August 24, 2006

HousingPanic Stupid Question of the Day - Bonus Edition


Inventory is at record levels. Sales volume has cratered.

Will home prices now:

A: fall faster and harder than anyone ever imagined?

B: fall slowly and surely for years and years to come?

C: stay the same but lose ground to inflation?

D: keep rising at the pace of inflation?

E: soar just like realtors, David Lereah and the NAR said they would?

92 comments:

Anonymous said...

A

we're screwed beyond belief

Bake McBride said...

Fall slowly and surely for the next 3 years...07 & 08 will be when most of the damage is done. That's when most of those "smart people" who took out those exotic loans will start to face reality.

Anonymous said...

The members of the two generations who have perpetuated this deserve one another.

Those of the boomer generation who are greedy, arrogant and self aggrandizing enough to actually somehow believe that the shack they live in is worth another individual mortgaging himself to the hilt and breaking his ass for decades for the privilege of living in said shack and their wannabe Gen X offspring “investing” in this crap trap. May they both get their asses shellacked in the upcoming recession! Eat Fancy Feast in your middle and old age you sniveling idiots.

Anonymous said...

You are a bitter renter!

LOL!

Anonymous said...

Until people actually begin to appreciate the gravity of Pluto being de-listed as a bonafide planet of our fair solar system, I have to believe that prices will remain essentially flat or at least increase with the rate of inflation. However, once joe-sixpack gets wind I have to believe that it's going to be nothing but crash and burn.

David in JAX said...

It's going to depend on how fast and how hard the recession comes.

Hard recession, prices fall fast in 2007 and then steadily decline for a few more years.

Soft recession, prices slowly drop until 2012 or so.

No recession, yeah right.

Anonymous said...

I think real prices have already dropped 20% in many places but we're just not seeing it because of incentives and lack of sales. The only sales we're seeing are by the few dummies still buying

A

Anonymous said...

GenX is not the offspring of the boomers- that would be GenY.

Boomers are f'ing GenX.

Anonymous said...

slow slide for the next few years after an abrupt drop. Even lereah concedes a 10% drop at first is needed for the mexican standoff to end.

Anonymous said...

trillions of "wealth" are about to be lost, much of it borrowed (leveraged)

this bubble pop will be so much bigger than the NASDAQ pop - more people involved, more money and significantly more leverage

I vote "A" too

Anonymous said...

boomers have gen x and gen y kids and they've screwed both

David in JAX said...

Gen Xer's may or may not be the children of boomers. If we go back to the original definition of Generation X from the early 80's it encompasses everyone born between 1957-1976 (X being the Roman numeral for 10 meaning the 10th generation of Americans).

If, like me, your parents were born in 1945 and you were born in 1974 then you are a Gen Xer who is a child of baby boomers. If your parents were born in 1950 and you were born in 1980 then you are a Gen Y with baby boomer parents. It's all based on year of birth, not who you were born to.

Dogcrap Green said...

Alrighty I will bite

You posed the same dumb ass question about Toll Brothers at $28 and I said buy. Certainly buying at $28 looks better than shorting.

Now I will say buy your home.

WE HAVE DEFLATING NOW NOW NOW NOW NOW NOW never mind yesterday. NOW WE HAVE DEFLATION.

borkafatty said...

Agreed, more like bendover and take it up the tail Pipe.

OT:

Took the kids school shopping the night (not that they needed anything)
but I have Girls so nuff said.

Anyway it was a little busy nothing great, I had 3 people in front of me as there was only one register open & a line forming behind me.

I like to observe what people are doing, and noticed all 3 that were in fornt of me were using credit cards, no not debit you can tell the difference between the 2.

As I glanced behind me I noticed others with the plastic in hand ready to go.

I get to the register and the young lady goes, credit or debit? I said neither cash.. you should have seen the blank look on her face, it was like a moment when someone tells a joke that is not funny, you hear the crickets chirpping.

What a strange world we live in when cash is considered an oxymoron..

Crash, Bang, Boom.

keith said...

note everyone that dogcrap publishes a blog called "The Upcoming Housing Boom"

Oh, man, that's funny

keith said...

"why the world is flat" and "evolution - the myth" must have been taken already huh dogcrap?

autofx in Phx said...

bake mcbride's got it right. The true sh*tstorm won't be seen until more of the loans reset at higher rates, and more of the smarty-pants are forced out of the homes they occupy.

As that unfolds, we'll see an accelerating decrease in retail spending, leading to an employment crisis.

The foreclosures, bankruptcies and layoffs we're seeing now are a mini foreshadowing of what's ahead.

Watch for banks going under. Watch for gold and silver to explode in price as our govt prints up "money" as never before.

A sh*tstorm of F5 severity cometh.

