October 31, 2006

The End of Suburbia

I'm not sure what would be a worse investment today - a McMansion in a far-flung suburb, or coastal property that'll soon be underwater due to global warming

My issue with the exburbs beyond the waste of resources and poor urban planning is the lifestyle - or lack thereof.

Strip malls, Wal-Marts, TGIF's, fast food, no culture and no character. Why Americans choose (or put up with) that lifestyle I'll never understand.

Watch the documentary - very interesting. It's an hour long, so click when you can take the time. Thanks to an HP'er for the link.

What's that smell? It's the REIC and Congress - corrupt bedfellows out to screw America

Guess, no, just guess who is one of the biggest congressional PAC $ contributors for 2006?

Hint - it's the organization led by corrupt liars who'll say and do anything to make a buck. The organization made up of con men and women who made money off homedebtors on the way up the housing bubble, and now will be sucking their blood on the way down the housing crash. It's the organization whose interests rest with getting the do-nothing Congress to do nothing.

Yes, the National Association of Realtors is the #3 contributor of blood money to Congress. The bigtime source of the mother's milk of politics - PAC contributions.

When you ask yourself why Congress let the REIC spin out of control and unregulated these past few years, look right to the millions of dollars our elected whores in DC gladly took to look the other way.

Why did Congress recently change the law to allow gains on real estate to go tax free, avoiding capital gains? Look to the money.

Why did Congress not investigate or regulate the corrupt quid-pro-quo system of appraisers, mortgage brokers, bankers, realtors and developers? Look to the money.

Why is there no regulation of this industry, which encompasses the most significant investment holding for millions of American families? Look to the money.

Our system has been corrupted folks, and it is hopelessly broken. Our nation is run by whores on the take, and the Johns who support them.

And millions of Americans will now lose their homes and livelihoods as a direct result of this growing stench. Hopefully that will be enough to cause a change in America, a revolution which may start as soon as next Tuesday.

We deserve better. And if Americans don't put down the remote control, take notice and take action, then they'll simply get what's coming to them. And it ain't pretty.

Top PACs Jan - June 2006:
#3: NAR - $10,380,000

Top Industries 2005 - 2006:
Real Estate/Construction $16,845,727
Party recipients:
Republicans: $11,565,774 (69%)
Democrats: $5,269,803 (31%)

Want to see the perfect physical manifestation of the worldwide debt and property bubble? Go to Dubai.

I love that this white elephant is going up in Dubai. Why? So that future generations, for possibly thousands of years, will be able to see the physical representation of the debt and property bubble of 2001 - 2007.

Dubai - land of 120 degree days, land of arab oil largesse, land of hundreds of thousands of new condos built with slave labor, bought by investors, and nobody to live in 'em.

Dubai - or my suggested new name: Ponziland

Slated to become the world's tallest skyscraper and symbol of a city given to grandiose projects, "Burj Dubai," or Dubai Tower, is rising in parallel with the profits of its promoter, Emaar Properties.

With two stories added every week, Burj Dubai is taking shape as the centerpiece of a 20-billion-dollar venture featuring the construction of a new district, "Downtown Burj Dubai," that will house 30,000 apartments and the world's largest shopping mall.

Jesus was a carpenter. What would he have to say about the housing bubble, the REIC, the GOP, and our current consumption-crazed American society?

Ya know, you just don't get that kind of question on the other bubble blogs, do ya?

Here's my take. First, the Republicans, the "party of jesus, god and morality", are also the party of big business, the rich, the REIC, big oil, and money money money. A bit odd, no? And Americans are still buying this BS?

Second, if jesus were amongst us today, what do you think he'd have to say about McMansions? About Nissan Armadas? About credit card debt? About HELOCs used for shopping sprees? About America's negative savings rate and ballooning debt?

What would jesus have to say about mortgage brokers? Anyone think jesus would be a realtor? Anyone picture jesus driving an Armada and living in a McMansion?

You don't have to be a bible thumping red neck fundamentalist hate-filled whacko to appreciate jesus' philosophy and teachings. And boy, if he were around today, he'd have a thing or two to say about the current state of affairs in America.

Here's a Halloween costume idea: Go as the biggest liar on the planet - the corrupt David Lereah

That's one scary costume you got there kid.

October 30, 2006

Warning - knowing what you know now, this should make you hurl

Will America go bankrupt? GAO Chief Warns Economic Disaster Looms

As a nation we are $40,000,000,000,000 in debt (not $8T as the government would have you believe) and growing.

We cook our books and do not report future liabilities on our official balance sheet. Social security and medicaid/medicare if not radically altered will cause the US to default on its loans or print money into hyperinflation. The US media is too lazy to report on this timebomb. And our elected politicians only care about the next election and not the next generation.

And Americans could seemingly care less, and won't care until the sh*t really hits the fan, which by then will be too late.

Here's an update though from the independent general accounting office's comptroller general. I've watched a couple of speeches from this guy, and my take is that he must have the most frustrating job in the world, knowing what he knows and not getting anyone to listen. He must go home at night, kiss his wife, kids and gold bars, and then resume work on the bunker.

