October 28, 2006

BUBBLETALK - October thread to talk about the housing collapse

Keep it clean, post article links, tell us about local conditions, have a good housing bubble chat


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Anonymous said...

keith, when do you decide to start the thread over and is it my imagination or do you have a web traffic bubble building? what are your numbers

tom said...

by Jim Willie CB

“My forecast is for the current housing decline, which is several months along, to become the worst housing bear market in modern history, just as the lending abuse was the most insane in modern history.”

“Fanny Mae routinely sells “repackaged loans” in mortgage bonds, which by law cannot be audited on an individual basis. This is a reckless sewage treatment process, a one-way street.”

Chris G said...

I think he starts the thread over either at the beginning or end of each month.

Chris G said...

Here is an update on the Amaranth hedge fund implosion. It mentions a couple other hedge funds that have had some shakeouts.


a.creampuff said...

Decline in DC-area real estate is all over today's (Saturday, Sept. 30) Washinton Post Real Estate and Business sections. Highlights include federal crackdown on banks and follow-up with two buyers and a seller from a series they ran in Spring. Big headline "Buyers, It's Your Move". Keith will love the article on neighbors tracking $100k price drops (actually some good insight into how actual circumstances vary - e.g. those who bought long ago can afford huge hits, others more pressed). Start of the long slide?

Anonymous said...

It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

Renters, and anybody born in a future generation, will not be able to afford a £15,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.

keith said...

scroll down the homepage if you want last month's BUBBLETALK thread, they're all saved

for latest traffic numbers scroll to the bottom of the page and hit the link

Anonymous said...

Chicago Sun-Times Real Estate Set yesterday (9/29) had an article of a nice yuppie couple that bought a 1,100 sq ft brick Bungalow orig build 1927 in Marquette Park (1/2 bad South Side hood, getting worse). No price of course. The place was rotten through and through. I read it wondering why the hell did they buy it in the first place. Can't raise kids there, they will end up being stray bullet catchers.

Bubba2Friday said...

The government is out with new lending guidelines - the changes are huge for the real estate market!


Anonymous said...

A glimpse of things to come as the collapsing housing market leaves illegal immigrants without jobs.

San Diego Union Tribune story

Police say local taco shops are a favorite with robbers
The neighborhood taco shop is becoming a popular target for armed robbers and a mounting concern for police.

Over past months, some of the same small eateries have been hit repeatedly. In the Otay Mesa area, robbers recently tried to strike two restaurants on the same block.

In other holdups, men have forced customers and employees at gunpoint into back rooms or made them lie on the floor while cash drawers, wallets and purses were emptied.

From May to August, San Diego police recorded 12 robberies or robbery attempts at taco shops. They say many of the Mexican restaurants lack security cameras, are open all hours, accept cash only and often hire employees with questionable immigration status who fear cooperating with authorities.

Bubba2Friday said...

Heard this ditty on the radio...

The roof, the roof, the roof is on fire!

The roof, the roof, the roof is on fire!

Anonymous said...

The illegal immigrants aren't the criminals.

The criminals are local US residents. The illegals are the victims, but don't report because they don't want to be caught by la migra, and in their home country the police are criminals with a badge.

Anonymous said...

Some of what is written on financialsense is wrong.

Fannie Mae does not buy and securitize the worst subprime loans.

It is supposed to be limited to conforming mortgages and the best tranches of the subprime.

Now there's always the possibility that they've been cheating, but at least in the letter of the law and regulation, they're better than the rest.

What I don't get is why the blogs and writers get medieval on Fannie and Freddie---when the privately owned banks are much much worse keeping and writing all sorts of toxic mortgages.

Is this some political pseudo-libertarian "if it's government it's bad" assumption? As if Fannie and Freddy employed a sub-species of pod people, and private banks only have Benjamin Franklins and George Washingtons running them?

Regarding goverment bailouts. You think the Fed will let Washington Mutual go under but save Fannie? No, they both have a chit of the Bernanke put; as the Fed will inevitably be forced by political pressure to securitize and monetize the crap from any big lender.

Anonymous said...


That motor mouth usually has to give his two cents about everything!

Anonymous said...

borky! We miss you!

Anonymous said...

Fannie Mae does not buy and securitize the worst subprime loans.

It is supposed to be limited to conforming mortgages and the best tranches of the subprime.

They've been violating their mandate for years. It's no secret.

Anonymous said...

thanks Keith,you are becoming a rock star. Don't let it go to your head, and keep up your prolific work (I hope you make $ at this) by the way what do you do for a day job -- or is this your day job?


Anonymous said...

Late to the game flippers have been flooding my area with listings all summer, now inventory is really spiking. They bought fixers on the fringes of the historic district, where the houses aren't great, but cheap and close enough to trade on the "historic" thing. They're easy to spot and verify with county records. Some are asking unrealistic (last year's) prices and others are forgoing the reno and selling "as is", scrambling to cut losses. Still, the "as is" houses are priced considerably higher than purchase, for nothing more than holding the place 6 months-1 year. Many falsely state the flip address as their primary residence.
I wish they'd be charged with fraud and made to pay the tax difference. I'm not big on schadenfreude, but I do find it gratifying to see these places gather dust on the MLS.

foreclose_me said...

Has any one noticed problems with online payment systems and/or their bank websites having problems reporting transactions or balances at the end of the month for the last 3 months in a row?

Anonymous said...

There is a really insightful -- and scary -- article about the imploding housing bubble on Barron's this week. The article's title is:

Florida's Housing Hurricane
by Mike Morgan.

"MIKE MORGAN is a real-estate broker in Stuart, Fla., and owner of Morgan Florida, which offers residential, commercial and investment real-estate services and research."

"The hurricane is upon us -- and it is too late to put up hurricane shutters or get out of the way."

Anonymous said...

A house should be a home

Our world throws change at us so fast and in so many ways that it's almost impossible to say when a certain thing changed, or whether it even changed at all.

But we're pretty sure that, not many years ago, people didn't pay all that much attention to monthly reports about the housing market.

You had a house. You lived there for a decent interval of time.

Then, if you needed to move, you put it on the market and waited a while until someone bought it. You probably walked away with a little equity money, but it didn't make you rich. And that was OK. You didn't expect to get rich from your house anyway.

Fast-forward to now.

With regard to housing, we find ourselves in a time of high anxiety.

This anxiety is not because we lack houses, not because we have no place for people to live. It springs, rather, from a Valley-wide hangover in the wake of last year's frenzy of speculative buying and selling, a craze as wild, unreasonable and fraught with peril as was the dot-com bubble of the late 1990s.

History and logic should have told us the craze could not go on forever, that people will not endlessly pay ever-escalating prices far beyond the intrinsic value of the item being bought or sold, even an item of such basic importance as housing.

But history and logic are the first casualties of such bubbles, and so it has been with this one.


Anonymous said...

Even if Rates Don’t Move, the Interest Bill Will Rise

MONEY has gotten more expensive. The Federal Reserve’s benchmark short-term interest rate has risen to 5.25 percent, from just 1 percent in June 2004. Long-term interest rates have risen less sharply.

When considering the broad impact of higher rates, economists have focused mostly on how they have affected businesses and the vast real estate complex. The truism that higher interest rates function as a tax on people who hold variable debt has been particularly apparent to homeowners holding adjustable-rate mortgages.

Mark Zandi, the chief economist at Moody’s Economy.com, notes that about $2 trillion in A.R.M.’s are scheduled to reset at higher rates from the beginning of 2006 to the end of 2008. If the mortgages adjust upward by an average of 2.5 percentage points, the interest payments by holders of such mortgages would be $50 billion higher in 2009 than they are today. “That’s not much in the grand scheme of a $13 trillion economy, but it is a problem for those homeowners,” Mr. Zandi said.


Anonymous said...

Consumer spending slows while inflation increases

Consumers battered by weak income growth and rising inflation trimmed their spending sharply in August. But analysts said a consumer confidence rebound in September should limit damage to the economy.

The Commerce Department reported Friday that consumer spending edged up just 0.1 percent in August after a much stronger 0.8 percent rise in July.

After removing inflation, spending actually dropped in August, falling by 0.1 percent, the weakest showing since September 2005 when the Gulf Coast was reeling from Hurricane Katrina.

“The consumer seems to have decided that maybe shopping until your bank account drops to nothing is not that great an idea,” said Joel Naroff, chief economist at Naroff Economic Advisers. “Clearly the consumer spending binge is coming to an end.”

Analysts attributed the slowdown to this year’s high gasoline and other energy prices, weaker job growth and a cooling housing market, which leaves Americans feeling less wealthy as they see their home valuations decline.


Anonymous said...

New worry: A hard 'soft landing'

Everyone agrees the economy is slowing but recent reports have some analysts concerned about recession.

Economists agree: It's time to shut off electronic devices, put up tray tables and return your seat to an upright position. And some say it might not be a bad idea to put your head down between your legs.

A recession is commonly defined as two straight quarters of shrinking economic output.

Kasriel is particularly concerned about the impact housing weakness will have on the economy, even outside that sector.

"Housing played a larger than normal role in the expansion," he said. "It's contributed significantly to employment growth and supporting consumer spending. With home prices falling, it means the ATM machines people had in their homes in term of their home equity won't be refilling quite as rapidly."

Kasriel noted that some factors, such as long-term interest rates now being well below the short-term rates in the bond market - the so-called inverted yield curve - are often a warning sign of a recession. That's because they can choke off cash available to businesses and consumers and put a brake on spending.


Anonymous said...

Anyone else noticed that
has improved.

It seems like when you type in your city and select foreclosure you only get a listing from the city you choose.

Anonymous said...

Scamming homebuilders ordered to refund more than $1 million

A homebuilder company that collected money from at least 11 Prince George’s County consumers for homes it never built has been ordered by the Maryland attorney general to pay back more than $1.1 million.


foxwoodlief said...

Forecast? Does anyone really know?

Instead of reading articles that reinforce any of our opinions, hit the road and get the real pulse of America.

After six weeks of travel all over the west from Texas, NM, Wyoming, Utah, Montana, Southern British Columbia,Washington, Oregon, California, Arizona, all I can say is the numbers are all over the map.

No place looked like they were in a panic or a depression. Construction did appear dominant on all fronts as a major source of industry. Most of the west is way over-priced in my opinion but hey, I've been wrong on prices for 30 years so I recognize how little my opinion matters. I've been waiting for the big meltdown for 30 years and now I'm 52 and still waiting. I guess if I wait long enough....maybe it will happen.

Prices? Don't just look at homes, everything is more expensive. Cars, food, gas (except the last two weeks I've noticed it drop...on the Texas coast Regular was as low as $1.98. On the trip the highest we paid was $4.50 and in Canada it was easily that high).

Hotel prices were the highest average I've seen traveling. Food? Even two What-a-burger Jrs, burgers only, will set you back just under $5. Other than a few items from the dollar menus, most fast food will set two back ten and dinner out? At least $40 minimum for two.

Prices? Texas coast? Homes from as low as $40,000 up to the mil range of course, but surprised at the number of beach homes for $200-400,000. California? Still way high and coming down, quickly in Monterey! I think that is where we saw the most dramatic correction in prices.

Arizona? People still playing games and only those who bought to flip at the end and don't have the money to hold are panicking.

Texas? Still a mystery after living here for five months. Low prices, high prices, most affordable and some of the highest foreclosure rates. Can't figure this state out. Still, prices on new construction even with builder incentives here in Austin are up 20% from a year ago in my area.

I think we'll see a surge in price in the spring of 2007 unless we have a terrorist attack, and then maybe if WWIII doesn't break loose.

Conclusion? About as sure of what will happen as when I pull the handle of a slot machine. The odds may seem to indicate one direction and you always end up surprised.

sandiegoHICK said...

Took a little drive around North San Diego county inland area today (sat) Beautiful day, with an ever increasing amount of FOR SALE signs, Everywhere!!!

Something else I noticed, there is a certain area where people park their cars, motorcycles...etc., that are for sale. Usually about 7 to 12 vehicles on average. Today there must have been 50 or more! Never seen so many in that area (residential) ever! Lived here 34 yrs.
Another thing, a lot of them were pretty new, I was very surprised!

Is this telling us something on a small scale? Or the start of the liquidation of excess!

foxwoodlief said...

Just looked on zillow. Confused. A house we sold in 2000 for a guy for $140,000 (we paid $62,000 in 1996) and saw it sold for $230,000 in December and I watched the Zillow price fall to a low of $198,000 and now it is back up to $215,000. What gives? Every home I owned there are all showing a gain in price since I last checked the beginning of August, which had shown drops?

Also, my parent's house in California, Los Gatos in the bay area, continues to show a rise in value, albeit at a lower rate, only $1,000 this month.

Why so many contradictory signs?

Anonymous said...

Anonymous said...

"The illegal immigrants aren't the criminals.

"The criminals are local US residents. The illegals are the victims, but don't report because they don't want to be caught by la migra, and in their home country the police are criminals with a badge"

I hate to tell you, but more than a million illegal immigrants are in US prisons because of major felonies (murders, rapes, etc.). Some of the most violent gangs in America are composed of illegals.

Illegals immigrants are criminals by definition. Notice the word "illegal?"

Anonymous said...

"So. Calif. mortgage fraud raises fears of defaults" reads the head lines from the Associated Press.
"Los Angeles- Mortgage fraud surged in So. Calif. as borrowers overstated income , exaggerated assets and hid debt to qualify for expensive mortgages, authorities and industry observers said."
"The FBI said lenders filed nearly 4,300 reports of suspicious activity in the last 11 months of the fiscal year ening Saturday- on track to double last year's total."
""This is the calm before the storm", said Steve Smith, and Redland's appraiser."
"The increase has raised worried among observes about the possibility of more defaults and foreclosures in th cooling housing market."

Anonymous said...

Get the hell out of any stocks!


Anonymous said...

From: http://www.freemarketnews.com/WorldNews.asp?nid=22476

"Is there a big bang coming to hit the markets? If you believe that those in the know use insider information before major events, then you might be interested on the HUGE number of October 6th put options for the big indexes."


What's gonna happen? Invasion of Iran?

Anonymous said...

Alert: the US Census under counts inventory and over reports housing sales by a statistically significant amount.

Currently almost %60 !!!!!

Example, 1000 houss for sale. 100 go into contract. 30 (%30) contracts broken.

US Census reports inventory of 900 and sales of 100.

Actual figure is inventroy 930 and sales of 70.

If a house is in contract then it is counted as a sale. If the contract is broken then that house is not added back to inventory - EVER.

So all that houses that went into contract and did not sell are in no mans land and not counted.

Anonymous said...

Does anyone think now is a good time to buy a foreclosed condo? I live near St. Paul, Minnesota and I found a 2 bed/ 1 bath condo that the bank is selling for tens of thousands of dollars less than others in the community. It is a nice community, area, etc and still no takers on the condo ...

Anonymous said...

"no takers". I think you just answered ur own question. tens of thousands? try 100k

Anonymous said...

that condo certainly has more downside potential.
what does it cost you to wait ?