Now would be a really really REALLY good time to "get it" if you haven't yet.

Anonymous said...

Homebuilders stocks... were now lowering their year guidance numbers to keep in-line with Analysts estimates.... to prevent massive stock sell-offs !!!

They do huge share buybacks also to mask LOW HOME SALES !!!!

Have fun folks !!!








====

Alan P. said...

A is not possible because I said some time ago that the price for some will be $free$. There will be mountains of foreclosures, so many the banks go under. There are already bank owned houses around here and the crash hasn't even started. Prices will crash, the banks will unload for pennies on the dollar starting later this decade. Don't bother with the seatbelts kiddies, jump now.

Anonymous said...

Put up a clip of NAR spokes people spinning and then a clip of the character from Outlaw Josey Wales saying "don't piss on my boots and tell me it's raining".

borkafatty said...

Oh and one more thing, one does not have to be mortgaged to the gills and still have a hard time making ends meet, shit I own and live cheap compared to some of the stories I read..Things are expansive anyway no matter if you are house strapped or not.

Anonymous said...

First B, then A, then B again. Then B for a while longer, then longer still. Think Japan, but much worse. Imagine a long slow painful descent, recession, stagflation, unemployment, declining property values, declining equity values, and a declining dollar. Everyone will postpone his own day of reckoning as long as possible, be it homeowners, builders, banks, the Fed, Realtors, or elected officials. They will all stay in denial until they are personally screwed, at which point they will blame everyone but themselves. You may not live long enough to see property values increase again.

Anonymous said...

Boomers have been fucking generation X forever.

Time for some "bitter renter" schadenfreude??

Oh bring it on

Anonymous said...

No housing bubble in Miami. My "house" is still the same as 20 years ago, probably not worth as much as it was back then. But, it's home and it rocks me to sleep every night. Retirement is good. Let the gator go. Home sweet home.
Signed,
Sonny Crockett

invest3 said...

With this market in freefall, looks like the binge debtors may have a bit of a hangover.

"Hey, where’d all that equity go?"

“What d'ya mean I have to bring a check to closing?!?!?”

borkafatty said...

But, it's home and it rocks me to sleep every night. Retirement is good. Let the gator go. Home sweet home.
Signed,
Sonny Crockett

I'm with Sonny /..Cheers M8

Anonymous said...

Why do people have a problem with using credit cards? I use them for every single purchase I make. 1% cash back on everything, 5% for groceries and gas.

They pay me $30-50/month to spend what I would spend anyhow. You're dumb not to take the free money.

invest3 said...

Most people don't pay them off every month. The average household with credit card debt owes over $12,000 on them.

Stuck in So Pa said...

I'm thinking B or C. Housing is always sticky on the way down.
We also use credit cards for everything. Like anon said: cash back on everything. We also pay off full amount every month. Credit card companies don't like us. Maybe thats why we have a lousy FICO. We refuse to go into
socially acceptable, structured debt!

Anonymous said...

We are on the right side of the neck (looking left to right at a lengthy chart of housing prices relative to incomes) of a head and shoulders pattern. Dead cat bounce in Spring 07 - false sense of "whew, that was close" when the right shoulder appears. Then down we go from there - as we drop off a cliff on the right arm back to imaginary line that runs horzontal with our bunghole. SB

JR said...

Anon 5:54:34 has it right:

PRICES HAVE DROPPED 20% ALREADY

In Sacramento, we have seen many $500,000 re-sell homes repriced to less than $400,000. AND THEY HAVE NOT SOLD YET.

The builders have cut 25% off the prices of their inventory. And they are having problems keeping deals under contract and getting rid of standing inventory.

Any one who buys a house today is a fool. Prices will run down another 20% in the next 12 months, then perhaps another 10% in the following 12 months. A $500,000 house in June 2005 is worth $400,000 today and will be worth $288,000 by June 2008.

borkafatty said...

Credit card companies don't like us. Maybe thats why we have a lousy FICO. We refuse to go into
socially acceptable, structured debt!

BINGO! I do own 2 but refuse to use it unless dire need so in reality I dont own them, which is why I need constant cash flow..to me the cash back thing ehh! not worth it ..and this is why my FICO is in the can also thank you for pointing that out I thought it was just me,

Christina said...

I would say B, but only because I have read some very lurid, outrageous scenarios. If there were an option "fast and hard, like some expected" I would vote for that.

Anonymous said...

First A, then B after A is finished.

BRAHAHAHAHAHHA!!!!!

Anonymous said...

A - from 2006 through 2010.
B - 2010 and beyond.
C - if the interest rate remains the same or goes up higher and no salary increase due to recession, if one is to happen.
D - is a wishful thinking.

