Bits Bucket For August 16, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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If everyone can see the stock market is about to crash, what is keeping it from crashing now?
VIX Signals S&P 500 Swoon as September Approaches (Update4)
By Jeff Kearns and Michael Tsang
Aug. 10 (Bloomberg) — Options traders are increasing bets that the steepest rally in the Standard & Poor’s 500 Index since the 1930s won’t survive September, historically the worst month for U.S. equities.
Traders were betting the VIX, a gauge of expected stock swings, would increase 13 percent in the next five weeks, according to futures prices at the end of last week compiled by Bloomberg. That’s the biggest spread since August 2008, before the S&P 500 suffered the steepest two-month plunge in 21 years. The indexes have moved in the opposite direction 81 percent of the time over the past five years, Bloomberg data show.
VIX futures above the level of the index show investors expect fluctuations to widen and stocks to retreat. The S&P 500 has rallied 49 percent in five months, pushing valuations to the highest levels since December 2004. The S&P 500 gained 2.3 percent last week as reports showed home sales rose and the unemployment rate fell.
“It’s a danger sign,” said Ronald Egalka, a 36-year options trader who oversees $8 billion as chief executive officer of Rampart Investment Management in Boston. “People expect volatility to pick up in the future, and that implies that there’s going to be a downward movement in the market.”
…
“People expect volatility to pick up in the future, and that implies that there’s going to be a downward movement in the market.”
Step right up, place yer bets, folks!
Step right up and get slaughtered, once again. It is obvious how easily the stock market can be manipulated. I would rather join NYChick snatching up all this bargain New York City real estate, waiting for the currency collapse, than jump back into The Wall Street Casino, Resort and Brothel.
Would you feel differently if you had billions and billions of zero interest (Fed-provided) loans available for gambling?
Would you feel differently if you had billions and billions of zero interest (Fed-provided) loans available for gambling?
Here is your answer
Aug. 14 (Bloomberg) — Instead of a so-called New Normal of subdued growth, the U.S. may be heading for a robust recovery.
The worst recession since the 1930s has created a reservoir of demand that will buoy the economy, say a growing number of economists led by James Glassman at JPMorgan Chase & Co., former Federal Reserve Governor Laurence Meyer and Stephen Stanley at RBS Securities Inc.
“Whenever we have plunged off a cliff and fallen into a deep hole in the past, for a while the economy has a tendency to bounce back very quickly,” said Glassman, a senior economist at JPMorgan in New York. Glassman and his colleagues this month said forecasts of 3 percent to 4 percent growth in coming quarters may be too low given “pent-up” consumer demand.
I’d love to see how this guy and JPM are invested. The good news inflation or deflation are the same in terms of housing which will steadily head down.
The worst recession since the 1930s has created a reservoir of demand that will buoy the economy,…
Is that the proper term for the pool of freshly-printed liquidity the Fed has loaned to Megabank, Inc at a zero percent interest rate?
They do understand that the “pent up consumer demand” needs some “pent up jobs” and “pent up raises” to go with it, don’t they?
Or maybe by “pent up consumer demand” and “economic growth” they mean executive bonuses?
If everyone can see the stock market is about to crash, what is keeping it from crashing now?
-Two words: Green Shoots. Fake ones, of course. The same thing is keeping the stock market alive and rising that has been keeping it on its rocket-launch trajectory from the March 9 lows. We are talking about a massive coordinated last-ditch propaganda and number-fudging effort involving banking systems and governments all over the world. Does anyone remember a world banking summit meeting taking place right at the market lows? You remember, right around the time they decided to do away with mark to market accounting rules. The whole recovery is a sham and a giagantic media fueled ponzi-scheme that has been effectively sold to investors. The sham will continue until it doesn’t any more. When it fails, a catastrophic depression will follow. The ones who still appear to have complete control of this scam (led by Goldman) are not ready for this and must perpetuate green shoot theory or go down in flames .
I’m an investor. No. I’m not a very good investor. I didn’t know what a put was (I was enlightened yesterday). I still don’t know what a call is. I missed the March Rally of Last Year. I missed the March Rally of This Year. I think “Green Shoots” require pepto bismol or perhaps Maylox.
I do know what BS is.
I’ve made a little money (3%/year) over this past two and a half years. I certainly didn’t loose money. “How?” do you ask.
Ans: I do know what BS is. Other than that, I’m lost.
Roidy
“I didn’t know what a put was (I was enlightened yesterday). I still don’t know what a call is.”
A put is an option to sell and a call is an option to buy.
If anyone doesn’t know the meaning of some terms, I suggest they stay the f00k away from those investment vehicles.
I am sure Kim would agree.
Gain knowledge for sure but know what you are doing in copious gory detail.
Especially right now.
Good Post Roidy.
It’s not Green Shoots, it’s Goldman Sachs. Most of the recent rally has nothing to do with retail investors getting back into the market—it’s TARP money that was given to the banks and used to blow a gigantic stock market bubble, and most of the action is traders playing games every day. Go back and look at the daily S&P or Dow charts for the last sixty days. On a majority of days you’ll see anywhere from a 30-100 point run up in the last 30 minutes as the program trades kick in (see Friday’s chart for a perfect example–the Dow ran up 50 points in the last half hour on a day when it SHOULD have finished in the red by triple digits). You can almost set your watch by it. This market is for traders, not investors, and most of the smart investment money is elsewhere. A 50% runup that’s pushed P/E ratios to all-time highs and has had no siginficant correction (the wimpy one in July doesn’t count) won’t end well. There’s probably some cash to be made here in November or December index puts.
+1
“A 50% runup that’s pushed P/E ratios to all-time highs and has had no siginficant correction (the wimpy one in July doesn’t count) won’t end well. There’s probably some cash to be made here in November or December index puts.”
So when would you recommend novice investors who enjoyed the big 50% runup should race for the exits before they loose their shirts while Goldman Suchs cashes in on their short strategies? I need to give my sister a call to advise to pull the plug on her day trading before wipeout recurs…
If I could predict the market with that kind of accuracy I’d be retired. I thought this thing was overbought in April, but I was wrong (and have losses on options trades to prove it). After this kind of runup, though, it seems prudent to cash in some of those gains. Aside from my options account, I’m nearly 100% in cash as of a couple of weeks ago (I have a large cap growth mutual fund with a small amount of money in it). There are those who say this rally could continue, and they may be right—it’s in the interest of a lot of people in high places to avoid a crash, and they have the money and power to keep it from happening. But they can’t hold it off forever.
I have a cptn for a neighbor who does investment column for his industry friends. He said we are in a Bull market.
