Lest any of you think I root for the carnage underway and meltdown to come, you couldn't be more wrong. I recognized we had a problem a year ago, I got out, I told anyone and everyone I knew what I saw coming, and I started a blog to warn as many people as I could.
Some people listened, most did not. And now I'm seeing the personal toll of the housing implosion among my friends
* A realtor who hasn't made a sale this year
* A developer who tells me "the market has fallen off a cliff"
* And yesterday, a friend who had a company importing marble from China for all those countertops, well, no more. They're shutting down.
True, they all made a bundle during the bubble, it was tough not to. So they'll be fine. But now all of them have to find something else to do. Because this industry is toast, for quite some time.
Tell your stories here. Luckily that's the worst of mine so far, although I know that won't be true in a year.
I don't know anyone who bought at the peak with an interest only and got killed. I don't know any flippers stuck with inventory and looking at Chapter 11. Living in Phoenix, most folks I know rode the bubble up, and are riding it down, and will be back where they started, no harm no foul yet (but without the riches that they expected, and we'll see what comes).
August 06, 2006
The human face of Greenspan's folly. Tell your housing bubble friends and family stories here
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Had dinner tonight with 3 friends.
1. One is upside down 50k in his house and has 30k in credit card debt.
2. Another has 150k in business debt and has a house falling in value super fast.
3. Another didn't buy a house and stayed renting. He's really lazy and has been for years. Funny thing is the lazy guy is better off right now than the hard workers.
The word is spreading fast.
"Everyone's talking about Real Estate but instead it's how bad it is. "
Rumor has it one of the Horton's from DR Horton was involved having an affair with the DR Horton sales agent that was murdered.
This bubble is unraveling FAST.
I bought my house for $116,000 in 2004. My neighbor sold his house for $235,000 last week.
Know where to buy and the fair price for it and you will do alright.
The only three stories I have are positive ones.
1) My wife and I sold our house at the begining of 2006 (tried since Oct. 2005) for a nice hefty profit. Now we rent an awesome place for cheap.
2) My company (property management and development) saw the crash coming. We sold all of our mortgaged rental property at or before the peak when everyone was buying and made huge profits (people may not know that apartment and commercial buildings were being flipped just like houses). Now, we are sitting with all of our property paid off and at historicaly high occupancy rates. We are going to sit tight until nobody is building. Then we will test the waters on some new projects.
3) My mother saw the crash coming. She sold all three of her rental houses for a nice profit. She refinanced her own home at 3% on an ARM knowing she would be making more interest in her 5-something% CD's. When the ARM is due, she pays off her home and still has lots of cash left over. The great thing is that she's a school teacher with absolutely no formal financial training. I love it knowing that her great common sense and gut feelings make her much smarter than most bozo real estate "experts".
I have an Uncle in Chicago who bought a new house to live in while still owning his old house... 8 months later not a single bid on the old house, and they're now stuck with two mortgages..
He thought that the first one would sell immediately.. it's a nice home in a nice neighborhood... and not a single bid.
Guy next door put his house on the market for $800,000.00. One month later dropped it to $770,000.00. Sold it for %700,000.00. That's a 13% drop in my book. After he sold his house, nothing else has sold in the entire neighborhood.
If you didn't buy a house while prices in Las Vegas zoomed 46% in 2004 and 15% last year, maybe you felt like a sucker. And given that the Standard & Poor's Homebuilding Index has skidded nearly 38% so far this year, you probably feel lucky if you don't own real estate stocks. But are you brave enough to bet against conventional wisdom and buy real estate stocks now?
Even if you are, bear in mind that it's hard to find five stock picks in real estate now. And forget about finding short-term slam dunks for investors. Yet there are a handful of ways to approach real estate's uptick -- whenever it happens. We reached out to an economist, a top industry exec, and two S&P stock analysts to generate five ideas to help you think about investing in housing. You can't expect to get rich courtesy of any of these, but they might help you feel lucky down the road.
1. Be long term
Mark Zandi, chief economist for Moody's (MCO, news, msgs) Economy.com, predicts existing home sales will fall this year, next year, and again in 2008. Same for housing starts. He figures U.S. home prices will rise 4% on average this year (compared with 13% in 2005), and 1% in 2007 and again in 2008.
Those are the three big levers driving the housing market, and none of them look strong. After the 1990-91 recession, it took housing until about 1995 to get truly healthy again. The recovery probably won't be as tough this time, Zandi says, because the job outlook is much better. It helps that the real estate correction isn't coming at the same time as big defense cuts and a general recession, as in the early 1990s. But housing is likely to wallow for a while. "The downturn we're in the middle of has at least a year to run, perhaps two," he says.
2. Watch the Cendant deal
The onetime conglomerate Cendant has split into four companies, three of which started trading publicly on Aug. 1. (The fourth, which owns some of Cendant's travel businesses, is being sold to a private-equity outfit.) The one that matters here is Realogy (H, news, msgs), which is by far the nation's biggest real estate agency and franchisor, owning the Century 21, ERA and Coldwell Banker brands. Its relationships reach 25% of U.S. existing home sales that use a broker -- a share so big that its New York Stock Exchange ticker symbol is just "H," as in housing.
Realogy shares rose 81 cents to $26.10 at its debut on Aug. 1, but have headed south to around $23.50 as of Aug. 3.
The interesting thing about Realogy is it can serve as a proxy or neo-index for the housing market. If you think housing's decline will be manageable followed by an eventual resumption of a long-term secular trend, Realogy is a good place to be.