Anonymous said...

dogcrap TOLgreen, how's the beating feel? Next level 20 after those with large quantities of this turd, keep it propped up and sell to the likes of you and get out of their positions.

GUARANTEED to go under 20. When do you run screaming?

borkafatty said...

here is an interesting piece

http://tinyurl.com/owxtm

Anonymous said...

Negative Savings Rate + Jobs Growth tied to RE + Equity Extraction + ARMS + I/O + Inflation + National Dept + 70% GDP tied to Consumer Spending + High Oil Prices + Low Affordability + Record Inventory + No Manufacturing Base + War = Happy Soft Fluffy Fuzzy Landing.

My vote is for F
F is for Fluffy
F is for Fuzzy
F is for ____

Richard said...

Pimp thread guys !!!

LOL

Anonymous said...

I wonder if there was a big run up in the value of home owner equity on Walton’s Mountain right before the Great Depression. I mean in the show, it was a free and clear house and operational sawmill. It must have been worth quite a bit when things were flush. Once things unraveled and no one had any money and not many could receive credit, how long do you think it took for it to become evident to Jim Bob, John Boy and Granny that the equity wasn’t really worth anything? Difference with that generation from what we have today is they were scrappers – I’d take odds on Granny from the Waltons over most assclowns you meet today in a contest of survival.

Anonymous said...

The problem with the US version of the Real Estate boom is the massive overbuilding. Literally STOP building. They are just adding toward the problem with these condo or residential projects that are turning into graveyards.

hence the massive inventory, the difference from Europe(where the building wasn't nearly as bad) and the bigger bust to come.

Man, what a mess. Send those illegals back across the border. You don't need them to build anymore MFer.

borkafatty said...

Looks like the Chinese are smelling the down wind draft from the housing fire.

Amazing how things are happenng so fast..cant be our "Lame Duck President Status"? Well could it?

http://tinyurl.com/j7ewb

Richard said...

Economic Projection Mid 2006



1. Soft Landing vs. Recession. The Wall Street bulls point to strong corporate earnings (from downsizing and offshoring) and the growth of GDP from productivity (also from offshoring) as strengths of the US economy. But the strength of profits is based on the hollowing out of our manufacturing base, cutting us wages. Government statistics lie about how low inflation is masking that our economy in real terms is struggling along. The jobs growth after the last recession is the weakest we have had, and that is measured with government doctored statistics such as the birth / death of new companies that may not be there. The major cause for recession ahead, that is already unfolding is that rising interest rates have already started cutting off the housing bubble. Introductory low Adjustable Rate Mortgages are being reset at unmanageably high levels, forcing sales and foreclosures. As consumers are forced to make higher mortgage payments, and house prices roll over, the sources of borrowing will dry up so consumers won't be able to continue spending as much. Consumers account for 60% of the economy. A slowing economy will mean lower sales and profits for businesses. Lower profits will cut jobs, leading to an even worse position for the consumer. Over capacity in manufacturing will eliminate more jobs, including the jobs for building factories. Business investment will collapse. This will be a big slow down, because the problems feed on themselves.



2. Strong dollar vs. high inflation and interest rates. If the dollar maintains its purchasing power, so inflation is low, interest rates do not have to rise. Wall Street points at the low wage growth and relatively stable dollar in the last year to say there is no problem. But the prices of basic important commodities, headed by oil and metals, show that the dollar is losing purchasing power. The biggest driver of the dollar in the long term is the Federal Deficit, because as the government spends more than it collects in taxes, it prints more money, flooding the world with dollars and thus making the dollar less valuable. Government deficit, driven by war costs, baby boomer retirement, tax cuts, and recession will drive the government to print money, decreasing its purchasing power, causing inflation, higher interest rates, and even more deficit. The deficit rises because there is higher interest and in recession revenue decreases. Government deficits accumulate to eventual currency crisis. The long term baby boomer demands on the government will make the deficits impossibly worse unless we change the current promises. Since cutting retiree benefits is political suicide, that is not likely, so the deficit will grow. Rising interest rates will make the cost of financing homes and cars prohibitive. The huge overhang of the accumulated Trade Debt will mean that the dollar will weaken against foreign currencies, further weakening its purchasing power and increasing inflation on foreign purchased items. Rising interest rates will make the cost of financing homes and cars prohibitive. This feed back is self defeating, because as the dollar starts to drop, the band wagon effect of lots of parties wanting to get out of the dollar can't happen slowly.



Additional inputs:



3. The Fed is said to balance the requirement to keep inflation low against maintaining economic growth by setting short term interest rates. Their decision to stop raising rates is considered supportive for business. That they did this in the face of rising inflation, most notably in oil and metals, is a decision to let the dollar slide and inflation continue. The problem is that we are likely to have both higher inflation and slower economy, because we have too much debt to unwind, we have world competition, we have expensive wars and retirement requirements.



