The Housing Bubble

The estate is shabby now. I don’t know how they’ll sell anything’

CIARÁN DOYLE lives in a well-designed, highly insulated, nicely finished three-bed house which he describes as “perfect”, yet everyone in town refers to where he lives as “the building site”.

http://www.irishtimes.com/newspaper/ireland/2010/0816/1224276886748.html?via=mr

It would appear that abandoned property developments are not just an American problem. I rather suspect it is a global problem.

I have a dumb question about Zillow and other sites purporting to give estimates of residential real estate values.

In states like California, the sales price of houses is a matter of public record and available in electronic format. Therefore a database of recent sales prices may be used to support estimates. However in other states such as Idaho the sales price of houses is not a matter of public record. It’s completely voluntary to report the sales price of a house to the county assessor and county recorder, and few buyers do this. How then does Zillow come up with their estimates in Idaho? Are their estimates in Idaho much more inaccurate than in a state like California?

I’m tired of seeing daily, weekly, monthly figures put out by the powers that be. One Fed governor in the last year spelled it out perfectly: ‘We tell the truth the best we can without causing a panic’. Ergo I believe nothing coming out the the spinmeisters.
What is more valid are reports from individuals from their locations in the US and abroad. A big thanks to Ben.

Good thing this could never happen here…

Japan’s economic growth slowed markedly in April-June and analysts predict further slowdown, adding to policymakers’ difficulties as they grapple with deflation and a rise in the yen that threatens an export-reliant recovery.

Slowing growth in Japan’s key export destinations such as the United States and China clouds the outlook, while policymakers step up efforts to talk down the yen after it surged to a 15-year high against the dollar this month of 84.72 per dollar.

Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa are likely to meet later this week to discuss the yen’s strength and possible responses, although analysts say likely options would be limited.

“I think the Bank of Japan and the government need to take decisive action against currency moves. Solo currency intervention is possible if the yen approaches 80 to the dollar. If that is accompanied by monetary easing by the Bank of Japan, it may have a certain effect,” said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

They’re known as ‘the 99ers,’ and their numbers are growing in Ohio and nationwide.

CLEVELAND, Ohio — About 15,000 Ohioans didn’t get a penny when Congress extended unemployment benefits.

They are people like Ramona Walker of Cleveland and Bill and Norma Zapotechne of Oberlin — people who have been jobless so long they’ve already used up all 99 weeks of their unemployment checks.

They’re known as “the 99ers.” After two years or more without jobs, they say they’re losing a critical safety net at a time when finding work is still agonizingly difficult.

The result: a growing legion of people — many of them older, many once middle class — who are exhausting their benefits. It’s a wave that threatens to besiege social services and leave the government grasping for answers.

July home sales reverse trend, skid by 37 percent
August 16, 2010 ~ Charleston,S.C.

The local housing market is still awash with too much inventory.

The momentum that had been lifting local home sales in recent months came to a jarring halt in July, raising questions about the long-awaited recovery of the residential real estate market.

Newly released data from the Charleston Trident Association of Realtors showed 643 area homes sold during July, a striking drop-off from the 1,022 transactions recorded in June. The decline followed the expiration of federal tax credits for homebuyers.

Local agents say they were expecting a drop but they’re struggling to grasp how long the dip will last and how quickly the momentum generated by the temporary tax subsidies will return.

Recession-Worn Seniors Tap Social Security Early
Program Created During Great Depression Provides Cushion as More Elderly Americans Forced into Retirement

(CBS) Saturday marked the 75th anniversary of Social Security, and many questions remain unanswered about its future.

As for its present, the program created during the Great Depression has quickly become a last resort for older Americans before they ever thought they’d need it, CBS News Correspondent Rebecca Jarvis reports.

After working 40 years in the chemical industry, Michael Tait of Locust Grove, Va., could not wait until he turned 66, the full retirement age to collect Social Security. He can’t find a job.

“Lowe’s and Home Depot and the grocery stores and the gas station,” he said, listing the places where he’s tried to get work. “Nothing.”

With his unemployment checks running out, Tait decided to apply for his Social Security retirement benefits two years early, at 64, despite the catch that when you collect early, your benefit is cut up to 25 percent permanently. For Tait, that’s a loss of $252 every month.

Still …

“Something coming in right now,” said Tait. “I got to take care of my family, and that’s the most important thing.”

In New York, semi-retired medical lab technician Bobby Lee said he will apply for Social Security as soon as he’s allowed to, when he turns 62 next year.

“You’ll get less, but nobody guarantees how long you’re going to live,” Lee said.

Lee and Tait are part of a growing trend.

“In order to become the master the politician poses as a servant.”

~Charles De Gaulle

The pitfalls of condoze:

Over the weekend I learned that a new building down the block built during the height of the boom imposed a one million dollar emergency special assessment due to problems with its foundation apparently caused by seepage. I don’t think the building ever entirely sold out, so now the 30~40 unit owners have ten days to come up with their share of just over one million dollars. If they can’t come up with the dough the association will secure a loan for them and tack it on to their regular assessment. While they probably will go after the developer - keep in mind that condo developers in my city shed their names/corporate identities like a snake sheds its skin - if they’re even still in business.

Given the wider situation here at the moment, vomiting would have been the proper and acceptable response on the part of the owners.

Wow. Someone in the MSM actually grasps the difference between monetarism and Keynesian theory.

