share the view with boatloads of tourists.
That panda is also being sent back to China soon. I like your predictor.
I thought they extended the pair’s stay…didn’t they? Maybe it was only if she was pregnant.
I don’t think that covered Butterstick himself.
Uh-oh, does that mean we have an anchor panda on our hands?
No, he’s here on an H1B visa. Doing work that US bears won’t.
Hahahaahah!
Ahhhh…. *wipes tears of mirth from eyes *
What a great blog this is.
Hey, I wouldn’t want to hang out in an enclosure near Connecticut Avenue eating bamboo all day. And most North American black bears or grizzlies wouldn’t be that excited by it either.
Bend, a high-desert hub built on timber and farming, quadrupled its population since 1990 to surpass 80,000. New residents from California and beyond flocked to central Oregon for its sunshine, rivers, mountains and outdoor activities from skiing to golf…
The city’s volcanic housing market of just a few years ago has collapsed into a sea of foreclosures, bankruptcies and plant closures. …Bend foreclosures have exploded. Deschutes County had 59 default filings in the first quarter of 2006. This year, the first-quarter number hit 827…
When I remember what Bend was like before this madness… oh, gosh. I haven’t been back recently. I don’t want to go back any time soon, either. I simply do not want to see what has happened to Bend, ’cause I’d cry and wail and bawl and stuff.
Olympiagal,
Your wails of despair will be drown out by mine. It’s SO bad my wife and I would prefer drive through Oakridge, OR on Hwy 58 ( which makes Molalla look like a happening place ) than go thru Bend.
I don’t think I could take all the “upscale” closures etc.
Oakridge is cool….
Jeanie Lampert, laid off from her hospital job as an operating-room assistant, spends her food stamps at Grocery Outlet, a bargain store.
Hey Olygal can appreciate that.
Along the same highway, the Westward Ho Motel promotes a $29 “stimulus special.”
Does that “stimulus special” include a Westward Ho, or just a normal one?
DennisN,
LOL! Hey, this is a family blog!
Besides, I -love- Grocery Outlet. They have all the brands that ‘used’ to be at Costco etc. at deep discounts. Stuff you just don’t see anywhere else.
LOL that’s even funnier a family blog….
Name me one person under 18 who reads this blog…..
seekual innU-N-do is part of life
———————————
LOL! Hey, this is a family blog!
agree on Grocery Outlet, live within walking distance of one and it is always a hoot to go there, even surreal at times…and there really are some deals once you figure out what to look for…oddly this one is on the fringe of the best part of town in what looks like an old ’60’s Safeway building
Does that “stimulus special” include a Westward Ho, or just a normal one?
Haha!
I love the Grocery Outlet. I’m alla time getting fantastic bizarre cheeses and other exciting foodstuffs there. Plus, they have exciting and local wines for only a few bucks!
Stimlatin’ Oly!!
To all my friends on Ben’s Place, have a nice Memorial Day weekend, and be safe!
Greg
I need to go back to the local Grocery Outlets around here. There’s one in Nampa and one in Boise near downtown. Both are a drive for me.
They opened one in Ontario OR and closed the Nampa one. But the Boise store has a 10% senior citizen discount 8-Noon on the first Thursday of each month.
I feel the same way driving through the Gallatin Valley. The last best place to be completely screwed up.
“‘It’s just way down,” said Star Lumber president Chris Goebel. ‘To be honest, right now is probably the best time in your and my lifetime to buy a new home for a multitude of reasons — price, quality and interest rates. But folks aren’t buying because of confidence. They’re listening to the news and not liking what they’re hearing about their jobs.’”
How can he say that about Wichita? Business jet lines are being slowed; this is hitting the local economy pretty rough at overtime is halted and layoffs go through.
Oh, 787 production ramp up will help the workers at Spirit… but wait… when Boeing sold the shop they took a 1/3rd pay cut!
The only thing that would save the city is a tanker order.
Got Popcorn?
Neil
“the best time in your and my lifetime to buy a new home for a multitude of reasons”
But next year will be even better!
