Bits Bucket And Craigslist Finds For June 28, 2006
Please 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.
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Name:Ben Jones
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Buy a $669,900 tenament and get a free iPod.
http://boston.craigslist.org/rfs/176297388.html
You’ll need the iPod to drown out the salsa music, car alarms and Flowmaster exhausts blasting at all hours.
Unbelievable.
Rumours that the authorities are in town looking into realtor fraud got me thinking about all the calls for a 30%-40% drop in prices. I’m thinking we need that much just to ring all the fraudulent price increases out of the laundry. Then we can start reducing the prices back towards normal relationships with wages.
Which town is this?
In addition to realtor fraud at a local level, I would love to see a massive roundup of all of the big-name housing bubble perps and pimps, i.e. Learah, Appleton-Young and every other bubble denier who has pumped this thing into the ground. Prosecute them for massive criminal conspiracy, something under the RICO act. You can be sure they are all secretly wringing their hands but they still maintain that smiling “happy happy soft landing” public facade. That is conspiracy in my book.
I know it’s a free country and as individuals we are free to deny the bubble if that’s our perogative, but the financial devastation that is being unleashed on this country has been fueled in large part by the chief realty clowns we all know and despise. Wouldn’t mind seeing them in jail at all.
Rant over..
Most realtor codes state that you can’t make predictions or statements that will lure buyers or sellers to purchase based on panic selling or buying . As far as I’m concerned the NAR and the whole realtor group have been doing that on a number of levels .So I’m ranting with you .
What do the codes say about flipping a property your realtor buddies before selling it to someone off the street?
waaahoo ….. These double escrows are a questionable
conflict of interest IMHO . It depends on the situation and what the facts are , but the realtors might of not acted in the best interests of the seller in that they picked up a additional piece of the action ,(that should of gone to the seller ) .
Hmmm…
I’m hearing all kinds of punishments for the guilty… Gotta be careful what you deem punishment… What appears to be punishment may not be so for them. Imagine if christianity is a fraud extended/expanded by King James himself - if the person is executed, whether by injection, public town square shooting, or what ever, given that we know nothing about what lies beyond the physical plan of this world, what is the possibility of the criminal escaping mentally unchanged from this life to the next one, and be completely in hiding as a child in his next life, until he strikes again with no warning?
What if you submit him to the Suzanne ad for so long it does nothing but deranges his mind, and when he dies, he comes back as the next Bush or Hitler?
It’s important to get through to them the consequences of actions through all angles of experience.
Stephanie Ellison
How about Gore, Clinton, or Kerry? The Medicare drug plan is a fraud.
If I’m not mistaken, the medicare drug plan was started earlier this year or last year under the Bush administration. I refused to join on the grounds that I was going to pay out a lot more in drug coverage, nevermind no Part B coverage, than I would if I paid for the doctor’s visit, the bloodwork, and medications on an annual basis. The corporations and up are responsible for the profit fraud they have committed.
What is Clinton to be strung up for? Being sucked off? Come on, man!
Stephanie Ellison
Wow! That’s a .04% incentive! I am sure that will get all those IPOD lovers out in droves. Oh wait they already have one.
David
http://bubblemeter.blogspot.com
I guess this guy did not here that he is supposed to give a free plasma TV or and SUV. Pretty soon they will give a person a free house with a purchase of a house. 2 for 1.
LOL!!!!!
Craven - and notice their terrific spelling skills.
How about a public torture execution for these real estate clown. That would even be better than jail. Or if they are in jail, they have to listen to constant TV of people telling their individual sob stories about being upside/down after following the advice of the likes of Suzanne.
How about just the Suzanne ad played over and over 24 hours a day in a continuous loop until they go mad.
News: Mortgage apps at four year low:
http://www.marketwatch.com/News/Story/Story.aspx?column=Economic+Report&siteid=mktw&dist=
And rates are up a full eighth of a point in a week for all types. They never make a big deal about this part of the report, and it comes out separately as a Freddie Mac survey tomorrow around noon EST, so we might be able to get a double-dip so to speak out of these numbers tomorrow as well.
And BofA downgraded the sector again this morning. Lots of lowered price estimates. DHI, HOV, PHM come to mind; there were maybe two more but I can’t remember them offhand.