GAO Chief Takes to Road, Warns Economic Disaster Looms Even As Many Candidates Avoid Issue

David M. Walker sure talks like he's running for office. "This is about the future of our country, our kids and grandkids," the comptroller general of the United States warns a packed hall at Austin's historic Driskill Hotel. "We the people have to rise up to make sure things get changed."

Walker doesn't want to make balancing the federal government's books sexy -- he just wants to make it politically palatable. He has committed to touring the nation through the 2008 elections, talking to anybody who will listen about the fiscal black hole Washington has dug itself, the "demographic tsunami" that will come when the baby boom generation begins retiring and the recklessness of borrowing money from foreign lenders to pay for the operation of the U.S. government.

Their basic message is this: If the United States government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation. That's almost as much as the total net worth of every person in America -- Bill Gates, Warren Buffett and those Google guys included.

A hole that big could paralyze the U.S. economy; according to some projections, just the interest payments on a debt that big would be as much as all the taxes the government collects today.

HP gets a fan letter from the Montreal Gazette

Hey, this makes up for the bizarre hack job over at the REIC-corrupted Palm Springs Desert Sun last week. Nice to see some MSM take notice of HP's little corner of The Internets eh? Maybe they found us using The Google? Thanks for the kind words Don, made my day.

DON MACDONALD, The Gazette Published: Monday, October 30, 2006

I have to admit to taking an unhealthy pleasure over the last couple of months in visiting an Internet blog called Housing Panic.

Written by someone claiming to be an American living in London, Housing Panic bills itself as the "Housing Bubble Blog with Attitude." It lovingly compiles every new piece of evidence suggesting there's a devastating crash under way in the U.S. residential real estate market.

Its author rages against greedy mortgage brokers, unscrupulous financing companies and people like David Lereah, chief economist at the National Association of Realtors, whom he holds responsible for helping to pump up the housing bubble.

Browsing through this material has made for some guilty fun, given the fact that we, here in Canada, seem to be well removed from the carnage in the U.S. real-estate market.

But the U.S. housing bust suddenly became a lot more real last week, and a lot less amusing. The U.S. Commerce Department identified it as a big factor in a dramatic slowing of the economy south of the border. The U.S. economy grew at only a 1.6-per-cent annualized rate in the latest quarter, the slowest rate in three years.

Got some time on your hands? Go start looking at Phoenix dead inventory homes for sale, but better get started now.

At least 54,000 pieces of overpriced dead inventory stucco hellholes are for sale in the Phoenix area today (not including FSBO's or builder specs)

So let's say you wanted to go visit each of these homes, to see if any are to your liking. Say you saw two homes per hour, looking eight hours a day, seven days a week.

It'd take you 9.3 years to see every home.

So better get started now, 'cause pretty soon, it could take you 10 years, 12 years, 20 years, ...

Look - it's a falling knife - let's reach out and grab it!..... OUCH!!!

I love their anecdote - a nice 23% off sale for a new homedebtor who felt he got a good deal. I hope they follow up 2 years from now to see if he still feels that way... he he he...

It's 'Seller beware' in Housing - Buyers have the upper hand as owners cling to old optimism about pricing

Roger Maehler has good reason to feel smug about the panoramic mountain views from his new backyard.

"I think I got a good deal," the Scottsdale, Ariz., resident says of the acre-plus adobe ranchette he snagged last week for $655,000-a 23 percent discount from the original $850,000 asking price.

Complete with swimming pool, spa, and a big-screen TV in the great room, the sprawling five-bedroom property was high on his list when he began shopping for a new home in May. But like many buyers these days, Maehler decided to hold off and see how the weakening market shook out over the summer. "I guess it was worth the wait," he says.

"I literally could have spent eight hours a day, five days a week looking at houses," says Maehler, who toured more than 30 properties before making a bid.

Indeed, the national inventory of 4.3 million unsold homes now stands at about a seven-month supply, a glut some economists say will persist until sellers make meaningful cuts in their asking prices. "Buyers want more than the traditional 2 to 5 percent price reduction before they sign on the dotted line," says Gregory Miller, chief economist for SunTrust Bank, who doesn't expect a significant reduction in inventory until early next year.

Got blogs?

I'm looking for some good new reads. Besides the blogs on my blog roll on the right, what blog(s) do you recommend HP'ers check out and why?

And is it me, or is the MSM getting even worse (as in poor journalism skills, good PR-copy-and-paste skills) than ever before?

October 29, 2006

Random HousingPanic Questions of the Night

Random bubble thoughts for your comments and consideration:

* What percent of Wal-Mart's sales are to illegal Mexican immigrants? And wouldn't a good percent of that turnover be in jeopardy now that the illegals in housing have no jobs?

* Why doesn't the US have to record it's outstanding debt plus future liabilities ($40 Trillion total) accurately when reporting its financial condition?

* Why didn't David Lereah have much to say last week after the horrific numbers? Perhaps a coup? Or maybe he figured there'd be nothing constructive he could say or spin?

* Does the actress who plays the wife in the Suzanne commercial get sneers and evil looks when she's out in public?

* Why does society think housing prices going up 100% is a great thing while gas prices going up 100% is the worst thing ever?

* Will George Bush be seen as the worst president in US history?