I still think it is a deadcat bounce and a highly manipulated one at that. But I don’t have his paycheck, so maybe I don’t know.
I rely on PB and all ya’ll.That is southern for you guys!
Is there any chance the next CIC will try to rekindle Teddy Roosevelt’s concept of trust busting? Because if the institutionalized theft is ever to end, we need a president who will do the right thing for the American people, not for Wall Street.
I am guessing that any candidate who made a credible commitment to do this would get elected. Any takers?
I am guessing that any candidate who made a credible commitment to do this would get elected. Any takers?
Or would end up like Kennedy, or would have the market crash to prevent re election, or would have some secret scandle manufactured ect ect.
While Teddy Roosevelt’s actions were laudable, in the end, the Great Depression still happened.
It was only because of the GD that any regulation AND enforcement was passed. That’s exactly what it will take again.
Teddy Roosevelt’s actions are far enough removed from the GD (more than a quarter century) that it’s difficult to demonstrate a causal relationship about his actions.
Not that I don’t admire the man greatly; I just find it hard to figure out whether what he did had any effect on the commencement or duration of the GD, good or bad.
Social changes and their effects are usually measured in decades, not months or years.
However, I wasn’t trying to imply that Teddy R’s actions had a direct impact on the GD, just that it was one of many factors, although a good one in that he tried to bring some order to the anarchy and social Darwinism that was big business and high finance back then.
ABC retracement — stalled at Fib 38. The next wave is coming — when 6Pack realizes the government can save Wall Street banks w/funny accounting but can’t stop the foreclosures and subsequent carnage on Main Street.
So, you’re saying GS=GS? I agree. Without Goldman Sachs, there can be no fake recovery/huge stock market rally. Without Goldman Sachs there can be no joy or happiness. Without Goldman Sachs there can be no light. Without Goldman Sachs there would be just an empty universe full of despair. Goldman is the meaning of life. Pray to Goldman for evey blessing.
“A 50% runup that’s pushed P/E ratios to all-time highs…”
I believe the all-time high on P/E ratios (S&P 500) was in the neighborhood of 28-30. That was back in 1999/2000 when everyone in the tech world thought they were geniuses. Then they got slaughtered.
Today’s P/E ratio (S&P 500) is around 16 - at least it was maybe 8-10 days ago when I last looked.
That 16 multiple is as fake as saying there are no hidden losses on CDo’s , REO, etc.
Mark the gigantic derivative and REO losswes to the market, and the S&P is sporting a multiple of 140.
My calculations show about 130 but what’s a factor of 8% between friends, huh?
Thanks for pointing that out talon. I would have never caught that.
I know GS is gaming the hell out of everything, but I don’t play the market so I would not have caught the trading patterns.
I notice that every day. And then there is the ‘after the bell rings’ and it still bounces up.
Thanks for pointing it out, helps to not think oneself is kuku!
“If everyone can see the stock market is about to crash, what is keeping it from crashing now?”
They’re hoping to sell to Larry Kudlow?
He has a saying about capitalism being the path to prosperity.
That is true in the shortest of terms if you are the reciepent of an outsourced or offshored job.
In time you have to hand the benefit to the next best deserving person.
Wha? but the economy is recovering. How could the market crash? Economists say it won’t be a V or W shaped recovery this time folks. It will be a new type of recovery, the FU recovery.
Or will it be more of a FUBAR recovery?
“Traders were betting the VIX, a gauge of expected stock swings, would increase 13 percent in the next five weeks, according to futures prices at the end of last week compiled by Bloomberg.”
Even if it does that still leaves it under 30. Historically, that’s not a big deal so I’m not seeing a problem with it. The problem is grossly overpriced stocks that just keep flying.
All the MSM financial market commentary suggests the stock market is on the brink of a selloff. Is this news ignorable, given the appearance of an extreme amount of behind-the-scenes manipulation underway to prop up the market?
Market Snapshot
Aug 15, 2009, 12:01 a.m. EST
After impressive climb, U.S. stocks ready for an intermission
Up nearly 50% from March lows, major indexes facing ‘Ides of September’
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) - After a near six-month ascent, the U.S. stock market is more than likely headed for a pause as investors waited for signals to continue a rally that many now view as overdone in light of the still-shaky economy.
…
The upsides of yet another stock market selloff:
1) Lower long-term interest rates;
2) Lower mortgage rates to support high housing prices;
3) Stronger dollar.
The Motley Fool
3 Reasons Mortgage Modifications Are Failing
By Morgan Housel
August 13, 2009
…
So what gives?
Many factors are stalling the modification process, — not the least of which is the crushing demand banks can’t keep up with. But a recent report by the Federal Reserve Bank of Boston gives a few less obvious reasons.
1. They called your bluff
Modifications cost banks money. By either reducing current payments or forgiving debt, the bank is making a sacrifice that benefits the homeowner.
Banks know this. And homeowners know this. Naturally, there’s an incentive for homeowners to try to game the system, intentionally skipping payments to become eligible for a modification, even if they don’t actually need assistance.
…
2. They think you’re a lost cause
As I showed last month, the redefault rate on modifications is ghastly. Ninety days out, nearly half of modifications are back in default, making it nothing more than delaying the inevitable.
Now think of this from a bank’s point of view: It can foreclose today and sell the house at today’s price, or foreclose down the road, and sell the house at a price that has likely since declined. When prices are falling, it’s often more profitable to foreclose today than to give a homeowner a second chance.
…
3. They’re basking in fees
Credit card companies love people who don’t pay their bills on time. Banks love people who overdraw on their checking account. While this doesn’t seem intuitive, the amount of fees they can suck out of delinquent customers is staggeringly large.
Same goes with homeowners. As borrowers miss payments, late fees rack up. The longer they’re late, the more fees accrue. And a mortgage servicer often can’t collect those fees until the house is sold in foreclosure.
…
They think you’re a lost cause
Of course they didn’t think that when they made they loan and took those juicy fees up front, did they?
Of course they didn’t think that when they made they loan and took those juicy fees up front, did they?
No one could’ve predicted that — it was a perfect storm of buffoonery.
The subprime mortgage lending kingpins acted as though they knew in advance that the Treasury and the Fed had their backs, and (surprise!) it turns out they were correct. This above all is why Ben Bernanke should not be reappointed. We need someone at the helm of the Fed who will clean up the mess, not try to sweep it under the rug in order to perpetuate it.
House of Cards thoroughly explained that phenom. cnbc
Hey oxide, how old are you?
