August 31, 2006

HousingPanic Stupid Question of the Day

Things appear to have really sped up in the bubblesphere with the imploding housing market, combined with a world spinning out of control with Iran/Iraq/North Korea etc, all kinds of stories from Wall Street, and the continuing political drama.

So, HP'ers, what'd I miss? In trying to connect the dots, what dot did we miss? What connection didn't we make?

Forbes columnist: "20% decline in median single-family house prices nationwide, and that number may be way understated"

20%? Pretty bold.

We're talking a devastating crash if that comes to pass. What do HP'ers think the peak to trough number will be?

Man, I wish I could fast forward a few years to see how this all turned out. I feel like I should be shorting every stock I can find that touches the consumer.

The housing bubble is deflating rapidly. I expect at least a 20% decline in median single-family house prices nationwide, and that number may be way understated.

A bursting of the bubble would force many homeowners to curb their outlays in order to close the gaps between their income and spending growth. That would surely precipitate a major recession that would become global, given the dependence of most foreign countries on U.S. consumers to buy the excess goods and services for which they have no other markets.

With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.

Glut of high priced condos in LA - "builders still bullish on new projects!"

Knock knock. Who's there? Realtor. Realtor who?

Real tore up that I just lost everything I owned thanks to my realtor

he he he

Tell your best housing bubble joke here. Winner gets the HP gold star of the day

US laughingstock Florida getting uglier and uglier and uglier

Warning - if you live in Florida, you might not want to read this. And yes, I'm gonna get in a bit of trouble here. But here goes...

Maybe I missed a memo, but when did backwater towns like Tampa start generating household incomes that could find buyers for $500,000 apartments? When did Florida start getting tons of Fortune 500 jobs that could support $1 Million Toll Brothers McMansions? When did Florida get rid of the humidity, the bugs, the race issues, the lack of culture, the Piggly Wigglies and the strip malls from hell? When did Florida stop being the laughing stock of the US?

I suggest it never did. But it got really good at the Housing Ponzi Scheme. It got really good at generating fake income from people buying homes from each other at higher and higher prices. It got really good at no-down, no-doc, negative am financing. It got really good at cash-out refis. It got really good at using Housing ATM loot to buy that big ol' pick up truck with the NASCAR stickers and the confederate plates.

Now it's getting really good at crashing.

Adios Florida. It was fun while it lasted. Now you're heading back to being the laughingstock of the US (again)

Economic gloom tightens grip

Floridians' confidence in the economy plunged this month to its lowest level in 13 years, University of Florida economists said Tuesday.

The chill in the housing market, higher interest rates and fuel prices appear to be taking their toll. National confidence numbers also fell in August, but not as much as they did in Florida.
The Florida Consumer Confidence Index fell 11 points to 76, while the national index, compiled by the Conference Board, went from 107 to 99.6.

The Florida drop is very similar to the one that occurred last September in the wake of Hurricane Katrina, only this time there was no hurricane to blame. Chris McCarty, director of survey research at the University of Florida's Bureau of Economic and Business Research, thinks the changed outlook for housing is at least partly responsible.

"Florida is in a position to really be affected by a decline in housing," McCarty said. "There are a lot of overvalued markets in Florida, and there are a lot of risky loans, some of which are going to readjust right about now," he said. "Also, a lot of employment increases over the last few years have been related to housing."

If you're not for us 100% you're a fascist, pro-terrorist, anti-American, cut-and-run coward

I really hope Americans aren't still buying this BS

Man, I can't wait for the carnage in November, for both parties

Vote the bums out. Let's get new blood. Hopefully the bursting of the housing bubble helps sharpen the point of the bayonette a bit more

August 30, 2006

Bubble Sign #12949: HousingPanic continues to set records for visits and page views

Now if this blogger could just make some $ off of the blog and retire to an island to blog full time, all would be good in the universe...

Thanks HP'ers for your support this past year. 250,000 page views a month coming up - pretty darn cool.

Seriously, I blog for fun, and to try to create a forum for folks to gain the information they need to make good life decisions. I hope for some of you HP has saved you from a big mistake (that of buying a home at the peak)



Housing bubble burst effect #11093: Realtor sign pollution crackdown in San Diego

I've gotta admit, living in Phoenix for so long, the sign pollution and dancing $10 an hour open house arrow guys were so annoying, when trying to enjoy a nice drive out in the desert.

Well, in bubble-central San Diego, the local authorities took it into their own hands. Bye bye realtors, we'll sure miss you. Thanks MM for the link...

Local real estate agents are incensed after code-enforcement officers collected more than 100 open-house signs and threw them in the trash behind City Hall.

City officials say the signs failed to comply with existing codes for temporary signage and that they were placed illegally in the public right of way.

The crackdown Sunday came as part of the city's nearly $1 million beautification program, which includes monthly code-compliance sweeps.

"About a month ago, we started doing some of these sweeps,” Councilman Ed Gallo said. "Work-at-home signs, telemarketing signs, garage-sale signs. We're not picking on the real estate people."

Real estate agents say that without the ability to post clear signs directing potential buyers to open houses, properties will languish unsold in an already tough real estate market.