* Why hasn't iamfacingforeclosure.com Casey been arrested yet? Will he be?

* What MSM source is doing the best job today covering the housing crash? I'm leaning toward USA Today lately - coming on strong

* Why aren't young people in America rioting in the streets? Why are there no war protests taking over DC?

* What's Fox News gonna say after the Republicans are shown the door in a few days?

* Will the Dems be blamed for the economic collapse of America, which will now occur on their watch?

* Why is Britney still with Kevin?

HousingPanic Midterm Election Poll

A week to go until the epic battle of the clueless and incompetent Democrats versus the corrupt and evil Republicans, so let's find out the political mindset of bubblesitters and various HP constituencies.

The Ten HP Midterm Election Questions:

1) Will you be voting?
2) What State?
3) Will you vote against every incumbent on the ballot as HP has recommended?
4) If not, will you vote a party-line ticket - and what party?
5) Do you approve of Bush's job performance (Yes or No)?
6) Do you believe the Iraq war was a mistake (Yes or No)?
7) Do you approve of Congress' performance (Yes or No?)
8) Who are you leaning toward for President in 2008?
9) Besides Iraq, what is the most important issue effecting your vote?
10) Is the US heading in the right direction (Yes or No)?

Gold? US Dollars? Euros?

To me there seems to be so many conflicting storylines when it comes to gold and the US$

* The dollar should plummet as the US economy goes into a tailspin, the Fed is forced to lower rates, the US sees deflation, the trade deficit becomes unmanageable, and foreign bankers and investors switch out of dollars and into Euros, gold, etc. Gold priced in US$ skyrockets.

* The dollar should rise as the world economy goes into a tailspin, and foreign banks and private investors do a classic flight to safety and into the arms of the US dollar, while the Fed tightens again due to inflation. Gold priced in US$ is pressured, gold demand for commercial use weakens

Here's an interesting presentation from the gold bull who runs Bullion Vault, a company here in London where you can buy physical gold bars and keep them in their vault for safe storage.

Yes, I'm thinking of gold again. And I moved a big chunk of change last week into Euros, after these comments by Peter Costello, Australia's treasurer, who pleaded with Asian bankers to "telegraph" their move out of dollars so as not to crash the market.

Treasurer Peter Costello has called on East Asia's central bankers to "telegraph" their intentions to diversify out of American investments and ensure an orderly adjustment.

Central banks in China, Japan, Taiwan, South Korea and Hong Kong have channeled immense foreign reserves into American government bonds, helping to prop up the US dollar and hold down American interest rates.

Mr Costello said "the strategy had changed" and Chinese central bankers were now looking for alternative investments.

"Of course you can have an orderly adjustment," he told reporters. "And what I would recommend is that these matters be telegraphed well in advance. I think we should begin preparing ourselves for it."

Pick the sucker



Is America's housing crash taking Wal-Mart down with it? Wal-Mart posts worst sales performance in years

After they announced their dismal September results (sales not keeping up with inflation), I posted this over on the Wal-Mart board (feel free to chime in there as well):

Think of all the illegals (the Wal-Mart customer) who no longer have work building houses

Think of all the lower middle class families with ARMs resetting who can no longer afford anything beyond basics as they try to keep their homes

Think of all the middle class folks panicking because that wealth they thought they had in their homes just disappeared

America's housing crash will end up crashing Wal-Mart

Here's the announcement. Wonder how the market will take this Monday?

Wal-Mart reports weakest monthly sales in years

Wal-Mart said sales at established U.S. stores rose an estimated 0.5%, far off the 2-to-4% gain the company originally forecast for October.

On Oct. 23, company executives pared back their rosy outlook, saying that October same-store sales would be closer to September's figure of 1.3%.

The 0.5% same-store sales figure for October is the weakest since the 0.3% rise posted in December 2000, according to the Wall Street Journal.

Wal-Mart executives blamed the weak October figure on weakness in sales of women's apparel, as well as disruption to sales from remodeling efforts at almost half of its U.S. stores.

October 28, 2006

Someone had to build all those houses we didn't need...

The biggest ponzi scheme of all - borrow from China to buy China's crap

Goodbye American middle class - we'll sure miss ya!

HousingPanic Stupid Question of the Day: Who is backing away from "Stay the Course" faster? George Bush or David Lereah?

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

I'm reading a lot of stories about the American housing crash here in England... When will they start wondering "will it happen here?"

Since the debt-and-speculation-fueled housing ponzi scheme went worldwide these past few years, not just in the US, wouldn't you expect to see the people of the world collectively coming to their senses, with the US as always leading the way?

Housing prices became even more detached from reality in places like Ireland, England, Wales, Spain, Dubai, New Zealand, Russia, Sweden and hell, even China.

Now that the US story is getting massive press around the world, I would expect a collective wake-up call, where people stop in their tracks, look around at the housing madness in their own town, and that little element of doubt should quickly become a big nugget of fear.

And then the requisite rush for the exits.

In addition, the US housing and GDP crash affects everyone, since our consumer-based economy serves as the world's economic engine. Job losses caused by the US slowdown in themselves are enough to stop the housing madness.

But in the end, what'll blow the world's bubble is the change in mindset, the realization that home ownership costs should not be and cannot be two times rental costs.

