Bits Bucket For March 16, 2010
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
December 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
I got to bring the smackdown to some Hawaiian realtors and landlords while visiting the islands recently. The inevitable topics of the tax credit expiring, interest rates going up, and the “economic recovery” were brought up by each person. It’s been a while since I’ve gotten to respond to these ideas, as most of my local friends avoid the subject now and I tend to avoid local realtors. I particularly loved one realtor’s response to my claim that prices would drop when interest rates rose and you’d be able to refinance the mortgage but not the principal. I could see the little “oh crap” light go on in his head. “well, I suppose that is true”
I’m never sure with realtors whether or not they actually agree with me or they’re just trying to be nice to make a sale. This guy was a very decent fellow who spent a whole lot of time with us even though he knew we were just looking for a rental. In the event that I do decide to purchase a house some day I plan to use him as my realtor. I almost hated to rebut his claims and ruin his day… almost.
I’m never sure with realtors whether or not they actually agree with me or they’re just trying to be nice to make a sale. This guy was a very decent fellow who spent a whole lot of time with us even though he knew we were just looking for a rental. In the event that I do decide to purchase a house some day I plan to use him as my realtor.
You just answered your own question
That is the most likely answer, of course. I haven’t quite given up on humanity yet though. This assumes you consider realtors to be human, which I still do.
“you’d be able to refinance the mortgage but not the principal…”
It may be too early in the morning, but I’m not sure what you mean by that.
Improper choice of words there. I realized after the post. Too bad we don’t have an edit feature here.
I’m sure you know what I meant… that you can refinance the mortgage at a lower rate, but can’t lower the principal*.
*: unless you’re a FB who gets lucky.
Better to buy at a lower price at a high rate than a high price at a low rate. With a lower price, you pay less interest over time (taken to its logical conclusion, with a low enough price you could pay cash and no interest overall). And you can always refi to a lower rate later. Rates don’t stay high for the whole 30 years.
Or, the short version: the NAR meme of “buy now because interest rates are historically low” is complete and total bunk.
And yet the number of supposedly educated people who truly believe that when rates rise, prices will rise, is astoundingly high. Everyone I know aside from the handful of “Bubble aware” folks believes this; I point out the math (how a person must split their housing budget between the interest payments and the principle, so when one rises, the other falls and vise-versa), and they just ignore me since “real estate only goes up!” and “now is the time to buy!” no matter when “now” may be.
Maryland is a nuthouse wrapped within an enigma…
“And yet the number of supposedly educated people who truly believe that when rates rise, prices will rise, is astoundingly high. Everyone I know aside from the handful of “Bubble aware” folks believes this; I point out the math (how a person must split their housing budget between the interest payments and the principle, so when one rises, the other falls and vise-versa), and they just ignore me since “real estate only goes up!” and “now is the time to buy!” no matter when “now” may be.”
That’s because they keep forgetting that the buyer sets the price of a house sale, not the seller.
If you have any statistical data to support the conclusion that higher interest rates historically result in anywhere close to a 1:1 reduction in sales price so that the net is held constant please present it. My data does not support this. This is because historically rising interest rates are associated with wage inflation and economic recovery although clearly this does not have to be the case, and prices are stickier than interest rates, at least when people have jobs and are not forced to sell. Also, people with cash can change the amount they are putting down. I do agree, however, that rising rates with no wage inflation would put considerable downward pressure on prices. In short, if you actually end up living in the house for a long time and put only a little down, low rates now might be better for you. If you have a substantial down payment, obviously you prefer a higher rate and a lower sales price.
Natalie,
There are a whole bunch of cases where you can have deflation and high rates or inflation and low rates. Clearly we had inflation in the broad sense with increased money supply in the run up to the bubble.
We also might get into a situation where lending is restricted and investors or banks are hunting for deposits.
Could clearly be headed into a period of contracting credit.
The situation now is a classical depression. We have cheap money abounding but “you” can no longer get any. Basically the banks are unwilling to lend as their are few creditworthy buyers. The people who are credit worthy don’t need loans. Meanwhile the US Govt and Fed have become the lenders to the insolvent who quickly blow the money.
Rising rates always lower how much the “howmuchamonth” people can afford. So, it effects that calculation directly.
“Rising rates always lower how much the “howmuchamonth” people can afford. So, it effects that calculation directly.”
I don’t disagree with this, or your analysis generally. I do note, however, ability and willingness to pay mortgage interest is not a constant and often, but not always, moves in tandem with rate increases. Loan underwriting standards are also an important variable. If we have job recovery, it is not true that prices need to fall if interest rates rise to get us at the same monthly net nut payment that is required to reach historical equilibrium today.
Natalie,
I think there are big time constants in the equasion. There is a substantial time lag between the rate increase and the price drops. So, there is ringing in the system if you model it.
Normally it’s part of the boom/bust cycle. Rates fall and assets that are purchased with credit go up in price and sales increase. Rates go up and there are some finite sales increases to lock in low rates, prices follows still increasing. Burns out really quickly due to affordability concerns. Then sales drop often very fast. ex. fall 06 home sales. Prices will hang in for a long time. We didn’t see significant decreases until 2007.
Again, the housing debt isn’t self liquidating so this gets drawn out as mortally woulnded banks and people deal with the impaired assets and credit.
Those wave theory guys are on to something though. Clearly looks like we are in an echo bubble in prices and another strong leg down is on order.
It is interesting…Japan used massive intervention for decades. The net result of that was further malinvestment, guys wearing bras, and massive debt. Meanwhile the bad debt is apparently been extended till the present day. While this prevented a deeper crash, the malaise lasted longer. In fact they seem to be straining very badly.
There is some lesson for the USA there. As usual I expect we will ignore it.
Natalie,
I don’t know if house prices go down if interest rates go up. However, I’m pretty sure that house prices go up when interest rates go down. The bubble saw to that.
By the way, there is no such thing as “wage inflation.” That was replaced by “outsourcing” about 15 years ago. So throw out any models which include wage inflation.
Even so, I don’t belive that there is no one to one correlation between interest rate and house prices because there are too many other variables in the equation. In fact, I would posit that the largest influence on house price is required down payment.
And lastly, the question isn’t whether house prices go up or down with interest rates; the question is which situation is financially best for the buyer.
“[T]he question is which situation is financially best for the buyer.” I agree with pretty much of all of what you said. The only thing I would question is whether a person that wants to put the very minimum down and actually stays in the place for a decade or more is better off in a low or high interest rate environment at the time of purchase. I think in most times they are better off with the low rates (as I do not think that historically the downward pressure on prices because of higher interest rates has compensated to make the net payment the buyer must make in the two scenarios equal). This is especially true if we go into hyper-inflation because of job recovery. For people that want to pay the house off as quickly as possible, however, and have cash, it is reversed.
Something I forgot to mention: He confirmed what we’ve heard from people in many other mainland locations. That low-end properties were flying off the shelves — primarily due to investors but also due to the tax credit — while expensive properties languish on the market. He also told me that rentals of all types never last more than a week or two on the market.
Here in Southeastern Virginia, I know lots of young people that have bought recently. I’m sure the tax credit added to it, but they wanted a house. I think they overpaid for some garbage eyesores, but you can’t say that to your friends. 1300sqft old houses for $150K+. One is buying a 900sqft place and adding on a garage and other stuff, and was talking about how it will be a $200K property when done. I just cringe.
Yeah, Maryland is the same way. Near tear-downs start at 3x income, and it goes up from there… I keep thinking about those insane townhouses that they are building between: the airport, the Amtrak line, Route 100 (basically an interstate highway within the state), and a stone yard… all built in a swamp… selling for $320,000 and up?!
What is wrong with these people?!?!
You can’t fix stupid.
I live in Hawaii, and what he told you was a typical realtor BS. By and large the only properties selling are <400K (and the majority are under 300K) but they aren’t “flying off the shelves”. Sales suck. REOs are up by a factor of 20 over the same time last year! Rents keep going down as the job market is going down, so an investor who plans to rent out is going to see the value of the house decline and typically aided by poor treatment from renters.
To all of the Colorado HBB’ers out there, how is the market in northern Castle Rock/Southern Denver area? I will be relocating there later this year. Thanks in advance!
I do not know your price range. Castle Rock and Parker are down significantly, especially in the high end range. At the upper ends you can get 40% off peak, at the lower ends not so much as the fools are using the their tax credits to start bidding wars. Littleton and Highlands ranch are down less. Maybe 10%. Again less in the lower price ranges, more in the higher. You can find decent homes in the mid 200’s. In the over 800k range, you should be able to find a luxury home below what it cost to build.
