The Feast Is Coming To An End
It’s Friday desk clearing time for this blogger. “Baoding has reported rapid increases in new-home prices, from about 3,000 yuan (Dh1,750) per square metre in 2007 to 6,000 yuan in 2010. With 1,800 luxury apartments in a prime downtown location, Guo Zhai Hua Yuan is just one of countless schemes emerging in this city of 1.6 million. An hour south-west of Beijing, the former capital of Hebei province is at the frontline of China’s building boom, with a cityscape full of cranes and half-finished apartment blocks. At its peak, residents were ‘crazy about buying property,’ said Ma Tengfei, Huazhong Realestate’s sales manager.”
“‘We gave our customers only half an hour to decide whether to buy or not because we had other customers interested. People were in such a frenzy, they didn’t worry about the quality. They were just worried whether they could get one,’ he said.”
“Across China, potential buyers are now holding off. Mr Ma said at the peak his offices received 20 to 30 visits a day from families or other potential purchasers. Now the figure is five or six. With the market in limbo, those who snapped up property several years ago are glad they did so. Pei Wenbo, 31, an accountant, bought his three-bedroom flat in the north-east of the city in 2008, paying about 3,000 yuan for each of its 167 square metres. He has since bought a second, yet-to-be-completed flat as an investment.”
“‘It’s a huge relief that I got this apartment earlier,’ he said. ‘Nowadays there’s a huge pressure on people thinking of buying a flat. Wage earners find it almost impossible to afford an apartment, because incomes haven’t kept up with property price hikes.’”
“Twice a year, one of Beijing’s largest convention venues holds a large-scale international property fair. Developers and agents spruik property from all over the world - the United States, United Kingdom and Singapore all have a large presence, as does Australia. The drawcard, it seems, is more than property. One booth, which advertised property from all across the Australian east coast, prominently boasted: ‘Invest in property; speedy migration.’”
“One prospective investor, who gave his last name as Wang, said Beijing property prices were too high and unstable. ‘I have a friend who has ten properties in Melbourne. I want to invest too,’ Mr Wang told BusinessDay.”
“One Chinese agent explained: ‘You need over $600,000 in Australian assets, and have a controlling share in a company for more than two years with a turnover of more than 2.4 million yuan (about $350,000).’ It all sounded a bit too hard, one investor remarked.”
“‘Will you only consider Australia for migration? What about Canada?’ came the reply.”
“‘Blaming Chinese For High House Prices in Vancouver Is Racist,’ April 6. Pretty strong stuff from Allen Garr last week. Hello? Vancouver real estate made headlines around the world, shooting to the second least affordable city on the globe. And the media have told us why in clear terms: international investment—spurred by China’s new wealth. Here’s a small sample of the headlines: Bloomberg: Chinese Spreading Wealth Make Vancouver Homes Pricier than NYC. Wall Street Journal: Chinese Fuel Vancouver Home Boom. China Daily: Chinese Drive Up Vancouver Home Price. South China Morning Post: Chinese Love Affair with Canada Continues. Globe and Mail: Canadian Real Estate - A Piggy Bank for Chinese Investors.”
“It’s only now that the public is questioning its practices that the real estate and development industry has hit full tilt back-pedal mode. Denial, denial, denial, with a helping of racial invective on the side. Richest of all is the quote from Larry Beasley, identified by Garr as a former city planner, who dismisses public anxiety about international capital as ‘bullshit,’ adding that it’s ‘racist.’ Interesting that Garr didn’t mention that Beasley is now VP of Aquilini Developments—part of the Aquilini Group reported in the media for inking its strategic partnership with Asian developers, and for its proposal to market the remaining Olympic Village condos to—where else—China.”
“A significant part of China’s growth since 2007-08 has been an illusion. Its headline growth of 8-10 per cent since then has been driven by new lending averaging 30-40 per cent of GDP. Up to 20-25 per cent of these loans may prove to be non-performing, amounting to losses of 6-10 per cent of GDP. The case for a soft landing assumes that the investment and property bubbles are less serious than thought. The case for a hard landing assumes the rapid and destructive unwinding of asset price bubbles and problems within the Chinese banking system.”
“A poor external environment and losses on foreign investment exacerbate the problem. Growth collapses, triggering massive social unrest and political tensions. But the end of a cycle of debt- and investment-driven growth is typically disruptive. Japan’s experience, which China has drawn on in shaping its economic model, is salutary. Japan grew by 10 per cent in the 1960s, 5 per cent in the 1970s, 4 per cent in the 1980s, and has remained stagnant since, adjusting to the deflation of its debt-fuelled bubble.”
“The global economy increasingly looks to China to drive the world’s growth. These febrile expectations are ill-founded. There will be significant effects on commodity prices and volumes, affecting resource producers and commodity-exporting nations such as Canada, Australia, Brazil, Russia and South Africa. It will also affect demand for industrial goods, especially advanced machinery. Chinese demand for US dollars, euros and yen will diminish. This will force borrowers, primarily governments, to find alternative buyers for their bonds.”
“A hard landing will be especially traumatic for the global economy, which has not dealt with its core problems – excessive debt levels, weak non-debt fuelled demand and global imbalances. The crisis and its effects have been masked in developed economies by artificial demand from government spending, which is proving increasingly difficult to sustain. In China, it was masked by debt fuelled investment. Now, that feast too is coming to an end.”
“Sherry Cooper was reminded of just how devastating the U.S. housing crisis has been for families and the overall economy in that country after speaking recently with a friend who is having trouble selling his house in New Jersey. Ms. Cooper, the chief economist at Bank of Montreal, is starting to worry about Canada’s housing market after refuting the arguments of the extreme bears in the past.”
“But now Ms. Cooper is looking at the debacle in the United States and the blistering pace of the market here and warning people to tread carefully. I can add a story to the mix: I have a family member who paid about $750,000 for a house in Indiana in the late 1990s. She doesn’t think she could get $350,000 for it today.”
“She also knows that, if she were to list it, her house would be competing with swathes of newer houses built on the surrounding farmland during the boom. Meanwhile, her husband’s job has been re-located about three hours away in Chicago. They’re stuck with a house they can’t sell without taking a huge loss. How many years will they have to wait for it to recover its value, if it ever does?”
“‘I’m not forecasting a crash landing but it would be foolish to ignore the lessons learned south of the border, Ms. Cooper says.”
“Sales by Realtors of single-family homes in Jupiter were more brisk in February than elsewhere in Palm Beach County and Florida. Though the median price was almost 5 percent down from a year ago, sales volume was up almost 21 percent. Though new listings are up 10 percent from a year ago in Jupiter and 21 percent throughout Palm Beach County, the inventory of available homes is down 37 percent in Palm Beach County, even sharper than the 34 percent decline statewide.”
