Reporting today from burst-bubble-central Vegas - where when you fly over you still see tons of crappy wood-frame suburban debt-traps going up.
Here's an article in the Sun Times on a theme we've been discussing for months at HP - who to blame for the mess we're in. Also note the new balls-out lying from the corrupt David Lereah.
As the housing boom winds down the finger-pointing is just warming up.
Did a long-overheated market simply cool or did it have some help? Where did everybody go?
"Every time a boom ends, people are similarly puzzled," said Yale University economics professor Robert J. Shiller, who forecast the tech-stock crash in his 2000 book "Irrational Exuberance" and began casting doubts about the real estate market in 2003."I'm not even sure [the cycle is] about to end now, but I have a strong suspicion that the current change in the market is an important turning point," Shiller said.
Last week, home builder Robert Toll, CEO of Toll Bros., one of the country's largest builders, jumped on the blame bandwagon, pointing to terrorism, the war in Iraq and Hurricane Katrina as reasons for the weakened demand for housing.
From Toll to mainstream analysts such as Shiller to 30 or so boisterous blogs devoted to the predicted housing bubble pop, the post-mortem is under way to determine what led the housing market to overheat, possibly to a point of no return.
Among the leading suspects: a bubble-obsessed news media; overly cheery housing-industry economists; zealous real estate agents; and bankers offering low mortgage interest rates that carried on too long.
The list goes on: overly lax lending standards that made homeowners of people who could not afford it; the horde of neophyte investors who overpaid for their acquisitions; and builders throwing up too many houses.Or maybe, some say, it's housing fatigue: sellers fixated on getting unrealistically high prices and buyers just taking a breather from the binge.
"It's dead. The market is dead," David Kerpel said recently. "There are no buyers."
Lereah and his fellow housing industry economists don't come out unscathed. Critics say they generated unfounded optimism that the housing market would soar perpetually.
"In October 2005 Lereah was busy calling the bubble believers `Chicken Littles,'" goes one post in a blog dedicated to criticizing the economist, davidlereahwatch.blogspot.com. "Many of the predictions espoused by the `Chicken Littles' are fast becoming closer to reality. ... David Lereah has lost credibility because of his irresponsible cheerleading."
Lereah counters that he has been forecasting a change for some time. "I've been wrong for three years in a row. I've said we're about to get a correction. For three years, I've said, `This is the year that sales will come down.'"But now, it's not because mortgage rates went up, it's because of the psychology of the marketplace," he said. "The prices just got too high."
September 11, 2006
Let's play the housing meltdown blame game
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White Collar Criminal Becomes Blue Collar Prison Bitch: The David Lereah Story
7 mortgage brokers shut down by state (Massachusetts)
The state yesterday shut down seven mortgage brokers in Massachusetts and banned a variety of deceptive lending practices in what regulators called a sweeping crackdown on rogue brokers who steer customers in poor urban neighborhoods to loans they cannot afford.
Massachusetts.http://www.boston.com/news/local/massachusetts/articles/2006/09/09/7_mortgage_brokers_shut_down_by_state/
The David Lereah Watch Blog is also run by David from Bubble Meter Blog.
http://www.boston.com/news/
local/massachusetts/articles
/2006/09/09/7_mortgage_brokers_shut_down_by_state/
Personally I would not buy a house today if they were giving them away.
Over priced box to store your shit in, that is all it is.
Besides that , the upkeep costs, property taxes thru the roof, and the scumbag Neighbors, who give to shits about their property..IE White Trash.
Ya I own..but am sorry I did not jump ship when i had the chance..not levereged..just need a change of pace..at least if I were renting I could say I have had enough of this place lets get out of dodge..nope sorry have to sell or pay the man if i walk away...I love my home I am just sick and tired of Massachusetts and the cost of living in this pathetic state.
And all we hear on the news is the Clowns running for governor and I quote:
TAXES THIS TAXES THAT...typical false promises from people in the upper 1% who could carless what the cost of things are. I want a Do'er not a False Promise.
Really? What is gold selling for now? It was very high recently wasn't it?
if you have an ex-wife, somehow and some way, it will be your fault that her newly built house completed in 2005 is hissing value everyday. just deal with the best way you can
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paintblot - try to keep up with the blog - haven't owned gold for some time
I believe in cash
autofx, the psychology aspect comes into play not for those who can't afford it, but for the bulk of masses who are driven by the mania and panic, whether it be up or down. For instance, the general psychology of the masses last year was that real estate was a no-lose situation, and so mass speculation existed in the market and even those who wanted to live in the homes were buying them even though they could not afford them (by means of creative financing).