Here is a link to the foreclosures short/sales in the denver area listed on MLS which is pretty easy to use, as well as a free link to Denver area MLS listings which allows you to use many search features such as neighborhood, price, etc. I am not promoting the realtors who created the sites at all (and have never met them), just use their free tools.
http://www.colorado-homestore.com/properties.bank/a/145.php
http://www.washingtonparkhomes.com/
On the second site, use the SEARCH MLS link on the left.
Also - Denver’s Property Assessor’s records are public and available on the web. Do a Google search and, once on their web site, you can look up a property address. It will show you what the current assessed value for property taxes is, and (about 50% of the time - as you can request that such information be removed for privacy reasons) what the current owners paid. Outside of Denver you can try to do a Country or City search, but I do not know if they are public record.
“At the upper ends you can get 40% off peak, at the lower ends not so much as the fools are using the their tax credits to start bidding wars.”
This seems to be the case in pretty much all markets. I think it’s mostly due to speculators rushing in for low end properties which barely cash flow. Cash flow positive properties could not be found during the bubble years, and the second they returned, so did massive speculation. I think that people are overpaying grotesquely for many of these eyesores, and will be disappointed not only as prices ultimately continue their decline, but rents do as well.
This seems to be the case in pretty much all markets. I think it’s mostly due to speculators rushing in for low end properties which barely cash flow. Cash flow positive properties could not be found during the bubble years, and the second they returned, so did massive speculation.
You just wrote Tucson’s story in a nutshell, Griz.
And, sorry to say, a lot of these speculators are going to get a very painful learnin’ in the realities of landlording. That’s happening to a guy who owns a house down the street from mine.
Three years ago, he and the wife moved out, fixed the place up, then rented to a family of louts and their pack of nasty dogs. Those dogs would bark at everyone going to and fro past the property.
Didn’t matter if you were bicycling over to the university or walking to the school bus stop, those dogs would charge the front gate and act like they were going to tear you to bits. We neighbors did not care for the dogs, and more than a few of us suspected that they were there to, ummm, guard something that the tenants didn’t want disturbed.
Suspicions were heightened after the tenants moved out, but left the dogs behind. People were going in and out of the vacant property during the late night and just-before-sunrise hours.
On one occasion, I was up late and I saw one adult male taking small children onto the property. That was just before midnight, and the male was not the kids’ father. Looked more than a little suspicious to me.
‘Twas time to let some of my friends wearing badges -n- blue know about this and other things. To their credit, they got right on it, and, wouldn’t you know it, the night visitors and the dogs disappeared in a matter of days. They haven’t come back.
Nowadays, we’re enjoying the tranquility. The unoccupied property doesn’t look too bad from the outside, but every time I see Mr. Landlord over there, he does not look like a happy man.
I think he’s looking at some major repair/renovation bills before he can put the place back on the rental market. If he does. He may just fix the place up good enough to sell and be done with it.
Update on the above story: The property is now being inspected (from outside the front wall) by an animal control officer. Too bad the (now former) tenants and their nasty dogs disappeared last Friday. An encounter between the former tenants and the ACO would have been quite the sight.
We have friends who bought a smaller SFH in Highlands Ranch about 2 years ago. Based on some recent nearby sales (obtained from the site below) selling prices have held steady to slightly up.
www dot homes dot com/Content/Sold-Homes-Prices.cfm
Enter a street address and ZIP code and the site will return up to 20 nearby recent sales, with address, price and sometimes the square footage of each.
The Denver (and Colorado in general) market is weird.
Even in a smaller places like Ft. Collins there are neighborhoods where houses sell quickly (in a few days) with multiple offers and others where nice houses sit unsold for months.
Lower end homes in Castle Rock are selling fairly quickly right now. The builders are now building new 3/2 products for $180,000 or less. This is putting more pressure on sellers throughout the market. Last year Castle Rock gave out 259 new home building permits (very strong compared to most of the front range). Castle Rock and Parker had about 800 to 900 forclosures each in 2009. I think the big question in Castle Rock is how many option ARMs and I/O are out there? I think A LOT. This means places like Castle Rock, Highlands, Lone Tree and Parker may be in for some very unpleasant housing conditions over the next few years. It also appears that a large percent of the community is upside down currently, since a large chunk of its growth was during the boom. Rental rates are also putting a lot of pressure on owners. It appears most rentals are upside down by about 500 to 800 dollars a month.
I looked at realtytrac and saw all I need to know. More like castle-will-drop-like-a-rock. Had no idea a smaller town in the middle of Den and CO springs would be so bubbly. Thanks for your responses, it looks as if this location has a long way to go.
Incidentally, have you SEEN Castle Rock? I do not understand the appeal of the area at all. The terrain is barren, to say the least.
There are many places in the United States are more attractive than Castle Rock. I’ve traveled extensively by car (in all 48 continental states), and I know of dozens of places where I’d rather live…such as the sand hill country of central Nebraska. Literally.
Castle Rock? Yuck. It’s ugly there.
I grew up in the Rocky Mountains, and I think Castle Rock looks great. Too many people for my tastes, though.
It is hard to believe we destroyed America (and the UK) over keeping people in houses they can’t afford and keeping bankers in jobs/bonuses their banks can’t afford…
—————
Moody’s warns nations to cut spending or risk AAA ratings
Washington Post | March 16, 2010 | Howard Schneider
The United States and other top world economies need to make potentially painful government spending cuts or risk losing the high-grade credit ratings that have kept borrowing affordable, the Moody’s rating agency said Monday.
Outlining the dilemma faced by policymakers in the United States, Great Britain, Germany and France, Moody’s said that debt levels in the four large credit-worthy economies had reached the point at which they are at risk of being downgraded — a step that would drive up interest rates, increase borrowing costs and mark a turn in perceptions about the world economy.
Economic recovery might ease the problem by increasing tax revenue, Moody’s reported, but “growth alone will not resolve an increasingly complicated debt equation. Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.”
The dollar rose against major currencies despite the report, a reminder of its continued role as the world’s reserve currency.
“fiscal adjustments” = less entitlement spending
Oh the pain! Social security cuts, medicare cuts, pension cuts, … all sorts of cuts.
The money is just not there.
Spend all you want - we’ll make more.
Sincerely,
- The Fed
(P.S. combo I hope you know this is just good-natured ribbing.)
Oh, if we’re gonna be conciliatory, then I’m sorry I said you might wee your Ayn Rand jammie-jams last night…and I’m sorry I called James a smoke-blowing Archie Bunker…and I’m sorry I said we should nuke the Rocky Mt states…
The money is there for Wall Street but my guess is that there just won’t be enough for main street.
We’ll have to take one for the team. Sacrifice for the good of the country, for Uncle Sam. We’ll have to do it for GOD. We all know Goldman Sachs is doing GOD’s work.
The question we have to ask is who does the FED work for.
If it’s for politicians then we can expect them to overshoot on the inflation side. (Again I don’t think printing money will fix the problem of low GDP as well this time)
If they work for Bankers, after handing off the cash and taking most of the loans that will go bad off their hands. The bankers might want to see a collapse so that they can buy up all means of production in the US for pennies on the dollar.
I think as we see further fed intervention making wealth distribution worse and real economic activity decreasing that the printing will end.
The increasing political fall out will probably destroy the Fed if they chose that path.
Overall credit is still decreasing. I wonder if most of the new debt is going to the government. Everyone else is defaulting, paying down or conserving cash.
“The money is just not there.”
We (HBB) know where it is Combo. It’s buried in your backyard.
LOL. Just look for suspiciously-new flower beds.
Interesting story - my great-great-grandfather and his brother lived in Gettysburg in the 1860’s. When they got wind of the Rebs coming, one of them (I forget which) buried lots of their valuables in the yard, and planted a flower bed on top of them. Apparently it worked.
One of their homes was a prime spot for a sniper, with a high window looking out from town. You can still see lots of pockmarks all over the outside wall where the confederates tried to take out the sniper.
No one has reshingled the outside of the house since the 1860’s?
Wow.
Lots of brick houses in Gettysburg, Polly.
It’s brick.
If you’re ever in Gettysburg, look for a gray brick house, with a high window on the end - I think on Washington street. That’d be it.