"Even though there are ads in the paper, without signs, people don't know where to go to find the open houses," said Pamela Wilcoxson of Prudential California Realty.

HousingPanic Stupid Question of the Day

What will the US and UN do tomorrow about Iran, now that they're in violation of resolution #1696?

Consumer Confidence Crashes (we'll have a blue, blue christmas without you)

More of tomorrow's headlines today at HP. In the end, perhaps it's a good thing that Americans are going to cut back on the consumer spending orgy, especially during the Holidays, which I've always found disgusting.

Full disclosure: I'm short retailers PSUN, HD, LOW, RTH, AMZN and CC (so far)

A sharp decline in sentiment may signal a grim holiday for retailers and trouble ahead for the economy

Retailers, prepare to get Scrooged this coming holiday season. Consumers are becoming increasingly pessimistic about the economy as they worry about jobs, the weakening housing market, and high oil prices.

Americans have already cut back on entertainment, eating out, and all sorts of discretionary spending. The report may signal trouble ahead for consumer spending—and perhaps for the overall economy.

Early reports of August retail sales show that shoppers of all stripes are already cutting back, from the lower-income shoppers at Dollar General (DG ) to the more affluent who buy their linens and dishes at Williams-Sonoma (WSM ).

P.F. Chang CEO Rick Federico says he hasn't seen anything like this for over 15 years. "There have been other ups and downs, but none where the industry is seeing discounts fall across the segment for a prolonged period of time," says Federico.

With all these worries weighing them down, it's hard to imagine consumers opening their wallets wide during the upcoming Christmas season. They may have to make due with other expressions of holiday cheer.

Scary bubble chart of the day

For new HP'ers: What is HousingPanic?

With the record traffic we're getting, obviously a lot of new folks have found their way to this little HP corner of the internets (I always loved the use of that word - he he). So let's address the question of 'What is HousingPanic'?

As loyal HP'ers know, this isn't just a housing bubble blog - if you want that go to Ben's boring blog. Some would say this is the Fox News of bubble blogs though - opinionated, sensationalistic, over the top, in search of ratings, stupid, loud, attacking, etc. No matter your view, I hope you never think it "boring" and I hope from time to time it's pretty damn funny.

And I hope you learn something along the way, something that you can use in your daily life, for the better.

Bottom line, this is an opinion blog, one which discusses the buildup and unraveling of the debt-fueled American economic system, with housing speculation at the core. We get into the causes, the effects, the nuances and the players, and try to tie it all together. Here's a recent thread exchange, hope you enjoy and comment away

Keith, I thought this was a housing bubble blog. Why do you always post all this war stuff?

This isn't a housing bubble blog. this is a blog about the unwinding of the debt-fueled, speculative financial bubble, helped along by the continuing blowup of world events, misguided financial policy, and aided by incompetence and corruption in the white house, fed and the REIC.

Houses and real estate happen to be the speculative asset that people bought with tremendous leverage which are now selling off.

If that asset happened to be goat cheese, maybe I would have called the blog "goatcheesepanic". hope that helps

August 29, 2006

One day we'll look back on this and say "what were they thinking?" The negative-ammortization timebomb (and WaMu bubble trouble)

I smell a systemic meltdown... Someone wake up Neil Bush and Charlie Keating...

From Barron's ("The No-Money-Down-Disaster", by Lon Witter, Aug. 19, 2006):

"The following figures are from Washington Mutual's annual report: At the end of 2003, 1% of WaMu's option ARMS were in negative amortization ... At the end of 2004, the percentage jumped to 21%.

At the end of 2005, the percentage jumped again to 47%. By value of the loans, the percentage was 55%.

Every month, these borrower's debt increases; most of them probably don't know it. There is no strict disclosure requirement for negative amortization.

This financial system cannot work; houses are not credit cards. But WaMu's situation is the norm, not the exception. The financial rules encourage lenders to play this aggressive game by allowing them to book negative amortization as earnings. In January-March 2005, WaMu booked $25 million of negative amortization as earnings; in the same period for 2006 the number was $203 million."

Ahmadinejad finishes with an original, created and new slogan: "Death to Israel". I guess "kill the Jews!" was getting a bit t

Get ready for an even more expensive commute from that new Toll Brothers house in the far-flung exburbs. The deadline approaches my friends. What will the Security Council do?

It's time for another Churchill speech to kick off WWIII in style

FLASH: American consumers pulling back: Consumer confidence index plunges (yet again), number even worse than expected

Isn't it interesting to hear housing inventory is "higher than expected", sales are "lower than expected" and now consumer confidence falls "more than expected". Note to MSM: Call HousingPanic - we'll tell you exactly what to expect - none of this bad news is coming as any surprise to HP'ers, is it?

By the way, the Republicans are about to be completely swept out of power in November. As much as I cringe to think it, get ready for "Speaker Pelosi".

Also get ready for one heck of a market meltdown pre-election. The entire US economy is 70% based on consumer spending and they're in full hunker-down-for-the-winter mode and getting worse daily.