“Pretty much all the honest truth-telling there is in the world is done by children.” Oliver Wendell Holmes
“3. They’re basking in fees
Credit card companies love people who don’t pay their bills on time. Banks love people who overdraw on their checking account. While this doesn’t seem intuitive, the amount of fees they can suck out of delinquent customers is staggeringly large.”
Correction. The amount of fees they can BOOK from delinquent customers is staggeringly large. They can charge the fee and add it to the customer’s account. They then get to show it as income because they are on accrual basis accounting (book the profit when you have done what is necessary to be owed the money, not when you actually collect it).
However, if the credit card holder/account holder/house owner doesn’t have a sufficient source of income, those fees will never be collected and they will show up as losses down the road. It is just the bubble game all over again. Phantom gains lead to big executive bonuses. Losses down the road? Well, we need to give them the same bonus or our very valuable leader will take some other job and we will lose his wise counsel - after all, there were gains last quarter.
Wow. That felt good.
US banks will earn about $40 billion in overdraft fees this year, according to the Financial Times. It may not be true for, say, credit card fees, but I’ll bet most of the overdraft fees booked are actually collected, if only because the bank has a direct pipeline to one’s checking account.
And: 90% of the overdraft fees are levied on just 10% of the checking accounts.
There is probably a lot of merit to going to a cash based accounting system and getting rid of accrual systems all together, because in reality you cannot count your chickens before they hatch!
Psst, don’t let a “respected economist” hear you say such blasphemy!
What are you? Some kinda dang socialeest/commie?!
(actually, we can never go back to a cash based accounting system but we sure as hell have to stop playing fast and lose with accrual)
Good one, Polly. Whew!
First they have to collect it, and in full.
Homeowners Avoiding Foreclosure Through State Mediation
By Greg Bordonaro
gbordonaro at HartfordBusiness dot com
08/17/09
The state’s hallmark foreclosure mediation program continues to have a high success rate for homeowners, but still relatively few people have chosen to participate in the program.
The service, which was part of comprehensive mortgage relief legislation passed last year, allows borrowers to meet their lender face-to-face to try to reach a settlement on an overdue mortgage.
Statewide, 2,932 foreclosure mediation cases have been completed as of May 31, and of those 60 percent, or 1,771 cases, have reached a settlement that allows individuals and families to stay in their homes. Of those who stayed in their homes, 41 percent or 1,224 homeowners, received a loan modification from their lender, according to data from the state’s judicial department.
Another 397 homeowners decided to leave their home but were able to reach an agreement with their lender to pay off the balance of their mortgage either through a short sale or a deed in lieu. Mediation remains unsettled in 26 percent or 764 cases.
Despite the high success rate, only 35 percent of eligible homeowners have actually participated in the program.
…
Hey CA renter,
Following up to your response about “La Costa” amazing Resorts, I wonder what they must be thinking when I show up and say I just need a room for a couple of hours (kidding! ;-))? Probably run a facial scan of me through the NSA and say: “sorry, AIG/AMEX/GS has booked everything…last minute”
Comment by CA renter
2009-08-16 03:22:32
“…It looks like they’ve been hurting, but if you want to stay there, they are not offering any tempting discounts. You’d think filling up rooms, even at a discount, would be better than keeping them empty.”
SNAPSHOTS OF THE RECESSION:
By E. Scott Reckard and Roger Vincent August 12, 2009 LA Times
Coastal resorts in Orange County struggle at height of travel season:
“…But price cutting is tricky for hotels that on weekends even now can command minimum prices of $600 to $800 a night for vacationers. Cheaper rooms at upscale resorts attract… “a different demographic,” …as Wise delicately put it — people who hoteliers fear might spend lightly in restaurants, damage the furnishings and perhaps alienate wealthier travelers.” (They’ve described ol’ Hwy to a tee!
)
There’s that word again: Irvine Co.!
“…Ralph Griffo, president of resort operations for Pelican Hill developer Irvine Co., said the company reduced its financial expectations for the complex last fall because of the near-meltdown in the financial system just before it opened. The operation is meeting those expectations, he said, and pursuing its strategy of courting wealthy Southern Californians.”
“On a sultry midweek afternoon at the grand new Resort at Pelican Hill, a scant dozen vacationers lounged at what is billed as the world’s largest circular pool, flanked on one side by a Coliseum-style amphitheater and on the other by an ocean-view golf course.”
“A few miles south in Laguna Beach, most of the 170 lounge chairs at the Montage resort’s oceanfront pool were empty as the afternoon wore on. Cocktail hour arrived, but at 5:45 p.m. only a single table at the poolside Mosaic Bar & Grille was occupied.”
“Few businesses have been so brutalized by the recession as hospitality.”
“…At the height of the summer travel season, the still-fractured economy has posed a severe test for the luxury hotels of Laguna Beach and adjacent areas, the most lavish examples of Orange County’s recent efforts to convert its sunny and scenic coastline into a magnet for high-end pleasure travel and business meetings.”
It’s a scene repeated at luxury resorts throughout California, where 250 hotels are now in default or lender-owned, according to a recent survey.
But it’s particularly poignant in Orange County, where so many millions were invested to create an unbroken line of luxury along the coast.
And of course it is also where the St. Regis Monarch Beach, the millionaires’ retreat where insurer American International Group Inc. spent $440,000 to fete its sales stars after receiving a huge federal bailout, was seized last month by a lender after its owners defaulted on a $75-million loan.
On Tuesday, the developers of the Montage said the recession had forced them to “indefinitely suspend” a plan to expand by redeveloping an older hotel on a nine-hole golf course in nearby Aliso Canyon.
““a different demographic,””
Tell ya’ what Hwy, I’ll bring the kids and they can scream, yell, and cannonball into the pool. I’ll sit around in one of my loudest beach shirts of which I have legion.
We’ll have huge, loud rooms parties.
I’ll be great.
Roidy
Mr. Cole had a great time in the swimming hole @ Mandalay Bay…Thanks again to SD RE Bear & CA Renter! (and all you “other” $$$ contributors bink/ Big V /ahansen /Lavi d, etc,etc…)
HBB meet up at La Costa?
We’ll bring the kids and have a “different demographic” blast!
Hi all, and kudos to ahansen for the great post the other day. You sure kicked up some awesome comments from the community! My book list grew by several must-reads.
So I summered this year in Vietnam. As I have local friends, I end up in some interesting places. One rainy day we stopped by a riverside restaurant for cold brews and seafoood. I walked in and there were aquariums everywhere holding the night’s dinner options.
I knew them the minute I saw them - geoducks! Got pics - where is the best place to post them? In the forum?
“…So I summered this year in Vietnam.”
Cool!…Hey, I know Vietnam grows coffee, how much does a cup of coffee cost?
where is the best place to post them?
