Bits Bucket for September 5, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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“Comment by Blue Skye
2012-09-04 19:41:11
Leveraging debt. That is all. That is the problem. You are an investor, a speculator.”
Here’s what I don’t get - On the one hand real estate investors get derided on this blog - but then it seems every other post is saying it is better to rent than to own. Well if that is so (and it may be for a lot of people) , then who are you going to rent from????
It is strange that I can’t participate in conversations in a timely manner — Ben wants to screen my posts because maybe he is worried I am going to try to infect you all with landlord cooties???? Hunh?? I am the first to admit that landlording has its annoying moments - but so do most jobs.
It was to free people from landlords that the whole pro-ownership public policy was developed, along with public housing.
Turns out people didn’t end up so free after all. The banks and street gangs took the place of the landlord.
Turns out people didn’t end up so free after all. The banks and street gangs took the place of the landlord.
This be true.
But all things being equal (ie., rent or PITI being a certain percentage of your salary), you will lose the roof over your head if your check does not arrive on the first of the month.
After having several intrusive landlords and losing a rental due to the house being sold, I’m ready to rent money from the bank. At least the bank isn’t going to come and tell me to clean my garage and that I can’t get another dog.
that I can’t get another dog
Don’t get another dog.
signed,
your neighbors
Count me as another neighbor signing the petition. I am so sick of having barking force-fed into my living space that I could scream.
Either you can control your dog or just don’t bother having one. Really, it’s okay to be pet-free.
I’m grateful for the barking force on both sides of our dog-free living space, as I assume they help keep away would-be intruders.
Don’t get another dog.
You’re barking up the wrong tree there.
I train dogs, as well as being able to manage a classroom of thirty kids.
People with untrained dogs are jerks. People who don’t pick up after their dogs have a special place in hell.
What’s your address? I’ll bring my 90lb Rottie over to your front lawn… right after his dinner =)
Now that I own, I can get a dog. But it turns out, I don’t want to. (I’ve decided I’m more into occasional dog-sitting for friends than doing it full-time myself.)
At least the bank isn’t going to come and tell me…that I can’t get another dog.
They can, indirectly: certain breeds = no homeowner’s insurance = bank won’t give you a mortgage.
They can, indirectly: certain breeds = no homeowner’s insurance = bank won’t give you a mortgage.
Meh, just spray paint the Rottie all black. Voila! A black lab mix.
“…then who are you going to rent from????”
I can’t speak for everyone who posts here, but I rent from a get-rich-quick speculator who bought a home near the bubble peak which was always owner-occupied for the previous two decades of its existence before it was turned into a rental. So far they have only lost $150K or so; I’m sure the market will eventually turn around and make them a bundle of money on the purchase.
And you are going to rent from them forever, of if you could buy a place you really liked for $50 a sqft, would you buy?
It doesn’t matter as much the price/sqft, what’s more important is the price/rent ratio. When I was renting in Palm Beach Gardens, the house last sold for 511K, and my rent was 2K/mo. The insurance on the house was about 3K, the taxes about 8K, and the HOA was 425/mo. So, the fixed costs on this house were approx 1500/mo which meant, to me, unless I could buy the place with 20% down and wind up with a 500/mo mortgage payment, it was a no brainer to rent. Another way of looking at it was the purchase price was 20X the annual rent, if it’s more than 10X, you’re probably getting a good deal by renting.
So, if rent was… say… $650-700 a month and you could buy for $48,400, property taxes about $500 a year, insurance $540 a year, HOA was $120 a month, then price/rent might mean that it would be better to buy?
That would be something like a purchase price being 7x annual rent.
DarrylTheLiar,
Once again, you’re defining the market with lies.
Your lies define you.
Yes, if I really liked it! Problem is if were two story, or in the wrong location, I had to move walls, or in need of major repairs I wouldn’t buy it because at my age it is not something I want to undertake.
We can’t buy a place around San Diego where we would care to live for under $200/sq ft, so your question is moot.
So, you are using San Diego’s high $200 a sqft prices as justification that Phoenix townhouse prices under $50 a sqft are still on a high plateau?
No.
You’re misrepresenting $50/sq by using Phoenix 2005 highs.
Now why would you do that DarrylTheLiar?
I would gladly pay 4x as much to live in San Diego over Phoenix. But that’s ’cause I’m not a desert person. I agree with CIBT, SD is still WAY overpriced. I’d thought I’d be buying in 2008, then 2010, then 2012 and now it’s looking like 2016. (Obviously now for investment property as I don’t plan to live in SD again ever. Like my standard of living in the Midwest much better.)
And mark me down as one who believes another big shock is coming to the system soon that will have economic ramifications we aren’t yet imagining.
That said, if I were in Phoenix, and did not have a million pets (ok, only 36) I would buy a condo at 50k IF it met my needs, had fallen over 60% from it’s high AND the HOA wasn’t in big trouble. And only if I hated my rental. After all, if I’m in a great rental (I have yet to find one, but you can’t get much with pets) I’d rather not tie myself down.
I think everyplace has some decrease left, especially when i-rates rise, but I think there’s a lot more danger in SD then Phoenix.
You have 36 pets?
I’d thought I’d be buying in 2008, then 2010, then 2012 and now it’s looking like 2016
If you don’t mind me asking, how old are you San Diego REBear?
At what age would you just say the heck with it I’m tired of waiting?
“Like my standard of living in the Midwest much better.”
Was just there over the weekend. Did you get the 2″+ soaking rain left over from what was Hurricane Isaac?
“You have 36 pets?”
Yep.
Ok, not as bad as it sounds. 4 dogs. 2 cats. 30 mice. (Started with 2 female mice. Didn’t know a wild mice would climb a stove to get to them. Didn’t separate babies in time. But they are darn cute.)
“Did you get the 2″+ soaking rain left over from what was Hurricane Isaac?”
Yes and we desperately needed it. Unfortunately it poured on Saturday when our little town had it annual festival. Total bust and I feel horrible for the vendors and Main Street shops that depend on that weekend for a significant amount of annual business.
We get more rain here than Seattle. We just tend to get it in massive doses.
I love rain and big electrical storms and spent Saturday wandering in the rain to the few vendors still in their tents. But I wish it could have held off one day. Great storm this morning about 5am!
“Great storm this morning about 5am!”
I grew up terrified of twisters, but now that I am removed from Tornado Alley, I miss the excitement.
Maybe I will succeed in talking one of my sons into becoming a storm chaser, so I can at least partake of the thrill vicariously.
“And mark me down as one who believes another big shock is coming to the system soon that will have economic ramifications we aren’t yet imagining.”
Regrettably, I’m on-board with this prediction.
If you don’t know what it will be, how can you know to expect a shock at all?
Many of us expected the shocks caused by the housing bubble, but that was because we could point at the root cause and extrapolate from there. What is the root cause of your unease right now?
“What is the root cause of your unease right now?”
What’s changed? Seriously? There’s been some correction in prices - enough in some places perhaps, no where near enough in others. But have the big guys stopped the financial games? Have the badly run companies been allowed to fail so we are back to a real and healthy (albeit smaller) economy? Are people anti-bubble or are they hoping for housing and other asset prices to start ballooning again for “instant wealth?” Are we making anything in this country? Have we solved a SINGLE problem that existed in 2008?
I don’t believe so and I still think there will be a reckoning.
And I, on the other hand, rented from commercial complexes. HBB likes to say that if I don’t like the high rent, I can walk to another complex. That was never my experience. My experience is either:
1. In a complex with yuppie tenants, the building is usually new, shiny, and close to transit. Rent is high to cover cost of land and construction.
2. In a complex of older cheaper buildings, rents are high because tenants have to compete with Section 8, military allowance, and 2-3 incomes per unit.
And no, commercial LL’s do not “reward good tenants and want to keep you.” It may have been the case in the past, but no more. Now, rents are set by market rates, and the managers are a thousand miles away and pressured by their profit-motive bosses. They want tenants who will pay the rent, even if they trash the place. The higher rent more than makes up for the cost of repair.
commercial complexes
Who use this:
http://www.mrisoftware.com/about-MRI
or similar software to push rent hikes on tenants. The squad has lived in Very Large Commercial Complex and never will again. Renting from small, local LLC is better.
1. In a complex with yuppie tenants, the building is usually new, shiny, and close to transit. Rent is high to cover cost of land and construction.
2. In a complex of older cheaper buildings, rents are high because tenants have to compete with Section 8, military allowance, and 2-3 incomes per unit.
In both cases rent is high because people are willing and able to pay it, not because of the cost of land and construction. If there are enough people willing and able to pay the high prices, they’ll build more. That’s how the current shiny new ones came to be.
Carl, I think it’s a chicken and egg question as to who came first — the yuppie or the shiny building. IMO it’s a moot point because the end result is the same: high rent.
But my point is that rent can and will fall as soon as there aren’t enough people willing AND able to pay it, regardless of the cost of land and construction.
I can only hope rents go down here. It’s getting out of control:
What $3,500 gets you in SF single-family homes
Living in a single-family home in San Francisco is getting pricier and pricier — even for current tenants. As both rental and real estate prices climb, landlords are sending unwelcome news to tenants in the form of rent increases. Houses, it turns out, are exempt from the rent control laws that protect apartment-dwellers from rent hikes.
Carolyn Said reported in Sunday’s Chronicle that some landlords are jacking up the rent to push out tenants so homes can be sold on the newly hot market.
If you’re looking to get into a single-family home in San Francisco, the average rent for current listings is $3,517, according to Rentbits. That’s up from an average listing price of $2,530 last September. By comparison, the average single family home in New York City is listed at “only” $3,073 per month, Rentbits reports. That’s yet another indicator that San Francisco rivals New York City as one of the least affordable places to live.
What does $3,500 a month get you in a San Francisco house?
Boo hoo hoo
“If you’re looking to get into a single-family home in San Francisco, the average rent for current listings is $3,517, according to Rentbits.”
Gotta wonder what a Section 8 voucher is worth there?
I rented from a guy who owned the house since the 70’s…it was small, and well located. I asked him to let me know if he was ever considering selling. He owned all-cash and told me he would never sell.
The wonders of Prop 13.
He was a good landlord, recognizing the beauty of a painless tenant. He didn’t bother me, I didn’t bother him. He raised our rent a total of 10% over 7 years, and raised it another 30% before leasing to the next guy.
Ultimately, the house was too small, and rats were too big for us to want to live there any longer.
+1. And if you are a lowly landlord you should get out of it ASAP, as all renters are going to trash the place. Oh wait…
Being a landlord gives one a perspective on humanity that too few experience.
When it comes to that perspective, my former landlady bent my ears pretty hard. To the point where I decided that managing rental property was NOT for me.
Hey locallandlord. Just my take on the irony of the present day real estate investor on this blog: “Yes, I am here because I realize that we have witnessed the largest real estate mania and housing bubble and credit expansion in history, but that was so yesterday. I’m tired of all this negative talk about the anatomy of the correction of said largest bubble. I am sure it is safe now to buy some property with cheap borrowed money and get some of the profits that are just laying in wait for me. I cannot get hurt, blah, blah, blah.”
I have nothing against landlords in general. I have a problem with debt zombie evangelists. Their type got us all into a huge mess, and they just won’t quit!
Not all debt is bad. A reasonable level of debt, say 3x income, could be the basis of a very successful economic system.
What I decry is that we’ve allowed debt to explode.
1980: total debt $4T. 80 million households = $50K each. $18K income = 3x income.
2012: total debt $38T. 120 million households = $320K each. $50K income = 6x income.
Me borrowing another $30K brings my debt to…. let’s see….
$145K primary residence
$30K place for my kids
$10K auto loans
$40K student loan for my wife’s masters.
$92K for my share of federal government debt
$80K for my share of business debt
Call it $400K.
Household income of $170K…. 2.3X?
Oh, but maybe I’m over leveraged on this purchase? Hmmmmm…. $48.4K purchase price and $30K mortgage, so 2 to 1 leverage….
Logic is so tricky. You say the government debt is unsustainable, yet you personally have several times as much. Am I the only one who finds this humorous?
Debt GROWTH at a rate higher than inflation and population increase is unsustainable.
Logic certainly seems to beyond your abilities.
That, or you’re just going to extremes in an attempt to prove an invalid point.
5 years ago I had almost $300K in personal debt and household income of $130K. Even after this purchase, I’ll be at substantially lower debt and higher income.
On the flip side, 5 years ago, my share of the national debt was HALF what it is today.
It is the doubling of real (publicly held) government debt over the last 5 years that is unsustainable.
….. and Darryl wants to make you a debt junkie too.
“and Darryl wants to make you a debt junkie too.”
How do you figure?
I have not recommended that anyone else buy or even take on debt. All I have done is explain why I am doing so.
You haven’t done anything but lie.
“You haven’t done anything but lie.”
You’ve never proven Darrell a liar.
But you RAL, have been proven a liar. How long has it been since you were called out and failed?
DarrylTheLiar has been a proven liar time and time again.
Why run from it?
Still can’t find that link that was posted so many times huh. Polly found a link showing 18 million. Why don’t you finally admit that you made up that 25-30 million?
No Darryl The Liar. The 25 MILLION excess empty houses have been discussed over and over again.
Why buy housing when prices are falling and massive excess housing inventory is growing by the day?
Answer the question Darryl The Liar.
“The 25 MILLION excess empty houses have been discussed over and over again.”
Discussed, but not proven. Never did give that link, but other real links have shown you wrong. You’re a slippery ex-realtor aren’t you.
And as I told you, I’m not Darrell.
RAL: You shut up
Darrell: No you shut up
RAL: You shut up
Darrell: No you shut up
RAL: You shut up
Darrell: No you shut up
RAL: You shut up
Darrell: No you shut up
RAL No you
Darrell: No you
Not Darrell.
You may not be darryl but you sure are a liar.
“Not Darrell.”
You fell for his little trap, for that is exactly what Darrell would say if he was you and wished to lie about it! Case closed.
At the price you paid for that property I don’t think your going to get hurt Darrell ,given the rates being so low also .
I do think however some areas are going to go down more
depending on what happens .I think the low interest rates are
outstanding if you have a area that has over corrected .But the problem with these times is that there isn’t the same stability there use to be and to many artificial means are used to prop up the markets . Nobody has the job stability they use to have and that’s a problem . To many foreclosures
being held back right now also . How many foreign buyers are
they going to have to buy up the inventory pending .
In your area a lot of investors from Canada have been buying
for the last couple of years for vacation homes and investments.I picked up a condo like yours a couple of years ago and made a 40% profit on it and took the money and ran .
You can’t do that now .Actually I was going to move to the condo but I changed my mind ,so I didn’t even buy it for investment . I’m still in my house in California but I’m not liking what is going on in California either . But no question that the prices really crashed in Az .
Suppose prices collapsed by another 40% from here, say from $50K to $30K; would Darrell “not be hurt” by that?
In case you think this is beyond the realm of possible, remember that nice SFRs in Detroit were going for under $20K in the recent past. I don’t see what would prevent desert condos from similarly reverting to fundamental value, in the absence of artificial intervention to prop up prices.
“Not all debt is bad. A reasonable level of debt, say 3x income, could be the basis of a very successful economic system.”
I followed this rule on my 1st two houses and seemed to do ok. This time I spent 1.7x income and got a loan at 3.99% whereas my last loan was at 8.2% in 2000. And I’m gonna tell ya, under 2x income was all I was comfortable with. Not sure how I paid more for my last house while making less, but this time I seem to be more stressed. I am putting over 20% away for retirement (28% with company match), so that’s a big chunk, and I have more savings needs, and medical (HSA) is about 250/month), but still it does seem like my money doesn’t go as far as it used to and I think basics are a big part of that. And they are only going to go up.
I think one of the better pieces of advice here was to avoid more than 2 times income if at all possible. Thanks guys!
I can tell you one thing… Doubling my income has not come close to doubling my take home. The reason is taxes.
When I had a household income of $75K, I got something like $35K in deductions and exemptions, and then pay $5K income taxes. Oh, but then I got $2000 in child tax credits and such so would really pay more like $3K in income taxes.
At $150K, my deductions were up to maybe $40K. On the $110K, taxes are like $20K, and I don’t qualify for the credits as they phase out.
And that is just Federal. I think the increase in state was even steeper than the jump from $3K to $20K.
Adding state (5%), SS+MC (7.6%) and Federal (28%) I’m north of 40% marginal. I make an extra $1, the government let’s me keep $0.60 of it. Put another $0.05 to 401(k) and my take home income is up only $0.55 for each extra $1 I make.
“At $150K…”
Wow, that’s pretty tall cotton these days.
$150K is for a two-income household.
Blue Skye said: “Their type got us all into a huge mess, and they just won’t quit!”
They can’t stop. The middle class is now forced to speculate. They have to shovel money into the stock market, for instance. They have to see that return. And they have to buy up any spare housing they can; again, to get that return. They have to re-capture their lost opportunities before they finally lose their career to some guy in China. And they are always trying to capture what the media is constantly telling them, to be rich, rich, rich.
They will never stop until they stop having the income and credit lines that promote this rampant speculation. My new theory is that local housing bubbles will now always exist across the nation, driven by a remaining maddened middle class. The media will always trumpet each event, and swarms of mad Americans will descend on that local market, struggling to out-bid each other.
I think the house thing has a mathematical side on the one hand and an emotional side on the other hand. I will be buying and making an emotionally rational decision as the mathematical side will never pan out for me. The houses you get to rent in our area are not the houses I would consider buying. They are not my dream house. So I fully expect to take a huge loss as it will be our toe tag home. I won’t be paying a mortgage but I will be paying taxes up the ying yang.
Well you won’t take a loss - your heirs might but is it really a loss to them? If SS is means tested this might work in your favor.
I may want to have the milk, but don’t want to own the cow.
‘Owning Is a Pain in the ***’: Testimonies from the Cheapest Generation
By Derek Thompson
The Atlantic
Edit - And this is completely ignoring the major issue with home-ownership in general (in my view)… The sheer, overwhelming cost. If you live in the Northeast, for example, and can only afford to purchase a home for under $200,000, the prospect of owning a home becomes significantly less interesting.
http://www.theatlantic.com/business/archive/2012/08/owning-is-a-pain-in-the-testimonies-from-the-cheapest-generation/261566/
It used to be that you could take out a bit of debt, buy a house, and gain more benefit from using it than the cost you pay. Nowadays, the debt middlemen are not willing to leave any money on the table. The amount of debt you must take on and pay down offset to a large degree, the benefits of ownership. High initial cost, loss of mobility, maintenance. There are certainly benefits to ownership. But there are certainly costs as well.
