July 6, 2010

Housing Bubble Predictions For 2nd Half Of 2010

What are your housing bubble predictions for the second half of 2010? Some from the first of the year. “I don’t think that the RE recovery will begin any time soon in FL. There is still an incredible number of foreclosures and abandoned houses that aren’t on the market. With interest rates so low it doesn’t appear that the banks have much incentive to move these houses.”

A response, “I think the bottom end of the market has stabilized in Ca and Az.The higher end is going to take a major hit this year.Dont get greedy and buy what you can afford.Buy when everyone else is sh@tting in their pants and sell when it seems times are too good to be true.”

One said, “Not sure about CA, but in AZ if you are referring to areas like Maricopa, Suprise, Buckeye, SanTan and such as the low end, then you are probably correct. The low end of areas closer in still have not come down to where they would be in line with median incomes.”

A broad prediction, “I don’t think the real estate market will stabilize yet, though some places will have bigger price drops than others. There may even be a stupid and brief resurgent mania or two in some big cities. Unfortunately, what will continue is ineffectual attempts by the government to “rescue” the housing market. Things like tax credits, homebuilder bailouts (direct and/or indirect), continuing low interest rates and funky FHA-like subsidies will be invented by politicians. Shadow inventory will continue to grow.”

“One good thing that may happen is that sellers will become more restless and rebel against the REIC, and the MLS will not have a monopoly on information like in years past. Realtors will continue to dwindle in numbers, and commisions will decrease in size. Sellers advertising their home on Craigslist may become the norm, even for banks.”

One said, “I predict Q1 of 2010 will see a continuation of the mania in the housing and stock markets, with housing **inventories touching lows** only seen near the peak of the bubble. Housing prices will rise in many areas due to the lack of inventory, low interest rates, the tax credit, and relatively low prices (as perceived by buyers who think 2005 prices were “normal”). The power of low interest rates cannot be overstated.”

“The GSEs will become the ultra-super-SIV, and principal reductions will become the norm on GSE loans. IMHO, one of the reasons inventory has been kept off the market is because the PTB wanted housing prices high enough that borrowers can refi into GSE loans. I believe a good portion of the toxic loans now belongs to the GSEs, and they can now do what they’ve wanted to do, without the complications of multiple layers of investors in the private, securitized market.”

“Conspiracy time: It’s possible we’ll discover that a lot of the “shadow inventory” was sold off in bulk, possibly to creditor nations (like China) in exchange for our Treasury debt — another possible reason for them wanting to keep prices high for the time being.”

“Rates will be kept low, and housing prices will be kept high until late spring/early summer, when some of the housing investors, bulk purchasers, and regular sellers (who’ve held off in anticipation of a better market) see strength in the market and inventory begins to build again around June-September.”

“The DOW hits ~11,500, and the S&P hits ~1,400 by September. Gold goes to 985 in January, then goes back up to the 1,200-1,400. The dollar rallies to 78.21 in the first few months of the year, then declines as more govt programs are announced at the end of April and the Fed continues to force rates down. No change in interest rate policy until Q3, when they raise rates 1/4 pt. with a disclaimer that they will drop them if need be. Unemployment drops for the first three quarters, then rises again next winter.”

“Overall, 2010 is relatively flat, with bullish tendencies for the first 2-3 quarters. IMHO, 2011 will see another “official” recession with multiple state/municipal bankruptcies and bailouts, and housing prices begin to take another leg down.”

A reply, “What were Japanese interest rates like over the period (roughly 1990-2009) when their housing prices crashed spectacularly, never to return?…What happens from here is a gamble on whether interest rates can remain low, and even given low rates, whether home prices can stay permanently high relative to incomes. I still see more downside risk, in the forms of the risk of higher rates or the risk that “higher than expected” foreclosures at the high end will sink everything of lesser value, than I see the risk of getting “priced out forever” again. Further, I am willing to live with the latter risk; I would rather get priced out of San Diego and live out my days in a part of the world with saner home prices, then to get stucco and kick myself forever for failing to follow the sane advice I have freely dispensed here over the past several years.”

Here’s another, “I’ll make a prediction, but it’s more of a pipe dream. If the original premise is wrong, then the whole thing goes to pot. Prediction: Obama and Congress are going to shut off the financial spigot. <— all of 2010-2012 will hinge on this. Extend and pretend may work, but only for a while. There is huge bipartisan agreement in Congress that those billions could be easily put to better use than sneaking it over to AIG or Fraddie.* So at some point, Congress is going to say: ‘Enough. You want liquidity? Sell your shadow inventory for pennies on the dollar and pay your bills with it. If it’s not enough, you can declare BK and wipe out some debt, just like Kmart did. Live by the sword, die by the sword.’ If nothing else, Congress can gum up the works long enough to effect the same effect.”

“Commercial RE will take out a lot of small banks, and all that will remains is the original FDIC deposits. I also think that a couple of big-banks will go into simultaneous bankrupt and break-up. The billions will be put to use creating jobs — even if it’s make-work. If housing prices fall and credit is cut off, you can still live as long as you have a job. Lots of FB’s will go BK as they should, and many will have to squeeze into an apartment or fly without health insurance,** but it will be a life based on fundamentals, more like it was in the 50’s and 60’s, when people lived with layaway and putting a little in the bank.”

“The political disagreement is where to put the billions: jobs, education, health care, war, or paying down debt. But it’s pretty established that the money shouldn’t go to the damn banks.”

A reply, “I’ve been thinking the same thing. Obama says that he doesn’t care about being re-elected, but I don’t believe him. Everything he does this year will be aimed at increasing his popularity. I think he’ll screw the banks and come up with a bunch of “jobs” programs. FDR mode. We’ll see if it works (politically and/or economically, but it won’t work politically unless it works economically.)”

From Brazil, “2010 Predictions: Housing will continue to rise with the rate of inflation. Only a few areas will experience undue speculation. Being under-built, housing construction will increase and home builder equities will rise faster than market indexes. Mortgage debt increases bringing the countries total mortgage debt as a percentage of GDP to 4% up from 3.5% in 2009. Mortgages will be involved in 65% of total house sales with an average down payment of 15%. The average term of the mortgages will be 17 years fixed at 8.5%.”

“Government programs will continue to benefit the poor and middle-class. Because of strict import controls, the industrial and manufacturing sectors will continue to expand adding purchasing power and enabling the middle-class to grow for the 12th straight year. Consumer goods will remain expensive. Exports will rise slightly and therefore increase the trade surplus. Poverty and hunger will be reduced further. The rich will tolerate such things because “inexplicably” (for supply-siders), their wealth will continue to increase as well. These are my 2010 predictions for BRAZIL.”

“2010 predictions for the United States of America: Housing: The hard hit, low-end areas will rise 8% and the thus far “immune” fortress areas will fall 12%. Economy: Interest rates will rise 1.25%. The Dow will end at 9000-10000, Gold at $900-1000 and oil at $70. The fudged unemployment numbers will end about unchanged. Politics: Republicans will experience moderate gains in Congress. The country will become even more politically polarized at the extremes however…”

“Political/Social: 2010 will see an emerging movement from the rational center. Leaders will rise with a message that damns both parties for the sake of America’s survival. Bailouts, lost jobs, lost hope and hijacked government will be the Rubicon crossed. Real, grass-roots movements will involve both the Right AND the Left. The clear and present danger of our corrupt 2 parties will be recognized as the greater danger allowing many to put aside differences for the greater good.”

One notes, “I think we have hit bottom and will stay there for a very long time. People have too much debt to start buying and housing is not going to rebound giving us a feeling of wealth. The feeling of wealth will have to come from someplace else. Our economy needs to change by creating something we can sell to the world and create new jobs. Maybe our educational system can provide the knowledge to create new ideas for a different economy, but people are going to have to give up on the idea of entitlement and put in some honest work.”

A reply, “How can we possibly speak of “bottoms” in the light of trillions of dollars of bailouts and stimulus that have held us up so far? If the government, and The Fed (where does one end and the other begin) can keep pumping money into the system then we may be able to talk of a bottom. Anybody that doesn’t believe The Fed and the federal government can keep pumping in Viagra to the out of work porn star, known as the U.S. economy, cannot yet speak of bottoms.”

“If you believe we are at bottom then you believe the actions of Bernanke and Geithner can continue indefinitely with no external force calling their bluff.”

