The Housing Bubble

NYTimes
Published: May 24, 2009

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher.

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income than the consumers of exotically lenient mortgages that formerly typified the crisis.

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.

Bombs under north korea!

Pigs fly. Hell freezes over. The WaPo prints this on p. 1:

Housing Bust Leaves Most Sellers at a Loss
Local Prices Expected to Continue Falling

Minor peeves:

The story contradicts itself, saying District prices have held steady and then citing a woman who is trying to sell in Adams Morgan for $40K less than she bought in ‘05.

And of course, they have this graph:

Predictions vary about when the region’s prices will hit bottom. They may keep tumbling until late 2009 for close-in communities and until 2011 in outlying suburbs, according to a study . . .

Until late 2009? Ya mean 6 more months? Oy. All this does is encourage people to keep their homes off the market for another six months. As this realtor put it: “I can’t tell you how many listing appointments my team scheduled only to have the client say: ‘You know what, we’re just going to just stay put and hold out on selling for a while,” said Melissa Stewart, a Century 21 real estate agent who works in Fredericksburg. “We’ve had probably eight of those in the past month and a half.”

Still, I hate to nit-pick, this story is progress!

Having been nuked by the flu since my flight back from Reno, Im a firm believer in biological warfare; much more debilitating to the survivors. Dont know what variety it was, but, if the Swine flu is as bad as was my variety, look out! Anyway, I’m blaming it on my proximity to a number of non English speaking passengers with whom I was in close proximity to, but, who really knows. More on the Reno/Sparks RE fiasco later.

Bloomberg

Obama’s Plan

Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans in the fourth quarter, the highest in records going back to 1972, the Mortgage Bankers Association in Washington said March 2. Loans in foreclosure rose to 3.3 percent, also a record and up from 2.04 percent a year earlier.

Obama’s $75 billion plan to reduce foreclosures by modifying mortgages targets as many as 4 million homeowners. Foreclosed properties helped drive down home prices in 20 U.S. cities by an average of 19 percent in January from a year earlier, the fastest decline on record, according to an S&P/Case-Shiller index.

The program, announced Feb. 18, is part of Obama’s efforts to shore up companies from General Motors Corp. to Citigroup Inc. and financial markets amid the first global recession since World War II. U.S. gross domestic product shrank 6.3 percent in the fourth quarter. Last month, the World Bank predicted the global economy would contract 1.7 percent this year.

The mortgage initiative offers subsidies to lenders, including bond investors, to help lower borrowers’ housing payments to 31 percent of their income. What troubles bondholders are the incentives for loan servicers, the industry middlemen who decide which loans will be reworked.

Servicer Fees

Servicers can get $1,000 for each modified loan under the plan, an additional $500 for every loan changed before borrowers fall more than two months behind and $1,000 annually for as many as three years of on-time payments.

At least six servicers have signed up to participate, including New York-based JPMorgan Chase & Co. and Wells Fargo & Co. in San Francisco. Government payments to those companies may total $9.9 billion, according Treasury data released April 15.

Guidelines on the Treasury’s Web site tell servicers they can rework a loan only after they verify through financial models that new terms for the homeowner would be better for investors than an immediate foreclosure.

Bondholders still fret that some homeowners who don’t need help will be allowed to rework loans and that calculations to measure the impact will be skewed against bondholders, said Sean Kirk, a trader at New York-based Seaport Group LLC.

‘Financial Incentive’

Part of the concern is that the four largest servicers, including Charlotte, North Carolina-based Bank of America Corp. and JPMorgan, own almost $450 billion in home-equity loans, many tied to the same properties as the mortgages they service, Amherst’s Goodman said.

“They have a large financial incentive through the program to modify, and they’ll also benefit from putting more losses onto the first-lien holders because of their large second-lien positions,” said John Huber, who oversees about $30 billion in Minneapolis as chief investment officer of fixed income at Royal Bank of Canada’s Voyageur unit.

“What’s probably most troubling from a bigger picture perspective is what this means for the sanctity of contract law that has historically differentiated the U.S. as the gold standard of markets,” he added.

‘Respect the Laws’

Responding to complaints that American International Group Inc. was excessive in awarding bonuses and paying off banks after accepting $182.5 billion in bailout funds, National Economic Council Director Lawrence Summers said March 15 on ABC’s “This Week” that “we are a nation of law, where there are contracts” and “the government cannot just abrogate contracts.”