Worries about the job market caused consumers' confidence in the U.S. economy to tumble more than expected in August to its lowest level in nine months.

The Conference Board, a New York-based research group, said Tuesday its confidence index fell to a reading of 99.6, down from 107.0 in July. The index was lower than analysts' expectation of 102.5.

"You've got a deterioration in business conditions coupled with lackluster job growth," Franco said.

Americans' sentiment about the labor market worsened in August, with consumers saying jobs are "plentiful" decreasing to 24.4 percent in August from 28.6 percent in July, and those saying jobs are "hard to get" increasing to 21.1 percent from 19.6 percent.

One year ago, Bush: "Brownie, you're doin' a heckof a job". Today, HP: "How many more days remaining for the dimwit on the left?"

October 2005, Ben Bernanke: There is no housing bubble to burst, cooling won't hurt economy

Oopsie - my bad! But he knew it all along, didn't he?

"House prices are unlikely to continue rising at current rates," said Bernanke, who served on the Fed board from 2002 until June. However, he added, "a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near its potential next year."

Greenspan has said recently that he sees no national bubble in home prices, but rather "froth" in some local markets. Prices may fall in some areas, he indicated. And he warned in a speech last month that some borrowers and lenders may suffer "significant losses" if cooling house prices make it difficult to repay new types of riskier home loans -- such as interest-only adjustable-rate mortgages

HousingPanic Stupid Question of the Day

How's renting looking now?

Perhaps we are, like Japan, to suffer Deflation versus inflation as our housing-fueled, debt-fueled economy collapses?

I admit, I struggle with the idea of inflation vs. deflation as our fate (as I bet Ben does too). But I'm at least open minded to the idea that as consumer spending falls off the cliff, as the consumer-debt fueled economy collapses (along with home prices), perhaps it's deflation around the corner, not inflation? Perhaps we'll see the Fed rapidly dropping rates (again) to try to get us out of the mess?

Smart people in the room chew this one over and let us know your thoughts. Cite some good sources to back up your arguments.

All asset bubbles are "Credit Bubbles." Well, Debt is just the other side of Credit. I think that Americans are running out of bubbles. No? Also, the Fed and its constituency, Bankrupters and Fraudsters of New York City (BFNYC), are running out of "options" to push more Consumption Debt (yes, mortgage is consumption debt) and Scams.

And it was the unprecedented push of Consumption Debt, mostly via "reckless mortgage lending," that has kept the US economy out of a recession for the past four years. I think that the "Bush recovery" has been pushed as far as it could be pushed already. Nicht mehr, nicht mehr, nicht mehr. (No more, no more, no more).

Now, about the Deflation case. Most people misjudge the powers of the Fed. Almost all its power, long-term, is a matter of The Confidence Game (title of a book on the Fed). Fed is in no position to inflate as most inflationists think.

Deflation will come so suddenly, as a result of the Demand Destruction leading to inflation falling very fast and going from +1.0%, YoY, to below zero within months, that Fed will not be able to pre-empt it.

Once Deflation takes root for few months it would be very hard to get rid of. The proverbial Pushing On the String (not being able to Pushing ON More Debt!) will become a reality. It would be good for Americans to learn about the limits of Fed's power in being able to manipulate the economy. Americans will also learn a thing or two about what wealth is and what an investment is.

Now the burst housing bubble is so obvious comedians and cartoonists will start making jokes about it

Could the US actually lose World War III against the islamic fascists, led by Hitler II Ahmadinejad combined with Al Qaeda?

I think Israel's recent defeat to an out-manned and out-gunned enemy, combined with our ongoing defeat in Iraq, combined with China and Russia lining up against us, is starting to make the odds a little less of a sure thing that we "win" the war on terror (aka WWIII) against the islamo-fascists. I'm actually starting to think they might be the favorite (much to my chagrin).

I don't think the US, the big ol' nation-state, is prepared financially, militarily or psychologically to win a war against islamic and other US-hating nation-states aligned with islamo-fascist terrorist organizations, especially suicidal ones. Think about it, we'll spend over $1 Trillion on a "war" against Iraq, and yet we'll eventually come home as losers.

Here's an interesting older article on the idea, the thought, that we could actually "lose". You owe it to yourself Dear Reader to at least consider the idea in your mind, and the consequences, before you say yes or no to what we're about to do with Iran and Syria.

It's the thought of losing that makes me want to go in right now, today, and take out Iran and their mullahs and Hitler II who calls for the destruction of Israel and funds terrorist groups. It's the idea of losing that makes me want to do the same wherever else this cult is creating a strong-hold (Gaza, Lebanon, Pakistan, etc). You fight wars to win, and that is harsh, and you focus on decapitating the leadership and establishing your authority. We would have "won" in Iraq if we had gone and killed Muqtada al-Sadr and his ilk, burned down the mosques used to hide the enemy, and sent in a real force.

Instead, we fought in Iraq not to lose (and so PC), so we lost. Yes, I'm so far to the right here you can't see me, but I believe in fighting to win. And yes, this does have everything to do with the future price of houses.