One from Illinois, “I don’t disagree that prices will continue to correct toward equilibrium, but it seems to me that the litany of interventions has kept (most) housing markets from going completely FUBAR. The Powers That Be have succeeded in slowing the inevitable in a somewhat controlled fashion — I was expecting considerably more chaos, despair, weeping, and gnashing of teeth.”

One from California, “My predictions are reruns from previous years: Cash will remain king as banks and other financial entities continue to relentlessly absorb money from the economy rather than recycle money they receive back into circulation. This subtraction of circulating money will force consumers to cut back on non-essential consumption - not a good thing in an economy where 70% of economic activity depends on this consumption.”

“Because money will be tight people with money will tend to save rather than spend, which will act to restrict money velocity and will make money all the more scarce. The war on savers will end; The war on spenders will begin. Those who need money the most won’t be able to get it, at least not on terms favorable to them as they were in the past. This means those with money will get to call the shots, will get to set the terms.”

One said briefly, “Let’s just hope that the housing market continues to improve defying dark predictions for 2010.”

And finally, “A sure lesson of 2009 is that crazy hangs on longer than anyone expects. I see an increasing number of people thinking that the worst is probably well behind us and we should start getting back up to normal just any time now. Most of my friends are much worse prepared for another shock than they were in the fall of ‘08, many of them say they could not survive another round of trouble. More than a few of these poster children have loaded up on debt in ‘09 to “maintain”, wasting a valuable stretch of time to better prepare.”

“My take is that Normal, in the sense of something sustainable, is still a long way down there. We are headed there in fits and spurts, dragging and clawing all the way. Likely we will get in a wave at Normal without the train stopping at the station. The lesson for me is not to take the day as an end game, but to live, work, play and love hard all along the way. In the last year of this decade I see good things.”

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Comment by GH
2010-07-03 12:16:31

There is WAY too much debt left to go bad (most of it). 2010 will have lost it’s gains by the end of the year and prices will have begun to slide again.

The biggest hidden catastrophe which is ongoing is the mass collapse of small businesses, which are failing at the rate of a couple of GM’s a week in the US and around the world. Each takes with it promise of the future, and a boatload of unpaid debt. It does not appear that small businesses are any ones concern yet, but these are the employers of the future and when the future comes they will be not be there!

So NO I really do not see a sustainable rise in real estate over the next few years, but believe that once the supports are finally removed, we will see a continued downward spiral in prices.

Comment by DebtinNation
2010-07-03 18:53:13

I think we will see a cascading downward effect — no more funny money = no more cushy jobs, HELOC’s, people livin’ large. With the trade deficit and taxes on deck for next year, there will continue to be a net sucking of massive amounts of cash out of the economy. Even with interest rates at virtually zero, people can’t borrow their way out of this recession. Don’t even get me started on the toxic assets and no more free rent for FB’s. This economy has more dead weight chained to it than Jimmy Hoffa. It’s gonna flatline for a long time.

Comment by Bluto
2010-07-05 19:48:39

agree, see it weekly where I live and it is a relatively prosperous area (Sonoma Co., CA)….for lease signs everywhere and even when a deal finally goes through on one the new business often folds quickly too…scary stuff

Comment by aNYCdj
2010-07-05 22:47:19

probably very little walk in traffic or like here mad crazy meter cops….i saw 6 of them saturday at 10:05 am yes 10:05 am writing tickets up and down a main street…its a 1 hour parking zone from 9 am-9pm…..

That’s always great for business a $45 OT ticket

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-06 20:35:41

“…continued downward spiral in prices.”


U.S. Edition
The Wall Street Journal Online
JULY 7, 2010
Industry Cuts Back as Steel Prices Fall

Steel prices in the U.S. are declining after holding firm for months, potentially a bad omen for the nation’s economy as manufacturing activity slows and consumers grow more cautious about big-ticket purchases, such as cars and appliances.

Domestic demand for steel has recently eased in China, raising fears the country could step up steel exports to the U.S. and other markets. Above, an employee at a factory of Baosteel Group, China’s biggest steel maker.

Steel prices tumbled in June, and U.S. steel mills are responding by cutting production. Earlier this year they were ramping up capacity to meet the growth in demand they hoped would emerge from the economic recovery. Instead, demand has been spotty.

Another wild card for the industry is China. While the rest of the world was reducing steel production and consumption during the recession, China’s voracious appetite for building bridges, autos and appliances, helped support global steel prices.

For the most part, China has stepped back from exporting raw steel, in favor of higher-value finished goods. But a recent easing in demand by China’s domestic steel consumers has raised fears the country could step up steel exports to the U.S. and other markets.

“There is a very real risk of steel from China being dumped illegally into the U.S. market, despite all the recent trade action,” said Michelle Applebaum, of Steel Market Intelligence, a steel consulting firm.

Comment by awaiting wipeout
2010-07-03 13:06:36

As no loan contingency buyers in So Ca, we haven’t see much under $500K in our search criteria, which is a modest one-story circa 1960-70’s. Most of the homes are in somewhat marginal neighborhoods, and went out in the high $200K’s, low $300K’s in 2001. I just don’t buy we’ve hit bottom yet, either. With salary deflation, unemployment, debt levels, and shadow inventory, I see another slide down in the second half. Maybe I listen to Christopher Thornberg and Meredith Whitney too much, or maybe Behavioral Econ doesn’t work, and fundamentals do count. (I vote for fundamentals, myself.)

Comment by DebtinNation
2010-07-03 19:10:41

Spot on, wipeout. I’m in SD, and am searching for much the same as you from what it sounds like. And where I’m looking, same story as far as the modest but decent houses selling for 200’s - 300’s circa 2000 - 2002; people seem to think they’ve doubled in value. Funny how rents and income certainly haven’t.

I don’t know about the dynamics of your particular market, but here, there are a lot of people who bought in the 70’s or 80’s for cheap, and they don’t have a gun to their head to sell (unless they’re HELOC’ed of course); at some point, they will, but I think a lot of them will hang on tight.

My other fear with SD in particular is that maybe it is at least (slightly) different here! Not to say the market doesn’t have a long way to go down, but when we moved here in ‘74, my dad got a decent house in a decent neigborhood for about 2x moderate income. That same house would sell at about 8-10x today. I doubt it’ll ever revert to that index.

Maybe a bunch of people from LA and OC figured around 1998, “why am I slaving here to make 120K to pay for a house at 500K when I can make 80K in SD and buy a house for 250K?” Just a thought, I don’t know.

Comment by awaiting wipeout
2010-07-03 20:34:21

Nice to meet you. It is insane. Just an average stick in the burb house is all we want. We came out of a two story McMansion jungle to find a simple one story, and it’s been a brick wall during this bubble. And don’t get me started on the flippers, the delusional sellers, who think bringing deferred maintenance up is an upgrade, and the pos UHS. You and I are being screwed. Waiting is getting old.

Comment by DebtinNation
2010-07-03 23:05:53

Amen to all that. My wife and I are getting tired as well. We’re outgrowing the 2BR condo we’re renting because our daughter is 6 mo. old now, and I really don’t want to saddle myself with another one-year lease somewhere lest we find the right place to buy some time between now and then. And yeah, that deferred maintenance crap is ridiculous as well — we made an offer on a place that was in decent shape but everything was from the 70’s and would have been about 100K to bring it up to date, so we offered accordingly. Of course, the seller thinks her house is a “comp” to the one that’s turnkey.

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Comment by awaiting wipeout
2010-07-04 05:18:46

I’m with you. Your comments are spot on as well. We’re renting mo to mo, surrounded by illegals (bad neighbors), with everything in storage.

Your lease situation sucks. Enjoy your daughter. I call that age “false advertising”.

Comment by ann gogh
2010-07-04 07:23:46

Even though I am renting a great home, the landlord is a slum lord and the prop. manager is abusive. my lease is up in oct and the last thing i want to do is move, but my imagination is saying there must be something better. Is anybody really buying in sd? my biggest rant: I pay for watering a 12 station network of dead or dying grass, i pay a gardener to come 4 times a month but he only comes twice and now the manager threatened to dock my rent if the lawn doesn’t improve. swear words!