“‘More people are looking, and there is an influx of Canadian buyers,’ Chris Cox, president of the Jupiter-Tequesta-Hobe Sound Realtor Association said in an email.”
“Across Tallahassee and throughout Florida, it’s a scenario that is played out thousands of times and for a host of different reasons. The result, however, is a distressed property and an often frustrating effort by the homeowners to resolve their situation. After more than three years of phone calls, faxes and correspondence, Neil and Jane Mooney’s foreclosure ordeal may be over.”
“For the Mooneys, making the $1,188.88 monthly payment on the Cabin Hill house was not feasible and, in fact, took a chunk out of their retirement income they could not sustain. ‘We were not able to continue doing that,’ Jane Mooney said. ‘For a long period of time we went through the modification, trying to get a modification and all this kind of thing. Finally, they did give us what we thought was a forbearance on the situation, but we learned later that money had not gone toward the payment, but had been put into a fund to pay the taxes.’”
“Jane Mooney concedes that she’s not ready to celebrate having the case behind them, not yet. The retired Tallahassee couple anticipated a resolution before, only to face repeated disappointment. ‘I realized when I was about a month into this that it was going to be a long time. That’s the thing. I knew that it was going to take a while and sure enough, it’s been three years now and still no resolution to this situation,’ she said.”
“Other sellers are on the sidelines, as reflected by the 7,000 houses in this market the past five years that didn’t sell and are no longer listed, said Joe Manausa, broker and owner of Century 21 Manausa & Associates. ‘It’s another 10 years before we work our way out of them.’”
“Recently, Gov. Scott Walker was the featured speaker for Realtor/Government Day in Madison. This is a time when Realtors (such as me) from around the state meet with their government officials to rally support for issues vitally important to homeowners. He did give a nod to the importance of Realtors. Glaringly missing, though, was any defense of his taking of $25.6 million from distressed homeowners and instead applying it to ‘plug holes’ in the state budget.”
“The money is part of the state’s $141 million settlement with big banks responsible for foreclosure fraud and mortgage-servicing abuses. It is intended to be used for foreclosure remediation. The money could provide up to $2,000 in aid to two of my neighbors who have lost their homes to foreclosure (due to tragic illnesses). It could prevent another neighbor, who took a lower-paying job when he lost his, from doing a short sale and instead refinance at a lower rate. It could help one of my clients who was a victim of Wells Fargo’s ’servicing abuses’ (the bank actually renegotiated the loan to a higher rate).”
“It could prevent three of my military families (recently deployed out of state and out of the country) from losing their homes. It would allow my daughter to refinance her condo (devalued by foreclosures in her complex) at a lower rate.”
“Our home has dropped $23,000 in assessed value since the housing decline started, yet we still have a property tax increase of over $500. We Realtors are not happy with this. Realtors are on the front lines dealing with the fallout of the depressed market on homeowners. Walker took money that could prevent this from happening to you. This money could help keep up the value of the house you own.”
“Foreclosure activity in Shasta County extended its downward trend in March. But experts say the recent decline isn’t necessarily an indicator that the supply of distressed homes has been exhausted. Banks continue to do a good job of manipulating the flow of foreclosures as they work to sell off these repossessed properties, said Curt Largent of Sheldon Largent Realty in Redding. ‘It will continue to be a very controlled flow,’ Largent said. ‘Banks are managing the flow of foreclosures, whether it’s the number of homes they are actually foreclosing on, the number they are postponing or delaying, or the number they are sending to market.’”
“The number of homes for sale in Shasta County is low, down roughly 30 percent from a year ago. The low inventory has made the lower end of the market, homes priced below $200,000, very competitive. ‘There is a lack of inventory under $200,000; there is a huge lack of inventory under $150,000,’ Largent said.”
“Doug Juenke, board president of the Shasta Association of Realtors, believes banks are seeing that values may be coming up, so they are ‘metering’ the release of foreclosed homes in their portfolio accordingly. ‘That means if they are holding and releasing at a slower rate, they will get more money,’ Juenke said.”
“‘Through relentless meddling with delusions that ‘foreclosures are bad,’ they effectively destroyed the macro housing market,’ says California-based mortgage analyst Mark Hanson, referring to government intervention in the housing market. ‘Contrary to popular thinking, the eradication of foreclosures will lead this housing market into paralysis, not recovery.’”
“Hanson claims that the lack of ready and available distressed supply, ‘portends big trouble’ for the overall housing market, but more pointedly for California, Nevada and Arizona, where distressed supply and sales are the bulk of the market. Some of the modifications, claims Hanson, are even more ‘exotic’ than the loans borrowers defaulted from in the first place, like 2 percent interest-only loans, 40 year amortizations, 33 percent forbearance, and five-year fixed rate loans. This as more than 11 million borrowers (22 percent of homeowners with a mortgage) owe more on that mortgage than their homes are currently worth. ‘Legacy borrowers are now more levered than ever,’ worries Hanson.”
“‘It will soon become apparent that ‘foreclosure prevention’ was one of the biggest housing and finance policy blunders of all time. That’s because it circumvented interest rate policy in part aimed at household de-leveraging, kicked the problem forward and spread it out over many more years.’”
From the Jupiter, FL article;
“Though the median price was almost 5 percent down from a year ago, sales volume was up almost 21 percent.”
You mean to tell me sales volume increase on declining prices? You don’t say…..
Whoodathunk!
“A hard landing will be especially traumatic for the global economy, which has not dealt with its core problems – excessive debt levels, weak non-debt fuelled demand and global imbalances. The crisis and its effects have been masked in developed economies by artificial demand from government spending, which is proving increasingly difficult to sustain. In China, it was masked by debt fuelled investment. Now, that feast too is coming to an end.”
There it is. Buckle up.
It’s amazing the media isn’t connecting the dots.
‘Will you only consider Australia for migration? What about Canada?’
Why do these people need to migrate? Why are they throwing tons of money at Australia, Canada, and the Bay Area in the US? It has always been a global mania, and it looks to me like it’s more connected than most realize.
‘What is happening in China today is very similar to what happened in Russia after the Communist implosion: the “reformist” leadership in Beijing is quietly selling off the nation’s “socially owned” resources to the highest bidder, creating a class of ostensibly “Communist” princelings – the sons and daughters of high-ranking leaders from the “revolutionary” era – who are living off the fat of the land. They are making themselves fantastically wealthy by establishing cozy relationships with Western corporate interests, taking bribes, allying with China’s gangster underworld, and handing out favors and concessions to the highest bidder. If and when the full story of China’s “Yeltsin years” is ever told, it will no doubt resemble the large-scale looting of the post-Communist Russian economy, which gave rise to the infamous Russian “oligarchs.” With one difference: there is a lot more wealth in China to loot.’
http://original.antiwar.com/justin/2012/04/12/the-framing-of-bo-xilai/
“…media…connecting the dots.”
Mike Wallace is dead.