The West confronts not a throwback to medieval Islam, but a Westernized version of Islam transformed into a totalitarian political ideology. Although it draws upon Islamic sources and overlaps with some strains of Muslim belief, the ideology of Al-Qaeda has greater kinship with Nazism, another synthetic pagan religion, than with traditional Islam.

Like Nazism, it is a deadly threat. Remember that Hitler very nearly won.

Like the Nationalsozialistische Deutsche Arbeiterpartei, Al-Qaeda might win. Al-Qaeda wants no territory, no conversions, no loot, no slaves. It wishes to destroy the West and happily will sacrifice millions of Muslim lives in order to do so.

Rather than batter Afghanistan, whence any terrorist worth his Cemtex departed long ago, the West should act unexpectedly and without mercy against states which allow Al-Qaeda. There is no need to go into details here. Doing so now offers at least the chance of gaining the respect of the Islamic world. Failing to do so makes probable a gradual accumulation of failures. It means that the war will be Al-Qaeda's to lose. We were lucky with Hitler. We may not be so lucky again.

August 28, 2006

You can't make this up - REIC whores really starting to get desperate, while eating their young

This grotesque story from bubble-central Phoenix, where builders are trying to make nice with the realtwhores they screwed last year during the peak days (when they stopped paying full commission).

Now? Builders throwing parties, paying bonus commissions, and trying to woo the sharks back into the water. Realtwhores response - a big middle finger.

Meanwhile, doesn't the NAR espouse a code of ethics? Doesn't the buyer's interest figure in this mess somewhere? Gren Credo by the way is doing some great reporting now at the Republic - must have pushed the incompetent Catherine Reagor to the side..

Builders work to mend fences with agents

Home builders are spending big bucks and dishing out heaping helpings of hospitality during what has become the summer of love in the Phoenix new-home market. The objects of their affection? The real estate agents they spurned during last year's housing boom.

The wooing has agents sipping wine and tossing down hors d'oeuvres in Buckeye, networking to live music in Chandler, munching free sandwiches in Florence and cashing fat commission checks.

It was a different world in Phoenix housing last year at the peak of the boom. With buyers camping out at subdivisions, builders didn't need agents to bring them prospects. Builders, looking to maximize their profits, cut agents' commissions or started paying flat fees, if they paid any fees at all.

That angered a lot of agents, who felt that builders were abusing the long-standing relationship between the people who sell homes and those who build them.

But the tables have turned. Demand has evaporated, and builders are trying to get cozy with agents again, throwing parties and offering big fees - commissions of 4 to 5 percent - for selling houses fast.

Yet some agents are steering clear of new subdivisions unless clients ask to see homes there. It's payback, they say, for builders who got greedy in a runaway market in which builders raised prices with impunity and slashed commissions.

Here you go - my favorite NAR / David Lereah honesty-is-the-best-policy slides

Are you ready to see the corrupt and incompetent Kofi Annan plant a big wet kiss on Hitler II (Ahmadinejad) this week?

Well, if you aren't, get ready... I think he's putting on lip gloss as we speak...

UN Secretary General Kofi Annan is to visit Iran next Saturday, the Iranian foreign ministry has confirmed. The visit will come two days after a UN deadline for Iran to suspend uranium enrichment and amid fears it is trying to develop a nuclear bomb.

I'll say it again - I think we're heading for a wicked market crash

Last time I posted a headline that I felt like a stock market meltdown was just around the corner was April 11, 2006 ("Anyone feel like a good crash"). Yes, HP was laughed at there, as the market was setting new fresh highs, confidence was in the air.

Well, on April 11, the NASDAQ closed at 2310. Today it's at 2140, or down 8%. Not a crash, but a big bear hit for sure. Then look at almost any stock that has anything to do with real estate or the consumer and there are crashes all around. Sell in May and Go Away, yet again.

Well, now it's time for a real crash. The Housing ATM is closed, the consumer is rapidly sobering up, GDP is falling, the dollar is tanking, inflation is roaring, restaurant and retail stocks are getting killed, REIC stocks keep going south, consumer and CEO confidence has plummeted, the homebuilder index is drifting to suicidal, the Fed doesn't look like it's done, gas prices are still high and going higher, and last week's housing news and even internal NAR report scared an entire nation of homeowners.

The US economy is rolling over, it's fallen off of that cliff we all knew it would one day. There's only so much debt that can be hoisted, then it contracts, sometimes wickedly. In addition, millions are already feeling the Bubble pain, with realtors, mortgage brokers, appraisers, title agents, builders etc not getting paid (thus not shopping, not dining out, not buying houses...)

The crash might come suddenly, or like the QQQ's 70% freefall 2001 - 2003, it could be a death by a thousand cuts. Something like Iran blowing up (possibly this week) can really set it off, and something like a Fed rate CUT could confuse it even more. But we're going down, not up.

I'm in 5.05% US$ cash, COP options and now 9 stocks (mainly retailers) on the short side via Jan '07 puts, five that are up over 100% already. And I sleep well at night, although I worry about the country and what's to come.