Comment by michael
2010-07-04 07:40:17


I am in a similar situation. My wife really wants to build a house. The way I see it is…that if we can get through this depression with the only “sacrafice” being renting a nice townhouse for a few years for half of what it would cost to buy…then I feel like we are in good shape compared to some.

Comment by DebtinNation
2010-07-04 14:22:39


You’re absolutely right. Thank you for helping remind me to count my blessings. It is a little frustrating, but not a big deal in the overall scheme of things.

Comment by eudemon
2010-07-04 23:37:46

Guys, renting is nothing. Don’t worry about waiting, despite the frustration. Pissant landlords, realtors, homeowners, etc., will be handed theirs in California, too.

Whaddaya think the new payrate of $7.25/hour will do? How about a significant hike in most people’s health insurance rates come next January? How about the hike in capital gains taxes come next January? In FICA taxes come next January? In corporate profits that are being taken now instead of in 2011?

Stay resolute. It’s your civic duty to do so.

Comment by aNYCdj
2010-07-05 05:58:04

How about if you retire you’d better be RETIRED…..make everyone prove you have no other job each year or you can’t collect until you are 65…

Comment by Jerry
2010-07-04 11:20:41

Will not be fun living in San Diego when it goes into bankruptcy next year. City will not be able to continue oversize pension benefits as the city income will not pay for both pension benefits and “run a city properly”. The money is not there! After living there for 35 years it was time to move.
Sold in 2005 because of the RE bubble. Sad to leave but my head won the battle over my heart.

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-04 14:23:21

“Will not be fun living in San Diego when it goes into bankruptcy next year.”

1. Are you the mayor of San Diego?

2. Do you have independent evidence on the claim that SD will go bankrupt next year, or is this merely your personal opinion?

3. Is it a good time to buy just before a city goes BK?

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Comment by GH
2010-07-04 19:16:29

That San Diego MUST go bankrupt is simple 2 + 2 = 4 math. The question is when.

Comment by Suresh
2010-07-05 05:18:36

In country nepal, sectors receiving the hardest blow are housing and apartment builders and customers. People wanting to build homes or buy apart ments now find it difficult to get a home loan or simply cannot afford the outrageous interest rates.http://www.housingnepal.com/articles/display/92

Comment by Matt_in_TX
2010-07-05 06:02:29

Don’t they have to vote to go bankrupt? :)

Maybe they will just sit and twiddle like the state government. How do you reposess stuff from the state if the government is disfunctional?

Comment by Cantankerous Intellectual Bomb Thrower
2010-07-05 09:57:34

I’m with you — budget constraints trump irrational exuberance every time, except for cases where government intervention in mortgage lending serves to separate housing purchase budgets from the buyer’s ability to repay the loan.

Comment by CarrieAnn
2010-07-07 04:45:17

I find myself married to Meredith Whitney’s beliefs too. The hardest part is filtering the country’s situation through the neighborhood particulars we’re dealing with. There is increased inventory but it’s in all the 3500+ niches because basically that’s all that’s been built here in the last 20 years. I wouldn’t be interested in anything that size anyway as I fear an energy price spike in the future. In the 2500 sq fters, the inventory is very, very thin and that means you can’t count on anything happening with price reductions just yet.

I’ll gingerly venture forth with the prediction that the 3500+ niche will see a price collapse by next spring due to burgeoning inventory. But these sellers have been pretty stubborn and I haven’t seen as much price reduction as one might imagine by properties sitting up to a year. Many just take them off the market thinking they’ll try later when the market improves.

Comment by Bill in Los Angeles
2010-07-03 13:17:08

I stand by my prediction of ZIRP for the rest of this year. No housing recovery this year and I predict the MSM will be “surprised,” just as they were surprised the sales dropped significantly after the $8k credit passed the end of April.

I predict Phoenix house price drops of at least five percent the next six months.

Official unemployment down to 9.3% in late October and the Democrats will spin it to mean a success. But the voters won’t take the bait in November. Lots of incumbants will be forced to walk the plank.

Nonprediction: The architects of this country did not realize the problem of too much legislation at all levels of government. There are millions of laws on the books that are clogging the arteries of the American economic system. We’ve far more regulations than many “communist” countries. I would like to see a rearchtecture such that all legislative bodies should have a one year break from making new laws and spend that year removing laws instead. Each legislative body should remove five laws per day that year - federal, state, and local. We are in near gridlock.

Comment by awaiting wipeout
2010-07-03 13:36:43

Bill in L.A.
I agree, but I assume you’re not saying we can trust too big to jail to be on their own. If we just enforced laws to begin with, maybe the law junkies could give it a rest. My husband (an EE, too) say the worst invention in Washington (& Sacramento, for that matter) was Air Conditioning.

Comment by LehighValleyGuy
2010-07-03 16:22:07

I assume you’re not saying we can trust too big to jail to be on their own.

Too big to jail are a PRODUCT of regulations. Banks and other corps are chartered from the get-go by a byzantine web of government fiats. With fewer regs, smaller players could catch up and compete.

If we just enforced laws to begin with, maybe the law junkies could give it a rest.

We CAN’T enforce the laws. That’s the whole point. Most laws are simply exercises in wishful thinking, with no thought given to practical realities of enforcement.

Bill, I like your approach, but I think it needs to be even more drastic. We need to dump entire bookshelves of statutes in the river and start over. Popular referendums should be necessary to pass any new laws.

Comment by awaiting wipeout
2010-07-03 17:02:20

We need regulations to some degree. It would be the wild west out there. We can agree to disagree, but you can’t trust corporations to do the right thing. I use to work for “We Say So” Corp, myself, and I’ve heard the get out of our way, and we’ll do the right thing mantra over and over. Doesn’t work. I use to be a Republican before I became a Poltical Atheist.

Case in point, they reversed the Glass-Seagall Act. Nuff said.

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Comment by awaiting wipeout
2010-07-03 17:06:53

“Glass Steagall Act”- to correct

Comment by LehighValleyGuy
2010-07-03 18:26:12

you can’t trust corporations to do the right thing.

When did I say you could? I don’t think there should even BE corporations. They are the product of an obscure and pointless body of law which only serves the interests of a few fatcats.

they reversed the Glass-Seagall Act.

I don’t know how many times I’ve said this, but only about 10% of Glass-Steagall was ever repealed. Specifically, only the risk-limiting, and not the risk-creating provisions (the FDIC, FOMC, etc.) were eliminated. Obviously, this was asking for trouble, but it was hardly an example of across-the-board deregulation.

Comment by Mark
2010-07-03 19:17:30

“I don’t think there should even BE corporations.”

Laws that allow corporations to exist are not obscure or pointless. The point is to allow anyone to take a risk and start a venture and avoid loosing everything they own.

This is not just for fatcats either. You probably visited several small corporations this past week.

Comment by LehighValleyGuy
2010-07-03 20:03:01

Laws that allow corporations to exist are not obscure or pointless. The point is to allow anyone to take a risk and start a venture and avoid loosing everything they own.

So why isn’t everyone automatically a corporation? Why require formalities such as board meetings on penalty of losing one’s corporate status? What public policy does this serve?

And the only reason one would risk losing everything they own is because of the effects of other laws, right? Why not just repeal or scale back those other laws for everyone? Why only for corporations?

Comment by Mark
2010-07-03 21:36:13

Well, if you’re talking about comprehensive tort reform, I’m in total agreement with you.

Comment by varelse
2010-07-05 13:41:32

“Bill, I like your approach, but I think it needs to be even more drastic. We need to dump entire bookshelves of statutes in the river and start over. Popular referendums should be necessary to pass any new laws.”

Nice sentiment….but who would do the starting over? Who would write the new laws to replace the old laws? I don’t trust any of our current politicians on either side of the aisle with that job, and I’m not too impressed with the new blood that is trying to take advantage of the anti-incumbent attitude in the electorate either. Again, I love the idea of scrapping whole heaps of statutes and starting over, to a degree, I just don’t think we have the people who would be able to do so in a responsible or effective manner nor will we have those people for a generation or more. We could end up worse off instead of better off if we did it now. Yet later it may be too late. Frustrating to say the least.

Comment by eudemon
2010-07-03 17:06:20

I like the “if it works, keep it - if it doesn’t, toss it out” approach, but popular referendum isn’t necessarily a good idea.

The United States is a republic, not a democracy, per se. Mob rule ain’t where it’s at.