“If we don’t respect the laws on which people reasonably relied, the potential chaos, disruption, lack of credit and resulting unemployment will be that much greater,” Summers said.

There was the post yesterday of the North County Times article of all the problems with a condo conversion in Escondido.

A coworker last night was telling me about some of the problems in the Casitas condo conversion in RB, off I-15 and Rancho Bernardo Road. I have a different coworker that bought a unit there a couple of years ago and the brother (and wife) of the coworker to whom I was talking last night also bought a unit there. Some of the “highlights”:

- The HOA is broke.
- The HOA is suing the builder that did the conversions.
- The pool has been closed.
- The deck overlooking the pool has been closed due to structural problems.
- The grass/landscaping is dying because the sprinkler system has been shut off.
- The gates allowing access to the parking areas aren’t working. Several vehicles have had break ins.
- Many units have had broken/leaking pipes with mold problems.
- The unit of my one coworker’s brother and wife has had four pipe breaks/leaks so far. They’ve pulled up carpet and pealed back drywall only to find mold because some of the pipes have been leaking for so long.
- Some of the neighbors leave a lot to be desired. Lower levels have patios, upper levels decks (wooden with space between slats). For my coworker’s brother, one set of upstairs neighbors had a big dog that they would let out on the deck to relieve itself. The p!ss would drip trough onto their patio as would some of the cr@p. Especially nice as they were trying to grow tomatoes and other veggies on their patio. The next set of neighbors was very loud, shouting and yelling things at other neighbors off the balcony late at night.
-Units that once sold for around $400K are now selling for around $150K in foreclosure.

What were once very decent apartments and should have remained so are now becoming a hellhole thanks to greedy developers. Given the financial condition of the HOA and the decaying condition of the property, are units in that complex effectively worth zero or less?

Who needs a nuke when we have a housing bomb?

From yesterday,
Now Financial Stress seems to be affecting “housing” at the ironbar hotel
http://news.yahoo.com/s/ap/20090524/ap_on_re_us/us_meltdown_no_bond_required

(Bail bondsmen complaining about the Increasing practice of releasing prisoners ‘without bond’)

Supporters of such pretrial programs, which are being tried from Atlanta’s Fulton County to Spokane, Wash., argue that the usual practice of requiring bond for release doesn’t prevent crime.

“It simply separates those who have money from those who don’t,” said Tim Murray, executive director of the Washington-based nonprofit Pretrial Justice Institute. “They’re looking at their (jail) population and realizing that many of the people they’re paying to house are there because they can’t pay their bonds,” Murray said.

(In Fulton County, Ga.,) “We, like every jurisdiction in the country, are operating under financial stresses that require us to be innovative,” said county spokesman Don Plummer, who said Fulton expects to save $5.5 million a year by expanding its program.

Florida’s St. Lucie County adopted its program in 2007. Nonviolent offenders who can’t afford bail “take up bed space for violent people who need to be in there,” said Mark Godwin, the county’s criminal justice coordinator.

—
and finally:

Maj. Bill Nelson, the Larimer jail’s warden, said it’s all counterintuitive to everything his 30-year career taught him. But he’s pleased with the results. “We used to try to put as many people in jail as we could,” Nelson said.

MYRTLE BEACH — The five Grand Strand golf courses operated by Legends Group are being foreclosed on by General Electric Capital Corp.

The lending company has filed foreclosure papers on the courses in Georgetown and Horry counties and Brunswick County, N.C. The courses will remain open and may be taken over by another management company.

“They’ve filed foreclosure and we’re not contesting it,” said Legends Group founder and partner Larry Young. “We can’t make the payment. Our spring [rounds are] down 25 percent. Our debt is right at $50 million. No course would be able to survive being down 25 percent, unless they were debt-free.”

Young’s family-owned Legends Group developed and has been operating Heritage Club in Pawleys Island and the Parkland, Moorland and Heathland courses at Legends Resort in Myrtle Beach since the four layouts were built between 1986 and 1992.

The company has been leasing the 26-year-old Oyster Bay Golf Links in Sunset Beach, N.C., for several years. It is owned by Brunswick County businessman Ed Gore, who is also a partner in Sea Trail Resort. GE is foreclosing on the lease.