People of the world, get ready. Housing panic is here.

The late great housing bubble ponzi scheme: Ah, it all seems so obvious now, doesn't it?

The housing crash will in the end be the biggest economic story of the past 200 years. We'll be studying this thing for the rest of our lives. Then future generations will pick up the ball and study and dissect it even more.

Here's Kunstler's take, which to me reads like a history book written five years from now. Very insightful read:

The basic insanity of a system that presumes vastly increased wealth where none will occur, has led to further distortions in finance. The most obvious one is the so-called housing bubble.

The misplaced extreme expectation in the ever-increasing value of paper wealth, led to the hijacking of mortgages by financial playas who bundled them into odd lots of tradable debt (promises to pay) and used them to leverage abstruse bets (hedges) on the behavior of other kinds of paper markers (currencies, interest rate differentials, commodity prices) -- very profitably as long as all playas believed that industrial societies that run all oil would continue to grow, to produce more wealth.

The level of abstraction in these rackets -- their distance from the reality of productive activity --is self-evident. But they were so successful that the profligate creation of ever more mortgages became an increasingly reckless and irresponsible enterprise.

Contracts were made with house-buyers who had no record of credit worthiness and often no real proof of income. Contracts were made on terms (interest payments) that were deceptive, even ruinously false, for the house-buyers.

The reckless reassignment of lending risk into ever more abstract layers of deferred obligation, and the ease of credit that ensued, allowed millions of ordinary people to acquire real property on unrealistic terms, which had the affect of bidding up the price of houses that these owners will eventually have to surrender for nonpayment.

That process is now underway.

The reckless creation of mortgages had the further effect of stealing demand for house-building from the future. So many new houses were built and then sold to people who will probably have to surrender them, and then so many more beyond that were built in the expectation and hope that reckless mortgage creation would continue forever, that there is now a massive over-supply of total existing houses while the pool of suckers for new ruinous mortgages has shrunk to zero.

October 27, 2006

You think September's new home sales drop of 10% year-over-year was bad? Just wait.

Here's a chart of the US median new home price for the past five years (thanks to HP'er WB). A picture is worth a 1000 words, and this is the one the NAR and REIC don't want you to see...


Will the illegal Mexicans go home now?

Housing crash goes 100% mainstream as it's all over USA Today cover page

My only questions are:

1) What took so long, and
2) When does Time finally do its housing crash cover story?

Housing crash was yesterday's USA Today cover story. First of many in a series I would imagine that'll run for 3 to 6 years.

Sellers sing the blues as price drop sets record

Then: San Diego's housing market was so hot that the town house next to Jeff Cruce's was flipped from buyer to seller three times in three years. The owners, who never moved in, didn't even need to put up a "For Sale" sign.

Now: Since August, Cruce and seven of his neighbors have put their town houses on the market (that's nearly 20% of the units in the complex). All have cut their prices, including Cruce, who chopped his price last month by $30,000 to $559,000. Not one has received an offer yet. Each time one owner would lower the asking price, it put pressure on the others to follow, says Cruce, 38, a salesman who's moving to Atlanta.

"It was surprising just how quickly the market seemed to turn," says Mark Zandi, chief economist for Economy.com. "It was like, boom, boom, bust. It was like, 'What happened?' The psychology in the marketplace unraveled very rapidly."

Being a mortgage broker, Diaz knows some investors who used their home equity like debit cards. He says of the quick decline in real estate, "It's coming like a culture shock to many." 'Everyone was doing it'

Vicki di Bernardo agrees. "It taught us a lesson," she says of the downturn in Las Vegas. "It was a little risky, but we got caught up in it. Everyone was doing it. ... (Now) everyone is very, very nervous here about the real estate market."

"The problem is the builder is giving away homes," Rauch says.

FLASH: Housing crash slows US GDP growth to worst level in three years (and we're just getting started)

Doesn't it seem some days we HP'ers know what's going to happen before it happens?

As we've discussed for months and months, the housing crash and it's associated issues will now crash the US economy and GDP.

Millions of REIC will go unemployed, the debt spigot will be turned off, wild spending via HELOC's will dry up, the negative savings rate will reverse, and the consumer-based US economy will now dramatically slow, first into recession and then into who knows what to call it.

Are you ready?

Housing market hinders economic growth

Economic growth slowed to a crawl in the third quarter, advancing at a pace of just 1.6 percent, the worst in more than three years.

The latest snapshot of the economy, released by the Commerce Department on Friday, showed that the slumping housing market figured prominently in the economy's dramatic loss of momentum. Investment in homebuilding was cut by the biggest amount since early 1991.

The reading on gross domestic product was weaker than the 2.1 percent pace many economists were forecasting.

"The housing bubble burst and that really knocked down growth," said Joel Naroff, president of Naroff Economic Advisors.

Treasury Secretary Henry Paulson struck a similar note. He said the housing boom over the last five years was "clearly unsustainable".

Let's do the housing bubble math

2005: Homedebtor A decides to stand in line all night to score a Toll Brothers house.

$800,000 purchase price
+$100,000 upgrades
+$100,000 lot premium
$1,000,000 total real cost

2006: Homedebtor B takes the bait and picks up a similar Toll Brothers shack during the firesale.