How the US economy is being ‘Japanised’

Federal Reserve policy is taking a worrying turn towards monetarism. This can only result in an American ‘lost decade’
o Chris Payne
The Guardian

n 1963, Milton Friedman and Anna Schwartz wrote a seminal piece on the Great Depression (A Monetary History of the United States, 1867-1960), parts of which have become accepted wisdom in monetary policy and theory ever since. Friedman and Schwartz’s argument is that what turned a recession into a depression in the 1930s (where output dropped by 30% and unemployment rose to 25%) was a collapse of the money supply, as banks were forced to call in their inter-bank loans, creating a domino effect of collapsed banks and lost savings.

Tuesday’s policy announcement by the Federal Reserve can be understood as yet another nod to Friedman and Schwartz: “whatever happens, let’s keep the money supply from falling.” It is also, as I shall explain, yet more evidence that the US is going the way of Japan, meaning that it is entering into a protracted era of low economic growth.
(snip)
So as long as there are US treasury bonds for the Fed to buy, then there are mechanisms for stopping the money supply from falling, even while consumers rush to pay back their debts and cancel out their credit positions in the banking system.

This is all well and good: but let us be clear about one thing, this is not a real “stimulus”. It would only be a stimulus if, by doing this, the Fed was creating funds that were being invested in productive assets. Instead, these measures represent ongoing desperate attempts to keep the money supply from collapsing, in the hope that, at some point in the future, businesses (and consumers) will start to borrow and spend again. In times like these, when uncertainty is rife, when people are saving, not borrowing, low interest rates are, as Keynes said, nothing more that pushing on a string.

The chicoms will blow our doors off next…

China overtakes Japan in 2Q as world’s No. 2 economy amid slowdown in recovery.

TOKYO (AP) — Japan lost its place as the world’s No. 2 economy to China in the second quarter as receding global growth sapped momentum and stunted a shaky recovery.

Gross domestic product grew at an annualized rate of just 0.4 percent, the government said Monday, far below the annualized 4.4 percent expansion in the first quarter and adding to evidence the global recovery is facing strong headwinds.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain

American Dilemma: By Jim Quinn

“The American herd has gone mad. A few people have regained their senses, but the vast majority still exhibits the behavior of sheep being led to slaughter. The ruling oligarchs have utter contempt for the average American, but they fear the masses. In order to retain their power and wealth, they gladly hand out two years of unemployment payments, food stamps, and welfare payments to keep the masses sedated. The working middle class foots the bill. Corruption abounds and is sustained by the passage of more laws and regulations. The sociopathic powers that control the levers of power in this country need to be brought to justice if this country has any chance at survival. The den of vipers and thieves have trampled on the Constitution, speculated with the country’s funds, risked blowing up the financial system, committed fraud on a massive scale, and continue to rape and pillage the American citizens. Vincible ignorance by the American people is no longer a legitimate excuse. The criminals on Wall Street and Washington DC must be routed out and Americans must awaken from their delusional state before it is too late. I weep for the liberty of my country.” ~ Mass Delusion - American Style

Study: N.Y. has highest closing costs
By Bankrate.com

New York and Texas remain the most expensive states for mortgage closing costs, according to Bankrate.com’s annual mortgage fee survey.

In last year’s closing costs survey, Texas was most expensive and New York was second. This year, the order was reversed. In four of the past five years, the two states have occupied the two top spots.

Utah, California and Alaska round off the top five most expensive states.
Closing Costs Study

Arkansas was the least expensive state in this year’s closing costs survey, followed by North Carolina, Iowa, Montana and Wisconsin. There was no consistency at the bottom of the rankings; in 2009, five completely different states occupied the least-expensive rungs.
Big jump in fees?
On average, the origination and third-party fees on a $200,000 purchase mortgage added up to $3,741 in this year’s survey. That’s a 36.6 percent increase over last year’s average of $2,739.

Fees charged directly by lenders went up 22.8 percent, while fees charged by third parties — for things such as appraisals and title insurance — rose 47.2 percent.

Did fees really go up that much? Probably not. Lenders say fees did rise — but modestly. A more fundamental change happened this year: The government began requiring lenders to provide accurate good faith estimates of closing costs, or GFEs.

Lowe’s Profit Trails Estimates as Sales Growth Misses Forecast

(Bloomberg) — Scott Galloway, a professor at New York University’s Stern School of Business, talks about the behavior of U.S. consumers. Galloway talks with Pimm Fox on Bloomberg Television’s “Taking Stock.”

Lowe’s Cos., the second-largest U.S. home-improvement retailer, reported second-quarter profit that missed analysts’ estimates after sales trailed its forecast.

Net income rose 9.6 percent to $832 million, or 58 cents a share, in the quarter ended July 30, from $759 million, or 51 cents, a year earlier, the Mooresville, North Carolina-based company said today in a Business Wire statement. Analysts projected 59 cents, the average of 22 estimates in a Bloomberg survey.

Sales in stores open at least 13 months rose 1.6 percent, compared with the increase of 2 percent to 4 percent forecast by Lowe’s in May. In July, sales at U.S. retailers rose less than economists projected, signaling restrained spending and consumer confidence until companies start hiring again.

Back to School? Bring Your Own Toilet Paper
The New York Times

When Emily Cooper headed off to first grade in Moody, Ala., last week, she was prepared with all the stuff on her elementary school’s must-bring list: two double rolls of paper towels, three packages of Clorox wipes, three boxes of baby wipes, two boxes of garbage bags, liquid soap, Kleenex and Ziplocs.

