Comments for "Housing Activity Forecast"

ghostfacedinvestah wrote on Sun, 04/19/2009 - 1:25pm. CDT

Just wait until all the new foreclosures hit the market, you ain't seen nothing yet. Four months of pent up foreclosure demand, coming soon to a RE market near you.

ghostfacedinvestah wrote on Sun, 04/19/2009 - 1:27pm. CDT

BTW, you are right about the true turnover rate - one thing this bubble will foster is a generation of immobile workers, stuck in an underwater housing situation. Maybe this is a problem for another day, but since the US depends to some degree on a mobile workforce, this is going to have serious economic implications down the road.

bobnbot (member) wrote on Sun, 04/19/2009 - 1:27pm. CDT

Ways to view comments on this thread:

Dead simple, read only interface at: http://users.thelink.net/bobn/CR

CRC-like interface at http://realize.org/cr/crcizer/

Full Blown Interface at http://www.hoocoodanode.org/

For live chat, join us in IRC.

To access IRC with firefox, install the chatzilla add-on and go to irc://irc.realize.org:9996/calculatedrisk.

Or set your IRC client for server irc.realize.org port 9996 and /join #calculatedrisk.

Feed back via bobn

Anonymous wrote on Sun, 04/19/2009 - 1:29pm. CDT

Yes, but an immobile workforce will also have political implications. People who are stuck in one place tend to get cranky. This tendency has been heretofore masked by the freedom to move around.

RockyR (member) wrote on Sun, 04/19/2009 - 1:29pm. CDT

I keep waiting for housing to reach affordability even here in DFW. I can't imagine what people in other parts of the country must be going through. Me thinks we have a ways to go, yet.

Tim waiting for 2012 wrote on Sun, 04/19/2009 - 1:29pm. CDT

CR when do you think new home construction or starts will bottom?

MS wrote on Sun, 04/19/2009 - 1:30pm. CDT

Sounds like the next PR scheme to get yet another short squeeze in the hb stocks. I think I saw that most of those are owned by the 'tutes....something like 93% of the entire sector's float.

In any case it's just more noise...none of these statistics really have mattered and won't anytime soon, in the broader context of how the system is trying to show (yet again!) that this is another bottom.

Ciao
MS

norma wrote on Sun, 04/19/2009 - 1:31pm. CDT

Does this report take into consideration unemployment, under employment and the fact that people who are finding jobs are making less money?

Anonymous wrote on Sun, 04/19/2009 - 1:32pm. CDT

in 80s people just left thier homes in Southern California empty while they went to work in other states, or we could just ask Pelosi to give them to any illegal Mexicans that want to have babies in America, of course those closest to emergency rooms would be preferable.

Tim waiting for 2012 wrote on Sun, 04/19/2009 - 1:36pm. CDT

The gap between new home sales & existing will have to close. You have to believe all the FHA programs are keeping that existing number artificially high. Existing home sales esp distressed generate almost 0 economic activity so the macro economy will suffer as capital is diverted to knife catching housing assets.

Samdog (member) wrote on Sun, 04/19/2009 - 2:34pm. CDT

Being at the bottom does not imply things will start to go up ....

Tim waiting for 2012 wrote on Sun, 04/19/2009 - 1:38pm. CDT

Agree with MS unemployment and business investment seem to be leading the recession. I know many people that spent money as normal until the got the pink slip. Now its Survivalist mode with unemployment checks paying the bills.

CalculatedRisk (member) wrote on Sun, 04/19/2009 - 1:39pm. CDT

Tim waiting for 2012, my guess is this year some time. ... we won't know for sure until 6 months or more after it happens, but it is possible the bottom is already in for single family starts. Or maybe later this year.

best to all.

Calculated Risk

CalculatedRisk (member) wrote on Sun, 04/19/2009 - 1:40pm. CDT

Samdog, yes - that is worth repeating over and over. A bottom is definitely different that a rebound. I don't see much of a rebound in new home sales ... all that existing home inventory and foreclosures will keep a lid on sales for some time.

best wishes.

Calculated Risk

uno mundo wrote on Sun, 04/19/2009 - 1:41pm. CDT

Does anyone blogging at CR want to buy a home now? Got down payment? Got excellent credit? Wanna buy in a neighborhood with more pending foreclosures? Is your job secure for the next 30 years?