4. Oil is a special case, because it has become a scarce resource in the world where we don't know how to provide the energy to maintain world economic growth. 20 years ago we had 10 Million barrels a day of excess production that could be brought on line if there were demand for it. Today at 85 M bbl / day we have no excess capacity. If we have a world conflagration such as shutting down the Straights of Hormuz, we will face real shortages. Even without any of a dozen scenarios for world tension erupting, there is the fundamental geological limitation that there are no more rotting dinosaurs, and the oil supplies that were built up over millions of years will be used up. The exact timing is debated, but even the optimists only allow for a few decades and the pessimists say we are now at the peak of production. Oil prices are up because of wars, and shortages from difficulty of finding even one quarter as much new reserves as we use in a year, as well as from the flood of new dollars from deficits. Higher prices at the gas pump, for home heating, and for airline tickets, plastics and fertilizer will limit discretionary spending on other sectors of the economy. The result is world conflict and confrontation over resources. Wars are expensive and inflationary, and interpreting the short term problem in Iraq, we expect the situation to worsen.



The feed back of higher inflation and higher interest rates on the slowing economy, and the slowing economy on wealth and spending, make the downturn scenario very big. One economist likened the concern to the flying of a jet plane: if it slows too much, it will crash.

Bud Conrad

borkafatty said...

Richard: Interesting scenarios there thank you for the read.

Introductory low Adjustable Rate Mortgages are being reset at unmanageably high levels, forcing sales and foreclosures.

This is most relevent and happening as we speak...the rest is soon to follow for sure.

You wonder what are all the millionairs doing with their money these days.

dvo said...

Borkafatty,

Cash IS an oxymoron.

Why oh WHY would you carry around dirty, losable, flammable cash?

My wife and I use the rewards Mastercard for EVERYTHING.

- The miles rack up so fast...free stuff all the time. And not just airline tix...merchandise, travel, CA$H.

- Automatic downloads into our money management program. Attach a spending category to a payee, and the program will remember it next time! Me doing our spending register: enter, enter, enter, enter, DONE. Makes writeoffs MUCH EASIER at tax time, too...

- Here's the biggie: We Pay the Damn Thing off IN FULL every month.
Finance charge = $0.00! In fact, we can keep the money in an interest-bearing vehicle until the last po$$ible day! Thanks, CC company -- you suckers!

In short -- cash $ucks. Unless your gains are ill-gotten/shady, I guess...*grin

And GOLD/SILVER -- that's another, non-BS-fiat story.

Anonymous said...

why are there so many condos and houses for sale in santa barbara all of a sudden? i thought everyone wanted to live there, so what if there are no jobs. were all these houses bought by investors?

Anonymous said...

a $500,000 house near bakersfield sounds nice right about now.

Anonymous said...

I'd like to believe "A", but I don't see the double digit price drops as of yet. I still see sellers listing their homes @200 - 300k more than they are worth...but they aren't selling either, just sitting there with a big price tag.


jj

Alan P. said...

Check out Figure 2. on this link:

http://tinyurl.com/lar6b

Next stop recessionville.

Anonymous said...

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

Anonymous said...

To me, the strangest delusion that this bubble has created is then idea that you can buy a property that has had a few cosmetic upgrades done and purchase for a price 25% - 40% more than it is truly worth when using a conservative cash flow model even though the property sits in a blighted or ghetto area.

I am seeing people plunk down their money or borrow it or a combination of both to buy properties adjacent to crack houses, public housing, derelict buildings, overgrown vacant lots, vacant industrial sites, etc. To live in these types of neighborhoods with the miscreants that normally inhabit them, it must be an everyday occurrence to be panhandled at a minimum. Of course, if you are into hookers or dope, you wouldn’t have to walk too far to score – just open you window and yell “Hey Tamisha, how’s about a date?” It doesn’t appear to be just foolish but downright dangerous as well.

I guess if you are an adrenaline junkie who likes the sensation of walking through an urban jungle every time you need a gallon of milk it would be fulfilling. How do you take a peaceful vacation with the nagging feeling that your “neighbors” are probably robbing you blind everyday. Of course with the price you paid for the new abode in the up-and- coming gentrified neighborhood, you might not have enough cash for any belongings worth the effort of stealing and your idea of a vacation would be to get a movie from Blockbuster and order a Pappa John’s pie. Probably couldn’t co-ordinate consistent days off from the two jobs you have to work at in order to make the monthly notes on the “historic” pad. Oh well, vacations are overrated sour grapes anyway.

Anonymous said...

QUESTION:

Is it possible that the reset of these ARMs, majority of which ($2 trillion?)will happen in 2007, be gradually done or phased so as to avert massive foreclosures?