Either that or it is the story the Real Estate agent tells the unsuspecting couple buying the overpriced POS across the street in lieu of explaining that a driveby occured a few weeks ago at that very spot.
Maybe it was brick. Did they have masonry block back then?
Imagine what a few Winchersters would do to a modern Pergraniteel McTyvek…
That makes more sense. I have to admit I didn’t even think brick.
I’ve actually seen plenty of houses in WA from the early 1900’s which have the original cedar shingle siding. They’ve been repainted LOTS, but the siding is not new.
There are lots of colorful stories like that. There are no shortage of brick homes from the Civil war area still in Gettysburg, and most of them proudly point out the pock marks left by shot.
A related side note; when we were in Berlin last spring the loft apartment had one bedroom that had been built where a bomb had gone off during WW2. It had destroyed the next-door building and the damage was stopped at the exterior wall, which is now a partition wall. The owner left the brick exposed after the remodel to “show off” the shrapnel damage.
I’ve actually seen plenty of houses in WA from the early 1900’s which have the original cedar shingle siding. They’ve been repainted LOTS, but the siding is not new.
My house in CA had the original redwood siding - from 1890.
That stuff was solid as a rock. I had a heck of a time ripping it out to put in the vinyl siding.
(j/k on that last part
- the rest is true tho)
“The money is just not there.”
Poof!
“We’ll make more.”
Shazam!
“Social security cuts, medicare cuts, pension cuts, … all sorts of cuts.”
Sounds like the 65+ fixed-income set will be fleeced for a disproportionate share of the damages — just like in the 1975-1980 period.
This time, anyone who produces and saves will be fleeced, not just the old. Get in debt now or you’ll still have money to take when they come looking for somebody to pay off everyone else’s debts!
I’m half-joking, I think, but it does make you wonder how much longer we can plunder the productive to reward the crooked/useless?
This is a tough question.
Say I want to buy a house and have enough cash.
Do I borrow and purchase the house and then invest the cash in a risky stock market or no interest so called safe investments? Knowing that my taxes are going to go through the roof.
or do I just buy the house with cash? Knowing that it will likely go down in value but so far the FEDS haven’t taxed homes and I can only get taxed by the state which will tax me anyway.
I’m leaning toward buying the home outright, then putting up solar, geotherm, led lights etc so I have very few needs going forward. I think the game is broken.
anyone who produces and saves will be fleeced
Do you mean “producers” as in bankers who “worked hard” for their millions in bonuses, or do you mean people who really produce something for $60K or less?
“This time, anyone who produces and saves will be fleeced, not just the old.”
Right. Washington is prosecuting an anti-production War on Savers which they think will somehow suffice to maintain American competitiveness in the 21st Century and beyond.
Perhaps it is just that Wall Street has so thoroughly bought the Washington political establishment that that we are on a fast track back to third-world status. It will be all good, so long as Wall Street’s bonus pool remains intact.
Only for younger generations, though. Not those “at or over 55″ right?
You bring a good point. There is a high likelihood that it is future generations of retirees who will get to pay for program cutbacks rather than those currently with political clout.
People that I know over 65 are getting fleeced right now by either lower fixed income because of the rates ,any increases in SSI gets a increase in the medicare costs ,so no gain there in battle with inflation . A number of retired people I know way over 65 got reductions in their pension plans . I’m thinking about
a guy who worked for a grocery market who got a 30% reduction on benefits and he was over 75 . I know another women who is waiting to find out how much her pension will be reduced . It depend on who the Corporation was that you were employed by . How about all those retired people who had shares of the Company stock as their retirement and the BKs rendered their retirement impossible (60 to 64 year olds I’m talking about) people who where just getting ready to retire or people who were retired that were holding the Company stock . One guy was talking about losing 200k in
what was to be retirement stock with one of these BK Banks
Add to that these people can’t get back into working even if they wanted to . And when you look at the fact that
many in this older group just don’t have the funds to pay for the increase in costs of Health care (because medicare only pays so much and inflation has been unkind ). These people retired when you didn’t get 30% increases in health care in one year, Than if you add nursing care in the end ,I would be surprised if many don’t become penny-less and have to become wards of the state . Also many pension plans are fixed and you don’t get cost of living increases on them .
So,how much money you would actually need to have a successful retirement these days has increased dramatically.
It doesn’t surprise me that a many of this older set got into
equity loans they couldn’t afford .
So the pressure on all age groups to make ends meet is getting critical ,while the employment sector is actually reducing wages and benefits and even jobs to go to .
how much money you would actually need to have a successful retirement ??
I don’t think it is the money more than its the guarantee…Government pensions (so far) are guaranteed through the tax payer…They can’t go bankrupt until the private sector can no longer carry the weight…Private pensions are always at risk to some degree…
There’s a guy at work who’s near early retirement age and he spends a frightening about of time looking over every detail of his pension and throwing fits when it differs from his calculations, last month’s numbers, etc. by a few dollars/cents. After hearing enough of this, I’ve mentioned to him that he needs to realize that just because he “got good numbers” when he retired, that in now way holds the company to those numbers. They can, at any time, do whatever they want and basically reduce your monthly pension to busfare if that’s what it takes to keep the bonuses huge for those on top.
Nobody likes to hear it, but the reality is for my generation: there will be no pensions worth mentioning, Social Security will barely cover your cable bill for the month, Medicare will be broke, and there will be no jobs. It sucks, but that’s the way it is: too bad most of us had little choice in how we got here.
Maybe government retirements will be the best no doubt ,I think they have cost of living raises also .
The point is that a system change was pulled on many people making whatever they planned not valid . I think private industry is engaged in a full scale effort to try to transfer their obligations to the government anyway . How long is it going to take for private industry to just refuse to buy medical care for their employees ,or make them pay more of a share . I’m sorry people but Globalism regarding wage competition and foreign manufacturing is playing its hand in this system change .
Talk about discrimination . It’s a fact now that health care discrimination if effecting job discrimination . And all you people thought that affirmative action was needed ,what about job discrimination because of health care prejudice .
Never thought the day would come that one would be judged by the level of their health care risk and get the economic prejudice that would go with that .
My dad’s pension was cut off when he and my mom moved out of Michigan in August. He worked for his nephew, who decided it was time for a closer family member (that would be me!) to take over financial responsibility for the old man. I thought about contacting a labor lawyer, but my dad would probably have a fatal heart attack if I did.
My parents aren’t doing badly health-wise for people in their 80s, but they still spent $12,000 out of pocket last year on health care. Dental work and hearing aids were the biggest-ticket items. Anyone who thinks old people can get by on Social Security and Medicare alone doesn’t know what they’re talking about.
Elanor …I had a pension reduced and I’m getting creamed by
these low interest rates because I can’t make any speculative investments at my age .Right now I’m healthy enough that I don’t use the health care system (in fact I haven’t used it much my whole life ),but I did use it for a family member that passed away and I averaged between 10 to 15 k a year for a long time.
People do not realize that medicare doesn’t cover long term nursing care and other chronic conditions . With the Insurance companies cutting down what they cover on policies in general
i shutter to think what toll that is going to take on peoples personal finances ,even the younger people and families that need to use the system .
Inflation is a killer if you don’t get wage increase with it .
Those over 55 are getting shafted RIGHT NOW. Don’t think it’s just the younger workers who will have nothing. That’s just propaganda by the PTB to keep the rest of us from remembering who got us into this mess.
The PTB that got us into this mess have been largely dead for 15-50 years.
The mess started in 1913, and was enforced at various times, such as 1918, 1934/35 and 1965/66.
Two thoughts here: One, given the tone of this “warning” from Moody’s, you have to wonder if someone in the Fed goobermint might not be regretting not having gone after the ratings agencies with more than a slap on the wrist, right about now.
Two, WTF is Moody’s even doing opining about financial matters these days, after knowingly rating toxic securities AAA?
Maybe they’re trying to redeem their tarnished reputation.
It just may be that Moodys has gotten religion and now they can be trusted as never before. Maybe.
Kinda like how it may be safer to fly the airline that just had the plane crash?
Maybe it’s a warning shot across the bow of any gov that might want to regulate or discipline them. “Mess with us, and lose your triple A. We’ll run your real numbers.”
This seems to be the most plausible explanation.
Wall Street buys the ratings . To bad its difficult to rate anything that isn’t transparent anyway . To bad people thought that the Rating Agencies were independent and objective entities .