At Pauoa Elementary School in Honolulu, every student must show up with a four-pack of toilet paper

“The first time I saw it, my mouth hit the floor,” Emily’s mother, Kristin Cooper, said of the list, which also included perennials like glue sticks, scissors and crayons.

Schools across the country are beginning the new school year with shrinking budgets and outsize demands for basic supplies. And while many parents are wincing at picking up the bill, retailers are rushing to cash in by expanding the back-to-school category like never before.

Now some back-to-school aisles are almost becoming janitorial-supply destinations as multipacks of paper towels, cleaning spray and hand sanitizer are crammed alongside pens, notepads and backpacks.

Things are getting interestinger & interestinger. How will BB & company keep the lid on this pressure cooker?

Beware of $1 Trillion Under Chinese Mattress
(Bloomberg)

Last week, we learned China’s households hide as much as 9.3 trillion yuan ($1.4 trillion) of income not reported in official figures — 80 percent of it by the nation’s wealthiest. This massive pile of stashed cash is equal to about 30 percent of gross domestic product.

There may be both good and bad news in the above study conducted for Credit Suisse Group AG. The good: it lends credence to the domestic-demand story for Chinese growth. It turns out, the average urban disposable household income is 32,154 yuan, or 90 percent more than official figures. The bad: China’s rich-poor gap may be much bigger than we realize.

China’s “Gini coefficient,” a statistical measure of wealth equality, has long been too high. In May, the Economic Information Daily, a government-affiliated newspaper, said the figure reached 0.47, higher than the recognized “warning level” of 0.4.

Things may be far worse in the most populous nation. A widening wealth disparity will lead to trouble down the road for 1.3 billion Chinese and investors betting on stability in an economy that may already be the second-largest.

The wasted 4.44% mortgage rate

Last week, U.S. mortgage rates fell for the eighth consecutive week to a record low after the Federal Reserve said it would buy more government debt to help the economy recover. A 30-year fixed-rate mortgage in the week ending Thursday dropped to 4.44% from 4.49%, according to Freddie Mac, which noted it was the lowest since the mortgage finance company began collecting data in 1971. The 15-year rate averaged 3.92%.

The fall in rates ostensibly means homeowners can lower their monthly loan payments by refinancing their existing loans. They’re certainly trying — the Mortgage Bankers Association reported last week that 78.1% of all mortgage applications fell under the refinance category, up from 58.7% in April.

But many of them are filling out all that paperwork only to get a rejection letter in response. The mortgage association does not quantify how many of those who apply for refinance actually get approved, but mortgage brokers say many homeowners are ineligible. Last year the Home Affordable Refinance Program, or HARP, was created to help homeowners get new loans, but the program has only resulted in a small fraction of the refinancings the government aimed to enable.

“The qualifications are so much stricter,” says Dale Robyn Siegel, CEO of Harrison, NY-based Circle Mortgage Group and author of The New Rules for Mortgages. “Banks have realized that even the best of borrowers have lost their jobs. A lot of people are really tapped out.”

Coming soon to a neighborhood near you: An Islamic house of worship — not that there is anything wrong with that: They have their Constitutional freedom of religion, and if most of the new congregation happen to be illegal immigrants, they had their Allah-given right to cross our border.

* POLITICS
* AUGUST 16, 2010

Obama’s Mosque Remarks Reverberate
By VICTORIA MCGRANE And SIOBHAN GORMAN

President Barack Obama’s weekend remarks supporting the right to build a mosque near Ground Zero reverberated across the country, nationalizing a debate over the New York City project.

A number of Republicans on Sunday folded the president’s remarks into their election-year narrative that Mr. Obama, a former constitutional scholar, is out of touch with the American citizenry.

The dispute over the mosque is just the most prominent in a series of debates around the country where Muslim groups have sought to build mosques. In the community of Temecula, Calif., where a proposed mosque has sparked an intense dispute, Mr. Obama’s comments spurred a surge of letters to local newspapers decrying his statements. Pastor William Rench of Calvary Baptist Church, next door to the proposed mosque site, said he now expected opposition to the mosque plan to harden.

“It will galvanize their desire for resistance to the mosque,” he said. “It confirms in their minds the idea that Mr. Obama seems to be more accommodating to the Islamic world than he is for the Christian representation in America.” Mr. Rench said former President George W. Bush, who also spoke of Islam as a peaceful religion, might have made similar statements, but Mr. Rench said he disagreed with those views.
…

I personally detect no shortage of BS artists who are happy to provide the good news on housing which the market is unlikely to provide in the near term.

If it looks like a bubble, inflates like a bubble and pops like a bubble, IT’S A BUBBLE, FOR CRISSAKE!

Your House Might Be Underwater for Years
By Michael Carliner - Aug 15, 2010 6:00 PM PT
Bloomberg Opinion

The housing market has usually led the U.S. economy into and out of recessions. It certainly led us into the latest slump.

The same can’t be said of the recovery. If anything, housing today is stifling economic expansion.

Rebounds in housing have typically been driven by declines in mortgage rates. Not this time. Rates on a 30-year mortgage have dropped to about 4.5 percent — the lowest since the early 1950s — with little effect. Tax credits and other programs to encourage buyers have provided only a modest, temporary boost.

Other traditional measures of value, such as the size of monthly mortgage payments relative to income, show that housing is a bargain now.

None of that matters because houses are bought with an eye toward the future and in anticipation of an eventual sale.

We saw what happened in the boom in the middle of the decade — even though prices soared, demand increased as consumers thought about how much money they would have made had they bought sooner. People bought homes, often with no plans to occupy with an eye toward selling and making a quick profit.