Like I say, the debt middlemen are not allowing any money to be left on the table.
Unfortunately, the same system is shaping up with students and college.
We are trying to recruit a 28yo former co-worker but he is stuck in an underwater condo on the other side of town and has zero mobility. But at least he can paint the walls any color he wants*
* actual defense of loanownership from former co-worker
My daughter moved into a rental and complained about the color of the kitchen. My advice was to just paint it whatever color you want. The worst they can do is keep part of your security deposit.
The house went into foreclosure and she lived there rent free for the last 3 months before it went on the auction block. The free rent was worth the loss of the security deposit.
My advice was to just paint it whatever color you want. The worst they can do is keep part of your security deposit.
Indeed, I’ve never understood that argument. I have painted walls in several rentals I’ve lived in. Before moving out, I repainted them white, no big deal. I almost always get my full security deposit back.
It used to be that you could take out a bit of debt, buy a house, and gain more benefit from using it than the cost you pay. Nowadays, the debt middlemen are not willing to leave any money on the table.
First, they killed the goose that laid the golden eggs. They learned that that’s no good because the golden eggs stopped.
So, they fed the goose well. Geese were happy and healthy and laid lots of golden eggs.
Then, they felt that they were spending too much money on goose food — money that was better spent on yachts and sports cars and bidding up the price of abstract art.
Now, they keep the goose barely alive. As long as those eggs keep a-comin’, it’s okay for the goose to suffer.
Question is: can they thread the needle and feed the goose as little as possible, but still just enough to keep it alive?
“then who are you going to rent from????”
In my case it was a couple of Deadbeats who called heads but when the coin came up tails, stuffed their pockets with $1,700 a month anyway. I`m not worried about “landlord cooties” but if I catch Deadbeat cooties my father is gonna roll over in his grave.
But we have something in common, I am the first to admit that Deadbeating is annoying.
JIMMY BUFFETT - BAREFOOTIN’ LYRICS
Everybody get on your feet
You make me nervous when you in your seat
Take off your shoes and pat your feet
Robo signed victims can`t be beat
We’re Deadbeatin’
Deadbeatin’
Deadbeatin’
Deadbeatin’
Went to a party the other night
Long Tall Sally was out of sight
Brand new car, just got back from a Cruise
She`s a Robo signed victim and she can`t lose
She was Deadbeatin’
Deadbeatin’
Deadbeatin’
Deadbeatin’
Hey little girl with the red dress on
I bet you can Deadbeat all night long
Take your payments and stow them away
Cause we get to live where we don`t have to pay
Deadbeatin’
Deadbeatin’
Deadbeatin’
Deadbeatin’
Lil John Henry he said to Sue
I`m a Deadbeat, how about you
Sue told John, Hey that`s just great!
I haven`t paid since 2008
Deadbeatin’
Deadbeatin’
Deadbeatin’
Deadbeatin’
Take off your shoes and dance
Deadbeatin’
Deadbeatin’
Deadbeatin’
Deadbeatin’
“real estate investors get derided on this blog”
Because most of them deserve it. They act in herds, following trends, largely promoted by bankers. That only leads to market bubbles and then collapses. Housing had long left the market of UTILITY.
I don’t have any trouble with you buying housing with CASH. Most of you landlord scum aren’t using cash, however. So we have piles of housing in the hands of people who are only taking the housing out of the hands of people who could have afforded to own.
This blog is about REAL homeownership: Taking CASH, buying a house with it, and then living in it for decades.
Since the collapse of the housing bubble, we now have lots and lots of speculators trying to ALL become landlords, like the brainless herd animals they really are. That logically produces a Rental Glut. So most of those people will lose. And I’m left wondering how much more tax money will be used to bailing them out.
“I don’t have any trouble with you buying housing with CASH”
Well you do get the best deals when you buy with cash, but I’ve been known to take out a loan once the place is fixed up and rented. Some of this discussion strikes me as strange. The 1 br house(cash) that brings in $550 /mo is a good investment but the 4- plex that brings in $1500 is not because it has a $500/mo loan? I tend to think otherwise.
“So we have piles of housing in the hands of people who are only taking the housing out of the hands of people who could have afforded to own.
This blog is about REAL homeownership: Taking CASH, buying a house with it, and then living in it for decades”
I agree with you it was a mania. And I’m sorry it kept you from owning at a reasonable price. Have prices not come back down in your area?
I honestly don’t see the problem with a 15 year loan on a house if you plan to stay in the area and can afford the payments in a worst case scenario.
No it’s not.
This blog is about dispelling the lies and myths created by the Housing Crime Syndicate of which you’re a part of.
And if you don’t see a problem with paying an inflated price for depreciating asset for which your costs double due to financing, then YOU are cruising on the wrong blog my friend.
localandlord said: “Have prices not come back down in your area?”
I was fortunate. Prices around here crashed HARD in 2008. I live in a depressed area so when the national market crashes, it’s amplified here.
So I bought, for cash. I see people bragging they bought for $50/sf. I beat that by a LOT. I won’t say how much, but finding homes for less than $30/sf was easy in 2008. And mine was less than $30/sf. I pay about $100/mo in property tax.
Then the F$%#% speculator herd rumbled back in, and locked up a lot of the property base, trying only to do minor renovations and then rent ‘em back out at predictably high rents for the area. And so many of those places just sit.
I’m soooooo glad that I struck when my iron was hottest. After 20 years of renting, I won’t have pay a landlord (or banker) for my housing for 40 subsequent years.
Prices may be resuming their downward march here. I’m doing a bit of renovation work lately. One house that I’m working on, the guy bought recently for $3100. No typo; that’s a bit over three thousand dollars. It’s a single bedroom, and one of the things I did was install a metal security screen door (tells you the neighborhood it’s in), but if the owner can get it put into the Section 8 program, he’s going to be making money hand over fist, even when he pays a management company to take care of it. $250/mo return? Houses like this can cash flow well, provided you drop the rents to undercut the other landlords. The owner knows about dropping prices to increase market share, so hopefully he’ll make out.
Hey localandlord…. I detect some pseudo-victimhood and pandering in your post so I have once question for you.
Are you a liar?
Update on the Philippine Mortgage Fraud rings in Sacramento:
You recently read about the felony arrests of Cynthia Suratos Lorica and Edwinna Suratos Firmeza here on this blog. The related Suratos families seems to be in deep trouble. Edwinna recently plead guilty to felony bank fraud and will be sentenced to prison in December. Cynthia changed her plea from innocent to guilty for both bank fraud and income tax evasion and will be sentenced to prison in October. Once they serve their prison time, they will likely be deported back to the Philippines, leaving behind their families, which appear to include husbands and their U.S. born children.
Lorica and Firmeza reportedly participated in about 75 property transactions in Sacramento and Placer Counties. The mortgage fraud deals were rampant and many of the participants are now stuck with houses they cannot unload and wrecked credit reports. The banks are losing millions of dollars.
So here is the latest twist: This group appears to be short selling their houses to each other!
The ability to look up houses on Redfin, Trulia and Metrolistmls makes it easy to follow these transactions:
Rob Wolf with Keller William Realty recently listed 4081 Monteverde Drive, Lincoln, CA. Strangely, the 5242 SF house was already a “Pending Sale” when he listed it on the MLS at $450,000! The seller is Erna Alva, of Philippine descent and it will be interesting to see who the buyer is and what the final selling price will be! Why? Because the neighboring houses at 4041 Monteverde and 3481 Monteverde are pending with listed prices of $769,900 and $926,300 respectively.
Bank of America may be about to take it in the shorts from Rob Wolf arranged short sale. He and Erna Alva may be taking the bank for somewhere between $300,000 and $475,000! Such foolishness!
Just to add to the mix, Patrick and Cecelia Alva (Erna Alva’s relatives?) recently purchased the 5242 SF house across the street at 4140 Monteverde for $450,000. This house was previously owned by Jessie and Joenalyn Guintu who live in Union City, CA, home of the Suratos clan. It appears Lorica and Firmeza hooked the Guintu couple up with a mortgage fraud loan: $1,020,000 in financing on their $1,074,000 purchase of 4140 Monteverde (95% LTV) using IndyMac.
IndyMac! There is another fine example of America’s finest lending institutions. All the depositors with over $250,000 in that bank lost their money and they should file a claim for repayment with the Suratos clan, who probably cost the banks hundreds of millions of dollars with their misdeeds in 2006 & 2007!
The FBI and the banks will be informed about these ongoing shenanigans and their appearance of impropriety. If they check out, more innocent people may get burned and pay the price: prison time, broker’s licenses revoked, tax fraud charges. It takes a while to unwind this stuff, but it is all documented with the county recorder, so the perps can be tracked down and put away….just like Lorica and Firmeza!
Paladin, if you don’t mind me asking, how did you first stumble onto this bunch? It seems like they’re a needle in a very large haystack of fraud, given what has gone on in Sac for the last decade or so. I’m elated whenever I read about some mortgage scammers ending up in the slammer. It seems like the local DA is actually prosecuting some of these folks (mostly Russians/Ukrainians, it seems).
I was curious about one property transaction which seemed suspect. The more I dove into the issue, the more crazy stuff I uncovered. It started with an Elk Grove property. I have a good friend who lives in Union City, so tracing their roots back to the SF East Bay was easy. They were doing the same thing in Union City and then moved up to Sacramento, where the “pickin’s were easy”….or so they thought. 75 deals is hard to hide!
I’m suprised a bank would fall for that , no back up offers ?
The property was put on the market with a “Sale Pending”, which discourages back up offers. The banks are too busy to see the scams in motion, but if this is a scam, they will be alerted and the bank will go after all the parties for the shortfall.
I have heard there is a group that goes after these abuses for the bank in exchange for a percentage of the award. Sort of a “Short Sale Abuse Bounty Hunter”. With the market recovering and the assets increasing in value, there is equity and net worth to encourage the bounty hunter.
You could say that the whole Lending Ponzi Scheme entitled people to be made whole again regarding this major fraud .
In other words ,people who purchased property were entitled to compete with transactions that weren’t fraudulent ,and it was the Banks duty to prevent fraud ,not encourage it ,or misrate securities ,or past title incorrectly . The Bail Outs were some attempt to avoid the true liability of this major lending crime spree that Wall Street and the Banks pulled off .They rescued the culprits ,not the victims .
Exactly. Wall Street’s loose lending to the fraudsters drove up prices for everyone. Someone should start a class action lawsuit for the regular people…they’re the ones who got hurt the most…except for people like Lorica and Firmeza who got caught and are going to prison.
Paladin, if you don’t mind me asking, can i ask an update regarding to your article? are they already in prison right now? just curious. thanks
Up early. Listening to noise rock. It’s what’s on the radio at this hour. And I love me some noise rock!
I am up early…… researching the latest mortgage fraud game: short sale to your friend at below market prices. More to follow shortly. So we both share in the “Noise” factor!
Whatever it sold for is the market price.
Market price is what an arm’s length purchaser is willing to buy for because it is the best option on the market for the best price they could get.
Market price is not whatever to fraudsters are willing to negotiate in a back room, then lie to the lenders saying that it is an arm’s length transaction.
“Market price is what an arm’s length purchaser is willing to buy for…”
No, market price is whatever RAL pulls out of his posterior and repeats over and over. If you never get with his program, you’ll never stop being harassed!
Nobody asked for the definition of “market price”. Especially from known liars like you DarrylTheLiar.
“Nobody asked for the definition of “market price”. ”
Then why did you say?
“Whatever it sold for is the market price.”
You offered a definition, and so did Darrell and I. But whatever you says is the absolute truth, even if it makes no sense, because you’re an ex-realtor who’s used to just making up whatever you want to make your point.
Imagine… A liar and victim says I’m a realtor.
You liars are flailing now. lmao!!
And one that got fired for not being a good enough liar. At least realtors make their lies plausible while yours are just obvious.
Poor victim. Can’t even make up good accusatory lies.
Nice try though.
Flailing and lying about housing seems to be your stock in trade.
Why is that?
Speaking of victims, how much did you lose flipping houses?
Speakingof liars, how many times are you going to tell lies?
At below-market prices? The horror!
Why that flies in the face of the “House prices are increasing again” meme that we’re hearing so much of now.
The average price per square foot for monthly sales in Queen Creek has risen from $51.27 on May 19, 2011 to $74.29 on August 23, 2012, an increase over 45 percent over 15 months.
http://santanvalleytoday.com/pages/?p=227706
I am up too early as well. Checking the news sites.
It’s all rock and roll these days!
hey!
‘At below-market prices? The horror! ‘
I have a question. How can a buyer of a house complain they are paying an insurance rate for replacement cost of a house that is much higher than what they bought the house for? I guess the lucky buyer got the house much below market value? In other words, the buyer paid X dollars ( got a mortgage for) and then bought insurance and the rate was for replacement cost of say twice the amount the buyer bought the house for. Isn’t the price the buyer bought for the true market rate? I heard this on a money radio show yesterday. Wonderful problem to have in a way I guess, having the built in phantom equity so to speak, but it was more or less trying to suggest houses were just waiting to gush forward in price but this pesky market is keeping prices too low vs. real price……
‘How can a buyer of a house complain they are paying an insurance rate for replacement cost of a house that is much higher than what they bought the house for’
If the house is older, it will probably cost a lot more than the purchase price to replace it with new materials. Unless you pay too much, of course.
It is an insurance scam. The higher the policy value, the more they can charge for the premium. I have purchased houses for under $100/SF for say $300,000. The land value is $75,000 (and is not insured, since it can not burn). So the house cost me $225,000 or $75/SF. The insurance policy is for $550,000, taken off the Dodge Report for Buidling Costs (or something similar).
The insurance agent says building one house is much more costly than buidling 200 at once (true), but I always make him lower the insured value substantially, so the premium is lower.
Wouldn’t that have an effect by lowering local comps? I’ve suspected that happening here in Monterey Co. as well. It seems as though RE type keeps bids off the property for months and then convinces the lien holder that this one bid is the only thing available.
Just out of curiosity what make these deals fraudulent? The fact that they are not arms length transactions? I’m not suggesting that they are legit, just saying that if I want to sell my house I can sell it for whatever I want to whoever I want as long as the bank signs off. Isn’t it up to the bank to decide what fair-market price they are going to accept?
That said I ran into something fishy the other day. Wife and I were looking at a short sale and the broker (friend of the underwater owner) mentioned that the furniture was also for sale and that even thought the transactions were separate she inferred that buying the furniture would put me in a better position on the house. We really didn’t like the house so we kept walking, but really brings up issues where owners might be tempted to submit a low ball offer to the bank on a short sale and pocket cash on the side.
If Erna Alva and Rob Wolf work in collusion to get a related party to buy the huse for $300,000 below what you will pay, lots of laws are broken. First, the short sale paperwork has all sorts of repesentations, and that is what the U.S. Attorney will hang them on!
???
Folk Implosion? Sebadoh? Sonic Youth?
Check out Corb Lund’s new album Cabin Fever and listen to the song ‘Gettin Down From the Mountain’. Corb comes from Alberta and is a cross of Bob Wills, Steve Earl and little Woodie Guthrie.
http://www.allmusic.com/album/cabin-fever-mw0002396502
I likey-likey!
Check out this band. Very eclectic, home-grown, granola, authentic and all that…
Awake too early as well. Checking the news.
The average price per square foot for monthly sales in Queen Creek has risen from $51.27 on May 19, 2011 to $74.29 on August 23, 2012, an increase over 45 percent over 15 months.
http://santanvalleytoday.com/pages/?p=227706
green shoot?
I get a Prudental reality update all the time and see homes selling for quite a bit more than just 8 months ago. Used to be around 390K to 425K now 455K to 495K and some really crappy homes are showing up sold which would not have had a chance of a sale a year ago.
The FED and its easy money policy so why can’t we have another bubble ? Nothings changed, same banks, same realtors, same FED. I would have thought this Housingbubble and bust would be a good lesson ? Doesn’t look like it to me.
Some werid engineered economy we have here in the belief easy money is the path to full employment.
And Phoenix housing sales CRATERED 22% in a single month. See what happens when prices begin to inflated? And they’ll continue to crater until prices roll back to early 1990’s levels.
http://www.armls.com/docs/stat-ppi-2012/stat-august-2012.pdf
Interesting that you didn’t mention that the report that you linked to shows pending foreclosures are down from 42K to 16K over the last 2 years, that total distressed sales are down from 6K a month last year to 3.5K a month this year.
You also forgot to mention that new units listed for sale was at a 5 year low, and that it is lack of inventory, not lack of buyers or prices that were reducing the number of transactions.
Do I think house prices in Phoenix have bottomed? Probably not. I would not be at all surprised if buyers went away through the winter, inventory surged, and prices resumed falling. That is kind-a what happens in the winter.
Does the link you provided prove that is what will happen? Nope. Long way from it.
Darryl The Liar,
The link proves that you’re a serial liar.
RAL, you DID NOT JUST POST A LINK TO REALTOR PUBLISHED DOCUMENT!!!!!!!
But if you’ve decide realtor aren’t liars, then prices are not cratering.
“Sales prices continued on the upward trend begun in August/September 2011 with gains in both sales price metrics. Median sales price increased 3.2% to $146,000, while average sales price increased 1.2% to $197,000.”
Nice cherry picking on the sales volume though.
You’re right. Realtors are lying.
And worse yet, your mischaracterizations can’t detract from the fact that sales are cratering in Phoenix.
Why are you lying to the public about housing DarrylTheLiar?
“You’re right. Realtors are lying.”
And so are you, so it’s not surprising you’re turning to your ex-buddies for your lies.
Lying on the way up, and lying on the way down. That’s RAL.
Sorry Darryl The Liar. Nobody is pimping housing here but you and you alter egos.
Nice try though….Darryl The Liar.
Hah, not pimping anything. Housing is in a bad way, and there’s lots of truth to prove it. So why do you need to lie? Hard to break your old RE selling ways?
You’re pimping housing. You’re a liar.
Why?
No, you are the liar. When faced with someone who posts like you do, do you see the pointlessness of it?
Probably not.
Why are you pimping housing and lying?