Refi market is crumbling. The house ATM has a whole lot less $$$$$$.
6.2% is a big drop for purchase applications… I think that tells you what’s going to happen to home sales in the next couple of months.
Watch the 10-year bond — the change in these mortgage rates from last week to this week pretty well correlates with the change in the 10-year bond from two weeks ago to last week.
http://phoenix.craigslist.org/rfs/176294049.html
“selling well under marketprice”
Apparently not.
no, the flipper bought this for $89,900 in 2002.
Of course, in true reckless fashion, they borrowed about $147K on the house in September.
http://tinyurl.com/ruoma
Some comments by Txchick maybe me want to check out all the hoopla at SDCIA blog site. What disturbed me in their holier-than-thou was this posting and its ethical implications; anyone care to comment?
“Native—CA————–
It seems to me that the strategies break down into two categories, depending upon whether you are personally responsible to pay the loan. Here in CA, if you sell a house with a purchase-mortgage loan on it, you are not responsible for the loan after the sale.
However, this is not true in most of the other states. However, if you ARE NOT personally responsible for the loan, I’d suggest the following approach. Deed the property over to somebody who does not care about their credit report. Perhaps a minor, a derelict, a very elderly person who never buys on credit, somebody else who does not care. Make sure that you “sales agreement” makes you responsible for the ownership expenses so you will be able to deduct them from your taxes. Then rent out the property for as much rent as you can. After a few months, stop paying the mortgage and let the property go to foreclosure. Later you have “credible deniability” for the loan. That is, you can explain to credit granters that you were not responsible for the new owner’s having defaulted on the loan.
If you are personally resposible for the loan, I don’t have much to add to what others have said. The only thing is, nobody has mentioned the tax benefits of owning rental properties. If you rent out the property and can take advantage of the tax benefits of owning a rental, you might find that the monthly payment is not quite as bad as you have been thinking.
I’m sorry you are taking a painful seminar in real estate investing. I hope you can minimize the damage.
Good Figuring Things Out*********Ron Starr************
I cannot even start to think that this is legal. They are in effect conning two innocent parties into their trainwreck. First is the lienholder, and second poor grannie…
WTF no ethics left in this. As I said in another post, the slimeballs get the good jobs, and the get out of jail free cards, and the straight shooter get to live on the other side of the tracks…..
Actually, the SDCIA members themselves decried this advice from Ron Starr… (calling it both unethical and illegal)
Holy they ain’t (the SDCIA folk), but they aren’t evil either. They’re just trying to make a buck, like you and me.
I’ve found that I learn a lot from their postings. They have their idiots and slimeballs, but so do we.
In my mind, there is a place for speculation in any market, it can help with liquidity of a market. Before you tear me limb from limb, hear me out.
In a market, transactions need to be made. There must always be a buyer and a seller. Without one, a transaction is not possible. Speculators can act as a counterparty to a transaction. They thus increase the possible numbers of transactions, i.e. they increase liquidity.
Unfortunately, in the last 2-3 years they made up a significant portion of housing liquidity, making housing TOO liquid. BUT remember, for every purchase there was a counterparty, some of them other speculators, but some of them (it looks like 60%) were end users. Both parties agreed to the transaction.
We are now seeing a converse. Speculators are not present in today’s RE game. We thus have a severe downturn in liquidity. Not fun for a lot of end users/regular folk trying to sell.
just an observation.
and yes, I realize that housing is a NEED. But there is speculation for EVERYTHING that we need. Housing, Energy (oil, natural gas), food (pork bellies, corn, wheat, etc). It’s called the Futures markets folks.
And the speculators inject liquidity that helps ALL of these markets function.
The problem hasn’t been the speculators. The problem has been the GAME. (the feds, the loose lending, the banks, etc)
clouseau
I have absolutely no problem with transaction costs, and intermediation, as it is necessary most of the time. That is what salespeople do for a company, they go out and find the customers for their product, and are paid for that.