The mass psychology has shifted (or is shifting). It is this opinion of the masses that drives the markets, not individual intelligent opinions.
"The state yesterday shut down seven mortgage brokers in Massachusetts and banned a variety of deceptive lending practices in what regulators called a sweeping crackdown on rogue brokers who steer customers in poor urban neighborhoods to loans they cannot afford."
________________________________
++++I think shutdowns like these are just the beginning. Soon it will spread to other states. In the future, we may see class-action EEOC lawsuits against mortgage brokers for discriminating against minorities by steering them into "exotic" loans.
I have some gold. In the event of a severe deflationary event, the price of that may drop a lot. I also hold silver, but again, it also may be subject to the same deflationary forces.
The problem with paper money, gold, silver, sea shells or whatever is that they only are useful if other individuals are willing to exchange what you need for them. There's a much better chance that gold and silver will be considered valuable by post financial disaster people than paper money, but during a true crisis it may not be possible to purchase things you need with money.
When the bubble truly implodes, any sort of financial system activity will be like finding the best deck chair on the titanic.
In fairness, Dave was calling for a Real Estate bust in 01-03, but he called wrong at the top, which is a bad bad decision.
Now it busting badly. A classic hard landing.
Well, now it's starting...
the witch hunt for the rogue brokers!
This should unsettle alot of recent homeowners nerves.
http://www.rockymountainnews.com/drmn/news_columnists/article/0,1299,DRMN_86_4983839,00.html
Great article!!!
Lereah got it half right.
The WHOLE truth was the price got too high for the product they were selling...
Why is GOLD collasping? I thought it always goes up?
how are all you oil bulls doing? Know anyone who is bearish?? Scary huh? Needs to really hold here in front of $65. Look at the weekly and monthly trendlines. It could get ugly and fast.
Can this twit get his lies straight?!
Maybe he needs to write everything he says, so he can go back to it later to see what to say next.
how are all you oil bulls doing? Know anyone who is bearish?? Scary huh? Needs to really hold here in front of $65. Look at the weekly and monthly trendlines. It could get ugly and fast.
Short tern is ugly, but its going to be a long, long winter...
The 'Blame Game' is Truly The Great American Past time!
"Great article!!!"
Yeah, a real tear-jerker, where's my hankie? Not. I'm so sick of the Press portraying these illegals as somehow noble in their lawlessness and squalor. Our local paper wasted two full pages on the sad story of a meth bitch who abandoned her kids and ended up paralyzed after her hubby shot her point blank in a meth-crazed paranoia. My only pity is for her two kids and their misfortune of having such dirtbags for parents.
Losers are losers, and laws are laws. Maybe it's time for a good housecleaning...
Look to the WSJ for the article on lender regulation tightening. This will stop the easy money that has fueled this nonsense!
look to the WSJ for the article on lender regulation tightening. This will stop the easy money that has fueled this nonsense!
This will no doubt compound the collapse.
If the average home owner loses 10-25% of their equity in their homes we will be in a depression. It will be bad! The similarities with the Great Depression are there. Stock market crash that led to land devaluations, and here come the soap kitchens and the rest. But this time will we have a WW II to bail us out?
http://www.poly.asu.edu/news/2006/09/11/
AZ RE Info from ASU
NOW is NOT the best time to buy!
30 days from now will be the absolute best time to buy!!!
(I started RE Sales Licensing classes today and should have my license in about a month :-)
---> fire away, y'all <---
FORBES.COM article posted on MSNBC.Com
How low will real estate go?
The boom is over, now the arguing is about how long lean times will last
By Lacey Rose
Forbes
Updated: 6:33 p.m. ET Sept 11, 2006
Get used to it — the seller's market is closing up shop. The days of fat, fast home value increases are gone. Pack away those flipping fantasies.
"The boom is definitely over, there's no debate about that," said Mark Zandi, chief economist of West Chester, Pa.-based research firm Moody's Economy.com. "Now the question is more how hard is it going to land, if it lands at all."
The answer? Depends who you ask — and what location you're talking about. How to feel about it? Depends which side of the market you're on — and what location you're talking about.
Few, if any, economists are enthusiastic about current market conditions, thanks to a host of bleak figures recently released by home builders, federal agencies and the National Association of Realtors.