At first I thought the Rating Agencies were going to get sued silly
when the meltdown occurred ,but apparently they have so many disclaimer that its a joke. So ,it should of been a” buyer beware ”
market and than maybe pension plans would not of been invested
or other funds and you would of not had this endless supply of easy money looking for a place to park .
Where I think Wall Street was sneaky was that they were riding off the past good will and reputation of the lending secondary market and half way decent lending where the losses were low .They pulled a change in risk because of the CBS’s and applied the risk
of a prior lending cycle . To me this is misrepresentation . When
you change variables you would need a long period of time to weight and test that change . It like changing a medication but keeping the same name and not testing what the new change does in term of risk of the medication .
There would of been no question in my mind that the new loose lending standards and toxic loans and especially no skin in game
would be high risk lending ,in fact crazy lending ,criminal lending
really ,Ponzi scheme creating lending to be honest . No wonder it turned into a high speculation fraudulent RE market . Wall Street in its quest for profits created this situation ,yet they are being pampered ,bailed out ,and protected by our Politicians .
What new reform addresses what happened and why there is a need to actually take away the ability of Wall Street to do this ? Wall Street will always want new ways of making profits ,so every
hair brain thing they come up with are we going to socialize their losses ,no way .
Moody’s works for FED and Wall Street.
They want people to believe the dollar is about to collapse. Get them spending and investing.
“They want people to believe the dollar is about to collapse.”
That scenario is also good for making people feel desperate about working their tails off to remain employed. This shows up on the official government statistics as a beneficial ‘productivity gain.’ Nobody will connect the dots to the blood on the streets we will enjoy over the next half decade.
Well I posted this same thing below, before noticing this one.
I’ll add my same comment - treasury yields are down (????) this morning. Go figure.
Top 5 Most Troubled Real Estate Markets
1. Miami, Fla.
Delinquency rate: 28.8%
Comment: In greater Miami, including Fort Lauderdale and West Palm Beach, one-quarter of mortgages are 90 days past due or worse. In Miami proper, one-fifth of mortgages are in foreclosure or converted to REO. Worst in the country by far.
2. The Rest of Florida
Delinquency rate: 16%
Comment: The only significant metro area in Florida with a delinquency rate below 10% is Pensacola, where 9% of mortgages are 90 days or more past due.
3. Las Vegas, Nev.
Delinquency rate: 21.7%
Comment: Maybe building all those high-rise condo buildings off the strip wasn’t such a great bet after all. Mortgages in foreclosure or converted to REO here are 10.2% of the total.
4. Riverside, Calif.
Delinquency rate: 19.1% Comment: Riverside’s boom is a fading memory; 7.7% of the mortgages in this metro area are either in foreclosure or converted to REO. That’s twice the 3% national average.
5. Bakersfield, Calif.
Delinquency rate: 16.4%
Comment: In this quiet area north of Los Angeles values are way down and 6.4% of mortgages are in foreclosure or converted to REO.
http://realestate.yahoo.com/promo/most-troubled-real-estate-markets
GO MIAMI!!! At least we’re #1 in something.
Coming soon to everywhere, USA - no matter how large the government bailouts and tax credits.
If you can’t afford your house, you can’t afford your house. Now throw in 10-20% unemployment.
Green shoots!
Wow - I knew Miami was bad, but didn’t realize it was that bad.
Is Ft. Myers broken out though? I believe they’ve had it the worst by far, at least in terms of price drops - about 75% now. Maybe it’s not as as bad there now in terms of delinquencies though, since they’re probably further along the curve.
Bakersfried…
“…In this quiet area north of Los Angeles values are way down…”
I reckon Mon - Sun 7pm - 5am “party” gunshots / screams from knife stabbings / car windows being shattered…can’t compete with the noise from LA
Should I mention about the scent of pesticide & “soil flu” ?
Interesting that the foreclosure capital of the world was not in the top 14. Los Angeles and Chicago beat them out. Where are you Stockton?
Wow one of the several banks holding my 5%+ CDs was just charged with TARP fraud (but of course FDIC took over the deposits and sold to another bank with no customer loss):
Ex-Chief of Park Avenue Bank Charged With Bailout Fraud
By BENJAMIN WEISER and ERIC DASH
Published: March 15, 2010
A former president of the Park Avenue Bank in Manhattan was charged on Monday with fraud, embezzlement and bribery in what the authorities called the first criminal case of trying to defraud the federal government’s bank bailout program.
The former banker, Charles J. Antonucci Sr., misled state and federal regulators into believing that he had come to the rescue of his troubled institution by investing $6.5 million of his own money to improve its financial position, the authorities said.
Instead, they say, Mr. Antonucci actually made the investment with the bank’s money. He secretly routed it through a group of entities he controlled, and then used it to buy a majority control of the bank, as if the money were from outside investors, according to a criminal complaint filed in Federal District Court in Manhattan.
This allowed him to make the bank appear stronger than it really was, essentially double-counting the money, in an application for more than $11 million from TARP, or the Troubled Asset Relief Program. The government established the program during the height of the financial crisis to pour capital into the nation’s banks at a time when private investors were too nervous to invest their own money.
I miss the days of Italian banking; they occasionally went to jail.
they occasionally went to jail ??
And the remainder ended up sleeping with the fish…
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLpgycVDze3E&pos=1
Hot off the press: February housing starts declined 5.9% “due to winter storms.”
I am drafting the July headline: “Housing starts declined X.X percent due to summer heat.” Dang global warming.
“February housing starts declined 5.9% “due to winter storms.”
I agree that all of this weather stuff gets ridiculous, but consider: my wife’s grandfather was a builder in upstate NY, he started building in Florida during winter becuase he couldn’t in NY. So while I agree that weather affecting housing is an absurd notion, it’s affected my life in an intersting way — it’s single-handedly why I live where I live. I mean, a lot of other pieces had to fall into place, but the I live in FL because of the relationship between housing and weather.
The Triplets of Opacity Police just pulled my keyboard over… gotta run…
“…due to
winterfinancial sh!t storms.”Riiiiiiiiight, because usually there’s so much building going on in February. Especially in cold climates.
FWIW - this isn’t far-fetched. They are actually starting new town houses around the corner from me, and indeed this area (and most of the mid-atlantic) was completely out of commission for about a week due to that big storm, perhaps more for construction. Yes I know we do normally have snow in February - but we don’t normally have all-time-record snow like we did last month.
Moody’s says the U.S. and U.K. have moved substantially closer to downgrade below AAA, due to rising debt service costs going forward.
For background info - they downgraded Japan this time last year.
As a result treasury yields are… down (?????) sharply this morning. Figure that one out.
Already posted by 2banana above I see - ignore this one.
ROT In America: Systematic Discrimination and Exclusion In Federal Reserve (FOMC) Appointments?
http://groups.yahoo.com/group/TheNewForum/message/25976
Howdy Jas, any bank failures in your ‘hood?
Not so sure there’s a shortage of credit available out there. Took my car to a national chain shop to get the timing belt, water pump, etc replaced. If you sign up for their credit card, you get 10% off the service/purchase, then get 6 months deferred interest.
Save $100 off the maintenance? Sign me up.
Did you compare their price with any other shop’s price? My experience is that there’s no free lunch.
From my experience dealers are about 50% more than a regualr shop.Stay away from carmax whatever you do.
carmax services cars?
But you have to shop around. I’ve found many “independent” shops charge as much, if not more, than car dealers for repairs.
Did you compare their price with any other shop’s price? My experience is that there’s no free lunch.
Yes. I actually got them to price match another quote I had gotten. So it was 10% off an already 15% discount.
Of course, they couldn’t get it running after putting it back together (turns out they broke a small tooth off some gear), so I had a rental car all weekend. But got it back yesterday and it runs fine. Didn’t even have to argue with them about the rental.
“Save $100 off the maintenance”
Assuming the service was not substandard, what you got was $100 worth of deflation, not credit. Credit has to be repaid with interest; deflation is yours to keep.
“what you got was $100 worth of deflation, not credit.”
Except that these deals were around before and during the boom as well.
What you really got was a discount courtesy of other customers, who will sign up _thinking_ they’ll take the free ride, and actually end up paying the stupidity tax. To the lender, it is just a numbers game.
and actually end up paying the stupidity tax.
The shop employees were pretty good about telling everyone it’s deferred interest, and to make sure to pay it off or you’ll get hit with it all at the end (I was there while they upsold a few people on the card).