” Comment by Cantankerous Intellectual Bomb Thrower©
2012-09-04 19:11:33
Darrell apparently thinks that anything which cannot go on forever will, nonetheless, go on forever.”
What can not go on forever is $600B a year international trade deficits and 70% of the $1T in corporate profits ending up in the hands of the people that already have more money than they can spend. This requires we create new debt/money at 3x the sustainable rate. That can not continue.
What could not go on forever was house prices increasing at 10-25% the rate of inflation.
What can go on forever? Townhouse prices that have fallen 70% from peak, that are 20% below pre-bubble prices non-inflation adjusted, 35% below pre-bubble prices inflation adjusted, that are now selling for 3x the income of someone working a full-time minimum wage job do not need to continue to fall.
AND…. even if they do still fall, I don’t care since $48,400 for a townhouse to house my kid is still a good deal for me personally.
Do town houses have home owner associations? If so, who handles the funds collected?
Yes, you can have condo townhomes. You can have 1-story attached condo homes — “patio homes” I think. I’ve even heard of condo-style SFH.
I guess there are different levels of control, but I believe that you own the house but the developer/HOA owns the land. The HOA collects fees to keep all the lawns mowed and flowered and the pool cleaned. A LOT of the new developer communities in outlying burbs of DC are like little self-contained towns. They have mixed housing, from condo flat to SFH but with a common pool and tot lot etc. Adult living 55+ communities seem to follow this model. They are trying to recreate the small-town Music Man feel. IMO, they are having some success, but you pay through the nose for it.
As for me, I stayed the heck out of it. I live in a relatively old neighborhood with NO HOA. I answer only to the county. People can do whatever they want. In my nabe, people get away with mowing the lawns once a month, putting on haphazard additions, filling in garages as rooms, re-sodding, chain-link fenced front yard… One guy even built a deck on the FRONT of the house.
This sounds like a “Ground Rent”-esque situation:
http://en.wikipedia.org/wiki/Ground_rent
Back during the bubble I saw older duplexes marketed as condos. LOL! Who’d like to be in an HOA of two?
In my nabe, people get away with mowing the lawns once a month, putting on haphazard additions, filling in garages as rooms, re-sodding, chain-link fenced front yard… One guy even built a deck on the FRONT of the house.
This sounds awful. The key is to find a nice enough neighborhood with people who wouldn’t do such tacky things.
I dunno, I kinda like it. I can walk the block and no two houses are the same. Some people did great stuff, some people are very plain, some are rentals. The lot sizes are a little bigger. In a neighborhood less tacky, the houses cost $200K more, there’s probably an HOA, and it’s a lot farther from the office.
Chain link fence doesn’t belong in a front yard unless it’s in a ghetto. Seriously tacky. Same thing with a front yard porch. I guess that did keep property prices down, though. And at least you’re not counting on appreciation in price. I don’t mind if some people have different design ideas, but the not mowing the lawn, chain link fence, etc. is way, way too junky for me. I spent less than you and I don’t have to deal with any such hideousness.
Then you are luckier than me. Count your blessings and shut your mouth.
The townhouse i am buying, the HOA owns the land, the grass and trees, the pool and last coat of paint on the outside of the buildings. The fee is $120 a month. They provide trash collection, and nothing else.
The owners are the association, and have hired a property management company to run the day to day maintenance and such. Any fee increases or special fee collections would have to be approve by majority of owners (not just majority present at a meeting, but true majority).
Most of the townhouses I looked at, the HOA also owned the roof, the heat pump(AC/Heater), but the rent in those places was much higher (some in the $250). Some also included water, basic cable TV, high speed internet, etc., but again, those had much higher monthly fees.
The downside of the HOA not owning the roof is that all the roofs are mismatched. Mine has a light colored asphalt composite shingle. Some have the more expensive foam and rolled composite. Others have terracotta tile. The upside is that I do not have to pay for roofs of others.
all the roofs are mismatched
That’s a deal breaker.
“Darrell apparently thinks that anything which cannot go on forever will, nonetheless, go on forever.”
If I had known I was going to inspire yet another trade deficit rant, I never would have posted that.
Darrrell is an enigma. He cannot afford to “buy” a $50K stick box in the capital of building for building’s sake without contributing to the debt bubble.
He thinks debt is the root of all evil in the global economy (especially the hated trade deficit), yet uses it to buy an AZ condo.
No. I think debt as money is a perfectly fine economic system, IF debt is kept at manageable levels.
The root of all evil is embracing trade imbalances instead of leaning against them, forcing debt to increase at an unsustainable rate.
Well then, enjoy your own little evil trade imbalance micro climate.
Clinton and & The Housing Bubble
The first is his obsession with pushing homeownership to new highs via government coercion.
The second is his unleashing of Wall Street risk-taking.
Clinton charged his Housing secretaries, Henry Cisneros and Andrew Cuomo, with driving homeownership rates up to about 70 percent of households from around 64 percent in the early ’90s.
How did they do this? Through rigorous enforcement of housing mandates such as theCommunity Reinvestment Act, and by prodding mortgage giants Fannie Mae and Freddie Mac to make loans to people with lower credit scores (and to buy loans that had been made by banks and, later, “innovators” like Countrywide).
The Housing Department was Fannie and Freddie’s top regulator — and under Cuomo the mortgage giants were forced to start ramping up programs to issue more subprime loans to the riskiest of borrowers.
Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/bubba_the_housing_bubble_8cUhYsqNdXVlWjflbbjiUO#ixzz25awWjsX8
I know some might not like this source, but is the information correct? My premise is that the government initiated/allowed the housing bubble through it’s policies. Clinton started it, Bush allowed it to continue and Obama is extending it (by making it more difficult to foreclose).
And in the end, we are all going to be paying for it one way or the other as the US is backing of Fannie and Freddie with our dollars.
And when Clinton was pushing home ownership, prices were in line with historic norms and fundamental price/rent and price/income ratios.
Bush continued to push these home ownership policies even as house prices doubled on near flat rent and income.
When the situation changes, the policy should change.
“And when Clinton was pushing home ownership, prices were in line with historic norms and fundamental price/rent and price/income ratios.”
Clinton and his band of Wall Street cronies put in place policies, such as the $500K capital gains exclusion for appreciation on a primary residence, which unhinged housing prices from incomes.
Bingo! The tipping point, the fuse that lit the bomb. Is it still in effect, if so why?
“Is it still in effect, if so why?”
The answer is perfectly obvious, and it is also the answer to why myriad other federal housing subsidies which have been put into place over the decades are never rescinded:
Take any of these pillars of the housing bubble away, and housing prices will crash.
The old policy for cap gains exclusion on a house was that the gains were excluded if you used them to buy another house within a period of time (18 months, maybe?) and then you got a one time “downsizing” exclusion when you were over a particular age (I think it was 55).
The lending explosion happened when non-banks (not subject to CRA or much regulation of any kind) got into the home loan origination business to sell the loans to investment banks for the private securitization market. Everything else was a minor blip.
what polly said.
+1 Polly.
The capital gains exclusion was passed in 1997 (googled for the date). If that alone was enough to fuel the bubble, then we would have had the bubble in 1999.
No, we needed additional fuel to really make it explode. it was a combination of low interest rates, and especially the implicit government backing of F&F. Without those, banks of any stripe would never have allowed the down-payment requirements to lapse.
It was the zero-down policy which really cut prices loose from reality. Even at 0% (or less) interest rate and stamping every loan, if you still require 20% down, then house prices would never budge above 5x median savings.
…and it was wall street that created the real mess. Sub-prime NINJA loans. Fannie, Freddie and FHA never had sub prime loans. You have to prove jobs and assets to get any of those loans. The sub prime mess then created a fraud mess which took us to new hieghts.
In 2004 my Marine Corp son returned from Iraq. We went house hunting and the real estate agents laughed when we said he qualified for VA. “We have a much better financing program for you!” 80-20 sub-prime. Today, the VA loan program has never cost the taxpayer one dime. Sub-prime cost hundreds of billions.
‘the VA loan program has never cost the taxpayer one dime’
‘Q: I’ve read about strategic default and bankruptcy, and I’m a bit confused as to which is the better option for me. I have a VA loan on my house in Georgia, that I moved out of in 2008 due to a military PCS transfer. The house sat empty for nine months until I got a renter to move in it. But the renter finally moved out four months ago.’
‘In that time, the property fell dramatically in value and it is now worth about half of what I owe. I didn’t try to sell due to the local real estate housing market being bad (and it still is). I have a good, low interest rate and can afford to pay mortgage, but really, without a renter, I am just throwing cash away each month. I could be putting that money towards my children’s future each month.’
‘No one seems to understand the VA portion of my loan. I’m not looking to make money. I just want to get my name off loan and try to preserve my credit. What are my options?’
‘A: While you can afford to pay your mortgage, it’s clear that you no longer want to. That leaves you with several options: strategic default, short sale, foreclosure or bankruptcy.’
http://articles.chicagotribune.com/2012-08-16/classified/sns-201208101530–tms–realestmctnig-a20120816-20120816_1_strategic-default-short-sale-foreclosure-auction
‘Low mortgage rates have made refinancing an attractive proposition for homeowners who want to cut their monthly payment, extend their term or restructure their housing debt. Yet there are hurdles that can make refinancing difficult. Here are three of the most common refinance hurdles and ways to overcome them.’
‘Two other high-LTV options might be the FHA Streamline Refinance program, if your loan is insured by the Federal Housing Administration, or a loan guaranteed by the U.S. Department of Veterans Affairs, if you qualify for that. Given its 100 percent financing, no mortgage insurance and flexible qualification guidelines, Parsons describes the VA loan as “the best loan on the planet, by far.”
http://community.nasdaq.com/News/2012-08/how-to-jump-over-3-refinance-hurdles.aspx?storyid=164299#ixzz25bbvTJrY
Best for what?
Best for what?
For providing veterans, people who sacrificed a considerable amount for the defense of the country and who, by and large, are poorly compensated for that sacrifice, with access to financing for property ownership.
But a VA loan is only valuable when veterans are the only ones with access to those terms. During the bubble everybody had it. I’m still waiting for the VA loan to become valuable again. I think we’re getting closer…
Your premise would be wrong.
It was the Commodities Modernization Act that allowed banks to bundle and securitize bad mortgages without risk to themselves.
A law that was lobbied for by Wall St. Heck, it practically written by Wall St. (no joke)
“Commodities Modernization Act that allowed banks to bundle and securitize bad mortgages without risk to themselves.”
Is that a good example of the highly-touted ‘financial innovations’ which have made the modern financial system the pillar of strength that it is?
That and the Grahm-Leech-Bliley Act! You betcha!
Darrell:
‘Exactly what would you consider a “cheap” price if under $50 a sqft is a high price?’
Cantankerous:
“Less than irrationally exuberant debt-financed borrowers competing with equally irrationally exuberant all-cash investors for artificially shrunken inventory are willing to pay.”
Answer the question! How much per sqft would you consider to be NOT an artificially high plateau?
The high plateau was $150 a sqft for a townhouse. We came crashing off that plateau to below $50 a sqft.
We’re at the point where a townhouse is 3x the income of someone working a full-time, MINIMUM WAGE job.
If $50 a sqft is still a high price, than what is the $ per sqft would not be high?
DarrylTheLiar,
Nobody cares what a shack sold for in 2005. It’s immaterial.
You’re paying a grossly inflated price for what can be built, with profit, for far less.
Your failing effort to define the market demonstrates just how corrupt you are.
RAL, does your under $50/sf cost include legal labor, worker’s comp, site and utilites costs, permits?
I’d be curious to see a breakdown.
And now you know what a 20 year old run down condo in the desert is worth.
Hint: A number far less than $50/sq ft.
Darrell:
I think it’s time to give up this fight. If the 50k condo works for you and your situation you should go for it. There’s no “price per square foot” that is the correct answer because there is no correct answer. It may be $50. It may be $25. It may be $75 and you’re getting a bargain. It may be $0 if the zombies attack. (I personally am hoping we do not have a Mad Max scenario, but cannot rule out the possibility as an outlier event.)
Truth is some areas are below where we thought they should be when we were still speculating about a crash in 2005. Some areas have barely budged (too many parts of San Diego for example.) If we had the same incomes and employment we had in 2005 buying that condo would be a steal. But the economy is not the same and there are still huge problems with the underlying fundamentals that have convinced many of us this problem is not nearly over. CIBT is one of those people. He’s not ready to buy and it’s understandable why. I believe another shock is coming but I choose to buy. Illogical? Perhaps. But my life was on hold for 10 years and I needed to move on. With my PTSD from the original bubble I’m not sure I’ll ever feel comfortable buying a house again.
As long as the buy makes sense for you AND you understand there is still a strong possibility of losing money when you sell it, then make the purchase. But asking for a bomb throwers blessing is probably going to be a tough sell.
I’ve never asked for anyone’s blessing.
All I’ve done is explain why I am buying, then defend attack after attack from people that seem to want a global greater depression.
“…seem to want a global greater depression.”
Just because I regularly post articles documenting the global recession we are tipping back into doesn’t mean that I want this to happen. But I’m a realist, and I like to look reality squarely in the jaw.
If you prefer to bury your head in the sand, then have at it.
“…All I’ve done is explain why I am buying,…”
ad nauseam.
For a nifty read Wiki-up “mosquito laser”.
Then, for some videos, google-up “mosquito-killing laser in action”.
Yikes! And what happens if that mosquito happens to fly between your eye and the laser at the wrong moment?
Cantankerous:
“Your comments suggest that you believe “it’s different” in the segment of the Phoenix market in which you are investing.”
1) I’m actually arguing that it is NOT different. “It is different” is an argument used to justify why fundamentals do not need to rule in a market, and I’m arguing that fundamentals have already crashed the Phoenix townhouse market.
2) I’m not investing in that I do not expect the price of this place to go up. I’m purchasing a place that I know will be an expense, just a smaller expense than renting, to house my kid.
“You seem altogether too willing to ignore the distortionary effect of top-down interventions to withhold inventory from the market on prices and rents.”
How closely have you been watching the Phoenix real estate market? Perhaps you don’t realize, but since we’re a non-judiciary state, the foreclosures have been processing pretty quickly here. We’re not letting people live in places for 4-5 years since their last payment. You stop making payments, and you’re out in about a year.
We have ALREADY had our massive drop based on mass inventory flooding into the saturated market.
“When these inventory withholding measures end, prices and rents will go lower, and not just at the high end.”
I’m not convinced they will end in this market segment since I don’t think those measures have been focused at this segment of the market.
I’m not sure you are grasping that townhouses in Phoenix were off about 75% from peak. WE ALREADY HAD OUR CRASH. The “buying frenzy” has brought prices all the way back up to 65% off peak.
I’m buying for 20% off nominal 2000 price, and 35% below inflation adjusted 2000 price.
I’m sorry if inventory is being held off the market where you want to buy, and I’m sorry that prices are not 75% off peak, and 35% below 2000 inflation adjusted prices where you would like to buy. They are here.
Go for it darrell!!!!!!!!!! Make something happen dude.
Darrell
Darrell, Darrell, Darrell…
Correction:
Liar
Liar, Liar, Liar……
I’d seriously question any decision I made if I found myself vehemently defending it in response to anybody else’s slightest question about the decision.
That’s my advice: Take it or leave it.
Your advice is not worth a penny.
I’m defending because of the consent ignorant attacks. I enjoy showing ignorance for exactly what it is. The fact I’m so easily able to defeat the ignorant, non-cogent posts attacking my decision just convinces me what a good decision I’ve made.
If $50 a sqft is a high plateau, then what would you consider cheap?
Have prices in Phoenix bottomed? Probably not. Irrelevant for me since I’m not buying as a speculative investment expecting to make a lot of money when I sell in the future. I’m buying as a lesser expense to having to rent a place to house my kids.
I get it…. The game is rigged and that pisses you off. It pisses me off too. But, I see no reason to believe that it is going to stop being a rigged game anytime in the near future.
Have prices in Phoenix bottomed? Probably not. Irrelevant for me since I’m not buying as a speculative investment expecting to make a lot of money when I sell in the future. I’m buying as a lesser expense to having to rent a place to house my kids.
I get it…. The game is rigged and that pisses you off. It pisses me off too. But, I see no reason to believe that it is going to stop being a rigged game anytime in the near future.
While I agree with everything Darrell says above, I have to disagree with the “irrelevance” of price reductions part.
If housing goes down another 20% after I buy, it will not be irrelevant to me.
And yet, at a certain point, “timing the bottom” when you need a place to live and just want to get on with your life is speculation in its own right.
In 2006 I was in agreement with the sentiment here that the bubble was going to burst. In 2010 I was in agreement that prices were still going down. Now, it doesn’t seem so obvious (to me) what is going to happen.
Nobody here expected or predicted the amount of gov’t. intervention and collusion to keep prices high (shadow inventory, historically low interest rates, etc.) that we’ve seen in the past few years.
Maybe some of you really really believe that you know how this will play out in the next 3-7 years, but my take is that we are in uncharted territory. Maybe Goldman Sachs and Obama and the Illuminati have a plan we don’t know about, but the rest of us are just speculating and arguing about who has the more accurate crystal ball.
On a 48K purchase, 20% drop is like $10K. That is just a tad over our household monthly take home.
If I were buying for more than, say, $300K and a 20% move was $60K, that would be a much bigger deal.
And I agree. I have no idea what is going to happen.
Cantankerous seems to be on this kick that “what can’t continue must end” then throws EVERYTHING that is happening into this “can’t continue” pile.
We can’t keep allowing 10% of GDP to leak out of circulation, then replace that money with $1.3T of new debt money, increasing total debt at 3x the sustainable rate as determined by inflation and population…
I see no reason to believe that we can’t keep the excess inventory off the market, or keep the ultra low interest rates, or keep making 3% down loans, or keep the banking system liquified, or…. For a very long time… like beyond the point where we’re finally forced to inflate or cascade default our way out of the excess debt.
On a 48K purchase,
I think you’re making a big mistake because you’re going to get yelled at.
Why are you lying darryl the liar?
SFrenter, that was a really nice post.
SFrenter, that was a really nice post.
Thank you.
Maybe we just need to kill RAL with kindness and then he’ll go away.
Heh…. I was here when you doddered in and I’ll be here long after you’re done squealing and gone.
“Have prices in Phoenix bottomed? Probably not.”