Legends employees received a letter in their paychecks May 19 stating the Youngs may no longer be running the courses, though they were expected to keep operating Ailsa Pub at Legends Resort and Legends Resort rentals.

Young said GE intends to hire Century Golf Partners, which owns Arnold Palmer Golf Management and operates clubs throughout the United States. He expects Legends Group to continue managing the properties at least until a hearing Wednesday, when the court is expected to appoint a receiver.

“They want to put another management company in there,” Young said. “GE is the lender so it’s their decision. I didn’t want it to be a surprise to our employees. They’ve been hearing rumors and I’d rather tell them myself.”

Young said rounds at his properties were off 34 percent in November compared to 2007, and that contributed to a missed debt payment in January. Legends Group has been in default since, and GE claims in court documents it is owed more than $51 million - the remainder of a Legends Group loan with Bank of America that GE acquired in the summer of 2006.

Young had been negotiating a possible merger/partnership with Myrtle Beach National Co., which owns nine and manages 10 Strand courses. “The bank is making decisions on how they’re going to proceed going forward, and at this time we don’t know anything,” said Myrtle Beach National vice president of golf operations and marketing Jim Woodring.

Legends Group has been managing the TPC of Myrtle Beach since 2006, when it was bought by co-owners Chip Smith and Danny Young, who is Larry Young’s son and a partner in Legends Group. But the TPC is not affected by the foreclosure, according to Smith and Larry Young.

“Danny and I have been running our day-to-day operations for quite a while, even though we have benefited from the Legends,” Smith said.

The foreclosure continues a series of financial setbacks for Young and his companies in the past couple of years.

Young’s sale to Lee Rawcliffe of four properties in the Sands resort properties chain in January 2008, through Sands Resorts Holding LLC, left what Young estimated was $2.6 million in debt to area courses for unpaid rounds booked through packages.

His courses took a hit in that deal. Young claims $750,000 of the $2.6 million was owed to his five courses and even more was owed to the four-course Barefoot Resort.

Legends Group was the managing partner of Barefoot for six years from the summer of 2002 into 2008, but sold its 50 percent share back to Barefoot developer Sammy Puglia in a deal that encompassed the Sands debt.

Young also settled a $3.8 million lawsuit judgment early last year with Charleston-based Golf Trust of America with an offer of 118 acres in near McClellanville and $500,000 over five years. He was a former board member of Golf Trust.

Not sure if this has been discussed on here or not, but I was looking some more into QSPE’s (Qualified Special Purpose Entities), and their impact on the bubble and the subsequent troubles. I was wondering about other folks’ thoughts. Seems to me this is something that’s not highlighted nearly as much as it should be. Will posts links as a follow-up.

In general QSPE’s were a way for the banks to hide a pretty good chunk of their securitized(sp?) debt, such that:
A. Accounting details of these securities were very hidden and/or simply not known.
B. These securities weren’t subject to capital requirements.

These weren’t small amounts of money - we’re looking some trillions of $ (e.g. $800 at Citi alone).

There have been various changes proposed, but the gist of them is that now these SPE’s are going to be in essence gone, or in effective - apparently now at the end of this year. Seems like this is a big deal, and could really cause another big hit in the markets. Much of the discussion though is really CPA-ish and above my head.

Thoughts?

Looks like Vegas is seeing good times again?

Casinos serve up bargains to draw visitors back

At O’Sheas Casino, the president of five Harrah’s Entertainment Inc. hotel-casinos on the Las Vegas Strip is poking fun at the economic downturn and the excesses that built Sin City’s anything-goes reputation.

Don Marrandino points at a sign pushing $45 bottles of Jack Daniels whiskey or Smirnoff vodka, and says the promotion parodies the not-too-distant past when the gambling resorts marked up liquor by hundreds of dollars a bottle and patrons couldn’t empty them fast enough.

And then it all changed.

“I don’t get scared too often,” said Marrandino, who oversees the Imperial Palace, Flamingo Las Vegas, Harrah’s Las Vegas and Bill’s Gamblin’ Hall & Saloon. “In January, I was scared.”

Across Las Vegas, casinos found consumers unwilling to pay premium prices for just about anything, from meals to hotel rooms, drinks and entertainment. Occupancy citywide dropped to about 72 percent in January, far below the 90 percent-plus normally enjoyed by Las Vegas hotels.