Flickr, or some other photo-sharing site perhaps? I can host them if that isn’t an option, but I believe Flickr accounts are free.
Warning pdf:
Real Estate Agents Report on Home Purchases and Mortgages - 2009
http://www.campbellsurveys.com/AgentSummaryReports/AgentSurveyReportSummary-June2009.pdf
I’ve been slogging through this report from the front lines made available on John Mauldin’s latest newsletter. It’s only based on 1500+ responses nationally, skewed too much to CA and FL for my tastes. The fun part for me is reading through the realtor comments which begin on page 21. Interesting short sale commentary. Comments on specific areas are found on page 42.
Wow! That’s an eye opener! Good find. Thanks!
Wow…. the squealin’ and twisted rationalizations of realtards in that article is enraging…
[b]“FHA Appraisals are getting extremely difficult to get values. The comps are not there
for the non-distressed homes and the appraisers are using the distressed for comps.[/b]
[b]“Foreclosures are adversely affecting home values; and the appraisers who use
REOs/foreclosures as comps are doing a disservice to the home seller who has paid his
mortgage and wants to move to some other area, or just move up.[/b]
[b]“The real value vs. appraisers’ value is abysmal. Banks appear to be influencing real
value. And appraisers are falling in the trap in order to get more business.”[/b]
Hey scumbag realturd industrial complex….. your blatant corruption has blinded you all.
We knew the appraiser comments were comin’. They just made me giggle.
I was enjoying how realtors were talking about avoiding the short sales. One saying they refused to work w/Wells and a few other banks because they were such screw ups. One part of the organization didn’t know what the other was doing. Realtors could only make a pittance on the short sales. Buyers were walking because banks took too long to respond to offers. I was wondering what would happen if that part of the market had no middlemen once the banks decided they did want to move them. Sounds like a real nightmare.
Wow — a portion of the US mortgage market the size of the Kansas State population is behind on their mortgages. That sort of puts things into perspective, no?
Posted on Sun, Aug. 16, 2009 03:00 AM
Homeowners tell how banks failed to modify mortgages
By KEVIN G. HALL
McClatchy Newspapers
Nearly three years into the deepest U.S. housing slump in generations, lenders are modifying only a small number of problem mortgages, and rising foreclosures are restraining the economy’s recovery.
The Obama administration has stepped up pressure on lenders and their mortgage servicers, who act as bill collectors on behalf of investors who own mortgage bonds. The administration on Aug. 4 unveiled the first of what will be monthly “name and shame” exercises, publishing data on the loan-modification efforts of about three dozen companies.
The administration thinks that about 2.7 million U.S. homeowners are at least two months behind on their mortgage payments, roughly equal to the population of Kansas. Yet only 9 percent of eligible borrowers had been offered trial loan modifications through June.
McClatchy’s Washington Bureau received calls and e-mails from borrowers across the nation in response to a recent story about the “name and shame” effort. In subsequent interviews with them, a common theme emerged: Virtually all say they were encouraged, directly or indirectly, by their lenders to fall behind on their mortgage payments in order to qualify for loan modifications. Then the modifications never came.
…
“and rising foreclosures are restraining the economy’s recovery.”
Douche bags, all of them. A scab on a wound may not be pretty but it signals that the healing process is taking place. Why can’t anybody in the MSM be honest enough, or smart enough, to report the truth?
“and rising foreclosures are restraining the economy’s [fake] recovery.”
Editorial suggestion:
“…
restrainingilluminating the economy’s [fake] recovery.”Name and Shame.
Yeah that’s gonna really help. As if the Name and Shame crowd really cares.
Hey,…maybe a few of the Bankers are Catholic…a few’s better than none right, right?
“…Bankers are Catholic…”
Your post begs a comment, but I won’t go there because I know Mr Blog Filter would take it the wrong way…
Try “name and shame” and all of a sudden you will find people who have miraculously rediscovered the care they owe to their shareholders.
Now, pass a law saying nobody who works at a bank on the list can earn over a million bucks a year, and then you might see some action, duty of care be damned.
Mr. Bear excellent post, by Vincent Bénard …many tanks…
I will have to have my “millionaire” tax expert “TrueBeliever’s™” brother go over this theory at our family “Thanksgiving” feast:
From his article:
“Tax codes that favour over-leveraged companies (especially financial institutions):
Most countries include dividends to stockholders in the tax base of their corporate taxes, but exclude interest paid to debt holders. This results in a well-described distortion(5) in the choices companies make, leading them to leverage their balance sheets above suitable levels just to enhance their rate of return on equity. This trend is especially noticeable for big financial institutions, whose balance sheets frequently total more than one trillion dollars. One percent more or less in capital requirements may represent hundreds of millions of dollars of profits—or losses—all because of this one fiscal distortion.
The very low level of equity in financial institutions’ balance sheets has been the biggest factor in the expansion of the crisis, revealing how phony the capital structures of these financial companies really are. Tax distortions leading to such situations should be removed.
And also:
“Good regulation should compel banks to disclose fully the primary investment vehicles in their asset portfolios and the exact levels of their liabilities”
I’ll have to include a subset in my “”TrueDeceiver’s™” folder with the above statement.
“Bankers/Financiers get the BIG house…those that help the bankers/financiers get the BIG house…get a a “big” house of their own as well….sometimes…perhaps” (From “Quotes along the highway” by Hwy 50)
There is some correlation here with the mortgage interest deduction as well.
Same distortion?
How to back away from this slowly is a good question.
“How to back away from this slowly is a good question.”
Is’nt the word: ‘unwind”?
How does one go about knowing when is the time to take the “Ginormous” ball of fishing line that’s in a knotted mess…. and just cut the line and start fresh, especially when you know that you have a humongous “croaker” on the “hook”
How to back away from this slowly is a good question ??
I still believe there is a place for some incentive for home ownership…If you have ever lived in a neighborhood of owner occupied residences vs. a neighborhood of a large amount of renters then I believe the argument can be made that owner occupied homes enhance the community in any number of ways…Now, with that said, I agree that it has helped to distort the value of single family homes so I agree that some unwinding of this tax deduction is appropriate…I think a cap on the interest deduction that would incorporate most of the median prices throughout the country would make sense..Let’s say $250,000….That would assist the people who need it the most…Moderate income and first time home buyers…
I think you have likely assumed that correlation is indicative of causation. Post hoc ergo propter hoc is a logical fallacy.