Notice that in the last couple of years the sellers (i.e. those that are holding the product) where calling the shots and imposing conditions. That is an unnatural market to say the least. Generally it is the buyer who imposes the conditions on the market, as there is no need to buy. All that said, when buyers having made a decision to purchase, and then becoming sellers are unable to sell their property, decide to offload their decision on uninvolved 3rd parties, i.e, granny or aunt Edna, then that is where a nice pair of handcuffs come in play. Also giving that advice, is the sign of a slimeball. It does not reflect on everybody in the SDCIA, and I have not said it does. I just state that activities like this should be but are almost never penalized.
The ones who try to wade through life with a honest profession, or skill set often than not end up in the poor house.
The “crafty” ones tend to become CEO’s or CFO’s of companies like Enron or MCI.
Once it is all about making a buck, and all ethics aside, there is no stopping how low we will go to get it…
BTW I am most decidedly not an economist, neither do I play one on tv…
Once it is all about making a buck, and all ethics aside, there is no stopping how low we will go to get it…
Agreed. And this is the huge failing of “capitalism”.
The big problem in the end is “the game”. Capitalism is an amoral (not immoral… amoral…) system. Pure capitalism is only concerned with profit. That can lead to disasterous results like Enron. Or enormously wonderful results like the cure for smallpox too. Or in this case, the pricing out of the majority of Americans from their preferred neighborhoods.
And you’re right, the most unscrupulous people often play the game better than those with morals. Because they understand the POINT of the game better (profit). Too bad there aren’t more Buffetts out there.
yeah, it sucks big butt what has happened since 2000. ‘
clouseau
Good points M. Clouseau. IMHO, the speculators are pulling out of the housing market - As a result housing sales will decline even further. I expect counties that were formerly doing 400 housing transactions per month to be doing 400/year in 2007. The impact will be on future appraisals for comps. Then the real price decline starts.
You forgot to mention the poor renter who gets kicked to the curb, losing any deposit monies.
The fact that they are discussing fraud as an option to remedy their investment strategy says more than I ever could. However, these gurus always leave out some very important details.
“Here in CA, if you sell a house with a purchase-mortgage loan on it, you are not responsible for the loan after the sale.”
This is a typical half-truth that is going to burn a number of people who take it on faith. Assuming he is refering to a short sale, the seller will get a 1099 from the lender. A CPA can get this amount excused, with effort, but only if it is “the purchase-mortgage”. Cash out refi’s and helocs change everything, and I’m sure his earlier advice to these people was to do just that in order to leverage their investments. People need to learn to think for themselves.
Ron Starr…isn’t he a porn star?
It sounds like “conspiracy to defraud” to me, starting with the post itself. I’d go so far as to say that the “partner” who starts with the bad credit record is being hurt as well, even if he doesn’t care.
Was this a serious post? Turn it over to a MINOR? How in the world will a transaction to a minor change the original person’s liability/responsibility? This is either a very stupid person or someone trying to be funny. I’m afraid it’s a serious person and I do hope eventually they get their due.
Have to run. Am going to sell my SUV to my 12 year old nephew and have him sign that he’ll take over payments. See this way I’ll be off the hook for them, the repo will be on his credit report and I can go buy another car with better gas mileage.
Yep. No problem with that logic!
look at the size of that marijuana tree in the backyard
Hmmm, now this may be a buyer’s incentive.
(Not for me though - don’t believe in doing anything that purposely gives you the munchies!)
$169.00 is overpaying for that piece of crap. Why does the yard look like the Dust Bowl?
Priced $42,000 below assessment-ouch. I’m bad at math but even I know that’s a big percentage!
http://washingtondc.craigslist.org/nva/rfs/174482617.html
This is located at the infamous Bubblicious Bench.
http://tinyurl.com/fbso3
Actually I am wrong. Please ignore.
P-aPenny. Yes someone needs to investigate that particular poster and the industry for the schemes they are pulling at the expense of the tax payer. Doesn’t mean that all parties involved are free of individual responsibility. My point in posting it was that that site promotes themselves as more ethical(elite investor class) then posters on this blog and were upset when Txchick threw what they considered bile and venom in their direction at some ‘greater fool’…..
I did read TXchick post, and found it to be very neutral, and not at all agressive. I think that when they see some something that does not quite jive with their point of view, they think that bile and venom is being thrown in their direction, almost like sports fans act when the fan from another team states something negative about the home team, even though it is true!
