HousingPanic Stupid Question of the Day (Bonus Edition)

August 01, 2006

HousingPanic Stupid Question of the Day (Bonus Edition)

Are we seeing the first nationwide (and possibly worldwide) housing crash happen right now in front of our eyes?

42 comments:

Anonymous said...: yes!; August 01, 2006 1:34 PM
Markus Arelius said...: US nationwide, definitely yes. Worldwide? I don't believe so.
It appears that home prices in Asia Pacific are rising (Japan, Singapore, China).; August 01, 2006 1:41 PM
Anonymous said...: Is this the FIRST nationwide housing crash? Was there a nationwide or worldwide housing crash prior to the great depression? I personally don't know but would love to see a post on a prior nationwide housing crash if it ever existed. I know Florida crashed right before the great depression. Did any other areas of the country?; August 01, 2006 1:56 PM
Anonymous said...: Yes.

If by worldwide you mean Europe and Australia, yes as well......

As the John Goodman character in the "Big Labowski" say's "son, you're about to enter a world of pain ".

That's what we are headed for.; August 01, 2006 2:06 PM
Anonymous said...: Any realtors out there should proceed to the nearest tall structure and jump the fuck off.; August 01, 2006 2:10 PM
Anonymous said...: Read "The Coming Real Estate Crash" by Cardiff and English. It's in paperback and was published in the early 1980's. I bought it because I majored in Real Estate Finance back then. It was the most insightful book I ever read on the subject and is still pertinent today because it describes prior real estate crashes in history that everyone forgets about and describes the market psychology of a crash. I highly recommend it to everyone. You can probably get a used copy for about $2.00. It's short in length and an easy read.; August 01, 2006 2:20 PM
Anonymous said...: you are a big asshole; August 01, 2006 3:08 PM
Anonymous said...: yes. got freeze dried food?; August 01, 2006 3:22 PM
Anonymous said...: The Housing Bubble crash, astronomical oil prices and an inflated dollar held up by duct tape and bailing wire are each by themselves enough to cause a recession.

All three at once? We are in for a depression.; August 01, 2006 3:27 PM
Anonymous said...: Yes, it is fun to watch. Especially watching it crumble all around me. Mostly because I was not one of the idiots to believe all that hot air about how "real estate always goes up in value." I live in a tiny house, low utility bills. Drive a small car, low gas bills. Have a mortgage that is less than 25% of my monthly gross, saving money and buying gold.

People need to stop believing everything corporate shills tell them. Think outside the box. Think for yourself. THINK!; August 01, 2006 4:42 PM
Dragasoni said...: This comment has been removed by a blog administrator.; August 01, 2006 4:44 PM
Dragasoni said...: No, certainly not the world. But there is definitely a bubble in past "hot" markets, such as San Diego, Phoenix, and just about all of Florida.

-Dragasoni-; August 01, 2006 4:45 PM
Anonymous said...: Core inflation edges higher in June
By Tim Ahmann
1 hour, 53 minutes ago

WASHINGTON (Reuters) - Core U.S. consumer prices rose a moderate 0.2 percent in June for a third straight month, but the year-on-year rate hit a nearly four-year high, keeping financial markets on edge over a possible Federal Reserve interest-rate hike.

ADVERTISEMENT

In the same report, the Commerce Department said on Tuesday personal income rose 0.6 percent in June, with nominal spending up 0.4 percent. The data, which was incorporated in a report released on Friday on second-quarter economic growth, matched Wall Street expectations.

Still, the 2.4 percent rise in nonfood, nonenergy prices over the past year, the biggest gain since September 2002, caught the eye of traders in the markets.

Prices for U.S. government bonds slipped, stock futures lost further ground and the dollar moved higher as markets saw growing chances of a Fed interest-rate hike next week.

The data followed Friday's report showing U.S. economic growth slowed to a 2.5 percent annual pace in the second quarter after a 5.6 percent burst in the first three months of the year.

"This should alleviate any fears that folks had after seeing that GDP number that showed the economy was slowing more than we thought," said Mark Vitner, senior economist at Wachovia Securities in Charlotte, North Carolina.