But as hotel-casinos from one end of the Las Vegas Strip to the other lowered rates, visitors have returned to cash in. By March, occupancy rose to 85.9 percent — and 92.5 percent on weekends.

Visitors are more conservative with their cash, but they’re demanding the same experiences and quality they always have, said David McIntyre, vice president of food and beverage for MGM Grand.

“It reflects their state of mind as they’re constantly being fed a diet of economic information that is less than glowing,” McIntyre said. “They’ll definitely continue to be conservative as long as that diet exists.”

http://finance.yahoo.com/news/Casinos-serve-up-bargains-to-apf-15338202.html?.v=2

I hope you all have a happy Memorial Day! Well, ‘happy’ is not the word. I hope you all have a Good Memorial Day.

My grampy flew a bomber in WWII and was once stationed at the naval base up the way on Whidbey Island. Small world, huh! Which is where he learned that oysters are delicious. So for the rest of his life back in Utarr he would not talk about the war ever but he would often express his yearning for oysters and when he got some he’d gobble them up with joy. So, in his honor, I’m gonna scamper down the road to the beach and grab a whole bunch and shuck them and eat them up while I make airplane noises and drink beer*.

*(Just like I do every weekend, only this time it’s in respectful honor of grampa).
We’re going to have a -4 tide today! That’ll be the farthest out I’ve ever seen it. Maybe I can reach that red seaweed the Japanese neighbor revealed to my attention as delicious, and maybe dig out another wild geoduck. I dug out and ate my first one yesterday. I really have to say, those things are very comical in appearance. Who designed them?!
http://tinyurl.com/qmb96q

I steamed it for 30 seconds, slipped off the skin, and then sliced it up with my favorite knife and ate it with rice and a bit of ginger and slivered radish. I figured simple is best, to get started. It tasted a bit like a meaty cucumber that quivered every now and then, which is better than it sounds.

And now I must drink coffee. I just wanted to wish you all a good day first.

The SDLookup dot com web site provides a useful format in which to quickly view San Diego MLS data. This should not be viewed as a complete listing of what is on the market, as there are other listings that show foreclosures currently for sale (e.g. ForeclosureTown dot com), but it is nice to be able to get a quick snapshot of homes on the MLS, provided you realize the resulting picture is incomplete.

For instance, in our zip code (Rancho Bernardo West — 92127) I see 159 single family homes built in 2000 or later on the market, with a median list price of $1,275,000. If you refer to my post from yesterday’s bits bucket on San Diego zip codes which had a median sale price above $1m in either April 2008 or April 2009, you will notice that 92127 is not one of them. How the sellers of these homes will all find buyers willing to pay anywhere near their wishing prices remains to be seen.

I posted previously about a friend who was in the market to buy a house. A couple of things have happened since that post, I think his situation is a good example of why we likely have considerably further to fall.

When my friend started looking at the house the listing history was as follows:

$630k
$607K
$599K

This is in a nice town in North Jersey and these prices are not unheard of in the neighborhood he is looking in, but for the house in question it seemed way to high. My friend expresses interest in the house to the agent and is basically told that all offers will be at least countered. The price on the house is then lowered to $569. My friend bids $410k, and despite the promise of a counter none is made. Two weeks later he gets a call from the agent, the price of the house has been lowered again to $549k. He decides to bid his max for the house which is $450k, a counter offer does come back this time of $540k. My friend decides to extend his lease for another year and continue renting.

This house is vacant and has been for about 6 months. My guess is that the seller will have to come down at least another $75k to make a sale. These kinds of situations are playing out slowly all over the country, there are still countless listings priced at levels well above what the market will bear. Eventually we will come back to a level that incomes will support, but it seems that day is still a ways off.

“Banana Republic” gets any honorary mention!:

05-24) 04:00 PDT Washington (SF Gate)-

This year, the government is borrowing 50 cents of every dollar it spends. If that were just a blip caused by a historic financial crisis that necessitated a $787 billion fiscal stimulus and a $700 billion bank rescue in the space of about three months, there would be little cause for concern. But it is not a blip. It is a relentless curve of red ink that will, within the decade, take U.S. debt levels to the record reached at the end of World War II, from 40 percent of the nation’s output now to 80 percent, and then rapidly thereafter into the realm of banana republics.