That said, Bill’s idea is good. In addition, perhaps there should be a law that prevents all lawyers from practicing law while holding public office - say from governorships on up (Congress, president).

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Comment by varelse
2010-07-05 13:45:32

We are theoretically a constitutional republic, but over the last few generations we have essentially become a mob ruled democracy in practice. That’s how we have come to this “bread and circuses” point in our national history so quickly.

Comment by oxide
2010-07-05 15:33:25

I like the “if it works, keep it - if it doesn’t, toss it out” approach

Except for the issue of time scale. What if it “works” just long enough for the CEO to escape with bags of gold and goodies, and then it “doesn’t” work 5-10 years from now?

Companies have been doing “what works NOW” for generations, and we see the end results. But what do they care? They got their pile.

Comment by ann gogh
2010-07-04 07:26:30

Bill, the budget was deemed passed on thursday nite. no budget just a spending spree.

Comment by scdave
2010-07-04 09:30:52

spend that year removing laws instead. Each legislative body should remove five laws per day that year - federal, state, and local ??

What ?? That would be Heresy !!

Your suggesting that we would actually be the;

Land of the Free and home of the Brave ??

Happy 4th to everyone…

Comment by octal77
2010-07-03 15:14:47

Here in SoCal (Orange county) there is *way* too much
shadow inventory.

How long can the banks hang on?

If just one bank (probably one of the smaller ones) breaks
rank and starts dumping, then all bets are off.

It will be a tsunami of epic proportions.

Comment by awaiting wipeout
2010-07-03 15:55:44

From your mouth to reality, but what I am concerned about is Rule 157, which lets the banks pump up their Income Statement, hiding losses from MBA’s. This inflates their profits (and bonuses), and delays the cleansing of all this shadow inventory.

I hope they start unloading properties in bigger quanities. The problem is, the reic insiders are snatching up the homes we are interested in (cheap fix & pricey flips). We live in Thousand Oaks, which use to be nice. (Illegals, gangs, have more presence here.)

Comment by jlurking
2010-07-03 16:12:27

but what about NYC? any comments?
And a bigger Q: If properties are not listed as short sales but have been on market forever is there any way a prospective buyer might get this started?

Comment by DebtinNation
2010-07-03 19:31:15

“Q: If properties are not listed as short sales but have been on market forever is there any way a prospective buyer might get this started?”

Not sure exactly what you’re asking, but you can always make a low-ball offer. Maybe the wishful seller is just trying on a price for size and won’t give, but on the other hand, maybe you’ll be surprised. Obviously it’s not selling for a reason, so it could be (in the case of an REO) an unresponsive bank, or there could be something wrong with the house (do your homework!), or it could be that it’s just priced way too high.

Comment by awaiting wipeout
2010-07-03 20:43:12

I went to an Asset Managers meeting and the topic of hiding REO’s using Mgmt Co’s as the Listing Broker came up. If you see a Property Mgmt name as the seller, chances are it’s an REO in disquise.

Comment by rosethorn
2010-07-03 17:10:32

The “baby boomer” narrative bears rethinking. If you look at a chart of US births between 1909 and 2009 you’ll see that an upward trend in births started around 1939. What does that mean for housing? Perhaps more retirement age folks looking to sell than the conventional projections.

Comment by rms
2010-07-03 21:16:30

Many of the greatest generation who pulled hard on those Pall Mall(s) and Viceroy(s) are long gone, thank gawd, but the obese graying Berkeley hippies that now hog the MUTs two abreast with their mobility scooters simply live too long with modern medical advances and SSDI. Pedaled around two of ‘em today, and one of them had an oxygen tank professionally mounted on that scooter, and she was gently pulling on a nail as I rode around them in the dirt; the courtesy bell didn’t mean chit!

FWIW, age distribution, not births is the issue.

Comment by Eddie
2010-07-04 06:36:09

Yeah you’re right. These new medicines that keep people living long are awful. Oh how I long for the good old days when people died in their 50s. Life was so much simpler then.

Comment by Sean
2010-07-04 08:59:50

Baby boomers have been one of my pet peeved for a while. One of the biggest reason for 9.5 percent unemployment is that these boomers just arent retiring. They live thru the disco and Reagan self-gratifyng days of buying stuff thy don’t need, and it’s carried over into my generation. Saving for retirement? Hell, I’m gonna be like Fame and “Live forever!”

I saw an article online about a 60 year old guy complaining about age discrimination when companies interview him. I didn’t hear him complaining back then when employers shut out minorities and women, and didn’t have to compete with a global economy. (Both outsourced jobs and foreign people coming here to work). Your cheap four year degree years ago was fantastic getting you a job back then, now a four year degree is the baseline to getting a good job. (Oh, and it costs a hell of a lot more nowadays).

You wanna see this country get better? Encourage old people to retire. 30-40 years in the workforce and you haven’t saved? Not my problem.

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Comment by In Montana
2010-07-04 13:03:52

I’d love to, but then I’d be “lazy.”

Comment by Molly
2010-07-04 14:52:15

“You wanna see this country get better? Encourage old people to retire….”

I agree, Eddie. Unfortunately, most people HATE folks who can afford to retire before they’re 70. They even want cops and firefighters to work until they’re at least 65.

How about a procreation tax? Maybe a long-life tax?

Comment by technovelist
2010-07-04 16:00:31

Unfortunately, most people HATE folks who can afford to retire before they’re 70. They even want cops and firefighters to work until they’re at least 65.

I suspect it is not the age at which those people retire that annoys others, but the fact that their retirement is a burden on the taxpayers. I don’t mind people retiring on their savings.

For example, I can retire well before 70, but only because I’ve lived below my means and saved the difference for the past 40 years of working.

Well, that and the fact that I invested almost all of my savings in gold about ten years ago. :-)

Comment by CarrieAnn
2010-07-04 16:29:00

Oh please, kids where I live are getting jobs in DC (ambassador support), in NYC (apparel design, high end fashion photographer), in Boston (financial–I know so many who’ve been hired in the financial industry) and everyone appears satisfied w/pay. A young relative of mine is VERY busy modelling. I won’t tell you what she gets paid just to get her hair done before she even steps before the camera. But she’s a smart girl and is busy working on her pharmacy degree and then working for peanuts at her internship.

We just had a huge burst of post graduates getting hired away from the work for fun place (vs work for pay) where I am employed. They’re newly employed as a commercial planner, accounting, second one in accounting, health services, health club director, second health club director, and a distribution company manager.)

If you haven’t gotten work yet it may be time to revisit your contacts, education, background, attitude. I waited 8 mos to get my first job after graduation and I created a business from scratch while going to school. Let me tell you one thing Sean, you won’t be getting the job the boomers are relinquishing because those will go to the next in line who have put their time in. At a time of contracting labor numbers, a boomer’s relinquishing of his postion will probably be absorbed by the time it gets down to potentially hiring new at the bottom. That’s how it’s been at my husband’s place of employment. Btw, Sean, he’s 50ish and they’re paying for him to further his education. He doesn’t pay a dime to go to a top school. So I don’t think the company plans for these people to go anywhere soon.

What you need to do is prove you’re worthy of the same. Bust your butt, then sell everything that’s good about what you bring to the table when interviewing. Network! Network! Network! If your friends are sitting around going nowhere, find new ones that want to prove themselves. Don’t be afraid to move to where the jobs are to get your career going.

Good luck!

Comment by Sean
2010-07-04 21:15:32

Thanks Carrie, but I don’t need career advice. I am an Airline Pilot who started working even before I graduated. I knew my track from the time I was 14 and I did bust my butt to pay for what I have now.

The problem with the “gummers”, as we call them, is they look out for themselves and only themselves. Folks in the industry for 30 years voting in crap contracts, pay cuts and watching their retirement fizzle. Three alimony payments, two bastard children, a boat and a vacation house all in the name of “Me Me Me”. They screwed up their life and there is no Delorean doing 88 mph to bring them back and set them straight.

So what did they do in 2002? They complained about age discrimination and raised the FAAs manditory retirement age from 60 to 65. Five more years of mine and others career on hold so they can ‘get theirs’. When you talk to a gummer they feel like it is owed to them. I don’t need a scab (Yes, a true line crossing scab) to tell me what to do with my life or career. You wanna go down memory lane? Do it over a shuffleboard court in Sarasota. Maybe someone down there cares what your saying.