Any thoughts?

Anonymous said...

I'm wondering if the above scenario will produce some Yuppie vs. Bum street fighting.

brokersleaveyoubroke said...

I like to observe what people are doing, and noticed all 3 that were in fornt of me were using credit cards, no not debit you can tell the difference between the 2.

Funny thing about debit cards, if I use it in a store my bank charges me a transaction fee. Credit card is free as long as I pay it off every month. I would prefer to use debit card but I don't because it costs me money.

Anonymous said...

Tough one. The resetting of ARMS is going to take 3-5 years to shake out. I think we will see plummeting prices, then pauses when people think it is finally over and then slow drifts. All told - we could be looking at 7-10 years,

Dogcrap Green said...

Thanks Kieth - 33 folks came from your blog to hear the truth.

Try not to damage the minds of the 2 free thinkers I sent your way for a laugh.

Anonymous said...

Speculation, speculation, that is what all the investors do. Looks like that is what this blog is doing as well. What level heads are out there? Don't buy on credit, stash your bucks, diversify, what the H*** is wrong with that? Not all real estate agents push people into unaffordable properties, I don't. I think D for the areas without the loonies. Take a ten year tour of the prices in your area and see where it comes out. 5% per year in PA near major university. Country of risk takers or idiots? If risk takers then the denial will go on, if idiots, the same outcome. Where have all the sane people gone?

Anonymous said...

I'm going with B -- it took about 11 years for this bubble to crest, it'll take about six or so for it to crater, then back up at the rate of inflation until the next bubble.

Richard said...

Part II

A key inconsistency in my 2 points is that conventional wisdom suggests that the two opposite ends of the spectrum are high inflation (with high growth economy) against low inflation (and perhaps recession). I argue that inflation will appear along with recession in the worst of both worlds.

The problem is that if the reader accepts the argument for recession of point 1, he may feel that the slowing economy will bring deflation first. It is a valid argument. I need to make my case for inflation in my point 2, more strongly. I have struggled with this, as the logic is credible. The biggest example was in the Great Depression, where we had 30% deflation, especially in real estate, with a credit collapse. Also to add to that point, there is some evidence that for small recessions, the demand for credit falls, so inflation and rates fall. For the real estate recession I see ahead, caused by the unwinding of ARMS and too much debt, it looks like we could extinguish enough credit to drive some prices down, especially housing. So the case has merit.

But my tentative conclusion is that the government has already planted the seeds of continuing inflation in the huge and accumulating budget deficit. I argue that the constraints on the dollar in the Great Depression, of being tied to gold with only one big revision by Roosevelt from $21 to $35, was strong enough to limit paper printing and devaluation of the currency, and that caused the deflation. The financial community has taken the de facto "Moral Hazard" support for extending its leverage way beyond any reasonable measure with derivatives supporting huge expansion of credit and money that has allowed us to avoid meaningful expunging of bad debt. The government has as much said so in the emphasis on keeping the economy growing as opposed to supporting the dollar. My piece on Janet Yellen confirms this as even Fed policy in saying that the Fed doesn't use the dollar (meaning exchange rate) when making rate decisions. They do look at inflation, which some say is de facto supporting the dollar, but they then manage which measure of inflation to use, and pick an innocuous "core" PCE, not for example, oil or gold or housing. My argument is that the "toothpaste is out of the tube" or the "writing is on the wall" that the Fed and the government don't care about defending the dollar, and would be happy to let it slide, because then foreigners would buy more US produced goods like agriculture, and help US based business. A decreasing dollar makes managing their bloated deficits easier too, but I'm not sure they care or are collectively smart enough to be actively pursuing that logic.

On the recession slowing the economy and decreasing inflation, the data support that view when the recession is small based on the 4 year business cycle, that has roots in the Presidential cycle, inventories, and capital investment by business. But there were 2 notable big recessions, accompanied by oil shock as now, in 1974 and 1979 that were a similar collection of events to what I see happening now. Then, oil shocks drove inflation and interest rates up. The higher rates shocked the economy and we had the two biggest recessions post WW II. Very high inflation can cause a recession. I think we are close to that tipping point. The key restraint on US rates rising has been foreigners re-investing their huge trade surplus (to them) in our government debt, keeping rates low and the dollar stronger than it would be otherwise. They have surprised all of us economists in keeping our rates low, even as the dollar has dropped 25% against many currencies, meaning that their investments here were losers in their home currency. This has only been a threat, and hasn't happened. If it does, the dollar will crash as there is nobody that would want to hold dollars. But I have been proven wrong for years on this fear, so I have to allow for being wrong again. ( An interesting related line is your comment about China rising to ascendancy: if they want to crimp America, they could let their Renminbi rise, and sell off a few hundred $B of US dollar assets. It could get that time bomb to explode and the dollar would collapse in a feedback frenzy, with others like Japan jumping into the crisis.)