In short, the housing market in the middle of the decade had all the characteristics of a bubble.

Bust Time

Now we’re seeing the opposite mindset. If a potential buyer believes that housing prices may fall more, then mortgage rates of 4.5 percent won’t attract home buyers. Rates could even drop to zero and it might not outweigh consumers’ negative perceptions.

Household expectations of future U.S. home price appreciation aren’t directly measured, and are probably based on recent experience.

If expectations reflect changes in home prices over the last three years, for example, consumers seem to anticipate annual house price declines of 3.7 percent to 10.4 percent, depending on which of the various house price indexes is used.

This pessimism is heightened by increased uncertainty, because home ownership typically ties up a high portion of an individual’s assets. Diversification isn’t likely to offset the risk associated with home ownership.

What will it take to turn this attitude around? Only a sustained flow of favorable information is likely to alter negative perceptions of housing as an investment. The market is unlikely to provide such good news in the near term.
…

Internships attract more experienced and older applicants
By Matt Cherry, CNNRadio
August 16, 2010 8:31 a.m. EDT

(CNN) — They’re not just for college kids anymore.

It appears the struggling job market means more competition for fall internships — and age is no boundary according to a new survey by CareerBuilder.com. It found 23 percent of employers are seeing experienced workers apply for internships with them. These applications have come from people who either have more than 10 years of experience or who are age 50 and older.

“This economic downtown has really redefined what an internship is,” said Mike Erwin, senior career advisor for the website.

Erwin says while internships have traditionally been seen as a way for college students and entry-level workers to get experience for their resume, the survey indicates mature workers now need this as well in order to re-enter the workforce.

“They need to make sure that they’re filling in the gaps while being unemployed, so they’re going ahead and taking these internships whether they’re paid or unpaid so they can get more experience, and hopefully land a full-time job,” Erwin said.

—-

Wow, every time I think that corporations have raided every possible pocket of value in passing their costs on to customers and employees, they find another one. First it was outsourcing. Then it was longer hours. Then fewer benefits. Then it was job-security and rank-and-yank. Now it appears that companies are raiding the employee salaries themselves. Use ‘em up, keep a few, throw ‘em out, find a new batch. Just another item that you HAVE to have on your resume (along with multiple college degrees).

And companies have convinced the workers that it’s their own fault because they were lazy and “didn’t produce.” This is insane…

3 out of 5 boomer’s don’t have enough for retirement

http://tinyurl.com/25zub4k

comment section (this could have been my comment as well, but it wasn’t…):

“never get married..NEVER have kids, and you will be just fine.
just because everyone does it, does not mean you have to.
I didn’t..not worth the trouble.”
———————————-

My own comment: If 60% of the boomers saved nothing for retirement and if 50% of those have houses, then 30% of the boomers will unload their houses to be able to pay for their health care and other needs. That of course would mean far more years of price drops ahead. The tail end of the boomers turn 50 in 2013 or 2014. About 15 years of saturation of the housing market unless we can give amnesty to the drug running cartels from south of the border. Then they can have ten people to a house (and there goes the neighborhood!).

Found this while trying to relocate the headline (at 2 am) story of foreclosures rocketing to the most extreme levels yet in metro Atlanta (the story of extreme new levels of foreclosures has disappeared).

Realtor Accused Of Stealing From Students:

http://www.wsbtv.com/news/24643147/detail.html

New record set for metro Atlanta foreclosures:
The Biz Beat New record set for metro Atlanta foreclosures
4:33 am August 16, 2010, by Henry Unger

The foreclosure picture in metro Atlanta is getting worse.

The number of foreclosure notices in the 13-county region skyrocketed 59 percent in August from July, shattering the previous monthly record, according to data released Monday by Equity Depot

“I will say the foreclosure crisis now is clearly a self-feeding monster,” Barry Bramlett, president of Alpharetta-based Equity Depot, said in an e-mail to the AJC. “People are underwater and clearly many are making the judgment that a credit hit is better than throwing money away they don’t feel they’ll recover.”

Bramlett said “this month’s totals are off the charts.”

Link:

http://blogs.ajc.com/business-beat/2010/08/16/new-record-set-for-metro-atlanta-foreclosures/?cxntfid=blogs_business_beat

To put this story further into perspective, American Public Media’s Marketplace just mentioned the home-builder confidence index was at a level of 72 in 2005; as mentioned below, it has steadily remained under the “neutral sentiment” level of 50 since April 2006, with no sign of recovery in sight.

You have to wonder why the builder-related stock price indexes would rally on this news. I suppose that each time this index reaches a new low, we are that much closer to reaching a housing market bottom?

Economic Report

Aug. 16, 2010, 10:49 a.m. EDT
Home-builders index slumps to 17-month low

By Steve Goldstein, MarketWatch

WASHINGTON (MarketWatch) — Home-builder confidence slumped in August to a 17-month low, according to a report released Monday, in another indicator of a tentative housing market.

The National Association of Home Builders/Wells Fargo Housing Market Index fell 1 point to 13, its worst reading since March 2009. Economists polled by MarketWatch had anticipated a rise to 15.
Housing ills cloud Fannie-Freddie summit

Nick Timiraos discusses what to expect at Tuesday’s summit that is planned to address some of the problems at Fannie Mae and Freddie Mac.

To put the data in perspective, any reading above 50 indicates that more builders view conditions as good than poor. There hasn’t been a reading above 50 since April 2006.