Not trying to sound harsh Carrie, but there is a reason the BB are called “The Worst Generation”. Paul Begala wrote a great article on it ten years ago - I wonder what he has to say now. Also, I do live in the DC Metro area, and it is frigging expensive to live out here. 100k sounds great in some areas, but not this one. To quote CC Sabathia “We ain’t Detroit, son”.

Comment by Happy2bHeard
2010-07-04 21:44:56

The 60 year old guy has had to deal with affirmative action since he was first employed. His was the transitional generation that has been asked to step out of the way at every turn.

At 60, he still has a few years before retirement. He doesn’t qualify for Medicare. If he lives to 90, he needs every working year he can get.

40 years ago, he faced the inflation of the 70s and watched it eat a good chunk of every penny he saved. In inflationary times, it makes more sense to buy now and take on debt than to save.

Remembering the effects of inflation, he wonders if he has saved enough. He wonders if Social Security and Medicare will be there in 20 years. He has seen investments tank in stock market busts and houses lose value.

He may be supporting aging parents and putting his youngest through college at the same time. He worries that his children won’t be able to find their first job. God forbid he needs their help in 20 years, will they be able to help him?

Comment by Happy2bHeard
2010-07-04 22:27:47

Airlines are being impacted by the downturn in the economy and the increasing use of video conferencing. The consolidation of airlines is a long term trend.

Your difficulties in moving up are due as much to these economic forces as to the retirement age being increased.

Comment by Eddie
2010-07-05 06:21:47

AMEN Carrie Ann.


“The problem with the “gummers”, as we call them, is they look out for themselves and only themselves. ”

Who exactly are they supposed to look out for, you? Of course they look out for themselves. Just like I look out for myself and you should look out for yourself. I really don’t understand your mentality. You want a 58 year old in his prime earning years to say “you know what, I’ll quit now so Sean can take over while”. On what planet do you think this happens?

Comment by technovelist
2010-07-05 08:32:26

The problem with the “gummers”, as we call them, is they look out for themselves and only themselves. Folks in the industry for 30 years voting in crap contracts, pay cuts and watching their retirement fizzle. Three alimony payments, two bastard children, a boat and a vacation house all in the name of “Me Me Me”. They screwed up their life and there is no Delorean doing 88 mph to bring them back and set them straight.

So what did they do in 2002? They complained about age discrimination and raised the FAAs manditory retirement age from 60 to 65. Five more years of mine and others career on hold so they can ‘get theirs’. When you talk to a gummer they feel like it is owed to them. I don’t need a scab (Yes, a true line crossing scab) to tell me what to do with my life or career. You wanna go down memory lane? Do it over a shuffleboard court in Sarasota. Maybe someone down there cares what your saying.

Not trying to sound harsh Carrie, but there is a reason the BB are called “The Worst Generation”.

I’m one of the “gummers”, as you refer to them. I still have my teeth, though, and I have no alimony payments, children, or boat. I do have retirement savings that are enough to live on, assuming I get Social Security, which I have (involuntarily) “participated” in for 40 years. I’d be happy to get back all of my “participation”, including the employer’s “share”, with interest, and not get any of the promised benefits, but of course I don’t have that option.

As for the “worst generation”, I think you are well qualified to be the worst in anything related to compassion or empathy for others. Also in spelling and grammar, which I guess aren’t required to be an airline pilot.

Comment by CarrieAnn
2010-07-07 05:18:37


You may be older than I assumed in my original post but I have to share this with you. My husband graduated from Embry Riddle but changed direction because of what was going on in the aviation industry that year (Reagan busting up the unions) I’m sure his parents loved footing the bill for education that was never once tapped.

He’s working and has always worked (never collected UI) because he stayed flexible and chose another route (and married a woman who supported him while he went back to school). The truth of the matter is even if someone else is to blame you can wallow in it or you can do what you gotta do. Survivors stay positive and keep tweaking themselves to stay marketable.

Also laughing at your “gummers”……you should see some of the 60+ year olds at my gym. They’d probably kick your behind. 54 year old friend just returned from biking the Alps. He looks amazing. And another 60ish friend did his first triathlon in 1.5 hours. Positive thinking baby!

Comment by aNYCdj
2010-07-04 10:09:49

Yup Eddie and sex at 13 was legal…..aka jerry lee lewis….

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Comment by Timmy Boy
2010-07-05 11:23:27

Just got back from France.. & noticed… as I was touring Versilles & other museums.. that the average age of most of the prominent figures back in the 1600s-1700s was approx. 75!!! (Based on the lifespan age on their statues)

So…. average people even back in the day… was far greater than 50… more like 70… & if u were very wealthy… (enough to have a statue made after you!!)… you lived until your 80s or 90s.

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Comment by CarrieAnn
2010-07-07 05:29:58

You bring up a good point Timmy Boy. The founding fathers didn’t retire young now did they?

I can’t even believe anyone would suggest that if someone wants to work instead of collecting from a system we all fear will shortly be bankrupt that that is a bad thing.

Comment by Bill in Los Angeles
2010-07-03 20:42:36

I know from reading one of the January predictions it was Combo’s: “Velocity of money,” “war on savers,” “war on spenders.”

Combo, I’m still awaiting signs for the war on spenders. I think it won’t start for another three years as long as unemployment stays above 9% and house prices fall thirty to fifty percent.

Still hoping to hang onto my job for three more years at a minimum. By then I still would think it’s foolish for me to personally buy rather than rent. I’m open to downsizing and moving to a studio apartment when my government securities investment income is four times the rent. I can imagine myself moving back to Tucson and biking around the area, just like Arizona Slim does.

Comment by combotechie
2010-07-04 06:21:42

“Combo, I’m still awaiting signs for the war on spenders. I think it won’t start for another three years as long as unemployment stays above 9% and house prices fall thirty to fifty percent.”

Imbedded within this statement are signs that the war on spenders is well on its way. Unlike the war on savers, which is waged from the outside, this war on spenders is being waged by the spenders themselves. To paraphrase Pogo: Spenders have met the enemy and it is them.

“… as long as unemployment stays above 9% and house prices fall thirty to fifty percent.”

With unemployment above 9% one has to wonder just where spenders will get money to spend. It surely won’t be from HELOCing their houses as their prices fall “thirty to fifty percent”.

Comment by fries with that?
2010-07-03 22:53:01

For the rest of 2010, I see a continuation of the current trends: declines in home sales, stocks, and even oil, but no crash. The economy cannot improve until the old order (unsustainable government debt, artificially low interest rates, misallocation of resources to zombie corporations, worship at the idol of homeownership) is swept away. But the people who have a vested interest in the old order are so powerful, they can keep it going awhile longer.

Comment by WT Economist
2010-07-04 03:53:19

The private sector economy has stopped getting worse in the aggregate, but will not get much better. Housing prices and wages will continue to drift down in real dollars, and will only stabilize or improve in nominal dollars if we get inflation, which will probably not occur until 2012. Aggregate employment gains will occur, but they will be small compared with the prior losses.

The next big crisis hits in mid-2011, and it will concern the public sector this time. With the economy stalled, the federal government tapped out, and state and local governments in crisis, there won’t be much way to avoid some serious pain.

I don’t expect serious economic improvement on the private side until 2012, and that assumes we aren’t Japaning or Greecing. On the public side, that improvement may take decades — until the last boomer dies.

Comment by Spook
2010-07-04 06:10:39

I predict a major riot/civil unrest in a city before the end of this year.

You know the drill; police kill unarmed blk male, crowd forms, name calling, bottles thrown, shots fired, fires set, looting…

Oh wait a minute? the president is black right?

Strike that;

Obama will start a “real war” with Iran or N Korea that scares the ___ out of everybody and forces the masses to rally around the flag; those who challenge it will be neutralized by being called racists for not supporting the blk president.

Pretty slick eh?

Comment by DennisN
2010-07-04 16:44:49

Oakland is now bracing for a riot after the verdict is read on that BART cop.

Comment by aNYCdj
2010-07-04 22:17:47

cool we need more riots and burning down crap housing is great locations….maybe this is the new answer to Eminent Domain and urban renewal

Comment by DennisN
2010-07-04 16:46:16

By the way, Obama isn’t black. He’s one of those “moo-latte” fellows. He was raised in a 100% white household.