I’ve had my eye on several areas adjacent Universities, and all of them are still north of $140/sqft, and these are for listings that typically include, “Sold AS-IS. Waive SPDS and CLUE Reports. Seller to be Fannie Mae.”
Another drop in RE values is built-in, IMHO.
“Your advice is not worth a penny.”
Then I suggest you ignore it, as your vitriolic attacks suggest you think otherwise.
“Your advice is not worth a penny.”
Actually his advice has been excellent on a number of occasions. He’s just not answering this particular question which seems to be driving you nuts. Which is why I guess he’s not answering you.
Move on is always good advice.
I have this evil twin child who likes to rub his siblings the wrong way, just to get a rise out of them.
A little part of me enjoys playing the role of the evil twin.
“slightest question”
Sorry, but the attacks against Darrell have been more than “slight questions”.
At $50k, I say go for it… what’s the worst that could happen? The property goes to $1 like in Detroit and your on the hook for property taxes on land that you can’t sell?
What’s the best case scenario? A re-stoking of the housing bubble or very high inflation drives up the cost of property, allowing you to profit [at least on paper if not in real terms].
Reality is probably somewhere in between the two. Personally, I don’t see the big deal. I’ve lost more than that trading options on the stock market… [which is why I'm in software and not a professional trader].
I’d seriously question any decision I made if I found myself vehemently defending it in response to anybody else’s slightest question about the decision.
P-bear, you are defending your decision to rent as vehemently as those are defending their decision to buy. And we are now all seriously questioning each other. Except for one guy that seems to be questioning himself.
Darrell in Phoenix,
I hope you are learning to ignore RAL and all his aka names. It is pointless, so it may be best to leave him alone. Enjoy your excellent aquisistions and outstanding values. Nothing beats purchasing below reproduction costs. It doesn’t get much better! Have a great day.
“Enjoy your excellent aquisistions and outstanding values.”
Mutual affirmations are the first step on the path to real estate investing losses.
I’m not buying an investment!!!!!
I know this is an expense that is going to cost me money!
I’m SPENDING MONEY to have a place to house my kids. An expense that is cheaper than renting from someone else.
Why is it so hard to get that? I have NO delusion that I will make money on buying this townhouse.
I just drank a soda. Guess what. When I purchased that soda, I didn’t consider that purchase an investment EITHER! It was an expense, just cheaper than milk.
I’m SPENDING MONEY to have a place to house my kids.
Talk my mother, will ya? I so wish someone would buy me a place to live.
Lucky kids! Generous dad.
Such an attitude is not uncommon in other countries. Americans are somewhat unique in their “kick the kids out” philosophy, and are regarded with suspicion for that.
The biggest problem in housing is that people consider their personal residence an investment.
When talking about your primary residence, housing is consumption.
“…housing is consumption.”
Consumption with an expected home equity wealth effect kicker…
“Consumption with an expected home equity wealth effect kicker…”
Again, that’s the problem. It should be viewed as consumption only.
“It should be viewed as consumption only.”
Tell that to the bubble-headed MSM cheerleaders who refer to housing price increases as “improvements.”
U.S. home prices make biggest jump in 6 years
Home prices jump the most since 2006
A “For Sale” sign posted at a home in Los Angeles. Home prices in July jumped the most in six years. (Kevork Djansezian / Getty Images / September 4, 2012)
By Tiffany Hsu
September 4, 2012, 8:19 a.m.
Nationwide home prices shot up 3.8% in July, making their largest year-over-year leap since 2006, according to real estate data provider CoreLogic.
The gain marks the fifth straight rise in the gauge, part of a positive swing following a year and a half of slumps. The last time prices rose so much was in August 2006, when they jumped 4.1%.
Prices in California bounded up 4.4%. Without distressed sales – including foreclosures and short sales – national prices were up 4.3% compared with last July.
The report, coming as a glut of house-hunters clamor after a shrinking inventory, suggests that the real estate market is “clearly seeing the light at the end of a very long tunnel,” said CoreLogic Chief Executive Anand Nallathambi in a statement.
Compared with June, prices got a 1.3% boost in July, according to Santa Ana-based CoreLogic. The company forecasts at least an additional 0.6% monthly improvement in August, or what would be a 4.6% increase compared with 2011.
Arizona led the country in price appreciation with a 16.6% surge, followed by Idaho, Utah, South Dakota and Colorado. Delaware’s 4.8% plunge was the deepest drop-off in prices, with Alabama, Rhode Island, Connecticut and Illinois also suffering major slips.
…
Lol… “Outstanding values”….
Yeah…. $50k debt on a rapidly depreciating asset is an outstanding value now folks.
You read it here first.
Rapidly depreciating, do you mean dollar value or decay? You use the two interchangeably, being the sly ex-realtor you are.
Mutual affirmation you say? http://3dsplaza.com/picture_gallery/pictures/21629.jpg
So long as central bank stimulus hopes are alive and well, the stock market always goes up, or at least doesn’t drop as quickly as it otherwise would.
Sept. 5, 2012, 8:21 a.m. EDT
U.S. stock-index futures trim losses on ECB report
By Kate Gibson
NEW YORK (MarketWatch) — U.S. stock futures eased Wednesday declines after Bloomberg News reported the European Central Bank’s bond proposal would “pledge unlimited, sterilized buying” but “refrain from setting public-yield caps.” Peter Boockvar, equity strategist at Miller Tabak, noted in an email that ‘the bond-purchase plan will only be triggered by a specific country request who then must adhere to conditions that must be met. Thus for now, no ECB action will likely begin until Spain asks for it.” Scaling back a third of their losses, futures for the Dow Jones Industrial Average (DJU2 -0.06%) were off 19 points at 13,031. Futures for the S&P 500 index (SPU2 -0.06%) retreated 4.8 points to 1,401.2. Futures for the Nasdaq 100 (NDU2 -0.18%) fell 12.5 points to 2,762.
Stock charts appear to be doing that seismograph thing today. Was there a recent earthquake in the global financial landscape?
ECB will be buying bonds….. Oh, it will be sanitized (meaning they take as many deposits into the bank as they buy bonds) meaning it is not real quantitative easing.
And, yes, there was also an earthquake.
Did something about the RNC turn American voters off? The diverging price trends in the graphs posted below suggest this is the case. The Vote Share Market prices are a bit ambiguous, though they have shown Obama ahead since Feb 12, with some of the widest leads in the past month. By contrast, the Winner Takes All Market prices show a decisive post RNC bounce in Obama’s favor.
For obvious reasons, it will be interesting to watch how this develops over the course of the next several days.
Pres12_VS
2012 US Presidential Election Vote Share Market
Pres12_WTA
2012 US Presidential Election Winner Takes All Market
“Did something about the RNC turn American voters off?”
They talked?
I’m guessing this will happen with the Dems too.
“They talked?”
As Stephen Colbert noted, lies started spewing out of Ryan’s mouth the instant his lips started moving.
QECB is here. It seemed like gold traders already new what was up yesterday.
This should also give a nice pre-election bounce to the U.S. stock market, which will obviously be due to Obama, per the logic of Republican economic blame games.
Breaking News
Draghi’s Plan Pledges Unlimited, Sterilized Bond Buying
ECB Plan Said to Pledge Unlimited, Sterilized Bond-Buying
By Jana Randow and Jeff Black - Sep 5, 2012 5:22 AM PT
European Central Bank President Mario Draghi’s bond-buying proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said.
Under the blueprint, which may be called “Monetary Outright Transactions,” the ECB would refrain from setting a public cap on yields, according to the people, and a third official, who spoke on condition of anonymity. The plan will only focus on government bonds rather than a broader range of assets and will target short-dated maturities of up to about three years, two of the people said.
The euro jumped half a cent on the report to $1.2596 and European stocks advanced. An ECB spokesman referred to an Aug. 20 statement in which the Frankfurt-based central bank said it was misleading to report on decisions that haven’t been taken yet.
Draghi told the European Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in the fragmented euro-area economy and ensure the survival of the common currency. Policy makers will start deliberating on the plan later today and Draghi will announce whether it has been agreed to at a press conference tomorrow.
…
Ahhh, lip flap. Is there anything it CAN’T do?
There was not nearly so much drama with changing into the Euro. I’m wondering why the drama with changing out of it.
This story makes me wonder whether Lehman ever sold off its California real estate holdings and realized its losses. If not, are plans in place to do so by 2015?
Lehman’s Detroit Escape Means 90% Loss on Properties: Mortgages
By Oshrat Carmiel - Sep 4, 2012 9:00 PM PT
Lehman Brothers Holdings Inc. has said it plans to be patient in selling real estate holdings four years after filing the largest U.S. bankruptcy in history. In Detroit, it’s willing to accept less than 10 cents on the dollar to get out while it can.
Lehman is selling a 251,000-square-foot (23,000-square- meter) office property in suburban Farmington Hills. In June, the bank offered it at auction for $10 a square foot, which would have recovered less than 10 percent of the $27.5 million mortgage it extended in 2007. It’s also selling 1 Woodward Ave., a tower overlooking the city’s riverfront and border with Canada that’s 44 percent vacant.
Asking rent for office space in the Detroit region was $17.81 per square foot in the second quarter, the lowest on record, according to data from CoStar going back to 2000.
Detroit’s metro office market is missing out on Michigan’s revival three years after the government rescued General Motors Co. (GM) and Chrysler Group LLC amid the worst financial crisis since the 1930s. Borrowers 30 days late or more on Detroit-area office loans packaged into commercial mortgage-backed securities rose to 24 percent from 15 percent in August 2011, according to data compiled by Bloomberg, compared with 9.9 percent nationally.
“This is probably not a market where you’re going to see much growth and for that reason, it might make sense to just move on,” said Shaw Lupton, a senior real estate economist at data provider CoStar Group Inc.
Lehman said in July it’s attempting to recover as much as $12.9 billion for creditors by selling real estate holdings that range from condos in Hawaii to Archstone Inc., the eighth- largest apartment manager in the U.S. Lehman has said it plans to hold some assets as long as 2015, waiting for opportune times to dispose of properties as the commercial and residential markets recover. It moved to take Archstone public last month.
Kimberly Macleod, a Lehman spokeswoman, declined to comment on the firm’s Detroit holdings.
Lehman had $260 million in outstanding senior loans secured by Detroit-area property at the time of its September 2008 demise, in addition to $13.2 million in mezzanine or junior loans, according to court documents.
The bank had extended some of the loans as part of a joint venture with affiliates of developer Kojaian Management Co. The partnership, which had dated to 1995, was dissolved a year after the bankruptcy and Lehman took title to 15 properties in lieu of foreclosure.
…
This is exactly why the FASB was responsible for putting a floor on the market when they waved the Mark-to-Market rules. How else could these assets be held off the market this long?
Seems criminal, no?
Ultimately, the economy is moved by the myriad persons in it, acting to improve their situation.
Lying about values, in waiving the mark-to-market rules, was designed to obfuscate the reality, helping some (those in-the-know), hurting others (outsiders). It would lead the outsiders to make bad decisions as they try to improve their situation.
The outsiders wouldn’t discover the true values until they became the marks. So, the real book valuation strategy was more like “mark to mark”.
Old school accounting: “Mark to market.”
New school accounting: “Market to mark.”
“Seems criminal, no?”
Indeed. And the U.S. Justice Dept. is working overtime to get those perps locked up.
http://www.thedailybeast.com/newsweek/2012/05/06/why-can-t-obama-bring-wall-street-to-justice.html
Breaking News
U.S. Productivity Grew More Than Forecast 2.2% in 2Q
FedEx Sees First Earnings Drop Since 2009 as Economy Slows
By Thomas Black - Sep 5, 2012 4:28 AM PT
FedEx Corp. (FDX), operator of the world’s largest cargo airline, projected its first decline in quarterly earnings in almost three years as slowing economic growth hurt demand for the express packages that provide most of its sales.
A slump in Europe and slowing growth in Asia may have exposed a weakness of FedEx’s express business, which was built around customers willing to pay more for speed of delivery, said analysts from Sanford C. Bernstein & Co. and Raymond James & Associates Inc.
“The economy needs to get better,” said Arthur Hatfield, an analyst with Raymond James in Memphis, Tennessee. “We see some pent-up demand but corporations aren’t spending the money until they get clarity on where policies are going.”
FedEx’s forecast marks the second time since June the company has issued a profit estimate that trailed analysts’ projections. The company is considered an economic bellwether because it moves worldwide goods ranging from financial documents to pharmaceuticals.
Profit for the quarter that ended Aug. 31 will range from $1.37 to $1.43 a share, Memphis-based FedEx said yesterday in a statement. That was less than its June 19 forecast of $1.45 to $1.60 a share and year-earlier earnings of $1.46. It would mark the first drop in adjusted earnings per share since the quarter that ended November 2009.
FedEx fell 2.9 percent to $85 as of 7:24 a.m. in early trading in New York after closing at $87.54 yesterday. FedEx released its statement after the close of regular trading. The shares rose 4.8 percent this year through yesterday’s close, trailing a 12 percent gain in the Standard & Poor’s 500 Index. FedEx is set to release quarterly earnings on Sept. 18.
Speed Focus
Even with an economic rebound, shippers probably won’t return to paying a premium for overnight service, said Dave Vernon, an analyst based in New York with Sanford C. Bernstein.
“The way that FedEx’s business is set up, it’s really geared for speed,” Vernon said. “They need to restructure that and make it a little bit more economical on how they run their network. That’s going to be a relatively slow process.”
The International Monetary Fund in July said it expects the global economy to expand 3.9 percent, down from an April estimate of 4.1 percent. FedEx in June lowered its projection for U.S. economic growth to 2.2 percent for the year that ends May 31, from a 2.3 percent forecast given six months earlier.
Manufacturing in the U.S. contracted for a third month in August, the longest slide since the recession ended and a sign the expansion may lose a source of strength. The Tempe, Arizona- based Institute for Supply Management said yesterday its factory index fell last month to the lowest since July 2009.
The euro-area economy is forecast to contract 0.4 percent this year, according to the average of 39 economists’ estimates compiled by Bloomberg. China’s economy is expected to slow to 8 percent from 9.2 percent in 2011, according to 30 estimates.
A decline in Asia caused average volume for international priority packages to fall 3 percent from a year earlier for the quarter ended May 31, FedEx said in its June 19 quarterly report. In the U.S., express package volume fell 5 percent.
“The global economy is weak and it’s impacting their business in the short run,” Hatfield said. “I don’t think there’s anything inherently broken with their business.”
Analysts had predicted adjusted profit in the quarter would be $1.56 a share, based on the average of 23 estimates compiled by Bloomberg. They already had lowered their projections from earlier in the year. The average for the quarter was $1.70 a share before FedEx’s outlook statement in June.
…
In other news, time off and wage increases for US workers remained flat, keeping US workers at the bottom of 1st world industrialized countries in workers benefits.
Productivity gains accrue to the Producers, not the worker bees, silly rabbit! Now get back to work and spin that hamster wheel faster you peasant
It is strange that no one looks at the Fed Ex model…..it is dying. There is no need for express documents anymore! Scanned signatures are just as good. If you need wet ones, regular mail will suffice.
Sure there is shipping of merchandise, but if the reason you buy it on the internet is the price, why ruin the advantage with next day air?
When you need a critical boat part, next day delivery is priceless.
You’ve got it. Nobody stocks parts locally anymore (they wouldn’t stock any parts, if they thought they could get away with it). They are in some giant hub warehouse close to a major hub airport.
The only thing I can buy locally is generic hardware, and chemicals/greases. Everthing else comes out of Wichita, Delaware, DFW, or Florida.
Heck, these days the local car dealer doesn’t stock more than a few basic parts.
I’m amazed at how much stuff we overnight here at my job. On occasion we pay more for shipping a used item than you could send someone to the store to buy it brand new for.
All of my housing loan doc’s were sent by Fax to San Diego and to Texas. No FedEx involved. USPS is cheaper for packages and is becoming the biggest handler of on-line shipping.
It’s tough to beat media mail rates.
The last time I used Fedex was to rent a camera lens. Good thing I did, because it sure came in handy at a couple of concerts last month.
I don’t know about Fed-Ex, but the UPS truck swings through the nabe pretty much every day.
when is 5hr energy going to come out with an IPO and swindle some investors?
Are there any investors left to be swindled?
There are piles of OPM looking for a return and there are thousands of money managers looking for some OPM to manage, so - yeah - I’d say there are lots of investors left to be swindled, but maybe not directly.
Makes ya wanna puke, don’t it?
Anyone here remember the good old days when investment advisors like T. Rowe Price used to urge ordinary people to take a look at what products and services they use that they like and put their money in the companies behind them?
The logic being, if the product or service is good, chances are the company is a good investment.
take a look at what products and services they use that they like and put their money in the c
Peter Lynch
piles of OPM
I disagree. There are no “piles” of OPM. There are tiny grains of OPM which money managers want to leverage into piles of temporary debt looking for a split-second return to be banked as juicy fees.
It’s too bad that Occupy Wall Street didn’t make that ONE single demand to apply a tax to stock transactions under 10 seconds (or whatever the time was). But no, they had to go all Woodstockian on themselves.
Seems like the only ones left are hedge funds running HFT schemes all day skimming 401ks. Volumes on the exchanges are pathetic as retail investors still have their tail between their legs from the cleansing of 2008.
Hey, Dude! Where are you in AZ? I’m in good ole Tucson.
I’m stuck in the golden state right now.
Seems like the only ones left are hedge funds running HFT schemes all day skimming 401ks. Volumes on the exchanges are pathetic as retail investors still have their tail between their legs from the cleansing of 2008.
I believe those two sentences may also be connected. The retail investors may not be able to exactly identify the smell of the HFT schemes, but I think they notice something doesn’t smell right.
Right after I sell my Facebook, GM and Groupon IPO stocks for a profit…
when is 5hr energy going to come out with an IPO and swindle some investors?
Funny…..
I love my 5 hour drink it puts me to sleep real fast…..
Getting sleepy on a stimulant that would wake most people up is usually a sign of ADHD.
I guess the demise of Lehman left behind a lingering chilling effect on global commercial real estate lending.
Bloomberg News
Bank Property Lending Retreat a Lehman Legacy: Mortgages
By Nadja Brandt, Nichola Saminather and Neil Callanan on August 31, 2012
For J.H. Snyder Co. to start building a $197 million Los Angeles apartment complex in June, the developer cobbled together funds from two city agencies, a mezzanine lender and a pension fund to help fill a 63 percent funding gap left by JPMorgan Chase & Co. (JPM)’s construction loan.