Finally, I think people around the world are now realizing how illiquid their housing assets are, and how liquid their stock investments can be. And now that they're going into hunker down mode, and raising cash, they can hit the sell button right quick.

PBS Video on the collapsed housing market, with NAR hack Lawrence Yun, who must have missed the NAR Bubble Has Popped presentation

Is the bubble all over the mainstream media back in the US? It sure feels that way sitting a few thousand miles away here...

One thing driving me batty right now though is the media reporting that prices went up 1%. No, actually, they're crashing - the use of incentives is distorting this number to the point that it's completely unreliable. In addition, they're reporting it versus a year ago. Why is that relevant?

The real comparison for any market is price versus the peak. Here's a good site to look market by market with charts and graphs for certain timeframes. The true comparison should be "Home price dropped X% since they peaked in Y month." But even that like I said is bogus because of the incentives/cash back manipulation going on.

Here's the video, pretty interesting, but the NAR hack is a joke, given what we saw from them on their internal presentation. He's here saying that there are "many people on the sidelines" that'll make everything OK dokey, soft landing, robust job creation, "we are returning to more normal housing activity", "healthy cleansing", blah blah blah. Why does the MSM let these discredited hacks on?

I do laugh a bit because you know every person reporting on this story owns a home themselves and while someone is blabbing away, they're doing the math in their head how screwed they are, and man, think how different this piece would have been if HP or Robert Shiller or Chris Thornberg were the studio analyst versus the NAR hack..

Doesn't this reaffirm everything we've been saying about the REIC and who's took over these crappy jobs?

August 27, 2006

HP dedicates this to the Phoenicians who bought homes last year at the peak

HousingPanic Stupid Question of the Day

If a homeowner buys a home for $400,000, got it appraised during the silliness for $500,000, takes out a $100,000 HELOC, blows that on say, cocaine and hookers, and now the home is truly worth only $400,000, isn't that HELOC now truly unsecured?

And are we about to see massive bankruptcies, commoditized credit write-offs and bank failures?

Man, the wicked, shocking, brutal honesty keeps coming: A three-year supply of homes in Queen Creek, Arizona

Even though all of this was predicted, and is part of the Econ 101 meltdown underway, it's still a bit shocking when you see it in print for the first time. We spoke months ago about the far-flung suburbs of Phoenix being a future ghost town disaster area of empty stucco homes as far as the eye could see, that nobody would want at any price, and, well, that's what we've got.

Here's (yet another) report from housingpanicgroundzero, Phoenix, Arizona, complete with panicked realtors getting together to commiserate and figure out what the heck to tell homeowners that they had just a few months ago told "real estate never goes down"

Slowdown in house sales compels 'brutal honesty'

Real estate agents need to be "brutally honest" with sellers today, as there is about a six-month supply of unsold homes, agents were told at a panel discussion Thursday night.

Many clients are still holding out for last year's prices and not trusting their agents, but agents were advised to teach sellers how competitive the market is and not just tell them what they want to hear.

"You are not going to sell a property at market value. You are not going to sell it for its appraised value," said Paul Pastore of Re/Max Achievers in Chandler. "You are only going to sell it for what someone is willing to pay."

There is an 18-month to two-year supply of unsold homes in Surprise and 2 1/2- to three-year supply in the Johnson Ranch area near Queen Creek, said Russell Shaw of John Hall & Associates in north Phoenix. Homes are taking an average of 77 days to sell in the Phoenix area, he said.

It is common for prices to be reduced several times if a house isn't selling. Pastore said he even quit putting prices on fliers because they are so flexible. Agents talked of houses selling for $50,000, $80,000 or other amounts below appraised values. One agent said she has a home priced $100,000 below appraisal that isn't selling.

Bruce Fraser of Century 21 Metro Alliance in Chandler remembers an Ahwatukee Foothills man who insisted that he be able to set the price and commission and wanted a price in the $500,000s. Fraser recommended a lower price. "The man shook my hand and said, 'OK, it's time for you to leave.'

Alan Greenspan's wisest words: "History has not dealt kindly with the aftermath of protracted periods of low risk premiums"

Read every carefully chosen word of this quote, which Greenspan made after he created the bubble (of course). Read every word, slowly, then go back and read every word again, and again, and again.

And you'll see what has happened, and what is to come.

Get ready.

Thus, this vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk.

Such an increase in market value is too often viewed by market participants as structural and permanent.

To some extent, those higher values may be reflecting the increased flexibility and resilience of our economy.

But what they perceive as newly abundant liquidity can readily disappear.

Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher prices.

This is the reason that history has not
dealt kindly with the aftermath of protracted periods of low risk

The housing bubble in three act structure - Acts I and II are now over, what does Act III look like?

Act I - Euphoria and Riches

The glee and riches as the bubble started to inflate, money started falling from trees, society no longer needed to save for retirement, we could buy anything at the mall we wanted, and we bragged how smart we were to everyone who would listen. Bush said buy a home, the NAR said buy two, and Greenspan said use an ARM. Home prices would never go down, they never had, and you'd be a fool not to buy, no matter the price.