Comment by Arizona Slim
2010-07-05 11:56:01

He’s black on his father’s side of the house. White on the mother’s side, and I seem to recall reading that his maternal mother had some Cherokee blood.

Comment by Spook
2010-07-05 15:36:31

what is he when its time to catch a cab?

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Comment by jeff saturday
2010-07-04 06:12:24

Roubini sees eurozone 2010 growth “closer to zero”
July 4, 2010 7:47 AM ET
AIX-EN-PROVENCE, France (Reuters) - Euro zone growth in 2010 could be “closer to zero” after a volatile second quarter threatens to dash previous estimates of 1 percent, U.S. economist Nouriel Roubini said on Sunday.

The currency bloc does not face a double-dip recession, however, despite deteriorating financial-market confidence over economic growth in an age of fiscal austerity, Roubini told a conference in Aix-en-Provence.

“Given the shocks of the last few month s… by year-end, euro zone growth could be closer to zero percent,” said Roubini, who has been nicknamed “Doctor Doom” for his pessimistic forecasts.

He said his previous estimate of 1 percent was similar to forecasts by the European Central Bank and the International Monetary Fund.

The past three months’ stock-market correction, rising credit spreads and a jittery inter-bank lending market suggested there were serious concerns over economic growth at a global level, said Roubini.

Growth in the U.S. economy could slow in the second half of this year to 1.5 percent from 3 percent in the first, he said.

“For the global economy, by year-end, the picture is not a very nice one,” said Roubini.

Comment by pressboardbox
2010-07-04 07:21:48

Breaking news from Charlotte, NC the banking capitol of the south:


Comment by jeff saturday
2010-07-04 15:54:26

“The clock has just run out for a lot of people,” said Wells Fargo senior economist Mark Vitner.

Damn clock.

Comment by cobaltblue
2010-07-04 08:51:27

With respect to the second half of 2010, I don’t think most people have factored in the impact from the Gulf Oil disaster, or the real ongoing deterioration of the economy.

The Gulf oil disaster will create a Gulf area economic disaster and plunge many businesses, families, banks, and states into insolvency. Many properties are now becoming less than worthless, where last year they were potentially income producing.

The government and MSM have already used such ludicrous Psy-Ops memes about “recovery” and “green shoots” as to have destroyed any credibility they once had, IMHO. California State workers facing minimum wage should tell you things are getting worse, not better.

Second half 2010 = more pain, higher unemployment, more bankruptcies, more foreclosures, lower standard of living for most Americans. The collapse of the bubble continues.

Comment by Sean
2010-07-04 09:12:43

Realtors will continue to dwindle in numbers, and commisions will decrease in size. Sellers advertising their home on Craigslist may become the norm, even for banks.”

Someone gets it!!! People are seeing Realtors for who they really are! I sold my house last year. Had it listed with Century 21 for six months with one lowball offer. I fought with her every step of the way. Open house? “Nobody goes to those”. Ad in the paper? “They cost too much”. Even Craigslist? “My broker doesn’t believe in Craigslist since we don’t get much of a return”. Finally I ended the ‘relationship’ after they decided to hold an open house on Sunday, but they advertised it in the paper for Saturday!

I put my house on Craigslist, took a video of my walking around it with my iPhone, uploaded it to YouTube and put that link in my Craigslist ad. Two weeks later and after dozens upon dozens of people emailing me, I held an open house only to hear “How long has this been on the market? We haven’t seen it before or even heard about it”. Two weeks afterthat I had an offer and sold it. The sweetest part was getting a phone call from my old realtor saying “I have some new ideas on how to sell your house! Let’s drop the price and get aggressive!” When I told her I was driving to the closin ceremonies and got more than what she wanted to list it for, let’s just say she wasn’t too pleased. All I said to her was “If I were you I’d look for another line of work” and hung up the phone.

Bottom line to sellers: PUT IT ON CRAIGSLIST FIRST before signing up with an agent!!!!!!!!

Comment by CarrieAnn
2010-07-04 16:38:08

Craigslist in my area has been taken over by the agents. And agents refuse to show FSBO unless expressly asked by their buyers. Most homes eventually revert to the MLS unless the home is in a high traffic area and gets noticed….not so much the norm in a town of developments.

Also I’d have to say many of the FSBO who are on Craigslist have not had the benefit of a market analysis on their home and are usually way off on what the current market will bear. Going to MLS usually results in a price reduction.

Comment by Sean
2010-07-04 21:37:48


When you search Craigslist RE, it says in blue at the end of the Ad “Broker” or “Owner”. Click on the “Owner” to find real FSBOers. I’ve had good luck here and find the sellers very pleased to hear from a potential buyer (For obvious reasons).

Comment by CarrieAnn
2010-07-07 04:29:28

Thanks Sean,

I was aware of that distinction by Craigslist. I was just pointing out that the broker to owner ratio in our neck of the woods leaned very heavily to broker listings. I also noticed there are noticably less FSBOs in the area I’m looking for this year compared to last year.

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Comment by Happy2bHeard
2010-07-04 22:24:53

There are many formerly lucrative careers that are undergoing pressure from technological advancements and/or deflationary pressures like outsourcing and insourcing.

Photographers are experiencing increasing competition from good amateurs that practically give away their work. CAD/CAM has reduced the number of people needed in architecture and engineering. Manufacturing faces pressure not only from low wage places, but also from increasing use of robotics. Legal research is being outsourced to India and online libraries make searching for precedents less time consuming.

Medical tourism and hiring of foreign trained personnel is impacting nursing. We are still at the beginning of this wave.

Youtube is changing entertainment and education. Wikipedia and other online sources are replacing reference books and libraries. Newspapers are dying, due as much to lost advertising as to online journalism.

Comment by aNYCdj
2010-07-05 05:55:50


DJ’s too the biggest barrier to entry was your record or cd collection you had to fork out the money to even get started, most New dj’s worked for a companies that had 10-20-30 sets of equipment and over time you bought out other dj record collections and then went out on your own…

But today with everyone stealing the music and with Terabyte hard drives full of 100,000 songs thousands of videos and karoke for $500 anyone with that a laptop and 2 cheap powered speakers can gain entry…and IT SHOWS…

Even photography you either have the eye or you don’t…some thing you just can’t learn even with $10,000 worth of equipment.

Photographers are experiencing increasing competition from good amateurs that practically give away their work.

Comment by Arizona Slim
2010-07-05 12:02:12

Photographers are experiencing increasing competition from good amateurs that practically give away their work.

If you’ve been freelancing for more than five minutes, you’ll know that there are all sorts of offers to work for free, or almost-free in return for exposure, referrals, publicity, or future assignments at your full rate.

For example, you might find yourself like the record store, restaurant, or hairdresser shown in the popular YouTube video in which customers ask for substantial discounts off the quoted price.

Or you may be asked to give your work to organizations that can well afford to pay for it. Happened to me last summer. I was asked to share some of my photos with a local organization. I told the person making the request that I’d be happy to work out a licensing agreement. Her reply: The organization had no money for such a thing.

I guess I was supposed to take pity on this organization and share my work, but I didn’t. Something just didn’t seem right. After all, this outfit has a well paid staff and a nice office in downtown Tucson. I later found out that its annual budget is more than $1.5 million.

As you can see from the above, the ability to say no is one of the most valuable things you can develop. You can say it nicely the way Washington, D.C. photographer John Harrington does with his prospective clients. Or you can be nasty like Harlan Ellison is in this YouTube video, where he describes how he refuses to have an on-camera interview reproduced on a DVD.

Comment by Chris M
2010-07-06 09:14:01

All I said to her was “If I were you I’d look for another line of work” and hung up the phone.

Wow. That is some sweet, sweet schadenfreude!

Comment by January
2010-07-04 09:43:22

I enjoy your blog, it fascinates me. I have a question though, and I’m not sure where to ask it so I will give you guys a try. I have never bought or sold real estate so my knowledge is limited. What is making me curious is this - - This couple I know, in their late-thirties, just bought their first home in Marin Co. CA. They paid $708,000 with only 3% down. It seems kind of crazy to me buy such an expensive house with such a small down. I didn’t even know you could do that! Isn’t it normally 20%? I really hope they didn’t get into some weird loan situation…..thanks for listening, I’m just trying to figure this out because it just doesn’t sound right!