“The structuring of this deal has been one of the most complex I’ve seen,” Thomas Dujovne, chief investment officer at Los Angeles-based J.H. Snyder, and a 17-year veteran of the industry, said in a telephone interview.
Snyder’s 397,000-square-foot (37,000 square meters) residential and retail project is typical of a broken funding market globally for commercial real estate construction. Banks are cutting lending from Sydney to London to Los Angeles as they cope with the after-effects of the 2008 financial crisis that’s left them with debt arranged before property markets crashed, and as they navigate Europe’s fiscal issues.
That’s restraining construction and forcing developers to fill the funding gap by turning to real estate investment trusts such as Starwood Property Trust Inc. (STWD), sovereign wealth funds and public pension funds, even if it means greater risk, higher costs and additional time to arrange financing.
The amount of new lending for European commercial real estate fell by about 77 percent from 2007 through 2011, according to estimates from Michael Haddock, research director for CBRE (CBG) Group Inc. That’s partly because banks are only willing to lend on more conservative loan-to-value ratios and also because some investors have bought properties using little or no debt, Haddock said in a telephone interview.
The withdrawal of banks from commercial-property lending in Australia is the “most significant change” since the collapse of Lehman Brothers Holdings Inc. in 2008 froze credit markets, the Reserve Bank of Australia said in May. Australian banks have cut outstanding loans for commercial real estate by 15 percent since the peak in 2009, the central bank said.
Outstanding housing and land development lending in China by major financial institutions slowed on an annual basis for three consecutive years starting in 2009, according to the People’s Bank of China.
As bank credit has tightened, real estate trusts, which attract money from wealthy Chinese to property projects by offering higher returns, more than doubled from the level on March 31, 2010, to 605.2 billion yuan ($95.3 billion) as of June 30, 2011, and further climbed to 675.1 billion yuan as of June 30, 2012, according to Ping An Trust & Investment Co.
In the U.S., the world’s largest economy, construction and development loans on the books of the 7,307 banks backed by the Federal Deposit Insurance Corp. totaled $228.3 billion in the first quarter, a 23 percent decrease from the year earlier.
“Construction funding today is market specific, sponsor specific and project-type specific,” Bruce Beal Jr., executive vice president of New York-based Related Cos., said in a telephone interview. “When capital was easily available, banks were eager to lend. Today, money to fill that funding gap is coming from a variety of places.”
…
Is Lehman going to unwind the remainder of its real estate holdings during this dead cat bounce, or ride them all the way down?
I guess time will tell. However, the article posted below almost makes it sound as though the ghost of Lehman is doubling down on the dead cat bounce. Good luck with that plan!
Lehman Lives to Pay 18 Cents on Dollar With New Sales: Mortgages
By Oshrat Carmiel - Aug 14, 2012 1:05 PM PT
Property and artwork from the Lehman Brothers collection during the auction at Christie’s International in London.
Rupert Hartley/Bloomberg
Hawaiian-condo investors, homebuyers in Montana and travelers seeking a room at Miami Beach’s upscale Setai Hotel all can turn to one company to meet their needs: Lehman Brothers Holdings Inc.
Four years after filing the largest bankruptcy in U.S. history amid soured real estate bets, Lehman is still in the property business, wagering it can recover about $12.9 billion from mortgages and assets around the globe. Its $3 billion purchase this year of the remaining 53 percent of apartment owner Archstone Inc. made it the biggest buyer of U.S. commercial property by value in the last 12 months, according to research firm Real Capital Analytics Inc.
Lehman has invested $5 billion in real estate since its demise, acquiring loans and buying out joint venture partners. Instead of selling to vulture investors, it’s waiting for opportune times to unload properties as the commercial and residential markets recover. The company last week moved to take Archstone public to capitalize on soaring demand for rentals.
“The entire strategy was ‘don’t put yourself in a position of having to sell,’” said Jeffrey Fitts, Lehman’s New York- based head of real estate and a managing director at Alvarez & Marsal, the advisory firm managing the liquidation. “If you’re selling with a gun to your head and people know it, you’re dead and you will leave hundreds of millions of dollars on the table.”
Lehman aims to raise $53 billion through 2016, to pay creditors an average of 18 cents on the dollar on about $300 billion of claims. The company made its first payment of $22.5 billion in April, about 53 percent more than it previously estimated was possible, after exiting court protection.
Higher Recoveries
It intends to retain some assets at least through 2015, according to a statement last month, in which the firm boosted its forecast for real estate recoveries by $1.6 billion compared with its outlook a year ago.
The bank filed for bankruptcy in September 2008, 158 years after its founding as a cotton brokerage in Alabama, and five months after David Einhorn, president of New York-based Greenlight Capital Inc., said he was betting against Lehman’s stock because he believed it overvalued some real estate assets.
Lehman failed because of too much debt and risky real estate investments, according to a bankruptcy examiner’s report. Chief Executive Officer Richard Fuld reported record earnings in 2005, 2006 and 2007 after riding the property boom. He bought originators such as Irvine, California-based BNC Mortgage, to obtain subprime home loans to package into bonds, turning the company into the largest U.S. underwriter of mortgage-backed securities.
Archstone Faltered
Even as housing prices began to fall in 2006, the bank continued making loans, including for commercial properties. In October 2007, it financed and invested in the $22 billion takeover of Archstone with Tishman Speyer Properties LP, eventually converting the loans to equity after Archstone faltered during the credit crisis.
Lehman listed total real estate assets of $23 billion the day before its Sept. 15, 2008, bankruptcy. They had a market value of about $14 billion nine months later, according to court papers.
As of March 31, the firm reported commercial real estate holdings of $9.6 billion, including more than $2 billion of commercial mortgages and mezzanine loans. The tally doesn’t include the final 26.5 percent stake in Archstone that Lehman acquired in the second quarter from Bank of America Corp. and Barclays Plc.
Justify Reinvestment
“If I were a creditor and I were not real estate savvy, I would almost look at Lehman as my real estate department,” said Lawrence Longua, director of the REIT Center at New York University’s Schack Institute of Real Estate. “They’re taking an asset and maximizing it. That should be beneficial to me as a creditor.”
Lehman’s efforts rely on values continuing to climb, to justify re-investing money that could have otherwise gone to investors, he said.
“You’re in an industry that’s cyclical so it can turn around and bite you,” Longua said. “There’s a risk to it, no doubt about it.”
…
…”But who cares?” He continued. “I got mine.”
If you want to see a real a$$hole check out his last congressional testimonies on C-SPAN:
http://en.wikipedia.org/wiki/Richard_S._Fuld,_Jr.
Baltic index down on weak panamax rates
Fri Aug 31, 2012 11:09am EDT
Aug 31 (Reuters) - The Baltic Exchange’s main sea freight
index, which tracks rates for ships carrying dry
commodities, fell on Friday as weakness in the panamax segment
outweighed a small rise in capesize rates.
The overall index, which reflects daily freight market
prices for capesize, panamax, supramax and handysize dry bulk
transport vessels, fell 0.57 percent to 703 points. The index
has fallen about 2 percent this week.
The panamax index fell 3.03 percent to 735 points,
with average daily earnings for panamaxes, which typically
transport 60,000-70,000 tonne cargoes of coal or grains, down
$184 at $5,840.
“Slow and difficult trading conditions prevail (for
panamaxes) with little improvement in the volume of
trans-Atlantic cargoes. Conditions are being exacerbated by the
steady stream of tonnage ballasting into the U.S. Gulf,” Braemar
Seascope said in its research note.
“Mineral prices continue to fall, eating away at profit
margins for mining companies and encouraging buyers to test the
resolve of counterparties regarding their contract obligations.”
The capesize index was up 0.26 percent at 1,172
points.
Average daily earnings for capesizes, which usually
transport 150,000 tonne cargoes such as iron ore and coal, were
up $58 at $3,308.
Iron ore was set to hit nearly three-year lows on Friday,
with monthly performance in August its worst in 10 months, as
Chinese steel producers shun fresh cargoes in the face of waning
demand.
Iron ore shipments account for around a third of seaborne
volumes on the larger capesizes, and brokers said price
developments remained a key factor for dry freight.
Average daily earnings for handysize ships were down $52 at
$6,672, while that of supramax ships were down $22 at $8,960.
bullish?
The BDI must be bouncing along a long-term bottom. I have no idea how one might make money off such knowledge; investing in the global shipping industry is out of my realm. I’m just interested in the BDI as a general indicator of the state of the global economy.
“investing in the global shipping industry…”
Investing in something that is already in gross oversupply is tricky.
That’s exactly why I often question the wisdom of the many real estate investors who have recently resurfaced on the HBB.
And with 25-30 MILLION excess empty houses, you gotta laugh at their impending personal financial train derailments. lmao.
Sept. 5, 2012, 4:08 a.m. EDT
Euro-zone August composite PMI falls to 46.3
By William L. Watts
FRANKFURT (MarketWatch) — The downturn in private-sector activity in the 17-nation euro zone deepened in August, the Markit euro-zone composite purchasing-managers’ index, or PMI, for the region indicated Wednesday. The PMI fell to 46.3 from 46.5 in July and was down from a preliminary reading of 46.6. The index for the services sector fell to 47.2 from 47.9 in July and was down from a preliminary figure of 47.5. A reading of less than 50 signals a contraction in activity. “The final August PMI came in only slightly below its earlier flash estimate, leaving the euro-zone economy on course to fall back into technical recession in the third quarter,” said Rob Dobson, senior economist at Markit. “Sharp declines in new orders at manufacturers and service providers, plus further job losses, mean that there is little prospect of a sustained improvement in economic conditions over the near-term,” he said.
With all of the disagreement (I think that’s being generous) over whether AZ/CA markets have bottomed (for the record I tend to agree more with RAL’s take), can we at least agree that areas like NYC Metro (NY/NJ/CT) [heck the entire northeast] are ripe for further collapse?
Count me as someone who doesn’t believe that AZ’s market has bottomed.
Why? Because our state’s job and income growth indicators have been anemic at best. Not to mention household formation. It isn’t breaking records these days. These three things tend to drive house price increases.
Furthermore, our recent house price increases have been driven by lack of inventory. What you hear about foreclosures being kept off the market is very true here. Our shadow inventory is substantial.
Combine this lack of inventory with investors buying house to rent out, and you have a short-term house price jump. However, there are already quite a few rental houses standing empty. I’m seeing plenty of them around the University of Arizona campus, and we’re now in the third week of the fall semester.
Weren’t they basically giving away homes in the phx area for awhile? some of these homes were cheaper than a car. How far do they have to drop before they are a bargain? 60-70k for a home doesn’t seem that unreasonable to me especially at these interest rates.
My dad sold our house in Buffalo for $6K in 1960. It was for sale again a few years ago for $5K. For some places, recovery means a return to trees and grass.
There are no trees or grass in PHX. Recovery for them might mean a return to barren wasteland.
I get the image, but I believe there were indeed trees around there not so long ago.
“I’m seeing plenty of them around th University of Arizona campus, and we’re now in the third week of the fall semester.”
Oooops. Time to re-visit that nifty spreadsheet, the one that had the profit line forever extending upward.
Right on, Combotechie.
And the real head-slapper is the NEW student housing that’s opening — and going up. All of it is of the lugg-zhury type.
I think these new upscale complexes are sucking tenants away from some of the existing SFRs and apartment complexes around campus. But I have no proof. However, it seems to me that it isn’t alleviating any sort of housing shortage. It’s just moving the tenants around.
They will do like we’re doing here, import people with housing vouchers.
Stop harshing on Darrell’s mellow!
But wait…I forgot it is different in his corner of the condo market.
Carry on.
Considering prices are falling irrespective of location, there isn’t any agreement/disagreement. That truth stands on its’ own.
Hey, Florryduh’s having a real estate renaissance! Boo-YAH!
So says all the realtors, and you know what that means…
Realtors. Are. What? What? Anyone?
Hard working upstanding people just trying to earn a decent living?
The minute the wall street bailouts and the Fed’s QE stops -it tanks.
NYC Metro (NY/NJ/CT) [heck the entire northeast] are ripe for further collapse?
What makes you think they are going to stop?
Exactly: Everything that cannot go on forever nonetheless is highly likely to continue nearly forever…
Why can bank bailouts and QE not continue forever?
You assume the conclusion that they can not continue forever, then use that assumed conclusion to prove the conclusion.
If it is peer reviewed, then it is true.
“Why can bank bailouts and QE not continue forever?”
They can, and I am sure they will in your corner of Phoenix.
To be fair, I don’t think I’ve ever said that I think AZ real estate prices have bottomed.
What I have said is that at the current price, it is a good deal for me to buy.
I’m not buying as an investment. I’m not speculating in that I’m not expecting to make money.
I’m buying, knowing it is an expense, because the expense is less than renting a place for my kid.
It is a gamble that my children are going to struggle in this economy, and that I’m going to have to help them get on their feet, and buying a place for them to live in makes more financial sense then paying them to rent a place from someone else.
In order to set them free, you must imprison them.
How is living in Dad’s condo paying little or no rent a prison? He didn’t make the kids co-sign the mortgage.
How is living in Dad’s condo paying little or no rent a prison?
Maybe dad won’t pay for their cable.
Maybe you are right Polly, maybe he won’t charge his son rent. Maybe he will. In any case the “help” obliges an obedient son to live there, watching reruns of Escape from NY. If he doesn’t, his dad realizes an immediate financial loss, or becomes an accidental landlord. The rants would be relentless….maybe.
None of my children are under any obligation to live in the townhouse. Two are eager to live there now, but if there comes a time that no one wants to live there, no problem.
At a monthly expense, (YES, expense not investment) of about $300 ($100 interest, $120 HOA, $45 insurance, $45 tax), I have no qualms with it sitting empty.
I have 5 children, 2 married with children of their own, 2 more in college, and a high schooler. My dad is in his 70s and healthy as an Ox. Both of his parents lived into their 90s, with his mother 93 and still active, healthy and living on her own.
My in-laws are way upside-down on their 2800 sqft Sun Lakes retirement community on a golf course Baby Boomer special, and who knows, could end up needing a place eventually. SIL and her husband have had work and job issues, and may need an emergency place.
Cousins, 69 y/o aunt that is still working as a school bus driver to make ends meet…
I think that if I sent out an email to all relatives asking if anyone wants to live in a Phoenix townhouse for the cost of the HOA and utilities, I suspect someone would take me up on it.
You are fortunate to have such a healthy family. The beneficiaries of your debt are many.
and buying a place for them to live in makes more financial sense then paying them to rent a place from someone else.
You’re crazy. You should rent them a place from someone else. Why? Because it will cost you more money and that is good because it will show your kids that you love them more because you are spending more money.
(And you’ll save money not buying neon paint that landlords don’t allow)
Anywhere that has a judicial foreclosure process is at risk, IMHO. If the courts were to ever accelerate dealing with the issues in Florida, the market would collapse there. Similar story in NJ, NY, etc.
And since we don’t have judicial foreclosure in AZ, we’ve had a massive supply of distressed houses already hit the market.
Thanks to RAL for posting the link to the Phoenix housing report that shows pending foreclosures are down from 42K 2 years ago to only 13.5K now.
We already had our crash!
Really Darryl The Liar?
With sales volume cratering 22% in a single month?
Debunking your lies is like fishing in a barrel.
Mind you, peak foreclosures is one of the roadsigns we are watching for that indicates the next big leg down is dead ahead.
I think what Darrell is saying is that peak foreclosure sales happened a couple of years ago in AZ. To have lots of foreclosure sales causing that next leg down, you need to have a lot of foreclosures in process.
In judicial states, about 6.5% of all loans are in the foreclosure process.
In non-judicial states, about 2.4% of all loans are in the foreclosure process.
If there is to be a spike in foreclosure sales, and thus a leg down, it is more likely to happen in judicial states than non-judicial states. I’ll ask the question again, what is going to cause judicial states to speed up their processing of foreclosures?
I fear that the only answer is “courageous state lawmakers”–where can we find some?
Hey Pimp,
We know what Darryl The Liar is saying. Your lies and misrepresentations are no different than his.
DNC: “Government is the only thing we all belong to.”
Hear it for yourself. I wonder if George Orwell would be proud of his prediction?
http://www.youtube.com/watch?v=6gLa9Te8Blw
FYI - the government belongs to us. But that is a radical evil right wing position.
I also found it interesting that the Dems kicked off DNC2012 with a tribute to the only politician with a confirmed kill in the war on women.
confirmed kill
I’d rather go hunting with Dick Cheney than driving with Ted Kennedy LOL!
At least Dick Cheney only shoots lawyers!
Cheney displayed what real power is. A wealthy, connected, power-broker lawyer gets shot in the face, and HE apologizes to Cheney for being in the way.
That’s power
“…the government belongs to us.”
Meaning the real Ownership Society — the top 0.01%, right?
Enough with the politics of envy already…
Every Lucky Ducky could become 0.1% someday!
Bootstraps, Horatio Alger, rugged individualist, American exceptionalist, et cetera
A lucky ducky could reach the top .1%. However, not more than a few handfuls can. Widening wealth disparity means that while a few have lots, lots and lots more have little.
It is like Lotto. It is possible for a few people to win hundreds of millions. It is impossible for everyone to win.
And what the Republicans sell is the availability of the 0.01% lotto for all Americans to play; never mind the near-impossible odds of making it home if you weren’t born on third base.
the Dems kicked off DNC2012
Repub Covention bounce: So far, a fart in the wind.
My prediction after last night:
Democratic Convention bounce: 2-3% (which is huge in this election)
Dems are talking a lot of policy, policy successes (really) and emotion while the Repubs talked about…….I forgot. What did they say they’d do? Oh yea. Obama is evil.
Why should they talk policy. Most everyone I hear talking about the election either wants not-Republican or not-Obama. Are there actually issues that we should be concerned about?
issues that we should be concerned about
Such as “legitimate rape”, from which it is impossible to become pregnant? And which is reportedly quite rare, since with all those other rapes she was actually asking for it considering how she was dressed.
Of whom do you speak? If there is some sensational news story I have missed it.
A week or two ago some GOP candidate said something along those lines.
If there is some sensational news story I have missed it.
Repub’s attitude on women and Religion meets Repub Biology. What’s not to like?