On Aug. 22, luxury home builder Toll Bros. announced that its net income fell 19 percent in the quarter ending July 31 from a year prior. Earlier in the month, the company said new orders had fallen 47 percent. According to NAR, the number of existing home sales plunged 4.1 percent in July to a seasonally adjusted annual rate of 6.3 million, the lowest since January 2004. Nationwide, the median sales price for an existing single-family home inched up a painfully small 0.9 percent compared to double-digits in 2005.
But that's just today's pain. What about six months from now? A year? Five years? Opinions about the future range from hopeful outlooks to doomsday predictions.
"One possibility is that you get a quick return to normal, which is what the economists for the realtor groups tend to hope for," said Edward Leamer, director of the UCLA Anderson Forecast. "But there's nothing in the historical record that suggests that we're going to get a return to normal anytime soon."
"It is a question of whether it is deep and quick or not so deep and much longer," Leamer added. His prediction: "Not so deep and rather long."
The way Zandi sees it, the market is going to weaken considerably more. "It has been correcting for about a year, and it's got another year to go," he said.
Not surprisingly, Lawrence Yun, a senior economist for NAR, is more optimistic. He claims that the market has returned to more earthly figures after a period of unsustainable growth. "Any decline will be very short-lived," he said. "By the spring of 2007, the market will begin to see increased sales and strengthening in home prices."
Others are less willing to prognosticate an end date for the slowdown, due to a host of unknowns, including future interest rates and job markets.
Whatever the future holds, the present doesn't look good. The number of unsold homes on the market rose another 3.2 percent in July to 3.9 million, a 13-year high, according to NAR. If the current selling rate held steady, it would take 7.3 months for all of those houses to move.
One reason for the holdup is a disconnect between buyers and sellers, said Anderson's Leamer.
Many property owners are reluctant to cut their prices. Unlike builders, who are so desperate to sell their properties that some are throwing in extras like upgraded countertops and one-week vacations, many sellers are willing to wait. Their logic is simple, Leamer explained: "A lot of owners figure, 'My idiot neighbor sold his home for $1 million, and I'm not taking a penny less.' "
On the other side of the equation are the buyers, equally strong-willed. Unwilling to fork over those sums in a wavering market, they are watching from the sidelines, waiting for prices to drop.
"Buyers are holding back currently to see how long and far this cooling will go," said NAR's Yun.
What's more, two key sources of housing demand are locked out of the market, explained Moody's Zandi. One is first-time home buyers, who can't afford to buy given the mix of rising interest rates and still-high home prices. The other is speculators, who can no longer benefit from dramatic appreciation by flipping real estate.
Of course, real estate is a highly fragmented market — what happens in Palm Beach, Fla., may be completely different from what is taking place in Cleveland or Phoenix. Not everyone benefited equally from the boom, and not everyone will suffer the same in a bust.
Areas that were once epicenters of the boom, like Phoenix, San Diego and Las Vegas, will be among the hardest hit, Leamer said. "Regions where a lot of the economic growth came directly from the real estate sector and where that was a huge plus, that's going to turn into a huge negative," he explained. "Wherever the party was the loudest, that's where the hangover is going to be the greatest."
To get a sense of how home prices will perform in various parts of the U.S., we turned to Moody's Economy.com for historic and predicted median home prices in 15 major metropolitan areas. We looked back ten years and forward another ten. The results show several cities, including Boston, New York and Washington, D.C., experiencing ups and downs (more precisely, downs and ups) in coming years — a boon for buyers, perhaps, but not for current owners. Other places, such as Houston and Minneapolis-St. Paul, may just keep chugging along.
The company bases its forecasts on an econometric model that looks at the relationship between prices and various factors that have historically driven supply and demand in these markets. The intricate formula was proved to work when compared with actual house-price performance through the early 1990s, a period when home prices rose and then fell sharply.
http://www.msnbc.msn.com/id/14787588/
Anon: I don't know why anyone would care if you go hungry to be honest about it? Good luck to you.
Look for "I beieve nicotine is not addictive" from the NAR president at the Senate Banking, Housing, & Urban Affairs Hearing "The Housing Bubble and its Implications for the Economy." Witnesses do not include Learah, sadly.Wednesday 10 AM.
Yeah, Mr. Toll, had Katrina not happenned, we wouldn't be in this predicament.
At least they are admitting the market is dead I guess.
Blame Canada!
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