$720,000 purchase price (using yesterday's 10% price drop number)
-$100,000 free builder upgrades
+$50,000 new lower lot premium
-$50,000 cash back at closing
$620,000 total real cost

Now, seller A gets divorced (his wife left him for the realtor Suzanne), has to sell. It finally sells for just a bit less than the builder price (people will always choose a new home where they get to colorize vs. a used home) - say $600,000. He pays 8% closing costs or $50,000, total proceeds after close of $550,000

You got it - $1,000,000 - $550,000 = $450,000 loss in one year. Or $1233 A DAY.

That's doin' the math, housing bubble style.

America's great new thrill ride: The Debt-Fueled Housing Crash!


HousingPanic Stupid Question of the Day: Are Bubbles Still for Bathtubs?

I love the condoflip morph into a panic site for desperate condo sellers, versus a profit site for easy condo flipping.

Check out the "panic buttons" where you can select your level of desperation as well.

I think they need more levels now...

I'm also reminded of the idiot Donald Trump Apprentice winner, Kendra Todd, who wrote recently:

"You can't go anywhere without hearing people talk about "the real estate bubble." Such talk drives me to distraction, and I'll tell you why. It's because there is no real estate bubble. Bubbles are for bathtubs."

Well, I guess the little kid found out that no, bubbles aren't just for bathtubs. They're for idiot kids playing "investor" to get caught up in, since they have no sense of history or financial education, thus losing hundreds of thousands or millions of other people's money, while they skate off into bankruptcy court.

Bubbles are for tulips. Bubbles are for dot-com stocks. And bubbles are for houses.

October 26, 2006

With 100% confidence I say we've officially moved past Denial and firmly into Fear now

Even the realtors aren't in denial anymore about the bubble bursting. Even if they want us to believe we've already briskly sailed past desperation, panic, capitulation, despondency and depression, that the worst is over, and that we'd be heading back up the curve now. Yeah, right.

Memo to realtors and the masses: It's never different this time.

After this epic and historic ponzi scheme, we must go through each stage. It hath been foretold.

I think looking back on the late great housing bubble in our own minds we can now think back to what each stage before fear felt like. Yes, HP'ers are ahead of the plodding masses. When everyone else was in Euphoria, many of us were in Fear, and got out.

So who's with me? Is America done with the silly Denial days? Is fear here?

It sure smells like it.

With realtors saying we've bottomed out and the worst is over, it's time to replay this video of stupid quotes

FLASH: HOLY CRAP! New home median price crashes 10% (plus value of unreported incentives) - biggest decline in 35 years

And just think, that bogus number is horrific without including the $100,000 in free upgrades, the $100,000 cash back at closing, the hawaii trip, the new car, or the free hookers and cocaine.

OK, I'm not sure if builders have resorted to free hookers and cocaine yet, but you know they've gotta be thinking about it. And again, one day, the MSM might pull their collective head out of their ass and report the overstatement of this Commerce Department number. Or not.

Bottom line: anyone who bought a new home in 2004 or 2005 during the housing craze - your builder is now completely and totally destroying your financial future in a scorched-earth-mother-of-all-firesales. Your comps will be ruined for years to come.

Real estate never goes down they said. This house will make a great investment - you'll make a killing. It's always a good time to buy they told you (before cashing their commission check).

In reality, Suzanne researched it, and you're fu*ked.

New Home Prices Fall by the Largest Amount in More Than 35 Years

WASHINGTON (AP) -- The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.

The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005.

It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970. The weakness in new home prices was even sharper than a 2.5 percent fall in the price of existing homes last month, which had been the biggest drop on record.

The declines in prices served to underscore the severity of the correction in the once-booming housing market, which had seen sales of both new and existing homes soar to record levels for five consecutive years, propelled by the lowest mortgage rates in more than four decades.

Christopher Thornberg calls housing crash "slow moving train wreck", says housing prices "easily 30% to 35% overvalued"

Thornberg argues that home prices will stay flat for years and years, leaving the devaluation up to the ravages of inflation to get back to their true worth. I agree on his 30 to 35% call, but disagree on how the excess will be washed away.

I think we'll see both - an immediate crash in prices, combined with ongoing inflation-led devaluation for years and years. Very similar to Japan, but more harsh on the front end as people panic as they're doing right now. Also, we have a massive amount of dead inventory out there, and in order to move it, it has to come down in price, and that price cut will be led by the builders, who can cut all the way to the bone, where they break even or lose a bit.

Individual homedebtors having to compete against builders to move inventory will have to drop prices in many cases way below what they paid. To the point of bankruptcy and foreclosure. It's a housing blue light special in aisle three America.

The housing bubble already has burst. The only question is how badly. That was the conclusion of a UCLA economics professor who spoke Wednesday at a conference in Torrance.

"At the end of last year, the real estate bubble popped. And right now, we're in the middle of the bubble popping," Christopher Thornberg said at the South Bay Economic Forecast Conference. "The real question is, of course, is it going to be a hard or soft landing?"

Thornberg, who also serves as principal of Beacon Economics, described the housing situation in harsh terms: "This is a slow-moving train wreck."