Tim waiting for 2012 wrote on Sun, 04/19/2009 - 1:41pm. CDT

CR Gracias wish I was in Santa Monica

Effective Demand (member) wrote on Sun, 04/19/2009 - 1:42pm. CDT

On the low end of the housing spectrum in So Cal the market is white hot, many more buyers than inventory do to low interest rates and distressed inventory. But now we are running out of inventory due to the foreclosure moratoriums. Sales will either slow by mid-summer or enough inventory will resume onto the market to keep the market transactions on an upward trend. I see the same story repeated across many markets and many states. The high end is sitting in denial and hasn't adjusted nearly enough yet.

http://effectivedemand.blogspot.com

Anonymous wrote on Sun, 04/19/2009 - 1:43pm. CDT

Some estimates say 50% of all option arm mortgage borrows are making minimum payments, that is they are in negative amortization, that is their debt is getting bigger, no matter what interests are at in 2010-2011 when these hit and borrows have to make regular amortizing payments then the end is here...

...I really mean the end is here, as in the absolut end, becuase there are more of these loans outstanding then sub-prime...that is also when the stock market plunges 80% plus and we get great depression II capitulation.

You have been warned. Consider this a tax deductable community service.

uno mundo wrote on Sun, 04/19/2009 - 1:45pm. CDT

Want to buy a home near a mall that's going under? Want to buy a home near a residential development that's going to be bulldozed? Want to buy a home with Chinese drywall?

Anonymous wrote on Sun, 04/19/2009 - 1:46pm. CDT

'People who are stuck in one place tend to get cranky.'

Well, that's true if they are used to leaving their problems behind them.

On the other hand, some people seem to enjoy actually being part of a long term community, without thinking that running away when problems arise if the optimal solution.

Of course, such people often seem un-American.

Lavrenti Beria wrote on Sun, 04/19/2009 - 1:47pm. CDT

ghostfacedinvestah,

A valid and most interesting observation. Imagine yourself in the situation of an Ohio autoparts manufacturing worker, recently laid-off, with his eight year old home worth about 70% of what he owes on it, unable to sell so as to seek work in a more favorable location, and with no prospect locally for any kind of work. Literally, people in this kind of a dilema are frozen to their pasts, unable to do much to help themselves respecting current obligations. Soon, an army of these folks are going to want someone's scalp and, finally, just may be ready for the strikes and demonstrations necessary to put an end to a system that permits ownership of our political system and its politicians by financial and foreign policy lobbies. Can we hope?

uno mundo wrote on Sun, 04/19/2009 - 1:49pm. CDT

Want to buy a home that's been stripped of fixtures? Want to buy a home because if you don't you'll miss the best prices? Want to buy a home because the interest rates are going up? Want to buy a home because it'll appreciate over the years and that'll be your nest egg?

bearly (member) wrote on Sun, 04/19/2009 - 1:50pm. CDT

With diminished wages and prosperity in general, increasing taxes on the more affluent and likely changes to the tax laws limiting mortgage deductions, the upper end will suffer a decline in prices to levels we saw in the mid '90s and stay there indefinitely.

RockyR (member) wrote on Sun, 04/19/2009 - 1:52pm. CDT

"...I really mean the end is here, as in the absolut end, becuase there are more of these loans outstanding then sub-prime...that is also when the stock market plunges 80% plus and we get great depression II capitulation."

Do you mind providing some links to substantiate these dire claims?

patientrenter wrote on Sun, 04/19/2009 - 1:53pm. CDT

Very insightful, CR. Thanks.

When prices were going up a lot every year, and downpayments had shrunk to a fig leaf, buyers on average had little long-term commitment to keeping their purchases. Now more buyers are prepared for, and capable of, holding for the long haul. So future sales will go down. Fair enough. I still think that there is a large group of responsible buyers who were priced out (using their own conservative standards of affordability) and who will become buyers over the next 5 years.

uno mundo wrote on Sun, 04/19/2009 - 1:56pm. CDT

The bottom is mass homelessness in a land where the govt. and the Fed Reserve and its investors own all the homes sitting empty except for the squatters.

Marco Didio Falco (member) wrote on Sun, 04/19/2009 - 1:58pm. CDT

CR, even J.Lacker is forecasting a bottom in housing by the end of the year or early.

I don´t know if my math is bad, but

Growth population in 2.008: 2.7 million
People/homes occupied: 2,7

Assuming similar ratios, population demand for new homes or renting will be 1 million homes.

Vacancies for sale: 2,2 million (I bet here´s not the shadow inventory)
Ratio homeowner: 68%

Assuming 100% will buy a new house (noone can believe this) there´s an oversupply of more 50%.
Building aprox 0,7 million homes/year (trailing 12-months), don´t help to solve the problem.
Working with an oversupply of 20%, could take two years to clean the mess, ceteris paribus.