I think the more important argument against deflation is from my point on Peak Oil. If we are even a few decades away from no longer increasing oil production to support our and Asia's economic growth, then we can expect to price this most fundamental of world commodities ever higher, and expend huge sums on wars and trying to find other energy sources, all of which will lead to inflation, even more extremely than the examples given in the 1970s.

Bud Conrad

Had good credit once said...

Bork,

I had a 795 last fall when i was thinking about buying a house. Got the free reports and closed out a few accounts that were still open (I had long ago cut up the cards). No more cards. Paid off my remaining mtg. Debt free.

I wonder if my credit score drops.

Anonymous said...

the country got a real does of economic reality this week, and I'll vote A. Lines and waiting lists at new condo developments seems like a million years ago now

Russian's view of the dollar said...

Keith,

Here is a great pic to steal and use. I would caption it "good money after bad" to describe the money the phlippers poured into their "investments". Remodeled kitchens, granite, tile, you know...

http://www.mosnews.com/money/2006/08/22/russiansdefaultfears.shtml

Anonymous said...

I think the fee on debit cards depends on what particular plan you have with your bank. I don't pay anything for debit card use.

I am not hoping for a crash in housing as the resulting overall economic disaster would result in the disruption of my comfy lifestyle. Having some of your assets out of the US in non US dollar denominated form might be wise also.

The really serious economic problems will be caused by a change in psychology of consumers. What if it becomes "cool" to be a saver, and to spend as little as possible? Businesses which depend on the current state of rampant consumerism will encounter hard times.

Anonymous said...

dvo,

Mastercard charges retailers 3%. They are not suckers. The interest is the main portion of thier profit but no matter how you use the card...they still win.

American express charges 5% which is why some retailers refuse to accept them. But almost everyone accepts them now.

Blue cash is probably the best cash back card (3-5%). The miles cards are ok but I buy my tickets online for dirt cheap so cashback is always king to me.

Got $640 free dollars just by using my blue cash last year for everyday purchases. Now if I can find a way to pay my rent with it!

Anonymous said...

I'll be different and vote B.

A looong drawn out process of recession/depression. The Fed pulling out all the stops until after the Nov. election. Then a slow death of the US economy as we know it. Gas prices didn't jump over night. It took 3 years to go from $1 to $3/gal. The same with happen process will occur with real estate.


The housing deals will happen, but some of you won't have jobs to take advantage of those deals. It's hard to buy a house without a job.

We must remember that a recession/depression will effect everyone. Be careful in what you wish for.

REM said...

Thanks to this blog, I have just taken the deposit I was going to put down on a new house here in Gilbert, AZ and paid off my credit cards. My girlfriend and I had found what we thought was the best offer to build a house around these parts at $250,000. When we told the builder we were having second thoughts he knocked the price down to $210,000. $40,000!!!! Something is not right here. I took it as an insult. God it is nice to be debt free and renting!

Richard said...

So what idiot ANON said whatever the US$ does China will get burnt and to hell with them...

Hmmm...

CHINA OIL BOURSE



[China is the first to go beyond the rhetoric of opening a new oil bourse.

As China’s appetite for oil grows by leaps and bounds – and the country successfully secures supply contracts around the globe – this bourse is a no-brainer. Venezuela is providing 150,000 barrels per day (bpd) to China this year with plans to double that by 2007. By 2009 it plans on sending 500,000 bpd. This could end up resulting in direct competition with America for oil supply.

http://www.bloomberg.com/apps/news?pid=20601086&sid=ajLuGT5BWt34&refer=
latin_americahttp://www.forbes.com/home/feeds/afx/2006/08/23/afx2969811.html

The first day of trading last Friday reported a “robust trade.” Insiders say two overseas oil giants have set up branches in China to trade on the Shanghai Petroleum Exchange but their identities have not been disclosed.

http://news.xinhuanet.com/english/2006-08/19/content_4981883.htm

This bourse will certainly empower other nations to implement their promises to do the same – open non-dollar denominated oil bourses. I would suspect Russia is likely to be next. Moscow has already promised to open a domestic oil bourse by the end of this year.

http://www.themoscowtimes.com/stories/2006/05/16/041.html

Enter the yuan and the rubble into petrodollar (or rather, petrocurrency) warfare.

Of course it could be Iran that opens their on-again off-again bourse before Russia, but the fact that they have bluffed more than once indicates their primary goal may be to act as a cheerleader for the big boys (China and Russia) to lead the way. But eventually Iran’s bourse will see the light of day as well.