Other than in the recent past, home owners in the US were more likely to be long time residents or born here, in stable jobs, from families that had previously owned property, with the ablility and propensity to gather a large amount of savings, etc. All these are reasons why the neighborhoods populated by owners might have been nicer than ones largely populated by renters in the past. You were dealing with people who knew how to maintains a house and how they were supposed to behave in their neighborhoods. But their behavior is a combination of shared social mores and wealth, not the act of ownership itself.
Yes Polly, you are correct.
However, we used to call neighborhoods “low rent” where even if they were owners, they did not seem to have any social mores (manners and civility) or pride of ownership.
And I hate to say it, but this is most of the poorer neighborhoods. I know from personal experience.
Polly, homeowners = nicer more well maintained homes?
You must be talking about the neighborhoods that do a massive christmas light bonanza!
Just drove through some “nice” middle of the road areas that had multiple pick up trucks in the driveway, and all over the street, much less the occasional boat or RV. Which, although I know you guys love yours, it does take the vibe down a bit in the look of the neighborhood.
Question Guys,
I looked at a house in a newer Winston-Salem Development about 6-8 months ago. The house had solar panels on the roof and the developer claimed if I had an electric bill over $40, he would pay the difference.
If this is true, why arent all houses running off panels? What are the pros and cons to this solar thing? Shoot, seems you could almost take a house off the grid. And actually, the new house wasnt that expensive. It sure beats the $200 light bills I was getting when I was living in an apt..(and please, no lectures about turning up and down thermostats and putting on sweaters and stuff, there are just somethings I will not do without)…..
“….the developer claimed if I had an electric bill over $40, he would pay the difference.”
Get it in writing…Weld the garage shut…start making/selling ice… block/20-10 lbs bags…it’s a cash $$$$ business…if you can’t make a profit past $40.51…unwind & quit.
Systems are very expensive and unless you have a big honking amount and a big honking battery system it does nothing for you at night.
The grid balances that out and some areas, not LA inexplicably, will buy electricity from you.
ROI on solar panels sucks ass. Usually negative.
Not sure what it means from roof maintenance.
and a big honking battery system it does nothing for you at night.
Why is that? It seems the system would store energy during the day to be used at night when alot of lights are on. Otherwise, it seems to be a waste to have the panels. What good are they if you cant use them at night? If a storm knocks out power, it would be nice to not have to depend on a gas generator like everyone else….
Different systems. You can spend more to get one with a charge storage system, batteries, or as I mentioned sell power to the grid during the day and buy power at night. So, works out to a slight profit.
If you want a system that will allow you to have an on-grid Western middle-class lifestyle with off-grid solar power that is quite expensive.
A couple of panels and batteries that will allow you to keep the refrigerator running and do some cooking and boiling of water in an emergency would be a lot less.
Remember Maslow’s hierarchy of needs:
Air
Water
Food
Shelter
Social Status
A paid-off house with a little rain-water collection system and a few solar panels and batteries goes a long way to supplying the first four just fine when grid services go down for an extended period. Most of the country is totally dependent on the grid with no plan B and is about three days away from anarchy if the grid goes down.
Because it will reduce electric company profits. Because less $ will flow to politicians. Politicians therefore discourage solar incentives.
Back in the early 1980s, when I moved to Fla from up North, there was a huge flap about rising energy costs. Power bills were worse than they are now (or were). So people started going solar, with solar pool heaters, hot water heaters, etc. Nothing major, but solar did start to make inroads. The petro biz about crapped its pants and then lowered prices to ensure that solar was a more expensive option.
This game will go on until it can’t anymore. There are alternatives, they just can’t gain traction quite yet.
Palmetto, I moved to Tampa in 1983 (company transfer) and bought a house off of Gunn Hwy. I had a solar water heater installed–what a disappointment. I saw no worthwhile decrease in my power bill and had it removed when the shingles were replaced. I grew up in a hot, humid climate and keep the ac summer setting on 80 and turn if off in the winter. I’m on levelized billing and my monthly nut is $75.
Power companies are notorious for overbilling and not reading your meter accurately.
At today prices you pay $1000 in up front capital costs to generate $30 bucks/year of electricity using standard 13% efficiency silicon solar panels. That’s just the panels and doesn’t include energy storage and that’s if you’re in one of the desert southwest areas that gets good insolation and the panels are optimally oriented.
So $200 x 12months x $1000/$30 = $80K upfront costs for panels to eliminate your $200/month light bill.
In today’s investment climate guaranteed 3% returns are not that bad if you’ve got cash lying around that you want something to do with but not useful if you need to borrow the money.
But you have to sort of wonder why solar costs don’t come down. I guess it would have to be widespread in order for that to happen. Other technology has drastically reduced in price over time.
There’s no need to wonder. The “Moore’s Law” improvements in electronics have come from learning to make smaller and smaller transistors and pack more of them on to chips (and we’re getting near the fundamental limits of that). There’s no corresponding improvements that are possible with solar cells, it’s just a simple pn junction with a large area.
The best hope for improved solar cells is with materials that are cheaper to manufacture like thin film.
The best hope for improved solar cells is with materials that are cheaper to manufacture like thin film.
Cheaper materials, cheaper components, cheaper installation, more efficient uptake, cheaper storage — there are many places where some improvements in price or efficiency can be made, but as you note, the solar energy game is hardly a Moore’s Law-like arena, for reasons practical, economic, and material.
Thanks for trying to explain this. It just me trying about 80% of the time.
The light gathering systems that use mirrors and smaller high efficiency cells might improve things. Can get something like 40+% efficiency. Cells are expensive and only efficient if you use a certain illumination level. Hence the reflectors to gather more light. Still not worth it except to us amateur hobby folks. Could be another decade before its worthwhile.
Wind is a better option. Heck if Stp2nme ends up in VA you might be able to do some kind of hydro project. Heck, wind is near as cheap as coal/nuke plants.
Also should mention that solar hot water heat is generally a winner as a solar use project.
in VA you might be able to do some kind of hydro project
Huh? Not much drop in elevation there. You really need the large drops in elevation (e.g. the western US) for decent hydro generation.
A useful thought: the Mississippi river only drops about 800 feet from Minneapolis to the Gulf of Mexico, a distance of about 1,400 miles. The Payette river near me drops over 2,000 feet in just 16 miles.
Since we’re on the subject here’s a fun fact.
The average american consumes 47MWhrs of energy from all sources every year (that’s both direct consumption and the energy embedded in the products they buy). That’s the equivalent of $4700 of electricity/year at 10 cents/kwhr.
Every American would need to buy around $160K worth of solar cells to generate all of the energy they currently consume. Or for the country as a whole you would need to buy about $48T of solar cells covering half the state of Nevada.
Solar is coming down. Drastically. This is NOT something you’re going hear on MSM unless you watch TLC or Discovery.