‘To be honest, right now is probably the best time in your and my lifetime to buy a new home for a multitude of reasons
ANYTIME anyone says ‘To be honest..’ I immediately narrow my eyes suspiciously and check my purse to be sure my wallet’s still in there.
While I am not rich, I can honestly say I do not have any idea what is going on right now. I have bands of information, but nothing seems to fit, in order to conclude anything.
“…..not like what they are hearing about their jobs.”
It ain’t done yet…….up to now, the General Aviation manufacturers have mostly been laying off the bargaining unit types.
According to “X-GS Rumor Control”, engineers and salaried exempts will start taking hits, starting soon. Most of the survivors will take one step back on the pay scale.
Along with building aircraft, Wichita has a huge number of shops that make/sell/repair/overhaul components for aircraft in service.
Flight hours down 40% = 40% less repair work to do = 40% fewer parts/components sold = 40% fewer employees needed.
…Star Lumber president Chris Goebel. “… right now is probably the best time in your and my lifetime to buy a new home for a multitude of reasons — price, quality and interest rates.
Price ? - What Hubble Telescope undiscovered galaxy does
this guy live in? The slide has just begun.
Quality ? - Biggest joke of all. New tract homes I have seen
are practically built from plastic and paper mache.
The absolute junk out there that passes for
“construction” is beyond belief.
Interest rates ? - NO. NO. NO. Best buys are when interest rates
are HIGH, not low. High interest costs forces down
asset prices even lower. And, the option to re-fi
to lower rates exists in the future.
I dunno about you, but 1986 is in my lifetime. And that wasn’t a bad time to buy. Heck, 1998 was in my lifetime, and in most places that was still a better time to buy. 1993 definitely was.
These people are absolute idiots.
Anytime between 1983 and 1989 was an excellent time to buy in Wichita.
Unfortunately, I bought my house there in 1981, right before the airplane market crashed in 1982-83.
Anyone who says “house prices only go up” needs to give me a call, so I can throw the BS Flag.
You just insulted Hubble, bubb.
You may want to read this before complaining about insulting Hubble . . .
http://www.hubblehomes.com
I know the offer was set up long before the credit card bill went through this week, but I just wanted to report that I got an offer of a Chase Business card this week - no annual fee, 0% introductory APR, 3% cash back for everything spent at gas stations, office supply stores and restaurants and 1% cash back on everything else. I shredded it as I always do with these things, but the really interesting thing was this one was not connected to any of my former schools or any other groups that might have sold my name to Chase. Just totally generic.
So, when the people in that industry talk about making me miserable if this bill becomes law, I say call them out on it. Try to take away all the benefits and keep your business. I don’t play the arbitrage game because it just isn’t worth my time, but that doesn’t mean that the people who make them bundles of money with almost no effort at all on their part (interchange fees) won’t choose to find the good offers.
I hate it when companies try to pull nursery school tricks - play the game my way or I’m going to take my ball and go home. Go ahead kid. There are lots of other balls out there.
I can remember a time when you really had to jump through some hoops to qualify for a credit card. I tried to get one through my credit union back in the late 1980s. They turned me down because my income was too low. I finally got one in 1990. With a $300 hard limit.
Just pay your bills before they are due. No problem. I now have an excellent credit score by following this rule.
Yeah, about seven years ago some outfit was trying to offer me, I don’t know, $20K interest free for six months, but the only profit for THEM that I could see in it would be late fees and like that. So I tried to get them to agree to send duplicate statements to all my alternate addresses, and/or to take their monthly payments directly out of my ML account. But the effort to set this up became a big huge hassle — as you said, not worth one’s time. Eventually I told them to go jump in a lake.
“Patience is the name of the game, and in the long run, the outlook for the local housing market is bright.”
In the long run we are dead. Imagine trying to muster the patience to sit on the sidelines throughout Japan’s 20-year-long real estate decline. Not that I expect it to take that long to bottom out here, or anything like that…
I think Thornberg is taking a longer view. We used to discuss how quickly the market would adjust, and now we know it has been rapid. Perhaps by bright, he means getting back into equilibrium and a market where we build houses for people that who to live in them.