Original post on SDCIA
“I purchased a home in south Tucson (Vail) through Chris Szabo and closed on it 1 month ago. The market is flat and there is now competition and plenty of homes for sale in my neighborhood. I had planned to flip this right away but I have had NO offers and very FEW lookers. I’m feeling seriously burned and need out!
Here are the numbers:
Payments (all inclusive): $2500/mo first payment due 7/1
Loans (100% financing): $299k
Lowest competitor on mkt priced at $298k and not sold.
If I COULD sell it at $299 I would lose the RE commissions and closing costs estimated to be about $14K. Of course, the longer I hold it that $2500/mo starts to really add up. I want to prevent getting even deeper into this.
I need to either dump this asap and take a sickening loss or…? Should I contact the lender and tell them I can’t make payments? What would foreclosure/ short payoff/ deed in lieu do to my credit? Given the way the market is going(looks flat) is it worth it to try and lease option? Can you think of any other options?
I acknowledge I have made a huge mistake so please no flames. I know there are great minds on this board so any help would be greatly appreciated.”
TXchick’s response:
“My advice to you would be next time, consider the possible downside to your greed before you do something stupid like that again. Houses are places for people to live, not a commodity for clowns like to you flip like the burgers you will all be flipping shortly. Sorry I didn’t know about you when I was looking for a place to rent in Tucson last month. I might have paid you as much as $900 a month.
With that said, my participation in this ridiculous circle jerk is done forever.
Hope you all enjoy your debt slavery.”
I was wrong. I assumed it was the JDuniphase posting where she said that people thought that jduniphase was a good buy at around 35, and now it was 2.50…
Oh, well, at least I did not buy property in Tucson hoping to flip, and I have not stayed in a holliday inn either…
Actually, I feel the ‘clowns and burgers’ comment was uncalled for and made it easy for the posters there to dismiss her comments as a drive-by flaming.
A simple “I am angry (at what you’ve done to honest buyers/the market/etc) … I hope (you reap what you sow)” would have gotten across her anger but put it a better context to be examined rather than dismissed. Simple name calling does not help things, and reflects poorly on the poster, and indirectly this blog (as following posts noted where she came from).
Let’s take the high ground when posting elsewhere and promote this blog as place of informed facts and multi-faceted discussions, and it’s posters as reasonable people, many of whom are justifiably upset at the damage this asset bubble hath wrought.
This ad has been running in Phoenix Craigslist for a couple of months. First one was for 308K, second one was “reduced 100K” it is listed on MLS for 349K, so asking price on CL was 249K. Ad said home MUST be sold on Sunday night. A couple weeks latter another ad was listed for the same house with the same “must sell on Sunday night, any reasonable offers accepted”. The price had been lowered to 224K. I e-mail the owner and asked if the house had sold. He wrote me back that the current bid was 308K and did I want to submitt a bid. Apparently, this is a common selling techinque where the owner holds a week long auction to get the highest bidder. Has anyone else seen this selling technique? My guess is he dosen’t have any offers.
Opps
forgot the link
http://phoenix.craigslist.org/rfs/168474881.html
You should have said you weren’t interested in putting in a bid since you were considering only going up to 300k.
Do you think these folks are crooked or what? I’m hurrying to get their toxic loan.
http://sacramento.craigslist.org/rfs/176321153.html
LISTED AT $600,000 AND $1800 PER MONTH
——————————————————————————–
Reply to: hous-176321153@craigslist.org
Date: 2006-06-28, 7:20AM PDT
PURCHASE YOUR HOME TODAY!
$500,000 TO OVER 1 MILLION DOLLAR HOMES CAN BE YOURS WITH OUR 1.25% RATES.
REFINANCE YOUR HOME WITH ABSOLUTELY INSANE LOWER MONTHLY PAYMENTS!
GET A $2000 FREE ONLINE SHOPPING SPREE JUST FOR INQUIRING!
PAY ONLY $300 PER MONTH FOR EVERY $100,000 THAT YOU BORROW.
GET YOUR APPLICATION TODAY. EMAIL US AND REQUEST APPLICATION.
SERIOUS INQUIRIES ONLY!
WE CAN CLOSE YOUR LOAN IN 15 BUSINESS DAYS. NO HASSLE. NO UPFRONT FEES.
NO MORTGAGE GRIDLOCK.