However, Google has all the information. There are big, legit, companies bringing the prices down fast. They are not mom and pop, academic startups or little hippie operations. They are corporations with million+ dollar operations and they are profitable operating huge factories. Heck, they make roof shingles that are actually solar panels but like normal shingles!
Did you know that Solar power tech export is one of our largest and profitable exports? The rest of the world is buying technology we make but won’t use because we don’t know how cheap and efficient it has become.
The best way at present is to have solar installed is on a new build and fold the cost into the mortgage. However a system capable of fully handling 1500 to 2500sqft costs about as much as a large SUV. Still seems like a good investment to me.
Here’s something else to think about. Do you think current energy costs will ever come down? Of course not. In fact, they are most likely to do… what? Yeah, you got it.
Read my post below about capital costs v. distressed buying.
It’s not at all as obvious as people make it out to be. Perhaps for the average person.
Most people on this board are not “average”. There is extreme selection bias going on just by the virtue of being here.
In today’s investment climate guaranteed 3% returns are not that bad if you’ve got cash lying around that you want something to do with but not useful if you need to borrow the money.
Now factor in inflation, say energy prices double over the next 5-10 years as the dollar collapses.
This is a great hedge against inflation.
Assuming you live in the same place during the crash. Otherwise, you’re enriching the future user of the product.
That’s my plan anyway. Get someone else to pay the capital costs. Buy at distressed levels. It works everytime except the boom times.
$200 electric bills in an apartment? Were you using electric heat in that apartment? Because that is a very expensive way to generate heat - I had electric heat in Jersey City and it was a killer. You can’t compare the electric bills you get on electric heat to a house with gas or oil heat. It’s comparing apples and fire trucks.
Were you using electric heat in that apartment?
Yes, I think it was electric. But we did use alot.
Well, if you used a lot then that is why the electric bill was so high. If the house with the solar panels doesn’t have electric heat your proper comparison to the old electric bill the the new electric bill plus the costs of the heat and hot water (ususally oil or gas).
My bill runs around $500 a month, because I run a computer business out of my apartment. I switched one of my servers to an Atom based solution, but a typical high powered PC requires around 300 - 400 watts to run and I have several high wattage servers. I just take the high wattage power use deduction, so that helps. SDG&E steps the power bills so that by running a business from my home I am penalized in a very big way and treated as though I run an AC day and night.
“The house had solar panels on the roof and the developer claimed if I had an electric bill over $40, he would pay the difference.”
What if the developer goes out of business? Is there a time limit on this guarantee? Is it backed by anything except his word?
What if the developer goes out of business? Is there a time limit on this guarantee? Is it backed by anything except his word?
I was just passing through and saw the panels on the house. Not all of the houses had them on top. He just happened to be riding by in his truck and saw me and the wife looking in the driveway. I sort of got the impression the HOA would be covering any costs in his promise, but when we started talking about the price of the house, me and the wife left. Dont get me wrong, the house wasnt too expensive, around $300k and was fairly big in size and it was shiney new. But I wasnt totally in the market for a house like I am (or will be after my vacation this sandbox) now. It just seemed like a good idea to have a backup source of power when electricity fails, and just using sunlight should be a good way to do it, if the technology is there…
Local desert newspaper ran an article a few yrs back(04) front page. Guy bought a house, had it retrofitted with solar. We are talking desert heat summer time, swimming pool- jacuzzi filters constantly running, remote garage door, and so on.
Then they ran the article the full year later, with charts/graphs and his monthly, yearly electric bill.
He ran his a/c at low 78 daily during summer.
He made money selling power back to SCE. It was a Major win for him. The spinner thingy was running backwards.
So cool.
Also forgot to say, SCE here in the desert, west of Washington St is the highest rate in the nation.
We are the ones that the Enron guys were laughing at, “oh those poor grandmothers” by shutting off the grid and doing rolling blackouts. There is a special place in hell for those guys.
Now admittedly, I have not done the math in several years, but I have found solar to be about 3x more expensive than buying off the grid. Hear I think electric runs about $0.11/kwh. When I do the math on solar it runs about $0.33/kwh, assuming a 20 year life span.
Of course buying a solar electric house from someone else that already took the financial hit may change the math.
Having lived in a passive solar house for years, I can tell you that is the way to go. But when we moved in there was a solar drain-down hot water system. It worked well, but maintenance was killing me. I put in a cheap gas fired water heater that paid for it self many times over the “free” heat we got from the sun.
I’ve got nothing against solar, I just think it’s a waste of money in most cases.
What type of maintenance costs? (I’ve been thinking about solar)
Here in San Diego, I pay around 60 cents a KW over a certain amount because the billing is stepped, so solar to take off the top 30% of my bill would actually pay off very well right now.
Ditto here in the desert. Which by the way is the entire southwest as well.
Well here is an update from the trenches: Ventura County California.
Looking at a house that has been forclosed. Sold for $1.2 mill about 3-4 years ago.
House built in 1979
House price in 2000: About $550,000. Some houses in neighborhood sold for $1 million around 2005-2007.
History of house: Sold to a Hispanic family. House was for sale about 9 months ago and very presentable. Wanted $950,000 to 1 million.
Looked at house nine months ago. Illegal garage conversion, all rooms rented out. Spoke to neighbors and they said about 10 people lived in the house. Most rode bikes in the morning and came home on bikes in the PM.
Pool looked clean, some illegal wiring in the back yard. Etc. Overall the house looked clean and presientable, but asking price was way to high.
Present condition.
House forclosed. House is complete disaster! Pool full of pond water. Pool lines filled with concrete. House is a complete disaster. Dead grass, cars, trash, torn out appliance etc. Windows boarded up and house has been broken into by past owners.
Realtor said owner is Deutsche Bank. Realtor is working with a contract managing company out of Florida that has to approve all improvements, changes and has complete oversight of the house. He cannot do anything without first checking with the Florida branch. When he calls in to check on something he gets sent to a call center in India who usually puts him on hold. He said the Florida contract company gets a fee for managing the place, so they are in no hurry to move the house. The house has had two all cash offers, one for $500,000 and the other for $550,000. The bank wants $675,000. Estimates are it would take around $150,000 to 200,000 to bring the house up to neighborhood standards.
The house is a huge eye sore for the neighbors and now there are some other houses that are starting to go into foreclosure. Many neighbors are seeing what their $1 million house is really worth.
Let us know if somebody commits arson on the property. It sounds like a prime candidate.
“History of house: Sold to a Hispanic family.”
These Strawberry Pickers make the rest of us look bad.