“Beacon Economics forecasts that home prices will fall by another 10 to 15 percent (to a median price of $301,000) by the first quarter of 2010.”
I don’t follow him, as the most recent San Diego median sale price (April 2008) was reported by DataQuick at $290,000. How is it going to drop another 10 to 15 percent from there to a median price of $301,000?
Oops!
April 2009 = $290,000
(The April 2008 median was actually $400,000.)
IMO, Beacon is a little moderate on what the declines could be and when. I’m not going to second guess them, as they have the bucks to do indepth research. But even the Voice of San Diego is squinting for a bottom.
All I can say is that when the bust hit Texas, the bottom came around the time nobody gave a damn anymore. We were all too busy trying to make a living.
Exactly.
Which is why “the bottom” will come in equities and in housing when nearly everyone, MSM included, has long stopped talking about whether we’re presently at “the bottom.”
I suspect that time is years away for both.
Yep, if everyone is looking for a bottom, then there are still too many speculators looking for a quick ride back up. When all of these knife catchers have been wrung out of the system, we can see the real bottom. As as Thornberg says, we will hit bottom with a splat rather than a bounce.
sfjack,
A bottom in equities can indeed be short and sharp. The one in my young adulthood, that I’m always harking back to, involved a two-year 40% decline in the Dow, which was immediately followed by a six-month rise of nearly 50%, and then some bobbing and weaving but it basically never really came back down again, at least not in nominal terms.
I don’t think they will stop talking about whether a bottom in equities has come. (UNless it has already come and gone, which I think is possible but unlikely.)
An RE bottom on the other hand can certainly be a “splat.”
I’m not saying the actual bottom will be not be short and sharp, I’m saying that the bottom callers will have been quiet for some time and won’t recognize it as such.
Then again, given massive government interventions of all manner, both in the recent past and in the future, I suppose any outcome is possible (see equities, since early March).
“…the bottom came around the time nobody gave a damn anymore.”
Given the current crush of flippers to snap up Inland Empire foreclosure homes like hot cakes, contrasted against moribund coastal Cali where one cannot even guess the current market value of homes due to the dearth of sales, I’d say we are not there yet. I expect before this is over, quite a few more $30 million coastal homes will be sold at 40 pct off fishing price like that place in La Jolla you posted yesterday.
‘…when nearly everyone, MSM included, has long stopped talking about whether we’re presently at “the bottom.”’
Does your version of ‘nearly everyone’ include cheerleaders at the Fed and Treasury? Frankly, I cannot recall top economic policy makers undertaking such an active campaign to manage expectations for a quick end to a recession. Has this been attempted before? If so, did the brainwashing effort work, or did real world constraints (e.g. budget constraints) prevail over whimsical jawboning?
Could the discrepancy between DQ’s $290K and the apparent $330K or $355K Thornberg is using be the difference between SD city, SD county, or “North County” (since the piece appeared in the North County Times) ??
Anyway we can all pretty much respect Thornberg, whether we agree with him in detail or not.
I didn’t mean to sound like I was questioning his figure; I just did not understand the discrepancy. I frankly find the $290K San Diego median a little bit hard to fathom, given that the current MLS list price for SFRs in our zip code remains stuck up at $1,275,000. (It was $1,050,000 last time I checked! I guess someone snapped up a lot of the lower priced homes, or else lots of lower-priced homes were just withdrawn from the market…)
There was a change to the Sandicor (MLS) system. From what I’ve heard, there is a new category called “contingent” for the short sales that had offers that were pending.
Much of the inventory over the past 6-12 months (?) was really not available because they were short sales with offers already in, but the banks required (?) them to remain as active listings (presumably to get back-up offers).
“He couldn’t get over the quaintness of the Orange County town that surrounds it. ‘The little town was amazing.’”
I’m glad somebody still thinks that Chapel Hill is quaint and amazing. I stopped using those terms to describe Chapel Hill years ago!
Carrboro beat Chapel Hill easily in the character department. I called it Granola Central.
I’m moving to Chapel Hill in the near future. I looked into the development this article was about. It’s up in Hillsboro only a few blocks from “down town.” The only word for that one-stoplight town is quaint.