Anonymous said...

Naples Florida...


Check out the scam to sell a home in the reader comments section.

Anonymous said...

hi - does anyone know how to find out the address of a property listed in the MLS? Also, how to find out the taxes? Thanks!

stocksystm said...

Renter for Another Year

My supposed condo-conversion in Tampa just sent me a notice that I can renew my lease for another year. Plus they offered an incentive of one month free rent. I decided to take the offer, which puts my monthly rent below what I was paying 3 years ago. I feel sorry for anyone paying the overinflated prices still being asked for houses around here. A house I looked at last month sold for $160K in August 2004 and then sold again for $240K in April 2005 (a 50% increase in 8 months!). I could have bought it for $240K, but I suspect it will fall to the 2004 level eventually (maybe 2-3 years).

Anonymous said...

More on Naples...


Condo conversions going back to rentals with free month of rent + 6 months of paid utilities.

Anonymous said...

Income checks get faster, pose abuse risk

Starting Monday, it's going to get much riskier to fib about your income when you apply for a home mortgage. That's because the Internal Revenue Service is overhauling a key income verification tool used by lenders -- making it faster and easier to pull up electronically the confidential income tax information of borrowers.

``It could be huge'' in spotting fraud upfront -- before it's too late -- said Mike Summers, vice president of Veri-tax.com, a Tustin-based firm that services 3,000-plus large and small mortgage lenders nationwide. Fraud in mortgage applications is now a multibillion-dollar-a-year problem, according to the FBI, and falsified income tax filings are an important contributing factor.

Some popular mortgage products themselves open the door to bogus claims about income. Many lenders in recent years have offered ``stated income'' and other limited documentation mortgages aimed especially at self-employed applicants. Dubbed ``liar loans'' by industry critics, stated-income mortgage programs allow applicants to bypass standard underwriting requirements for W-2s or copies of personal and corporate income tax records.

Instead, applicants simply assure the loan officer or broker that, yes indeed, we earn enough to qualify for the mortgage, and the transaction proceeds to closing. Often lenders will ask borrowers to fill out what is known as an IRS Form 4506-T along with their other mortgage documents.

That form authorizes the lender or the investor providing the money for the mortgage to obtain transcripts from the IRS summarizing income and tax data for as many as four years. The form must be signed by the borrower and can only be used during the 60-day period after the date of signing.

Until now, the process of faxing in 4506-T requests to the IRS and obtaining transcripts has been paper-driven and non-electronic -- making income verifications slow and difficult to fit into lenders' highly automated loan underwriting systems. Most lenders have used 4506-T forms as a way to perform quality-control checks on pools of closed mortgages.

But now, with the IRS promising to provide electronic transcript tax data within one to two business days in an electronic format, more lenders are likely to run income checks before closing -- even on loans to applicants who are not self-employed or using stated-income programs.

``This is going to be light-years ahead of where the IRS was before,'' when the income verification process was in the horse-and-buggy era, said Summers. ``We are really excited'' at the prospect of lenders making more extensive use of IRS double-checks before closings.


Anonymous said...

No more easy home re-listings in Silicon Valley

Just when the real estate market has slowed down for the first time in years and home sellers are grasping for effective marketing tactics, a popular one is being taken from them. As of Sunday, there will be no more easy ``re-listing'' in Silicon Valley.


Anonymous said...

Swimming in surplus

Take Scott Boulevard south to Thornbrook, or Nifong Boulevard west to Mill Creek Manor, or take a short drive to any of the new subdivisions surrounding Columbia, and you’ll see empty houses.

It’s not that new homes aren’t selling. New-home sales in the first three quarters of this year were down just a little from last year, according to the Multiple Listing Service real estate database. But 2005 brought a significant increase in newly built homes in Columbia, and there are just not enough prospective buyers to match the number of vacant houses.


LauraVella said...

Income checks get faster, pose abuse risk

Starting Monday, it's going to get much riskier to fib about your income when you apply for a home mortgage. That's because the Internal Revenue Service is overhauling a key income verification tool used by lenders -- making it faster and easier to pull up electronically the confidential income tax information of borrowers.
Thanks for posting this Anon. This is HUGE news! Tomorrow the lenders will be shaking in their boots. This morning, I already see open homes signs going up, which is unheard of here in Reno.

The enforcement of lending standards will change the housing market starting today. Finally, the buyer has to prove he can pay it off. No way can anyone qualify...hello dropping home prices! The party is over!

Anonymous said...

Does anyone know the whereabouts of borkafatty?

Anonymous said...

Not on the side of a milk carton, yet!

Anonymous said...

I can't function without his rantings!

Anonymous said...

I'm scared!

Anonymous said...

There is already too much info available on people. It's like the book 1984. I know that the borrowers fraud led to this. But should we all pay for the fraud of a few. Also checking on the income of borrowers now is like shutting the barn door after the horses have bolted. Just going to make it hard for the ARM crowd to refinance. Crash and burn is accelerated.

Anonymous said...

Here is some information on Hercule, California that you requested.

Listing of Foreclosed home in Hercule

Anonymous said...

I have seen a lot more people leaving the U.S. for sunny tropical shores , and permanent European vacations! What's up? Have they finally realized their money goes farther there, or is it the two maids and a villa?
Has anyone read Paul Therhost book "How to Retire by Age 34, and Live the American Dream". He sold his house in So. Cal. during the last real estate boom, and put the profit into C.D.'s. He moved to Argentina and spends time in Paris and Asia, living quit well of the interest. He stopped working in 1984, and has not worked since. I see his articles every few months. What a life?

Anonymous said...

Where are the put options coming from? If one knows this it will really help! Weren't there a lot of shorts and puts prior to 9/11?

Dogcrap Green said...

Decline in DC-area real estate is all over today's (Saturday, Sept. 30) Washinton Post Real Estate and Business sections.

I not arguing with about DC, but I have always found it odd regarding the housing explosion in Prince George County.

Currently I'm involved with 400 new houses there that are under construction and about 75 others througout the rest of Maryland put together.

Even with the drop of a DC condo from 1 million to $700,000. You have to ask yourself. Just how much does it cost to build a house, and is there profit in it?

Anonymous said...

Honey, they shrunk the housing market

It used to be such a cinch to sell real estate in this city. Now it takes patience - and often price cuts - to land a buyer for your home, no matter how hot your nabe's supposed to be.
Rising interest rates are partly to blame. The Fed increased its benchmark rate 17 times in a row before taking a breather - from a 46-year low of 1% in June 2004 to 5.25% now. Mortgage rates have notched up - the 30-year fixed rate is 5.75%, versus 5.39% a year ago.

Nationwide, existing-home prices have fallen year-over-year for the first time since 1995.

In Manhattan, apartments are staying on the market for an average 144 days - 42 days longer than a year ago, according to appraisal firm Miller Samuel. A record number of apartments are available for sale - 53.9% more than the year before.

Fresh numbers are due out Wednesday - and these trends are expected to continue.

The stats tell a tale of a slowing market. So do homeowners on the front lines, strategizing and struggling with frustration.


Anonymous said...

Investors have trouble making numbers add up

For the past six years, Alan Renzetti supported his family by buying houses, fixing them up, then selling or renting them for a profit.

No more. Seeking a steady income in the face of an icy housing market, Renzetti earlier this year took a job managing an Applebee's restaurant.

"I've got too many kids to just wait for the market to change," said Renzetti, a Wellington man who has six children, ages 4 to 23. "I've got to get out of the business because of the economy, the insurance and the taxes."

Renzetti isn't alone. When real estate investor Bruce Morton crunches the numbers, he can't help feeling frustrated.

Morton, a full-time landlord, owns five houses in West Palm Beach and Lake Worth. All have appreciated significantly, yet the soaring costs of property taxes and insurance have left him unable to run a profitable business.

For instance, the tax bill on one of his houses in Lake Worth is about to double from $2,000 to $4,000 a year. Investors aren't protected by the state's Save Our Homes tax cap, so many have seen big increases in their tax bills.

"How do you pass that on to the tenants?" Morton asked. "You can raise their rents until it just forces them to move out. It's hard for an investor to buy a house and hold onto it and even break even."


Anonymous said...

A key FACT from Barrons

"Jeff Barcy, CEO of Hearthstone, a San Francisco-based land banker with access to $4 billion of equity capital, cites a deal in which a publicly traded home builder recently walked away from an option to buy land in Florida for $60 million. The parcel recently was resold for $32 million."

Think about the above for a second. A little while back, some one thought the land was worth $60 million, now it sells for just $32 million. Almost a 50% reduction. The affect on that particular parcel is only the tip of the iceberg.

Now, a new value has been set for land in that area. Any adjoining parcels will likely have there value impacted negatively. Existing properties with homes already built will potentially also be affected. Loans out on land may not meet debt/equity requirements. And so on.

Amazing, $28 million dollars in perceived value simply vaporized. POOF. And that is just one piece of property.

Goto and type KBH for quote
and go to messages board.


Anonymous said...

The October 1 Forsaken Craft news links is out


Anonymous said...

What happens on Oct. 6th- the employment numbers. If they are down then this could be enough to sink the stock market. Perhaps someone has seen the numbers, or the are quessing at them to be down! Therefore the put buying!

Anonymous said...

Analysis: Why housing prices might be primed to fall

If you count yourself among the skeptics who scoff at talk of a housing bubble, you would have found good company three years ago in one coterie of economists who set out to prove the doom-and-gloomers wrong.

"We were very suspicious of that talk and thought it was a bunch of hooey," said Richard DeKaser, chief economist at National City Corp., a financial-services holding company based in Cleveland.

They formed a joint venture with economists at Global Insight, an economic and financial consultant based in Waltham, Mass., and arrived at a statistical model that tries to use data to explain and account for differences in housing prices in 317 metro markets across the U.S.

"Our initial research found in 2003 that only seven metro areas appeared to be overpriced," DeKaser said Friday. "When you took the total market value of those markets, it only accounted for about 2 percent of the housing value in the country."

Proof in hand, the economists continued to make modest adjustments to the model, adjusting for the vagaries that make each market somewhat unique.

"As time played out, housing prices not only continued to rise but continued to rise at an accelerating pace," DeKaser recalled.

Late last month, the venture's Housing Valuation Analysis appeared to all but sound an alarm about overvalued housing prices. The most recent estimate of valuations for the second quarter found that 79 of the 317 markets were "extremely overvalued and at risk for a future price correction." Those 79 markets also accounted for about 40 percent of the estimated value of all of the nation's single-family homes, DeKaser said.

Mention that it sounds like he's talking about a housing bubble, DeKaser is quick to correct a misinterpretation. "If you ask the question, I have to say, 'No,' because 60 percent of the housing is not extremely overvalued."

At least for now, DeKaser prefers to describe the worrisome markets — where the model finds median sales prices overvalued by 34 percent or more — as "regional bubblets," strong candidates for falling housing prices.

The 34 percent threshold is key. In back-testing the data to 1985, the economists found 63 local market price declines where overvaluations at that level and higher were followed in coming quarters by declines of 10 percent or more over two years or more.

The greater New York metro area, which includes Westchester, Rockland and Putnam counties, first touched that level in back-testing in the second quarter of 1987, just before housing prices tumbled.

Through most of the 1990s, the model found the region's median price to be undervalued. But it's now flashing yellow, estimating that housing prices overstated fair value by 21.7 percent in the second quarter.

In comparison, Naples, Fla., was at the extreme, with median single-family home prices estimated to be overvalued by 101.5 percent.

It's important, DeKaser said, to note that the model isn't offering a prediction that housing prices will fall by a like amount.

"Future variables can change," he said. "If, for example, interest rates were to plunge tomorrow, that would lower the risk."

Both DeKaser and Jeannine Cataldi, a senior economist and manager of real estate service for Global Insight outside Philadelphia, said the model is not intended to be a predictor of future prices and caution against trying to use the model to make buying or selling decisions.

Still, the trend line and data for the greater New York area invite temptation to mull the model's implications. A comparison of second-quarter valuations shows single-family homes in the area were undervalued by 25.4 percent in 1998, just before housing prices starting appreciating at double-digit rates in the late 1990s.

So we had to ask the economists: If circumstances led to their relocation to the New York area, knowing that the model estimates prices are overvalued by 21.7 percent, would they buy now?

"It depends on your personal circumstances," Cataldi said. "If you need a home, you're going to buy a home. ... If you're looking to invest ... that's a different story."

DeKaser sounded more circumspect. "If I was moving to your area and expecting to stay for a long time, I would buy a house and forget about all this. ... The ability to time all this with extreme precision is hopeful. If you have a long-term horizon — say 10 years — it probably won't matter in the end."

And if he only expected to be here for three years? "I certainly would not buy," DeKaser said, "because I do not see a reasonable expectation for appreciation."


Anonymous said...

Housing bubble is finally at bursting point

THE thing with bubbles, to paraphrase Joni Mitchell, is that you don’t really know you’ve got one till it’s gone.
When the air is expanding inside a speculative balloon, stretching the film of credibility that contains it to an ever-more improbable thinness, you can always find someone to explain why this time it’s different — why technological/demographic/astrological factors justify valuations today that have always proved historically unsupportable.

Until the bubble actually starts to deflate or burst, there’s just enough doubt about whether prices really will revert to their historical mean to keep us all guessing. Even the most convinced sceptic can never say with any certainty when a bubble will collapse, and so the science of identifying bubbles is an inherently retrospective activity.

But it looks now as though we can say with some confidence that the long American housing bubble is over.

To the anecdotal evidence accumulating over the past year — estate agents cancelling holidays in the South Pacific, the houseowner around the corner who is said to have dropped her asking price three times — we now have some firm and depressingly clear data. Last week we learnt that existing home sales in July were 11 per cent below last year’s levels. Within a couple of days, the next report said that new home sales had fallen in the same month by 21 per cent from a year earlier. Just a week before that, it was reported that housing starts fell 13 per cent from a year earlier.

If the housing market really is in retreat, the two important questions are: how far will it fall, and how much damage will it do to the US and, by extension, the world economy? It is not an exaggeration to say that the buoyant US economy has been kept afloat in the past five years by its housing sector. The first and most obvious effect has been the direct contribution a booming real estate market has had on employment and income.

If you dissect the official employment data over the past five years, and lump all the housing-related stuff together — construction, estate agents, mortgage broking, home improvement, housing insurance investment — you get some staggering numbers.

By some estimates all this housing activity has accounted for more than 40 per cent of all the jobs created in the US since 2001. Now, all these new jobs are not going to disappear in a housing slump. But even if residential real estate activity falls by half in the next year or two it will represent a sizeable blow to the labour market that could, if there is nothing else to take up the slack, push unemployment significantly higher, and income somewhat lower.

The much bigger effect of a housing slump, however, is likely to be on household balance sheets. According to the Federal Reserve’s latest figures, the total amount of residential housing wealth in the US just about doubled between 1999 and the first quarter of 2006 — up from $10.4 trillion (£5,500 billion) to $20.4 trillion.