However, the business is not super now. Chief Operating Officer Richard Smith says earnings before taxes and noncash charges will be $925 million to $1.045 billion this year, down from $1.17 billion last year, on about $7 billion of revenue.
He says the company hopes to beat the industry's performance by focusing on high-margin franchising businesses that usually gain share in recessions. (That is, when times get tough, regional agencies that had resisted paying 8% of their revenue for a franchise affiliation give up and align with the national brands.) But, warns Smith, "you have to understand there will be macro issues, and you have to deal with it."
3. Think geography -- and value
Look for companies with more exposure to markets that have not had big run-ups in housing prices and less exposure to markets where prices have skyrocketed and will most likely come down. In other words: more Texas and less Florida.
One reason S&P is so bearish on homebuilders is that almost all the big ones are heavily exposed to Florida. Analyst William Mack rates only Dallas-based Centex (CTX, news, msgs) a buy (4 stars), because it has less debt than most of its peers and gets at least some of its revenue from a construction-services business that does nonresidential work.
Mack has strong sell (1 star) recommendations on Meritage Homes (MTH, news, msgs), MDC Holdings (MDC, news, msgs), Levitt (LEV, news, msgs) and Beazer Homes (BZH, news, msgs). He has sell rankings (2 stars) on Hovnanian Enterprises (HOV, news, msgs), Ryland Group (RYL, news, msgs), and Pulte Homes (PHM, news, msgs).
If you're looking for a bargain, builders have actually become cheap, with most trading below their book value and a handful even hanging below their tangible book value. That's one reason homebuilders have caught the eye of value mavens at Legg Mason Value Trust (LMVTX, news, msgs), which owns Ryland, Beazer, Pulte, and Centex.
But those positions have been in place for months, Mack says, so don't take it as a sign of a quick turnaround. "If they liked the valuations then, they've got to love them now," he quips.
4. Don't chase performance
One real estate play that has done better than most is real estate investment trusts (REITs) tied to apartment buildings. REITs offer steady income, since they pay out at least 90% of their taxable income as dividends. Plus, deteriorating affordability for home buyers will boost occupancy of apartments.
The problem is, apartment REITs have gotten very expensive -- and, on average, offer less than a 4% dividend yield. "It's tough to say, 'Buy them as a contrarian move,'" says S&P REIT analyst Royal Shepard. Apartment REITs that he follows are trading at 21 times funds from operations -- a cash-flow multiple higher than many Internet stocks, without nearly as much long-term growth potential.
Shepard has sell opinions on seven of the 11 REITs he follows. If you want stability, performance, and some income, a better bet is a mortgage operation such as IndyMac Bancorp (NDE, news, msgs) or Countrywide Financial (CFC, news, msgs). IndyMac yields 4.1%, it's up for the year, and it's gained a reputation as a particularly tech-savvy, cost-conscious operator.
5. Look for big names
Big brands gain share in real estate recessions -- and this is especially true in home building, where access to capital and the ability to hold on during tough times play such a large role. But it's also true for brokers. You can probably buy the leaders a year from now and get them at least as cheaply as you can at present. But the housing recession isn't a depression, and there will be a big, vital industry left standing when the storm passes.
Realogy's Smith argues that house prices have risen nearly 5% a year through the decades, once you factor out the surges and the busts. And people move about every seven years. So the best thing to do is watch for the companies that are built to withstand the downturn and grab more market share while sales shrink. They're the ones that are likeliest to zoom when the economy puts some wind back in their sales -- whenever that is.
Keith,
It looks like your blog is being used as an infomercial by people wanting to see a HB stock rally.
I only go to two RE blogs. Does anyone else see this kind of crap being posted on other sites.
Anon,
The people posting on this blog aren't going to fall for your crap. You should recognize your target audience and try to market to them. We all know that the HB stocks are not a long term buy now. Stop wasting everyone's time. You should go and advertize on Realty Times or another site where more people will listen.
David, We all know that the HB stocks are not a long term buy now.
NOT ALL OF US
I've been pumping TOL since $35 per share. Still feel good about my position.
Kieth may be a raciest cracker that hates America, but I think he has enough self respect to understand that a blog that attacks homebuilders will attract people that believe that home builders are a great investment tool. Just as morons ike yourself understand why Kieth seeks out the real estate pumping blogs.
I live in a smallish Florida beach town. Wages are quite low here, but until recently it didn't matter much, since the cost of living was also low.
That was before "developers" and floppers discovered the place. The cost of houses here doubled in three years. Now the median home price is almost ten times the median income.
Working people here can no longer afford even a very modest house. Many are having to leave, thanks to the near impossibility of finding affordable housing. The dramatic jump in taxes (due to the price runup caused by rampant speculation) is driving out a good many homeowners, esp. elderly ones.
Meanwhile, the developers have paved the beach and thrown up miles of soulless concrete boxes that sit mostly dark at night. We have about a year's worth of single-family homes sitting on the market, and close to three year's worth of condos, at the current rate of sales. Things are going to get ugly here.
All in all, average peope were screwed and a beautiful landscape destroyed forever so that a few rich people could get richer. But isn't that the story of the housing bubble everywhere?
Why do you call me a moron? Because I don't think HB stocks are a buy YET? If we equate HB stocks to the late great telecom stocks the good buy is yet to come.
By the way, Toll Brothers is at about $27/share. I think it's going to level out (when it levels out) somewhere under $30 and possibly under $25 for a long time.
I have been involved in several crashes. I bought a house in Colorado in the 80's for 126K. The bank sold it at auction for 75K eight years later. I achieved similar results in northern New England in the mid-90's. I thought I was the only person in america who could reliably lose in real estate.