Builder pessimism is also reflected in the stock market — both the SPDR S&P Homebuilder exchange-traded fund (XHB 14.23, +0.08, +0.57%) and iShares Dow U.S. Home Construction Index Fund (ITB 10.99, +0.07, +0.64%) are mired near 52-week lows, though both indexes advanced Monday.

Jennifer Lee, senior economist at BMO Capital Markets, said in a research note that all the gains made over the past year as the economy has recovered and the now-expired homebuyer tax credit came into effect are gone.

“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” said NAHB Chairman Bob Jones in a statement.

“Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market, and tight consumer-lending conditions are causing them to lose potential sales,” he said.
…

Banks to benefit most from White House program to help fight foreclosures.

thehill dot com/blogs/on-the-money/banking-financial-institutions/114349-banks-to-benefit-most-from-white-house-program-to-stave-off-foreclosures

This is news?

In a Wall Street Journal piece by Gerald O’Driscoll, former Vice President of a Federal Reserve Bank. He says, “Treasury Secretary Tim Geithner is proposing to repeat the mistake of Herbert Hoover, who persuaded Congress to raise taxes in 1932.”

~ The Fed Can’t Solve Economic Woes

Mortgage closing costs jump 40% in Illinois

Average mortgage closing costs have jumped 40 percent in Illinois this year, according to an online survey by personal finance company Bankrate Inc.

The origination and third-party fees on a $200,000 mortgage added up to $3,505 in the the 2010 survey, up from $2,486 a year ago.

Illinois was not alone in the dramatic rise. Nationally average closing costs increased 36 percent to $3,741. Bankrate said one of the reasons for the increase has to do with new regulations implemented in January. Lenders are now required to provide an estimate of title and closing fees within 10 percent of what the final cost will bd, or they’ll risk penalties. The regulations require more labor in getting a loan together.

Even with the increase, Illinois ranked 31st out of 50 states surveyed (plus Washington, D.C.) The most expensive state was New York with an average fee of $5,623. Last year, Illinois ranked 43rd.

Homebuilder confidence sinks for 3rd month
Weak economy, competition from foreclosures push index of builder confidence down.

WASHINGTON (AP) — Homebuilder confidence dropped for the third straight month in August as the struggling economy and a flood of cheap foreclosed properties kept people from buying new homes.

The National Association of Home Builders said its monthly index of builders’ sentiment about the housing market fell to 13, the lowest reading since March 2009. The index is adjusted for seasonal factors.

Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.

Fewer people are buying new homes, even though prices have stabilized in the past year and those who have good credit can qualify for the lowest mortgage rates in decades. The market is struggling because jobs are scarce and credit is tight. And many analysts predict home prices are likely to drop again in the fall.

How low can it go?

Bond Report

Aug. 16, 2010, 11:44 a.m. EDT
Treasurys gain ground after weak U.S. data
Investors look towards Fed buying starting this week

By Deborah Levine, MarketWatch

NEW YORK (MarketWatch) — Treasury prices advanced on Monday, pushing 10-year yields to the lowest since March 2009, after reports on manufacturing in the New York region, U.S. home-builder confidence and Japan’s growth fueled worries over the global economy and had investors buying assets perceived as safer.
…

Anyone (In Colorado?) have any insight into the housing market in the Denver metro area? Specifically Highlands Ranch? Are there a lot of foreclosures/distressed owners (and hence more price drops ahead)?

Also, any thoughts on the public school cuts and funding situation with Douglas County Schools?

Thanks in advance for the input!

Previously:

Islam is the second-largest religion in the world and arguably the fastest growing religion in the world.

With about 1.57 billion Muslims comprising about 23% of the world’s population

America has an immigration quota:

An annual limitation of 300,000 visas was established for immigrants, including 170,000 from Eastern Hemisphere countries, with no more than 20,000 per country. By 1968, the annual limitation from the Western Hemisphere was set at 120,000 immigrants, with visas available on a first-come, first-served basis. However, the number of family reunification visas was unlimited. While as of 2010 there are no quotas for immigrant spouses of US citizens, quotas for other types of relatives of US citizens have since been instituted

No worries,…it’ll take awhile to dilute 310 million Americans from looking like the rest of the outside world.

minus this group in roughly 25 years:
65 years and over: 12.8%
(male 16,901,232/female 22,571,696)

multiply this group during that time:
In 2009, 40% of births were to unmarried women

maintain this number for everyone with MS-MA-PHD’s/MBA’s:
2.05 children born/woman

By 2035, I’m thinkin’ visiting the swap-meet in Wichita, Kansas is gonna feel different than 2010

New comedy routine by Jeff Houseworthy.

You may be underwater….

If you pay more in mortgage than your neighbor rents his house for…. you may be underwater.

If your realtor promised you the house would double in five years…. you may be underwater.

If you’re afraid to open Zillow.com in your browser…. you may be underwater.

If you believed refinancing to take that dream vacation was a good idea…. you may be underwater.

And finally… if Suzanne researched it…. you are DEFINITELY underwater.

If you turned down a 90%-of-asking offer on your house because you’re waiting for “The Right Buyer”… you may be underwater.

NEW YORK — Lowe’s Cos missed quarterly profit and sales estimates as benefits from the home-buyer tax credit and cash for appliances programs waned, and the retailer warned of uncertain demand.

The second-largest home improvement chain after Home Depot also forecast current-quarter profit of 28 cents to 32 cents a share, while analysts were expecting 31 cents.

Sales at Lowe’s and Home Depot had benefited immensely in the first quarter, which ended in April. Many who put off renovations during the recession upgraded appliances to take advantage of a federal stimulus for energy-efficient goods, while others tried to take advantage of the first-time home-buyer tax credit.