Russia, China, Venezuela and Iran all lean more towards state control than to the ‘free’ market – each in its own way, for better or worse. Beijing shows little sign of reducing state control over the oil industry within its borders even though it agreed to do so by December 11th of this year.

http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyID=2006-08-18T014529Z_01_SP308161_RTRUKOC_0_US-ENERGY-CHINA-WTO.xml

One week after 9/11, an 800-page document marking China’s membership into the WTO was rubber stamped in Geneva. The Doha Round of WTO negotiations has recently fallen apart, where U.S. bullying proved to be impotent this time around.

There are two points to note here: 1) U.S. power and influence has taken a considerable amount of blows and the wounds are not healing, and, 2) As Peak Oil becomes undeniable the free market will not be as “flexible” as it is today, so nations with centralized state authority will be more powerful; in other words global capitalism is dying. That does not guarantee what replaces it will be any better, but if leaders like Hugo Chavez are able to nurture their ideas properly, maybe it will be. – MK]

China opens oil bourse in Shanghai

Anonymous said...

Essentially,Mercantilism. Yeah, Russia,China,3rd world countries that have despotic traditions which used Marxism to keep despotic rule post-WWII and it now transfering to Mercantilism.

Almost like Nazism in some respects. You here people like people like Chavez, Putin and others talking about "organic" relationships, partnership between the "invisible hand" of the market and the traditional cultural rule of the state. Sounds like a new Fascism.

Scary.

LauraVella said...

It cant be anything else other than "A".

borkafatty said...

REM said...

Thanks to this blog, I have just taken the deposit I was going to put down on a new house here in Gilbert, AZ and paid off my credit cards. My girlfriend and I had found what we thought was the best offer to build a house around these parts at $250,000. When we told the builder we were having second thoughts he knocked the price down to $210,000. $40,000!!!! Something is not right here. I took it as an insult. God it is nice to be debt free and renting!




** Good for you Rem Knowledge is power ***

Anonymous said...

Here in SF, I vote for "B". In the outer orbits of the Bay Area, I vote for "A".

B will last for a long time, and be really unpleasant for lots of sellers. Keep in mind that slowly depreciating prices actually represent a major loss money for sellers.

I watched a house take 5 months to sell in SF recently. It was purchased for around $675, and sold for around $720. Sounds like a profit, right? But the seller (who bought it to flip) remodeled it (50K), and held it for about 6 months (about 20K). That's 70k right there - resulting in about a 25K loss. And I think the seller got off easy.

Imagine if the house had dropped by just 5%... now the seller's loss is closer to 75-80K. The slow leak that is "B" will actually represent a much deeper loss than the 3-5% declines you'll see year after year after year after year.

And hey, this is just my best guess. I am most definitely not counting out "A".

Anonymous said...

If history is any indication then "B"

http://query.nytimes.com/
gst/fullpage.html?
res=9C0CEFD6133BF93AA1575BC
0A966958260

Anonymous said...

A-We are so hosed.But screw it ,it had to happen.The general public should be alot smarter after this clears up in 40 years.

Anonymous said...

You folks still don't understand. You're wishing for a terrible event.

Having survived the troubled years of the mid-70's and the seemingly never ending 1980-83 recession, you have no clue what you're hoping for. When the recession hits are you going to have a job??? 10-20% here won't be working for 3-5 years. Do you really want an economic downturn?

Metroplexual said...

Anonymous said...

You folks still don't understand. You're wishing for a terrible event. """"


I don't know how to say this but few of us "hope" this. We ar just pissed off that the people in charge let this happen. It is cataclysmic and anyone cheering it is a jerk. But bad stuff is coming and bad policy decisions made it happen.

Anonymous said...