"Prices are easily 30 to 35 percent over-valued," Thornberg said. "Whether prices go down or stay the way they are, you can pretty much guarantee that whatever the value of your house now, that's going to be the value of your house in 2011."

Starting in 2003, home buyers bid up home prices by chasing the upward trend in a "feeding frenzy," he said.

HousingPanic blamed by California MSM newspaper with helping cause housing crash by confusing potential homedebtors

OK, now it’s getting weird.

HousingPanic was blamed today by the Palm Springs Desert Sun with causing the housing bubble to burst and spreading lies. Here’s the quote, I mean "fact", reported by the Desert Sun:

Ten fast facts about Coachella Valley’s housing market

#2: Blogs such as housingpanic.blogspot.com are helping to confuse buyers about everything from rumors to “bubble” theories.

Well, I’m flattered. And pissed. And laughing. "Fact"? Try "REIC spin point" instead.

this reporter either made a big mistake reporting realtor spin as "fact", or is just simply another corrupted pawn of the REIC, like Catherine Reagor. You can ask for a retraction or clarification by emailing him here (michael.perrault@thedesertsun.com).

At the end of the day, it’ll all get worse, much much worse. HP and the bubble blogs will indeed be blamed in part for causing the bubble to burst, and thus the financial downfall of America. I’ll be called a treasonous traitor (as I was yesterday over at Bloodhound Blog), HP will be seen as a force of evil by crushed homedebtors and the devastated REIC, and we’ll get more and more trolls – mainly unemployed REIC and pissed homedebtors.

And to think, all we wanted is for housing to return to normal, where homes are again simply a place to live, not lottery tickets, with appreciation that matches the base inflation rate, and where a young couple could save up a 10% downpayment, take out a 30-year fixed mortgage, and pay a reasonable share of their income for a decent place to live and raise a family.

School textbook mention in the year 2500: The Great Housing Ponzi Scheme Bubble and Crash

In your business, if your sales collapsed 40% to 50% in a year, would you call that a soft landing? Or would you think the rapture had occurred or the world had just ended?

I don't know about you HP'ers, but in my 15-year marketing career, I've never suffered a sales decline year over year. So to see the US and city by city numbers we're seeing - 30%, 40%, 50% declines in home sales - man, those are some ridiculous, incredible and epic numbers.

Soft landing my a*s. Housing has fallen off of a cliff, and there's no way for the NAR, MSM or REIC to spin it otherwise (try as they might).

Bottom line: These are historic days for housing, which will be written about for generations to come.

The Great US Housing Crash of 2006 - 20??. Think about it - 400 years later kids still study the Dutch Tulip Mania in school. I propose that kids in the year 2500 will be studying what happened these past few years in the US and around the world. And as we do in regards to the Dutch, they'll shake their little heads and ask:

"What were they thinking? The fools!"

'May you live in interesting times' it has been said. And so we do. And so we do.

Like a fine wine, it just gets better with age..

Executives? You gotta be kidding.

Uh, maybe I missed something, but don't you usually need a high school degree to become an "executive"?

Don't you need to have some type of authority, maybe P&L responsibility, or management responsibility, to be an "executive"? When I think "executive" I think boardrooms, shareholders, important strategic decision-making, you get the drift.

And wouldn't there normally be an interview process or qualification beyond being able to fog a mirror in order to become an "executive"?

Pick the definition below that best matches the use of "executive" by Realty Executives:

ex·ec·u·tive (ĭg-zĕk'y-tĭv) n.

1. A person or group having administrative or managerial authority in an organization.
2. The chief officer of a government, state, or political division.
3. The branch of government charged with putting into effect a country's laws and the administering of its functions.
4. Life's losers who in many cases didn't complete high school, who found themselves with no employable skills beyond fast food order taking, stealing or hooking, who realized that if they took a few-week course, bought a lot of makeup, leased a Lexus, were willing to lie and screw people for a living, and paid a small fee, could get some great looking business cards, and an instant career as a realtor

October 25, 2006

Bogus and overstated NAR numbers show crashing home sales, record price decline, and Lereah says "worst behind us..likely the trough for sales"

One day the MSM will hopefully do their job and not just a rip-and-read with NAR press releases. Or not.

The real story on today's already-horrific numbers is that they're waaaaaaaay overstating the average sales price.

Stories of $100,000 cash back, $75,000 off in incentives, 125% loans, free cars, paying for the downpayment, Hawaii trips, $20,000 gift cards and more are now commonplace. Existing home sellers have to compete with the fire sale packages being offered by builders, incentives and cash back are out of control, and the official NAR median price number is completely bogus.

That the MSM would report these numbers today and not even mention the issue shows you how lazy they've become. Hello blogs, goodbye MSM.

Existing Home Sales Drop 1.9%, Prices Decline

Sales of previously owned homes in the U.S. fell last month to the lowest level in almost three years, prompting sellers to reduce prices.

The median price of an existing single-family home dropped 2.5 percent from September 2005, the biggest year- over-year decline since record-keeping began in 1969.

And here's the PR from the NAR, with another hilarious quote from the corrupt David Lereah:
David Lereah, NAR’s chief economist, said stabilizing sales should build confidence in the housing market.