“We are accumulating a massive debt. We owe about half of that debt to foreigners, including the Chinese and others whose foreign policy is not always well aligned with ours,” said Isabel Sawhill, a former Clinton administration budget official who now co-directs the Center on Children and Families at the Brookings Institution. “So we are really losing control of our economic destiny and possibly losing control of our foreign policy as well.”

Japan has lost its AAA credit rating, the United Kingdom may soon follow, and there is talk that the United States is headed fast down the same path.

The markets fired a warning shot last week when the Treasury Department announced a huge sale of new debt - $162 billion - as part of its financing of the government’s $1.8 trillion deficit this year. That’s as much as the entire government spent just eight years ago. Within hours, interest rates on U.S. Treasuries shot up.

In recent weeks, the prices of credit default swaps on U.S. government debt - a measure of the risk that the government could do the unthinkable and default - have risen to record levels.

Ambitious plans
The market reactions highlight a growing disconnect between the Obama administration’s ambitious spending plans, including a $1.5 trillion overhaul of the nation’s health care system, and the money available to do it.

As if to underline the point, the Social Security and Medicare trustees, who include three Obama Cabinet officials, issued their report saying the finances of the two bedrock social programs are dire.

“We are heading toward very high debt-to-GDP ratios very soon,” said UC Berkeley economist Alan Auerbach. He said the rise in perceived risk of the federal government going bankrupt is sobering.

As it is, the United States does not even meet the standards for admission to the European Union, because its deficit and debt levels are too high, said Sen. Judd Gregg, the top Republican on the Senate Budget Committee. The federal government faces either enormous tax increases or inflation (regressive taxation in another form), to remedy the problem, he said.

“That means people, instead of having money to buy a home, have to send it to the government to pay the interest on the debt,” Gregg, R-N.H., said in an interview. “There are no ways around this. This is not academic. It’s not theoretical. It’s real. The numbers are there.”

While our economic leaders assure us that green shoots are sprouting up all over the place, the world’s second largest economy has just posted its worst GDP decline since WWII. Luckily it is different here in America.

From The Times
May 21, 2009
Plunge in Japan’s GDP takes it close to depression and raises prospect of deflation returning

Shoppers check discounted clothes in Tokyo as it was revealed that Japan’s economy has shrunk at a record rate

Leo Lewis, Asia Business Correspondent

Japan may be the first leading economy to fall officially from recession into depression, with GDP shrinking at an annual rate of almost 10 per cent as its export-focused business model is tested to the limit.

The latest figures, for the period from January to March, showed the worst decline in Japan’s economy, the world’s second-largest, since 1947 and sparked a fierce debate among analysts over whether the country is now due for a sharp recovery or a long phase of anaemic performance.

Speaking of San Diego, anyone see this — 81 condos bought with rented identities last year, after the bust was in full swing?

http://www.voiceofsandiego.org/articles/2009/04/11/sommerset/sommerset-one1041009.txt

“Over the course of several months last year, McConville picked up at least 81 condo conversions from distressed developers and orchestrated their sale to more than 20 buyers who’d rented him their identities, according to a review of hundreds of public and private records and interviews with lenders, developers, former McConville employees, and six of the more than 20 buyers.”

“By arranging purchase prices well above market value, McConville was able to pay off the developers and capture what the developers’ records state as more than $12.5 million. Now, 74 of the 81 homes involved in the deals in Sommerset Villas and Sommerset Woods in Escondido and Westlake Ranch in San Marcos are in the first stage of foreclosure.”

“One lender said the fallout has already forced him to shut the doors of his mortgage business after 17 years. That lender and another say they were tricked by McConville and the buyers into making these loans and they now face losses of millions of dollars. And because the federal government has assumed greater responsibility for the mortgage finance industry, the American taxpayer is likely on the hook for the toxic debt.”

Green shoots are very hard to spot in the UK, perhaps due to their rainy climate.

I note that the British press corps seems far less inclined to paint lipstick on pigs than do US economics correspondents. Do you think our press corps is intimidated by the Fed’s econogandists into painting a rosy picture?

From Times Online
May 22, 2009
Household spend falls at fastest rate since 1980
Grainne Gilmore, Economics Correspondent

Spending by British households fell at the fastest rate since 1980 in the first three months of the year, official figures showed today.