“…more connected than most realize.”
Lots of economists were floating a theory a couple of years back that the world economy was ‘decoupling’ from the U.S.
How did that theory work out?
Wall Street Sees World Economy Decoupling From U.S.
By Simon Kennedy - Oct 4, 2010 8:50 AM PT
Wall Street economists are reviving a bet that the global economy will withstand the U.S. slowdown.
Just three years since America began dragging the world into its deepest recession in seven decades, Goldman Sachs Group Inc., Credit Suisse Holdings USA Inc. and BofA Merrill Lynch Global Research are forecasting that this time will be different. Goldman Sachs predicts worldwide growth will slow 0.2 percentage point to 4.6 percent in 2011, even as expansion in the U.S. falls to 1.8 percent from 2.6 percent.
Underpinning their analysis is the view that international reliance on U.S. trade has diminished and is too small to spread the lingering effects of America’s housing bust. Providing the U.S. pain doesn’t roil financial markets as it did in the credit crisis, Goldman Sachs expects a weakening dollar, higher bond yields outside the U.S. and stronger emerging-market equities.
“So long as it doesn’t turn to flu, the world can withstand a cold from the U.S.,” Ethan Harris, head of developed-markets economic research in New York at BofA Merrill Lynch, said in a telephone interview. He predicts the U.S. will expand 1.8 percent next year, compared with 3.9 percent globally.
That may provide comfort for some of the central bankers and finance ministers from 187 nations flocking to Washington for annual meetings of the International Monetary Fund and World Bank on Oct. 8-10. IMF chief economist Olivier Blanchard last month predicted “positive but low growth in advanced countries,” while developing nations expand at a “very high” rate. He will release revised forecasts on Oct. 6.
‘Partially Decoupled’
“The world has already become partially decoupled,” Nobel laureate Joseph Stiglitz, a professor at New York’s Columbia University, said in a Sept. 20 interview in Zurich. He will speak at an IMF event this week.
…
So I guess the US won’t have to bailout any more European banks?
Our media’s job is to entertain and mislead, not inform and update.
The truth is seldom palatable and as such, seldom finds a market.
“creating a class of ostensibly “Communist” princelings”
……so?, ….some animals are more equal than others?!? No one could have seen that happening.
“Up to 20-25 per cent of these loans may prove to be non-performing, amounting to losses of 6-10 per cent of GDP. The case for a soft landing assumes that the investment and property bubbles are less serious than thought. The case for a hard landing assumes the rapid and destructive unwinding of asset price bubbles and problems within the Chinese banking system.”
Holy looming craptacular crashtastrophe!
I don’t mind. Losses will ripple through the Chinese population, and a lot of those overseas buyers will find themselves “margin called”, meaning they will have to sell off their unwise “investments” in places like California and Canada. Those housing markets will find another plateau from wishing prices, then those overseas buyers will give in, sending prices downward again.
Sounds just fine, so long as the large excess population of young males left behind by their “one child” policy doesn’t end up in our backyards wearing uniforms.
I’ve often thought that too. That’s an awful large population of disposable young men who will never have wives or families. Too large not to be used.
China’s military rise
The dragon’s new teeth
A rare look inside the world’s biggest military expansion
Apr 7th 2012 | BEIJING | from the print edition
AT A meeting of South-East Asian nations in 2010, China’s foreign minister Yang Jiechi, facing a barrage of complaints about his country’s behaviour in the region, blurted out the sort of thing polite leaders usually prefer to leave unsaid. “China is a big country,” he pointed out, “and other countries are small countries and that is just a fact.” Indeed it is, and China is big not merely in terms of territory and population, but also military might. Its Communist Party is presiding over the world’s largest military build-up. And that is just a fact, too—one which the rest of the world is having to come to terms with.
That China is rapidly modernising its armed forces is not in doubt, though there is disagreement about what the true spending figure is. China’s defence budget has almost certainly experienced double digit growth for two decades. According to SIPRI, a research institute, annual defence spending rose from over $30 billion in 2000 to almost $120 billion in 2010. SIPRI usually adds about 50% to the official figure that China gives for its defence spending, because even basic military items such as research and development are kept off budget. Including those items would imply total military spending in 2012, based on the latest announcement from Beijing, will be around $160 billion. America still spends four-and-a-half times as much on defence, but on present trends China’s defence spending could overtake America’s after 2035 (see chart).
All that money is changing what the People’s Liberation Army (PLA) can do. Twenty years ago, China’s military might lay primarily in the enormous numbers of people under arms; their main task was to fight an enemy face-to-face or occupy territory. The PLA is still the largest army in the world, with an active force of 2.3m. But China’s real military strength increasingly lies elsewhere. The Pentagon’s planners think China is intent on acquiring what is called in the jargon A2/AD, or “anti-access/area denial” capabilities. The idea is to use pinpoint ground attack and anti-ship missiles, a growing fleet of modern submarines and cyber and anti-satellite weapons to destroy or disable another nation’s military assets from afar.
…
“China is a big country,” he pointed out, “and other countries are small countries and that is just a fact.”
Deep thoughts.
The MIC has been playing the “beware the Sleeping Dragon” card to extort money from American taxpayers ever since I first became cognizant during the Eisenhower era.
Why keep playing into it? Isn’t PRC allowed it’s own defense? Particularly in light of America’s (oiligarchy’s,) past aggression towards it?
‘Doug Juenke, board president of the Shasta Association of Realtors, believes banks are seeing that values may be coming up, so they are ‘metering’ the release of foreclosed homes in their portfolio accordingly.’
‘That means if they are holding and releasing at a slower rate, they will get more money,’ Juenke said.’
You don’t say. So it just might be that all this loan mod, boo-hoo program after program has served to help the owners of these houses ‘get more money’.
I thought trying to manipulate markets was ILLEGAL under the various “anti-trust” laws, beginning in the 1930’s. If your organization was found to control the markets or colluded with others to control the markets, you could be investigated and jailed, and the business organization broken up. My, how times have changed.
It seems the government is working with the crooks to help promote higher prices.
And all the while I thought LOWER prices were good. I guess that’s only true when you are not dealing with borrowed money.
Nothing much seems to be illegal any more these days, does it?
You seem to have forgotten, Cantankerous: if it’s legal, it is justified. Screw thy neighbor to your heart’s desire, as long as it’s legal. Because that’s all that really matters.
Ethics, schmethics. I know. I’m a fool.
It doesn’t have to be legal. It just has to be profitable enough to offset any legal costs, including fines in the millions offset by profits in the billions.
Apple Inc is getting a lesson in illegal activity.
Guess they did not bribe, er lobby enough in D.C.
Getting caught with a joint is plenty illegal.
“Banks continue to do a good job of manipulating the flow of foreclosures as they work to sell off these repossessed properties, said Curt Largent of Sheldon Largent Realty in Redding.”