"It looks like the economy has very good momentum going into the third quarter," he said of the spending and income figures.

The latest report showed overall inflation, as measured by a price index for consumer spending, also rose 0.2 percent in June as consumers enjoyed a respite after several months in which energy prices shot higher.

Inflation-adjusted spending rose 0.2 percent for the third straight month, while after-tax real income moved up 0.4 percent, the biggest gain since December.

Wage and salary income, which had been flat in May, rose 0.6 percent in June, before accounting for inflation.

The rise in income helped consumers to rely a little less heavily on their savings to keep spending, bringing the saving rate -- saving as a percentage of disposable income - to a negative 1.5 percent from May's negative 1.6 percent.

The saving rate has been in negative territory for 15 straight months.

Signs of cooling growth had led markets to bet on a pause in the U.S. central bank's two-year old credit-tightening campaign when policy-makers meet next Tuesday.

But the interest rate futures markets pushed the implied probability of a 18th straight boost to borrowing costs next week up slightly on Tuesday, to about 4O percent from 38 percent before the latest data.

Separate reports on Tuesday showed mixed readings on U.S. chain store sales. The International Council of Shopping Centers and UBS Securities said U.S. chain store sales rose 0.9 percent last week after a 0.2 percent rise a week earlier, while Redbook Research said sales were off 2.4 percent so far this month.

Separately, job placement firm Challenger, Gray & Christmas said U.S. planned layoffs fell to 37,178 in July, a six-year low, down 50 percent from a revised 75,076 in June.; August 01, 2006 4:52 PM
Anonymous said...: It is conceivable. If we believe the current bubble in the US is due to monetary inflation after the recession then it would also apply wordwide. This is because most of these countries were also inflating at a rate higher than the US.; August 01, 2006 5:00 PM
Anonymous said...: It won't matter, the floppers will just walk away from their obligations and go on to the next bubble. These people have nothing to lose and everybody else gets to pick up the check. Welcome to the new American economy!; August 01, 2006 5:31 PM
Anonymous said...: San Diego Home Sales Figures: Not All That They Seem
by Bob Schwartz

Reviewing the recently released real estate sales data for San Diego, the lay person might conclude that the June home appreciation figures were down approximately 1 percent as compared to June 2005. The reality is the decline is probably much closer to three or five times the published figures.

The reasons for this are really quite apparent when one considers the following facts:

The appreciation figures cited are the median sales prices. The upper-end, luxury home market has been extremely strong in Southern California and is relatively immune to increasing interest rates. It operates totally apart from the rest of the real estate market. The sales of these upper-end luxury estates skew the median appreciation sales data.
A far more accurate figure would be the average sales price. Alternatively, data should exclude, or make million dollar plus sales a separate category.

The reported sales data does not take into consideration incentives used by not only major builders, but, in today's market the majority of home sellers, to entice scarce buyers to purchase their properties.
Just open up the Sunday real estate section of your local paper and the magnitude of these incentives becomes quite apparent. Just a few incentives I noted in my recent paper: $15,000 closing cost credit and $25,000 towards an interest rate buy down or upgrades; $50K to help pay your mortgage; seller pays interest portion of your new loan payment for first 6 months, all nonrecurring closing costs, plus 12 months of HOA fees. I could go on, but, you must understand that the builders are not being altruistic. No, they just want to move standing inventory, and move it now before any further declines!

While on the subject of builder incentives, it was just a little over a year ago that the majority of builders were not even co-operating with real estate agents. Now, the builder/agent cooperation has gone 180 degrees plus! Typically, builders offer two or 2.5 percent co-op commissions. Now, agents are being invited to catered brunches and offered co-op commissions up to 5 percent, as advertised in the July 23, 2006, Union-Tribune!

The purchase incentive phenomenon is not by any means the exclusive domain of new home builders. Actually, I would say the majority of individual homeowners are also being forced into the incentive game. Though not many are offering incentives from the start of their marketing, after six to eight weeks on the market, the idea becomes more appealing. Even without offering any incentives, the majority of offers are now being presented with buyer incentives built-in as a condition of sale!