Comment by Martin
2010-07-04 12:12:20

Most loans are FHA with 3% down. Next year they will also go in foreclosure.

Comment by WT Economist
2010-07-04 12:18:08

“Isn’t it normally 20%.”

It was for a long time. Then it wasn’t. Then we got in the mess we are in now.

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-04 14:20:05

“They paid $708,000 with only 3% down. It seems kind of crazy to me buy such an expensive house with such a small down. I didn’t even know you could do that!”

Sounds to me like the work of the FHA or the zombie GSEs.

Comment by Mot
2010-07-06 10:48:37

3% down means they are not even putting down the first year’s interest.

Comment by DennisN
2010-07-04 16:43:14

FHA limits are generally much lower than $700K, but were permitted to rise up to that level in certain “overpriced areas” e.g. CA.

Comment by Matt_in_TX
2010-07-05 06:16:18

If the house drops 10% in value and they can actually sell it, then they have only lost about $121,000 dollars. (708 - 708 * 0.9 * 0.92 assuming only 8% for selling costs.) The good news is they only have to put $100000 more into it to escape.

Ah, the joys of “leverage”.

Comment by dc_renter
2010-07-04 12:04:39

So hot here in D.C. ! Anyway, prices have not bottomed out, imho. Remember the run-up was crazy (100 - 200% in some areas). Prices have a loooong way to go before people can afford them with rational loans. Plus, the job market has stalled and shows no signs of improving…..Freddie, Fannie have not stabilized and frankly, need to be broken up. Plus, Pluto has just begun its transit through Capricorn (don’t laugh) which means the return to more practical lending has just begun.

Comment by Ol'Bubba
2010-07-04 17:23:35

Plus, Pluto has just begun its transit through Capricorn (don’t laugh) which means the return to more practical lending has just begun.

Do you have a source for that statement, dc_renter?

Comment by Matt_in_TX
2010-07-05 06:06:22

The implication is that the next housing bubble will be 244 years from now?

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-04 14:18:30

“What are your housing bubble predictions for the second half of 2010?”

Uncle Sam seems to have decided to temporarily pursue a treatment of housing market bloodletting, in the wake of throwing in the towel on failing stabilization efforts. ‘Worse than expected’ 2nd-half price declines and sales are the likely result. Slow sales and lower prices are the result of a drop in demand coupled with stubborn sellers who don’t get the picture.

This scenario will persist in fits and starts until local home prices have declined to a level in line with local incomes and rents. Never forget: All real estate is local.

Comment by Hwy50ina49Dodge
2010-07-05 07:27:09

“…until local home prices have declined to a level in line with local incomes and rents.” ;-)


Comment by Cantankerous Intellectual Bomb-thrower
2010-07-05 10:03:27

That’s one way to avoid the dreaded dead cat bounce…

Comment by Hwy50ina49Dodge
2010-07-05 16:58:18

:-) Cheers!

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Comment by 45north
2010-07-04 14:59:30

Conspiracy time: It’s possible we’ll discover that a lot of the “shadow inventory” was sold off in bulk, possibly to creditor nations (like China) in exchange for our Treasury debt

US Gov announces shift in immigration policy: Foreign nationals that own property in US are now eligible to apply for green card.

Comment by Bill in Los Angeles
2010-07-04 16:37:28

I welcome them as long as they are educated and pay their own way. Perhaps we should adopt minimum net worth requirements as Australia does for its immigrants.

Comment by Matt_in_TX
2010-07-05 06:03:52

I’d rather see the requirement to be a qualified sheep shearer like New Zealand. Most of our shearers are getting very dispirited.

Comment by aNYCdj
2010-07-04 22:42:50

40% down get a green card….yes one of my predictions from last year

I like your idea of china buying up a few million houses….I just figured they would crash the market again so they could buy MSFT at $10 and ibm for $50….the shadow housing purchases would be a great stealth move until its revealed.

Comment by Lip
2010-07-05 20:38:53

I looked a rental ad, sent an email and the respondent’s name was
Xiaoli Yang. Made me wonder who really owned the home. The Peoples Republic of China???

Comment by Blue Skye
2010-07-05 04:31:38

A few less people in denial. A few more businesses closed. A few more houses with reduced prices. A few more natural disasters. A little less hope, a little less denial, a little more pain, a little more anger. Less belief in the China miracle.

What is happening in Germany is perhaps a fuse for the US. Those people know what big inflation is and they want it less than the rest of us, so they might be ahead of the curve. Asia won’t drag us into the next decade, they are the delayed extrapolation of what happens in the US and Europe. Austerity is a new word in politics. I expect we will hear it a lot towards November.

Comment by Spook
2010-07-05 07:31:02

“Austerity is a new word in politics.”

Austerity is too academic for the masses; whats an easier word for “Joe/Jane bag-a-weed’ to understand?

Comment by Happy2bHeard
2010-07-05 10:02:02


Comment by Cantankerous Intellectual Bomb-thrower
2010-07-05 10:04:41


Comment by Nashvillian
2010-07-08 19:06:44

Mayor McMellowharsher

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-05 10:10:40

“The DOW hits ~11,500, and the S&P hits ~1,400 by September.”

Seems like Mr Market is headed 180 degrees in the wrong direction for this to happen, but perhaps miracles will happen over the next two months to put smiles back on the faces of panicked bulls.

Comment by Bill in Los Angeles
2010-07-05 13:13:15

I say the Stock indices will drift lower through the next four months. We will know for sure in four months if “the bums get thrown out.” I don’t have high hopes, as the alternatives seem to want to smack me with their fiction book known as “The Bible.” That’s just as bad as being robbed by a socialist.

Comment by Insurance Guy
2010-07-05 10:52:26

The bad news is the Gov is running out of money. The good news is the Gov is running out of money. These states such as Illinois and California have to stop spending when they can’t borrow anymore. The fact that their situation is so bad is really good as it shows their is not way out for them. If they do raise taxes, we will welcome their manufacturing and other employment to move to South Carolina.

Same goes for Greece. They now have to pay for things and can’t afford them and so they have a crisis. The crisis is a good thing.

Housing will continue to crash and will go down another 50% in the states that had the worst of the bubble. It just makes the country a bit more livable for the young folks. A good thing.

Even the failure of the stimulus is a good thing. If they had never tried it, they would have said it would have worked. They tried it and it did nothing except break the bank. Done with that and so we can move on to fiscal responsibility. Another good thing.

I am optimistic today. Let it all crash. Most of us know that the future is on the other side of the crash.

Comment by Real Estate Refugee
2010-07-05 11:29:15

Because the video store next to Trader Joe’s went out of business, Trader Joe’s was able to expand into a big beautiful store.

You’re right, there is some good stuff coming out of all this.

Comment by Mitchell
2010-07-09 21:35:47

Ha! You’ve got to love that! I love hearing positive aspects in times of trouble!

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-05 12:02:15

“Housing will continue to crash and will go down another 50% in the states that had the worst of the bubble. It just makes the country a bit more livable for the young folks. A good thing.”

Hear hear!

Comment by Bill in Los Angeles
2010-07-05 13:16:49

I agree. There are silver linings. I predict that one way or another there will be significantly less welfare, subsidized housing, and other entitlements within the next eight years in the USA because…well, the taxpayers are not going to allow it because the taxpayers cannot afford it.

Comment by aNYCdj
2010-07-05 15:26:58

Yup Bill:

yo baby mama you had how many kids by deadbeat fathers?????

Time to get them adopted into homes that can raise them properly

There are over a million couples that can’t have kids because the plumbing doesn’t work right, and we subsidize YOU???????

Comment by SoFL
2010-07-05 11:43:50

I predict that homes that are more expensive than FHA lending guidelines will continue to sink like rocks. Homes that allow for an FHA loan, i.e. 3% downpayment, will not fall much further as long as interest rates stay stable. Anyone selling a home that requires a 20% (or more) downpayment and 6 months in reserves is screwed.

Comment by measton
2010-07-05 13:07:16


The gov has decided that those people in houses over the FHA lending guidelines, are small enough in number, and well enough off not to riot or make a difference in the polls. Many of these people are retired or they getting close to retirement. They are earning <1% on their conservative investments and are about to see an increase in their property taxes, insurance, income taxes etc. Even the ones who can take the hit will do so in silence so as not to have their neighbors look down on them. I think the upper middle class and lower tier of upper class homes will be crushed.