Rep. Todd Akin: The Statement and the Reaction
The sequence of events after Representative Todd Akin, Republican of Missouri, commented to a St. Louis television station on pregnancy as a result of rape.
Sunday
11:24 A.M. KTVI-TV posts to its Web site an interview with Mr. Akin in which he is asked whether he believes abortion is justified in cases of rape and replies that rape does not result in pregnancy. Twitter soon erupts with outrage and links to the interview.
“It seems to be, first of all, from what I understand from doctors, it’s really rare. If it’s a legitimate rape, the female body has ways to try to shut the whole thing down.”
4:28 P.M. Senator Claire McCaskill, the Democrat whose Senate seat Mr. Akin is seeking, releases a statement denouncing his comments.
“As a former prosecutor, Claire McCaskill has worked closely with hundreds of rape victims and intimately understands their trauma and pain. It is that experience that makes Akin’s statements so outrageous.”
4:59 P.M. Mr. Akin releases a statement saying that he misspoke in the interview.
“I believe deeply in the protection of all life, and I do not believe that harming another innocent victim is the right course of action. I also recognize that there are those who, like my opponent, support abortion, and I understand I may not have their support in this election.”
Seems to me that the guy loves the child, not that he hates women.
Would Martin Luther King even be allowed to be a Democrat these days?
“Seems to me that the guy loves the child, not that he hates women.”
Sorry it offends some of us that a woman getting raped and subsequently pregnant is considered not legitimately raped. And using false science (rape can’t cause pregnancy? really?) to push an agenda is sickening to us.
I don’t believe for an instant this guy gives a damn about children born or unborn. He just wants a cheap labor force best produced by keeping lower socio-economic woman from controlling their reproduction.
No rich Republican or their daughters will ever be denied access to abortion. This is class warfare at its worst.
“false science”
It is interesting the silly things that people will hear and accept without question when they are in their own trusted group.
Personally, I never had a problem with any anti-abortion laws. My stumbling block was the ban on dispatching unruly teenagers.
That bit about socioeconomic women, that’s pretty interesting too!
“Would Martin Luther King even be allowed to be a Democrat these days?”
The neocons would have the puppet strings of obedience connected to every moving part of his body. Nut’n [sic] would come out of his mouth that wasn’t scripted. He might even help Obama select drone targets were he around today; yeah, two laureates living the dream.
“Most everyone I hear talking about the election either wants not-Republican or not-Obama. Are there actually issues that we should be concerned about?”
I want neither. I’m finding a lot of people want neither. I think this is an issue in itself.
Actually I thought their message was that Obama did everything wrong the past four years.
Some well-put-together facts about the economic destruction caused by the policies of President Barack Obama.
But he just needs more time…
————————-
Obama’s Accelerating Downward Spiral For America
Forbes | September 2, 2012 | Peter Ferraral
New income data from the Census Bureau reveal what a great job Barack Obama has done for the middle class as President. During his entire tenure in the oval office, median household income has declined by 7.3%.
In January, 2009, the month he entered office, median household income was $54,983. By June, 2012, it had spiraled down to $50,964. That’s a loss of $4,019 per family, the equivalent of losing a little less than one month’s income a year, every year. And on our current course that is only going to get worse not better.
Obama never tires of telling us that the economy was in one of the worst recessions since the Great Depression when he entered office, as if he was the only President to have suffered a recession early in his term. But nobody expected that he would use the vast powers of the most powerful office in the world to make it worse. But that is what he has done.
Even if you start from when the recession ended in June, 2009, the decline since then has been greater than it was during the recession. Three years into the Obama recovery, median family income had declined nearly 5% by June, 2012 as compared to June, 2009. That is nearly twice the decline of 2.6% that occurred during the recession from December, 2007 until June, 2009. As the Wall Street Journal summarized in its August 25-26 weekend edition, “For household income, in other words, the Obama recovery has been worse than the Bush recession.”
The Journal elaborated, “The President portrays the financial decline of American families on his watch as part of a decades-long trend. He’s wrong. Real income for middle income households rose by roughly 30% from 1983 to 2005, according to the Congressional Budget Office.
The problem is that Obama has only greatly accelerated everything Bush did wrong, and reversed everything Bush did right. So Obama’s spending has skyrocketed the federal budget by nearly one-fourth as a percent of GDP in just one term. Moreover, the Obama Fed has abandoned any semblance of control over monetary policy, buying most of the soaring federal debt issued to finance Obama’s record smashing federal deficits with newly printed money (actually created by computer record, a sort of cyberprinting). Of course, the whole point of Obama’s tax policy has been to more than reverse the Bush tax rate cuts, which is now already slated under current law to go into effect on January 1.
That is why it will all only get worse in a second Obama term, as the economy slides back into a double-dip recession in 2013 unless these Obama policies are swiftly reversed. I first began ringing alarm bells about that a year ago with the publication of my Encounter Books Broadside No. 25, Obama and the Crash of 2013. But now even the Washington establishment CBO is pealing the air raid siren as well.
*Look at the bright side. Under Obama public sector employment has shed almost 1 million jobs and no one is expecting them to come back under Obama 2.0.
“During his entire tenure in the oval office, median household income has declined by 7.3%.”
It’s taking a predictably long time to undo the destructive effects of Bush’s Great Recession, which was really a depression. No surprises here.
Next.
So, it really was hopeless and it really is changeless? Obama has accomplished something significant. He killed public health care in the US. Even if he gets a second term, that will be his lasting legacy.
Killed public health care? For who?
For all of us. Ded as a dorenail.
I personally know 3 people whose lives it saved. Not only saved, but kept them out of bankruptcy as well.
For all of us? Not hardly. Not even close.
Do you know it also strengthened the pursuit and prosecution of Medicare and medicaid fraud? Who does that hurt?
Did you know that several million received rebate check from their insurance companies to compensate for overcharges?
http://abcnews.go.com/blogs/politics/2012/07/health-insurance-rebates-is-your-check-in-the-mail/
For ALL of us?
Turkey, “it” may have helped some, but “it” is not public healthcare.
Single payer would have been the best solution. But it wasn’t killed by Obama, but by the Republicans.
What WAS created has still helped more people than the system that was in place. Much as credit card reform didn’t really create strong consumer rights, just stopped the egregious abuses.
You have to start somewhere.
Single payer would have been the best solution. But it wasn’t killed by Obama, but by the Republicans.
My recollection is that Obama didn’t even try to get it past the Rs.
He couldn’t. It was killed dead in committee. Never even made it to the floor.
I thought that was for later issues related to the bill, but that he gave up on single payer before ever even seriously asking for it? I remember the left being upset at the time that he gave it away so fast it was like he never even really wanted it.
He killed public health care
He didn’t kill Medicare or Medicade and he’s opened the door to a public option.
My point is that he closed the door to the public option, by omitting it in his signature legislation. I could be wrong, but I don’t think so.
Nor just Bush, but 30 thirty years of Republican treason.
Treason is a little harsh. Maybe it was just larceny.
Millions of jobs offshored to a communist country is not just larceny.
http://thinkprogress.org/economy/2012/09/04/793041/charts-yes-were-better-off-than-we-were-four-years-ago/?mobile=nc
Please note cited sources for each chart.
Any questions? Spin? Backpedaling?
Yes, we have made great progress. Supposedly 2 million jobs added since 2008, which if that’s real I’d wonder about the wage part of the statistic.
These two million jobs were created by several million dollars deficit spending, per job! Never mind creating a job for me, just give me the several million dollars!
1. The charts are confusing by ignoring the years 2009, 2010 and 2011. Almost like a fat man who gains 50 lbs a year and then the last year loses 10 lbs. But only report the 10lbs lost to show he is making “progress”
2. If ANYONE believed this - why isn’t obama and dems screaming these stats from the rooftop at the DNC? Because NO ONE believes it and he would be laughed off the stage.
4. $5 trillion in debt in 4 years - and that is all we have to show for it?
“$5 trillion in debt in 4 years ”
How much debt is going to be added in Romney’s 4 years?
I figure Romney can just blame obama for EVERYTHING and spend away…
You’re finally learning how the system works
http://corvaircenter.com/phorum/file.php?1,file=76208,filename=Jedi.jpg
Direct link not allowed.
See below
‘Any questions? Spin? Backpedaling?’
Years ago, the electorate was never told that the president managed the economy. Somehow, this idea that the president is like the Wizard of Oz, sitting behind a curtain, pulling levers and pushing buttons, took hold and this person gets credit/blame for everything that happens on his ‘watch.’
So and so ‘created’ this many jobs! It’s just BS. Under this scenario, none of us have to get out of bed in the morning; we can just elect the perfect Wiz and prosperity will be deposited in our bank account, electronically!
What a government can do is make things worse. On that, it’s my opinion things have been made worse. What exactly has changed since the stock bubble? When people flipped never-to-be-built ‘condos’ several times? I don’t see anything having changed much. Instead, we’ve got the continuing delusion that zero interest rates and subprime lending are the cure to all our ills. We are farther away than ever from a sustainable economy.
One might foolishly think issues like globalism would at least find a way into the public debate at a time like this. After all, how did we get here? How and why did we turn in to a country of get rich quick bubbles? Do we not even remember when we were the worlds biggest creditor? It wasn’t that long ago.
“After all, how did we get here?”
We don’t ask that question because we don’t want to hear the answer. Most people participated in the mania in some way and do not want to admit their folly. Then we would have to make some painful changes. We’d rather wait for pain to find us than bring it on ourselves. So we elect enablers and corrupt lackeys who only discuss what is acceptable.
It occured to me lately, playing with my grandson, that the last generation who grew up within the bounds of physical reality is passing away in a sense. Real sand in the sandbox and all of that. Having to pay cash for things. Books vs internet. Cooking. When everything is instant, reality might have a harder time reaching us.
Add dollar to the list of “virtual” things that have replaced real tangible things in the lifetime of the currently dieing off generation.
Once upon a time, the dollar was a unit of gold or silver, and we knew these “notes” that were printed by banks were actually just other people’s debt. If the bank didn’t get paid back its loans, then the back would fail and the value of the notes the bank issued would poof away. Now we have FDIC and Feral Reserve that lets us virtually ignore, and forget, what these notes are.
bounds of physical reality
First World problem. Applies mostly to North Amerikans, Western Europeans, and some Asians. For the other 5+ billion Lucky Duckies, physical reality is rather real.
Intelligent government policies can lift all boats.
Stupid government, and/or government bought and paid for by oligarchs, gets us to where we are now.
I’m of the opinion that we haven’t had a decent president since Eisenhower…..maybe Kennedy (Ford doesn’t count).
“One might foolishly think issues like globalism would at least find a way into the public debate at a time like this.”
This is exactly why I think things have gotten worse.
In the last 4 years, we’ve added $5.6T to total debt. (Household down $900B, Business up $800B, State and Local Gov up $100B, Federal gov up $5.6T).
What do we have to show for that $5.6T? We’ve funded 4 more years of $600B a year international trade imbalances and we’ve funded 4 more years of $1T a year corporate profits, 70% of which go to people that already have more money than they spend.
Four year later, we still have a Democratic party trying to do more of the same that got us here. We still have Gitmo, torture prisons, kill lists, PATRIOT ACT. We still have a democratic party that is frimly in the pockets of Wall Street.
On the Republican party, we have a radicalized wing that honestly believes that we can balance the budget without cutting SS and MC to those already over 55, and without cutting DoD, law and justice, war on drugs, homeland security, or any of the other stuff that makes up 80%+ of the budget.
Worse, the Republican party is convinced that if we DID cut spending, it would actually cause economic growth. LOL.
We’re worse off because we’re 4 years later, 4 more years of unsustainable debt growth, and no closer to admitting or addressing the underlying root cause of our economic troubles.
Heck, we’re so far from reality that most do not even have a clue what the dollar is, how they are created, or what gives them value.
In the last 4 years, we’ve added $5.6T to total debt.
Because we live in a “global economy” now so we have to “compete”!
What a government can do is make things worse.”
that is correct
How and why did we turn in to a country of get rich quick bubbles?”
we got too rich and forgot how to reward work. instead rewarding capital and parlor tricks.
I think it will change back but first we need a real catalyst the housing bubble bust didn’t appear to be that catalyst.
so something worse will happen
When FDR came into office he could only do so much also .
World War 11 brought on the jobs and the winning of the War brought on a new set of circumstances that than brought on the expansion era of the late 40’s 50.’s and 60’s.
In my view FDR was the right guy for the job at the time and the social safety nets he set up in my belief were not a bad thing . Had they not set up FDIC insurance most likely people would of never put money in a bank again .Many of the regulations that were set up in the 30’s
were good for keeping greedy Wall Street/Banks in its place ,especially The Glass Stegall Act.
The Government provided food for the bread lines and now they are providing Food Stamps .The development of the insurance program of umemployment insurance was a good thing .
I really don’t think that health insurance was a issue during the Great Depression because in 1929 they were just starting to get into the concept of health insurance with some industries . This was a pre-antibiotic period and pre-vaccine period also .
THe health community and hospitals chipped in during the depression and many people went without health care during those times .Now we have Health care raising the price during a recession as a testimony to the price fixing monopolies .
we got too rich and forgot how to reward work
I suspect we didn’t “forget” anything. We chose…
Who is this we, Kimosabe?
“Somehow, this idea that the president is like the Wizard of Oz, sitting behind a curtain, pulling levers and pushing buttons, took hold and this person gets credit/blame for everything that happens on his ‘watch.’”
Here I had thought all along that the Fed Chair was the Wizard of Oz character.
Make things worse? How’d that deregulation of Wall St work out?
“How and why did we turn in to a country of get rich quick bubbles?”
We always were. The FIRE sector regulations enacted during FDR were the only things keeping us more or less on and even keel.
It was only 5 years from deregulation of the Savings and Loan industry to the disaster. 7 years from the Commodities Modernization Act and Grahm/Leech/Blilely to the collapse of Wall St.
It’s was only that “thin veneer of civilization” that kept these disasters at bay and it will be an effort of much pain sorrow before it restored.
“Any questions? Spin? Backpedaling?”
Keep pulling the lever for your masters.
Any word on how R&R versus Obama might handle the future of the GSEs differently?
For instance, do the Republican candidates favor continued operation of these zombie vestiges of FDR’s presidency forever, or would they finally unwind them and let the private mortgage market heal after years of competing on an unequal footing with a too-big-to-fail, government-sponsored duopoly?
BUSINESS
September 3, 2012, 8:10 p.m. ET
Assessing Fannie’s Past and Future
By JAMES R. HAGERTY
Adapted from “The Fateful History of Fannie Mae,” to be published by History Press on Sept. 4.
The man with the keys to the White House on Nov. 7 will face a major piece of unfinished business from the financial crisis: What to do with Fannie Mae and Freddie Mac, the two government-backed providers of money for home mortgages?
The History of Fannie Mae
Fannie Mae was created in the 1930s as a minor detail of Franklin Roosevelt’s New Deal. It was an improvised response to a shortage of private funding for home loans. Then the provisional became permanent.
Four years ago almost to the day, the Bush administration seized control of the two companies amid staggering losses on millions of mortgages they owned or guaranteed. So far, the Treasury has pumped about $142 billion into Fannie and Freddie to prop them up.
Despite their financial woes, they remain the nation’s biggest suppliers of funding for home loans. With the help of Uncle Sam’s credit rating, they borrow money in the bond market and use it to buy mortgages from lenders or guarantee mortgage-backed securities against the risks of default. That effectively subsidizes consumer borrowing costs.
There already is a consensus among Democrats and Republicans that Fannie and Freddie represent a failed experiment in state-sponsored mortgage lending. The Obama administration is forcing them gradually to reduce their mortgage holdings. The Republican platform calls for “scaling back the federal role in the housing market and avoiding taxpayer bailouts.”
Deciding what sort of housing-finance system should replace the one now dominated by Fannie and Freddie is an arduous task. The basic question: Should the U.S. return to a free market in home loans?
The history of Fannie and Freddie suggests that Congress will find it difficult to do that.
…
As far as I’ve heard, no comment from R&R.
Wouldn’t matter if they’d made a policy statement since we’re going to get an etch-a-sketch wipe clean after the election anyway.
Seems like they are hoping their propaganda campaign will be enough to get elected, after which they will do whatever they want, unencumbered by the need to follow through on any campaign promises. Is that pretty much the plan?
The first thing just might be to HAVE A BUDGET….
A thing the government hasn’t had for 4 years.
And THAT is not Bush’s fault….
Say what?
http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=BUDGET&browsePath=Fiscal+Year+2011&isCollapsed=false&leafLevelBrowse=false&isDocumentResults=true&ycord=0
Well - it HAS to be better than this…
————————————————-
U.S. promises unlimited financial assistance to Fannie Mae, Freddie Mac
By Zachary A. Goldfarb
Washington Post Staff Writer
Friday, December 25, 2009
The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.
So you are saying that Romney has promised to not provide unlimited support to the GSE’s? That would be huge news since the GSE’s bonds continue to trade at rates similar to treasuries.
Heck, the government debt bond fund where I’ve parked my 401(k) funds waiting for the next stock market correction is PACKED with GSE bonds.
Indeed, let’s not kid ourselves, no matter who wins this fall, little will change in the housing market and how the gov’t manipulates it.
http://corvaircenter.com/phorum/file.php?1,file=76208,filename=Jedi.jpg
Oops! That link won’t work.
Try this for a lighthearted chuckle:
http://corvaircenter.com/phorum/read.php?1,541194,541241
“Indeed, let’s not kid ourselves, no matter who wins this fall, little will change in the housing market and how the gov’t manipulates it.”
Exactly. The Republicans had a chance to take a stand and change things, but instead opted to focus their campaign on trashing Obama’s presidency. I guess we will know in a couple of months how their armchair quarterbacking strategy panned out for them.
Pretty funny Colorado.
Jar Jar they are.
What’s interesting about this election cycle is that typically, the monied interests will front someone who will look after their interests. This year, CEOs are actually presenting themselves as contenders. First Cain, then Romney who actually became the candidate.
It’s bizarre, like the Republicans have a complete tin ear for (what I perceive to be) the mood of the electorate. They’re totally listening to their funders and not the voters. They seem to be forgetting the experiences of Fiorina and Whitman.
In a time when the curtain is being pulled back on the workings of politics and the financial industry, the sausage factory being made visible, they choose a financier / CEO as their candidate.