Data from the Office for National Statistics (ONS), which confirmed that Britain’s economy shrank by 1.9 per cent in the first quarter, revealed widespread weakness across all sectors of the economy, raising fears that the economic recovery could take much longer to take root than had been anticipated.

Household spending plummeted by 1.2 per cent - the biggest fall since the final quarter of 1980 - and follows a sizeable drop of 1 per cent in the final quarter of last year. GDP was also dragged down by stocks, which dropped by the biggest margin on record, highlighting the depth of the economic slowdown and uncertainties about the economic outlook.

Jonathan Loynes, chief European economist at Capital Economics, said the figures gave a “pretty grim picture of weakness right across the economy in the early months of this year”.

The decline in factory output also gathered pace, with manufacturing output dropping by 5.5 per cent, after a 4.9 per cent fall in the previous quarter. The drop in output by business services and finance sectors, including banks and accountancy firms, more than quadrupled as the sector shrank by 2.2 per cent, compared with a 0.5 per cent fall in the final quarter of last year.

The 1.9 per cent fall in GDP between January and March comes after a 1.6 per cent decline in the final three months of last year. GDP is now 4.1 per cent lower than the first quarter of last year.

Mr Loynes added: “Recent surveys have pointed to a much smaller contraction in GDP in the second quarter. But with key components like household spending and investment set to fall considerably further in response to the weakness of the housing market, the labour market and bank lending, we remain unconvinced that recent “green shoots” will translate into a return to decent growth next year.”

I hope y’all will forgive me. I just need to harp on an old pet peeve of mine.

The shuttle came down at Edwards AFB yesterday. It costs about 2 million each time that happens. The original cost estimate for launch facilities out west was 30 million. The thing has been diverted 100 times over the years from Florida to Cali.

Florida must have had one heck of a congressional delegation back in the day to convince TPTB that a vehicle that required near perfect weather for landing should be based out of a tropical swamp.

/rant off

May 25, 2009

COMMENTARY: Foreclosure spike reaches New Orleans area
by Autumn C. Giusti

We may be a long way from the Golden Gate Bridge and Lake Okeechobee but signs are surfacing that the housing crisis may be knocking on our back door.

It has been easy to watch from afar as rising foreclosures have forced housing markets to crumble in California and Florida, but we shouldn’t get too comfortable thinking the New Orleans area is an insulated ivory tower.

Foreclosure filings in several parts of the New Orleans area jumped by more than 100 percent in April compared with the same time last year, according to Irvine, Calif.-based RealtyTrac, a national foreclosure database:

• St. Tammany Parish had 120 filings, a 185.7 percent increase;

• Orleans had 309, a 113.1 percent increase; and

• Jefferson Parish had 153 filings, a 101.3 percent increase.

RealtyTrac spokesman Daren Blomquist said New Orleans is part of a new crop of areas experiencing big jumps in foreclosure activity.

“With this increase, you’re seeing the possibility that the foreclosure problem is spreading to New Orleans,” he said.

I am still puzzling over news that the California unemployment rate dropped in April despite the state leading U.S. job losses for the month. I am going to stick with the hypothesis that the reported drop in the unemployment rate reflects sampling error, rather than an actual decrease in the population unemployment rate. If this is correct, the regression effect suggests there may be a “larger than expected” increase in May unemployment for Cali.

California Led U.S. in Job Losses in April
Article Tools Sponsored By
By THE ASSOCIATED PRESS
Published: May 22, 2009

WASHINGTON (AP) — Forty-four states lost jobs in April, led by California, where employers slashed 63,700 positions, as the recession took a further toll on workers.

Trailing California in over-the-month job losses were Texas, where 39,500 jobs vanished; Michigan, which lost 38,400 jobs; and Ohio, where payrolls fell 25,200, according to a Labor Department report issued Friday.

California’s unemployment rate was 11 percent last month, fifth-highest in the country. Michigan’s jobless rate was the highest at 12.9 percent, followed by Oregon at 12 percent, South Carolina at 11.5 percent and Rhode Island at 11.1 percent.

As the recession eats into sales and profits, companies have laid off workers and turned to other cost-cutting measures, like holding down hours and freezing or trimming pay.

Since the recession began in December 2007, the United States has lost a net total of 5.7 million jobs. The nationwide unemployment rate now stands at 8.9 percent, a quarter-century high.