Act II - The Realization and Pop

Some chinks in the armor started to appear - silly little things at first like negative cash flow for investors who bought to rent, unaffordability climbing to record highs, the proliferation of the no-down, no-doc, interest-only, teaser-rate loans to get the last fools in. Some folks started selling at the peak and renting, then told others about it.

Bubble blogs started up, the media started saying "housing bubble" more and more. Hundreds of thousands of unqualified societal losers got their real estate licenses, mortgage ads were all over TV where used car and E.D. ads were before. And then the negative numbers started pouring in - construction down, sales down, prices down, confidence down, REIC stocks down, and perceptions changed - houses were now bad investments that would actually depreciate in value for years to come.

This act ended this week with the horrible numbers, and the NAR admitting (finally) that the bubble was over (and actually ended in August 2005).

Act III - The Crash, Aftermath and Redemption

The final act is now to be written. What does it look like? And what's the movie called?

FLASH: I can't believe what I'm reading. NAR admits US housing disaster underway

I'm floored. I never thought we'd see this day. Ever. Even when inventory explodes another 200%, even when sales drop another 50%. Even when prices crash another 20%. I never thought the corrupt spinmeisters at the NAR would ever let information get out that the real estate industry is in historic meltdown mode.

Yet all the dirty laundry finally is here, courtesy of this internal NAR presentation given last week at their annual big-wig gathering. Oopsie, they posted it on their site though.

Of course the MSM won't report it, unless the bloggers get the word out to the point that they have to. And Lereah won't use this internal NAR data when speaking to the press - he'll stick on message for sure - all is well, all is well.

The only glitch is that even after all the horrific data, he still tells his henchmen "soft landing". Yeah, right David.

Here's what the winged monster had to say. You must download the full PowerPoint to see all the amazing charts - including the condo disaster unfolding on slide 16. Kudos to papermoney for the original post.

Real Estate Reality Check - David Lereah NAR Leadership Summit August 2006

What Happened?

•Boom ended August 2005
•Mortgage rates rose almost one point
•Affordability conditions deteriorated
•Speculative investors pulled out
•Homebuyer confidence plunged
•Resort buyers went to sidelines
•Trade-up buyers to sidelines
•First-time buyers priced out of market
•Sellers’ market transitioning to buyers’ market
•Home sales plummet, prices lag, inventories rise
•Cooling markets left with high percentage of exotic loans
•Builders offering non-price incentives
•Days-on-market lengthening
•Residential construction activity slows
•Home prices beginning to soften

HousingPanic Stupid Question of the Day

As recently as last year it was a "seller's market". Now the NAR is calling it a "buyer's market".

What should we really be calling this market?

August 26, 2006

HP's question: What members of this corrupt and incompetent administration face charges, impeachment or pardons?

Watch this great (and in-depth) PBS video report on Cheney and the Iraq debacle, then ask yourselves can it get any worse than this, can the American people be any more clueless and what will the end result be?

History will not be kind to this administration - foreign policy or the domestic policy debacle. The burst of the Housing Bubble will only expedite the pain and derision.

You are not qualified to comment unless you've spent the hour-plus and watched the full PBS video series in my book (fox news crowd)

HousingPanic Stupid Question of the Day

Crack dealers make money regardless of your personal well being. Arms dealers happily sell arms to both sides of the conflict.

So, is the NAR now changing their tune because their den of thieves made money off of you when prices were skyrocketing (and they were telling you to get in before it was too late), and now they'll make money off you you as prices crash (and they tell you to sell at any price)?

Checking in on the worst condo project I've ever seen - the failed Duke condos in South Scottsdale

Loyal HP'ers know we've been mocking this development since we started. Actually, this development was one of the reasons HousingPanic came to life - call it a jump the shark moment.

A terrible location in the seedy part of Scottsdale, unless you like having your crack dealer close by, with horrific architecture, a stupid, unlivable lay-out and when it came out in 2005 insanely overpriced units - $500k or so for a tiny little apartment. Basically a box of shoeboxes make up the eyesore.

Well guess what. Out of eight units built, after all this time, only one sold. I'd bet others were reserved at some point but the flippers (I mean buyers) probably wised up quick (or sobered up) and cancelled.

So what's a developer to do? Package the shoeboxes together and sell 'em! Now you can buy all seven units together. My recommendation - wait for the bank's foreclosure sale and buy for pennies on the dollar (if you can rent one out for positive cash flow that is!)

Complete and ready to occupy/sell now! With a Downtown Scottsdale area location, The Duke is an innovative 8-unit group of urban condominium homes located just south of the Loloma Arts District in Historic Scottsdale.

One unit sold, and there are 7 units remaining in the BULK sale of approx 9310 sq.ft. While other development in Scottsdale are either in still in planning or sport a luxury price tag of over $500 per square foot, The Duke remains the most affordable! See more at our azarchitecture web-site

Iran christens new nuke reactor, US and/or Israel about to go blow it up

Hope those crazy Iranians didn't spend a lot decorating the reactor, you know, nice Ikea shelving, maybe some Pottery Barn settings in the cafe. Nope, it'll be dust soon... along with the world economy... Get ready for another wild week on the housing / economy / stockmarket / iran / iraq / worldpanic front

UNITED NATIONS — With increasing signs that several fellow Security Council members may stall a United States push to penalize Iran for its nuclear enrichment program, Bush administration officials have indicated that they are prepared to form an independent coalition to freeze Iranian assets and restrict trade.The strategy, analysts say, reflects not only long-standing U.S. frustration with the Security Council's inaction on Iran, but also the current weakness of Washington's position because of its controversial role in a series of conflicts in the Middle East, most recently in Lebanon.