I’ve been watching Chapel Hill realty rather obsessively for the past few months and have been creating a spread sheet of listing prices from data off Realtor.com. I wish I had a better way of getting this data — so tedious. Anyways, I’ve been watching the $/sqft slowly drop. There are a few places at the $130/sqft range, but these are few and far between. Most are still listing near $160/sqft. In Durham, prices are closer to $100/sqft.
DataQuick Zip Code numbers are out for SoCal:
http://www.dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx
“Fredi Cohen expected the hand-carved sinks and tubs in her East Hampton, New York, home to stand out in the real estate market and help sell her three- bedroom house for $1.25 million. Almost two years later she’s still waiting. ‘People have stopped buying real estate,’ said Cohen. ‘Now I would sell it for $999,000.’”
But she can’t sell it for $999,000! Someone better clue him in that a measly 20% reduction in two years ain’t gonna cut it.
Maybe $700-750…..
b..b.. MY sinks and tubs ARE different!!
hahahah …in a funny kind of way, you have to love the Fredi Cohen type of people.
Heck, now a days, you would expect to have to pay for quality entertainment like this.
Mikey that was GREAAAAAAAAAAAAT!!!!!!!
Can someone please explain to me the attraction of “hand carved” sinks. To me it says “I’m stupid, with too much money”.
For that kind of money, I would be a least expecting a gold plated bathroom throne or something useful.
To me any accessories are of low-priority when looking for a house.
Location, location, location is more important. Plus to me the “bones” of the house are important. Anything you can quickly change out are down in the noise.
1. Location
2. Lot
3. Layout (including said “bones)
IMHO, these are the most important variables when evaluating a potential purchase.
For $25,000 hand carved sinks, I think I’d pay $1,000,000 - what a bargain!
oops! I’m awake now…
Next time I have guests over, I’m going to tell them my sinks are hand carved. They’re not, but who the h-e-l-l cares except for those in the sink carving profession?
So the Washington Post is still waving its housing pom-poms. From the most recent online chat, someone complained about NAR commercials that warn that people will kick themselves if they don’t buy.
The WaPo expert, Elizabeth Razzi: Actually, I find those ads kind of cute. Hey, you can’t blame salespeople for selling. You don’t feel pressured to buy a Sham-wow because of the ads, do you?
Riiiiiight, because Sham-wows are subsidized by the tax-paying public to the tune of billions, and the Sham-wow industry has ruined neighborhoods, lives and our economy. OK.
I honestly thought the Sham-wow commercials were a gag the first several times I saw them . . . Who would actually call a product as “Sham?”
You know - that tactic could work for the NAR . . . .
The Sham Wow guy would make for an excellent add to Obama’s cabinet!
The Fed’s self-appointed role as toxic mortgage asset investor of last resort seems to favor the malign view described below.
Financial Times
Wobble betrays fragility of investors
By Krishna Guha in Washington
Published: May 22 2009 19:40 | Last updated: May 22 2009 19:40
For a brief moment this week, it looked as if confidence in the two pillars of the US fightback against the crisis – the creditworthiness of the government and the capacity of the Federal Reserve to exploit the US position as issuer of the world’s reserve currency – were starting to wobble.
By Friday markets were again calm as investors concluded that a US sovereign credit downgrade, while in principle possible, would not come for years, if at all, and the dollar sell-off eased.
But the synchronised fall in US bonds, stocks and currency on Thursday was a reminder that both the administration and the Fed rely on the tolerance of global investors to sustain their crisis-fighting strategy.
Both US fiscal discipline and the Fed’s conduct of unconventional policy now face renewed scrutiny and criticism.
The benign view is that the past week was nothing more than a bump on the road to recovery. As global panic eases, the automatic appetite for dollars and safe US government securities abates and yields naturally rise. Investors have to get used to the fact that the Fed will not always be in the market for longer-term Treasuries and other assets. The price adjustment process is going to be rocky, but it is not the worst problem to have, since it reflects the fading of the crisis.
The malign view is that the week could represent the beginning of a new phase in the crisis, in which concern shifts from private credits to sovereign credits and the lengths to which central banks might have to go to smother a revolt in the bond market.