ACT NOW…DON’T DELAY. SEND AN EMAIL NOW!!
REFINANCE YOUR HOME WITH ABSOLUTELY INSANE LOWER MONTHLY PAYMENTS!
Most suitable for Absolutely Insane borrowers
http://sacramento.craigslist.org/rfs/176178001.html
FLIPPER turned FLOPPER? Desperate or what?
$155000 - Great Condo, Best Price!
——————————————————————————–
Reply to: hous-176178001@craigslist.org
Date: 2006-06-27, 5:52PM PDT
You can’t beat this price!! Very clean, front unit!! Move in ready!!!
2 bedroom 1 bath
laundry hook up in condo
even your own 1 car garage!
New Paint, carpet, tile floors, tile counters, window coverings and ceiling fans!
sellers very motivated!
call or email
Janet Hyde
916-837-4236
Greenholme Dr at Hillsdale Blv
Where are the stainless appliances and the granite countertops?
For $300K, you can be the proud owner of a dollhouse. Hope Barbie can squeeze into that tiny little thing. Heaven forbid if it is BIG BERTHA.
http://sacramento.craigslist.org/rfs/176119270.html
$299500 - NICE HOUSE WITH MOTIVATED SELLERS!!
——————————————————————————–
Reply to: see below
Date: 2006-06-27, 2:44PM PDT
COME SEE!!!!
5177 Thomasino Way
Antelope, California 95843
NEW PRICE $299,500
·Very lovely home in nice neighborhood
·Large Bedrooms with Vaulted Ceilings
·2 Bedrooms/2 Baths
·1091 Square Feet
·2 Car Attached Garage
·Covered Patio and Atrium
·Quiet Setting
Mark Baker, Co-Broker
Phone: 916-417-8779
Fax: 916-313-3526
Chris Givens, Co-Broker
Phone: 916-275-8937
Fax: 916-419-2869
5177 Thomasino Way at Downing Place
ME smells desperation here.
http://sacramento.craigslist.org/rfs/176020610.html
$439950 - COMMUTER/INVESTOR’S DEAL–COME & GET IT!!
——————————————————————————–
Reply to: deniseshanahan@sbcglobal.net
Date: 2006-06-27, 10:45AM PDT
HURRY, AMAZING PRICE!! 2121sf 4BD/3BA. (1 BD w/Full BA Downstairs). Sparkling Waterfall Pond w/ Relaxing Patio. Romantic Master Suite w/ Doublesided Fireplace Ajoining Luxurious Jetted Tub & Bedrm. Sep. Shower Stall & Large Walkin. Entertainer’s Kitchen Opens w/French Doors to the Outdoor Tropical Setting. Multi-phone Lines/Networked. Near Wackford Community Ctr & Laguna Community Park! Located between HWY5&HWY99. Seller Motivated! RM Real Estate Group. 916.708.2017
6832 Cedar Bluff Way at
Evans On The Economy — The (Still) Coming Slowdown
U.S. economic growth won’t finally ‘buckle’ until lenders cut back on ‘foolish’ home loans.
Industry Week Jul 1, 2006
“So why has the decline in housing not yet reduced the real growth rate of the U.S. economy?…
However, it won’t happen for several years. The rash of defaults and foreclosures usually peaks about three years after interest rates rise and housing prices level off and then decline. At least that’s how it’s worked in the past. This current process started in 2005, suggesting that the major negative impact of a declining housing market won’t hit until 2008. There will be some modest decline in real growth this year and next, but the increase in real GDP — at least as reported by U.S. Commerce Department’s Bureau of Economic Analysis — will remain around 3%. Not until lenders are put under great pressure not to extend as many foolish loans — similar to what happened in the early 1990s — will the U.S. economy finally buckle.”
http://tinyurl.com/ewqy8
HIC and don’t have a problem with what you are saying as long as everyone is playing by the same rules. However, in the housing game that became the Ponzi-Dream (Developer,RE, Appraiser,Mortgagee)-Scheme we have a group in the industry fraudulently creating false valuation to line their pockets and the tax payers expense. And again that latin phrase ‘buyer beware’ does not relieve the buyers of some of the responsibility. Unfortunately, a lot of nonparticipants in the scheme will suffer too.