But yes, PB is right that the “deflation” is mine to keep. But my point is that they’re offering credit as well. I won’t pay a dime on my discounted car maintenance for 6 months (well, I”ll likely pay it off early to ensure I don’t forget about it)
“I won’t pay a dime on my discounted car maintenance for 6 months (well, I”ll likely pay it off early to ensure I don’t forget about it)”
Perhaps they are expecting deflation to provide them with a positive real interest rate during the six months you enjoy a zero percent nominal rate? I.e., the cash you pay them in six months could end up being more valuable than an amount you pay currently, if deflation ensued.
I just don’t think it’s fair to call it “deflation”, considering that the identical thing was occuring during a period that most here considered inflationary. Other forces are obviously at work.
Barclays: Foreclosure Backlogs Are Worst in Florida, New York
http://blogs.wsj.com/developments/2010/03/15/barclays-foreclosure-backlogs-are-worst-in-florida-new-york/
Wow…There are some ugly numbers there…
Does anyone know if the Joshua Tree Extension is being updated to work with Firefox 3.6?
It’s already supported: http://mysite.verizon.net/drumminj_tx/joshuatree.html
Yeah, just remember to right-click on the link and save to desktop (or elsewhere), then drag on to FF. I never could get hold of anyone at Verizon who had a clue and could direct me to the folks responsible for web hosting.
http://mysite.verizon.net/drumminj_tx/joshuatree.html
As economy booms, China faces major water shortage
By Steven Mufson, Washington Post
Tuesday, March 16, 2010
… The source of the water predicament is China’s own economic success. A bigger economy means more factories and power plants, all prodigious users of water for processing and cooling. Big cities are getting bigger, using more drinking, shower and sewage water. People are eating better, and growing more food requires more water. They crave entertainment, too; the Beijing area has 100 golf courses and a dozen ski resorts with man-made snow.
The result has been a scramble for water that is pitting downstream communities against upstream ones, farmers against factories, and people concerned about the country’s environment against those worried that water shortages might be the mighty Chinese economy’s Achilles’ heel. Unlike oil needs, which can be supplemented with imports, water needs pose a much more intractable threat to China’s rise.
“China is facing two prominent challenges: water shortages and pollution,” said Ma Jun, director of the Institute of Public and Environmental Affairs, a Beijing-based group. On top of that, “what’s not receiving attention is the destruction of the river ecosystem, which I think will have long-term effects on our water resources.”
The article didn’t mention desalinization plants. China has a big enough coastline. Granted they’d have to transport or pipe it which would be expensive, but doable.
Desalinization is such a power/maintenance hog that it is only viable for very special small quantities or locations.
Not to mention giving rise to an interesting paradox:
In some areas of this great earth, we’re using potable water to grow corn to make fuel.
In other areas, we’re using fuel to take water and make it potable.
Kinda like raising property taxes to fund an affordable housing initiative….
Water levels rising due to Global Warming.
China consumes more water.
Problem solved.
That’s what I was thinking X-GSfixr. Can the poulation of China hold the Arctic ice cap in their bladders? For long enough? (It’s always gonna recycle. You know what they say- you just rent it.)
Lovely…
In the end, our nation will be filled with unemployed mobs roaming through Wal-marts that have turned into landfills of cheap, toxic junk. Meanwhile, China will have unemployed mobs roving toxic wastelands that used to produce all this junk.
Wow, this consumer economy idea sure worked out great for everyone, didn’t it?!
The end game of globilization on an Earth with limited resources. Poverty for the masses, wealth and power for those that control natural resources.
When I was in Beijing in the late 90’s they told us to use bottled water at all times.
Tour guide said even the residents didn’t drink tap water.
Guess this little trick with playing with assets was done by the BIg Boys as well as some small boys . I will only restore my faith in the system once
some of the King Pins do a walk . If they keep on dicking around and postponing Justice ,as bail outs have ,all the culprits will be beyond the Statue of Limitations . If the culprits crimes are legal ,than its time for a change of the laws ,but I don’t believe that they didn’t step over the line .
Interesting how the new finance reform is lacking in attacking the actual casino games and lack of transparency . Oh right .lets set up a system where you can only spot the crimes after the fact and the damage is done .
The Fed doesn’t want a audit ,the TBTF don’t want a audit . Lets see ,
they had to audit Lehmans because of the BK ,they had to audit Madoff
because he confessed .
I really dislike putting investments under the broad heading of funds that will have a built in Government backed bail out fund . It’s ok for the regulated banks in terms of FDIC ,but investment grade paper is to vast and to lacking in transparency and to leveraged to be put under this sort of false assurance . Investments are designed to have loss potential and there is no reason to set up government funds to bail them out . The culprits got this lucky bail out and now they want to institutionalize
taxpayers paying for their greed games if their risk taking goes to far .
Glass-Steagall separation of lending from investment was the ticket .
It wasn’t enough money for Wall Street to just trade stocks ,especially with the internet and the cheap trading options so they came up with
playing with other peoples money with lending /games with credit default swaps and they created a Ponzi scheme in Real Estate and destroyed the entire stability of the RE market . They rode on the past good ratings of that Secondary market
and created securities that were so high risk that the Nations stability has been destroyed over it ,not to mention many a household . Is there any question that they shouldn’t even be allowed to be lenders . And the little ploy of the TBTF Investment banks quickly buying Big regulated banks to make it look like they are regulated lender was a joke ,but the problem was they were in bed with the lenders .
Tell me what the different in reserve requirements are if you allow a unregulated Investment Bank to buy a regulated banks paper .If one has reserve requirement and the other doesn’t ,yet one can sell to the other,
you have given the regulated bank the same reserve requirements of the unregulated bank . In fact the regulated banks would of been put out of business had they not assumed the crazy / innovative lending
of the BIg Investment Firms . These are just greedy middlemen that
thought of a way to take other peoples money and make money off it through faulty lending with bogus reserve requirements and off the chart leverage ability .
The investment sector of the economy took center stage over productive activity as in get rich quick by easy money inflating the price of real estate ,which isn’t productive and is in fact destructive and fake. Also Corporations quest for dumping the America work force in favor of
Globalism game playing is not productive for American citizens and its
not productive for having a sound tax base . Until they address the real issues ,I can only conclude that Wall Streets influence is so huge that
the Politicians are incompetent in drafting anything that would be a
majority of Citizens saver, and that would include Health care reform .
Sorry for the big rant ,but its clear the Power Brokers don’t want a systems change that is necessary for the benefit of the Majority and
perhaps the saving of America .
“I will only restore my faith in the system once
some of the King Pins do a walk .”
Main purpose of Fed power grab: Provide cover up for the subprime mortgage lending kingpins of Megabank, Inc to get away scot-free.
Perhaps you’ve forgotten that GS was at the center of this mess and the GS alumni also run the government.
There will be no perp walk, only a scapegoating of some fringe players at best.
Besides, you have problem with Corporate Communist Capitalism©®™, comrade?
“GS alumni also run the government.”
Still worse: The treasury secretary is both a GS alum and a central banker. Is there any mystery about the move to vest more financial regulatory power in the opaque Federal Reserve? The move will help GS and its Megabank, Inc peers escape scrutiny and perp walks for their roles as subprime mortgage lending kingpins.
PB…….Just watching how these creeps acted after they got the bail outs is proof enough that they could care less about the suffering of Main Street and they just look at the majority as pawns . They don’t want their casinos regulated but they don’t want the fiduciary responsibility either that goes with handling
other peoples money . Now their big quest is to have a automatic bail out fund taxpayer paid while they get to play their casino games .
Joseph Kennedy knew how evil and corrupt they were and managed
to get his funds out of the game before the big stock market crash of 1929 . Joseph Kennedy help design some of the consumer protections later on regarding the casinos. Nothing like a insider who knows what to do ,rather than all this
PR chatter that wants to keep the systems in tact . They did the right thing in the 1930’s with new regulations but they aren’t doing that now . Creating FDIC insurance to insure a regulated banking system made sense . Doing the same thing with the investment sector is not practical for starters .
Still no financial regulation
Buffalo banker delivers a reminder that meltdown’s causes need attention
Updated: March 16, 2010, 6:35 am
Published: March 16, 2010, 12:30 am
Congress apparently hasn’t grasped the larger message of the financial meltdown that nearly vaporized the world economy from 2008 to 2009, so it’s useful to deliver a blunt reminder. It’s particularly useful when the reminder is delivered by a banker, and even more so when the banker has the stature of Buffalo’s Robert Wilmers.