If this were 2000, CEOs or financiers would have been a great choice. That was the height of the second bubble, the time of celebrity CEOs. But now? Not so much. Especially not the CEO of a financial company.
During the primaries, it was a constant drum beat of “Anyone but Mitt”. Unfortunately, every other contender fell out of the race, one after another.
I was sure that the Republican party would never nominate a guy that has not accepted Jesus, King of Kings as his one and only personal savior. I was wrong as I’d not considered the possibility of everyone else having even bigger issues.
I still feel like the Republicans have embraced Mitt as… Well, he’s the horse we’re left with, so I guess we have to ride him.
I was sure that the Republican party would never nominate a guy that has not accepted Jesus, King of Kings as his one and only personal savior
That’s Protestant Fundy language. RC’s (which Ryan is allegedly) don’t speak of Jesus as a “personal savior”, but rather as the savior of the whole world and that the relationship is primarily a collective one.
And Mormons do consider Christ their one and only savior even if the fundys don’t believe them.
The standard Fundy retort that I have heard over the years is “The Mormon Jesus isn’t the Jesus of the Bible”
“The Mormon Jesus isn’t the Jesus of the Bible”
I seriously doubt the real Jesus was, either.
I don’t know if anyone caught this, but during the GOP convention, enough states had enough votes to force the nomination of Ron Paul.
When it came time to initiate that nomination process, the GOP changed the rules ON THE SPOT.
That’s the fate of such a majority-rule system. Whoever gets 51% controls the process.
Remember 1992? I do. Perot got 19% of the popular vote, but he didn’t obtain even ONE electoral vote. Not one.
But Y r sum houzes still two xpnsive?
But Y r sum houzes still two xpnsive?
Taking up aviation, Hwy50ina49Dodge?
I realize this is 4 days old, but I had to LOL anyway. A link and some choice hilarious quotes:
http://articles.economictimes.indiatimes.com/2012-09-01/news/33535370_1_property-prices-property-investors-prospective-homebuyers
“Property is always a good investment ”
“Property has always delivered high capital gains for investors at all points in time.”
“good avenue for risk-averse investors”
“It is better to work around the interest rates by opting for a hybrid loan etc that allows you to change the scheme when the interest rate comes down rather than wait for that to happen.”
“helps in achieving the goal of a larger house.”
LOL Lawrence Yun in disguise, spotted in India. either that or the Iraqi information minister dude from the war.
Suggestion for a betting pool.
How many times, between tomorrow and the election, will a Democrat candidate or party operative compare a GOP candidiate or operative to a Nazi? The handful that have occurred so far don’t count in the final tally.
Such statements are just the thing to get independents on board.
Sure I’ll play. I think you are a closet fascist.
*Mitt Romney: I am offering to bet you $10,000, right here and now.
Hmmm….
Nazi is slang for the National Socialist German Workers’ Party
The Nazis argued that capitalism damages nations due to international finance, the economic dominance of big business, and Jewish influences.[143] Nazi propaganda posters in working-class districts emphasized anti-capitalism, such as one that said: “The maintenance of a rotten industrial system has nothing to do with nationalism. I can love Germany and hate capitalism.”[149]
Hitler, both in public and in private, expressed strong disdain for capitalism, accusing modern capitalism of holding nations ransom in the interests of a parasitic cosmopolitan rentier class.[150] He opposed free-market capitalism’s profit-seeking impulses and desired an economy in which community interests would be upheld.[138] He distrusted capitalism for being unreliable, due to its egotistic nature, and he preferred a state-directed economy that is subordinated to the interests of the Volk.
http://en.wikipedia.org/wiki/Nazism
What a nut. The economy should work for all people instead of just be about making the rich ever richer?
And yet it was the capitalists who built his war machine.
He also loved little children and old ladies.
Didn’t stop him from being the all time, world champion monster he turned out to be.
Another word that has lost much of its meaning, like “racist”.
And since the Republicans are such slobbering Israel lovers, who would likely cheer seeing Rachel Corrie getting run over by an Israeli bulldozer, how could they technically be Nazis?
Cognitive dissonance is the hallmark of the Repubs.
They can easily be BOTH!
http://www.bloomberg.com/news/2012-09-05/obama-is-wrong-on-romney-tax-plan-impact-reality-check.html
If true, Romney’s tax plan seems similar to what is being proposed under Simpson/Bowles commission. Other than being revenue neutral… the lowering of rates is combined with reduction of loopholes to maintain revenue.
Revenue neutral but decreases the tax burden on those earning more than $100K a year.
Hmmmmmm… I wonder what that means for those earning less than $100K a year.
A+B = C
X+Y = C
B<Y
I wish there was a way to figure out what effect that would have on the relationship of A to X.
Not sure where you are getting the language on the $100k per year (it’s not in the article). And I do understand Algebra.
The key point is that he is stating the desire to avoid the math equation that you proposing. Does “decrease burden” equal lower marginal rates? or lower revenue?
Interestingly, Simpson Bowles goal was to lower rates, raise revenue, and keep the tax code AT LEAST as progressive as it is now. The two primary ways they did this was to turn some deductions into credits (and thus give a benefit to those who don’t itemize), and equalize ordinary income and capital gains rates.
However, without detail, the Romney Plan appears to be as much of a candy-crapping unicorn as the Obama Plan to solve our debt woes by raising taxes on the wealthy.
Newsflash:
Bubble/No Bubble?
Copacabana Rio median price 3 br Apartment
Buy: $620,000 USD plus $500 a month property tax/condo fee
Rent: $2,800 month.
Ipanema: median price 3 br Apartment
Buy: $1.2 million USD plus $800 month tax/condo fee
Rent: $4,800 a month
Interest rates about 8.5% for 20 year fixed.
Bubble/No bubble?
BUBBLE!
Buy is more than 20x annual rent, then prices are at least 2x too high.
What is more likely? Incomes will double, allowing rents to double, bringing rent up to a more reasonable price/rent ratio? Or is it more likely that prices will drop at least 50%, and those having bought before the crash will whine like babies how they are victims and could not possibly have seen this coming?
BUBBLE!…Buy is more than 20x annual rent,
But I don’t want it to be a bubble.
More Rio Info: Bubble/No bubble?
Copacabana Rio, median price, 3 bdrm Apartment
Prices to buy/rent
2009: $300,000 USD (+ $350 a month fees) or rent for $1750 a month
2012: $620,000 USD (+ $500 a month fees) or rent for $2,800 a month
We told you a couple of years ago it was a bubble. You didn’t want it to be a bubble then either!
We told you a couple of years ago it was a bubble. You didn’t want it to be a bubble then either!
Yes I did.
Actually I didn’t and don’t really care that much. If it drops 70% three years from now I still break even and have “free” rent.
(But that won’t happen in Rio because it’s not the same here as other places.)
Well, everyone wants to live in Rio, and they aren’t making any more land. Real Estate only goes up, and if you buy today, 7% annual appreciation is a certainty.
everyone wants to live in Rio, and they aren’t making any more land. Real Estate only goes up, and if you buy today, 7% annual appreciation is a certainty.
And Rio right now is living under a totally new economic model. Prices might not go up much farther but it looks like home prices have reached what looks like a permanently high plateau.
Well, they really aren’t making anymore land in desirable places like Copacabana or Ipanema. I’m sure that the further inland you go, the cheaper its gets.
Even if prices do start to decline a little, it won’t portend a crash. More like a little hot air leaking from a settling souffle.
Copacabana or Ipanema. I’m sure that the further inland you go, the cheaper its gets.
True.
Shared sacrifice. I think the American people would believe someone they thought is actually looking out for their interests, if they were told they would have to sacrifice. But there is no such person. People are self-interested. They see the monetary relationships between Congress and lobbyists. They see banker pay going up as profits go down. They see failed CEOs getting out with multi-million dollar golden parachutes. They know they are the muppets in the eyes of the current crop of leaders.
I think the mood is that until sacrifice starts happening from the top down, there’s going to be no appetite for sacrifice.
No appetite for sacrifice means the voters will turn out anyone who threatens to stop deficit spending. That means this system will be run until it breaks down, like a horse.
Everyone’s betting on stimulus to spark the economies to grow so that the debts once again become small portions of GDP. Relying on growth to achieve that. It’s the Keynesian endgame. If it doesn’t work, will the result be “disorderly”?
This whole “grow away the debt” model was a result of the post World War II experience. I don’t think that high-growth post WWII environment exists today.
Keynes never said you could persist trade imbalances indefinitely through massive credit expansion.
What he said was that in an OTHERWISE SOUND economy, a government could spend a little extra in a recession and a little less in boom times, to help flatten the boom-bust business cycle.
We do NOT have an otherwise sound economy.
I suspect that if Keynes were alive today and we were to tell him that we are generating 8% of GDP worth of new debt every year, to fund 4% annual international trade imbalance and another 4% of GDP draining from circulation every year through massive corporate profits, 70-80% of which ends up in the pockets of those that already have more money than they can spend… and this was all being called Keynesian economics… well, I suspect he’d grab a gun and go postal.
The Power brokers just twist any of the economic theories of the past to suit their agenda .
The free sh*t army is NOT into shared sacrifice.
The phrase doesn’t exist in the American lexicon.
The free sh*t army is NOT into shared sacrifice.
That’s why Romney’s ilk (the real free sh$t army) pay only 13% in taxes and now want to pay less.
Why? Because the free sh*t army is NOT into shared sacrifice.
Neither is the country of Brasil for that matter. Hello George Soros and offshore oil rigs.
2banana ,
Where do you get that the free shit army has anything to give .
Does someone on food stamps have anything to give ? Does a person who has lost their job and house and they are living in
the forest have anything to give ? Does a person trying to live on shit wages with a high cost of living have anything to give ? Does a person who has just gone BK because of Health Costs being to high have anything to give ? Does a veteran who can’t work because of Agent Orange or Gulf War Diseases have anything to give? Does some little old lady living on 1000 a month Social Security have anything to give ,really ?
Forgive all these people in wanting to eat montly ,or maybe have shelter or a job that can pay their bills . And what about the college student who isn’t going to get the good paying job to pay his school debt because they are given to India and China .
You never address the high cost of health care and why its 50% more than other Western medicine Countries . That is a huge factor in breaking the backs of the entitlement promises .
The “FSA” is just the new code for “welfare queen” and we all remember what THAT was code for.
While there are plenty of poor people scamming the system, they will never amount to 1/10th of the corporate welfare given out every year.
Ever.
I will go so far as to say that the TOP needs to make big contributions to getting this economy going again because they were the greatest beneficiaries of the rigged markets and the
crime lending spree that took place from 2000 to 2012 ,as well as what were faulty policies the Government enacted .
All we need to do is penalize them for about 10 years . Lets start with taxing Warren Buffet about 50 billion for ill-gotten gain .
Look ,the Politicians were traitors ,and the Public was stupid . The aftermath of the Great Lending Swindle needs to be addressed in the right manner before people will be willing to do something for their Country . The public knows its rigged and they are the parties being asked to give up ,rather than the true culprits .
“Good jobs at good wages!”
From Bloom County:
“Opus the Penguin, Vice-Presidential candidate for the Meadow Party was brought before a Congressional Committee on charges of being a liberal -
“Mr Opus, is it true that you said in a speech during your last campaign that, were you elected, you would ‘grind the rich into free meatloaf for the poor’?”
After frantic shaking of his head, Opus replied “Ah, those silly days of youth, we were all so wild then. What I meant to say was, ‘Good jobs at good wages’.”
Even that is considered commie thinking these days.
Yet Wall St. has forced the offshoring of millions of our jobs to communist China.
The irony is… too much.
If it is common knowledge that insiders are dumping stocks, then who is buying to prop up the market on its temporarily-high plateau?
And how did the stock market ever get so dumb about pricing in bad news?
Sept. 5, 2012, 12:02 a.m. EDT
More bad news — this time from insiders
Commentary: Many insiders have recently accelerated their selling
By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — As if September didn’t already have enough strikes against it: Corporate insiders recently have increased the pace of their selling and cut back on their buying, suggesting that the stock market has gotten ahead of itself.
In fact, with one brief exception, insiders of NYSE-listed companies are behaving more bearishly now than at any time since the bull market hit its high in early May. That is an ominous parallel.
Consider an index of insider behavior calculated by the Vickers Weekly Insider Report, published by Argus Research, which is based on the ratio of shares sold by insiders to shares bought. Last week, according to the latest issue of the Vickers service, this ratio for NYSE-listed issues stood at 5.97-to-1.
In other words, these insiders on balance are selling six of their companies’ shares for every one they are buying.
But for one week in early July when this ratio rose to 6.25-to-1, its average between mid May through mid August was 2.91-to-1, less than half where it stands now.
During that three-month period it got as low as 1.36-to-1, and never got above 4.10-to-1.
So the insiders of NYSE companies have recently made a markedly bearish move.
How do we know that their move isn’t just a one-week aberration like the one they made in early July? One indication is that the sell-to-buy ratio for NYSE-listed companies has been close to 6 for two weeks in a row now — so, at a minimum, it’s more than a one-week blip.
How bearish is recent insider behavior?
…
Corporate buybacks? AKA: Stock repurchase. Rather than hand out all the profit as dividends, use some of it to buy back shares off the markets, increasing the profit per share by shrinking the number of shares.
Does it work with houses?
Pretty bad at FaceBook.
How bearish is recent insider behavior?
There must be a reason they chose FB as their ticker symbol.
Why not just stay out of the market until the storm is over?
Sept. 5, 2012, 12:33 p.m. EDT
The next 6 days could make or break markets
Commentary: Time to make money — or lose it
By Michael Casey
NEW YORK (MarketWatch) — It’s time to put down the margarita, climb out of the hammock, and perk up.
If ever there were a week to end the sleepy calm of an uneventful summer in world markets, it is the one that’s about to hit us. The next six trading days are full of what traders call “event risk,” or what we journalists call “news.” That could break currencies and other markets out of their narrow trading ranges. It will be a week to make money — or to lose it.
…
Seems to be debate in the Fed as to whether unemployment above 8% is structural or cyclical.
The Fed is going to continue to act as if it is cyclical. After all, what choice do they have? When you are a hammer, every problem looks like a nail.
But are they correct?
IMO: it is clearly structural.
Construction at half historic normal is still too high. We’re sending way too many people to college, employing way too many people in the higher education industry. Retail is still way too much of our economy. Still too many people in the financial services sector.
Maybe we need more computer programmers and engineers, but those are not jobs that someone with below median income are going to do well at.
Thoughts of others?
Cyclical or structural?
“The Fed is going to continue to act as if it is cyclical. After all, what choice do they have? When you are a hammer, every problem looks like a nail.
But are they correct?
IMO: it is clearly structural.”
That we agree for once probably matters a lot less than that the Fed disagrees. They will try their best to stimulate the housing market out of its cyclical downturn (by their reckoning), come hell or high water.
Never mind that massive (structural) inventory overhang.
“Maybe we need more computer programmers and engineers”
You meant to write
“Maybe we need more jobs and especially life long careers for computer programmers and engineers”
HR policies like “never hire a STEM person over the age of 30″ because there are so many out of work looking there’s no point in paying for experience, indicates we have way too many grads now. Only a microscopic fraction of PHD grads can get PHD level jobs… because there aren’t many PHD level jobs, but the pool of people willing to go into debt to buy a PHD from the educational industrial complex is very large.
For outsiders, STEM is exactly like professional sports. As an insider, I assure you that if you have a proven track record with experience in any one of the following: CCIE-Voice, expert level ruby-on-rails programming, or know how to write AND DEBUG Verilog or VHDL then you’ll get the superstar NFL quarterback treatment, or at least not get treated too badly. HOWEVER much like professional sports, 99.99% of the kids who wanna-be, after they try and fail to reach the absolute pinnacle of skill they’ll be lucky if they get jobs at a call center for $8/hr or maybe Best Buy geek squad.
Most job reqs have a requirements list as long as my arm. They now want:
Windows and UNIX/Linux experience.
C,C++, C#, Java and whatever specialty language is in vogue this week. .NET is a must. Visual Basic too.
Database design and admin experience.
XML, XSLT and various web tools and languages: ASP.NET and others.
Scripting languages (Korn, Javascript, Python, etc.)
Maybe we need more computer programmers and engineers, but those are not jobs that someone with below median income are going to do well at.
Especially not if they are only of average intelligence. You need a certain aptitude to pursue a STEM career.
HR policies like “never hire a STEM person over the age of 30″ because there are so many out of work looking there’s no point in paying for experience, indicates we have way too many grads now
Bingo. The ideal candidate is someone with about 5 years of experience and still in their 20’s. For most STEM workers, unless they move into management, that’s where the career mobility ends. Only a precious few get promoted into positions with titles like “Principal Engineer” or even rarer: “Fellow” or “Distinguished Engineer”. These are the pinnacle of engineering, and are paid about the same as a low level manager.
If you *really* understand storage…anywhere from a chip that holds data in a flash drive or SSD up to running the equipment in a data center, things are pretty good right now.
IMHO, part of the 8% is still cyclical. However structurally, I doubt we are going to be much lower than 7% over the next 10 years.
Structural.
They have a choice. Tell the truth for a change and accept that easy money is not the answer to a phony and structurally unsound economy like ours.
It is if you’ve already “got yours”.
You can buy new citizenship into almost any country you please.
Maybe not citizenship, but perhaps legal residence.
Structural .We need to bring back our manufacturing base and our job base . Whatever is required to stop the outsourcing of jobs and manufacturing is necessary ,and to bring it all back . Price fixing Monopolies need to be busted and a return to the smaller manufactures . The Political lobby system is working against the welfare of the Country as a whole and it has become a system of the
People with the Gold Rule ,rather than what is good for the Country .
The majority population isn’t represented anymore ,and that is mostly
the working middle classes . We can’t have a government that caters
to a third of the population at the expense of the other 2/3.
“We need to bring back our manufacturing base and our job base.”
Excellent. But you can’t do it by legislative fiat. The middle class is wholly aligned with outsourcing and offshoring. The class keeps buying up foreign production and keeps sticking its money in Wall Street accounts. The only solution is to stop participating in this system as a consumer… but the middle class keeps doing it even when it’s falling from it. Bad things need to happen to stupid people, and the American middle class is as stupid as you can get for that money.