BTW: Everyone on that thread tried to sugar coat the options…
True.
which is why I don’t hate the players (specuvestors), I hate the game (RE/lending industry as well as regulators and the FED.)
I just realized I’m “HIC”
Hope that isn’t too close to “hick”
Naw, now if you were using “Development Inspector Clouseau” then you would have an issue
42% chance of recession in 2007, due to housing.
http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2006-06-27T205327Z_01_N27446048_RTRUKOC_0_US-ECONOMY-HOUSING.xml
I’ll see your 42% chance of recession and raise you (IMHO) with a 25% chance of a world wide economic meltdown.
From ChinaDaily.com
June 28
China central banker urges reserve diversification
“…The return “will be zero” on those bonds after inflation and currency changes are factored in, Summers said in a lecture at the Center for Global Development, a Washington think tank.
…Summers argued that he was not urging worldwide wholesale dumping of U.S. bills. He said central banks around the world must keep “large volumes” of their money in super-safe assets such as Treasury bills….
Some government economists have said China should convert some of its foreign exchange reserves, which hit $875.1 billion at the end of March, into gold to hedge against weakness in the dollar….
Asian central banks have amassed about $2.8 trillion in foreign exchange stockpiles…
China faces pressure, especially from the United States, to allow a faster rise for the yuan. ”
http://tinyurl.com/efoo4
“Ed Leamer, director of UCLA Anderson Forecast in Los Angeles, likens the housing market to a powerful rocket that’s out of fuel and is starting to succumb to gravity. Odds are that it will crash back to earth rather than make a widely predicted “soft landing”, he said.
All major housing booms in the past 45 years have ended with peak-to-trough activity declines of more than 50 percent except one. In 1967, a rapid increase in federal spending for the Vietnam War provided new fuel for a sputtering housing rocket. Such a stimulus won’t likely be available to reverse the current downturn, given huge federal deficits, he said.”
http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2006-06-27T205327Z_01_N27446048_RTRUKOC_0_US-ECONOMY-HOUSING.xml
‘“Ed Leamer, director of UCLA Anderson Forecast in Los Angeles, likens the housing market to a powerful rocket that’s out of fuel and is starting to succumb to gravity. Odds are that it will crash back to earth rather than make a widely predicted “soft landing”, he said.’
fuel = home equity gains
thrust = housing ATM-financed consumption spending
gravity = higher interest rates and tightening lending standards
crash = the ultimate result of housing price deceleration, which is falling prices, and no more home equity gains to use as fuel
No bubble out here in Salinas. But that aside, here is what the local bay area RE guru has for you (this email came today):
“First of all, as I have previously announced, we have purchased a Penthouse Suite at the HP Pavilion which is home to the San Jose Sharks and numerous other events like concerts, Disney on Ice and more. As a past client, current client or future client (meaning you have made an appointment with me to discuss the sale or purchase of a property or have attended one of my home buyer/seller workshops or have referred a client to me) you will have access to tickets to these events so that you can come and enjoy a game or concert with me at my suite. No cost! No kidding. My way of saying thank you for allowing me the opportunity to be of service to you in your real estate needs.”
Read and vomit:
Virginia homebuyers could be hurt by proposed mortgage regulation (06/27/2006)
http://www.timescommunity.com/site/tab2.cfm?newsid=16854319&BRD=2553&PAG=461&dept_id=506071&rfi=6
Anybody else seeing totally irresponsible advertising by Builders? StanleyMartin had a large add in this last weekends Washington Post advertizing houses by their monthly payment at low “fixed rates”. Then you follow the aterisk down to the fine print and it says monthly payment based on 100% financing with a 5/1 1.75% option ARM with 7.5% APR. Total loan balance may not exceed 120% LTV. Assumes monthly tax savings based on a 31% Federal Tax bracket.
I see many lawsuits in their future. So if you purchase their 800k house for 2200 a month, after 3 years you will owe 960k on the house and you will no longer be able to pick the negative amortization option. The minimum payment will skyrocket up to fully amortizing at 7.5% on a 960k loan = $6,712. Meanwhile the house will likely only be able to be sold for 600 to 700k. If you haven’t already declared bankruptcy the rate will reset based on the libor (+ some) after the 5th year. So your 7.5% will likely bump up to 8.5% or 9%. Stanley Martin is helping to create the ultimate F*cked borrower! Unfortunately this was a print ad so I don’t have a link to show this madness.