This boom I sold on time(last year). I got 1.5 million for a house I had owned for six years and had a basis of 500k. Soon that house and four more nearby were up for sale for about 2.0 million each. None have sold, all are reduced, and the flipper who bought mine is in the red.
I learned.
For those interested in keeping tabs on the NJ or Northeast markets, take a peek here:
The Best Of Lowball!
grim
If you're looking for a bargain, builders have actually become cheap, with most trading below their book value and a handful even hanging below their tangible book value. That's one reason homebuilders have caught the eye of value mavens at Legg Mason Value Trust
Hah. Their book is infalted by all their raw land being valued at bubble prices. Including land under option and not actually owned. Last I look Toll had some $5b of this stuff. Take away half and these dogs are still way overvalued.
Legg Mason reported one of their worst quarters ever because they admit the mistake of overloading on HB stocks too early.
And "dogcrap"; Know where to buy and the fair price for it and you will do alright. Surely someone who had not a dime more to invest in TOL a month ago shouldn't be giving advice. Ever hear of a rising tide lifting all boats? Housing is priced at the margins. You may have gotten a fair deal but you won't be immune from repricing.
8 months later not a single bid on the old house, and they're now stuck with two mortgages.
SO+B. Stuck Owner plus Buyer. The name for people who bought at the top but missed the chance to sell at the top. Two mortgages or a bridge loan has got to hurt.
My company makes residential lighting. In the past years I have ran at full capacity to keep up with demand. Recently we laid of half our office because our numbers are down over half. We knew this was coming so everyone was prepared. Thanks HP for sharing our views and being a big part of our support group!
I have a brother from another mother working at a National home builder... he says.... sales are net negative.... which is no sales and lots of cancellations. this market is toast. the rally of the week was short covering and bottom phishers.. when the next round of builder earnings are out, the homebuilders will make new lows. put on your seatbelt.
Why do you call me a moron?
What is the proper term for an idiot that calls for censoring thoughts that differ from his own?
Update on Walnut Creek, CA.
I sold my condo in May at 490K (2 bd. 2ba 1200 Sq Ft). . .I reduced price from $510K. My neighbor at the Walnut Creek condo just sent me a listing - same size condo on the market for $455K. . .two recent sales in July $465K. The owner of the 455K bought years ago, and wants out, so has lowered price. . .the original owners bought for 120K back in 1987. . .but!. . one new owner who bought for 400K, got an appriasal for 500K . . did a refi and pulled out money. He now owes 500K on a 455K property. . .
it was a typo, he meant housing stocks are a "good-bye".
Hoard your cash. Eventually, when the conventional wisdom gets around to 99% of the world believing that Real Estate is a terrible investment, then it will be time to buy. Just as when 99% thought it was a great investment it was time to sell. As I did.
Only thing I bought was an apartment REIT in the Midwest, in late 2004. Damn I'm good. If only I'd done it all in bigger size I'd be king.
Anon at 5:07:40 PM:
sales are net negative.... which is no sales and lots of cancellations.
That bit of news brings a smile and a warm glow in my heart.
What is the proper term for an idiot that calls for censoring thoughts that differ from his own?
Who said anything about censorship dogcrap? YOU are the one who has called me a moron and an idiot since my opinions differ from yours. Next you'll say I'm a fascist becuase I think buying Toll Brothers is a bad idea. Am I the next Hitler if I short KBH? Pathetic.
By the way, I'm indirectly referencing the post on Goodwin's Law from the other day.
The dirt on the hb stocks has not come out, yet.
There will be scandals coming down the road that will haunt the hb stocks for years.
You can still get them another 30% cheaper.
I want to make book on the first hb cfo to go to prison....maybe betchris.com will?
"The only three stories I have are positive ones."
So, it's a good thing that both you and your very own mother probably screwed over a bunch of other people?
Apparently, neither you nor your mother (who is a school teacher no less) ever learned the Golden Rule.
May you, your mother and loved ones die slow and excrutiatingly painful deaths.
This blog sounds like a church....
AMEN!
Many of these posts look like prayers.......
You have heard alot of prayers here. They sound like they were made at the church of Countrywide.
I'm amused by the standard post that standard post that backs critics/contrarians right off: "you hate America!"
Well, I do hate America. It makes me sick what it has turned into. It is a whorehouse, spreading its legs for anyone with a dollar. It's become more important for the boomers to get a third home than for the poor to get a $1 increase in their wages?
Yeah, fuck America.
I'm looking for a new place to live.
In case you haven't taken notice? Most the world hates us.....
I'm embarressed.
btw: I hear that right after the elections, Congress will call for a draft.
Let's ee how many flag wavers there are then.......
I'm tired of hearing from all these "patriots" who let other peole do the fighting for them.
Even Israel will soon tire of carrying your weight. Americans remind me of a guy who goes to a bar fight and lets everyone get bloodied, then brags about it at work in the AM.
Shameful..........
The massive debt bubble:
http://tinyurl.com/o2fyj
Like the roaring 20's people are partying like no tomorrow. Only, unlike the 20's this time the currency is not backed by gold, there is not a population with a strong manufacturing / agricultural background and work ethic, oil is getting scarce.
The weather seems to be awfully hot and dry. The dustbowl was in the 30's.
History repeating??
" This boom I sold on time(last year). I got 1.5 million for a house I had owned for six years and had a basis of 500k.
I learned."
Ya done good!
"I want to make book on the first hb cfo to go to prison...."
A few think WLS went private to avoid having to open their books.