Notice how the MSM glosses over the questionable legality of collusion to prop up housing prices?
Did you guys read the articles about the real collusion that was going on with price for e-books? The reps from Apple (I think) and the big publishers were in a restaurant TOGETHER talking about what price to set. That is collusion. A bunch of people seeing prices going up a little and deciding that it would beneficial to their bottom line to hold back a little inventory until later in case they can get a higher price for it is NOT collusion - even if a bunch of them come to the same conclusion at approximately the same time.
“A bunch of people seeing prices going up a little and deciding that it would beneficial to their bottom line to hold back a little inventory until later in case they can get a higher price for it is NOT collusion - even if a bunch of them come to the same conclusion at approximately the same time.”
Why would you even assume collusion in the banking industry is limited this way?
“the questionable legality of collusion to prop up housing prices”
I’d love to be set straight, but: If it’s really in the banks’ perceived interest to meter the flow of foreclosures, then isn’t it entirely possible that they didn’t really need to “collude” to do so? Yes, evidently the govt. is aiding their efforts, but for different reasons that don’t prove collusion.
Have you heard any open discussion of coordination among banks to hold foreclosure homes off the market? I certainly haven’t.
If there was some kind of covert, coordinated agreement to withhold foreclosure supply, that would fit the definition of collusion.
The reason I suspect this may have occurred is that without collusion, each bank has a natural incentive to get foreclosure homes on the market sooner before its rivals, as he who markets foreclosures the fastest sells for the highest price; those who move slowest catch the falling knife that fell the furthest.
col·lu·sion
noun \kə-ˈlü-zhən\
Definition of COLLUSION
: secret agreement or cooperation especially for an illegal or deceitful purpose
— col·lu·sive adjective
— col·lu·sive·ly adverb
The guy who posted about buying a 400k house near Sacramento didn’t make a lot of sense to me the other day. What’s the rush to buy a house near Sacramento. Doesn’t that area have a double digit unemployment rate and isn’t the state of CA having huge budget problems? And then using Zillow to justify a long term purchase after just 1 yr? Makes no sense to me.
Oh, and he only got a 1/2 acre for that price, I believe. LOL, pwned. If you live in some podunk area like that, you really do need to wait for prices to fall. Right now, foreclosures are being hidden off the market. The prices can’t be propped up this long–there aren’t enough people who actually have the incomes to sustain the prices for the long run, esp with the population aging, CA taxes probably going to keep rising, and very unlikely Sacramento is going to discovery some new hot industry. That dump was propped up by the construction and mortgage industries, which won’t be coming back for a long time.
And this isn’t coming from someone who is averse to buying. I bought, but I got 50% off peak price in an urban area in a state with low unemployment and diversified labor market where I wasn’t as much buying the house as I was buying a stable address close to jobs, recreation, family, etc. LOL @ buying in some random suburb of Sacramento during a time when prices are artificially above what the labor market/wages and demographics can support.
‘@ buying in some random suburb of Sacramento during a time when prices are artificially above what the labor market/wages and demographics can support’
Is that a twitter account?
Definitely and without a doubt a twit. And what a twit! Kept going on and on about what a great deal he got and how these comps with a thousand more square footage than his house were selling for hundreds of thousands of dollars more, (really????) and how the Sacramento market was recovering even though, yes, unemployment is still at double digits and there is still a long back-log of foreclosures yet to hit the market. Yes indeed-y … a real grade AA twit. Oh, you said ‘twitter’! That’s different. NEVER MIND!
I recently drove the mighty I5 through Sacramento. I’ve seen better roads in Mexico. Truly fitting for the capitol of a failed state.
House Hunters had a young 20-something couple buying in Sac @ $300k+.
What an embarassment.
And both worked for the state.
High Expectations, Low Budget in Sacramento
Episode HNT-5313H
After house sitting for friends over the past year, Adam and Nicole’s days of living rent-free are over. So they’ve decided to buy their first home in Sacramento, CA. But after living in a beautiful home with a high-grade kitchen and a huge master suite, Adam & Nicole’s expectations for their new home are sky-high.
Adam expects a professional-grade kitchen. Nicole demands a large master suite.
The problem is, with a $400,000 budget, finding a home in Sacramento, CA that will meet their expectations could prove impossible.
Will Adam and Nicole come to grips with the fact their impeccable taste far outreaches their budget?
$400K is well over twice the median SFR price in Sac. I am missing it.
Unless this story simply amounts to more Realtor® lies, that is…
Home prices up slightly in Sacramento County, West Sac
Published: Friday, Apr. 13, 2012 - 12:00 am | Page 6B
A new Sacramento Association of Realtors survey released says the median price of single-family homes in Sacramento County and West Sacramento increased to $165,900 in March, up 1.8 percent from $163,000 in February.
…
Adam expects a professional-grade kitchen. Nicole demands a large master suite.
If Adam spent any time in the restaurant biz, he’d understand that a lot of great food comes out of kitchens that would be far beneath his “professional-grade” vision. After all, it’s not the cooking gear that counts, it’s how it’s used.
West Sacromento is a different town than Sacromento.
They’re both hopelessly screwed in the coming decade(s).
“Right now, foreclosures are being hidden off the market.”
Can’t recall JingleMale bringing that point into the discussion…
Why would he? The shadow inventory is so large (about 10 times larger than the foreclosures on the market now) that it would trounce his argument. Realtors and politicians and bankers all avoid information that denies the Ownership Society. They can’t make money if you’re truly educated; they make money from people being ignorant.
We still have realtors and as such, there will always be that sort of people out there spinning and lying and omitting, all to get people to bid like it’s 2006 again. The money came too big and too easily, just like with smuggling liquor in the U.S. Prohibition Era. Such things deform culture to the breaking point, and often beyond. When it comes to housing, our society is shattered. It will take a long time and a lot of pain, to repair such a fracture.
“The shadow inventory is so large (about 10 times larger than the foreclosures on the market now) that it would trounce his argument.”
Exactimento, amigo!
Agree with everything you say here - who couldn’t agree?
But, AGAIN, seems to me that a great many people either don’t know about (or conveniently ignore) what’s coming in
January, 2013.
Costs will rise significantly for everyone in the country.
How’s that recent house purchase going to look after the massive tax increases and service cuts scheduled for just eight months from now?
The guy who posted about buying a 400k house near Sacramento didn’t make a lot of sense to me the other day. What’s the rush to buy a house near Sacramento.
I also seem to recall that the person who used to post here used the screen name “paladin.” The individual who was posting earlier this week capitalized the first letter of the screen name.
“there aren’t enough people who actually have the incomes to sustain the prices for the long run”
Hard to tell here. The Silicon Valley is experiencing a nice recovery, how real and sustained we’re not quite sure, but just as it’s been since the ’90s, most get priced out of that south bay market during times of high employment (in Silicon Valley, not the rest of the state) and choose to buy in the central valley and do the 90-120minute commute. Lots of them.