Thanks to a highly efficient housing finance market, Americans have been withdrawing a significant part of this wealth to finance current spending. Exactly how much they have withdrawn is hard to gauge, but the wealth effect of housing on spending has been observed to be substantially larger than traditional estimates of the wealth effect of equities, which is about 1.5 per cent. If the right figure for housing is 3 per cent, that suggests over $300 billion has been taken out in the past six years, about $50 billion a year, or an average of about 0.4 per cent of US GDP. This seems a conservative estimate, as some economists put the wealth effect much higher.

However, people do not join a wave of selling when prices fall: most simply sit tight. Furthermore, the US market is a vast, diversified one, nothing like as dominated by a single, frothy urban market in the way the UK is affected by London. Prices nationwide have in fact never fallen in any year in the last half century.

But even if prices stay flat on aggregate over the next few years, that still suggests a substantial hit to GDP and, given the run-up in prices in the past five years, the chances of an outright, first-ever decline in prices must be substantial.

The other large effect of a housing slump might be considered a non-linear one: the impact on financial conditions of the millions of Americans who will default on mortgage payments as prices flatten, interest rates rise and the economy stalls.

In previous periods of weakness in property markets there have been huge institutional collapses. The savings and loans debacle of the early 1990s is the most recent example. Today, again thanks to increased financial efficiency, the risk of such a massacre seems smaller. The securitisation of the nation’s mortgage market has spread the geographical and sectoral risks to the broader economy.

But there will still be many financial institutions with significantly impaired balance sheets as the value of their mortgage-backed securities declines sharply over the next year. All in all, even on the most optimistic assumptions, post-bubble conditions in the housing market would be highly uncomfortable for America and could seriously sap demand in the world.

Of course, that is what the pessimists said about the collapse of the tech bubble in 2000. But back then, like a guardian angel, along came the housing boom just in time.

Is there anything that might do the same for the US in the next few years? There’s not much room for fiscal support. Unfortunately, and though interest rates have edged lower in the past few weeks, inflation pressures may limit the potential for support there. A further decline in oil prices would be useful, but can hardly be counted on. Which may leave the US in the unaccustomed position of hoping that the rest of the world can come to its rescue with a period of really strong demand growth. Who would bet the house on that?


Anonymous said...

I found a great site about the San Diego bubble


Anonymous said...

For Real Estate Brokers, Business ‘Has Dropped Dead'

Veteran real estate broker Deanne Esses, who plies her trade as a senior vice president at one of the city's biggest firms, Bellmarc Realty, said eight people in her Upper East Side office on Madison Avenue are leaving their jobs for alternative careers. Those eight represent 20% of the office's sales staff of 40.

That's only the beginning. Ms. Esses said she thinks more New York City brokers will be leaving the scene. "Business here is just not quiet; it has dropped dead over the past few weeks," she said. "At the same time, there's a flood of inventory on the market. We run open houses, we run advertisements, but nothing works. There are no buyers, and without buyers, there are no sales."

Given the housing slump, such departures — the latest wrinkle in a once-booming real estate market — could become a lot more conspicuous. In recent years it's estimated that the ranks of brokers expanded nationally by more than 200,000 at new and existing real estate firms. With the housing slowdown accelerating, many more career changes are likely.

In effect, the end of the current real estate boom is also signaling the end of the seemingly nonstop national flight into the real estate brokerage business by those folks who figured such an entry was practically a guarantee of a lucrative six- or seven-figure annual income.


Aaron Krowne said...

Surprised you didn't post this one, Keith:


(My commentary on extensive Barron's coverage of shady home builder financing, and cheat-sheet of builder stocks that look good for a short).

It is pretty damning stuff.

cracker said...

The Great Immigration Debate: The Invasion of the Crackers

Anonymous said...

The October 3 Expert Research news links is out

Expert Research

Anonymous said...

Get daily real estate & housing bubble news:


uknowwhoiyam said...

Check this out:

Full page ad in the Baltimore Sun:


"There is no such thing as a real estate bubble, it's called growth."

DarrenGainesvilleFL said...

Here is a post sent to me. Aol Money and Finance about Real estate collapse.

Anonymous said...

All points bulliten:

The whereabouts of borksfatty????

autofx in Phx said...

borkafatty fled in shame and embarrassment at not being able to spell d*ucheb@g.

Anonymous said...

no, borkafatty was dispatched out in the street repairing some potholes. he'll be back at lunch break.

mortgage said...

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Happy to live in Santa Barbara said...

Great Real Estate Market In Santa Barbara... NO BUBBLE HERE!


Multifamily comeback for the South Coast

Barbara Pearson
Staff Writer
In a market that has been crowded by townhouse and condominium construction in recent years, the emerging trend of multi-unit housing could be a positive sign for landlords and a red flag for homeowners in Santa Barbara County.

Two new apartment building plans were submitted to the City of Santa Barbara for conceptual review, just in time for the Santa Barbara County Real Estate Forecast on Sept. 21, which asserted that as housing sales slow, the rental market is beginning to fill up again.

On Sept. 18, the design for a nine-unit apartment building at 517 W. Figueroa was returned to the Architectural Board of Review, or ABR. Immediately following, a proposal for a seven-unit apartment building at 321 W. De La Guerra St. was brought before ABR for the first time.

“The Architectural Board of Review was very pleased that my client is proposing an apartment complex, recognizing that there is a need for rental housing stock in our town,” said Gregory Jenkins, the architect for the seven-unit building design, which was 10,259 square feet and two stories at its initial review.

The design included a studio apartment and a combination of one-bedroom and three-bedroom units. The project will be adjusted to reflect initial comments made by the city and then resubmitted. Multiple buildings would be demolished to make room for the new apartment building on the 19,406-square-foot parcel on De La Guerra Street.

“It seems to make sense when you look at the economy, when condos are really that bad off right now, who would build condos?” said Craig Lieberman of The Apartment Specialists.

The proposed 18,265-square-foot building on Figueroa would include a 7,577-square-foot subterranean parking garage and a central courtyard. All nine units would have two bedrooms and a roof deck.

But since its hearing at ABR on Sept. 18, the building design has already been changed to condos, according to architect Mark Wienke.

Often, apartment designs are submitted to the city with the intention of later converting the project to condominiums, which in recent years, have been a more profitable investment. Apartment buildings became a tricky investment. Prices rose and rents fell as potential tenants dropped off to invest in their own homes.

“It’s a tough thing to do to actually create apartments here that are just made from scratch as apartments, unless you have the land really inexpensively,” Wienke said.

But recent reports in a Santa Barbara County real estate outlook suggest that as housing sales come to a halt, tenants are going back into the rental market. The Santa Barbara County Real Estate and Economic Outlook, presented by Mark Schniepp of the Economic Forecast Project at Fess Parker’s Doubletree Resort on Sept. 21, discussed the end of the Central Coast real estate bubble and its impending soft landing.

Schniepp’s outlook may mark the beginning of a turnaround.

“The rental market is tight, demand is very high, and prices for residential real estate are so crowded that people have to seek rental housing,” Schniepp said. Comparing the first eight months of 2006 to the same period of 2005, condominium sales have dropped 35.3 percent and single-family home sales are down 20.3 percent in South Santa Barbara County.

Trends are much the same for the rest of Santa Barbara County and Ventura County. Sales have dropped 25.7 percent in the Santa Maria Valley.

Overall, home sales have decreased by 27.4 percent in Ventura County, and in certain areas that drop is closer to 40 percent.

Meanwhile, apartment vacancy rates in Santa Barbara were 0.3 percent as of June 30, according to the Santa Barbara County Real Estate Outlook, and with a full market, average rents in Santa Barbara rose by about $100 between June and July.

“Now in the city of Santa Barbara, there is less than 1 percent vacancy on rental housing, things have turned around where there’s such a strong economic incentive to build rental housing and no one is doing that,” Lieberman said. “It just maybe behooves an owner now as opposed to everything being turned into condos or townhouses.”

Another benefit to constructing apartment buildings with less than 10 units is that they are exempt from inclusionary housing requirements. Currently, the inclusionary housing policy in Santa Barbara mandates that an apartment complex with 10 units or more must have affordable housing.

If those units were townhouses or condominiums, they would be considered by the planning commission on a case by case basis to set the inclusionary housing standards.

Jaime Limon, a senior planner for the City of Santa Barbara, said that with the aging Santa Barbara housing stock, he is seeing more property owners decide that rebuilding makes more sense financially than trying to renovate a dilapidated building. So the choice between single and multiple-unit housing may become a greater issue for many property owners soon enough.


flipper nut said...


U.S. Economy to Weaken as Housing Market Declines
Weaker housing demand will have a ripple effect across the American economy, experts predict.

A tumbling housing market will cut sharply into U.S. economic growth for the remainder of this year and throughout 2007, but the American economy will stave off a recession, according to the Conference Board's U.S. Outlook - Autumn 2006.

"The spectacular gains in U.S. housing prices over the past few years have come to a grinding halt, forcing households to curtail spending sharply," said Kip Beckman, Principal Research Associate.

"Weaker housing demand will have a ripple effect across the American economy, yet the United States will not fall into recession next year because of strong growth in business investment and exports."

Growth in real gross domestic product is expected to slump in the fourth quarter of 2006, leading to an increase of just 2.2 per cent in 2007.

Already under pressure from high oil prices, rising interest rates and weaker job growth, households will limit their spending.

The decline in housing starts - by 10 per cent this year and almost 18 per cent in 2007 - will negatively affect the construction sector, consumer spending, and consumer and business confidence.

Weaker U.S. home building and consumer spending will have repercussions for the Canadian economy, especially in sectors that supply the residential construction industry.

However, strong consumer spending, buoyant capital investment and stable government spending will bolster overall Canadian economic growth.

Anonymous said...

Great economy super housing market!

The next time you hear someone complain about the state of the U.S. economy, you might point out that the Dow Jones industrial average is right on the edge of setting an all-time high.

And this time around, the stock market is reflecting solid underlying growth. It isn't soaring like a helium balloon untethered to reality like it was the last time the Dow reached this lofty level, 6 { years ago.

The Dow closed Thursday at 11,718, just a hair below the all-time record of 11,722. The broader Standard & Poor's 500 stock index has risen 72 percent since hitting its low point four years ago. Even the battered Nasdaq has more than doubled in that time. The healthy state of the stock market means investors have weighed the alternatives and are betting on the ability of U.S. companies to make them money.

If that's not enough to warrant breaking out the bubbly, then point to this: Since the brief 2001 recession, the American economy has created more than 5 million jobs and grown 15 percent in real terms (that is, factoring out the effects of inflation).

Inflation is still running a little on the high side, 3.8 percent a year. But one of the chief drivers of that -- the surging price of energy -- is abating. Oil prices have dropped to about $60 a barrel from more than $78 earlier this year.

The burst of the housing bubble has plenty of people worried, but so far it has not rippled through the economy. Housing starts have dropped about 20 percent. That makes this a medium-size contraction after five scorching years of housing growth and appreciation. That's about the size of the decline in housing starts in 1991 and is nowhere near the 50 percent drop from 1978 to 1982.

The bursting of the housing bubble may be painful to anyone who borrowed to the hilt at the market peak and has to sell at a lower price. But there are signs that the worst of the steep slide in housing may be over. Just a day after it was reported that home prices fell in August, the first monthly decline in 11 years, came news that new home sales posted their biggest gain in five months.

We are enjoying a Goldilocks economy, not too hot and not too cold. American consumers remain remarkably confident about the future and continue to spend money, according to the Conference Board's latest consumer confidence survey. They've been buoyed by the drop in gas prices and believe there are jobs available--not without reason, unemployment remains relatively low at 4.7 percent. They believe their incomes will rise in coming months.

Anonymous said...

Who's writeing this stuff, condi rice?

Richard said...

I said it before and I'll say it again - the housing crash ain't even a blip on the radar screen:

http://informationclearinghouse. info/article1516 1.htm

“A Total Rollback Of Everything This Country Has Stood For”

Sen. Patrick Leahy Blasts Congressional Approval of Detainee Bill

The Senate has agreed to give President Bush extraordinary power to detain
and try prisoners in the so-called war on terror. The legislation strips
detainees of the right to challenge their own detention and gives
the President the power to detain them indefinitely.

Broadcast : 09/29/06 Democracy Now! - Runtime 12 Minutes
[It's actually 22 mintues long]

Anonymous said...

Richtard - get a clue - not even a blip - you are a moron!!

Anonymous said...

WTF is this crap?

MSNBC now doing the "Hottest Jobs Markets" stories just to get sales going in those bubble markets?



dagg said...

Kendra Todd of the Apprentice show talking about bubble.


Anonymous said...

The October Trade Station User Group meeting will be held on Saturday, October 7 at 10:00 am at the Saratoga library. Our speaker will be Bud Conrad who will talk about an "Update on the Big Picture." Bud will give an overview of the economy. Housing is now prominent, as a reason for predicting recession. He is, however, also predicting inflation, which is not what people expect if we have recession. He will explain this position in these steps:

1. Review of projections made against the current actual. Last year I got the important ones right: S&P 500, Fed Funds interest rate, Gold, and Oil.

2. HOUSING is a crucial driver of consumer debt expansion, foreign investment, and projections for economic activity; but it is falling apart. As I predicted a year ago, housing is in trouble, and that trouble will extend to recession.

3. The BUDGET DEFICIT of $300B understates how serious the long term situation is, and suggests inflation ahead. Inflation under reporting has distorted GDP upward so we don't know how bad it is.

4. The TRADE DEFICIT of $800B has been matched by foreign reinvestment, keeping interest rates low and the dollar higher. This has been going on for years, but when it cracks will hurt the dollar and add to inflation.

5. The costs of WAR and the price of OIL are related, and the international political situation will have long term effects on the markets, the value of the dollar and interest rates. Peak Oil was a topic of discussion two years ago in my talks and it is not yet over.

6. Commodities: Gold is the Ultimate money. Bud will predict gold price for the short and long term, indicating what signs might mean the rise is over. Corn is an example of an ignored serious problem of world shortages for food and demand for Ethanol and export that could be a bull market for the year ahead along with wheat and cotton.

7. Stock market and economic PROJECTIONS are driven by the above,
The picture of how the various parts interrelate should simplify the analysis of particular investment choices. Bud has been a long term advocate of investing outside traditional US stock market holdings. Bring your own predictions: philosophical, political, and economic.

Info on Bud:

Bud Conrad is a well-known and popular speaker among South Bay
investment groups. He thoroughly researches market areas and
looks beyond stocks for investment opportunities. Provocative
and outspoken, Bud Conrad brings a wealth of charts to
illustrate economic projections. He holds a Bachelor of Engineering
degree from Yale and an MBA from Harvard. He has held positions
with IBM, CDC, Amdahl, and Tandem. Currently, he serves as a
local board member of the National Association of Business
Economics and teaches graduate courses in investing at Golden
Gate University. Bud Conrad has been a futures investor for 25
years and a full-time investor for a decade

Anonymous said...