A year ago one would be hard pressed to find any individual home seller or major new home builder offering incentives. Now, it is just these incentives that also skew the appreciation data. A $500,000 home sale with a $25,000 interest rate buy-down/closing costs package incentive will be recorded as a $500,000 sale. Yet, the $500,000 sale, in reality was only $475,000 or 5 percent below the reported sales data!

So if the $500,000 sale was just 1 percent below the June 2005 median appreciation, you can see that the 'real' difference was 6 percent below last year!

Other factors not being mentioned in the press that are important to our market direction are:

Typically the period from late March through September is the strongest for real estate sales. What does both a huge and continuing month over month sales decline and now a home appreciation drop, during this 'hot' time, portend for the market as it enters the weaker Fall/Winter period? Lastly, the bulk of the interest only, 100 percent loans used to prop up our market for the last few years, has two or three year time periods until the re-amortization (at the current prevailing interest rates) of the loan balances. The majority of these interest rate adjustments will occur in 2007 and 2008.

In my opinion, this is no 'return to normal' or 'slight correction' to the San Diego real estate market. By year's end there will be no denying we will experience a double digit appreciation decline. A decline that will take years, not months, to work itself out.

Published: August 1, 2006; August 01, 2006 5:49 PM
Anonymous said...: I lived in a really shitty apartment for 15 years and saved most of my income so I could pay cash for my house. It is 1800 sq ft and located in an area built in the 50s and 60s. We have mature trees, long term residents that have fought property tax increases, and best of all there will never be any major development here becasue there are no parcels of land big enough for a Walmart or something like that to pop up.

I have also never nought a new car in my life. I always get something around 6 years old in like new condition and have stuck to 4 or 5 cyl. models. I bought a V6 in 2002. My only V8 car was owned back in the late 90s when gas was 99 cents.

The only effect I have felt so far is on my tax. Both homes next to mine have changed hands and prices got jacked up. In fact, on of the homes has had 5 owners since 1997. My taxes have gone up 250% since 1997 when I moved in. The tax rate has not gone up more than 1% or so but the value of the house has.

I welcome the crash in real estate because my taxes will go down...lol...wish it was that simple. The ripple effect will be ugly.; August 01, 2006 5:51 PM
Bill said...: OT: OFF the presses

Core Inflation at 11-Year High
Core U.S. consumer inflation climbed in June matching an 11-year high and keeping pressure on the Fed to take action to cool rising prices.

The core personal consumption expenditure price index (excluding food and energy) increased 0.2% for the third straight month in June, and has risen 2.4% in the past 12 months, matching the largest year-over-year gain since April 1995.

Consumer prices including food and energy also rose 0.2% in June, and are up 3.5% in the past year.

But you say will the FED raise rates?

I would say yes they have to.; August 01, 2006 5:54 PM
Anonymous said...: We're heading to hyperinflation, guys. As I sad before, it's gonna be ugly ;-(((

For some things (food, gas, energy) we'll pay much more than we're paying now. In real terms, I mean as percentage of our income.

For virtual things (like insurance, real-estate taxes, income taxes and other avoidable payments) we'll pay less. I sad avoidable, because these taxes originated from the state and government policies.

When times are tough, the society starts fight against parasites sucking blood from economy. All these fraudulent service-folks, RE guys, etc, etc. are parasites on the body.

In good time there is enough food and energy for everybody, even for parasites (they're multiplying exponentially in these times). In bad times, when everybody screwed, people starting ditching all non-necessary things.

Back to housing market. We're heading to the times when house price will be defined by its true value. For example, by:

1. Proximity to the public transportation;
2. Energy efficiency (solar panels on the roof, but granite countertop), energy saving windows, AC BTU efficiency, heating efficiency and thermo-isolation.
3. Fertility of the soil where you can grow some fruits and vegetables.
4. Water supply (quality of water).

Therefore, many of suburban will turn into ghost cities, people will live more compact (barracks). Food, water, gas and energy rationing will be a common practice.