Investor concern about the sustainability of US public finances appears to have risen amid projections that public debt will jump from 41 per cent of gross domestic product in fiscal 2008 to 75 per cent in 2015 and keep on rising every year thereafter.
“Despite the ongoing popularity of President [Barack] Obama, confidence in policy is fading,” wrote analysts at MF Global. “If the vigilantes return and the markets attempt to inflict discipline, the Treasury prices could see serious weakness.”
Regarding the efficacy of green shoots stories:
Once investors figure out things are still really bad, and that global markets are still highly interconnected rather than decoupled, U.S. bond yields will get beaten back down and the dollar will go back up.
Here’s another gem from the WaPo chat:
Pittsburgh, Pa.: Do you have any thoughts on the recent news that the $8000 tax credit might be permitted (via bridge loans) to be used as down payments in the near future? Does this seem like a wise idea, given that down payment grants/loans have been implicated to some extent in the mortgage crisis? We are buying this summer via the FHA-insured program because we don’t have enough for a traditional down payment, and are debating whether applying the tax credit (if all goes through in time) would be worth it, or if we should just use what we have now and stuff the credit in a savings account for the future.
Maryann Haggerty: Ahhh, this one doesn’t bother me. If the $8K lets someone increase the size of their downpayment, I don’t see why that should be a problem.
Elizabeth Razzi: I’m not concerned. If you qualify for it, that $8,000 is your money. Unless you have to pay a prohibitive interest rate on it (and that would be a huge news story if it happened) you’re just taking cash out of your right pocket instead of your left.
I’m glad it doesn’t bother or concern them. Essentially giving people an $8K D/P both bothers and concerns me since study after study show that people who cannot come up with their own D/P go into foreclosure at a much higher rate than those who can. And since FHA loans now make up a whopping third of the market, we are setting ourselves up for a new bubble and a new wave of FBs and foreclosures. Is it so hard to imagine that “values” might drop another 3.5 percent?
Not to mention that at resale time, if this program no longer exists, the selling prices will have to reflect that. Although my SO says that is doubtful, that once a gov’t starts it never ends. He used to work in gov’t, in the budget office and has stories to tell of trying to cut supposedly “temporary” programs to no avail.
For heaven sakes, don’t you get it? They will earn the right to that $8,000 by virtue of becoming homeowners.
It’s a bigger and bigger pill to swallow as a renter.
We pay for their downpayment.
We back their FHA mortgage.
We subsidize their home ownership thru tax breaks.
We cough up cash to modify their loans.
And when they walk away, we are on the hook for the whole thing b/c it was a FHA loan.
It is kind of funny to see the D-rats in charge using all kinds of implicit regressive taxes on renters to subsidize (relatively) wealthy home buyers / home owners. Since when is this party about taking from low income people to reward the wealthy?
‘The deals are even better now,’ he said.”
‘We should have waited a year,’
“help sell her three- bedroom house for $1.25 million. Almost two years later she’s still waiting. ‘People have stopped buying real estate,’ said Cohen. ‘Now I would sell it for $999,000.’”
“Although there are some promising signs in the housing market for San Diego and Southwest Riverside Counties, more pain is coming.”
“But housing still remains expensive by historic standards.”
At various times, I’ve heard or read people say they just bought a house, they think they got a good deal, they plan to live in it anyway for a long time, so they don’t care if the value declines, they purchased it to live in.
Yeah, talk to me when a neighbor gets a comparable place and pays half of what they’re paying every month.
“At various times, I’ve heard or read people say they just bought a house, they think they got a good deal, they plan to live in it anyway for a long time, so they don’t care if the value declines, they purchased it to live in.”
It seems like these folks are just mindlessly repeating some incoherent argument a used home seller fed them, in order to make themselves feel better about their bad decision. To show how wrong they are, consider individual A who bought a San Diego home in 2005 at the median price of $517,000 and individual B who bought the house next door in 2009 for a price of $290,000. If for some unlikely reason, home prices return back to the mania peak level by 2015, which of these individuals will have done better on their highly leveraged investment in residential housing?