Net income at Lowe’s rose to $832 million, or 58 cents a share, in the second quarter ended July 30 from $759 million, or 51 cents a share, a year earlier.

Analysts on average were expecting 59 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 3.8 percent to $14.36 billion, but missed the average estimate of $14.52 billion.

Lowe’s said it expected a sales increase of 3 percent to 5 percent in the third quarter.

Anything look familiar? (7-10 year treasury index)

Fed says loan standards eased ~ August 16, 2010

WASHINGTON (Reuters) - The Federal Reserve said on Monday bank lending standards eased somewhat over the last three months while demand for business and consumer loans was largely unchanged.

In its quarterly Senior Loan Officer Survey, taken in July, the Fed found that tight lending conditions, which some economists have linked to the weak economic recovery, were starting to ease.

But that was mostly the case at bigger financial institutions, while smaller banks continued to struggle.

With benchmark interest rates already effectively at zero, the Fed last week took steps to ease monetary conditions further, announcing it would begin buying Treasury bonds with the proceeds from maturing mortgage debt in its portfolio.

The measure was aimed at spurring new lending at a time when economists are worried about the softening pace of the U.S. economic recovery.

A special question added to the July survey found some reticence to lend to European banks during months that saw heightened concern about those institutions amid mounting indebtedness in countries like Greece and Spain.

The Fed’s survey found looser lending conditions for most types of commercial and industrial loans.

Gallup: 18% unemployed or underemployed
Phoenix Business Journal

More than 18 percent of U.S. workers say they are either unemployed or underemployed, according to a Gallup Organization survey.

The running survey of U.S. workers shows 81.5 percent of them have jobs, but the national unemployed/underemployed number has been between the high-teens and 20 percent throughout the year. Gallup surveys 19,800 American workers each month.

The U.S. unemployment rate stands at 9.5 percent, according to July numbers from the U.S. Bureau of Labor Statistics. Arizona’s unemployment rate is 9.6 percent, according to June figures from the Arizona Department of Commerce. Underemployment also is an issue in Arizona as many laid-off workers turn to part-time service and retail jobs while they look for full-time jobs.

Owner of Super Fresh to shutter stores.

The owner of Super Fresh said that is closing 25 stores in five states as it tries to revive the company.

The Great Atlantic & Pacific Tea Company Inc. said it would close stores that are located close to each other or have expensive real estate or other cost issues. They will also shutter under-performing stores.

The company expects to close the stores by its fiscal third quarter.

The closures are “absolutely necessary to strengthen A&P’s operating foundation and improve our performance going forward,” president and CEO Sam Martin said.

A&P operates 429 stores in eight states and the District of Columbia. Its brands include A&P, Waldbaum’s, Pathmark, Pathmark Sav-a-Center, Best Cellars, The Food Emporium, Super Food-mart, Super Fresh and Food Basics.

“Currently we are not releasing the store list. The impacted stores include those across our A&P, Waldbaum’s, Pathmark, SuperFresh and Super Food mart banners located in five states - CT, MD, NJ, NY and PA.”

DeKalb throws the book at author/educators selling their stuff to the school system.

The AJC is reporting today that DeKalb County is firing two principals and demoting two other officials after an internal investigation found school funds were used to purchase thousands of dollars worth of books that school administrators had written.

I am delighted to point out the the investigation into the book sales followed an investigation by The Atlanta Journal-Constitution.

I think the public is getting fed up with schools asking for money while at the same time doing very little to ensure that money is well spent. I also question how DeKalb could allow such purchases with no oversight.

Every year, thousands of educators publish books. Thousands more would publish books if assured they could sell hundreds of copies to their own school systems.

Paul Craig Roberts~Infowars.com ~August 16, 2010

The United States is running out of time to get its budget and trade deficits under control. Despite the urgency of the situation, 2010 has been wasted in hype about a non-existent recovery. As recently as August 2 Treasury Secretary Timothy F. Geithner penned a New York Times column, “Welcome to the Recovery.”

As John Williams (shadowstats.com) has made clear on many occasions, an appearance of recovery was created by over-counting employment and undercounting inflation. Warnings by Williams, Gerald Celente, and myself have gone unheeded, but our warnings recently had echoes from Boston University professor Laurence Kotlikoff and from David Stockman, who excoriated the Republican Party for becoming big-spending Democrats.

It is encouraging to see some realization that, this time, Washington cannot spend the economy out of recession. The deficits are already too large for the dollar to survive as reserve currency, and deficit spending cannot put Americans back to work in jobs that have been moved offshore.

However, the solutions offered by those who are beginning to recognize that there is a problem are discouraging. Kotlikoff thinks the solution is savage Social Security and Medicare cuts or equally savage tax increases or hyperinflation to destroy the vast debts.

Perhaps economists lack imagination, or perhaps they don’t want to be cut off from Wall Street and corporate subsidies, but Social Security and Medicare are insufficient at their present levels, especially considering the erosion of private pensions by the dot com, derivative and real estate bubbles. Cuts in Social Security and Medicare, for which people have paid 15 per cent of their earnings all their lives, would result in starvation and deaths from curable diseases.

The wimp, whispering Harry Reid sez…

Reid: Build mosque elsewhere (AP)

WASHINGTON — The Senate’s top Democrat says a mosque should not be built near the site of the Sept. 11 terrorist attacks.