I saw an ad on a new condo building in D.C.: No mortgage payments for 6 months.
can you scan it and put it up on the web somewhere so we can see it?
Thanks.
need2leaveca–
I have to admit, that fireplace in the bathroom is pretty awesome…
Report from ground zero… “HomeWorld Expo 2006″ last weekend in at the Anaheim Convention Center in Anaheim, CA (Orange County). Reportedly the largest home show in California with over 2,000 exhibitors and, in previous years, over 10,000 attendees.
I had never been to a home show before. For those who have not seen one, it is a very middle-class crowd. The exhibitors are everything home related - companies like Home Depot, mortgage companies, people selling various home improvement products and services, and big ticket items like spas, furniture, etc. It’s kind of like the crowd and exhibits at modern day fairs - just the commerce part (no animals, quilts, etc.). Companies go to a great deal of trouble and expense with their elaborate displays - ex. a manufactured housing company had constructed a sample home in the convention center.
The event was DEAD. There were more exhibitors at this event than attendees. Even though I am a bubble-head, it took me a while to figure out what was going on. I walked through the main HomeWorld Expo part of the show and the despiration of the exhibitors was obvious. I chatted up some exhibitors and convention center staff. Evidently, this was by far the worst attended year of this event. Some exhibitors wanted their money back. I guess it was easy to generate attendance in the past with all the interest in real estate in Orange County - flippers renovating homes, HELOC’ers buying whatever their hearts desired…
There was also a “Body Beautiful Expo” part of the show with cosmetic and medical booth - also a dud. The headliner exhibitor was Thermage (a skin tightening procedure). Out of curiosity, I watched a presentation by a physician who does this Thermage. When she concluded and asked for questions from the croud, she was hammered with questions about cost. When she said that the procedure would cost 3-5k out-of-pocket, the lack of interest from the croud was obvious. Without the house-as-ATM the ability for middle-class Californians to afford cosmetic procedures will drop off a cliff.
Excellent observation! Thank you for posting that.
I know this has been covered in the past, but I just transferred my online bank savings accounts back into my brick and mortar bank. I’m now looking for a reasonably safe place to put the equity money from my sold home, that will draw a halfway decent return. Any updated suggestions would be appreciated.
Just wondering, why did you pull the money out of the online accounts? If you want (fairly) quick access to your money *and* a good interest rate, they’re almost always far better than brick-and-mortar.
Here in the DC area, there are some reasonably good brick-and-mortar deals on super-safe investments (e.g. CD’s) from places like Sandy Spring Bank, but in the rest of the country, my friends and family (with money to sit on) tell me the offers are not nearly as good, often a full percentage point or more below online banking.
Have you checked the rates on CDs at your bank? Mine has 4.8% on 6 month certificates. Vanguard’s Prime Money Market (VMMXX), home of my “hit by a bus reserves” currently has a 4.9% yield.
Of course, those may be too safe and too low a return for you. In which case, good luck!
Ground Zero:
I used to love that exhibition. It was a classy affair. Then several years ago it was going downhill. More mortgage lenders, funeral mfg’s selling caskets, pest control services, etc. Thanks for the news that it has now hit rockbottom.
I wanted to repost a link that Ultimate Warrior put in yesterday to a Schwab Article. It was an excellent summary of many of the concerns we all have towards the housing market and Schwab is willing to bring these facts to light. Enjoy!
http://tinyurl.com/hplc6
Thanks to both of you, missed it yesterday.
I have been reading the blog for a few months now, and love the knowledge in so many economic areas. I don’t post, because I have little expertise to add. I would love a thread to address my question for the econ guru’s out there:
The blog is filled with people from So Cal who are more current with respects to the OC LA and SD areas that can tell me how this housing bust is affecting OTHER areas of CA’s economy like retail sales, travel, etc.
I live and work in the IE, in an adventure sports industry (not a cheap one at that), and I am trying to confirm my belief that our numbers this season are down because of the housing crash and other economic factors related to it. I have already had a couple friends who were in RE get laid off as a result of the crash, and am seeing a slowdown in some areas…
The puzzling part of my theory: Our friendly rivals in AZ (very close to phoenix) are not seeing the same downturn in the business, in fact they are up. Anybody able to help shed light on CA consumer spending habits lately?