Chairman and CEO of M&TBank, Wilmers sent up a rhetorical flare last week, warning in his annual letter to shareholders that Congress still has not passed financial reforms that would ward off another calamity. It’s an important— and incomprehensible—point. The risky financial practices that brought on the “Great Recession,” from which the country is still recovering, remain officially unchallenged by Washington, whose duty it is to protect the nation’s fiscal infrastructure through sound regulation and oversight.
…Wilmers says Washington must address the problem of institutions deemed “too big to fail” and limit how far government will go in any future bailout. That would help to instill a useful degree of caution in the management of those institutions.
This state is the nerve center of the nation’s financial sector, giving New Yorkers special reason to demand action by Washington. The lack of federal regulation (together with bad government out of Albany) has pushed New York to the brink of financial disaster.
That gives our federal representatives, especially Sens. Charles Schumer and Kirsten Gillibrand, more than enough standing to lead the Congress in the direction that it must go, before bankers who lack Wilmers’ good sense once again drive us off a cliff.
I hate to preempt the almighty Fed, but I predict they will not announce a tightening of rates today.
Another prediction: If I am wrong about interest rates, then I predict a stock market crash.
I think you’re right, they won’t raise them until they have no other choice.
They won’t raise them until bankers and elite have off loaded all their bad MBS and taken on as much free cash as possible. Then they will raise rates unemployment be damned.
Exactly.
Nothing will be done to stop the printing of money and the runaway greed and corruption until some outside event forces their hand.
However, they WILL make up cute stories about raising rates since it suits their purposes and keeps people listening to them… but nothing will be done.
market pulse
March 16, 2010, 2:13 p.m. EDT
Fed stands pat on rates, policy wording
By Greg Robb
WASHINGTON (MarketWatch) — The Federal Reserve kept its benchmark interest rate at a record low level Tuesday and made no changes to the key “extended period” policy pledge.
…
How totally unexpected!!!
The sidebar to this story shows there was roughly a 12 percent YOY gain in used home and condo prices in San Diego from Feb 09-Feb 10. It also shows total sales of 2,465 homes. Given that foreclosure and default notices to SD County home owners were recently reported running at monthly rate of 5,399, I am wondering how the flow of used homes to market and sales are going to equilibrate going forward without further price declines?
Business
February housing prices rebound
Median cost rose $17,000 in county
By Roger Showley, UNION-TRIBUNE STAFF WRITER
Tuesday, March 16, 2010 at 12:02 a.m.
San Diego County housing prices rebounded last month after dropping unexpectedly in January, but experts said they are waiting for spring sales to tell them whether the market is improving or just treading water.
MDA DataQuick reported yesterday that the county’s median price in February rose $17,000 from the previous month to $322,000, its level for most of the second half of 2009. On a year-over-year basis, the median was up 13 percent, the best increase in five years.
DataQuick analyst Andrew LePage said the increase was not caused by a sudden increase in appreciation but by a change in the market mix. The homes that closed escrow in February were in all price ranges, he said, instead of mostly low-cost distressed properties.
“What did sell in January tended to be more concentrated in (homes for) the first-time buyers and investors,” LePage said, which caused the median to fall from $330,000 in December to $305,000 in January.
…
Good thing the median household income in that county is well over $100,000, right? Right? Oh, wait…
Unaffordable housing is key to a healthy eCONomy, or so I am told.
So is unaffordable medicine! And new cars! And higher education!
If the Fed’s powers are enhanced, that should help make it easier for Megabank, Inc to escape serious scrutiny for its role in causing the Fall 2008 financial meltdown.
* BUSINESS
* MARCH 16, 2010
Federal Reserve Could Emerge With Enhanced Powers
By SUDEEP REDDY
The Federal Reserve, battered by the public and politicians for months, emerged a winner in the latest Senate draft of legislation to remake the nation’s financial regulatory system.
The bill that Senate Banking Committee Chairman Christopher Dodd (D., Conn.) unveiled Monday would maintain the Fed as supervisor of the nation’s biggest financial institutions and give it a leading role in monitoring the financial system.
That is a departure from Mr. Dodd’s initial proposal, which would have created a new agency to oversee banks, over the objections of the Fed and the Obama administration. The new bill also would make the Fed the home of a beefed-up regulator to protect consumers, though it would exert little control over it.
But the Dodd bill, which faces an uncertain future in the full Senate, would take oversight of thousands of banks with assets under $50 billion from the Fed and give it to other federal agencies. The change was fought by most of the presidents of the 12 regional Fed banks, whose role would be diminished by the change. The Fed has warned that the proposal would unwisely narrow its scope to 35 of the largest financial institutions.
The bill would also institute more political control over the Fed by giving the president—instead of the Fed—the power to name the president of the Federal Reserve Bank of New York. That person directly supervises major Wall Street firms and serves as vice chair of the Fed’s monetary-policy committee.
“I don’t necessarily see it as punishing the Fed but rather getting back to core functions and having clear lines of authority,” Mr. Dodd said Monday.
The Fed’s political standing waned throughout last year as lawmakers attacked its handling of bailouts and its failure as a regulator of mortgages ahead of the crisis. The anti-Fed sentiment nearly toppled Fed Chairman Ben Bernanke’s confirmation to a second term as chairman, but his 70-30 victory in January appears to have been a turning point.
The Obama administration, banks and some Republican lawmakers have fought to keep authority inside the Fed instead of dispersing it to new agencies. Fed officials mounted a behind-the-scenes lobbying effort to maintain much of its authority.
…
I really only see one main problem with Dodd’s proposal to vest more power in the Fed. Since they are bubble blind, we should have no reason to expect them to be any better at seeing and rooting out corruption that surrounds them in their Wall Street banking constituency. In fact, I would guess the move to vest more power in the Fed will primarily serve to give Wall Street good cover to continue with business as usual.
Keep up the great work! I am looking forward to lots more bubbles and financial crises over the next thirty years, with plenty of bonus loot to split between politicians and banksters!!!
Danged weather! Even messed up the new home permits figure…
* REAL ESTATE
* MARCH 16, 2010, 10:19 A.M. ET
Housing Starts Tumble
By TOM BARKLEY And JEFF BATER
Home construction tumbled in February, with major snowstorms crippling business already hobbled by foreclosures.
…
Snowstorm hits US housing market revival
(AFP) – 2 hours ago
WASHINGTON — Construction of new houses in the United States slumped in February on freezing temperatures across the nation, breaking a rally that spurred hopes of a rapid recovery for the battered sector.
New construction starts were down 5.9 percent in February versus the month before, the Commerce Department said Tuesday, as analysts saw bad weather once again clouding their view of how well the US economy was recovering.
“It was tough to get the shovels into the ground in February so not surprisingly, home construction fell,” said Joel Naroff of Naroff Economic Advisors.
“It will be nice to get through the weather-driven February data so we can start getting a better picture of what is really going on in the economy.”
…
Once those global-warming-driven snowstorms are all over, I am guessing a home construction boom will ensue, driving home prices down to the most affordable levels on record.
How does that sound to y’all?
Homebuilder sentiment index falls in March
By ALEX VEIGA (AP) – 19 hours ago
LOS ANGELES — Harsh winter weather and competition from deeply discounted foreclosures are putting a damper on sales prospects for homebuilders.
The National Association of Home Builders said Monday its housing market index, which tracks industry confidence, slipped this month by two points to 15, back to its January level.
Builders are seeing fewer prospective buyers and are feeling less optimistic about the likelihood of sales over the next six months, according to the survey of 477 builders.
Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.
…
Got a letter from a Realtor who does mostly higher end stuff ($500K and up) that the bottom would be put in this year in Sarasota. Listings are down 50 percent from last year, and prices are down 50 percent from 2005. But another agent told me last week that bank foreclosure listings are just starting to come in heavier, just wait and see. I suspect they are both right, tightening at the top and very weak at the bottom. Does that really make any sense?
This is what my realtor from Sarasota sent me a few days ago.
Property sales up 49 percent in February 2010; pending sales spike
Overall property sales reached 528 in the Sarasota market in February 2010, up nearly 49 percent over February 2009, and pending sales were also strong at 967 - the second highest total in the past four years. The statistics continue to reflect a recovering Sarasota market, as median sale prices also rebounded for condos in February and remained stable for single family homes.