Updated Mortgage Reset Chart

“Before Katrina it cost $250k just to get into Lake View, and prices were much higher than that.”

I get a kick out of people wanting a view albeit ocean or mountain. After less than one week people have curtains up to protect their privacy, block the sun, etc and the view just becomes a background prop.

BTW: What happened to the view taxes in NH?

Not sure if this was linked to yet:

Christian Science Monitor 05/22/2009

“Brian Mehigan, the self-described “Mayor of Tara Lane,” knows all too well the rise and fall in real estate prices that he calls, simply, “the madness.”
One of a handful of original owners left in this decade-old Phoenix-area subdivision, the freelance plumber can tell you the fate of homes up and down his street. He points them out one by one: That one’s for sale, that’s now a rental, rental, foreclosure, short sale, foreclosure, original owner.”

“But, despite the short sales, foreclosure sales, and the burgeoning rental inventory, there’s also a massive “shadow market” of empty or rented homes yet to come on the block, as banks try to optimize returns on failed investments and homeowners hold off, waiting for a rebound.
In this foreclosure capital – over 75 percent of homes on the market in Phoenix are owned by banks – such a big backup of inventory could affect streets like Tara Lane for years to come. And it could dramatically impact the trajectory of the much-awaited recovery.”

http://tinyurl.com/rbgm2a

SammySchadenfreud;
Few things are sadder than seeing prime agricultural land gobbled up by tract housing and soulless cookie-cutter planned communities.

From yesterdays bits. Boy don’t I recognize that principle.
Having spent early childhood in and around the entire Hemet, San Jacinto, Temecula, Murrieta valleys, it is and was so sad yesterday to see all that beautiful land, farmland just gobbled up by ugly block houses so close together you could ask the guy next door for more toilet paper-WHILE on each others thrones. And those ugly suburbs/developments were in the middle of nothin…just beautiful land that had been thoroughbred farms, citrus ranches, walnut orchards, dairy farms, potato farms, you name it..
In fact what was once the King Ranch just off the 10 a nanosecond from Beaumont was once a premier thoroughbred ranch and you saw all the pretty horses just off the freeway.
Now it is ugly butt ugly matchstick houses.

For fun and furthering my eduMcation, I am thinking about taking some version of the real estate licensing exam. I am also thinking ahead to when and if I get around to buying another home (or perhaps helping my kids do so if the bubble continues to deflate for another 15 years or so) — I don’t want to have to blow upwards of $10K in today’s dollars to pay some idiot UHS for services that I can provide more cheaply for myself.

So I checked the Barron’s preparatory book for real estate licensing exams out of the library and started reading it. It is reasonably informative, and sometimes inadvertently entertaining, as well. For instance, in one of the practice exams for the UHS licensing exam appears this question:

1. A real estate broker is a
(A) general agent;
(B) special agent;
(C) secret agent;
(D) travel agent.

Funny, no?

Kool Aid anyone?

Jehovah Witnesses brings apocalyptic topic to West Palm Beach ‘leaky teepee’

By ANDREW ABRAMSON

Palm Beach Post Staff Writer

Sunday, May 24, 2009

WEST PALM BEACH — It’s the start of the Jehovah Witnesses’ convention season, and this year they’ll be preparing for the end of the world.

Starting Friday, the Witnesses will host 14 consecutive weeks of conventions at the Christian Convention Center on Palm Beach Lakes Boulevard.

This year’s theme, “Keep on the Watch!” is designed to discuss world events and how they relate to the Bible’s prophecy of the apocalypse.

While all conventions are open to the public, the Witnesses are specifically inviting the public to a discussion with the provocative title, “How to Survive the End of the World,” which will be at 11 a.m. Sunday.

“We feel it is imminent,” spokesman Richard Ferris said. “We can’t really put a date on it, and the scriptures tell us that nobody knows days or hours, but we’ll look at the signs as a theme of our convention and keep on the watch.”

Jehovah Witnesses believe that while the apocalypse will be terrible for many, it will be the beginning of a better world for the faithful.

“The fighting against nations, we’re seeing more earthquakes, you can look at the swine flu, all this, and it just points to the things that shows we are getting very close to what we feel is the end,” Ferris said.

Going door-to-door with Bibles and informational packets has become a trademark for the Witnesses’, and Ferris said there’s a reason recruiting is such a major part of their religion.