Sen. Harry Reid of Nevada on Monday became the highest profile Democrat to break with President Barack Obama, who on Friday backed the right for the developers to build a mosque near ground zero.

In a statement, Reid said the first amendment protects freedom of religion and he respects that, but the mosque should be built somewhere else.

Critics have said the location of the mosque is insensitive because the terrorists who struck were Islamic extremists.

Reid is in a tight campaign for re-election in Nevada. His opponent, Republican Sharron Angle, earlier in the day called for Reid to say whether he agreed with Obama.

Fortress Takeover of AIG Lender Costs Bondholders $792 Million
Aug 16, 2010

American General Finance Inc. debt has lost at least $792 million since Fortress Investment Group LLC agreed to buy the lender last week, punishing bondholders from Loomis Sayles & Co. to Pacific Investment Management Co.

Fortress’s purchase is sparking concern that the buyout and hedge-fund firm will seek to swap or repurchase bonds at discounted prices to trim $17 billion of American General’s debt, according to analysts and investors. That’s reversing a June rally fueled by expectations that parent American International Group Inc. would sell the unit to a bank with top credit ratings.

“The loss of a traditional investment-grade buyer is key to the selloff,” said James Palmisciano, chief investment officer at New York-based Gracie Credit Opportunities Fund LP, who said he’s been avoiding the debt. Fortress “management is smart, savvy and opportunistic, and will probably only repurchase debt when it makes sense — at larger discounts than here.”

Cotton Tests 1995 Peak as Supply Drops, Levi’s Raises Prices
Aug 15, 2010 ~ Bloomberg

Production by the world’s cotton farmers will fail to keep up with demand for a fifth straight year.

Cotton may climb to the highest price since 1995 as rising demand in emerging markets for everything from shirts to bed sheets forces textile makers to restock inventories that are the tightest in 13 years.

Export sales by the U.S., the largest shipper, are off to their fastest start since 1993 as apparel demand in China, the biggest consumer, increased 24 percent, government data show. Cotton may advance 13 percent to a 15-year high of 94.9 cents a pound before new supplies are harvested in October, according to 17 analysts surveyed by Bloomberg on Aug. 12 and Aug. 13.

The commodity is projected to extend its gains because demand is growing in Asia’s developing nations, even as signs emerge that the U.S. economic recovery may slow. While the rally is enriching some cotton investors, it’s also boosting costs for Levi Strauss & Co. and Hanesbrands Inc., the maker of Hanes underwear and the Wonderbra. The last time cotton traded above 90 cents a pound, in 2008, some merchants including Paul Reinhart Inc. were forced into bankruptcy.

“Global consumption is exploding,” said Ron Lawson, a managing director at Logic Advisors, a commodity consultant in Sonoma, California. “We just can’t get enough cotton in place to meet the growing demand.”

They should give her 10 years and let her see how funny her joke was. I have no patience for people that screw with kids.

Mom arrested for posting Facebook picture of baby with bong

http://www.palmbeachpost.com/news/mom-arrested-for-posting-facebook-picture-of-baby-861714.html - - Cached - Similar pages

WFTV
Posted: 8:57 a.m. Monday, Aug. 16, 2010

KEYSTONE HEIGHTS, Fla. — The picture of a Florida baby with a bong has now led to the mom’s arrest.

Rachel Stieringer, 19, is facing one count of possession of drug paraphernalia, a first-degree misdemeanor.

The Keystone Heights mother posted a picture on her Facebook page of her baby with a bong. She said it was just a joke.

DCF gave the infant a drug test and it came back negative. Prosecutors said they could not charge her with child abuse, because her son wasn’t exposed to any drugs.

The grandparents are now caring for the child

And, to put things in perspective, the air is starting come out of other bubbles:

Medical Care Prices Fall

The High Price of Higher Education Continues to be Questioned

In the interest of stimulating the economy, I think Obama should consent to briefly permit someone to stand in front of him naked, ideally an FB with a large mortgage and credit card debt. Just think of the tax revenue the “winner” will generate!

‘Face Obama Naked’ Dare Now Worth $1 Million

A billionaire who last week launched a dare for people to stand naked in front of US President Barack Obama has just raised the stakes for the prank to $1 million from a previous $100,000.

Billionaire Alki David, who comes in at number 45 of the Sunday Times’ rich list in the UK, promised the money to whoever manages to get naked in front of President Barack Obama with “Battlecam” written on their chest while shouting “Battlecam.”

finance yahoo com/news/Face-Obama-Naked-Dare-Now-cnbc-3259419195.html?x=0&sec=topStories&pos=6&asset=&ccode=

The Financial Times
Government-sponsored mess
Published: August 16 2010 22:18 | Last updated: August 16 2010 22:18

When the delegates gather on Tuesday at the US government’s conference on the future of housing finance, they must ponder this perverse fact: a political desire to make housing affordable is incarnated in policies and institutions that have made it politically and economically imperative to keep house prices high and rising.

The two government-sponsored enterprises for housing finance, Fannie Mae and Freddie Mac, hold or guarantee mortgages worth $5,400bn between them. With securitisation markets in a vegetative state, this dominance has only increased since they were put into conservatorship two years ago. Almost no new mortgage is being issued or securitised except through the conduit provided by the GSEs’ balance sheets.
…
Having helped create the mess we are in, Fannie Mae and Freddie Mac now stand in the way of solving it. Any fundamental redemption of the GSEs’ original sins – such as making clear that the taxpayer will not be on the hook for their losses – would send real estate and mortgage-backed securities into a tailspin. This is something the US is still not in a position to bear.