Inside a Wall Street Chop Shop

I used to work for one of the oldest and largest financial services companies in the world. But you wouldn't have known it from looking at the sign on the outside of the building. You see, the firm kept its name out of public view when it came to this business: the sub prime mortgage lending racket.


This Wall Street firm, spoken about in hushed tones around country clubs and cocktail parties, DOES NOT want to have its name associated with the financial services equivalent of a chop shop or a whore house. Oh no. It just wants the money associated with this despicable operation, and none of the press. Questions in the media about the propriety of these activities might cause discomfort for investors. Certain public appearances need to be maintained, after all.

This firm premeditated the exit from the crash unfolding before our eyes, both legally and in terms of public relations, years in advance.

Here's what it did.

Anonymous said...

The vision dims and all that remains are memories. They take me back - back to the place where the black pump sucked guzzolene from the earth and RE investors flipped pre-construction condos for big bucks. And I remember the terrible battle we fought - the day we left that place forever. But, most of all, I remember the courage of a stranger, a road warrior called Keith.
To understand who he was, you must go back to the last days of the old world, when, for reasons long forgotten, two mighty warrior nations went to war and touched off a blaze which engulfed them all.
For without fuel they were nothing. They had built a house of straw. People stopped in the streets and listened: for the first time they heard the sound of silence. Their world crumbled.
And only those mobile enough to scavenge, brutal enough to pillage would survive. At last, the vermin had inherited the earth. And in this maelstrom of decay, ordinary men were battered and crushed.
Men like the Warrior Keith, who in the roar of an engine, lost everything and became a shell of a man. A burnt out, desolate man, a dead man, running from the demons of his past. A man who wandered far away. And it was out here in this blighted place that he learned to live again.

Anonymous said...

I closed today on the sale of my townhome in a skitown in the rockies. I bought it for 170k in 1998. I sold it for 416k today. I will pocket 300k in cash. I now have no debt.
I am not posting this to brag. I am and have been convinced for the last 3-4 years that we are headed off a cliff in the RE market. Trouble is I'm scared to death after owning for so many years and now going into renting. The actual act of seperation is scary, folks. Any feedback is appreciated. I am a frequent reader of HP.
Thanks to all.

Anonymous said...

anon 2:41:58,

i'm not sure what you're scared of. however, if you're asking if renting would be a good option, my answer is a resounding YES.

all you have to do is play with numbers. if your income, allows you to secure a 30 year, preferably 15, fixed rate mortgage at 25-28% of your gross income, go for it.

just be patient, because in the next 2-3 years, there will be a lot to choose from.

Anonymous said...

It's Not the Homes, But the Bubble Loans That Won't Sell

What is becoming unsaleable now is the mortgage speculation in the housing bubble, rather than the homes themselves, commented Lyndon LaRouche, the world's foremost economist, on Sept. 26. "It's not the houses that won't sell, it's the mortgages that won't sell," he observed. Over the last five years especially, in regions of the United States, bankers have proliferated exotic mortgages to pump up housing prices, and make it possible to sell homes at inflated prices to home purchasers, many of whom could not afford them. Through these exotic mortgages, the bankers, as well as speculators in these mortgages, sucked out enormous money flows, usually in the first months of the mortgage, from the home-buyers onto whom the mortgages were dumped. Now, without the ability to sell these homes at an even more inflated price, the home-owner, whose living standard has been collapsing, cannot meet the mortgage payment.

There's not a solitary national housing bubble, added LaRouche. There are specific regions where the risky mortgages and speculative practices dominated, where the housing bubble built. Now, these regions inundated with "non-traditional loans," are the ones whose housing markets are blowing apart.

U.S. homeowners owe $9.84 trillion in home mortgage debt, as of the end of the second quarter of 2006. But against that mortgage paper, the giant secondary housing market agencies, Fannie Mae and Freddie Mac, have pyramided an additional, separate $6 trillion in mortgage-backed securities, derivatives, and bonds. Accounting for additional housing-linked debt, U.S. housing-related paper is above $16 trillion. It penetrates every pore of the U.S. economy, as much of consumer spending comes from borrowing against the value of homes. The oncoming series of homeowner defaults and foreclosures will ignite a shock wave blowing out the leading banks, financial institutions, and foreign lenders who have invested more than $2 trillion in U.S. housing—and the $500 trillion derivatives market.


Anonymous said...

The end is upon us, real-estate brokers look terrible - and forget the canapés

Just a few months ago, “open houses” in LA were like orgies. Real estate brokers would lay out tables of finger-food, while throngs of potential buyers would swoon over the stainless steel bathroom fixtures, fantasise about the remodelling potential (we can fit a hot tub in the back!) and, most importantly, jostle to outbid each other.

These days the ahi tuna canapés are gone, the brokers look ill and the only buyers are professional vultures, offering 30 per cent below listing. As for the sellers, they can be found upstairs in bed, hyperventilating.

The worst affected are the “flippers”: people who bought multiple properties in the hope of reselling them quickly. Now they’re left with more homes than Bono and no money for groceries.

This new Armageddon fills me with equal dread. Yes, the explosive charge in the foundations of America’s housing boom has been detonated. The wrecking ball has swung. After 17 consecutive interest-rate rises by the Federal Reserve, sales of existing homes in California have suffered their biggest fall in nearly 25 years, while the median home price across the entire country has recorded its first decline in a decade.

It’s all over. Let the demolition begin.


Anonymous said...

Man blames bank design for mugging

A Washington Mutual Inc. client in Palmdale, Calif., said the bank's new open interior design was to blame for his $20,805 mugging.

Real estate agent and landlord Jaime Quiroz Sanchez said the bank's new design -- which features tellers in kiosks arranged in a circle rather than the traditional bank counter -- allowed the mugger and several others to witness the teller inspecting the money, the Los Angeles Times reported Monday.

Sanchez said the bank refused to accept the cash deposit because his driver's license was expired. He reportedly told the teller he did not feel safe leaving the branch with the money, but "(the teller) said, 'I'm sorry, there's nothing we can do,'" Sanchez said.

Sanchez filed suit against Washington Mutual in Los Angeles County Superior Court in August, saying the bank's alleged negligence and reckless misconduct led to him being robbed at knifepoint outside the building.

Washington Mutual spokesman Timothy McGarry said he could not comment on the specifics of the case, but said: "As a crime victim, (Sanchez) deserves our sympathy."


Anonymous said...

Sellers offer more incentives

Signs of the times: Homes stay for sale Spike in housing inventory leaves properties on the market

The signs of a home buyer’s market abound.

Home builders are advertising more incentives. “Price Reduced” placards hang below “For Sale” signs. And the house down the block that you’d thought would sell in a few days? It’s been on the market for a few months.

For buyers, it’s great news. They can be more picky. They have an easier time negotiating prices. They can ask for – and probably get – the washer and dryer with the house or a few items knocked off the inspection report.

For sellers, now isn’t the time to mess around.


Anonymous said...

Quarter Foreclosure Filings Are UP

ForeclosureS.com president Alexis McGee.

She went on to point to several hot spots in the nation where foreclosure activity is spiking for a variety of reasons.

“In the West,” she said, “we’re seeing a jump in foreclosures in Maricopa County, Arizona. A total of 5,348 properties statewide went into foreclosure in the third quarter of 2006 up from 4,512 in Q2. 3,231 of those were in Maricopa County, the Phoenix/Mesa metro area.” She added that the Phoenix area had been heavily impacted by out of state speculators with about 25% of home purchases being made by investors that had no intention of ever occupying the houses they bought. “Now, trapped by a slowing market and negative cash flows, those people are being washed out of the market,” Ms McGee said.

She went on to say that other western hot spots included California with 39,896 new foreclosures in the third quarter and Colorado with 16,313. “We have a different problem in California because, in some communities like San Diego for example, more than 50% of purchase money loans were issued with high risk mortgage products like option adjustable rate loans with extremely low 'teaser' start rates. Now as those loans reset to market rates, people are being squeezed out of their houses,” said Ms McGee.


Anonymous said...

Assuring the Viability of Home Ownership

During WW II, experienced fighter pilots understood that if they maintained the maximum angle of ascent, eventually the aircraft would shudder, stall and begin to plummet toward earth. Recovery could be thousands of feet below.

Those buying real estate in California know the feeling. After a meteoric rise in the California median home price — which has seen a doubling over the last five years — the market is experiencing a shudder. The rate of increase appears to be rapidly diminishing, and nationally, it has just been announced, the median home price has declined for the first time in 11 years. A down market should not come as a big surprise. After all, this occurred as recently as the early 1990s, when a heated market saw a cooling that resulted in five straight years of lower prices.


Richard said...

http://www.freemark etnews.com/ WorldNews. asp?nid=22476

Monday, October 02, 2006 - FreeMarketNews. com


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Mammoth said...

Anon Monday, October 02, 2006 8:12:32 PM posted an article titled, “Great economy super housing market!”

Some quotes and my comments:

“And this time around, the stock market is reflecting solid underlying growth.”
- This time around, the economy is running on borrowed money and has been for some time. In other words, the economy is sitting on a house of cards.

“The healthy state of the stock market means investors have weighed the alternatives and are betting on the ability of U.S. companies to make them money.”

- Perhaps you are giving investors more credit than they deserve. This may also be construed as investors behaving like sheep, following one another to the slaughter. As housing cools, some savvy investors quit putting their money into houses and began investing in the stock market. After the market basically was going nowhere for the past few years, this recent up tick has caught the attention of the masses, who are now jumping aboard.
“Since the brief 2001 recession, the American economy has created more than 5 million jobs and grown 15 percent in real terms (that is, factoring out the effects of inflation).”

- What percentage of these new jobs are based upon the rip-roaring RE industry, which is now unarguably losing steam and may continue to do so some time? What percentage of these new jobs pays as well as the good-paying manufacturing jobs which have been bled overseas? As the paychecks going to agents, mortgage brokers, home remodelers and new-home construction decrease, where will the money come from that they were pumping back into the economy?
“Inflation is still running a little on the high side, 3.8 percent a year. But one of the chief drivers of that -- the surging price of energy -- is abating.”

- For how long? Pretty much everyone out there believes oil prices are being manipulated to mitigate the damage this may cause (to the ruling party), come this November’s elections. Also, given that the Middle East appears to be inevitably sliding towards yet another war, if and when this occurs there will certainly be additional increases in the cost of oil - a chief driver of inflation.
“The burst of the housing bubble has plenty of people worried, but so far it has not rippled through the economy.”

- The burst has only just begun. Nobody has a crystal ball to show how all this will pan out, but many people who participate on this blog have a pessimistic view of the future, and we are all putting our heads together here to try and figure out what is going to happen, and how best to deal with it.


Anonymous said...


you're right. no one really knows, but what i'm afraid of, even if the feds will cut the interest rates next year, is the panic withdrawal of savings. once it snowballs, you can't stop it and it happens fast.

Mammoth said...

Anon 3:30:37 PM,

Your comment brings to mind a question that hopefully you or somebody else here can answer.

People write about keeping a percentage of their holdings in cash. Does this mean a bagful of $100 bills stashed underneath the mattress? Or does it mean keeping money in a savings account or CD’s, where it is (theoretically) easily liquidated?

Please enlighten us.

Anonymous said...


Did you see the NYT story about teh show million Dollar Listing?

"Bravo has not decided whether it will renew “Million Dollar Listing” for a second season, but “we think there’s a long life for it,” she said.

The show is among the network’s most popular, drawing about a third more viewers than the Bravo’s average audience in the 8 to 11 p.m. time slot, the network said."

Maybe the HPer's could produce their own show "First Time Buyer" or "Buyer's Market"

Ask the HPer's what such show should be called...?

Maybe, the HPer's could do a show kinda like that "Cheaters" show where they act like prospective buyers and catch the REIC in all its lies and deceit. "Caveat Emptor- Real Estate" or something.

Anonymous said...

Here in Seattle we have a very large, local newspaper, the Seattle PI, having/allowing a "real estate" blog where the commenters are mostly realtors and ALL in favor of the continued climb in Real Estate prices in the Pacific Northwest.


Anyway, yesterday Susan Ryan posted "There is No Bubble" and referenced Kendra Todd's book.

What a tool, right?

Let her know what you think over at the Seattle PI's blog! Power to the people!

Believe it or not, there are many people that continue to be duped into believing housing is forever sustainable.

Anonymous said...

H5 in Dead Duck in Lakeport California

Recombinomics Commentary
September 30, 2006


The City Council will soon discuss banning any feeding of ducks or waterfowl at Library Park. This comes after another dead duck was found last weekend at Library Park and one of the ducks tested previously by the California Department of Fish and Game has tested positive for H5 avian influenza.

"In this particular case, we had a positive hit for avian influenza and the subtype is H5 category," said Retallack.

foxwoodlief said...

Keith, interesting tidbit. My wife worked for a law firm in Phoenix prior to our move to Austin. A co-worker called her last night to chat and told her,"The shit is hitting the fan here." What she meant was, (she works for a law firm that handles foreclosures for Bank of America in Phoenix) she has been working her ass off in overtime because the number of cases they've handled increased from 100 a month (normal) to 500. They've had 2000 cases in four months. A significant increase. Maybe the tip of the iceburg? Could it get worse?

The second point, BK is up as well. The bad news, her office is shutting down their BK department as it lost $100,000 this year in operating costs. Why? Good old congress's change to the BK laws last year. Big firms/banks/auto deals don't need them to fight to get their money since most who file can not discharge what they owe. I guess business will be up for those who handle personal BK but they still won't help those who file, they'll just reorganize thier debt for five years.

I don't think this willl happen nationwide, but I think a lot of those bubble areas will see this increase. What will the FED do? What will happen if there is a mssive default?

Anonymous said...

anon 3:58:48 wrote:

"...keeping money in a savings account or CD's..."

my suggestion to you is yes, but no more than $100k per bank, because that's the maximum amount that the FDIC will insure and pay you if and when the bank goes bankrupt. so if you have 300k, you may want to consider 3 different banks. in addition, consider a stable bank with no local investments. one thta comes to mind is a swiss owned bank (UBS). i think it stands for union bank of switzerland.

good luck.

Anonymous said...

Even though the market drops, thank goodness there are still real people want to buy real property.


Anonymous said...

Well I'm up here in Canada and my wife wanted to purchase a building lot
for retirement a bit over 3 years ago. Seeing what was coming down the
pipe convinced us last November to put the property on the market asap.
The property languished for 8 1/2 months with no action and suddenly out
of the blue a buyer appeared offering 25% under list price. No, I said
I want to sell but I don't need to sell because I've already paid off
over half the purchase price so I held tough. My estate agent ended
up handling both ends of the sale, talking the buyer up to my bottom
line and talking me down to within 40 dollars of what I said my minimum
price was. So the deal finally went through and I went up to have a look
late August just to see everything was all right. I noticed every third or
fourth house for sale, many with a reduced price sign. My stomach just
churned thinking of the prospects of closing this deal. Last Tuesday I
got the dreaded call from the estate agent informing me the buyer wanted
a postponement for 5 days on the close. I thought this was the end
but figured there was no point antagonizing the buyer so I reluctantly
went along with the change. Well, the cash is in my account (except for
what the estate agent owes me for the deposit adjustment) and barring
suing my agent to recover the balance, I'm out the door just before the
impending collapse. Never felt better about getting out of anything before,
but I have to say this much - Occasionally you will find an estate agent who
wants his payday and will work hard to get it. But there is a larger
element of luck in the timing and the details than I would care to admit to
in private!! - Lucky Seller in Canada (eh)?