I posted about a week ago that my law firm cut salaries for the younger associates in return for more time off. This really had nothing to do with our law business, though, because that is going great. It had to do with our property law and title services that handles settlements on commercial and residential property. The department was losing money and at one point, a decision was made to shut down the department. Which would’ve been good, because its not as consistent or profitable as the legal business. But, somehow, some way the decision got reversed and business has picked up. Yes, because prices are dropping there seems to be more activity on the market. However, I suspect this isn’t going to work out well for the long term and I want to go to a place that is focused on the law without time for this real estate and title crap.
I suspect next fall when real estate transactions drop off a cliff again, the firm will repeat the same cycle. THey have this illusion that the property bubble is going to come back and they’ll be done 20 closings and refi’s per week. They’ll make some small profits in spring and summer doing the real estate work… but then lose way more next fall and winter. And they’ll keep doing it because they believe the trope that real estate will come back, just 1 more year.
I should be able to find something better pretty quickly. In the meantime, I’m going to watch as otherwise savvy law partners get excited about a department that makes profits of 50k in spring/summer but then loses 100k in fall/winter. YOu can’t make this stuff up.
Microeconomic theory says that as long as economic profits (accounting profits plus opportunity costs) are greater than zero, a firm should not exit the market.
On the whole, the department is losing money and draining resources (not to mention office space and equipment) from the highly profitable parts.
Microeconomic theory =/= real life.
In real life, here is what happens… department makes profits for partners of “x” during ~6 months from March-September. Then in the 6 months from September until next March, the department does very little business but has virtually the same overhead costs and salaries.
This year (and this is typical, from what I’ve gathered) by December, the losses from the property and title group were dragging the entire law firm into the red on a month-month basis. Then, by early February, plans were made to close down the department… to slowly wind it down by spring.
Then, voila, we had a warm March and some sales started to trickle in. And now, it doesn’t make sense to let the department go. And the people who get the business from the real estate agents actually believe the RE agents that 2012 is going to be a great year (!!!!). In reality, its very unlikely that the department will make back the money that is lost during the slow months.
Next fall, the same cycle will repeat. Money will still be trickling in from fall closings and the decision-makers will postpone actually slamming the department shut, thinking that if they wait out one more winter… housing will come roaring back. Everyone will be doing refis and purchases. Then probably by Jan or Feb, they’ll see red ink everywhere, but act too slowly to close things down.
Bottom line–each yr, they’ll lose more in the slow months than the make in the warm ones. There are still WAY too many law firms doing this work and way too many people selling title insurance. Within 5 blocks of my office there are probably 25 different places that do this work. Lots of them are holding on bc they think bubble conditions will come back and they’ll have 20 refi’s and closings per week.
Yeah, I have little faith in economic theory and its application to real life. But this would be a good case study to apply the shut down or exit theory to in an exam, so I shall make note of it and hope that I can apply it in the future!
I have very little faith in economic theorists’ ability to say anything that applies to real life.
I have very little faith in economic theorists’ ability to say anything that applies to real life.
Speaking as someone who majored in economics, I heartily agree. Real life isn’t what the theorists are good at dealing with.
Speaking as someone who once RA’d for an economic theorist, I have to admit there are exceptions to the rule.
But the top dogs in the profession seem especially disconnected from reality…
This is the reason it seems foolish to try to cure the housing mania through housing price “stabilization” (aka price supports).
It’s causing all these firms that do RE-connected work to make terrible (in my opinion) decisions. It’s hard enough to face facts and close down a department and lay people off. It’s even worse when all the messages coming from RE agent scum and the NAR pukes in the media keep saying “property is going to start coming back! its a great time to buy!”
I would feel bad if the people were laid off. I really would. I like some of them a LOT and think highly of them. And they have other skills–most of them do wills & estates as well as RE related work.
All the money spent to hang on for the future is being wasted. Besides the fact our firm loses money on the RE and title stuff overall, it screws up the budgetary decisions for the more profitable areas.
On a positive note, I already have an interview lined up for next week and the partners are OK with me leaving and have promised good references. I’m not sure if I should mention any of my thougths on this to them at any point? Some of them are very cool and friendly.. and I know deep down they agree with me about this RE b.s. but lack the conviction to press the issue.
On a positive note, I already have an interview lined up for next week and the partners are OK with me leaving and have promised good references.
I wish you the best on your interview. The other firm will be very lucky to hire as thoughtful a person as you are.
“I’m not sure if I should mention any of my thougths on this to them at any point?”
Not until you are absolutely sure that not one of them will ever say anything about about to anyone in your local legal community again. In other words, never. You can go to their graves a few weeks after they are dead and whisper a few of your ideas after checking to make sure no one else is around to hear it.
I am perfectly serious about this. The is no grapevine like the legal grapevine and they don’t like being told they are wrong about anything, especially a business decision.
I am perfectly serious about this. The is no grapevine like the legal grapevine and they don’t like being told they are wrong about anything, especially a business decision.
Agreed. The legal community is very good at spreading the word quickly.
How do I know this? I used to date a lawyer, that’s how.
Thanks for the advice. I plan to not say anything. The only reason they know I’m looking is because they cut salaries on all the young people. They kind of *need* 2 or 3 people to step aside if they want to improve the bottom line.
However, like you say, they don’t need to have any discussions with me about their business. If they keep expending effort to get RE and title work, they’ll still do fine. They’ll just continually find themselves in a tight cash position towards the end of winter. Unless a bubble comes back and people start refinancing like crazy again…
Hey joesmith, good luck on the job search. If it makes you feel any better, my FIL moved on from the firm where he started, only to become one of two partners in a new firm. Nowadays, he is the only active partner.
Like many businesses in the United States, your law firm needs to realize that commerce will no longer produce steadily. That makes employees (who represent steady costs) a liability. They need to seriously investigate going 1099/contractors, and have those guys work out of their homes. It angers me terribly to keep seeing so many businesses require that their employees show up for nearly pure information work, which can be done at home with some careful planning, hence saving all that now wasted energy from commuting, not to mention the time now wasted for the commuters themselves.
I’m sure the law firm doesn’t give a rat’s patooey about employee time and energy being wasted, but by doing it the 1099 way, they CAN throttle their business a lot easier. When less work comes in, the contractors are told about the fall-off and are left to fend for themselves. Smart contractors will learn to deal with this and make hay when the sun shines, and when it’s cloudy, they can just enjoy life. No more sacrificing family and home life.
It angers me terribly to keep seeing so many businesses require that their employees show up for nearly pure information work, which can be done at home with some careful planning, hence saving all that now wasted energy from commuting, not to mention the time now wasted for the commuters themselves.