One theory: The bubble is rolling inland. The priciest coastal areas have seen the greatest slowdown in appreciation thus far (e.g., yesterday’s CAR report shows Santa Barbara County’s median price down 12.2% from 4/06 to 5/06) and hence home equity cashout financing is shutting or has already shut down. Though used-home inventory is piling up, price declines do not show up yet in the AZ data (or other areas where California investors plowed into) and hence the home equity ATM is still providing for fun and toys at this stage of the game.
One more theory,
Phoenix metro has a large transient population (the Snowbirds) that the IE lacks. Many of the snowbirds have second homes in the area that they can afford, and their lifestyle is not dependent on equity withdrawal and/or flipping. The question I would ask is if your rival has a normal seasonal volume downturn in the summer, as this would indicate they are affected by the snowbirds coming and going. In addition, even if the snowbirds are starting to get squeezed, this past season was planned before the masses even started hearing about a housing slowdown.
I spent a year in a small town just outside of Scottsdale. The population literally doubled in the winter/spring months, it’s something you need to see for yourself to truly appreciate. Every merchant in town had to figure out how to survive the lean summer months. Their economy is alot different than the IE’s.
SX -
Good point as to why their economy is different from the IE. Actually, usually our busy season is in the summertime here, and theirs summers are not as busy as wintertime, but they are finding their summer numbers at near all time highs. As far as our numbers here, we are having an unusually low year that really started slowing in April. we’re down nearly 40%. Does anyone know how the ATV / SCUBA / Retail is doing in So CAl? I have heard from previous posts that the malls seemed unusually dead in the OC, are there any good numbers or sites out there that can confirm this stuff?
BTW, I like GetStucco’s theory regarding the timing of investments. That might be exactly why the slowdown started here. Just looking to see if any other industry is showing it as well.
Danielle DiMartino: We’re still in denial on housing
http://www.projo.com/business/content/projo_20060626_dimart26.1823355.html
‘Goldman Sachs recently noted that the rate at which supply is growing indicates the inventory-to-sales ratio will rise “to levels that have historically been followed by real home-price declines.”‘
Great to hear that major Wall Street firms from the longstanding (Goldman) to the more recently established (Schwab) are suddenly forecasting real home-price declines. It sounds like affordability may once again return in our lifetimes (provided we live long enough).
Read and vomit:
Virginia homebuyers could be hurt by proposed mortgage regulation (06/27/2006)
http://www.timescommunity.com/site/tab2.cfm?newsid=16854319&BRD=2553&PAG=461&dept_id=506071&rfi=6
Definitely grasping at straws. IMO, everyone who wanted to buy has already bought. How much lower can their standards go?
Is it me, or is there **just the slightest possibility** that some people just shouldn’t/don’t want to own homes? Why do these GSEs think they should make loans available, seemingly regardless of risk, that people expect the govt to back in the event of mass defaults?
Problems…
A good one from USA Today yesterday.
The knee-slappers:
“The stocks are acting like (housing) will get killed,” he says. “This is your chance to buy good stocks at cheap prices.”
and (from another guy)
“It’s more evident each day we’re in the early stage of a down cycle.”
“early stage”, LOL
Here’s a funny quote;
“A housing-driven recession is “mathematically impossible,” said Wachovia Bank senior economist Mark Vitner, because housing is derived from the rest of the economy and construction is actually a smaller portion of the U.S. economy than during the housing boom of the late 1970s. Even if home values soften in expensive markets, many homeowners are still sitting on substantial home equity cushions.”
It should go down right next to this one”
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
Posted other times / places but worth an occasional review:
Christopher Cagan’s study of the last housing bust and recent boom in the LA basin (including OC). Of particular interest: The graph which shows the point of most rapid price drop in the last bust (92-93) — as Cagan pointed out, this was when defaults kicked in. Thanks to the prevalence of ARMs, it will get much worse this time, IMO.
(CAUTION: PDF FILE)
http://www.firstamres.com/pdf/Cagan_FireBurn_1104.pdf