Anonymous said...

Mark Zandi, chief economist @ Moody's Econ.com, say's,
"It is now more difficult for first time buyers to get into the market, and for existing homeowners to move up"
"This decline in affordability is the catalyst for the current sharp decline in housing activity!"

Anonymous said...


Anonymous said...

I'm not even a college graduate and i could figure that out!

Anonymous said...


Interesting article on the weakening housing market here in Oz. Not a rout yet but soon will be...

Anonymous said...

Forecast Sees Housing Prices Falling

Housing prices, slumping after a five-year boom, are projected to decline in more than 100 of the nation's metropolitan areas, with the Northeast, Florida and California among the areas hardest hit.

The forecast by Moody's Economy.com, a private research firm, presents one of the starkest views yet of the housing slowdown that has been gathering force in recent months.

The West Chester, Pa., forecasting firm projects that the median sales price for an existing home will decline in 2007 by 3.6 percent, which would be the first decline for an entire year in home prices since the Great Depression of the 1930s.

The forecast is included in a 195-page report, "Housing at the Tipping Point," which The Associated Press obtained before its general release on Wednesday.

The report projected that 133 of the nation's 379 metropolitan areas would suffer price declines. Those metropolitan areas with declining prices account for nearly one-half of the value of the nation's stock of single-family homes.

The price declines represent quite a contrast from the past five years when low mortgage rates pushed sales to five consecutive annual records and prices in the hottest sales areas skyrocketed.

But this year, the once red-hot housing market has cooled significantly. Some analysts are worried that the slowdown could become so severe that it could drag the entire country into a recession, much as the bursting of the stock market bubble in 2000 led to the 2001 slump.

The housing report said the biggest percentage price decline will be in Danville, Ill., where prices have already fallen by 18.7 percent from the peak in the second quarter of 2005 to a low-point in the first three months of this year. That setback occurred because of layoffs in autos and other manufacturing industries, which depressed the local economy.

The second biggest decline is projected to occur in the Fort Myers, Fla., area, a fall of 18.6 percent from the peak in the final three months of last year to a low-point for prices that is projected to occur in the second quarter of 2007.

The 133 areas with slumping prices are concentrated in the states of California and Florida and the Northeast corridor from southern Maine to just south of Washington, D.C., as well as boom areas of Nevada and Arizona and some depressed sections of the Midwest such as Detroit.

Of the areas with falling prices, 73 were forecast to hit their low point by the end of this year with the rest seeing a trough for prices in 2007 or later.

But even in areas which have already hit a low point, the rebound in prices is not expected to occur quickly.

"Prices are going to go down and stay down for awhile. It will take at least a couple of years to work off the excesses of the last decade," said Mark Zandi, chief economist at Moody's Economy.com and the principal author of the report.

Not all parts of the country will experience price declines. The report said Texas, the Southeastern states other than Florida and much of the Midwest Farm Belt should be immune from price declines.

It projected that annual price gains over the next two years would average 4.2 percent in the Dallas area, 3.3 percent in the Charlotte, N.C., area and 3 percent in the Columbus, Ohio, area.

The report said the most vulnerable areas for price declines were those regions where red-hot markets attracted speculators known as "flippers" who purchased homes in hopes of selling them fast for a quick profit.

"Housing's downturn has turned even more dramatic with the rapid flight of the flipper from the market," the report said. "These investors have gone from sending home sales and prices shooting higher to driving sales and prices lower."

The report described the current environment as a "correction" and not a "crash," but it cautioned that there were downside risks that could make the slowdown more serious.

A big threat is that the fall in home prices could have a significant impact on consumer spending patterns. The so-called wealth effect pushed consumer spending higher during the housing boom as soaring home prices made homeowners feel more wealthy and thus more inclined to spend money. But falling home prices could have the reverse effect and depress consumer spending.

"We believe the housing downturn will weigh on the economic expansion but will not break it. But there are risks," Zandi said.

The slowdown in housing occurred as a result of a two-year campaign by the Federal Reserve to push interest rates higher as a way of slowing the economy enough to keep inflation under control.

The Fed has kept rates unchanged for the past two months and many economists believe the central bank has finished its rate hikes as long as inflation pressures keep falling.

The belief that the current economic slowdown is restraining inflation has helped push mortgage rates lower with the 30-year mortgage now at a six-month low of 6.31 percent, an improvement that is expected to help put a floor on housing's fall.


Anonymous said...

There are good reasons why lawyers are either dropping or retiring from their bankrupty practices, all because of the ghastly ’05 bankruptcy bill, (according to the American Bar Association). For one thing, lawyers can be sued if they approve any financial statement their client makes that turns out to be untrue. There’s a lot of complex financial information required for a bankruptcy filing, and lawyers are hard-pressed to tell if their clients got it all right (or lied about the assets). In addition, folks up to their ears in unexpected bills are generally too broke to pay the minimum bill of $2,000 that a bankruptcy costs now. What will they do? Not file at all and keep racking up interest, while bill collectors harass them on the job and at home. This means there's also less work for bankruptcy lawyers.

Anonymous said...

Oct 3, 2006 news links are out

Forsaken Craft

Expert Research

Anonymous said...

Can you say Arson is going to be on the rise.

Dangers of Falling Home Prices Loom Large

The big bad wolf huffed, and puffed, and blew the house down. But the little pig didn’t care. In fact, the little pig thanked the big bad wolf, because his house had been for sale for some time, along with his neighbor’s, and 15 other homes further down the street. Now, instead of having to continually lower his asking price to attract buyers, the little pig could collect insurance—at least he would get something. Who knows how much less his house would be worth months from now? The pig’s neighbors thanked the wolf too, because now there was one less competing house for sale on the block.

Sadly, some version of this fairytale may become reality for many Americans in the not-too-distant future.


Anonymous said...

Cendant's (NYSE: CD) days are numbered.

The firm has broken up into the Realogy (NYSE: H) real estate brokering business, the Wyndham Worldwide (NYSE: WYN) resorts company and, as of Sept. 5, the Avis Budget Group (NYSE: CAR).

Realogy encompasses the COLDWELL BANKER, ERA and Century 21 names, while Wyndham includes Ramada, Days Inn, Super 8 and Fairfield, among others.


Bubba2Friday said...

The roof, the roof, the roof is on fire!

The roof, the roof, the roof is on fire!

[Not a recommended resolution to being underwater. The insurance companies are wise to arson and have seen the fad in the U.S. before, most notably in the late '70s/early '80s when folks were leaving the cities and headed for the suburbs...]

Anonymous said...

I wonder why these guys are selling their shares of COUNTRYWIDE FINANCIAL CORP


Richard said...

Russia - Oct 4

by Staff

http://www.energybu lletin.net/ 21140.html

Chief engineer at BP unit in Siberia is slain
Blomberg/AP, International Herald Tribune
The chief engineer at a Siberian subsidiary of the oil company BP's Russian joint venture, TNK-BP, was found shot and killed in Irkutsk over the weekend, the venture confirmed Monday.

Richard said...

The march of technology has meant that present
methods of oil extraction
have improved significantly. Through the use of
advanced drilling techniques
and new extraction processes, even the more
difficult fields are now seeing
their life spans extended. However, such methods
do not come cheap. While
some of the fields in Saudi Arabia produce oil
for less than 50 cents a
barrel, the more difficult fields in Oman are
producing oil for around eight
dollars a barrel.

Other hydrocarbon sources that are being
increasingly exploited include the
oil sands in Canada, which are now producing
around one million barrels of
oil a day at an extraction cost of some $10 per
barrel. While this level of
production hardly makes a dent in North America’s
annual need for nine
billion barrels of oil, it does demonstrate that
as the oil price remains
high, more marginal hydrocarbon reserves are
coming into play. This also
means that, combined with a rising world trend
for the consumption of oil
and its by-products, we could see a new floor
installed in the oil price
that is reflective of the higher end of the cost
of extraction.

It could also mean that one of the
least-exploited hydrocarbon sources, oil
shale, may finally become viable enough to enter
production. And the country
with the most to gain from any development of oil
shale technology would be
Jordan. Mention the word Jordan to most oil
experts and you will probably
be entertained by an amusing note of its daily
rate of oil production: 30
barrels. Yes, just 30 barrels a day according to
statistics. Jordan is a
desert island awash in a sea of oil, yet almost
none has come its way.
However, the country is sitting on some 40
billion tons of oil shale. The
old rule of thumb is that ten tons of oil shale
can yield one ton of oil,
meaning that Jordan could also join the league of
Middle East oil exporters
in the future. The problem is, of course, the

Oil shale has so far only been exploited in
communist and former communist
countries, such as in Eastern Europe, Russia and
China, and even then more
for reasons of national pride than sound market
economics. As the
infrastructure costs are quite high, developing
any oil shale project will
be dependent on a sustained high oil price.
However, there is another
obstacle for Jordan to overcome before oil shale
becomes an exploitable
resource: to process it requires large amounts of
water, and water is not an
asset that Jordan has in abundance.

Anonymous said...

Ben Bernanke, in his speech to the Economics Club of Washington, said the following:

1.) That there's a "substantial correction" in the housing market that will affect the GDP growth by one (1%) percentage point this year.

2.) Suggests that the national savings rate will be increased to 3% to offset the effects of the aging population.

3.) Consumption rate needs to be cut by 4% now or 14% later; again to offset aging population.

4.) Increase immigration (of younger immigrants) from the current 1 million per year to 3 million, to help offset cost of aging population.

5.) Will watch inflation and make sure it doesn't go up or "stays where its at."

Take note of item 5. To me, I don't see the Feds cutting the interest rate any sooner, even by 2007 even if the housing market crashes. In fact, he may continue to raise the rates up, maybe after the mid-term election.

Anonymous said...

"The decline in housing "was one of the major drags causing the economy to slow now," Bernanke said in response to a question after a speech he gave to the Economics Club of Washington Wednesday afternoon on the importance of preparing for the demographic changes in the U.S. economy."

I am tired of this crap, it is not a decline, but rather a return to the mean. It should not be something that is viewed as being bad "after the sharp runup in prices." In fact, a reduction in home prices would likely benefit the economy as people would be able to spend money on things other than their f'ing mortgage or rent.

Anonymous said...

can't argue with that!

Pssst, come here flipper... said...

The Inland Empire region of So Cal is exploding with new developments of $300-$400 PLUS houses. Packed in like sardines. Nowhere to work anywhere around there.

The next hot area for "investors".

Anonymous said...

Prices will drop 10-15% nominally in Q4 2006.

Anonymous said...

Big downturn seen for some home markets

Analysis of 379 metro areas forecasts double-digit declines for nearly 20 markets.

By Lex Haris, CNNMoney.com

October 3 2006: 8:05 PM EDT
NEW YORK (CNNMoney.com) -- The housing market will get worse before it gets better - that's the finding of an analysis by Moody's Economy.com to be released Wednesday.

In the survey of 379 metro areas, the study's authors concluded that nearly 20 areas eventually could experience a "crash," or a decline of more than 10 percent from peak to trough. The most hard-hit areas will be in California, alongside the Southwest coast of Florida, and in Arizona and Nevada.

In addition to 30 areas already experiencing declines, the study predicts that 70 others will soon experience measurable declines, with drops extending into 2008 and even 2009.

Using a separate analytical approach, the study's authors found that more than 100 markets have a significant probability of experiencing declines by this time next year. The authors considered home affordability, the local job market, supply/demand, and overall values.

Those 100 areas represent nearly half of the country's housing stock. As a result, the authors write, "odds are high that national home prices will decline in 2007; the first decline in nominal national house prices since the Great Depression."

Of the 100 largest markets with forecast declines, Cape Coral, Fla., is forecasted to post the biggest drop in home prices - 18.6 percent from the peak in the fourth quarter of 2005 to the trough in the second quarter of 2007.

Moody's Economy.com forecasts that home prices in Reno, Nev., will drop 17.2 percent by the fourth quarter of 2008.

The authors note that the housing boom has already begun to unwind, driven by the increase in adjustable mortgage rates - putting homes further out of reach of buyers - and the decline in "flippers" who had pushed prices higher hoping for quick sales.

Anonymous said...

Home builders' CEOs make timely stock sales
Posted 10/4/2006 2:44 PM ET
By Matt Krantz, USA TODAY

Investors hurt by the sharp slide in home-builder stocks might now wish they'd kept a closer eye on what industry executives were doing with their own holdings.
CEOs of three of the top eight U.S. home builders sold large amounts of stock last year and avoided some of the financial pain since the shares peaked, a review of regulatory filings for USA TODAY by Thomson Financial shows.

HOUSING : Forecast: price declines | Mortgage applications rise

Such insider selling, even as the stocks were hitting highs and home builders were pumping out homes, underscores how executives are often the first to react to swift business changes, says Mark LoPresti of Thomson.

Executives often have much of their wealth tied up in their companies and are closely aware of shifts in their industry. They're acquainted not only with their business' health and outlook but also have an acute understanding of the value of their company's shares.

So concentrated selling, or buying, by insiders can be a cue for individual investors. "We don't know for sure what's in the hearts of insiders," LoPresti says. But in his opinion, "It was extreme activity."

It wasn't just the CEOs who sold ahead of a big drop-off in home-building activity. Home-building executives sold 4.8 million shares in July 2005, Thomson says, the largest level of selling since 1990 when it started keeping comparable data.

The selling was well-timed. The eight home builders' shares peaked on July 20, 2005, with a collective gain of 47% for the year, data from Standard & Poor's Capital IQ show. Since then, bad news has buffeted the industry, including a three-year low in housing starts in August. As a group, the stocks are now 41% below their 2005 peak.

Top executives selling include:

•Chad Dreier, CEO of Ryland (RYL), sold stock on Jan. 21, 2005, and by April 2006 had sold 560,000 shares worth $38.3 million. Dreier's sales were made on a predetermined schedule in place for the past five years, says Marya Jones, a Ryland spokeswoman. After the April sale, Dreier still owned 476,916 shares.

Even by July 2005, Dreier still appeared optimistic, saying on a conference call, "We're on track for another record-breaking year." He was right. The company's 2005 net profit jumped 40% to $447.1 million on 22% higher revenue. However, the run ended when net income in the second quarter of 2006 fell 9.1%.