I think that not enough CEOs have been indicted and jailed. They pick out a few high profile ones but many other crooks are living large and free.
Who let the FB in?
"Apparently, neither you nor your mother (who is a school teacher no less) ever learned the Golden Rule.
May you, your mother and loved ones die slow and excrutiatingly painful deaths. "
America is great; it's society that's failed.
Realize, back in the 70s, we used to have dialogues on whether or not Milton Friedman and Univ of Chicago supporting Pinochet's totalitarian govt in Chile warranted him not getting a Nobel Prize. These things are still inside ourselves, however, society's failed.
Instead of focusing on real improvements, throughout the 90s, we got into the world of bubblenomics and the idea that GUIs, telcom, and other get-rich-quick schemes are conducive to a better world. Slogans/notions like "make change from within", etc became synonymous with corporate cronyism where stupid generation Xs (yes, my peers) thought that their generation had more options than their elders considering that before the 90s, there were real jobs in every industry outside of IT whereas afterwards, most white collar professionals served the IT/telcom sectors. I couldn't believe the stupidity of my own classmates. There were a few of us, in the real sciences, who saw that basic R&D was in decline and that 'taking data from one place and moving somewhere else' wasn't real science but marketing. Well now, cerca 2006, the rest of the world has caught up with America in the sciences, the smart Americans in sciences went into finance, law, or medicine because they like to be employed. And the few idealists are in postdocs, publishing shoddy papers just to keep some grant money on the table.
Along with that, we'd answered a telco/IT bubble with a housing one. How smart or forward thinking is that to all you free marketeer types? (*snide remark: I bet most of you market intellectuals don't even know what a differential equation is?)
Sorry, but it's society that's failed. If America simply stuck with its tried and tested 'Marshall-to-Eisenhower' ways, there could have been a transition from a cold war society to that of a heterogeneous modern world instead of a banana republic of scam artist CEOs, corporate cronies, and people who kiss their asses.
Bend, Oregon - inventory piling up, building not slowing at all, first snows expected in September, August considered the decisive make-or-break month...
The X factor is how many of the homeowners NEED to sell; the builders need to sell, of course, but local Realtors telling people that 50% of listings are non-motivated sellers just "testing the waters." Word on the street is that there is a very large need-to-sell component (flippers and builders), but that a town as heavily leveraged against home values as Bend will panic HARD if we start seeing prices fall the 30-40% they would need to to clear the market.
There are too many Realtors here; I know one very cute girl who sold several million dollars in houses last year but none this year.
cry baby
David in JAX said...
Keith,
It looks like your blog is being used as an infomercial by people wanting to see a HB stock rally.
I only go to two RE blogs. Does anyone else see this kind of crap being posted on other sites.
Anon,
The people posting on this blog aren't going to fall for your crap. You should recognize your target audience and try to market to them. We all know that the HB stocks are not a long term buy now. Stop wasting everyone's time. You should go and advertize on Realty Times or another site where more people will listen.
Sunday, August 06, 2006 2:57:05 PM
>>> Lest any of you think I root for the carnage underway and meltdown to come, you couldn't be more wrong. I recognized we had a problem a year ago, I got out, I told anyone and everyone I knew what I saw coming, and I started a blog to warn as many people as I could.
-- I agree with you about the *Housing Bubble*, but you still tend to "connect" it with Iraq, cheering for a global financial meltdown, peak oil, global warming, and other liberal views.
Just look at your book and movie selections on the site. Sure somethings are connected, but (as with the NY Times) it's pretty easy to pick up the slant.
I have neighbors who have been waiting to see the top of the market before selling. Now they have seen it but can not sell. I politely had suggested in Novemebr 2005 that they should sell but oh well.
"America is great; it's society that's failed."
You make a number of good points. I must disagree however with the notion that
america and the amercican society are sufficiently separate entities to justify
blaming one but not the other.
A physicist
I have a friend who built several spec houses in FL. Been on the market for a year but no takers, interest and property tax meter running...
I had dinner with a Realtor friend on Friday. He was all disheveled. He apparently had begun drinking again. He was chomping at the bread rolls and chewing with his mouth open and licking the butter knife and embarrassing me. He was yelling at other table, "HEY, you think you're better than me....I sold 8 houses in one month in 04! I'm better than all you...do you know who the hell I am?" Then he started rolling, YES rolling on the floor crying muttering, "I'm no one, my life is going down, my wife is going to leave me and I'm broke."
It was very sad. Later my realtor friend said he was thinking about selling his baby. He already is eating his grass for food...YES I said he is eating his grass!! Terrible terrible and I promise its all true, promise.
I do not have any friends that are in the realtor industry, but do have some relitives in the construction field, as well as 2 who have ARMS IO that i try to warn them that they need to get out of that loan product.
This is one of the comments i get..
"We will never lose our house I will work at Burger king if need be"
That is fine and dandy..If you can get that Burger King Job, cause the other guy next you and the guy next to him are here for the same job.
Oh and check this out, we had a gathering last night and the brother inlaw who is in the construction field..said to me last night and i almost choked on my beer..I quote.
"When we are done this development I am considering moving to Arizona (sick) to take on a big development there in 5 years or so".
i looked at him with this dumb founded look and he looked at me, and said "what"?..at which I Just sat the quite and said to myself people out there really dont have a clue. He is almost done a 55 plus develpoment 40 units 4 sold..$400 thou plus..and he says he cant wait to move to arizona to develope?
Not that I wish anything on anyone..but I look foward to hearing what he has to say this time next year..but i do wish him luck in his adventures.
The ARM IO friends..clueless..nuff said.