Just one little data point from the Arizona Slim Ranch, but I’ve found that I’m much more productive working “home alone” than I ever was in an office setting. Yes, there is this thing called the Internet and it can be a bit distracting, but I don’t have the larger distraction and energy-sucking drama called office politics.
Well, in our case we go to court a lot. Our office is 2 blocks from 2 court houses and also very close to post office, banks (for trust accounts), and the state’s attorneys offices. Also? we need to share advice and talk to clients at fairly unpredictable times. I do not work in a large law firm, but we have conference rooms and a library with relevant books we need. The books would be too expensive for anyone person to buy. And use of Lexis and WestLaw is beyond what most of our clients are willing to pay for their cases.
The other thing is, we can come and go from the office as we please, but without some friendly interaction and collegiality, people aren’t going to prosper in the law. You need to make some connections, find out who is good at what, share ideas, etc.
Your suggestion is thoughtful and has a place for reducing time in the office. But at least in my case there is a reason for us to be there.
The other thing is, we can come and go from the office as we please, but without some friendly interaction and collegiality, people aren’t going to prosper in the law. You need to make some connections, find out who is good at what, share ideas, etc.
True, dat. Law is a very schmoozy field.
joesmith, telecommuting isn’t for everyone. But every one of the document reviewers in your firm can work out of their homes. Most people who merely process paperwork, can do the same. Currently, corporate America demands that those people endure energy-gulping commutes to accomplish this work. It’s untenable.
I promised some bubble commentary on Bogota, Colombia last week, but wasn’t able to post. Here is part 1; because of the international flavor I’m putting it here instead of the bits bucket:
There are, by my estimation, at least 300 apartment buildings under construction in north Bogota, many of which are in the San Patricio, Santa Ana, and Santa Barbara neighborhoods. Also some apartments under construction in Rosales, Usaquen and Cuidad Salitre. These are all very high-income barrios by Colombian standards. I asked many locals who could afford these, and who was buying, and no one could say, even though two people told me that a building had to be half-sold before construction could begin. There is no shortage of units available in existing buildings in those same neighborhoods — most buildings have at least one unit with a “se vende” or “se arrienda” sign in the window (although I noticed that quite a few of the available units were on the undesireable second floor). On one street, I walked by a five-story building with four units for sale. Right next to it, an identical building was being erected.
The buildings are from four to twelve stories tall, with units generally ranging from 60 to 150 square meters, and have names like “Elementto,” “Terrazza,” and “Cavalieri” (what the f*** is it with Italian names?); in an apparent appeal to stressed-out capital residents, there was one named “Zen” that had the namaste yoga symbol on the facade, and another named “Mantra” that employed the sign for infinity as its logo. I will concede that the smaller buildings are attractive and well-scaled, as opposed to buildings here, which are dehumanizing and usually disgust me. The advertising materials, however, promise various amenities that suggest there is no reason to leave the buildings and take part in the world, just like such materials do in the U.S. There are sales billboards with smiling young people, and banners strung up over intersections promoting the buildings; the messages are depressingly familiar. One cooed “it is the time and place to invest in your family,” and another promised “a home at the height … of your dreams!”
Adjoining the construction there often is an attached, furnished sales room with a large window open to passerby. Needless to say, during my extended stay most of the rooms were unoccupied and I only saw two interactions that looked like purchases in progress. If the expected buyers are young people, that’s a bad bet, because many young people with talent openly express the desire to leave the country, on the ground of lack of opportunity. I read the newspaper each day, and it unquestioningly noted that, besides energy, the motor behind the growth in the PIB (”producto interno bruto,” like GNP) was the construction industry. Real estate prices, the paper noted, again without questioning, were rising.
I saw a single reference to a problem; one day, a columnist bravely came right out and said that illegal armed groups — in Colombia, that’s a euphemism for guerrillas and ex-paramilitaries — were putting money into the sector. That money, of course, comes from the drug trade.
It suggests to me that the drug dealers are trying to become legitimate OR, that even the drug lords are afraid of the Monetary Games being played by the “central bankers” throughout the world. Better put those dollars into real assets before the value of the paper gets back to its intrinsic value…………..nothing.
It also suggests to me that deadbeats/defaulters will get a different sort of mortgage modification program than here in the US.
I’m going to talk about security matters in a later post, but that’s a good observation. In what hardly qualifies as a scandalous revelation for Colombia, it was reported that in Cali and Medellin it is possible to hire a “sicario” (an assassin) over the internet. One website offering such services openly advertised “we’ll do for you what the justice system won’t” and listed unpaid debts as a reason to hire such an individual.
“In what hardly qualifies as a scandalous revelation for Colombia,”
I have never been to Colombia, but for some reason have always been a bit interested in the country. Maybe because, for the most part, I have found the Colombians that I have met stateside to be highly cultured and intelligent and distressed about crime and corruption in their country.
It has also been my understanding that, while far from resolved, these matters have vastly improved in recent years. If this is true, I give the citizens major props.
If you can speak Spanish and are capable of looking and acting inconspicuous, you should visit. It’s an addictive country even though the things that happen there on a daily basis are unbelievable.
The few Colombian women I have met have been absolutely gorgeous.
I can see this as a vehicle for laundering money. Amusingly, a telenovela from a couple years ago, called “Vecinos” (”Neighbors”) had as its protagonist an easygoing taxi driver who, after winning the lottery, moved into a ritzy, snooty north Bogota apartment building after becoming smitten with a real estate executive living there. This is not an uncommon theme in Latin American soap operas, but the leaders of the woman’s real estate firm, initially portrayed as savvy, high-powered business types, later are revealed as corrupt and associated with organized crime.
If the expected buyers are young people, that’s a bad bet, because many young people with talent openly express the desire to leave the country, on the ground of lack of opportunity.
Which is precisely the reason why my ancestors came to this country. And I’ll bet that a lot of HBB-ers could say the same thing.
The thing is, there aren’t a whole lot of places to go anymore. El Tiempo ran a piece detailing how many Colombian emigrants in Spain currently are having a difficult time making ends meet.
Interestingly, I’ve read that Portuguese young people are heading to Angola and Brazil.
Thanks for this, snake. Looking forward to your next dispatch.
We ALL know where this is heading…
“Across China, potential buyers are now holding off. Mr Ma said at the peak his offices received 20 to 30 visits a day from families or other potential purchasers. Now the figure is five or six. With the market in limbo, those who snapped up property several years ago are glad they did so. Pei Wenbo, 31, an accountant, bought his three-bedroom flat in the north-east of the city in 2008, paying about 3,000 yuan for each of its 167 square metres. He has since bought a second, yet-to-be-completed flat as an investment.”
LOL!
I wondered if the guy even paid attention to himself!
Who is he planning on selling to?
It’s all gonna end very badly in china. Very badly.
But it’s different in China….
Suzanne Li researched this…..
Is China a county or a race?