It will not matter what price of property is, but keeping energy floating inside your house, getting food and water, as well as a waste removal.

Our government "bringing democracy to the evil countries", read as "making oil supply more stable". It will work for a wile. However, the better approach would be preparing to challenges of energy scarcity, not grabbing resources from other nations.; August 01, 2006 5:56 PM
Anonymous said...: don't believe the NAR or government's median price numbers. Prices are collapsing, hidden by the use of incentives which are not recorded in the median price numbers

and on inflation, one word.

Gold.; August 01, 2006 6:06 PM
Anonymous said...: Crude Oil at $75 per barrel...
Mission Accomplished!; August 01, 2006 6:10 PM
Bill said...: oh and let us not forget the precious job numbers that are due out friday..should be real interesting for july numbers..I would say the fed has to raise no matter what the job numbers are..even though they will be weak at best...walmart anyone?

By the way would you not say we are in the early stages of stagflation not hyperinflation.Yet!.just a question; August 01, 2006 6:20 PM
Anonymous said...: >> Think outside the box. Think for yourself. THINK!

Thanks to our public school (ie. indoctrination) system, that's no longer possible. My niece graduated from high school this past spring. She couldn't tell me anything about politics (except that capitalism is evil), the economy, who the VP is, what the 3 branches of gov are, etc. But boy, could she tell me about all about Snoop Dog, the rap music scene, and basically a few other things that truly have no meaning to her life or mine. Sad...; August 01, 2006 6:29 PM
Anonymous said...: Assuming our economic end is near, I will actually feel joy that the following things will be no more: professional sports, rock stars, movie stars, celebrities. The people will have no money, and be hungry, so the above list of things will FINALLY be irrelevant. Which is how it should have always been anyway.

Does anyone here actually WASTE precious time watching professional sports? If so, WAKE UP! YOUR COUNTRY IS ON FIRE, AND YOU'RE ABOUT TO GET BURNED!!!; August 01, 2006 6:33 PM
Anonymous said...: A little humor... Whoever wrote this was on a roll!

WASHINGTON , DC (AP) - Congress is considering sweeping legislation, which provides new benefits for many Americans. The Americans With No Abilities Act (AWNAA) is being hailed as a major legislation by advocates of the millions of Americans who lack any real skills or ambition.

“Roughly 50 percent of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society,” said Barbara Boxer. “We can no longer stand by and allow People of Inability to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they do a better job, or have some idea of what they are doing.”

The President pointed to the success of the NAR, which has a long-standing policy of providing opportunity without regard to performance. Approximately 74 percent of realestate employees lack job skills, making this agency the single largest US employer of Persons of Inability.

Private sector industries with good records of nondiscrimination against the Inept include retail sales (72%), the airline industry (68%), and home improvement “warehouse” stores (65%) The DMV also has a great record of hiring Persons of Inability. (63%)

Under the Americans With No Abilities Act, more than 25 million “middle man” positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.

Mandatory non-performance-based raises and promotions will be given, to guarantee upward mobility for even the most unremarkable employees. The legislation provides substantial tax breaks to corporations which maintain a significant level of Persons of Inability in middle positions, and gives a tax credit to small and medium businesses that agree to hire one clueless worker for every two talented hires.

Finally, the AWNA ACT contains tough new measures to make it more difficult to discriminate against the Nonabled, banning discriminatory interview questions such as “Do you have any goals for the future?” or “Do you have any skills or experience which relate to this job?”

“As a Nonabled person, I can’t be expected to keep up with people who have something going for them,” said Mary Lou Gertz, who lost her position as a Hooters host and part time realestate broker in Naples Florida due to her lack of notable job skills. “This new law should really help people like me.” With the passage of this bill, Gertz and millions of other untalented citizens can finally see a light at the end of the tunnel.