Defying U.N., Iran opens nuclear reactor

KHONDAB, Iran - Iran's hard-line president on Saturday inaugurated a heavy-water production plant, a facility the West fears will be used to develop a nuclear bomb, as Tehran remained defiant ahead of a U.N. deadline that could lead to sanctions. The U.N. has called on Tehran to stop the separate process of uranium enrichment — which also can be used to create nuclear weapons — by Thursday or face economic and political sanctions

Israelis Back Attack on Iran Reactor

Israeli adults would support a pre-emptive strike against a nuclear facility in Iran, according to a poll by Teleseker published in Maariv. 63 per cent of respondents think Israel should bomb the Iranian nuclear core.


Here's England's house price chart. Anyone see the bubble? Look closely - it's there somewhere

August 25, 2006

Here's some charts that should 1) disgust you and 2) make you worry for the fate of the US economy

HousingPanic Stupid Question of the Day

If cities were stocks you could short, which housing bubble city would be at the top of your list?

Devastating housing/condo meltdown underway in Vegas (and it only gets worse)

Las Vegas will challenge for the HousingPanic Bubble Market of the Year award, given that in the middle of their meltdown a further 38,000 condo units are in development as we speak. Talk about adding fuel to the fire, this is going to get insanely ugly, and quick.

I love the advertisement for the W condo units smack-dab in this article (from the mid $600's!). Talk about bad use of ad dollars - geeze!

Anyone want to predict how far condo prices will fall in Vegas from peak to trough? I'd guess 60%. Seriously, 60%.

I'll be in that crappy town in a few weeks and I'll try to pop into one of the condo showrooms and see how big of a discount they'd be willing to give.

Las Vegas' housing market picked the hottest month of the year to show its clearest signs of cooling.

New home sales in July dropped 41 percent from the same month a year ago and existing home sales fell 35.1 percent as the market continues its downward slide after two years of record-breaking sales and price appreciation.

The 1,808 new home closings were the fewest since April 2003 and slightly more than half of the 3,474 closings in the previous month, local research firm SalesTraq reported Wednesday.

"I was kind of shocked when I saw 1,800 new home sales," SalesTraq President Larry Murphy said. "I started downloading the file and I knew it was a small file."

Murphy has challenged the housing bubble theorists every year by citing increasing prices in Las Vegas, but now admits he "underestimated the slowdown."

"Almost unnoticed on the canvas of the Las Vegas housing picture are nearly 38,000 high-rise and mid-rise homes in various stages of development," he said. "They paint a very different portrait of every aspect of the market."

More than 5,000 vertical units had closed escrow as of July and 90 percent of the 11,734 units under construction are in escrow, Bottfeld said. Still another 11,620 are actively being sold.

Recent news that Nevada ranked among the top five states with the largest slump in housing sales during the second quarter is only part of the story here, Bottfeld said.

Fear and the housing bubble

This interesting question over at on the F word (Fear).

The human behavior aspect of the late great housing bubble will be a fascinating study down the road - and two words come to mind - Fear and Greed.

Fear drove renters to get into a house or forever be priced out of the market (or so they thought). Greed drove people to buy more than one house, trade in a perfectly good house for a much more expensive one on the hopes of making a killing, and greed drove the entire REIC I'd say.

Now Fear has gone the other direction - people are now panicking, canceling their builder contracts, putting their home on the market as fast as they can, and fear is stopping new home buyers from even thinking of making an offer. Here's the post:

We've talked about the fear/greed cycle that drove the RE market for the last few years. The big fear, as discussed before, was usually about being priced out forever. People jumped into the market because they were afraid not to.

But now the fear is going in a different direction. People are afraid of losing their homes, their equity and their jobs. We're already seeing panic selling here in certain parts of Ca. And the news is offering up daily stories that stoke the fear of the FB's.

What affect do you think all this fear is going to have on the RE market in the near future? Are you afraid?

Florida now in total housing meltdown mode: Home inventories through the roof, sales freefall 33%, prices crashing

It's funny reading this reality versus what that tool mortgage broker wrote the other day about how Jacksonville is going to be fine and dandy. Not.

Important point too that all these crazy listing numbers we're now seeing do not include the FSBO listings. Someone do the research and let us know what those numbers look like.

As the number of home sales and the prices of existing homes in Sarasota-Bradenton continue on a downward spiral, real estate agents are taking a realistic look at the changing market. Sales in the area slumped 49 percent compared to last July as listings remain high.

There are more than 6,500 properties for sale in Manatee County alone, according to the Multiple Listing Service. The glut is forcing agents to take new approaches to the clients that are looking.