“Once upon a time not so long ago, developers seeking magic money poured $4 million into a ‘Lord of the Rings’ subdivision here complete with hobbit holes and thatch-roof houses. This month Umpqua Bank, which foreclosed on The Shire, unloaded the moribund development for just $750,000.”
Funny how Mordor never has problems with flippers and real estate bubbles. A very stable place. And the giant spiders keeps the bum population pretty manageable…
I think we need some giant spiders here in Hawaii.
The funniest part of that article is a mention of Epic Aircraft, “a Bend company where customers build their own planes.”
And here I thought the build-your-own-candle shop was a risky business model.
Article mentions before tax and after tax. More taxes less affordability. Yep.
No comments on Lions and Zebras?
Lions hunters, zebras prey.
Bankers lions, f’d-buyers zebras.
Re Ohio’s new $750 fee for foreclosure filing. My inclination as a lender would be to react to this by filing sooner rather than later.
“But folks aren’t buying because of confidence. They’re listening to the news and not liking what they’re hearing about their jobs.’”
Is it just me, or is the use of the term “Folks” manipulative most often. The connotation is “Us Folks”… “Folks, we are all in this together”…
This ain’t Bonanza, and this ain’t Milton Berle Babie………..
It’s part of the regional dialect…….”Folks” implies a degree of affection for the group he is talking about.
If he was referring to a group of individuals in a derogatory way, he would have said “People aren’t buying…….”, or “Those people are sure a bunch of idiots….”
That’s a good point, X. “Regional dialect”
I wonder how many folks with top jobs in government, real estate, finance, etc. now regularly read this blog which was talking of the collapse which caught most of them by surprise. I’d say a good number.
I would say a few.
Although I liked him, I always suspected aladinsane was really Henry Paulson.
That’s pretty funny, Mikey. I used to suspect the same about a poster here who called himself Gekko. I thought he was some really bright guy pretending to act like a bovine-brained stock market bull to rile up the regular posters. I used to enjoy sparring with that dude, but I think Ben finally got fed up and tazed him.
“They initially priced their 2,400-square-foot home on Halsey Lane, a half mile from the ocean, on the “higher end,” at $4.55 million, Keber said. The four-bedroom house on an acre of land includes cathedral ceilings with skylights, a heated pool and fireplace. The price was based on sales south of the Montauk Highway in recent years. “Now we’re more serious,” Keber said. The couple cut the asking price to $3.95 million in April”.
Let’s see, $3.95 million for 2,400 square feet works out to $1,646 a square foot - for a property that is not even on the water.
What am I missing? Unless the acre of land cost in the millions, how could the market possibly support this kind of pricing, particularly given the massive job and bonus cuts on Wall Street?
I don’t know if one post went through, but happy Memorial Day to my friends here. I plan on getting out of myself and helping others this weekend. Just buried a close older friend who served in Vietnam. He received excellent medical care from one of the Veterans Hospitals in St. Louis Mo. God Bless them for caring for him. I miss you Walt.
Ate-up,
I’m sorry to hear about the loss of your friend.
Dear SanfranciscoBayAreaGal:
Thank You for the kind words. As you know, we all suffer loss.
It is going to get shockingly ugly in the Hamptons due to a number of factors:
– Wall Street job losses
– Wall Street bonus cuts
– Toys get ditched first
– Higher taxes for the wealthy on the way
– Fashion – the Hamptons are fashion and eventually fashion changes, particularly when catalyzed by economic pressures
Finance and economics
Is America still AAA?
Não
May 21st 2009 | SÃO PAULO
From The Economist print edition
Brazil rates America
WHEN Brazil’s sovereign bonds were raised to investment grade last year there was much rejoicing, such is the heft of the big credit-rating agencies in emerging markets. Yet somehow the process does not work in reverse, even though there are several independent rating agencies based in the bigger emerging markets that are capable of judging sovereign creditworthiness. This may be about to change. SR Rating, a Brazilian firm, will soon issue a judgment on American government bonds. Its verdict is not pretty: the company says it will issue a AA rating.