“Considering that existing-home sales are based on closed transactions, this is a lagging indicator and the worst is behind us as far as a market correction this is likely the trough for sales,” he said.

“When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market, and sales will be at more normal levels in the wake of the unsustainable boom that we saw last year.” He noted sales already are improving in some areas.

HousingPanic Stupid Question of the Day

What are your friends and neighbors saying about your local housing market now?

A million foreclosures in the US this year alone - and we're just getting started

Good video on the foreclosure time bomb on NBC Nightly News.

Tick tick tick.

Pretty standard report these days, with the couple who "didn't understand" the mortgage they signed up for. Not sure if I believe that, but Americans are so financially ignorant, it could be true. This couple's mortgage went from $1700 a month during the "teaser" period to almost $4000 a month today.

Yes, make that 1,000,001 foreclosures...

After the smoke clears and all is said and done, especially with all the resets happening over the next three years in the middle of a housing price collapse, you'll be looking at 5 million, maybe 10 million or more foreclosures in this country post-bubble. It used to be easier to avoid, as you'd just sell the home, but now if you sell you're below water, so it's just a matter of time.

Again, the human face of the housing bubble will be seen with these foreclosures. Lives ruined. Families on the street. Financial devastation.

And realtors and mortgage brokers on commission laughing all the way to the bank.

Are realtors clueless and brainwashed cult members, lining up at the kool-aid line?

Either they're truly braindead clueless ignorant fools (which would make sense given their lack of education beyond GED's), or they know exactly what's going on and just put on a happy face when they all get together or talk to the media.

So which is it?

About 12,000 Realtors gathered in Long Beach for three days last week to hear the fate of the market at the California Realtor Expo 2006 at the convention center.

A housing report delivered at the conference on Wednesday forecast the median home price to fall slightly for the first time in 10 years.

But most Realtors spoken with at the conference viewed the market with optimism, as did those who compiled the numbers.

In fact, it was hard to find anyone at the conference who was down on housing, including three of the state's top housing experts, who spoke at the conference on Thursday at a panel discussion titled "Twists and Turns: Leading Economists Sound off on Today's Market."

"In my mind it's not a disaster in the making, it's just a normal balancing of the market," Karevoll said.

"You have a lot of media wanting to put a negative spin on the numbers," Kyser said.

October 24, 2006

Pets.com all over again as the REIC starts laying off its people. Countrywide throws 2,500 more out the door

Nice that Countrywide's scumbag CEO Mozilo made $160,000,000 last year, and cashed in over $200,000,000 in stock options at the peak, isn't it? I'm sure the thousands of Countrywide employees given pink slips could use some of that loot.

$200 million / 2500 laid off employees = $80,000 per employee. The French cut off peoples' heads in situations like these, no?

And just think - we're just getting started. Hundreds of thousands of REIC in the end will lose their jobs during this devastation. Hundreds of thousands of people with mortgages, car payments, health bills, kids in school, etc. The human toll of the bubble.

In the end folks, this was just pure greed. Pure, evil, historic, out-of-control bubble-fueled greed. Followed by the inevitable crash and cleansing of course. The question is, who will serve the time - a la Ebbers, Skilling, Lay, Kozlowski, Scrushy, Fastow and Rigas?

Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.

The company had already reduced staffing by 847 people from July to September, ending the quarter with 55,564 employees. "Gross layoffs will exceed 2,500 employees," Sambol said.

"This cleansing that takes place as the markets pull back is always healthy in the long run, for both Countrywide and the industry," Mozilo said.

Last week, Washington Mutual, the No. 3 mortgage lender and largest savings and loan, said it has cut 9,742 jobs, or 16 percent, this year. In May the parent of Ameriquest, which lends to people with weaker credit, set plans to lay off 3,800 employees, or one-third of its workforce.

2004 - 2005: Realtors tell everyone prices can't go down, real estate always goes up, and "are you missing the boom". 2006's message? You're F'd.

Blood-sucking leaches do OK as long as the host keeps living. But in this case, the millions of realtor blood-suckers may be in a spot of trouble, as homedebtors go bankrupt if they sell.

Homes ain't sellin' = realtors ain't gettin' paid. Suzanne ain't eatin' anymore.

So what do they do? A full 180 - and now they're out there (led by the corrupt David Lereah and the NAR) telling homedebtors to sell at any price, get real, and forget everything they told them in 2004 and 2005. Oopsie!

We're in full crash mode now - so drop that price 'til it hurts and let's move some dead inventory (and make our commission and Lexus payment)!!!

At a recent meeting with her Las Vegas real estate firm's 200 agents, Joanne Levy told them they needed to deliver a stark message to clients. They would tell them that unsold homes are at a record level and sellers need to lower their prices.

In other words: the boom is over.

"They want the 2004, 2005 market," Levy said of today's clients. "We don't have that."

With stubborn sellers refusing to relent on asking prices, many prospective buyers have kept their hands in their pockets.

Some industry observers fear that bull-headed home sellers could worsen a downturn by driving up the inventory of homes for sale and running off would-be buyers.

"There is a lag period between sellers' expectations and the reality of the marketplace," he said, and shaking them out of their high-price fantasy "is more psychology than science."