Without a system of mortgage renegotiations that actually works, a tidal wave of foreclosures would destroy economic value. Until procedures for letting systemic institutions fail are put in place, cramming down mortgage assets would pull the rug away from under a barely recovering banking system.

The answer is not a return to the status quo ante. A good start would be honest accounting. If the cost of subsidising homeowners well into the middle class was more widely known, more narrowly targeted policies might start to look politically feasible. By then, the ground must be prepared for tackling the inevitable – and desirable – result of proper reform: house price falls.

“That explains why virtually all American mortgages being issued today are by US government agencies or sponsored entities, up from a third before the crisis.”

Not quite. Before there were 4.5 percent mortgages, there were unprecedented Fed purchases of MBS. Private lenders have been deliberately crowded out of the mortgage lending arena by this policy, and nobody with an MSM bully pulpit gets it.

The Financial Times
US Housing
Published: August 16 2010 09:43 | Last updated: August 16 2010 21:11

Would you extend an American homebuyer a loan for 30 years for a measly 4.5 per cent that they can repay if rates continue to drop or default on with little consequence if the value of the collateral falls too far? Neither would we.

That explains why virtually all American mortgages being issued today are by US government agencies or sponsored entities, up from a third before the crisis. Although federal assistance to plug losses for GSEs Fannie Mae and Freddie Mac is projected to reach $400bn over a decade by the Congressional Budget Office – almost four times the net cost of rescuing private banks – they remain in a state of regulatory limbo.

Today’s Housing Summit, hosted by Barack Obama, the president, ostensibly seeks to address that. But the issue is too sensitive and midterm elections too near to expect much.
…
EDITOR’S CHOICE
In depth: Freddie and Fannie - Aug-16
US builder slump deepens in August - Aug-16
Overhaul of US mortgage lending - Aug-16
US borrowers pay down mortgages - Jul-28
Hard-hit Florida waits for house price recovery - Aug-15

LISTING PHOTO FAIL!

http://floridamoves.com/Property/propertydetails.aspx?SearchID=15026400&PropertyGUID=19DE568A-7BA8-4E26-9537-7E789966F497&RowNum=5

Step 1 to fixing the housing market: END HUD’S AFFORDABLE HOUSING MANDATES

* OPINION
* AUGUST 17, 2010

The Future of Housing Finance
We’ll never get a rational mortgage system until the government’s affordable housing mandates are ended.

By EDWARD PINTO

Today the Obama administration will begin a discussion on how to overhaul our nationalized housing finance system. Moderated by Treasury Secretary Timothy Geithner and Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD), the “Conference on the Future of Housing Finance” seeks answers to what went wrong in the U.S. housing market. This promises to be the next big domestic policy debate—one that could mold housing finance for a generation or more. But the early signs of where policy makers might be headed are not promising.

A consensus is building around a three-part grand bargain:

• An explicit federal guarantee of a large portion of the mortgage-backed securities created to finance American’s home mortgages;

• A tax on these securities to fund low-income housing initiatives; and

• A requirement that issuers of securities meet affordable housing mandates.

This is a dead end for two reasons. First, while supporters of an explicit federal guarantee tell us it will never be called upon, Americans have read this book before and know how it ends.

The second is much less well known but equally deadly: the central role in the recent real estate collapse that was played by the federal affordable housing policy created by Congress and implemented since the 1990s by HUD and banking regulators.

In 1991, the Senate Committee on Banking, Housing, and Urban Affairs was advised by community groups such as Acorn that “Lenders will respond to the most conservative standards unless [Fannie Mae and Freddie Mac] are aggressive and convincing in their efforts to expand historically narrow underwriting.”

Congress made this advice the law of the land when it passed the inaptly named Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (GSE Act of 1992). This law imposed affordable housing mandates on Fannie Mae and Freddie Mac.

Thus, beginning in 1993, regulators started to abandon the common sense underwriting principles of adequate down payments, good credit, and an ability to handle the mortgage debt. Substituted were liberalized lending standards that led to an unprecedented number of no down payment, minimal down payment and other weak loans, and a housing finance system ill-prepared to absorb the shock of declining prices.

In 1995, HUD announced a National Homeownership Strategy built upon the liberalization of underwriting standards nationally. It entered into a partnership with most of the private mortgage industry, announcing that “Lending institutions, secondary market investors, mortgage insurers, and other members of the partnership [including Countrywide] should work collaboratively to reduce homebuyer downpayment requirements.”

The upshot? In 1990, one in 200 home purchase loans (all government insured) had a down payment of less than or equal to 3%. By 2006 an estimated 30% of all home buyers put no money down.

“[T]he financial crisis was triggered by a reckless departure from tried and true, common-sense loan underwriting practices,” Sheila Bair, chair of the Federal Deposit Insurance Corporation, noted this June. One needs to look no further than HUD’s affordable housing policies for the source of this “reckless departure.” If the mortgage finance industry hadn’t been forced to abandon traditional underwriting standards on behalf of an affordable housing policy, the mortgage meltdown and taxpayer bailouts would not have occurred.
…

” If the mortgage finance industry hadn’t been forced to abandon traditional underwriting standards on behalf of an affordable housing policy, the mortgage meltdown and taxpayer bailouts would not have occurred.”

This is the big lie, told over and over.

Policies to encourage affordable housing went back decades. The loosening (abandonment) of lending standards was not done until it was convenient and profitable for the lending industry to do so, so as to make as many loans as possible that could then be packaged together in the form of mortgage backed securities to be sold to investors.