Said Senator Ted Kennedy, “It is our duty as lawmakers to provide each and every American citizen a high paying job, regardless of his or her adequacy."; August 01, 2006 6:40 PM
Bill said...: Well I watch the Red Sox, on occasion, would i spend $200 to go to a game no freaking way...6 pack at home and HDTV.

oh by the way the big news today for all you youths in the know..Lindsay Lohan was Sacked By her Record Label today...beep, beep, beep, alert, alert,...move on nothing to see here.; August 01, 2006 6:41 PM
Anonymous said...: quoted:
Separately, job placement firm Challenger, Gray & Christmas said U.S. planned layoffs fell to 37,178 in July, a six-year low, down 50 percent from a revised 75,076 in June.

guess what? ther is nobody left to lay-off!!! of course the rate is down.; August 01, 2006 6:50 PM
Anonymous said...: illegal mexicans being dismissed by homebuilders subcontractors don't count in the layoff numbers

also the trucks full of 'em outside home deopt and walmart used to remodel. no mas.

remember there are millions of 'em; August 01, 2006 6:54 PM
Anonymous said...: that photo was taken by eugene cernan, commander, Apollo 17, last manned mission to land on the moon, Dec. 72.

-space buff; August 01, 2006 7:43 PM
Anonymous said...: illegal mexicans being dismissed by homebuilders subcontractors don't count in the layoff numbers

also the trucks full of 'em outside home deopt and walmart used to remodel. no mas.

remember there are millions of 'em

A local day laborer recruiting strip on a street in a suburb of Portland, OR now contains 2-3 times (my estimate) of illegal Mexicans than is typical this time of year and from earlier last spring and early summer. Local police drive by dozens of times a day and the illegals don't even blink.

These people live 6-8 to a 1-2 BR apts. and even more for a single family house. They take over local parks for their fiestas and leave mountains of garbage behind for the cities to clean up. They play Mariachi music loud enough to wake the dead and laugh or give menacing stares to non-Mexicans who ask them politely to turn down the music. Their children run freely around the parks, often helping themselves to other people's food and drink without asking. When they are asked politely not to take the food and drink, they pay virtually no attention, as they do not (or behave as though they do not) understand English.

When the police are called, the Mexicans play dumb and shrug their shoulders and say, "Lo siento, lo siento." When the police leave, they laugh hysterically and pat themselves on the back for being so clever fooling the gringo policia.

Then, when the issue is brought up at local city council meetings complete with photographs and time-stamped video footage, non-Mexican citizens are shouted down by "immigrant advocates" often speaking Spanish and brandishing signs and making menacing gestures outside the council chambers or in the parking lot.

The illegal Mexicans' children are flooding the public schools with virtually no English skills, poor behavior, and high absenteeism. Classroom order has broken down, non-Mexican parents are complaining and pulling their children out of schools in droves.

The above description is just the tip of the iceberg, not to metion teenage pregancies (14-16 year-olds having multiple children out of wedlock), property crime, high high school drop out rates, taking over neighborhood blocks and menacing non-Mexicans in order to make them leave, and so on.

Ladies and gentlemen, the people referred to as "anti-immigrant" who describe the situation as "an invasion" ARE CORRECT. When small or manageable numbers of minority ethnic immigrants immigrate to a nation, assimilation is often achieved within a generation or two.

However, when large numbers of immigrants flood a country in a short period of time, it is much easier to commune with one's cultural/linguistic fellows, discouraging them from assimilation and encouraging "ghettoization". Lack of assimilation leads to isolation and lack of interaction with the majority population, which in turn leads to misunderstanding, mistrust, suspicion, fear, and diverging interests.

We are experiencing a disaster in the making and the increasing likelihood of a massive backlash by the majority population against the millions of illegal Mexicans who have come to feel entitled b/c of their concentrated numbers.

It's going to be ugly, friends.; August 01, 2006 10:27 PM
Anonymous said...: My take on immigration from South of the border (a re-print):

It's not about different ethnicities and nationalties not getting along, it's about E Puribus Unum.

For instance, when a group of Croats and Serbs arrive in America in 1920, they first dislike one another and avoid socializing and perhaps even live in different neighborhoods, their kids, however, absorb a lot of American culture, and finally, their grandchildren are mostly friends, they get along with everyone around them and do not want a Balkanized country and have wives/gfs of other Slavic or even non-Slavic backgrounds (i.e. Italian, French, British, Chinese, etc). That's the America we grew up in and it works because all these ancient tribes are now Americans.