Thanks for the update, Simiwatch. It’s sad to see people do that to houses. Guess they were “victims” of the bank, eh?
I went to my bank (Fifth Third) yesterday to cash my daughter’s check and of course the teller chick tried to cross sell me. I hate that.
Anyways, it sounds like 5/3 is implementing their own payday loan service of some kind. With direct deposit you can get an advance on your pay of up to $500 to last you a few days ’til you get paid. I didn’t bother to ask details re: fees, rates etc. ’cause I just wanted to get out of there.
Anyone else have something similar with your banks??
I have accounts at 5/3, too (the result of several regional bank mergers), and when I actually use the bank in person, I’ve noticed the tellers are always trying to cross-sell me something or other — CDs, identity-theft protection, home equity loans, blah blah blah. I don’t recall this constant low-key barrage before.
I think cross selling is happening everwhere. Get it at grocery stores.
And gosh darnit, I have a strict budget and going in and out of stores seeing tills for homeless..well you know where I am going.
I do one a day if out, not one at each grocery store.
When am I going to get a break? I feel bad for folks. Just try to pleasantly…
Yes. The wreckage of Provident Bank (M&T Bank now) is trying to cross-sell everything to make a buck. Last weekend, I went there to cash a check, and they tried to convince that I really needed to: get an annuity (right), put my money into stocks (brilliant?!), and otherwise give them a chance to take money from me with fees while I lose money in unsafe “investments.” Nope - sorry, I’m happy with my current setup where I get a guaranteed rate of return, even if it is low.
The idiot there also tried to convince me that I need to buy a house right now because “housing is very affordable now in Maryland” (it’s not - prices doubled or more and have only come down 15% at most) and that “when mortgage rates rise, housing prices will also go up.” That is obviously so stupid that it wasn’t worth responding to, so I instead just quickly left the place. What a group!
I made a list of properties with acreage to look at over the weekend. They are all gone. Winston’s tax credit started a mini-mania. They are not making any more land, you know? Might have to pitch a tent soon. ROTFLMAO!
They’ll be back.
You betcha! Real-time market sensing is healthy, however. At least, they are lowering the comps.
Land, what region?
The mania has been in full swing in the San Diego area for about a year or more.
Inventory is getting very, very low.
While BB is out pounding the pavement in his
reelectionreappointment campaign, big minds have questioned the potential fallout from policy shifts he has introduced at the Fed in his bid to cultivate green shoots of recovery (and reappointment).“I would suggest first that the new Fed balance sheet represents a fundamental transformation of the role of the central bank. The whole idea behind open market operations is to make the process of creating new money completely separate from the decision of who receives any fiscal transfers. In a traditional open market operation, the Fed buys or sells an existing Treasury obligation for the same price anyone else would pay for the security. As a result, the operation itself does not involve any net transfer of wealth between the Fed and the private sector. The philosophy is that the Fed should base its decisions on economy-wide conditions, and leave it entirely up to the market or fiscal authorities to determine where those funds get allocated.
The philosophy behind the pullulating new Fed facilities is precisely the opposite of that traditional concept. The whole purpose of these facilities is to redirect capital to specific perceived priorities. I am uncomfortable on a general level with the suggestion that unelected Fed officials are better able to make such decisions than private investors who put their own capital where they think it will earn the highest reward.”
Hypothesis: The Fed exists to favor big Wall Street bank interests over the interests of others. Can any serious empirical researcher figure out a way to empirically refute this?
Is it just me, or do the Fed’s bond purchases suggest to others a mother bear eating her own cubs to keep herself alive?
UPDATE 1-Fed’s balance sheet grows with Treasuries holdings
Thu Aug 13, 2009 5:06pm EDT
NEW YORK, Aug 13 (Reuters) - The U.S. Federal Reserve’s balance sheet expanded in the latest week, thanks to a jump in Treasuries holdings, Fed data showed on Thursday.
The Fed’s balance sheet liabilities — a broad gauge of its lending to the financial system — reached $2 trillion on Wednesday from $1.974 trillion a week earlier.
The U.S. central bank’s holdings of U.S. government debt increased to $728.97 billion on Wednesday, up from $705.33 billion a week earlier.
On Wednesday, the Federal Open Market Committee, the Fed’s policy-setting group, said after a two-day meeting it decided to move the expiration of its $300 billion Treasury purchase program to October from September.
The Fed’s buying of U.S. government debt has been the pillar of its quantitative easing policy aimed at trimming long-term interest rates in an effort to end the worst U.S. downturn in 70 years.
The Fed — the U.S. central bank — has also pledged to buy $1.25 trillion in mortgage-backed securities to target mortgage rates and help heal the battered housing market.
As of Wednesday, the Fed held $542.89 billion in these bonds backed by pools of mortgages, flat from the level reported a week ago.
…
The Fed’s buying of U.S. government debt has been the pillar of its quantitative easing policy aimed at trimming long-term interest rates in an effort to end the worst U.S. downturn in 70 years.
—————————
Wasn’t “trimming long-term interest rates” (and short-term ones) what caused all the problems in the first place?
Disaster capitalist case for BB’s reappointment: “The economy is in a state of (perpetual) crisis. Appointing anyone new to the position would risk making the situation worse.”
I’ve been wondering if propping up the market is an attempt to keep him in there. If the president entertains the idea of moving someone else in while the market is flying, then who gets the blame when the market crashes. The banks want to keep the free money flowing, seems to me they want to keep BB in office. They probably know they could end up with a Volker.
“They probably know they could end up with a Volcker.”
That could be good both for increasing the private flow of funds into the housing market (due to higher mortgage lending rates) and for restoring housing market liquidity (due to more affordable home prices).
Is there a down side?
No more asset-based inflation = bad news for banks.
Ace in the hole:
On the outside chance that BB’s reappointment campaign fails, there are other Wall Street-vetted disaster capitalists waiting in the wings who could potentially fill the post. If worse comes to worst, the new boss will most likely pretty much equal the old boss.
Alright HBB’ers, I have to go into battle mode for the next 4 months. My wife reports back to school tomorrow so it’s me and the littleman full-time again; she’s also due at the end of October. The capstone course for my grad program begins in a week and my field work and presentation wrap up in November + I have a bunch of conferences to go to next month. I’m going from 60 to 200mph tomorrow morning.
See you at the end of 2009!
Good luck. Sounds like a handful.
Good luck! Stop by from time to time.
Good luck Muggy w/school and the new addition.
Good luck Muggy!
Good luck Mugster. And to the Mrs!
Try not to let irrational exuberance over green shoots fairy tales tempt you to catch yourself a falling knife.