I had lunch with Crystal and she told me her Doc. bought a $350,000.00 condo. She put $30,000.00 worth of up grades into her new home in Lake Mary, FLorida, which, by the way is one of the top ten best neighborhoods to live in in the US.
The developer did the old' condo conversion-reversion back to rent. She now has been notified that she cannot buy the home and she lost her $30,000.00.
And, uh, oh yea, she already lives there, waiting to close, but she is now a renter.
Shall I state the obvious. She put $30,000.00 into a rental!
My sister is going to lose her home to foreclosure because of loans she took out against it that now she can't pay on. It's a sad situation actually.
Is it immoral or unethical to sell your home at today's prices, knowing that residential real estate is heading toward hard times?
8 months later not a single bid on the old house, and they're now stuck with two mortgages.
SO+B. Stuck Owner plus Buyer. The name for people who bought at the top but missed the chance to sell at the top. Two mortgages or a bridge loan has got to hurt.
---------------------
What happens to a person with a bridge loan? I had to look it up. Never hear of it.
Will they forclose one of the properties?
I sucked every dime out of my second house and bought all physical.
Sold my first house in July 05 - saw this crash coming twos years ago.
Next phase - the great oil crash - gold goes to $5000 in 5 years - gas goes to $25.00 a gallon.
Have a nice day.
"most folks I know rode the bubble up, and are riding it down, and will be back where they started, no harm no foul yet (but without the riches that they expected, and we'll see what comes)."
What most folks aren't talking about is how they did the equity extraction maneuver because it's "free money" and many now owe more that their house is worth.
The next time I see a big shiny Hummer with a huge Real Estate magnet on the doors advertising the agent I gonna go nucking futs !!!
"I must disagree however with the notion that america and the american society are sufficiently separate entities"
Of course the two are flipsides or amphoteric, however, America, as a modern nation, is based upon the Marshall-Eisenhower ideas of building up our allies, military readiness, and commitment to R&D for future growth and development.
That's somewhat different from the isolationism of the lost generation or even the pre-1914 generation. It's a modern view of a Franklin-Madison type of outlook.
When Milton Friedmanism started to take off with the Greenspan era, society failed to realize that govt (or national) R&D is what gave life to things like Apollo and modern computation, not the world of IPOs and easy money. Once this type of erroneous thinking became endemic, much of American research fell off the cliff and we saw the demise of the national labs, supercollider projects, and then soon afterwards, the private ones (like ATT/Bell Labs, Xerox, etc). Today, Google execs love to talk about themselves in the same breath as Nikola Tesla as if they could even shine his buckle. Sorry, but search engines do not make for real science research and doesn't even come an inch towards what Tesla had contributed to our country. And if generation Yers can't see that then perhaps we do need to send all our science jobs to Russia, eastern Europe, and Asia because that's where our society had failed. And without this bulwark, why would any international corporation need America around in the future since nothing's either invented, developed, produced, or proliferated here? I know that the whole brand name thing is big (Hint: iTunes) but cmon, it's the meat and potatoes that counts in the long haul. A 300 million persons first world nation isn't built on Amazon or iTunes store fronts but on the DuPonts, IBMs, GEs, etc, all of whom are sending R&D abroad.
So from the cold war, where the Marshall-Eisenhower "American" model was in place, we gave Milton Friedmanism and the "Banana Republic" wonks carte blanche on the future. Well... the future's in motion and we can see where it's headed.
I had to go do some work at Palo Verde Nuclear station last week. On the way home , less than a mile away from a Nuclear Generating station wit several reactors , I saw a development under way. The sign read something Ranch homes from the high 200's.
are there really people stupid enough to buy homes from quater million up within 1000 feet of a Generating Station like Palo Verde?? This place is shutting down weekly now due to technical problems !!
"And without this bulwark, why would any international corporation need America around in the future since nothing's either invented, developed, produced, or proliferated here?"
Yep, in a nutshell, the future's been hosed. There'll be no second coming of the post-WWII wealth in America. Once housing drains this last remaining vestige of capital, it's off to Argentina land for us. So, we could be seeing a serious bifurication where housing stays flat or losses 10-20% in wealthy regions whereas a vast majority of middle class communities, in bubble zones, could lose from 30 to 70% of their mean values over a decade's time to match the demographics of a haves vs havenots society with no American middle class.
:with no American middle class.
All resulting from short time thinking that that the lowest hanging fruit type of industrial R&D, but done in Russia or China, can keep the nation competitive and productive. What'll happen when all those experienced Russian and Chinese engineers leave and start their own companies or take that knowledge back to one of their own govts' think tanks? Who'll get the last laugh?
Ahhh, the housing Blog for nut-jobs. Or maybe thats the attitude?
Do I know anyone personally hurt by this housing thing? No not yet but I fear its just starting....
My wife and I sold our New York apartment 2 years ago. Despite my protestations, we watched our dear friends buy an overpriced house on an ARM with a begged, borrowed and stolen down payment. HENCE, today they admit their mistake and are praying for a sudden promotion or swetheart refinance. Ultimately I think they will sell, but I no longer give them real estate advice...
"All in all, average peope were screwed and a beautiful landscape destroyed forever so that a few rich people could get richer. But isn't that the story of the housing bubble everywhere?"
++++Yep. Great summary of the situation, IMHO.
To the America-hating Anonymous poster above. If there is a draft and you don't run to Canada or elsewhere, I hope you get drafted because your America-hating sentiment will not go unnoticed in the military.