“‘Blaming Chinese For High House Prices in Vancouver Is Racist,’
FWIW, there is no “American” race, yet we are collectively referred to as “Americans”.
Vancouver has always been expensive, IMO. Back in the mid 90s, the ex and I purchased a home from an Indian couple, who were relocating to Vancouver where they had family. They were bemoaning the cost of housing there, but the family ties were pulling the wife and the husband just wanted peace.
OTOH, Canada is more PC racially psychotic than the US, if that’s possible.
California has also always been very expensive. But that does not obviate the fact that something clearly went haywire when prices tripled in many locales between 1997-2006.
Quadrupled in some cases, my very first casa in sacto, paid 92k 1997 sold $370k in summer 05
as for jingle male, it sounds like he got a decent deal in a decent area, but I think he’s drank a little too much kool-aid in regards to the local recovery/economy.
“Here’s a small sample of the headlines: Bloomberg: Chinese Spreading Wealth Make Vancouver Homes Pricier than NYC. Wall Street Journal: Chinese Fuel Vancouver Home Boom. China Daily: Chinese Drive Up Vancouver Home Price. South China Morning Post: Chinese Love Affair with Canada Continues. Globe and Mail: Canadian Real Estate - A Piggy Bank for Chinese Investors.”
Damn racists!
“‘We gave our customers only half an hour to decide whether to buy or not because we had other customers interested. People were in such a frenzy, they didn’t worry about the quality. They were just worried whether they could get one,’ he said.”
Frenzy. This is the very definition of a MANIA. We’ve all seen the behaviour. No one wants to lose out. I saw it here in Florida in 2002-2003 when I was saying prices were TOO HIGH. The reply from the snooty young Realtor-Associates was, “we’ll the prices are only going to keep going UP.
If you don’t buy NOW, you’ll be PRICED OUT FOREVER.”
That’s what they push: FEAR. You’re worried you will never be able to get a house. So, rather than using your rational mind, that prices are disconnected from reality, you rush in to buy, thinking if prices do fall, then you can unload before it falls below your purchase price.
But when it does fall, everyone heads for the exits at the same time.
Everyone wants to get out before they get into too deep. CRASH.
“That’s what they push: FEAR.”
BINGO
But now it’s much more insidious. The NAR proxies in the media mischaracterize the typical seasonality of markets as “housing recovery/rising prices”. The Lying Realtors on Main Street suggest the same much more subtly so as not to appear to be the liars that they’re famous for.
This is all an orchestrated effort to create fear and a sense of urgency once again. It’s happening right here on this blog.
Don’t fall for it.
Wow - you sure can do alot with $2,000 these days…
Especially for idiot FBs.
The money could provide up to $2,000 in aid to two of my neighbors who have lost their homes to foreclosure (due to tragic illnesses). It could prevent another neighbor, who took a lower-paying job when he lost his, from doing a short sale and instead refinance at a lower rate. It could help one of my clients who was a victim of Wells Fargo’s ’servicing abuses’ (the bank actually renegotiated the loan to a higher rate).”
“It could prevent three of my military families (recently deployed out of state and out of the country) from losing their homes. It would allow my daughter to refinance her condo (devalued by foreclosures in her complex) at a lower rate.”
Yeah, this guy’s a whiner.
Trend-spotter sees chances
Updated: 2012-04-05 08:04
By Cai Xiao (China Daily)
…
“There has been a bubble in the Chinese property market which is now over,” said Rogers. “The Chinese government has been trying to burst the bubble. I think the government is doing the right thing to bring down the price of property. If you do not pop bubbles, lots of people get badly hurt. The bigger the bubble gets, the worse it is for everyone.”
Since 2010, China has taken many measures to cool down the property market including imposing a tighter credit supply and higher down payments and limiting the number of homes that people can own.
…
get rich quick schemes seem to be propping up a lot of economies these days.
The eventual failure of get-rich-quick schemes seems to be collapsing a lot of economies these days.
The core issue here and around the world has been broken debt markets. A system has been devised where lenders can make a profit by merely creating and selling loans, without having to worry about them being repaid. It’s basically a system of being able to print monopoly money, then redeem it for actual currency, while the government puts the taxpayer on the hook for paying back defaults. Very slick really. Took a while to put the system in place.
As long as there are buyers for these loans, you can have this kind of mania. I’ve thought for a long time that the housing bubble was merely one facet, a physical manifestation of the underlying debt bubble. The European debt crisis is a manifestation of these broken debt markets.
I’m guessing China has its own financial ecosystem, where there are both producers and consumers of these loans. I have been intrigued about why China, India and Canada have had unabated housing bubbles, while Europe and the US’s deflated.
‘Blaming Chinese For High House Prices in Vancouver Is Racist,’
What if it really is Chinese investors driving up Vancouver housing prices? Would it be racist to say so in that case?
It would be racist to blame the Chinese for driving down housing values, (there goes the neighborhood). This is anti-racist if it’s anything and the Chinese should be extremely proud for enhancing the value of property, no matter where in the world it is, and the local property owners should thank them!
“Recently, Gov. Scott Walker was the featured speaker for Realtor/Government Day in Madison.”
So Gov. Walker is a Realt-Whore.
Why am I not surprised?
There it is. The Cult of Public/Private Crime Syndicates.
Walker? No surprise at all. Kind of like Johnny Isuckson’s corrupt relationship with NAR and Kay”BeetleBaily” Hutchinsons relationship with Centex.
Isn’t it “Isucksome”?
China Property-Sales Drop Shows Risk of Hard Landing
By Bloomberg News - Apr 13, 2012 9:00 AM PT
China’s 18 percent first-quarter drop in home sales contributed to the slowest economic expansion in almost three years, highlighting the challenge for leaders who want to curb property prices without sinking growth.
The value of homes sold declined to 709.9 billion yuan ($112.7 billion) from a year earlier, the National Bureau of Statistics said in Beijing yesterday. Gross domestic product in the world’s second-biggest economy expanded a below-forecast 8.1 percent from a year earlier, decelerating for a fifth quarter.
Premier Wen Jiabao yesterday reiterated the government will maintain property curbs while ensuring the economy has enough investment to support growth. The stance on real estate risks a so-called hard landing unless authorities start to reverse their position, said Fred Hu, a former chairman of Greater China for Goldman Sachs Group Inc.
“For now the government says it wants to maintain a hard line,” said Hu, chairman of Primavera Capital, a Beijing-based private-equity firm he founded. “Sooner or later they will have to bow to the reality if they don’t want to have a prolonged economic slowdown.”
…
“Fred Hu, a former chairman of Greater China for Goldman Sachs Group Inc.”
Hu’d he work for?
‘We gave our customers only half an hour to decide whether to buy or not because we had other customers interested. People were in such a frenzy, they didn’t worry about the quality. They were just worried whether they could get one,’
Just like in South Florida, circa 2005…
PB,
Just like in Las Vegas, circa 2004-2005
“…with a cityscape full of cranes and half-finished apartment blocks.”