“While we don’t relish the thought of destruction that’s going to take place, that’s why we feel so strongly about door-to-door work and warning people,” Ferris said. “If you knew a hurricane was coming, and you were the only one and you didn’t tell anybody, it would be on your shoulders.”

For Diogenes in yesterday’s Bits.

And another favorite of mine was the 2 doofus “professors” from USCLA or Berkeley who had discovered that housing prices, based on their metrics were at fair value and slated to head higher indefinitely

The doofii

How can 29 cents on the dollar only lose $2 million out of $17 million

Chrysler slams Indiana State Treasurer’s demands May 25, 2009 7:28 PM ET

All Thomson Reuters news NEW YORK (Reuters) - U.S. automaker Chrysler on Monday slammed Indiana State Treasurer Richard Mourdock as making demands that would ultimately push the carmaker into liquidation — resulting in the loss of more than 4,000 jobs and 9,000 retiree pensions in Indiana alone.

Mourdock, who oversees pension funds invested in Chrysler debt, has objected to Chrysler LLC’s plan to quickly sell itself in bankruptcy, claiming it is a dangerous path that would hurt pensions for thousands of his state’s retirees.

The Indiana pension funds have filed court papers requesting that an examiner be appointed to investigate Chrysler’s business decisions, and that the company be placed in the hands of a Chapter 11 trustee who can act independently of the government. The funds also mounted a challenge to the company’s plan in U.S. District Court.

Chrysler claimed in a statement on Monday that Mourdock, a Republican, is willing to put Chrysler in liquidation over less than 1 percent of the three funds’ assets.

It calculates that the combined Chrysler-related investments in the three state pension funds in question totaled approximately $17 million and the cumulative loss under the proposed deal would be about $2 million.

Here’s an interesting story from the LA Times about how builders are going smaller in square footage to survive.

http://www.latimes.com/news/nationworld/nation/la-na-houses-smaller26-2009may26,0,3760958.story

I lived in a 1,040 square foot stucco box in San Jose for 25 years, and it just wasn’t roomy enough for me - neither did it have central heat or air. Retiring to Boise I bought what for me was a mansion: a 1985 square foot house with a three car garage. To me I mostly wanted a single-level home I could retire in - old folks don’t want to climb stairs. I could actually ignore the upstairs bonus room and half bath should I become disabled. Everything else is “cripple friendly”.

This place is about the right size for me. A master suite, two bedrooms to serve as an office and as a guest room, and a great room for kitchen/dining/living space. I’m guessing the house without the upstairs is about 1,800 square feet. I’m not sure what I would do with more space: and I’m sure if I had a spouse we wouldn’t bump into each other much.

At what size house would you feel that it has become “too big”?

This is the week for crazy bankruptcy stories. First, the author of Busted gets busted on his wive’s 2 bankruptcies, as they head for the family bankruptcy trifecta. Then Gawker reports that Vanity Fair photog Annie Leibovitz, is broke, selling the rights to all her prints for $15 million to pay off her creditors. Her road to ruin was over-leveraging on 3 Greenwich VIllage 1830s era town homes, which the historical society claims she purposely made inhabitable in order to get her way on some drastic remodel that literally destabilized her neighbor’s foundation. This has been going on since 2003. Something very Emile Zola about the woes of the rich and famous.

http://gawker.com/5266329/will-annie-leibovitz-be-forced-into-bankruptcy

Here’s an interesting story from the LA Times about how builders are going smaller in square footage to survive.

http://www.latimes.com/news/nationworld/nation/la-na-houses-smaller26-2009may26,0,3760958.story

I lived in a 1,040 square foot stucco box in San Jose for 25 years, and it just wasn’t roomy enough for me - neither did it have central heat nor air. Retiring to Boise I bought what for me was a mansion: a 1985 square foot house with a three car garage. To me I mostly wanted a single-level home I could retire in - old folks don’t want to climb stairs. I could actually ignore the upstairs bonus room and half bath should I become disabled. Everything else is “cripple friendly”.

This place is about the right size for me. A master suite, two bedrooms to serve as an office and as a guest room, and a great room for kitchen/dining/living space. I’m guessing the house without the upstairs is about 1,800 square feet. I’m not sure what I would do with more space: and I’m sure if I had a spouse we wouldn’t bump into each other much.

At what size house would you feel that it has become “too big”?

jj