But cold facts are staring some homeowners in the face.

Despite these truths, real estate agents say, many sellers continue to overreach on their asking prices.

"I try not to list those properties," California Association of Realtors President Vince Malta said of the overpriced homes.

In the meantime, many agents say they are in a difficult state of flux.

Get ready for the slew of realtor jokes and videos as this discredited profession gets disintermediated

Those who do not learn from history are doomed to repeat it

1: a hollow globule of gas (e.g., air or carbon dioxide)
2: a speculative scheme that depends on unstable factors that the planner cannot control; "his proposal was nothing but a house of cards"; "a real estate bubble"

Economic Bubble:
An economic bubble occurs when speculation in a commodity causes the price to increase, thus producing more speculation. The price of the good then reaches absurd levels and the bubble is usually followed by a sudden drop in prices, known as a crash.

Economic bubbles are generally considered to be bad things because they cause misallocation of resources into non-productive uses. In addition, the crash which follows an economic bubble can destroy a large amount of wealth and cause continuing economic malaise as was the case of the Great Depression in the 1930s and Japan in the 1990s.

We've seen it all before

A classic American rags to riches... to rags story. The collapse of Kara Homes

It's amazing the faith people will put in builders, simply because they have nice marketing brochures and advertisements, and plans for huge McMansions like this monstrosity to the right.

The late great housing ponzi scheme will have so many Kara Homes, little homebuilders who shot straight to the moon when the bubble money was falling from the sky. But one thing the new guys didn't see is that all booms end in busts, and they kept building and building and building, assuming the bubble was just normal business.

And then the roof caved in.

You can still see their spashy website here, with no mention of them going belly up. And heck you can still buy one of their homes (ha ha ha ha) and get $100,000 off. The only question is - is there anyone from Kara still at the model home to take your money?

Caught in housing undertow - Kara Homes got in over its head during boom times

It was a time when Kara and other homebuilders could hardly keep up with demand, selling homes long before a shovel hit the ground. That same year, Kara Homes was recognized by Builder magazine as the fastest-growing homebuilder in the country, and Karagjozi was predicting his company, which had barely $1 million in revenue in 1999, would hit $1 billion by 2006.

Then the bottom fell out.

After several years of meteoric growth, the market for new homes first slowed, then sputtered. House after house went unsold long after it was finished.

Suddenly, contractors working for Kara saw their payments go from weekly to bi-weekly, until they had to go to Kara's offices in East Brunswick to get paid. Work at 21 developments across the state stalled, then stopped altogether. The company, which once employed hundreds, had shrunk to a skeleton staff.

And the "golden punch list" was no longer so golden, contractors said.

"It was get them up, throw them up," one contractor said. "I don't care if the punch list is 100" things wrong.

By late August, even the Porta Johns started disappearing from construction sites -- a sure sign, the contractor said, the company was about to hit the wall.

And so it did.

Instead of reaching the $1 billion sales mark this year, as Kara's founder predicted, one of the state's largest privately held homebuilders filed for Chapter 11 bankruptcy protection this month, becoming the biggest casualty so far of the dramatic change of fortune in the state's housing market.

October 23, 2006

Video from a flipper - buying dirty and nasty homes to make a quick killing

MSM mocking bubble city homedebtors as lenders take shills to the cleaners with interest only loan stupidity

Two more years of this guy? We're screwed

It's two weeks until a major US election. You know what that means!

FLASH: It's official, Casey Serin, Iamfacingforeclosure.com liars loan kid, is now the official face of the late great housing bubble ponzi scheme

It's now official, and Casey Serin will now enjoy his 15 minutes of fame (right before his 3 to 5 years in jail). The kid is the cover story of the USA Today today - "10 mistakes that made flipping a flop - 24-year-old got in over his head in the real estate biz".

America is an amazing country. From when HP broke this story on September 21, to over a month later when the entire country knows who you are and what you did. Fortune many times follows fame in the US, so now the kid just needs an agent (in addition to a lawyer).

Casey Serin is the new Bernie Ebbers. The new Ken lay. The new Henry Blodgett. The poster child of a system run amok (again). The physical representation of fraud, greed, debt, fear, bubbles and human folly.

Not too long ago, HP made the following prediction: Two words... Mainstream Media. Watch the kid score some bigtime stories (Time, Newsweek, Jay Leno?). Little did I know then that'd I'd be enjoying a nice iced latte in Europe and see the kid's picture in my paper. Surreal.

You can also hear a story on him on NPR here too, where the corrupt Nicholas Retsinas makes an appearance too. Yes, the MSM is really following the bubble blogs now.

Only one problem with the future of the kid's blog though. I wonder if he'll be able to blog from jail?


If there's a poster child for everything that went wrong in the real estate boom, it just might be Casey Serin.

In one year, the 24-year-old website-designer-turned-real estate-flipper bought eight homes in four states — and in every case but one, he put no money down. At his peak, in April, Serin had $93,000 he'd taken out of the homes as he bought them. By July, he was broke, desperate for one last deal.

Now? Serin has $140,000 in credit card and credit-line debt and five houses in foreclosure. Last month, he started iamfacingforeclosure.com, a blog that's drawn both notes of condolence and expletive-laced condemnation.