The writer touches on the role of recent behind-the-scenes government interventions to prop up housing prices ($8K first-time buyer tax credit, foreclosure moratoriums, flood of Ginnie Mae-funded subprime loans, Fed mortgage interest rate buydowns, mortgage modifications, etc). The duration of these interventions will be crucial to the future direction of US housing prices.
* The Wall Street Journal
* REAL ESTATE
* AUGUST 16, 2009
Home Prices: There’s No Quick Recovery Ahead
By BRETT ARENDS
So, is our long national nightmare over? Has the housing market finally hit bottom?
There has been some muted — albeit exhausted — cheering from homeowners in recent weeks. But before we break out the champagne, look out for further potential problems just down the road.
…
Prices may — may — be nearing the bottom in many markets. But beyond the headlines, there are plenty of reasons to stay cautious. There may even be fresh dangers just ahead.
And even if prices have stopped falling, it may be years before they start rising sharply again.
First, late spring is traditionally the strongest season in the real-estate market.
And it’s hardly a surprise the market saw some green shoots this time around. It’s enjoying not one, but two, gigantic taxpayer subsidies — an $8,000 refundable tax credit, or gift, for first-time buyers, as well as those cheap mortgage rates. The Federal Reserve has been spending billions of dollars to keep interest rates down.
Both are only short-term fixes. Any sustained economic upturn would be expected to send long-term mortgage rates rising again, dousing the real-estate market with fresh cold water.
Glut of Empty Houses
The picture on inventories isn’t as good as it sounds, either. A lot of unsold homes have simply been put up for rent instead, especially in the most difficult markets like Miami. The result? A glut of empty rentals as well.
New waves of foreclosures and distressed sales may be coming, too. In states such as California, it can take many months for delinquencies to turn to foreclosures, which means last winter’s bad news may still be coming down the pike. Meanwhile, vast tranches of teaser-rate mortgages are due to reset later this year and in 2010.
As for the economy: Both unemployment and household debt levels remain at extremely high levels by the standards of postwar history. Either is bad news for housing. The combination is very bad.
…
“Both are only short-term fixes. Any sustained economic upturn would be expected to send long-term mortgage rates rising again, dousing the real-estate market with fresh cold water.”
I am missing his point here. What could possibly prevent the Fed from buying down mortgage rates forever if they chose to do so?
Hat tip to the Icelanders for figuring out how to make the best of a banking collapse:
Financial Times
Iceland delivers ‘crisis’ baby boom
By Andrew Ward in Stockholm
Published: August 16 2009 18:35 | Last updated: August 16 2009 18:35
They have been called the “Kreppa babies”, after the Icelandic word for “crisis”.
Just over nine months after Iceland’s banking sector collapsed, the country is experiencing a baby boom.
Deliveries are up about 3.5 per cent so far this year, putting the volcanic island on course to record its most annual births for at least half a century.
…
“I think many, many of us have sought solace in love and sex,” wrote Alda Sigmundsdóttir on her popular blog, The Iceland Weather Report.
…
Brett is a man after my heart…a realist mensch!
Brett Arends’ ROI
Aug 17, 2009, 12:01 a.m. EST
No light yet at end of California real-estate tunnel
Commentary: Despite some claims, situation actually may be getting worse
By Brett Arends, WSJ dot com
NEW YORK (MarketWatch) — Is California’s real estate crash finally hitting bottom?
Some people think it might have.
But color me skeptical.
…
Put that Napa Valley fizz back in the icebox.
Here are the problems.
First, there is no sign of a slowdown in the waves of foreclosures hitting the California market.
If anything, they’re getting worse. And that’s bad news for real estate, no matter how cheap it is.
Foreclosures actually have surged since a temporary lull last winter, according to RealtyTrac, Inc., which follows the data. And while that’s received some attention, it’s only part of the story.
If you want to see what’s coming next, you really need to look at the notices of default. Banks send those out when a homeowner has missed several mortgage payments. They typically don’t show up as actual foreclosures for another five or six months, following legal steps.
The current picture is not pretty. Notices of default have been surging in recent months, according to RealtyTrac.
In the first half of the year they averaged 48,000 a month, hitting nearly 51,000 in July.
That’s a lot higher than the first half of last year. Two years ago the figure was just 17,000 a month.
And then look at unemployment. In California, the picture has been startling. The number of jobless has doubled since the start of the recession. The unemployment rate is now 11.6%. You have to figure that is going to push up the rate of delinquencies and defaults still further.
Meanwhile, negative equity is at surreal levels. Zillow estimates 67% of homes in Stockton are worth less than their mortgages. A recent study by two economists at the New York Federal Reserve said the negative equity on all the homes in Los Angeles, San Francisco and San Diego topped out at more than $20 billion. The figure was $14 billion just in L.A. And those figures were from several months ago.
And now the crash is starting to spread to some of the higher-end areas.
…
Prices in Sausalito have been tumbling since last summer.
Baker’s analysis found that while real estate had become reasonably priced in crash towns like Stockton, the same certainly isn’t true in the upscale neighborhoods. He believes prices in San Diego, Los Angeles, San Francisco and Silicon Valley are still far too expensive compared to rents.
…
Only time will tell if that happens this time. But it’s still too early to call the bottom for California.
Prices in our area are absolutely bubbly…and people are buying houses that are priced around peak levels. I’ve even seen a number that have **made a profit** since the bubble peak.
We desperately need higher interest rates to bring some sanity to this market.
Obama backs away from public health insurance planAugust 17, 2009 6:22 AM ET
All Associated Press newsWASHINGTON (AP) - President Barack Obama is willing to embrace insurance cooperatives over a government-run plan as the White House faces mounting opposition to its broad overhaul of the nation’s health care system.
Abacoa developer acquires 193 lots, but at what price?
By JEFF OSTROWSKI
Palm Beach Post Staff Writer
Sunday, August 16, 2009
In a bargain-hunting move, Abacoa developer Cypress Real Estate Advisors has paid a mystery sum for the 193-lot Bayhill Estates project west of West Palm Beach.
Though the sale was recorded last week at $22.77 million, Cypress’ Nader Salour said the true price is lower than that. He said a confidentiality agreement prevents him from disclosing the amount.
The seller is Lennar/Centex at Bayhill. Bayhill Estates is a development of half-acre lots. The roads are in, but no homes have been built aside from Lennar’s model, Salour said.
It’s the first deal in years for Austin, Texas-based Cypress Real Estate, he said. Cypress aims to hold the lots until the housing market recovers.
“Their thinking is that in a few years, Palm Beach County will be back in a lot-shortage situation,” said housing analyst Brad Hunter of Metrostudy.