Where it doesn't work, however, is when a whole nation shows up, decides not to learn English, and lives in separate encampments from everyone else; this is the story of Mexicans in the US. With a setup like this, even generations later, there are ethnic/culture/language divides. That's a Yugoslavia type of nation, not the USA, where there are regional differences, like Dixie vs Yankee, but not national/cultural, both Southerns and Northerns can have a dialogue even if they don't agree and believe it or not, they do tend to respect each others' space.; August 01, 2006 11:38 PM
Anonymous said...: no; August 02, 2006 1:06 AM
Anonymous said...: Yes, it is a worldwide boom.

My wife and I both work in Hong Kong and pay HK taxes (15%) rather less than the typical 25-40% in most western countries. We also travel extensively in Asia, Europe & North America.

And you know what? As a professional couple in our mid-40's we couldn't afford housing in any of those markets if we were first time or low-equity buyers. Well, maybe if we developed a refined taste for beans every meal, thrift store clothing and selling body parts for cash.

Hell, frequently property in areas which aren't highly paid financial centres (Vancouver anyone) appears to be more expensive than HK! And HK is notorious for high real estate prices!

Lately, acquaintances have 'invested' in Thailand/Sri Lanka property to the tune of US $500 - 750K. You can't even earn a living there (well, at least not legally, and certainly not enough to pound that kind of mortgage down).

The same thing is repeated throughout Eastern Europe, Spain, the French Countryside - you name it I just haven't been anywhere where people think RE isn't a surefire bet.

I reckon money has flowed out via home equity withdrawals and all these second & third tier markets will get pounded. The really theatrical crash will be in the prices of overseas holiday homes, expensive cars & yachts - essentially, toys.

I imagine the primary markets where people actually live and work to take the less dramatic adjustment and simply grind people down over a long period till everyone hates real estate.

Cheers, Haggis

PS - Actually Germany & Japan aren't bubbles.; August 02, 2006 7:15 AM
Anonymous said...: The Free Lunch train has arrived at its last stop. All aboard for the Express Line to Hell!; August 02, 2006 7:42 AM
Adventures In Money Making said...: no.
because we'll inflate the value out of them. when gas is $8/gallon and a loaf of bread costs $6, $600k for a condo won't seem so bad!
it'll drop in coastal areas, but inland it should stabilize. there are many places in the country that haven't appreciated in the past 12-15 yrs. These will probably keep up with inflation.; August 02, 2006 11:08 PM
Anonymous said...: Join NOW for FREE...

The Quick and FREE Way to Get a SWARM of Visitors to Your Site!

To find out more visit: multi level methods site. It successfully exposes FREE information covering Traffic and multi level methods related stuff.; August 05, 2006 5:44 PM
Anonymous said...: With a meteorite rise expect a catastrophic fall!; August 07, 2006 12:06 AM
Anonymous said...: Well, it may be happening right before our very eyes, but so many people have their heads buried so deep in their collective asses will they see it?; August 07, 2006 12:13 AM
Anonymous said...: I don't know about country wide, but as for san diego...Burn Babay Burn!; August 07, 2006 1:53 AM
Anonymous said...: Hey, you have a great blog here! I'm definitely going to bookmark you!
I have a bad credit lease site.
Come and check it out if you get time :-)
Greetings.; August 07, 2006 1:13 PM
Anonymous said...: Hey, you have a great blog here! I'm definitely going to bookmark you!
I have a bad credit loan mortgage refinance site.
Come and check it out if you get time :-)
Greetings.; August 08, 2006 5:40 AM
Anonymous said...: Bloggers

Looking for gilbert company general contractors inc at http://doityourselfpro.com/. Well I recomend This Site. Maybe your asking who am I; September 21, 2006 12:33 AM

HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008

August 01, 2006

HousingPanic Stupid Question of the Day (Bonus Edition)

42 comments:

About Me

HP blogs & websites

Blog Archive