To anonymous-Thoughtful and stirring Question.Absolutely right about the devestating consequences.I have family that are in very bad spots.I have warned them from time to time.Lately It deteriorated on my part to just being right.I am concrened as hell about this yet at the same time,there are some crummy jrks out there that were so freaking low not only in there response to any concern,but also the way they had ripped off families,or first time naive homebuyers.I have upper management above me that will meet any talk of a bubble with fierce resistance.these same smucks will let every one of there workers go on believing ,and actually encouraging them to not think of reality.Right now my company is having 401k meetings to rake in more money from employees,and ending any hiring bonus to newly employed or refferrals so they can pretty-up there balance sheet.At the same time They know full well what is coming and have known for some time.My emmediate supervisors will be safe from what will happen.Maybe a couple of employees will be allowed to stay.I have seniority but will quit to make room for a fellow employee.I am prepared,and I am also Prepared to help.My Three Supervisors can go straight to hell,and I will help them get there.These slimebags are up to no f-ing good.These turds are incedibly sick natured towards any talk of reality.I don't have the heart for helping these people. The big reason for this is the change in attitude that america will have.Right now there are millions of Iraqi families suffering far worse than we ever will,Millions are dead and wounded,and are begging the American People to Reign in our government.These are CHILDREN,MOMS,and DADS.Iraq is a big fat lie,Iran is too,WE have been so freaking lazy as Americans that we swallowed obvious horseshit from our government,banks,and media so we could stay lazy and keep on fooling ourselves into not giving a rats ass.WE are sissies plain and simple,we think our politicians are phony but we are not?We suck.I was a white assed conservitive,and admit yhat I voted for the biggest goddamned murderer in the history of the world.Shut up Democrats you are worse.I do not believe in voting for the lesser of two murderous parties.We could not reign in these Jerks in WAshington,so now we will reap our just desserts.This isn't vengeance,call it natural law,we will learn one way or another not to be scared little lazy sissies.Our Time has come,and now we will pay.I do not feel sorry anymore for the bums,theives,con-artists,etc that populate this country from Wall street-WashingtonDC all the way down to your next door neighbor that was probably perfect his whole life but stood by, and wtched, as we all did the bloody murderous,child killing GW DICK CHENEY war machine destroy,and destabilize a country that had never done a thing to the US or America.Our soldiers are begging to come home,they were duped for their honor,what a scam,and we let it happen.FUCK YOU

Anonymous said...

I have experienced the downturns of the 70's 80's and 90's. I would like to think this time I am prepared.

Anonymous said...

The house in the photo is up for sale. Advertised as a fixer upper with some smoke damage!

Anonymous said...

>>Anonymous said...

You folks still don't understand. You're wishing for a terrible event.<<

It's unlikely most of these kids have jobs to lose.

Their parents may have more trouble supporting them though.

Anonymous said...

c

Anonymous said...

A: fall faster and harder than anyone ever imagined?

And thats all i gots to say bout that!

Alan P. said...

anon 3:54:28,

Well said.

devestment said...

The unexpected will happen so that the prepared and the unprepared will be separated from their savings thus perpetuating the welfare state of voluntary slavery.

Anonymous said...

Nouriel Roubini says "A"

Housing is in a free fall and is pulling the economy down with it

"This is the biggest housing slump in the last four or five decades: every housing indictor is in free fall, including now housing prices,"

The decline in investment in the housing sector will exceed the drop in investment when the Nasdaq collapsed in 2000 and 2001

"By itself this slump is enough to trigger a U.S. recession: its effects on real residential investment, wealth and consumption, and employment will be more severe than the tech bust that triggered the 2001 recession,"

"As the housing sector slumps, the job and income and wage losses in housing will percolate throughout the economy,"

"This is the tipping point for the U.S. consumer and the effects will be ugly,"

"Expect the great recession of 2007 to be much nastier, deeper and more protracted than the 2001 recession."

http://www.truthout.org/
docs_2006/082406K.shtml

Anonymous said...

Some people in Sacramento say "A"

At the Sacramento County Courthouse, it used to be that foreclosure auctions happened once a week. Now, several times a day homeowners are seeing their American dream turn into a nightmare.

http://news.yahoo.com/
s/kcra/20060825/
lo_kcra/9734571

Anonymous said...

Mr. Toll says "A"

“Builder: Oversupply slump worst in 40 years. Toll Brothers slashes outlook on new homes as orders plunge and revenue misses forecasts”

http://www.rgemonitor.com/
blog/roubini/142759/

Anonymous said...

H&R Block must be saying "A"

H&R Block Inc. said Thursday it is setting aside $102.1 million to cover possible losses from having to buy back mortgage loans as borrowers are increasingly missing their early payments.

http://www.miami.com/
mld/miamiherald/
15353310.htm

Anonymous said...

People at Coldwell Banker's is still hopeful.

Looks like "C" for them

http://www.centredaily.com/
mld/centredaily/news/nation
/15345330.htm

Anonymous said...

anon August 24, 2006 5:51:59 PM


LMFAO!!!!!

borkafatty said...

Friday, August 25, 2006 3:54:28 AM

Cheers Anonymous that was a good read.

Anonymous said...

Some of us are hoping for "a terrible event" if that's what it takes to shut up the equity-braggers and drive the flippers into poverty.

The greed culture could use a humbling experience.

If I suffer it'll be worth it to see things crumble and to see the way it devastates the cheerleaders of greed, republicans. We'll be hunting them with DOGS.

Anonymous said...

Scuddlebutt about housing bubble started in the wind a couple years ago. About a year ago I started hearing it in financial circles, then more. Now, today it has increased ten-fold in just the last six months! Been watching and listening and can't believe the difference just since June, in only 2 to 2 1/2 mos. Here it comes!