Your ass will be assigned to the front line for sure. Commies and liberals make great war fodder ; )
To the bozo above, it's people like you who've given our society to the globalists and have therefore done more damage to America than any liberal out there.
Liberals are femi-nazis and Hillary Clinton. All they've ever done is make the democratic party worthless and made it had for men to get laid w/o forking over their bank accounts.
The problem isn't liberals and socialist, it is boomers. The damnable boomers set us up for these problems. A better generation wouldn't screwed things up so badly.
I am so sick of anything Boomer related. All you hear about is the damn Boomer generation. A generation remembered for giving us political correctness, choking litigation, and entitlements. Personal resposibility, hah! Most selfish generation ever, thanks for a future of debt.
The US sold its technological advantage for pennies on the dollar all in the name free markets and globalization. Free-marketeers claimed this was a panacea but instead it was a cover for crony capitalism to loot the wealth of the US and destroy the middle class.
Russia, China, and India will take up the basic research that the US has given up. Their people are just as smart and they have the means. The housing bubble accelerates the process. The future looks less than rosy for the USA. But I'm not worried I'm sure I will become wealthy by flipping real estate as shown on "Property Ladder".
Dear anon,
I appreciate your defense of real-life R&D. I'm a physicist with top level education and work, and I am now unemployed at age 38 for the first time ever (literally). Not a single remote prospect in science or engineering.
Some economists now think that's perfectly A-OK, as in "Its better economicaly if China & India are more efficient at producing discoveries, as we can then buy their products!"
Some economists now think that's perfectly A-OK, as in "Its better economicaly if China & India are more efficient at producing discoveries, as we can then buy their products!"
How can we buy their products if we dont make enough money here, or we are unemployed? I am losing all faith in our government, the reported that the economy grew at 5% in Q1, 2.5% in Q2, everyone I talk to says business is "very slow". I am betting on 0 growth in Q3 and negative growth in Q4, with depression setting in somewhere around Q2 of 07.
People who rent aren't lazy. Some of us owned previously and are shocked at the prices and how the parasites of the RE system who manage to get a piece of the pie for doing little have multiplied. I saw this coming and when I worked the #s renting made more sense for my day to day life. Otherwise I would have been sitting my house, not going out, not traveling, not drinking good wine, not buying people gifts,no attending family events across the country.
Call me an america hater. I wasn't always this way, just since the conservative revolution 80s set the tone of the country to GREED with a big dash of SELFISHNESS and a big pinch of ARROGANCE.
Now I want to see this greedfest end like a Sam Peckinpah movie with blood and guts and misery all around. Complete and utter chaos, anarchy and pain. A dystopia of capitalist excess with no way out.
And I want the focus of the peoples' rage and frustration to be aimed squarely on the biggest cheerleaders for the free-for-all, for savage capitalism, for the transformation of the housing market, a necessity, into a speculative vehicle of GREED, the REPUBLICANS.
In Texas and much of the south we can expect assasinations and other acts of terror since they're crazy as fuck. But that works. In the civilized part of the country, the west coast, expect strict rules on when and where republicans can travel and what kinds of enterprises they can engage in. In the Northeast and Midwest perhaps work camps will be built for republicans to labor in. Or maybe we'll put the camps in the Yukon. Too early to tell.
Any way you look at it, many will be hurt and hurt bad. Republicans will show their typical indifference to the suffering of others (they'll have some justification- it was the duped's greed that nailed them too. Or perhaps they just wanted to purchase a house). That indifference will set off an ugly backlash against conservatism and all bets are off as to what kind of treatment republicans receive. You don't want to know what I want to see done with them.
But then we can emerge as a society that develops a better sense of decency, of community, of the common good. Personal relationships will improve without all the stress of competition and anxiety over money. People will relearn how to work together in genuine partnership to solve problems fairly. The first problem will probably be what to do with all the mass graves filled with republicans? HAHAHAHAHAHAHA
Short sighted hit the numbers greed also gets my vote for the destruction of the America. The democraps contributed a bit to that mentality, but the Repukes are by far, several orders of magnitude at least, more responsible for this. Ever since Saint Reagan set the country on the Greedfest path and now culminating with King George Junior, our country has been hollowed out in the name of free market capitalism. We will see on Junior's watch the onset of the 2nd Great Depression, thankyou Repukes.
Hey dogcrap green, your TOL is heading...
.
.
.
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LOWER. Why would anyone buy a company whose prospects over the next say 10 years are virtually zero.
BTW, you'll NEVER see $35 again on TOL. NEVER. GUARANTEED. You will se sub 20 though.
I say ride it down.
CNNMoney.com: This is beginning of Realtor's End:
( http://tinyurl.com/k6l77)
Discounters are alive and well
Full-service real estate brokers continue their efforts to secure their turf. But discounters' business is booming.
At the heart of the issue is a fight over how much individuals should have to pay to sell a house. Full-service agents charge sellers a 6-percent commission, and those fees can run well into the thousands of dollars. That buys a home seller everything from listings to open houses to help with negotiations at closing time. Those are useful services.
But some sellers might just want help posting a listing, for example. For them, discounters offer "limited service" and might charge just a few hundred dollars. The real estate establishment has long maintained that traditional brokers can find a buyer more quickly and secure a higher price than a seller could on his own.
It is not because Russia, China and India have SMART people. It is because we don't encourage or support our kids to go to college. Furthermore, our high school students are not prepared academically to go to college, due to poor learning standards.
In addition, you have restrictionists, who can't offer solution and who doesn't want to increase legal (skilled) immigration, but yet they whine about why other countries are catching up and getting better than us. You can't have both.