Reminiscent of Honolulu and NW Maui when we visited in Fall 2006…
‘We gave our customers only half an hour to decide whether to buy or not because we had other customers interested. People were in such a frenzy, they didn’t worry about the quality. They were just worried whether they could get one,’
Just like in South Florida, circa 2005…
“Across China, potential buyers are now holding off. Mr Ma said at the peak his offices received 20 to 30 visits a day from families or other potential purchasers. Now the figure is five or six.”
Foot traffic demand off by over 75% is a primary sign a bubble is collapsing.
“With the market in limbo, those who snapped up property several years ago are glad they did so.”
You’ll know the bubble is really over when MSM writers find themselves too embarrassed to use the expression ’snapped up’ to describe a property purchase.
“Developers and agents spruik property from all over the world - the United States, United Kingdom and Singapore all have a large presence, as does Australia.”
I had to look that one up. Being of sound mind and the age I am, there are not to many English words I have never before seen in print.
The verb form isn’t even in the Merriam-Webster online dictionary, but the noun form is.
sprui·ker
noun \ˈsprükə(r)\
-s
Definition of SPRUIKER
Austral
: barker
Origin of SPRUIKER
Austral. slang spruik to give a speech, make a barker’s spiel (of unknown origin) + -er
Good catch, PB
I was thinking who or what was a spuiker.
I have traveled Australia. The quanity of slang in the land down under is mind-blowing.
“Denial, denial, denial, with a helping of racial invective on the side.”
BwahahAHhaHAHAhaHAHAHAAHAHAHAHAAHAAAAHAHAHAAAAAAAA!!!!!!
“Interesting that Garr didn’t mention that Beasley is now VP of Aquilini Developments—part of the Aquilini Group reported in the media for inking its strategic partnership with Asian developers, and for its proposal to market the remaining Olympic Village condos to—where else—China.”
“This will force borrowers, primarily governments, to find alternative buyers for their bonds.”
Here’s a Gross picture if ever there was one.
Bill Gross, co-chief investment officer of Pacific Investment Management Co. Photographer: Andrew Harrer/Bloomberg
Bloomberg News
Gross to Gundlach Lead Bond Investors Seeing QE3 From Fed
By Charles Stein and Alexis Leondis on April 13, 2012
Bill Gross, Jeffrey Gundlach and Dan Fuss, whose firms collectively oversee about $1.5 trillion, expect the Federal Reserve to conduct a third round of bond purchases as signs of strength in the U.S. economy fade and Europe’s sovereign-debt crisis returns.
The managers at Pacific Investment Management Co. and DoubleLine Capital LP favor mortgage debt as Loomis Sayles & Co. purchases corporate bonds. Speculation that the Fed (FARBAST) will buy home-loan debt with quantitative easing has led 2012 returns on government-backed mortgage bonds to exceed Treasuries by 0.96 percentage point, Barclays Plc index data show.
…
“I have a family member who paid about $750,000 for a house in Indiana in the late 1990s. She doesn’t think she could get $350,000 for it today.”
It seems like everyone these days has a friend or family member who is a FB. I personally have several…
“I’m not forecasting a crash landing but it would be foolish to ignore the lessons learned south of the border, Ms. Cooper says.”
It’s funny to read a Canadian’s comments about what happened in the country ’south of the border’…
“They’re stuck with a house they can’t sell without taking a huge loss. How many years will they have to wait for it to recover its value, if it ever does?”
Got stucco?
It seems like everyone these days has a friend or family member who is a FB.
I just sent a LinkedIn shout-out to a cousin who used to be a real estate agent in Minnesota. Same one who had a house foreclosed on and tried to let the bank take it back. Bank didn’t want it back and the mortgage was re-negotiated for a much lower amount.
Seems that Cuz is now plying the real estate trade in Austin, Texas. I’m curious about what happened to the house I just mentioned. I wonder if, since he’s moved out of MN, if he isn’t going to just let the place go. It’s not like his musician sons could afford it.
“I can add a story to the mix: I have a family member who paid about $750,000 for a house in Indiana in the late 1990s. She doesn’t think she could get $350,000 for it today.”
That was a pre-bubble purchase. How the heck did it lose half its value going from trough to trough? And after nearly 15 years, shouldn’t they be well into paying it off? And isn’t $750k kind of crazy for Indiana?
‘Banks are managing the flow of foreclosures, whether it’s the number of homes they are actually foreclosing on, the number they are postponing or delaying, or the number they are sending to market.’
Try not to get Shasta’d.
“In China, it was masked by debt fuelled investment. Now, that feast too is coming to an end.”
I certainly will miss the excitement of the go-go days of the global debt-fueled credit bubble. However, I expect the hangover to provide a lingering memory for decades to come.
‘Contrary to popular thinking, the eradication of foreclosures will lead this housing market into paralysis, not recovery.’
Barn door left open.
All of the horses have fled.
Hurry, shut the door!
“‘It will soon become apparent that ‘foreclosure prevention’ was one of the biggest housing and finance policy blunders of all time. That’s because it circumvented interest rate policy in part aimed at household de-leveraging, kicked the problem forward and spread it out over many more years.’”
Luckily for the current generation of policy makers, they are likely to be retired from office by the time the SHTF.
Oh bugger…
Stocks’ worst week of year
Dow, S&P, Nasdaq suffer biggest weekly falls for 2012
Friday the 13th gives stocks the jitters, spurred by slower growth in China and more Europe woes. J.P. Morgan, Google earnings spark trading action.
• Will S&P 500 reenact the Titanic? (Minyanville)
• China’s growth report disappoints
• Dollar extends gains | Oil futures retreat
If the Fed’s objective is to bolster political support for QE3, wouldn’t it be wise for them to play mum, and let the DJIA drop by a couple of thousand points? After that, it would be obvious to everyone that QE3 is necessary.
The alternative is for them to keep jawboning economic weakness; trouble is, every time gets a hint that the Fed is mulling over QE3, traders snap up stocks as a hedge.
April 13, 2012, 5:48 p.m. EDT
U.S. stocks end worst week of 2012
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks fell Friday, with the major indexes recording their worst week this year, after China reported its economy slowed more than anticipated.
“The market dropped because China’s economy is slowing down more than expected,” said Jim Sloan of Jim Sloan & Associates in Houston, Texas.
“Everybody’s worried and everybody’s unsure if the global economy can stand on its own, and China is a big part of global growth. If it slows too rapidly, that would create a lot of pain. I don’t think it will, but there’s uncertainty,” said Alan Skrainka, chief investment officer at Cornerstone Wealth management LLC.
Still, “after an explosive 30% rise we were due” for a correction, said Skrainka of the market’s climb from its October lows.
…
smart money getting out, shorting and waiting for nose dive?