•Bruce Karatz, CEO of KB Home (KBH), sold 950,000 shares worth $76.1 million July 12-13 in 2005. After the sales, he still owned 1,668,070 shares. In a June 2005 press release, Karatz also was upbeat, saying, "Consumer demand ... remains vibrant, fueling strong growth in unit deliveries and selling prices." Results were strong in fiscal 2005, ended in November, when net income jumped 75% to $842.4 million on 34% higher revenue.

But KB also has seen a shift since then. On Sept. 21, the company reported a 53% decrease in fiscal third-quarter home orders in the USA. "Conditions in formerly strong markets ... have weakened considerably in recent months," Karatz said in an accompanying press release. KB declined comment.

•Robert Toll, CEO of Toll Bros. (TOL), sold $110.1 million of stock in February 2005 and reaped $134.1 million more through four sales by July 2005. Toll also didn't seem overly worried at the time.

"Although demand is not as strong as it was one year ago or two, most of our markets remain fundamentally healthy," he said in a Feb. 7, 2005, conference call. Spokesman Frederick Cooper says Toll still owned $1 billion in stock after the sales and owns 16% of the company today.

The company's profit jumped 135% to $170.1 million in the quarter ended April 30, 2005. But results began to flag a year later. Net income fell 19% during the quarter ended July 31, 2006, from the same period in 2005, to $174.6 million.

There's nothing wrong or illegal when a CEO sells company stock, says Todd Henderson, professor at the University of Chicago Law School. Because a vast slice of CEOs' wealth comes from a single company, it's prudent to sell in order to diversify, Henderson says. Other times, CEOs need to raise cash to pay for sudden personal expenses.

Additionally, CEOs, like any other investor, can sell when they think the shares may fall based on publicly available information, Henderson says.

"There can be a ton of reasons why executives may be selling," he says.

Still, some say the timing of the selling in the industry gives reason for pause.

"It's always a question: Is the timing lucky or is there something more?" says Jill Fisch, professor at Fordham Law School.

Anonymous said...

boston area, and state, making house ownership right, contingent upon health insurance, (1000$ aspirins, and research that states, the more health care one receives, the shorter,the lifespan statistic, and non restrainable insurance costs, (paid by lobbyists and bought by insurance companies,law, for profits, land grab rights, scheme?

Anonymous said...

Saw this on another board on October 3. No URL.

"Barbara Corcoran is a Real Estate magnate in the New York area, and frequent contributor to ABC's Good Morning America. Last week they challenged her to sell a house in NJ that had been in the market for six months. The challenge was to sell the house in one week. She showed every day the improvements and cosmetic changes made to the house to attract buyers, and the dramatic price reduction for the weekend open house. This morning on the air, they had to announce that despite all the attractions added by this premier real estate agent, and the price slashing, AND the national TV attention... she was unable to sell the house! 80 lookers... no buyers. Barbara looked flabbergasted."

Mammoth said...

Excerpt from Reuters news article in yesterday’s North Kitsap Herald Daily:

Whirlpool Corp., the world’s largest appliance maker, said Tuesday it will cut at least 1,000 jobs at US plants in Indiana and Arkansas and expand production at a Mexico refrigerator plant...

...”They are making adjustments they need in wake of increased price competition and the slowdown in the housing market,” said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management.

Yes indeed - the burst of the housing bubble will eventually touch us all. And the real panic still hasn’t set in yet.


Anonymous said...

The 30Y bond is only 50bps off the lows it hit back in 2003 and 2005. The FED can and will print anything it wants to support a low inflation story. If rates are heading lower why would the housing market crash? Are we talking about a 5% correction in home prices. BIG DEAL! Home prices have doubled in my area over the past 5 years. The entire system is rigged to debase the currency resulting in a misallocation of productive resources. I agree it will collapse some day, but will that day be 50 years from now??? I can't wait that long.

Anonymous said...

Kara Homes anticipates filing for bankruptcy
Posted by the Asbury Park Press on 10/5/06

East Brunswick builder Kara Homes Inc., one of the biggest home builders in Monmouth and Ocean counties, anticipates filing for Chapter 11 bankruptcy, a company official said in a letter given to laid-off employees earlier this week.

Roberta W. Schultz, vice president of human resources and organizational development at Kara Homes, said in the note that the employees' jobs were terminated as of the end of the day Tuesday.

Editor's note: Are you a Kara Homes customer or employee who will be affected by Kara Homes' bankruptcy filing? For information or to talk to a reporter, e-mail Press staff writer David P. Willis at dwillis@app.com or call him at (732) 643-4039.


InfidelWoman said...

Had cocktails with 4 British (Londoners) Flipper/Developers last night. Had a blast. Really funny jokes and such.
Anyway, the new "deals" are $35,000.oo water front condos in Egypt on the red sea and single family resort style Belize communities, to name a couple of the areas they are developing.

bubble trouble said...

I was wondering about that Good Morning America bit about how one real estate agent could sell a house in a week with the right stuff. That's funny that it did not sell. I guess they better slash the price some more.

I read a recent article about the possibility of an inflationary depression, rather than a deflationary depression. I thought it was interesting, I'm going to post the link. The only thing I'm certain of is tuff times ahead...unfortunately...they always follow time of excess.

This Friday will be the big day to watch....non-farm payroll numbers (new jobs). Then I think the important number to watch is the amount of money the fed is printing. As it stands now, they are pulling money out of the system. I don't think interest rates even matter anymore...they have been relatively low for so long, they don't boost economic growth or depress it. Homes just became unaffordable, I mean..."I'm sorry sir but no we are not going to give you a loan for $500,000 when you only make $40,000 per year." unaffordable. People are priced out, either way and in a down market they won't take the gamble.

It's the printing presses that are boosting economic growth or rather making it seem like growth is occuring, when in reality there is reduced growth and just more worthless money out there. So my point is, it seems that the fed is pulling money out of the system to allow for a contraction in the financial bubble. I think if you really want to track the deflation vs. inflation senario, you need to watch this number. Could the fed start printing like mad to keep the system afloat, sure...but for how long until people stop shopping, because they simply can only buy so much crap with their paychecks that are'nt going anywhere. So either we will have a deflation or more inflation, but either way, we are looking at a recession and possibly a depression in the economy. Which way we are going is anyones guess right now.

bubble trouble said...

Here's the inflation vs. deflation article. Interesting stuff...


bubble trouble said...

Another interesting article...


InfidelWoman said...

In 6 months things will be tougher than we thought. Add housing and debt together for a one-two punch and an economic time out results. Tough times, in that unemployment goes up and economy still grows, but no recession.

Clark Howard Radio Show Prediction today at 1:29 October 5, 2006


Anonymous said...

The 30Y bond is only 50bps off the lows it hit back in 2003 and 2005. The FED can and will print anything it wants to support a low inflation story.

Yields are inversely related to prices on the bonds.

Mortages are more closely tied to 10 year bonds. So the problem is actually that there is too much demand for the bonds so the yields go lower. (Yields went so low because they got rid of the 30 year bonds).

And if rates are so low then why aren't more people buying? ??? ????? ??????

Maybe because even at lower interest rates houses are still TOO EXPENSIVE compared to wages.

Before you start making such blanket statements maybe you better study economics a bit better.

Anonymous said...

Bond prices vs. yields:


Anonymous said...

"Add housing and debt together for a one-two punch and an economic time out results. Tough times, in that unemployment goes up and economy still grows, but no recession."

It's not just a one-two punch. Consider for a moment where these packaged loans were sold to? A lot of them went to retirement funds.

Also, consider the extreme debt and trade deficits of the U.S.

So it's going to be a one-two-three-four-five-six-seven-knockout punch and possible bankruptcy for the U.S. (which already went bankrupt in 1933).

One -- housing prices go down, stifling economic activity from HELOCs. People will be going bankrupt because even in foreclosure they still have a huge IRS tax bill.

Two -- loan defaults hit the retirement funds that bought heavily.

Three -- Extreme personal debt, people are tapped out. How can they borrow any more? They cannot.

Four -- Stock market fall because of all of the above problems. Sure, the Dow is higher now, but the S&P and Nasdaq haven't recovered yet.

Five -- Higher oil prices. OPEC has shown determination to keep oil prices high, and the U.S. isn't pushing alternate resources fast enough.

Six -- High federal deficits. How can they keep running such huge deficits? They cannot. This will hurt their ability to help get us out of this.

Seven -- Medicaid and Healthcare. As more baby-boomers retire, more of the federal budget is pushed in that regard. Already healthcare payments are a much bigger percentage than they used to be.

Knockout -- Once unemployment goes down significantly, what are people going to do? You've got something like 10 million illegal immigrants in the U.S. So Crime rises because of all the out of work illegals as gangs take over the U.S.

Anonymous said...

Sorry, that should have said employment goes down ... my bad.

foxwoodlief said...

Anonymous said, "And if rates are so low then why aren't more people buying? ??? ????? ??????"

Because there is a wait and see if we all are falling off the cliff before anyone decides to jump back into the market.

Markets are shifting. Obscene profits are taking their toll and new builders are adjusting. I saw a house on Craigslist in Phoenix, pretty nice, lots of bells and whistles, a little over 3000 sq ft (west side-good area) for $313,000. A year ago that house would have fetched well over $425,000. Once people feel prices have stablized and dropped as low as they can (can you still build for less than $100 a sq ft in major cities?) I saw article about Vegas and how now builders can build for $150 to $175 a sq ft and are competing with home sellers who are asking $270 a sq ft.

People will start buying again if they think the froth has been removed and rates stay low.

Anonymous said...



all the pot homes in elk grove,stockton california connected... with real estate agents and organized crime... i wonder if the 20 homes seized will have an effect on their no money down interest only mortgages....

InfidelWoman said...

Middle-class families in worse shape than ever, study finds

Typical families have not stashed enough money; struggling to pay for home, insurance, and education according to Center for American Progress.

September 28 2006: 4:41 PM EDT

To maintain day-to-day consumption, families have taken on a record amount of debt, equal to 126.4 percent of disposable income in the first quarter of 2006, according to the study.

Commenting on the study, SEIU Labor Union President Andy Stern said, "Of the total amount of our economy and income, we have the greatest share going to profits in modern history and the least amount going to wages in modern history."

for full story

Anonymous said...

The 30Y bond is only 50bps off the lows it hit back in 2003 and 2005. The FED can and will print anything it wants to support a low inflation story.

Yields are inversely related to prices on the bonds.

Mortages are more closely tied to 10 year bonds. So the problem is actually that there is too much demand for the bonds so the yields go lower. (Yields went so low because they got rid of the 30 year bonds).

And if rates are so low then why aren't more people buying? ??? ????? ??????

Maybe because even at lower interest rates houses are still TOO EXPENSIVE compared to wages.

Before you start making such blanket statements maybe you better study economics a bit better.

Yields went so low becuase they got rid of the 30Y? That's absurd. Do you even know what drives interest rates??? Supply and demand is the effect, do you understand the cause? Obviously not.

By the way the 30Y is back. Also, most folks have 30Y fixed rate mortgages so when the long bond drops nearly 100bps that's a huge benefit to them. It's cash right in their pocket. Investors who soak up the demand for these mortgages through mutual funds aren't knowledgeable enough to realize the asset they hold is being debased and the interest they receive is much lower than the actual rate of inflation.

Anonymous said...

"Yields are inversely related to prices on the bonds."

My vote for quote of the day. This says, "I'm a freshman in college and I just got my first econ textbook. I read all of chapter one and now I'm an expert."


beebs said...

"What's gonna happen? Invasion of Iran?"

We don't have the forces to invade.
We can hit them from the air.

But what do I know, I'm a chemist.


Anonymous said...

Bernanke is directly buying the long bonds.

This drop in rates is directly due to the FED monetizing

beebs said...


Go to public debt to the penny, you
will find that the claimed national
debt went up 574 Billion last fiscal
(OCT 1) year.

Anonymous said...

Sold the house 6 months ago, went to 1 year C.D.'s earning 6%. I'm sitting pretty, and watch the side show as Rome burns, or should I say "gets repo"d".

Anonymous said...

Maybe they're all ticked off at the real estate industrial complex....(ok, well maybe not)


Extremists planned mass Prague murders: paper

Thu Oct 5, 8:54 PM ET

PRAGUE (Reuters) - Islamic extremists planned to kidnap dozens of Jews in Prague and hold them hostage before murdering them, the daily Mlada Fronta Dnes reported on Friday.

The Czech Republic's leading newspaper quoted unidentified sources close to intelligence agencies as saying the captives would have been held in a Prague synagogue while the captors made broad demands that they knew could not be fulfilled.

When those demands -- which were not specified by the sources -- were not met, the extremists would blow up the building, killing all who were inside, the paper added.

The paper, which gave other few details, did not say whether any arrests were made and did not specify the identities of the extremists.

On September 23 the government deployed armed guards around dozens of buildings and on the streets in the Czech capital after security services issued a warning that an unspecified attack was imminent.

Prime Minister Mirek Topolanek and government officials have since refused to divulge details of what kind of attack they feared in Prague.

"I am not authorized to provide any information in this case," the paper quoted Topolanek as saying when asked about the information given by the sources.

"Concurrent with the government decision, I only continue to insist that the measures and the extent of information supplied to the public were, and are in proportion to the information obtained (by intelligence officials) and to the threat."

The Czech Republic has a small military unit in
Afghanistan and military police instructors in

Prague's Old Town is the location for the Jewish Quarter where thousands of tourists -- many of them Jews -- flock to see centuries-old synagogues and graves.

The country's once-flourishing Jewish community was decimated during World War Two.

Prague has not been a target of terrorist attacks in the past, although strict security precautions were taken several years ago to protect the downtown headquarters of U.S. government-funded Radio Free Europe.

Anonymous said...

Also, most folks have 30Y fixed rate mortgages so when the long bond drops nearly 100bps that's a huge benefit to them. It's cash right in their pocket.

Uh, no it isn't. Unless they refinance, but that transaction costs $3000. Funny how trading a t-bond future costs about $30. Why can't we trade our mortgage like that?

When the long bond drops 100 points then its a benefit to the owners of that higher-rate mortgage (the bank) who earn money on the spread.

I don't think Bernanke is monetizing the debt yet. There isn't a need yet. It is the bond traders betting on a recession.

As has been noted, (see www.rgemonitor.com), equity traders are bullish on the economy; bond traders are bearish.

One of these two bets are wrong.

Which one? Well, street lore has it that bond traders are smarter than stock traders.

The talk about the mythical soft-landing --- (i'm talking the whole economy now, obviously real estate is crashing) --- reminds me of something somebody said in 2000 or so:

"So, you think that the unraveling of the biggest stock market bubble in the last 100 years isn't going to have a big effect on the economy? Fat chance."

I remember this well, as it was not what all the 'experts' were saying at the time. Going back in the way-back machine I dug up some reports on investment advice near 1/1/2001. They recommended a significant allocation to tech stocks then noting how they were still a big part of the indices and they had already "corrected signifciantly". We know how that bet worked out.

As EVERYBODY knows, housing has much more of an effect on the real economy than the stock market. And we know what happened in 2000-2002. (There were two sucker rallies followed by new lows).