We tend to laugh at other peoples accent sometimes and pretend not to understand what they were saying, but in reality, they are the ones who can deliver the goods.
We are still the greatest country in the planet Earth. However, not until we embrace and acknowledge some of the reasons I mentioned, we will wake up someday living in a third world country.
"Who let the FB in?"
Not an FB, just a young professional who got priced out just when I finally thought I would have the cash to buy. Also, just unwilling to be a GF.
So, thanks to all of you jackasses (bubble buyers and sellers), I am now I'm f'd in rental land for the next 5-10 years.
Good work!
Invest3 said:"What most folks aren't talking about is how they did the equity extraction maneuver because it's "free money" and many now owe more that their house is worth."
I hear you, all of a sudden they are going crazy with their "improvements"- landscaping, remodeling, and additions only to discover their equity loans payments are increasing.
Money just doesnt grow on trees...
Hey, is that Ann Coulter in the middle of your photograph, Keith??
ecobuilder,
Discount brokers aren't the answer. In a hot, overpriced, quick sale market the DB's do great. Once things go back to normal or fall off a cliff,
Seller's will demand more service and expertise for their money. DB's, in general, don't offer either.
Hey anon/America-hater
March on down to the public library (it's staffed with flamers & people who think like you) and read how Pol Pot & the Khmer Rouge did their part to build a "better" society in Cambodia. Be careful though, sometimes the revolution tends to eat its own...
An acquaintance at my church is a RE agent. He was commenting on how slow the sales are going in the area (Mission Viejo, CA). He said he's trying to "help people" unload their $800k and 700k homes. He's still bullish on the market here and still stated about RE: "it's still a great investment". I know it's in the interest of these guys to be optimistic, but few people realize that RE agents also get paid for being pessimistic too, i.e. "sell now while you still can!". He kept talking about how many listings he has and how happy he is about it. But if I'm not mistaken this doesn't mean anything unless they transact. I don't know how one lives such a duplicitous life, requiring the intentional deception of other people - and still calls himself a Christian and smile about it. It has shaken my faith a little.
I live in a smallish Florida beach town. Wages are quite low here, but until recently it didn't matter much, since the cost of living was also low.
That was before "developers" and floppers discovered the place. The cost of houses here doubled in three years. Now the median home price is almost ten times the median income.
Working people here can no longer afford even a very modest house. Many are having to leave, thanks to the near impossibility of finding affordable housing. The dramatic jump in taxes (due to the price runup caused by rampant speculation) is driving out a good many homeowners, esp. elderly ones.
Meanwhile, the developers have paved the beach and thrown up miles of soulless concrete boxes that sit mostly dark at night. We have about a year's worth of single-family homes sitting on the market, and close to three year's worth of condos, at the current rate of sales. Things are going to get ugly here.
All in all, average peope were screwed and a beautiful landscape destroyed forever so that a few rich people could get richer. But isn't that the story of the housing bubble everywhere?
___________________________________
THis pisses me too. They totally phucked up Strathmere NJ like this in the past few years. Sickening.
Pol Pot & the Kmer Rouge? What's that go to do with the greed-soaked shithole america has become? So now we're comparing ourselves to more primitive, brutal regimes in third world countries to gain a favorable comparison? That's charming.
But on that subject, republicans/conservatives seem pretty fond of causing death being behind the loser Iraq war. And they never seem to lack for places to bomb. Pretty much we've been bombing some Middle Eastern country since 1983.
But that's all off the topic of the greedfest in housing that is also from the ideology of the shithead republicans.
"It is because we don't encourage or support our kids to go to college."
We have plenty of people who'd gone to school, to study the sciences, just to end up in dead end careers (see university postdocs) because of lab closings and other short term corporate plans of outsourcing core R&D.
Today, any science student with A's (and a few A-'s) is considered a moron if he doesn't go for law, medicine, or finance with his mental skills. With that in mind along with a deteriorating, insecure career track for scientists and engineers, why should any American be interested in getting an advanced degree for science other than an MD/PhD to become a brain surgeon with research credentials?
"MD/PhD to become a brain surgeon with research credentials"
MuDPhuDs are nerdus supremus.
I mean seriously, isn't it enough to be an excellent surgeon than to be a name brand "top" surgeon from a Mayo or Johns Hopkins hospital? I mean c'mon, competition's healthy and all but I think these guys just like to have initials next to their names.
My wife has a real estate agent friend in Chicago. She recently asked him how the local market was doing. His comment was that it had not just slowed down but stopped altogether. When she asked him what he was going to do to support him and his new wife, his answer was "Well, I could work at Target or become a porn star." Classic gallows humor!
Exactly: the average level of edumacation in science is pretty low, but that's not because they kids are dumb, but they are smart: street-smart. Why should they bust their ass for a dead-end future?
Still, there are some who still pursue it out of idealism and talent.
The reality is that at the top level of science & engineering---the ones who are actually capable of producing new products and discoveries, the US talent pool is as big as you want it to be. Quality is as high as ever at the top rank (which is the one that matters).
There are plenty---a vast glut---of "former engineers" and "former scientists"---educations and research experience paid for by US tax payer---working involuntarily in stupid jobs because they've been declared 'redundant' or 'unskilled' or whatever BS.
THE PROBLEM IS LACK OF JOBS AND COMMITTMENT FROM PEOPLE WITH POWER TO DO SOMETHING ABOUT IT.
I think that complaining about the state of education in high school---by these same power brokers---is nothing but clever propaganda to anaesthesize the people into thinking that "maybe all these layoffs and outsourciing is because we aren't making enough educated scientists."