I’ve noticed an explosive growth lately in the number of infotainment news releases pounding the message over and over that low interest rates equal low housing prices and when interest rates rise, house prices will rise. Sure that outright false idea has always been around, but lately they’ve increased the pace of saying the big lie over and over. I have occasionally wondered how someone can be smart enough to fix a leaky faucet or other stereotypical homeowner tasks, like lock and unlock a deadbolt lock, but dumb enough to think house prices will go up when interest rates go up.
http://www.usnews.com/news/blogs/home-front/2012/09/05/as-asking-prices-rise-again-have-house-hunters-missed-the-window-of-opportunity?google_editors_picks=true
“[House hunters] have not missed the window yet … mortgage rates are still near record lows,”
I suppose much like lotteries its all a tax on the innumerate. I can’t imagine anything less appealing that locking in an enormous capital loss when interest rates rise above record lows…
For most people, the cost of renting the money is more than the cost of the purchase.
Interest rates go up, the cost of the renting of the money goes up.
Of course, the price of the house would come down…. since most people base the purchase price on “how much a month?”
Eight dollar a hour jobs aren’t going to solve the problem ,unless all prices crash to 1960 levels .
Is the problem really solved by giving people wages they can’t live on because they have to compete with someone living in another Country ? I am sick of having nothing but foreigners answering service calls ,when those could be USA jobs .
Think about it . Industry decided it wanted to make more money ,so
Industry did everything in their power to decouple itself from the
USA workers and Globalism came about slow but sure . Currently GMC
is producing 7 out of 10 of their cars in China .Ford just moved their
new big plant to Mexico in which those workers get 5 bucks a hour with no other benefits ,yet they want to charge their high prices for those cars . Hershey just moved to Mexico also . If we keep this up all the illegals will move back to Mexico because that is where all the jobs will be .
$8hr in 1960 is equal to $61hr today according to http://www.halfhill.com/inflation.html
1980 prices would still be very reasonable. That would be $24hr in today’s money.
I made $8/hr in 1982. FWIW, I didn’t feel like I had a lot of money. In 1985 I was making 32K and still felt rather poor. Of course, I was paying $700/month rent and interest rates were really high. By 1988 I was making 45K and we bought a condo for about 88K. The interest rate was 11% and our monthly payment was ~$800.
This was in San Diego, where prices were high. There’s no way you could have bought a place on an $8/hr wage back then. Then again, there’s no way you could buy anything there today with $24/hr.
But Peyton looks good, doesn`t he.
Third-grader told Peyton Manning jersey has gang ties
By Gregg Rosenthal
Around The League editor
Published: Sept. 5, 2012 at 03:20 p.m.
A third-grade student in Greeley, Colorado was told he could not wear a Peyton Manning Denver Broncos jersey to school because, well …
“They told me I couldn’t wear 18 anymore because it’s a gang number and I had to take it off,” Konnor Vanatta told KDVR-TV in Denver.
The policy apparently doesn’t allow six different numbers: 13, 14, 18, 31, 41 and 81. The policy also does not allow for common sense.
“I’m pretty upset the schools have come down to this and I think they need to start paying attention to the education the children are getting rather than what they’re wearing,” said Konnor’s mother, Pam Vanatta.
Follow Gregg Rosenthal on Twitter @greggrosenthal.
Forbes: “Shadow Inventory Massive”
http://www.forbes.com/sites/afontevecchia/2012/08/28/what-housing-recovery-distressed-sales-still-high-shadow-inventory-massive/
Why buy a house when there are 25 MILLION excess empty houses with an additional 35 MILLION houses to hit the market as boomers head to adult living communities?
Buy later, after prices continue to crater for 65% less.
“a true housing recovery is far away.”
So far away
Doesn’t anybody pay for their place anymore?
It would be so fine to let the price hit the floor
And it doesn’t help to know that it’s just time away
Do you actually read the articles you link?
A few gems from this one.
“financial institutions including big banks with exposure to the mortgage business like Bank of America, JPMorgan Chase, and Citigroup are sitting on a shadow inventory of 1.5 million units,”
“the rate of distressed sales is falling.”
“Housing markets are no longer in free fall, even though there are risks to the outlook. But analysts are turning more bullish. Investors should remain cautious, but should expect prices to very gradually firm going forward.”
Do you actually ever stop misrepresenting the truth and lying to the public about housing Darryl The Liar?
With 25 MILLION excess empty houses and prices falling, you’re lies aren’t even remotely believable.
So, you are saying those quotes are not in that article you just linked?
Really?
That makes it pretty easy to see which of us is the liar.
So, you are saying the headline of the article Housing Inventory Is Massive isn’t true?
Really?
That makes it pretty easy to see which of us is the liar.
His name is Darryl and he’s a liar.
Why are you lying to everyone here Darryl?
“So, you are saying the headline of the article Housing Inventory Is Massive isn’t true?”
No. I have repeatedly said that the 10 million excess empty housing units is a MASSIVE oversupply that would take 20 years to work off at current construction rate.
And you repeatedly lie about the amount.
Why lie Darryl you liar?
Inman: Second Homes Languish As Inventory Looms
http://www.inman.com/buyers-sellers/columnists/tomkelly/second-homes-languish-shadow-inventory-looms
This is a beautiful article demonstrating the delusion of “second/vacation ‘home’ debtors and how they are doomed. All 5 MILLION of them.
Here’s a beaut of a quote;
“I’m pretty sure it’ll sell this summer,” the owner said. “We reduced the price again and things are looking better as far as the economy is concerned. I’m sure the worst is finally behind us. Prices will be going up.”
“I’m pretty sure it’ll sell this summer,” the owner said. “We reduced the price again and things are looking better as far as the economy is concerned. I’m sure the worst is finally behind us. Prices will be going up.”
Reminds me of Lil Sis and BIL’s mini real estate investing empire. They already own two homes, and are thinking of adding a new one (soon to be built) plus a foreclosure home to bring their total share of the single-family housing stock up to four.
I can’t help but suspect this widespread bubble investing mania is going to eventually come crashing down on the many U.S. households who loaded up their household asset portfolios with multiple purchases of single-family homes. But perhaps they will all figure out a way to get rich off this new era investing strategy, and I will regret not following the herd.
Sadly for your sister and her family, she’s made a tragic financial error from which she’ll never recover.
Does she not know that prices are falling?
There are some serious logical disconnects in play. For example, apparently BIL thinks he will be able to sell for more than $75K above the Zestimate once he finishes installing some siding.
My prediction: He’ll never sell, as he won’t budge below what he thinks the home is worth, and the market has another opinion.
I should add that they bought the home from a flipper back in 2006, who in turn got it for something like $40K below what they paid, which in turn was about $25K below the current Zestimate.
Fat chance the value of the home went up by $25K since year-end 2006!
“I’m pretty sure it’ll sell this summer,” the owner said. “We reduced the price again and things are looking better as far as the economy is concerned. I’m sure the worst is finally behind us. Prices will be going up.”
Idealistic people simply cannot be influenced by the pragmatic armed with empirical data.
Anyone who thinks there is no reason for the rest of the world to worry about what happens inside Afghanistan needs to read this.
Certainly humanity would be collectively better off without the last vestiges of the Middle Ages still terrorizing some corners of the planet, and trying to export the practices to others?
Acid attacks, poison: What Afghan girls risk by going to school
By Allie Torgan, CNN
updated 3:57 PM EDT, Thu August 2, 2012
Deh’Subz, Afghanistan (CNN) — Terrorists will stop at nothing to keep Afghan girls from receiving an education.
“People are crazy,” said Razia Jan, founder of a girls’ school outside Kabul. “The day we opened the school, (on) the other side of town, they threw hand grenades in a girls’ school, and 100 girls were killed.
“Every day, you hear that somebody’s thrown acid at a girl’s face … or they poison their water.”
There were at least 185 documented attacks on schools and hospitals in Afghanistan last year, according to the United Nations. The majority were attributed to armed groups opposed to girls’ education.
“It is heartbreaking to see the way these terrorists treat … women,” said Jan, 68. “In their eyes, a women is an object that they can control. They are scared that when these girls get an education, they will become aware of their rights as women and as a human being.”
…
Unfortunate from our perspective. But if that’s the way they wish to organize their country, it’s either comply or die for the people within it. Our interest is in making sure the country is not an incubator for another terror cell.
Or is it? If they keep relapsing into Islamic extremism, and it costs trillions for us to keep it at bay… that’s not a beneficial equation for us.
The world is a heterogeneous place. Different groups of people, different outlooks, temperaments, intelligence. Can’t expect to turn the Ukraine or Helmand into Vermont. I think we need to accept the heterogeneity.
“In February 1945, [Bomber] Harris wrote “I do not personally regard the whole of the remaining cities of Germany as worth the bones of one British Grenadier.”
We can continue to fight in failed states around the world. But how many American lives is it worth? Are there other strategies we can pursue, other than nation-building, to avoid terrorist slaughters in the homeland?
I can’t believe you guys spent so long arguing over a freaking $50k condo. I mean, for God’s sake, that’s not a lot of money. I’m sorry if this makes me sound like an elitist jerk or something, but LOL @ arguing over $50k for a house. Although, I do think it’s pretty weird not to pay cash for such a cheap house. But other than that, a 2 income household with decent incomes should have no issue with paying such a pittance of a mortgage.
Some posters can’t resist the temptation to brag on the HBB about their savvy real estate investments, and others cannot resist the opportunity to poke holes in their reasoning.
And there you have the makings of a good argument, no matter how insignificant the value of the property in question.
I don’t think it was as much about this one deal as it is about beliefs some are trying to instill.
Just as the “real estate always goes up” was a mass delusion, I think some are trying to create a meme that real estate is still crashing everywhere in the country.
Anyone daring to point out that they were once a true believer in the crash, but are now buying destroys the meme they are trying to instill that house prices are still crashing everywhere.
Then there is RAL, who is a member of Al Queda. He is a terrorist that uses bullying and intimidation in an attempt to engineer a collapse of western civilization triggered by a financial meltdown. That was Bin Laden’s goal in luring us into an endless war in Afghanistan.
And then we have Darryl The Liar.
Even though housing prices are still falling, he’ll continue to lie about it no matter how many people it harms.
Your biggest problem when buying a 50k house is… what is the neighborhood like? I can only speak for Maryland (much wealthier/pricier state, to be sure) but for 50k here, if you can even find it, you’d be surrounded by ghettos for blocks around.
I was in PHX last year and did see a lot of condos of the type you mention… hideous places, but they did have 4 walls and I’m sure the water and electric work, so … different strokes, different folks. Personally, I’d prefer to live life without dealing with human detritus for neighbors, even if it means spending a little more.
Several of the places I looked at were within a couple miles of my house. Nice area. I put offers on two of them.
The place I am buying is also in a reasonably nice part of town.
“I can’t believe you guys spent so long arguing over a freaking $50k condo. I mean, for God’s sake, that’s not a lot of money.“
Former Fannie Mae exec Franklin Raines would agree. He receives more than twice that every month ($125k/mo) as part of his retirement package made good by the taxpayers.
Say what you like about Obama, but nobody can truthfully deny his political capability. For instance, it took all of one day to correct the error of removing God from the Democratic ticket.
Sep 05, 2012
Democrats restore God, Jerusalem to platform; await Clinton
By David Jackson, USA TODAY
Updated 3m ago
CHARLOTTE — The Democrats opened the second night of their convention by adding God and Jerusalem to their platform, and awaiting the return of Bill Clinton.
Approved on a voice vote, the party platform now mentions God and declares Jerusalem as the capital of Israel — two previous omissions that had been attacked by Republicans and other political organizations.
President Obama personally intervened on both changes, aides said, approving the statement about Jerusalem and questioning why previous language about God had been removed from the platform in the first place.
…
If he is so capable, why did he even allow it to begin with?
Don’t tell me he and his handlers weren’t aware of this.
Now tell me what’s the difference between Dems and Repubs? Actually removing God and Jerusalem from their platform might have been the only things I have agreed with Dems.
“Actually removing God and Jerusalem from their platform might have been the only things I have agreed with Dems.”
Maybe you’d better find yourself another country, pal, because any candidate in America who does not have God in his corner loses.
“…the party platform now mentions God and declares Jerusalem as the capital of Israel…”
Well, so much for the deficit reduction idea.
“Say what you like about Obama, but nobody can truthfully deny his political capability. For instance, it took all of one day to correct the error of removing God from the Democratic ticket.”
Seems pretty inept according to the story here:
http://abcnews.go.com/Politics/bob-woodward-book-debt-deal-collapse-led-pure/story?id=17104635#.UEhRVqRYvGI
Some choice bits (starting on page 3):
“As debt negotiations progressed, Democrats complained of being out of the loop, not knowing where the White House stood on major points. Rep. Chris Van Hollen, D-Md., the ranking Democrat on the House Budget Committee, is described as having a “growing feeling of incredulity” as negotiations meandered.
“The administration didn’t seem to have a strategy. It was unbelievable. There didn’t seem to be any core principles,” Woodward writes in describing Van Hollen’s thinking.”
And
“One important moment in the negotiations came when the president scheduled a major address on the nation’s long-term debt crisis. A White House staffer thought to invite House Budget Committee Chairman Paul Ryan, R-Wis., along with the other two House Republicans who had served on the Simpson-Bowles debt commission.
The president delivered a blistering address, taking apart the Ryan budget plan as “changing the basic social compact in America.” Ryan left the speech “genuinely ripped,” Woodward writes, feeling that Obama was engaged in “game-on demagoguery” rather than trying to work with the new Republican majority.
“I can’t believe you poisoned the well like that,” Ryan told Obama economic adviser Gene Sperling on his way out of the speech.
The president told Woodward that he wasn’t aware that Ryan was in the audience, and he called inviting him there “a mistake.”
If he had known, Obama told Woodard, “I might have modified some of it so that we would leave more negotiations open, because I do think that they felt like we were trying to embarrass him… We made a mistake.”"
And
“But after the breakthrough agreement fell apart, Boehner’s “Plan B” would ultimately exclude the president from most of the key negotiations. The president was “voted off the island,” in Woodward’s phrase, even by members of his own party, as congressional leaders patched together an eleventh hour framework to avoid default.
Frustration over the lack of clear White House planning was voiced to Obama’s face at one point, with a Democratic congressional staffer taking the extraordinary step of confronting the president in the Oval Office.
With the nation facing the very real possibility of defaulting on its debt for the first time in its history, David Krone, the chief of staff to Senate Majority Leader Harry Reid, told the president directly that he couldn’t simply reject the only option left to Congress.
“It is really disheartening that you, that this White House did not have a Plan B,” Krone said, according to Woodward.”"
Obama had his chance to make a big deal to solve the biggest problem facing us (without a solution, we are doomed to money printing). Seems to me like he screwed it up royally due to his political ineptness.
Any sentence that mention God and Jerusalem and then says “awaiting the return of Bill Clinton” gives me the heebie jeebies.
Regular money baths or owning an overpriced energy hog mcmansion. The choice is yours.
Port St. Lucie woman charged with driving off without paying for gas … 10 times
By Will Greenlee
TCPalm
Posted September 5, 2012 at 10:49 a.m.
PORT ST. LUCIE — A 20-year-old woman was arrested on a felony charge after police say she absconded with gas 10 times from a business on Northwest California Boulevard, according to an affidavit released Wednesday.
Dauzree Arlanne Morticia, of the 5500 block of Northwest East Torino Parkway in Port St. Lucie, was arrested Tuesday by Port St. Lucie police on a grand theft charge in connection with the incidents at Murphy USA in the 100 block of Northwest California Boulevard.
Police on Tuesday spoke to a district manager, who said that on 10 occasions since Aug. 4, a woman in a silver Ford Taurus has fueled her vehicle and driven off. The manager gave police 10 surveillance DVDs and other reports, and said the total amount of pilfered gas is $366.51.
An employee told police he’s spoken to the woman and told her that she has to pay. Instead, the employee said, she “just drives off.”
Employees eventually were able to get the tag of the woman’s vehicle.
Police say the tag is assigned to a silver Ford Taurus and is registered to Morticia.
Contacted by police, Morticia agreed to return to the gas station. When told about the surveillance videos and other reports, she raised her hands and said she had no excuse.
She offered to pay for the gas in two payments, but the district manager wanted to pursue criminal charges.
http://www.tcpalm.com/news/2012/sep/05/port-st-lucie-woman-charged-with-driving-off-for/ - -
They still allow people to pump before paying? Everywhere I get gas it is pay first.
Yeah, that confuses me too. Who’s so insane as to run a fillup station that allows you to pump without paying? Maybe it’s a rich area.
http://www.lpsvcs.com/LPSCorporateInformation/CommunicationCenter/DataReports/MortgageMonitor/201206MortgageMonitor/MortgageMonitorJune2012.pdf
The next mortgage monitor is expected to be out any day now, but the link here goes to the June 2012 report. What I find most interesting are the differences between judicial and non-judicial states. Specifically:
Page 6: Judicial and non-judicial states are roughly equivalent in terms of 90+ day delinquent loans. However,
Page 11: In judicial states, 6.42% of loans are in foreclosure. In non-judicial it’s 2.41%.
Page 12: More than 50% of foreclosures in judicial states haven’t made a payment in 2 years. The number appears to about half that in non-judicial states.
Page 14: Judicial states are clearing about 2.09% of their homes in foreclosure each month. Non-judicial are clearing about 6.45% of their foreclosures each month.
Here’s the important part:
You may think “of course judicial states are clearing a smaller percentage of foreclosures each month, they have a LOT more to deal with.”
That is true. However, if you assume out of every 1,000,000 loans, you have:
64,200 are in foreclosure in judicial states, and of those, 2.09%, or 1,342 out of every 1,000,000 homes with mortgages are selling via foreclosure each month; and
24,100 are in foreclosure in non-judicial states, and of those, 6.45%, or 1,554 out of every 1,000,000 homes with mortgages are selling via foreclosure each month.
Despite having a much smaller pool of loans in the foreclosure process (a bit over a third the size of judicial states), non-judicial states are STILL foreclosing on more out of every million mortgaged homes than judicial states.
Judicial states have a LONG way to go. Non-judicial still have a way to go, but are farther along, and progressing faster than judicial.
Isn’t it interesting that those who continue to pimp housing here are LIEberals?
May have something to do with supporting the current suicidal monetary and fiscal policies, but those have been supported by the elite in both parties.
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