So, will the HousingPanic have just a wee "soft landing" in the economy?

That aint' just "voodoo economics", that's "tooth-fairy economics".

Anonymous said...

I make this prediction-

1. In 5 years the California bubble market will be down by 50-60% from its peak.

2. The U.S. average will be down from 20-30%.

3. Cash will be king.

4. Anyone buying from now to 5 years from now will be very sorry they did.

5. Democrates will take the Houses and the Presidential elections.

6. People will be sick of housing!

7. It will be the perfect time to buy. Once it plateaus!

8. Trillions of dollars of bubble real estate money will be lost.

9. People will be talking about "if only we sold the 1400 sq. ft. tract house and went to cash.

Anonymous said...

A Favor to Bush?


According to this theory, the Saudi government is doing Bush a favor by trying to bring down prices before the election. The evidence? Some say the Saudi government has a long-standing relationship with the Bush family. They also cite the 2004 book by author and Washington Post assistant managing editor Bob Woodward, "Plan of Attack," which said that then-Saudi ambassador to the United States, Prince Bandar bin Sultan, promised to keep oil production high enough to moderate fuel prices and bolster the U.S. economy during the presidential election year.


Anonymous said...

Also, most folks have 30Y fixed rate mortgages so when the long bond drops nearly 100bps that's a huge benefit to them. It's cash right in their pocket.

Uh, no it isn't. Unless they refinance, but that transaction costs $3000. Funny how trading a t-bond future costs about $30. Why can't we trade our mortgage like that?

Agreed, the transaction costs are large but the impact on cash flow may be more important. On a 400K loan that's an extra 250K in the consumers pocket each month. That's gas money. Considering the savings rate in the US the consumer has voted and cash flow is more important than financial position....at least for the time being.

When the long bond drops 100 points then its a benefit to the owners of that higher-rate mortgage (the bank) who earn money on the spread.

For the most part banks are interested in the fees. They want the 3,000 for refinancing and then they want to immunize the interest rate risk. Banks aren't in the business of speculating. That's for the Amanranth's of the world.

LauraVella said...

I thought this was interesting...

We needed to renew our auto policy and I requested three new quotes to compare rates. All of them told me credit score and having a current policy would determine the insurance rate.

Times have really changed-years ago, insurnace companies only used driving records to determine what the rate would be, now they determine the price of auto insurance based on credit score too.

With all the late mortgages and forclousures looming, this is going to be tough for alot of homedebitors on the edge.

LauraVella said...

Anon said: "The actual act of seperation is scary, folks. Any feedback is appreciated. I am a frequent reader of HP.
Thanks to all".

Congradulations! Glad to hear you made a bundle on the sale of your townhome and have no debt!

When we first sold our home, we didnt even look back. Recently,I think about the work I put into our home and how absolutely darling it was, but now, the new owners have it for sale after only two years of homeownership.

Remember, selling a house right now is now or never - and remember there will be many good buys in the future, because renting is the best alternative right now.

Good for you and enjoy renting!

Anonymous said...

"the actual act of separation is scary..."

i can relate to that. however, you must not allow emotions to take over, especially if your purpose is solely into investment. you have to rely on "numbers." who cares if the carpet is orange - right? my point is, when buying a house for investment only, don't attach your emotions to it so that when you sell in the future, it won't be hard to let go of it. always think of the $ sign.

I Love Broadband over PowerLine said...

Kara Homes- NJ file for Chapter 11 Bankruptcy

Housing bust
Posted by the Asbury Park Press on 10/6/06

Kara Homes Inc., one of the biggest home builders in Monmouth and Ocean counties, has filed for protection from creditors under the bankruptcy laws.

Earlier this week, at least some Kara Homes employees received a letter from the company notifying them that they were being laid off and stating that Kara "anticipates filing Chapter 11." Under that provision of the bankruptcy code, creditors claims are frozen by the court while the company can continue to operate as it attempts to reorganize.

It was unknown how many employees were laid off, and the company official who signed the letter, Roberta W. Schultz, vice president of human resources and organizational development, could not be reached for comment.

Patrick W. Turner, the general counsel for Kara, told Gannett New Jersey that filing for Chapter 11 "is one of the alternatives we're considering." He said he would not comment on the letter.

Turner said Wednesday the company terminated some personnel because it is "trying to restructure" the payroll. "We had to address payroll issues, and we did."

"We are trying to become more profitable," Turner said. He did not disclose what sort of financial trouble the home builder is experiencing.

East Brunswick-based Kara has a large presence in Monmouth and Ocean counties, with at least 15 housing developments in the two counties listed on its Web site, including Crine West Estates in Marlboro and Winding Run in Lacey.

The news has left people who have houses in the pipeline with Kara Homes anxious and uncertain.

Middletown resident Gina Haspilaire and her husband, Richard, have been waiting to move into their home at Cottage Gate at Navesink in Middletown since March 2005. The home's delivery date kept being delayed, Gina Haspilaire said.

Now the couple want Kara to return their deposit, which is about $125,000, she said. The couple used money saved for their son's college education to pay for the downpayment, figuring they would replace it with money from the sale of their existing home.

"When we did this, my son had two more years to finish high school," Haspilaire said. "Now we can't sell our house, and they won't give us back the money."

They don't want the house, which is completed but without a certificate of occupancy. She said she believes the contract was voided because the home wasn't delivered on time.

Frederick Young, a resident of Ocean Pines, Md., said he had a contract for a condominium at another Kara development in Mount Arlington, Morris County. After he and his wife became ill over the summer, he wanted to cancel the contract and get his $19,000 deposit back but hasn't been able to get in touch with Kara.

"I am being faced now with huge medical bills," Young said.

In a September interview, Kara founder Zudi Karagjozi responded to rumors about the company's problems. He said the company was operational, building and selling homes.

"Everything has been moving," he said. "It's just obviously, with this slower time, like all builders things are going a little slower than usual."

He said the company had been paring down debt, laying off some workers and selling some property.

Karagjozi started Kara Homes in 1999, and it quickly got noticed because of its rapid growth. In 2002, it was named the fastest-growing home builder in the nation by Builder Magazine. Last year, the company was 239th on Inc. magazine's list of 500 fastest-growing private companies in the nation.

But recently, Kara seems to have had problems paying its bills.

Some companies have filed documents with the Monmouth County clerk's office, saying they have not been paid for their work.

For instance, Whitman Construction LLC said that Kara owes it $44,326.75 for siding and roofing work done on a project in Sea Bright, according to a Notice of Unpaid Balance and Right to File Lien.

On Sept. 12, H&D Prime Construction Inc. filed a notice that it was owed $146,323 for supplying and installing siding and stucco at Kara at the Tradewinds in Sea Bright.

After several boom years, the residential real estate market has turned sour for home builders and real estate agents selling existing homes.

Homeowners are having a difficult time selling their existing homes, which is making it harder for them to step up into a new home, said Patrick J. O'Keefe, chief executive officer of the New Jersey Builders Association.

"Every builder I know . . . is in an aggressive inventory control posture," he said. "They are not starting projects; they are deferring projects.

"Where they have continuing construction, they are not beginning new units unless they have a firm contract in hand."

Housing starts are down 10 percent to 15 percent this year through August, compared with the same period last year, O'Keefe said.

"I expect it to decline further," he said. "This is the beginning of a very difficult market for builders and resellers alike."

David P. Willis: (732) 643-4039, or dwillis@app.com. Press staff writer James Prado Roberts contributed to this story.

Anonymous said...

SoCal city approves law against renting to illegal immigrants
Associated Press

ESCONDIDO, Calif. - City leaders have given initial approval to an ordinance criminalizing landlords who rent to illegal immigrants, the latest of a handful of cities nationwide to pass laws cracking down on people who hire or rent to undocumented immigrants.

The 3-2 vote followed a three hour debate that was frequently interrupted by shouts from some of the 350 people who filled the City Council chamber. On the lawn outside, hundreds of pro- and anti- illegal immigration activists rallied and watched a live broadcast of the debate on large television screens.

Dozens of police and sheriff's deputies in riot gear stood watch. Several demonstrators had heated exchanges, but no physical altercations occurred and no arrests were made, said Lt. Dave Mankin.


Anonymous said...

National city in south San Diego has declared itself a sanctuary city!

Thank God escondido took a stand against 'ILLEGALS'!

Illegal still means illegal!!!

InfidelWoman said...

Yea, but they can still get a no doc/125% LTV/ mort and rent the second floor and basements out, whilst three generations live one the main level.

Anonymous said...

I think this is not just an accident. With the current real estate market, these condos would have been an albatross around SOMEBODY's neck. There are WAY more condos, houses, apartments, etc. than there are people to rent/buy them.

This is "very convenient" for whoever owned them. Hmm...

MEMPHIS, Tennessee (AP) -- Fire swept through a historical downtown church early Friday, collapsing its steeple and flicking off embers that ignited three other buildings. Arson was not suspected, a fire official said.

The buildings were unoccupied, and no injuries were immediately reported.

The First United Methodist Church, built in 1893, was largely destroyed by the flames, which were reported shortly before 3 a.m. Its roof caved in, the steeple toppled and some of the walls crumbled onto the streets. (Watch how firefighters attacked Memphis blazes -- 1:58)

Soon after the fire started at the church, 10 mph wind carried sparks to three nearby buildings, including the Lincoln American Tower, once the tallest building in Memphis at 22 floors.

The buildings were part of a $45 million renovation into condominiums. Owner Will Chandler told WMC-TV that he was worried one couldn't be salvaged, but he said it looked like the tower might be saved.

At least two blocks separated the two fire scenes, but open windows in the buildings under renovation and wooden beams in the two oldest buildings helped feed the flames, said Alvin Benson, a deputy director chief for the fire department.

Crews also had to extinguish small fires in trash bins set by drifting sparks.

"I have no reason to believe it's arson," Benson said. The cause remained under investigation.

The Rev. Martha Wagley, pastor of the church, said members of her congregation gathered on the sidewalks as the structure burned, crying, recalling various worship services and telling stories of who was "married and buried" there.

Wagley said her church is a "seven day a week" church with a food pantry and other ministries to people downtown.

"The building is lost, but not the church," Wagley said.

By 8 a.m., firefighters were still hosing down the church and other buildings, and emergency vehicles filled blocked off streets. Arriving workers walked through streets and sidewalks coated in ash. State circuit court, held in a building close to those that caught fire, was canceled for the day, court officials said.

Anonymous said...

Times have really changed-years ago, insurnace companies only used driving records to determine what the rate would be, now they determine the price of auto insurance based on credit score too.

What's worse is that there are many employers who use an applicant's credit score to determine hiring eligibility. If your credit score is too low, they won't hire you.

Anonymous said...

Commenting on the study, SEIU Labor Union President Andy Stern said, "Of the total amount of our economy and income, we have the greatest share going to profits in modern history and the least amount going to wages in modern history."
Yep, Big Business is well on its way to killing the goose that lays the golden eggs. Consumer spending is still 70% of America's economic activity. When the middle class disappears, so does our economy....

Anonymous said...

Thanks for the support. I sunk 8 yrs of my life into that home and the more I read and see the more I feel completely lucky to have sold. I am now all in cash and no debt. Still, the act of becoming a rentor initially was unsettling after owning for so many years. As time goes on it gets easier.
I personally think that deflationary estimates by most on this board are too conservative. Once this debacle gets into full swing and panic really sets in I think a more common depreciation amount will be close to 80%. Many properties will languish for years. Many people will be decimated financially. Its sad.

Richard said...

BEIJING — China has started filling the tanks of
a strategic oil reserve
meant to insulate the country from disruptions in
supplies, an official said

The tanks in Zhenhai, a city in the coastal
province of Zhejiang, south of
Shanghai, are being filled with domestically
produced oil, said Xu Dingming,
deputy director of the Cabinet's State Energy

Mr. Xu didn't say how much oil had been pumped
into the tanks or when the
process was to be completed.

“All of the construction work (in Zhenhai) has
been completed,” Mr. Xu told
Dow Jones Newswires at an energy conference.
“Since the storage facility has
been built, it must be put into operation as soon
as possible.”

Anonymous said...

"thank God escondido took a stand against ILLEGALS."

Do you think Foley might be hiding there? Remember he did an ILLEGAL act, didn't he?

Anonymous said...


Anonymous said...

I drove by a 4 year old housing tract in Santa Maria, Cal. the other day. One-half of the houses were for sale! There were so many signs it reminded me of "realtor hell". Most were sold a lousy 3 year ARM that adjusted from a teaser of 3% to about 8 now! Most are first time home buyers who can't afford the jump. I feel sorry for them, because the ARM wasn't fully explained to them!
What can they do?

foxwoodlief said...

So all of you looking for a non-bubble? If you still don't believe a lot of America isn't in a bubble, check out real estate in San Angelo, Tx. What is the town like? 100,000, has Starbucks, most major department stores, a military base, oil economoy, telecommunications, university, hospital. Quaint old town, river, lots of parks, nice art museum,dry climate on the edge of the Hill country. A lot of houses under $100,000 (mostly historic) with the lowest for $19.500. Lots of houses I'd live in for $58-80,000. Most of these homes sit on the market for months!!

You can pay cash, not pay rent, live off your savings. What more can you ask? Point is, people love to bitch about the bubble but with 300 million Americans all wanting to live in SD, LA, SF, SE, Portland, DC, Miami, etc...on the beach (La Jolla etc) but only want to pay $100,000. Have you checked out the payment on a house at $100,000 or less? Even with ten percent down payments are less than $700 a month. A lot of the houses in SA I saw had paymets of $358 PITI.

Not to dismiss the bubble but why do you think people head to bubble cities? Jobs, climate, people don't want to live in small towns, and 5% appreciation on $300,000 is more than on $50,000.

I'm sure there are lots of cities, even in Delaware or parts of California you can buy cheap. Just ask yourself how redneck do you want to live?

Anonymous said...

"I drove by a 4 year old housing tract in Santa Maria, Cal. the other day. One-half of the houses were for sale! There were so many signs it reminded me of "realtor hell". Most were sold a lousy 3 year ARM that adjusted from a teaser of 3% to about 8 now! Most are first time home buyers who can't afford the jump. I feel sorry for them, because the ARM wasn't fully explained to them!
What can they do?"

Suffer ... these people should all suffer for living beyond their means and driving up housing prices for those people who do live within their means.

I have no more sympathy for people going bankrupt during this downturn than I have for the people having more than 2 kids who complain they can't feed them.

Anonymous said...

They already are suffering! I think it's just a matter of time before the banks and the country are suffering too! It reminds me of the book "Tale of Two Cities", with the quote "It was the best of times and the worst of times". Well we will all be seeing the worst soon! And all will be affected! Strap yourself in, it is going to be a hell of a ride!

Anonymous said...

News flash- a major home builder from Tex. building in Cal. "you can put in the name)just told all of its subcontractors to get off their property, and they tore down all their fondation forms! Then, they laid off 85% of their local office staff! If there is no money to be made, then they will pack up all their toys and go home!