Comment by Lisa
2010-07-05 12:40:36

“My take is that Normal, in the sense of something sustainable, is still a long way down there. We are headed there in fits and spurts, dragging and clawing all the way.”

I’m seeing this 100% in my neck of the woods, Marin County, CA. The last 3 sales in my neighborhood have been what I’d call a bloodbath for the owners…losses at $200K+ when you factor in price paid & improvements made, to say nothing of the big monthly payments over the last 5 or 6 years. But is it “real estate, yuk!” around here? Hardly. A young couple around the corner wants to sell to buy a larger home for their growing family, but acknowledge they will be lucky to get what they paid for the house, so it makes trading up somewhat challenging.

When I suggested they sell and rent a larger house for the next 2 or 3 years, you’d think I was speaking in tongues by their expressions. So even with all the money lost, or being trapped in a house with no profit after years of big payments, people still want to be “homeowners”…. even when it makes no financial sense.

Long way to the bottom…..

Comment by Bill in Los Angeles
2010-07-05 13:43:33

Well I guess that young couple will eventually be part of the statistics to send jingle mail in a few years.

I’m happy for a sister of mine. She moved back to Calfornia from Maryland and starts work Monday in Oakland. She will be living in the north peninsula northwest of San Rafael. Seems a kinda safe community. She’s throwing her money away on rent, which really means throwing less money away on shelter than a home owner would.

Comment by Martha Bridegam
2010-07-05 20:53:43

Nobody should buy property for any price in Arizona. Not while it’s passing neo-Nuremburg laws.

Comment by Ben Jones
2010-07-05 21:04:18

‘neo-Nuremburg laws’


Comment by Spook
2010-07-06 04:09:37

From the age of 14, black males are routinely stopped, questioned, and asked to show ID by the police; why should any other nonwhite people get an exemption from this “neo nuremburg law?”

Ive had the cops diggin so far up my ass the hit a slave ship!

Comment by aNYCdj
2010-07-06 05:02:01

well spook if black males committed crimes at the same rate as whites think how much better off our country would be…..now how do we get them peeps to co-operate with us?/

Comment by Spook
2010-07-06 06:22:51


Who is “us?”

(Comments wont nest below this level)
Comment by aNYCdj
2010-07-06 09:54:22

the non violent white folks……uh i’ve never been arrested

so why can’t black males do the same????

Comment by Spook
2010-07-06 18:29:29

You are missing the point; who said black males hafta “do something” in order to get stopped and questioned by law enforcement?

It happens to blk males all the time, I know cause Im one of em; white should other non white people (Hispanics) be exempt from the gestapo treatment?

Comment by aNYCdj
2010-07-06 23:13:34

well spook what are you doing to educate your brothers to stop committing so much crime?

All that broo haha about NJ cops pulling over those people resulted in tons of arrests on outstanding warrants and guns taken off the street…

Racial profiling works….when it doesn’t then and only then will I demand it be stopped.

Comment by Happy2bHeard
2010-07-06 23:29:44

I had a similar discussion with a friend a few years ago. I pointed out to him that IF blacks and whites commit crimes at the same rate and blacks are stopped more frequently, then blacks would be arrested and convicted of crimes at a higher rate than whites.

Furthermore, if it is accepted wisdom in the black community that blacks are frequently stopped, I would expect blacks to modify their behavior and actually commit crimes at a lower rate than whites.

Try driving a beater versus a beamer and see if there is a difference in the frequency with which you get to stop and talk to that nice policeman.

Comment by aNYCdj
2010-07-07 14:39:15

It’s all about getting blacks to co-operate and they won’t , so I take serious offense if anyone calls me a racist.

Comment by Happy2bHeard
2010-07-07 23:02:50

Who called you a racist?

Perhaps I did not make myself clear. My point is that crime rates do not tell the whole story. All other things being equal, the frequency with which police stop and question one group of people influences the crime rate of that group.

Perhaps economic profiling gives better results than racial profiling.

I once worked with a white guy who complained about being stopped frequently by the cops because he had a ponytail. I wondered why he didn’t just lose the ponytail.

I am just trying to encourage people to think. Often we see what we expect to see. I question my assumptions all the time. Sometimes they surprise me.

Comment by maldonash
2010-07-07 04:48:12

Makes me want to buy two houses and donate to the states legal defense fund as maybe a fund to counter sue the feds

Comment by dc_renter
2010-07-06 08:26:12

Unless the Federal Gov’t goes bankrupt, it is most definitely “different here”. In less than a year, there were 2 tear downs replaced with large homes (on a tiny lot) in N. Arlington, VA. Within seconds of hammering in the last nail, both homes were snatched up. One is already occupied. I’m sure price was somewhere between 1 and 1.5 million. This area before the bubble would get about 400 - 600 k for a house. So, I have managed to find a little oasis on the planet where indeed real estate is untouched by the crash.

Comment by john
2010-07-06 16:43:33

fannie mae announcing that strategic defaulters will have to wait 7 years indicates to me that more people are deciding to walk even though they can afford the payment. I think prices will fall back to where they were a year ago before the tax credit drove up sales. they could even fall lower here in Phoenix. but, i will still continue to look to buy a second property maybe later this year. i have been looking but not seeing the exact house i want for a second house. i paid cash for my first and have done a complete remodel inside except for the kitchen…i need a break from all the work. but, i am glad i did buy after being priced out by prices over 250k for the house i bought for 82k cash. i live in 1500 sq/ft compared to my old studio apartment of 400 sq/ft…so my living standard is much higher now. i could spend 6k a year now and not spend anymore than i did renting my old dump of a studio. so, for some it could be a good time to buy! it depends on your circumstances. oh, and i think the tax credit will come back when they see the inventory climbing again! right before the mid term election.

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-06 20:39:48

“Housing Bubble Predictions For 2nd Half Of 2010″

Smells like capitulation…

WSJ Blogs
Real estate news and analysis from The Wall Street Journal
July 6, 2010, 10:56 AM ET.
Signs of Improvement Are Fleeting for Mortgage Delinquencies

By Nick Timiraos

After several months of improvement, mortgage delinquencies rose in May, according to loan data tracked by research firm LPS Applied Analytics.

Nearly 9.2% of all loans were 90 days or more past due at the end of May, up from 9% one month earlier. Those numbers exclude the share of loans in foreclosure, which remained unchanged at 3.18% in May from the previous month. (LPS has posted its monthly set of slides online.)

The numbers raise questions about how enduring the improvement in mortgage delinquencies earlier this year will prove to be, particularly because delinquencies typically improve during February and March. The number of loans that were 30 days past due jumped in May from April, while the share of loans that were 60 and 90 days late also increased.

Already, other signs show that delinquencies may be hitting a plateau rather than declining. After two months of improvement, mortgage declines at Freddie Mac in May were flat at 4.06%. The rate of defaulted loans increased at the FHA in May after three straight months of declines.

The LPS data showed that the volume of loans in foreclosure that banks took ownership of fell in May from record highs in April. But the number of current loans that went delinquent in May increased, moving back to 2009 levels.

Comment by Cantankerous Intellectual Bomb-thrower
2010-07-06 20:50:57

The Wall Street Journal
July 6, 2010, 9:24 p.m. EDT

Asian Shares Mostly Down; Growth Concerns Weigh; Samsung Hurts Seoul
By Matthew Allen

SINGAPORE (MarketWatch) — Asian shares were mostly lower Wednesday as Tuesday’s weak U.S. data continued to raise concerns about the pace of the global economic recovery.

The Dow Jones Industrial Average Tuesday finished up 57 points, or 0.6%, ending a seven-session run of losses, though the market gave up most of its earlier gains towards the closing bell after weak U.S. ISM service-sector data raised familiar concerns over the U.S. recovery.

Japan’s Nikkei Stock Average was down 0.8% at 9,266.89, Australia’s S&P/ASX 200 was off 0.2%, South Korea’s Kospi Composite lost 0.7% but New Zealand’s NZX-50 rose 0.8%.

Comment by cactus
2010-07-07 08:48:58

RE prices will start down again in CA full depression will dawn on sellers by Winter 2010

Stock market will trade sideways for the reat of the year

Interest rates will stay very low

Tax cuts will expire for everyone and then a double dip by 2012

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