February sales of 379 single family homes and 149 condominiums was a major improvement over February 2009, which saw only 354 overall sales (260 homes and 94 condos). Pending sales, at 967, were about 19 percent higher than last month’s 815, and more than 23 percent higher than the 782 reported in February 2009. The statistic is a strong indicator for the next two or three months of sales, as pending sales are an indicator of current buyer activity, and likely reflects the rush of buyers to qualify for homebuyer tax credits before the April 30th expiration.
Median sale prices in the Sarasota real estate market rose in February 2010 for condos, while slipping slightly for single family homes. The median sale price for a single family home was $150,000, down 4 percent from January’s $156,250, but up 5.6 percent over last February’s figure of $142,000. For condos, the median price rose to $169,000 from last month’s level of $165,000, a 2.4 percent increase. Last year at this time, condo median sale price was $198,000. For the last 12 months combined, the median sale price for single family homes was $160,000, while the median sale price for condos was $185,000.
Distressed property sales represented 47 percent of the overall market in February 2010, nearly the same as the previous month’s figure of 48 percent. The high percentage of short sales and bank-owned foreclosure sales in the Sarasota market continues to be the single biggest factor holding back the overall median sale prices.
Normal arm’s length property sales continue to show median sale prices roughly 150 percent higher than distressed property sale prices.
“Despite the national economic doldrums, lingering high unemployment, and other negative factors, our local real estate market remains strong compared to recent down years,” said 2010 SAR President Erick Shumway. “There are now several months of positive numbers which indicate we are emerging with strength from the recent downturn. While distressed property sales remain a drag on the overall market health, all the other statistics are tracking in a very positive manner.. Our local and even our international buyers are proving the old adage that you can’t keep a good market down for long. And with pending sales at nearly 1,000 last month, the near term future looks very promising.”
The property inventory level fell slightly in February 2010 to 6,329 from the January total of 6,342, which remains at near the lowest level since late summer of 2005.
The months of inventory for single family homes was 10.6 months, a drop from last month’s 11.5 months and far lower than the 24.1 months in February 2009. For condos, the months of inventory level was 15.4 months, or slightly higher than the 14.7 months last month, and far lower than the 28.4 months only a year ago. Once the market reaches the 6 month level it is considered to be in equilibrium between buyers and sellers.
The first-time homebuyer tax credit, extended and expanded to include many other homebuyers on Nov. 6, expires at the end of April, noted Shumway. He urged potential buyers to contact local Realtors® and get a contract approved before the end of the month to ensure they can take advantage of the $8,000 and $6,500 credits.
Click HERE for the complete PDF version of the press release, along with two pages of statistical charts.
Conclusion, more money than brains.
Now for that mid-day funny yet disgusting I-can’t-believe-this-$!%#-happens news of the day:
‘Pubic’ Enemy Megan Barnes Caused Keys Crash by Shaving Bikini Line While Driving
Mar. 9 2010
According to the arrest report, on March 2, Megan Mariah Barnes told Florida State Trooper Gary Dunick that she was on her way to Key West to meet her boyfriend, and that she “wanted to be ready for the visit.” So, police say she had her ex-husband, Charles Judy, who was riding in the passenger seat, take the wheel while she attended to her pubic hair.
Police say Megan Mariah Barnes was shaving her bikini line while driving her Ford Thunderbird in South Florida. On March 2, she rammed into another vehicle that had slowed to make a left turn. Police also say that her license was under suspension because of a DUI conviction.
The results weren’t pretty. Going 45 mph, Barnes and Judy are said to have rear-ended a car that had slowed to make a left turn.
A day earlier, Barnes had been convicted of numerous driving infractions, including DUI with a prior arrest and driving with a suspended license. She had been ordered to impound her car, her license was revoked for five years, and she had been placed on probation for nine months.
Dunick told The Citizen newspaper that after the crash, in which two passengers in the other car were treated for minor injuries at an area hospital, Barnes drove for another half-mile before switching seats with Judy in an attempt to make it seem to police as though she had not been driving.
“It is unbelievable,” Dunick said. “I’m really starting to believe this stuff only happens in the Keys.”
“She was charged with leaving the scene of an accident,” said police spokesman Lt. Alex Annunziato, “in addition to all the charges stemming from her earlier violations.”
If found guilty of violating the terms of her probation, Barnes could face a year behind bars.
I think she should be required to have a tattoo depicting the hair she was trying to remove applied several inches down her legs from her bikini line.
Let the punishment fit the crime.
Her ex-husband was driving her to meet her boyfriend?
Wow. Bigger heart than me.
It could also make him the “smartest guy in the room” from the sound of it. Maybe he was just trading in a “lemon” for something else.
Take my wife … please!
At least everyone was alright. Sounded like a close shave!
What if Wall Street is just pretending to hate the Dodd bill? You know — the standard Grand Kabuki Dance routine of political theater? After all, with so much more power going to the Fed, it should be much easier to hide Megabank, Inc’s culpability in the recent financial meltdown.
David Weidner’s Writing on the Wall
March 16, 2010, 12:01 a.m. EDT
Going out like a lion
Commentary: Dodd plan seems built for his legacy, not Wall Street
Populist politics not Wall Street’s cup of tea
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — Here’s one way of looking at Sen. Christopher Dodd’s financial reform bill: if Wall Street hates it, it can’t be all bad.
…
I think many if not most people are suspicious of the financial industry. Which translates into, “If the banks want it, I’m opposed to it.”
Wall Street doesn’t want a CFPA in the first place. Their fallback position, I recall reading, is to have it at the Fed.
David Weidner’s Writing on the Wall
March 2, 2010, 12:01 a.m. EST
How health care sent financial reform to a death panel
Commentary: Obama doesn’t have the passion for cleaning up Wall Street
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — Barack Obama surfed into office on a wave of financial panic. A year later, he’s ended up dry but the rest of us are still looking for a life preserver.
So, what happened?
Instead of making financial reform and the economy his first priority, the president chose to follow through on a domestic agenda built for better times. He went to work on health care, high-speed rail, green technology and Iraq. He put financial reform in the hands of people who contributed to the problem.
…
He did what his Wall Street masters wanted him to do.
I sort of had the suspicion that the health care was done this way by design. Get the people riled up for something bitter and partishanhip and they will forget about WallStreet alltogether.
Just like shrub attacking Iraq after 911.
Revolution Investing: Fight the Fed
March 16, 2010
Fox Business anchor Cody Willard explains to Simon Constable why the conventional wisdom of selling when the Federal Reserve hikes interest rates is all wrong.
Without looking at the article - let me guess - “buy on the rumor, sell on the news”?
What do I win?
Paul B. Farrell
March 16, 2010, 12:01 a.m. EDT
‘Wall Street’ sequel is an omen of U.S. collapse
Commentary: Is Oliver Stone’s new film a market-timing signal for the Crash of 2010?
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) — Yes, Oliver Stone is suddenly America’s hottest market timer, as well as the voice of the inner “American Soul,” warning investors of a collapse. Remember the Crash of 1987? One-day 23% drop. Happened just before his 1987 “Wall Street” film hit the theaters.
He says he can’t predict the future. Don’t believe him: Even if he’s unaware of his “source,” it’s stirring again, rising from deep in what Carl Jung would call the “collective unconscious” of the “American Soul,” warning us again of a collapse, using Stone as a stock trader’s “alert.”
Has Wall Street dodged the bullet?
Senate Banking Chairman Christopher Dodd unveils details of a bill aimed at overhauling financial regulation. The News Hub discusses the impact on Wall Street. Plus, WSJ’s Darren Everson joins the News Hub to discuss this year’s brackets for the NCAA tournament and potential upsets in the making.
Wake up Wall Street: You’re getting the biggest market timing signal of 2010!
Seriously, why now? Why after 23 years, did Stone decide to update the message of his famous 1987 movie. Great question: The interviewer was Michael Lewis, former Salomon trader, author of “Liar’s Poker,” a guy who understands Wall Street’s soul.
…
Also author of “The Big Short” about CDS, AIG, and guys who turned 100k into 120 million shorting MBS using CDS in the subprime market, thru GS et al. I am too dumb to understand but a great listen on NPR today.
Turns out all the guys who got rich also got physically sick from their participation in profiting from the fall.
Looked at a house Friday. However, couldn’t get into one of the bedrooms because it was locked. There was a light on in the room. We knocked and called out, but no one answered or spoke. I liked the house and would consider making an offer, but need to see the whole thing before that happens. Will go back to (hopefully) see the mystery bedroom tonight.