Not Buying The Bubble said...

Here, I've got the perfect financial instrument for the never ending financial boom and housing boom.

It's the zero down, zero payment ... infinite time variable rate negative amortization loan.

Zero dollars down, zero dollars per month payment, the interest just keeps adding onto the principal for infinity ... and you never have to pay it back.

Anonymous said...

Give your prediction on what is going to happen in the next year, 3 years, 5 years, and 10 years>

Anonymous said...

Is it time to move overseas and drink mai-tais on a warm tropical beach? Or should we follow Keith to the "motherland". Where English is spoken quite properly>

Richard said...

Goldman Sachs Says Venezuela May Sell More Dollars, Issue Bond

By Guillermo Parra-Bernal

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Oct. 5 (Bloomberg) -- Venezuela may step up its sales of the U.S. dollar at the official exchange rate and sell dollar- denominated bonds in the local market in a bid to halt a weakening of the currency in street trading, Goldman Sachs Group Inc. said.

The bolivar has weakened in street trading to about 3,000 bolivars per dollar from about 2,500 in June, driving up the cost of some imports, Alberto Ramos, a Latin American economist at Goldman Sachs, said in a report. The official exchange rate - - the rate at which the government sells dollars to people and companies -- is 2,147.3 bolivars to the dollar.

To contact the reporter on this story: Guillermo Parra-Bernal in Caracas at at gparra@bloomberg.net

Anonymous said...


I remember being 22 and thinking that myself and a bunch of friends could take over the gov't. All it really is is a bunch of like minded people that take over- Clinton proves this- let's get on it. think about it, YOU could be PREZ if you have the balls...

Anonymous said...

Computer models say that we are in for a 1930's style recession/depression. Real estate will retrace its gains, and go back to pre-bubble levels. When the bubble finally explodes, the carnage will be massive.

Curly Tree said...

i'm still waiting for this housing collapse where i live. it ain't happening!

Anonymous said...

Computer models say that we are in for a 1930's style recession/depression.

Please, what computer models?

Anonymous said...

In 1989 675 Savings and Loans were bankrupt. The Federal Government needed $500 billion dollars to cover the losses. The bankruptcies were due to speculative real estate loans. Foreclosures were unable to cover the loan costs as there was negative equity in too many projects. Some home building companies were defaulting on their loans.

With low loan to value rations of current loans there is greater risk of massive foreclosures if the economy will increase its unproductivity and bad allocation of funds to searches for WMD's where there are none.

Napolean thought the French system was the greatest. He killed to try to establish it elsewhere. In reality he only spread his murderous rage and came to the end of his life in exile.

The stock market seems to be less risky than in 1929, yet susceptible to a correction if the market will see the economic slowdown becoming more of a problem with no soft landing.

Anonymous said...

I live in Chicago. Does any other place do stupid sh!t like this??


The affordable American Dream
Range of prices on a city block makes a healthy neighborhood

October 6, 2006
BY SALLY DUROS Real Estate Editor
The incongruous highs and lows evident in housing prices showcased in Saturday's Cavalcade of Homes are an expression of the City of Chicago's vision of what a mixed income community looks like.

"To have a healthy economical area, you should have a range of housing options," said John G. Markowski, commissioner of the city's Department of Housing.

The highs and lows are also an expression of Chicago financing methods, in which market-rate housing "cross-subsidizes" lower-cost deals.

In some of these newly developed city blocks, school teachers, former CHA residents and market-rate buyers are all living together in a neighborhood. This is the case in some areas like Jazz on the Boulevard on the South Side, Cabrini Green on the Near North and Roosevelt Square, near the University of Illinois at Chicago.

"You have one-third affordable, one-third market rate and one-third CHA replacement," Markowski said.


They already did some of this across the street from Cabrini-Green (one of THE worst housing projects in the world). The "market-rate" purchasers (read: the screwed) really wish they didn't do it.

Anonymous said...

Interesting link for those who might think there's not a bubble in NC. This sophisticated seller is obliviously too cool for school.


Anonymous said...

Halliburton charged with selling nuclear technology to Iran

Halliburton, the notorious U.S. energy company, sold key nuclear-reactor components to a private Iranian oil company called Oriental Oil Kish as recently as 2005, using offshore subsidiaries to circumvent U.S. sanctions, journalist Jason Leopold reported on Globalresearch.ca, the Web site of a Canadian research group. He cited sources intimate with the business dealings of Halliburton and Kish.

The story is particularly juicy, because Vice President Dick Cheney, who now claims to want to stop Iran from getting nukes, was president of Halliburton in the mid-1990s, at which time he may have advocated business dealings with Iran, in violation of U.S. law.

Leopold contended that the Halliburton-Kish deals have helped Iran become capable of enriching weapons-grade uranium.

Leopold's filed his report in 2005, when Iran's new hard-line government was rounding up relatives and business associates of former Iranian president and defeated mullah presidential candidate Hashemi Rafsanjani, amid accusations of widespread corruption in Iran's oil industry.

Leopold also reported that in 2004 and 2005, Halliburton had a close business relationship with Cyrus Nasseri, an Oriental Oil Kish official who the Iranian government subsequently accused of receiving up to $1 million from Halliburton for giving them Iran's nuclear secrets.

Source: GlobalResearch.ca, Aug. 5, 2005. Title: "Halliburton Secretly Doing Business With Key Member of Iran's Nuclear Team." Author: Jason Leopold.

Anonymous said...

The story is particularly juicy, because Vice President Dick Cheney, who now claims to want to stop Iran from getting nukes, was president of Halliburton in the mid-1990s, at which time he may have advocated business dealings with Iran, in violation of U.S. law.

Man oh man! This just burns me up. And I'm not surprised at all. Cheney is such an arrogant sleazeball....

Anonymous said...

I remember being 22 and thinking that myself and a bunch of friends could take over the gov't. All it really is is a bunch of like minded people that take over- Clinton proves this- let's get on it. think about it, YOU could be PREZ if you have the balls...

Don't be naive. You'd need a LOT of money to take over the government, either your own or funding from a LOT of wealthy friends. How do you think Bush came to power?

InfidelWoman said...

I just made my first Mortgage Payment on my new 30 year fixed loan on a check by phone automated system. I was informed within two weeks of the closing that the Bank the Mortgage Broker Represented would sell my loan.
I wanted to post the interesting recording that preceeded the eletronic payment notified me that the entity which bought my loan is a COLLECTIONS AGENCY! What forsight in a crash market. The word Irony comes to mind.

Anonymous said...

a diversion;

Anonymous said...


Anonymous said...

we get blown to bits and survive, who profits, in the sale of materials to rebuild, not just build, with copper pipe at bull market prices, and no demand etc etc,

sell real estate note said...

Interesting blog about notes.


sell real estate note

Hbarr said...

Pictures of some of my junk mail. I get crap like this almost every day. They even have Dan Marino hawking Florida land at liquidation prices.

Below Bank Appraisal!! Yahoo...

Keith, feel free to use them if you like.

Junk 1

Junk 2

Junk 3

Anonymous said...

No joke, just the other day at work here in Boston, I heard a coworker the next cube over talking to his bank.

Coworker:"Yeah, uh, I want to transfer some money from my HELOC to checking"
pause while he listens...
Coworker: "Uh, $30,000 ought to do it. Great. Thanks!"

Anonymous said...

My best friend has her car loan in her adjustable rate HELOC and I told her to refi while rates were low, and close the adjustable loan. She needs a new car and cannot pay off the old one, because her HELOC has doubled in the last year. She cannot afford a traditional car payment and her second now. She panics when she goes to work she needs a new car so bad.
Her stock broker told her I was wrong and to put her cash into BONDS.
Who do you think she listened to?

The China Expat said...

The housing bubble isn't just isolated to the Western hemisphere: Check out this article about the housing bubble in China:

China Housing Bubble

Or just click on my name if the link code isn't usable here.

Anonymous said...

"I hate all political parties, and I hate all asset classes right now."

Beautiful, man.

Anonymous said...

yeah, other countries are also bubblicious. take moscow as an example. prices are higher than in NYC and still rising fast.

Anonymous said...

Two interesting articles from today's Boston Globe:

'Sold!' Auction reflects downturn
Bidders pack meeting room, get better condo value than expected

Interesting (amusing) excerpts:

"Bidders ``got a better value than we thought they'd get," said Jon Gollinger , FolioBoston's sales agent, whose firm, Velocity Marketing, conducted the auction on behalf of the Folio developer, Michael Rauseo"

"Ten condos, with asking prices of $1.16 million to $1.76 million, sold for prices that were 21 percent to 36 percent below the asking prices. Less-desirable or smaller units on lower floors or with no views -- mostly priced in the $800,000s, and therefore attracting more bidders -- sold at smaller discounts, of up to 29 percent."

"Smaller discounts of up to 29 percent" - Did everyone read that?

Fear and anxiety in the housing market

"``Things have been really stressful," said Janelle Reagan. ``Luckily, our marriage is good and strong. We've been able to get through this together. But there were many nights I didn't sleep and I've put on weight because I've been eating more, because of the stress. And, to make matters worse, I can't get to the gym because I have to be here to make sure the house is clean -- just in case our realtor calls to schedule a showing. With two little ones, sometimes it looks like the toy box has thrown up. Not good. It's gotten to the point where Sean will say, `someone coming to look?' when I tell him to clean up his toys."

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Anonymous said...

Lennar cuts 100K in California
check this out

Anonymous said...

Lennar cuts 100K in California

And the lowest priced home still starts at 599K. That same home cost 350K only 5 years ago. There is no panic right now. There is no desperation. There is no bubble bursting. Land prices must fall for the bubble to burst. What is the catalyst for that to happen, anyone? Facts please...

Anonymous said...

Welcome to Fascist America!
by Gene Callahan
by Gene Callahan


My fellow Americans, it’s official now: We live in a fascist nation.

Now, the term "fascist" has been thrown around over the last fifty years in a loose way that has drained it of much of its meaning. If someone wanted to cut 5% off of a leftist professor's favorite welfare program, the professor would call his opponent a "fascist." I’m not using the word like that. I mean honest-to-goodness, old-fashioned, 1930s style fascism, featuring such old favorites as:
Secret prisons – they’re back!
Torture – we’re doing it.
Spying on all citizens.
Arrests and indefinite imprisonment without trial.
Rampant militarism.
Secret detention.
Enforced disappearance.
Denial and restriction of habeas corpus.
Prolonged incommunicado detention.
Unfair trial procedures.
(This list was compiled partially based on the work of Amnesty International, available here.)
An absolutely mind-numbing response to complaints that our traditional legal system is being torn apart is the question, "So, you want to protect the rights of terrorists?"

Um, no, I want to protect the rights of non-terrorists who might be falsely accused of terrorism! That was sort of, you know, the whole idea of our legal system. I’m sure there was some neo-con around in the 1700s saying to Jefferson or Madison, "So, you want to protect the rights of murderers and robbers?" but luckily they ignored him.

We’ve now gotten to the point where Nazi Germany was, say, in 1934. Remember, at that time, if you had told a typical German what his government would do over the next ten years, he would have looked at you as a madman. After all, his land had been civilized for over a thousand years. His was the nation of Albertus Magnus, Gutenberg, Goethe, Schiller, Beethoven, Bach, Kant, Hegel, Schelling, Fichte, Heisenberg, Reimann, Mann, Lessing, Herder, Handel, Dürer, Leibniz, Gauss, Helmholtz – he could have gone on, but you get the point. His nation could not possibly descend into barbarism! If you tried to tell him he was living in a police state, he would have pointed out that his government had used its vast new powers very judiciously, and only against a few trouble-makers. So far.

It is interesting, in gauging the direction we are heading, to look at the proclamations of "respectable" opinion writers who support this administration. For instance, we have people at a "libertarian" think tank proclaiming that Moslems are not entitled to full civil rights in the US. (Perhaps we need to make them wear something special on their clothing like, say, a yellow star, so we know just who they are, hey?) But "conservatives" provide even more stunning examples of purely fascist reasoning. For example, conservative demagogue Ann Coulter has called for the editor of The NY Times to face the firing squad for his part in publicizing this administration' s abuses of power. Let’s look at a recent column by Douglas MacKinnon at TownHall.com.

MacKinnon considers all of those involved in revealing the sordid collection of secret programs that have been launched by the Bush administration as "traitors" who have publicized these schemes "purely because they don’t like the policies of the new president." Well, he’s right in that "they don’t like the policies" that they consider unconstitutional violations of our rights. Far from "aiding the enemy," these revelations aided us, the American people, by letting us know what our government has in store for us.

Consider what the point of classifying these programs was in the first place, and who they were being kept secret from. The jihadists no doubt already knew about the secret prisons – their friends are in them! They surely knew that the war in Iraq has been helping their recruiting – it’s their recruiting! ("Praise be to Allah, Abdul, I read in The NY Times that it is the Iraq War that is sending us these thousands of new recruits – who knew?") They no doubt suspect they may be wiretapped – what they didn’t know was that all the rest of us are, as well. No, not one of these leaks helps terrorists, nor was one of them classified to stop terrorists from finding them out. We were the ones who weren’t supposed to find out about them.

MacKinnon continues: "And if even one American lost his or her life because of a leak, then I would want that person to be executed for treason."

So anyone who reveals our fascist government policies is a traitor who can be executed! This is obviously an attempt to intimidate the opposition so that our police state can be expanded without the annoying work stoppages caused by public outcry when the latest bit of construction is revealed. And just how does MacKinnon propose to show that some American lost his life because a journalist revealed that the US government tortures people across the globe, rather than, say, because the policies he supports have inspired a million new jihadists? Secret trial, perhaps? Or why even bother with trials for filthy traitors?

Herr Goebbels – oops, I mean MacKinnon – writes, "Until we severely punish those who leak classified information, then the traitors among us will not only continue to flourish, but will grow more brazen with the secrets they reveal."

Yes, what we ought to be able to do, you know, is simply seize anyone who even mentions our government’s "secret" prisons, and, without a trial, throw them in a secret prison! This is the logical conclusion of this fascist’s article, after all, since those who talk about the American Gulag are pretty much terrorists themselves.

Folks, this is coming real soon, and, once it does, domestic opposition is pretty much over. One journalist – that will be about all it takes – will be seized as a "terrorist" and thrown in the Gulag. The government may release him, but then another will simply disappear in the night in Iraq or Afghanistan, and rumors will circulate that he is being kept in a cage somewhere and waterboarded. No journalist lacking heroic courage will any longer be willing to seriously protest government policy.
America is full of decent people, who could never believe their own government could become fascist. So were Germany and Italy in the 1920s. But they became fascist anyway. They passed laws suspending civil liberties, but the government promised the frightened populace that those laws would only be used against targets like "Communist terrorists." And, a little bit at a time, the target kept getting bigger and bigger, slowly enough that the people who weren’t paying close attention never detected it.

And, next thing you know, there were millions of people dead! So, it turns out, it would have been worth paying attention after all.

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