Isn’t saying you will issue a AA rating pretty much tantamount to issuing one, so far as the impact on markets is concerned? It is something like saying you will issue a certain bank a failing grade on next week’s stress test (I am offering this as a hypothetical example; so far as I am aware, all the banks passed their stress tests with flying colors).
What do the rating agencies have to say about the shape of the Fed’s balance sheet these days?
HousingWire dot com
Fed’s MBS Purchases Ease
By DIANA GOLOBAY
May 22, 2009 11:11 AM CST
As US Treasury Department secretary Timothy Geithner testified this week that he saw green shoots sprouting across the economy as credit once again begins to flow, the green pouring out of the central bank into MBS markets continued to slow.
The Federal Reserve’s weekly agency mortgage-backed securities (MBS) purchases slowed in the week ending May 20 as its balance sheet topped $2.17trn with efforts to lift mortgage-related assets from banks’ balance sheets and stimulate continued lending.
The Fed bought a gross $25.52bn MBS from mortgage giants Freddie Mac (FRE: 0.79 0.00%) and Fannie Mae (FNM: 0.75 -3.85%), as well as from Ginnie Mae, down from $35.6bn purchased last week. The weekly purchases favored MBS with 30-year maturations at 4.5% coupons, with $3.7bn to settle in June, $5.85bn to settle in July and $5.5bn to settle in August.
Of the Fed’s $15.05bn in purchases of these MBS, only $95m of similar MBS is slated for sale this week, to settle in May. The Fed also sold $250m of 30-year MBS at 5% coupons, $200m of 30-year MBS at 6% coupons and $300m of 15-year MBS with coupons between 4% and 4.5% for a total of $845m in weekly sales.
Wall Street Journal
* OPINION: THE WEEKEND INTERVIEW
* MAY 23, 2009
Don’t Monetize the Debt
The president of the Dallas Fed on inflation risk and central bank independence.
By MARY ANASTASIA O’GRADY
Dallas
From his perch high atop the palatial Dallas Federal Reserve Bank, overlooking what he calls “the most modern, efficient city in America,” Richard Fisher says he is always on the lookout for rising prices. But that’s not what’s worrying the bank’s president right now.
His bigger concern these days would seem to be what he calls “the perception of risk” that has been created by the Fed’s purchases of Treasury bonds, mortgage-backed securities and Fannie Mae paper.
Mr. Fisher acknowledges that events in the financial markets last year required some unusual Fed action in the commercial lending market. But he says the longer-term debt, particularly the Treasurys, is making investors nervous. The looming challenge, he says, is to reassure markets that the Fed is not going to be “the handmaiden” to fiscal profligacy. “I think the trick here is to assist the functioning of the private markets without signaling in any way, shape or form that the Federal Reserve will be party to monetizing fiscal largess, deficits or the stimulus program.”
The very fact that a Fed regional bank president has to raise this issue is not very comforting. It conjures up images of Argentina. And as Mr. Fisher explains, he’s not the only one worrying about it. He has just returned from a trip to China, where “senior officials of the Chinese government grill[ed] me about whether or not we are going to monetize the actions of our legislature.” He adds, “I must have been asked about that a hundred times in China.”
A native of Los Angeles who grew up in Mexico, Mr. Fisher was educated at Harvard, Oxford and Stanford. He spent his earliest days in government at Jimmy Carter’s Treasury. He says that taught him a life-long lesson about inflation. It was “inflation that destroyed that presidency,” he says. He adds that he learned a lot from then Fed Chairman Paul Volcker, who had to “break [inflation's] back.”
Mr. Fisher has led the Dallas Fed since 2005 and has developed a reputation as the Federal Open Market Committee’s (FOMC) lead inflation worrywart. In September he told a New York audience that “rates held too low, for too long during the previous Fed regime were an accomplice to [the] reckless behavior” that brought about the economic troubles we are now living through. He also warned that the Treasury’s $700 billion plan to buy toxic assets from financial institutions would be “one more straw on the back of the frightfully encumbered camel that is the federal government ledger.”
“Joel Gonzalez, who used to make $100,000 a year installing hardwood floors”
Seriously? WTF is wrong in California that every blue-collar worker breaks six figures?