That's a load of Bullshit.
How many people transition INTO R&D mid-life? Zero. It's impossible to get the ability and high level of skills necessary, about as plausible as joining the NBA at age 47.
How many people transition OUT of R&D in mid-life? Plenty. How many people wanted to, deep in their hearts? Few.
"How many people transition INTO R&D mid-life? Zero. It's impossible to get the ability and high level of skills necessary, about as plausible as joining the NBA at age 47."
Yeah, a lower paying NBA but the analogy still applies. At most, a mid-career R&Der is a person who does a postdoc with his own money and why an independently wealthy person would want do that is beyond me. Nowadays, a so-called successful 50-something, in the sciences, is a salesman or consultant for big customers but let's face it, you've got to be able to close deals or bill hours or your career is just as insecure as anyone elses. At least the 50-somethings at the Y basketball leagues are getting a workout w/o having been suckered into the dream of playing for the Rockets.
Wow, after reading all these comments I can only observe that the real estate crash is really starting to freak people out.
The level of anger/rage/frustration in this collection of posts is far higher than anything I've read on this blog previously.
The real price slides haven't even started yet; its gonna get MUCH worse...
this blog attracts a wide view of people who axes to grind. To answer the original question 1995 300K plus,quit career and started title company in midwest.Now it is one of the largest title/escrow in our area. Profitable ? no. I am now 500K on the downside including 100K on the house.So, next year , one of the banks gets the office furniture and another gets the house, and I start over.
Bitter? NO! fifty years from now ,no one will remember who we are or what we did. Dust in the wind!! When you are 90 and drooling in the nursing home, how much money your house is worth doesn't matter.ypu are still drooling and dying.
Cheer up people !! we have lived in the wealthiest most successful country in human history.If you do not like it, go be a serf in Mexico or a starving tribal member dying in Africa .
Ok people, using the whole decline of true research and development as a backdrop, where's the upside when the tide goes out this time?
After the 70s stagflation, we had computers, wireless, and the net take off in a big way. The origins of that take off began in labs at Xerox, BBN, AT&T, Digital, and the DOE/DOD labs. Upon entering the commercial sectors, private industry took off with these innovations with the jointed support of financiers and industrialists.
Ok, fast forward to 2006, most of those labs are either DOA or close to going nowhere with idiot press releases like drawing molecules on a tip of a needle, BFD.
Now, we also have housing at historic highs with no base of R&D to chain react the next generation of products and services. So where's the next '80s and '90s going to come from? From China? Russia?
You see, when housing goes down, the whole enchilada goes down this time. Since the current housing prices are based upon the future of America looking like its past (think from 'American Graffiti' to 'American Pie') then we have a serious issue of collapsing prices to that of third world like valuations in non-wealthy communities.
2 Points:
1) I am a highly trained medical professional making $200,000+ in Orange County, CA and I can't even buy a POS shack in Santa Ana where the gang-bangers kill for fun.
2) I've worked in China for several years and have seen the massive number of ambitious English speaking college kids who will toil endlessly for 1/10 equivalent pay in the USA.
Prediction:
Housing market will crash because
incomes for highly paid professionals will crash and we will enter the second great depression next year.
Start accumulating cash/gold because that's all you'll have left.
The richest man alive, Bill Gates saw the writing on the wall and "retired" from Microsoft to give away his stocks that will soon crash anyways. Why not do some good before it does?
Likewise, let's not delude ourselves into thinking that our houses/stocks are worth anything. Do some good now and prepare for the hard times ahead.
"massive number of ambitious English speaking college kids who will toil endlessly for 1/10 equivalent pay in the USA. "
Don't forget, these kids will get work at DuPont R&D in China (FYI, Duppie had sent 2K science R&D jobs over there during the past 2-3 years) or another like multinational corp, build an expertise in product development, and then start their own companies with China's accumulated capital along with American knowledge.
Realize, it's one thing to study science in school but to get a full course of experience, in making something, is worth its weight in gold.
End result, no local American lab can compete with both the capital and manpower abroad. The final result: twenty years later, the US is another Argentina.
"End result, no local American lab can compete with both the capital and manpower abroad."
Yep, and this is so obvious that the govt, instead of focusing on a Manhattan Project for the future of science here in America, decided to let free marketeers determine what market driven research means. End result... iPods and Yahoos. Wow, a portable hard drive for mp3s and a search engine. At the rate we're going, we'll be ahead of S Korea and Japan in robotics and artificial limbs in no time!
I have practised patent law at a number of firms for several years- at each firm the vast majority of the clients are/were foreign companies. Without looking at the stats at the Patent Office, I would have to say at least 8 of the top 10 companies getting patents are foreign. Oh, and I cannot afford the POS townhouse that I have been renting and which just got sold out from under me. 550K for a 2 bedroom across from the projects? WTF?
:I have practised patent law at a number of firms for several years- at each firm the vast majority of the clients are/were foreign companies.
How long is Patent law going to be a viable profession for a young American scientist? That is given the trends with R&D being done elsewhere?
No bubble? Wanna have some fun?
Go to realtor.com, and look and see what 250k to 500k (single fam. res.) will get you in san diego! Good example, 696sqft., .05ac., built 1923, in the rough end of town......380k! Maybe they'll take 375K...can't hurt to ask.
Anonymous said...
well I don't think they care if the police are prepared. Just look at the Lt. test no questions about any critical incidents only gay protesters and African American community activists. We are all doomed....
1/09/2007 08:44:45 AM
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What part of Chicago? How much?
What part of Chicago is the bridge loan guy selling in?
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