Is it overpriced? Of course. What isn’t. But it’s in the perfect neighborhood for me and all the homes there are really solidly built. I have to at least try. My max offer is ~92% of their asking price so not bad, but people around here just do not seem to want to take less than 100%.
Progress report on the Blue Skye saga of “You Own that Property”. My angry landlord has started to tear down the buildings on the property in some kind of twisted display of “it’s worth more to me to pay to tear them down than to sell them to you for less than what it’s worth”. We have had a further falling out resulting from his rummaging in my son’s toolboxes in the barn for things to “borrow” and getting caught. I delivered a scolding like only the father of four stupid teenagers could. It made him very angry for me to insist on the word “stealing”. He does afterall think that as an FB he is a higher life form.
So, he is using a skidder to haul timbers and tin to the silage trench. There are a few hundred tires in there, used to be used to weight down the tarp over green chopped feed crops, like a redneck horizontal silo. Our state Department of Environmental Protection really has a thing about tires improperly stored or disposed of. I’ll bet they will have a hayday with burried tires.
One must be patient in these things of course. There are tons and tons of concrete and then dirt to go on top before he starts digging them up again. It’s a process.
Mortgaged land will make him rich.
HAHA!
I haven’t been watching the saga - but am intrigued. If you’re a renter - isn’t it illegal for him to be on the property without your approval?
I’m only renting the house. Now for only a month as he wants to move here. He offered to sell me barn and land, then jacked the price up double after we had agreed on a price. I have no rights to claim, as a house renter, on the entire farm grounds.
Not only is your LL a moron, he’s a dangerous moron.
I’d start looking for someplace else ASAP. But don’t move until you’ve dropped the dime about the tires.
I’d drop the dime after I moved.
Protesters Dump Blood at Thai Government Site
Wason Wanichakorn/Associated Press
Thai soldiers stood guard outside the Government House after supporters of the ousted Prime Minister Thaksin Shinawatra spilled blood at its front gate on Tuesday.
By THOMAS FULLER
Published: March 16, 2010
BANGKOK — Blood was spilled on Tuesday, the third day of mass demonstrations in Bangkok, but not in the way that many had feared.
Antigovernment protesters pooled their blood — drawn by medical workers in air-conditioned tents — to unleash a red tide at the gates of Government House, the office of Prime Minister Abhisit Vejjajiva, and later at his party’s headquarters.
“We will curse them with our blood and our soul!” yelled a protest leader, Nattawut Saikua, to roaring approval from a crowd of several thousand people at Government House, including farmers, monks and vegetable sellers.
…
Was reading into the healthcare package. Pretty simple language so far. I got through about 100 pages.
Has a bunch of requirements that I believe most insurance companies could meet.
There is a questionably funded high risk pool in there. It also mentions that when it’s out of money it’s ration time.
Then you get a bunch of amendments that make things nearly unreadable. Still digging into it.
Looks like there will be a secretary of health care.
I predict that many of the current villains, especially those that sell other lines of insurance, will get out of health insurance altogether. Which means that this country will get a public option by default.
BTW, a longtime friend in insurance sales once told me that there isn’t a lot of money in selling health insurance policies. Where the agents really make their money is in selling life insurance. That’s why if you see an agent about something else, say, changing homeowners insurance policies, they’ll make sure to get a life insurance sales pitch into the mix.
“It also mentions that when it’s out of money it’s ration time.”
Kill Grandma contingency?
I would say it isn’t kill grandma. More like go whine for another bailout.
Then we will get all guilty feeling and cough up the $.
I’d rather do stuff voluntarily with out all the government intervention. Personally I just end up giving money through my church and we go amazingly far with it.
Just not sure how much that applies to other folks out there. Level of community involvement is depressingly low.
Course there was a study that showed conservatives give more money to charity across all levels. Probably just a religion thing.
Think liberals are religious about government help.
My general feeling is that things are better handled by non-government local level intervention.
Looks like there will be a secretary of health care.
“Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
…
“He (King George) has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.”
…
- U.S. Declaration of Independence (included in the extensive list of grievances)
Some renter friends of ours (military family) just had their rental home sold out from under them. Turns out their landlord was an investor who kept collecting rent from them, even though he stopped paying the mortgage on the place months ago.
Can they bring suit against him to either (1) reclaim the rent he stole from them, which should rightly have been used to keep up payments needed to honor the landlord’s side of the lease agreement? (2) Have the scumbag debtbeat thrown into debtor’s prison?
Not a lawyer, but from where I’m from I’d say negative. If the renter had stopped payments (independent of whether or not the LL did) he/she is in breach of contract, so he didn’t steal anything from them since there was consideration given (the ability to use the house). Typically there is a 30 day vacate notice on either side though and the penalties for breaking the contract vary. Perhaps if they are kicked out immediately out they can sue for whatever damages are spelled out in the contract?
This doesn’t mean that I don’t agree that he’s a scumbag, however.
No and no, but if they are in Cali they have 60 days from notice to vacate, and the new owner may sweeten the offer to leave sooner.
Our friends actually got 90 days to vacate (not sure of the details). And apparently the former landlord (and owner) cannot be located.
you can’t do anything. My old landlord pulled the same thing, collected almost 11 months of payments from us before we got evicted by the sherrif, no warning except a notice taped to our door. This scumbag LL did this on 12 of his properties, pocketed the money, let the bank foreclose on all of them, then with all the money he made bought a sweet place with an ocean view in Carlsbad for cash.
The only suckers in this whole housing bubble were the savers and renters.
One law that came about last year is renters in these situations get to finish out their lease, it was not on the books for us to take advantage and we were kicked to the curb. Ruined our relationship, both of us had to move home and that was the end of our 5 year relationship.
If oil weren’t so bloody volatile, perhaps we could regard it as the “real” currency, given the perplexing nature of the value of printing press money these days…
* MARCH 16, 2010, 3:49 P.M. ET
Treasurys Up, Dollar Eases After Fed
By MADELEINE LIM
NEW YORK—Treasurys rose, while the dollar declined modestly after the Federal Reserve left interest rates unchanged and reiterated its commitment to keep rates low for a while.
The Fed, which held a one-day policy meeting Tuesday, repeated language it has used over the past year—that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” That phrase supports expectations that rates will remain close to zero possibly for the rest of this year.
Investors responded by pushing up the prices of growth-sensitive assets such as stocks and commodities, as low interest rates should help support the economic recovery. A low-interest rate environment means funding for investments and loans should remain cheap, buoying riskier assets with better returns.
The stock market gained after the Fed statement release, while oil futures ended up $1.92 at $81.72 a barrel.
…
It’s not so much volatile, as messy and hard to carry around. Unless you mean its price is flighty- but then why would it be a good substitute for currency?
More green shoots on the way…
The Financial Times
Fed signals optimism over US economy
By James Politi in Washington and Alan Rappeport and Michael Mackenzie in New York
Published: March 16 2010 18:27 | Last updated: March 16 2010 23:30
The US Federal Reserve gave a slightly more upbeat outlook for the country’s economy on Tuesday, but said interest rates would remain close to zero for an “extended period”.
The central bank said the labour market was “stabilising” and business spending on equipment and software has “risen significantly”. Both descriptions marked improvements in tone compared with the previous meeting in late January.
Despite the progress, however, Fed policymakers signalled no change in the central bank’s monetary policy stance, with interest rates set to remain at their current 0-0.25 per cent range for the time being.
Economists said this suggested there was still nervousness within the Fed about the strength of the recovery – and confidence that inflation would not pose a threat soon.
“The data flow has been on the positive side,” said Ethan Harris, an economist at BofA Merrill Lynch. “But the Fed needs to see something more fundamental in the economy to start hiking rates. The current path is not enough.”
After the Fed’s announcement, US equities closed at an 18-month high, the dollar came under renewed pressure and US Treasury yields declined.
Ben Bernanke, Fed chairman, has been treading a careful line between signalling the central bank’s readiness to tighten monetary policy as the economy recovers and insisting that conditions are not yet ripe for such a move.
“The actions of the Fed leadership signal a strong aversion to repeating the premature tightening mistakes of US central bankers in the 1930s or Japanese central bankers earlier this decade,” said Michael Feroli, economist at JPMorgan.
…
PB …in the meantime more from Dylan Ratigan on the practices of Wall Street.
http://www.msnbc.msn.com/id/31510813/#35899097