"That's a city in itself and that doesn't include the 'for sale by owners,' " said Ken Miller, agent with Re/Max Gulfstream.

Sales continued to tumble throughout Florida in July. Every market in the state showed a decrease in the number of homes sold as compared to last July, with only Naples seeing a bigger drop off in sales than the Sarasota-Bradenton market.

Numbers released by the Florida Association of Realtors on Wednesday showed sales in the local area dropped by 49 percent and prices are now starting to follow suit. Prices fell 11 percent from where they had been in July 2005.

In July of 2005, the median cost of an existing home was $338,100. The median price last month was $302,100. Statewide, home sales fell 33 percent in July, while the median price settled at $250,800.

Want to see what's really going on out there? Read this HP'ers post

Stories like this one warm HP's heart. More more more!

REM said...

Thanks to this blog, I have just taken the deposit I was going to put down on a new house here in Gilbert, AZ and paid off my credit cards.

My girlfriend and I had found what we thought was the best offer to build a house around these parts at $250,000. When we told the builder we were having second thoughts he knocked the price down to $210,000. $40,000!!!!

Something is not right here. I took it as an insult. God it is nice to be debt free and renting!

August 24, 2006

HousingPanic Stupid Question of the Day - Bonus Edition

Inventory is at record levels. Sales volume has cratered.

Will home prices now:

A: fall faster and harder than anyone ever imagined?

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

C: stay the same but lose ground to inflation?

D: keep rising at the pace of inflation?

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

HP dedicates this song to all the REIC members feeling a bit blue after this week's beating

Get the feeling that a lot of those fast money cocaine junkie used car dealers who beat their wives became mortgage brokers?

Gee, that's a shocker: Rampant overbuilding means condo boom may go bust

Again, everyone else is stupid, or HP'ers are just psychic.

Why is the meltdown underway such a shocker for most people and the MSM? Isn't this, all of this, just so obvious and predictable? Didn't anyone ever take an Econ 101 class?

During the past six years, South Florida's landscape shifted from low-slung homes to condominiums hundreds of feet high. As the buildings reached skyward, so did prices, topping seven figures for the more luxurious digs.

Today, though, the meteoric rise of condo development is on the verge of crashing down to earth.

The seemingly unstoppable juggernaut has come face-to-face with economic realities making even the most maverick developers gun-shy.

As supply outpaces demand, prices already are leveling off and values of newer condos could tumble by 30 percent or more by the time the market hits bottom, experts say.

"The condo market isn't just breaking lightly," Miami real estate consultant Lewis Goodkin said. "It's screeching to a halt."

FLASH: New Home Sales Tumble Badly (and median price number again is completely worthless)

I think this data is generally suspect, being it's from the government, but here it is anyway - pretty ugly.

We especially know the median price number is completely, totally and wholly bogus and unreliable, as it does not include the massive incentives being offered to move all this dead inventory (cars, pools, cash back, etc).

The media will just report the numbers without actually doing any reporting, so people will be led to believe that prices aren't tanking. Bad news folks. They are.

There's this little thing called supply and demand, and we all know what happens to prices when supply skyrockets and demand tanks. Econ 101.

WASHINGTON, DC, United States (UPI) -- New home sales in the United States last month tumbled 4.3 percent from the previous month`s level, the Commerce Department said Thursday.

Economists had expected sales of new one-family residences to decline 2.7 percent to about 1.105 million.

Instead, the figure was 1.072 million, which contrasts with 1.12 million in June and is about 21.6 percent below the July 2005 level. Meanwhile, the median sales price of new homes fell in July to $230,000.

The new data are expected to reinforce the perception that the U.S. economy is slowing significantly and that the central bank has no reason to resume its interest rate increases next month.

Spin spin sugar: "We're not living in a bubble here"

Bubble? Meltdown? Nah! Keep buying - full steam ahead!

I love the local media and REIC reports that do mention the bubble bursting - but never in that area - it's "those other people"

No, it's not. Here's a hilarious report today from the melting-down Florida market:

Statewide existing-home median sales prices have increased nearly 100 percent over the last five years, according to the Florida Association of Realtors, rising from $127,400 in 2001 to $254,800 this year.

The Jacksonville metropolitan statistical area continues to be ranked high in housing, despite the recent “doom and gloom media reports” to the contrary, according to Mark Carlson, mortgage banker and branch manger of Wells Fargo Home Mortgage.

“We’re not seeing it,” said Carlson. “We’re not living in a bubble here.”

Northeast Florida Builders Association Executive Director Daniel Davis agrees.

“What we’re seeing in other areas in the state — where there was a large amount of condo construction and high volume of investors flooding the market and there’s a ton of inventory — is not healthy for the new construction market,” said Davis, who is also City Council vice president. “In Jacksonville our numbers are much better as far as inventory and investors that are backing out of the market. The quality of life here, the availability of housing and the jobs we are creating are bar none.

We are insulated from all the other problems that you might see across the nation and across the state where they’re relying on one industry, or they don’t have the natural resources that we have that attract homebuyers.”