The bottom could take time to come...

sanityclause (member) wrote on Sun, 04/19/2009 - 1:58pm. CDT

uno mundo wrote on Sun, 04/19/2009 - 2:45pm.
Want to buy a home near a mall that's going under?
-----------------

Near a mall that's going under? I can do better than that. I'm going to buy $1 million condo IN a mall that's going under... in Glendale.

http://www.americanaatbrand.com/excelsior.html

MrM (member) wrote on Sun, 04/19/2009 - 2:00pm. CDT

I still hear plenty of smart and experienced people say that this is but a temporarily glitch in the matrix and it is all going to go back to the previous levels and now is the buying opportunity of the lifetime (get in now or you will be priced out forever).

The stock market shares the same view - but who cares about the stock market anymore? Its credibility as as an effective information processing mechanism is gone.

Unfortunately, the government has the same view, too. Either the reality has not sunk in yet, or they, too, believe they can define the reality.

The more one pulls a string, the more painful it hits when it snaps.

Ben Frank'll Tank Bernanke wrote on Sun, 04/19/2009 - 2:00pm. CDT

David Simon, Bill Moyers

http://www.pbs.org/moyers/journal/04172009/watch.html

Good night, moon. Good night, PoPo. Goodnight hustlers, scammers, hoppers.

Good night, hoboes, grifters, system gainers.

Good night America.

Goodbye virtue and plenty.

bearly (member) wrote on Sun, 04/19/2009 - 2:04pm. CDT

Obama's CHief of Staff is quite a thoughful guy

"The Obama administration probably won't seek more federal funds to help capitalize banks, White House chief of staff Rahm Emanuel said today.

"I believe we won't" have to request additional funds from Congress, he said on ABC's "This Week" program. "But I haven't seen the stress tests," he added."

Comrade Coinz! wrote on Sun, 04/19/2009 - 2:05pm. CDT

Yes, but an immobile workforce will also have political implications. People who are stuck in one place tend to get cranky. This tendency has been heretofore masked by the freedom to move around.

It also slows recovery because people can't move as easily to where the jobs are.

Anonymous wrote on Sun, 04/19/2009 - 2:05pm. CDT

OT:

http://www.pbs.org/moyers/journal/04172009/watch.html

David Simon, creator of The Wire, good stuff

Kung Fu Panda wrote on Sun, 04/19/2009 - 2:05pm. CDT

Regarding GGP:

"Among the company's properties is the Highland Mall in Austin, which made headlines last month when its owners were sued by Dillard's Inc. Dillard's said General Growth had not maintained the mall properly or lived up to the terms of Dillard's lease."

I haven't been inside a mall in a couple of years, at least, so I don't know what "not maintained the mall properly" means. I suppose not having windows washed as frequently and so forth. When a mall co goes BK, does that mean the tenants can reject their leases? Those leases seem the real asset for the mall co.

Samdog (member) wrote on Sun, 04/19/2009 - 2:07pm. CDT

RockyR (member) wrote on Sun, 04/19/2009 - 2:52pm.
"...I really mean the end is here, as in the absolut end, becuase there are more of these loans outstanding then sub-prime...that is also when the stock market plunges 80% plus and we get great depression II capitulation."

Do you mind providing some links to substantiate these dire claims?
_____

Just playing it safe: I'm long on rice and beans ....

uno mundo wrote on Sun, 04/19/2009 - 2:07pm. CDT

Instead of 'tea parties'...there will be 'homelessness parties' when the 'bottom' is in...lets hope the multi-trillion$ budget 'all in' poker move by the Omama apparatus quickly turns this around without tanking the dollar...bets on the outcome anyone? Something has to turn around in the next 30 days or many people are going to want their money under the mattress if they can get to their money. If a majority people say 'Show Me My Money' then say 'Give Me My Money', the Derivatives House of Cards crumbles. Buying a home now may be a nutty idea really. The govt./media campaign to stay calm is wearing out. Reality is waiting.

affordable_housing wrote on Sun, 04/19/2009 - 2:09pm. CDT

Is the price discovery only way to correct the house prices? That seems very slow.

I am talking about some coveted pockets where the prices are sky-rocketed in last few years and there is not much of foreclosure activity in those areas - like West Palo Alto, CA. How does the prices return to normal values there? I am getting a feeling that it won't.

Outsider (member) wrote on Sun, 04/19/2009 - 2:09pm. CDT

I saw a classified ad in a magazine recently offering land to pitch your tent/motor home/camper/whatever on for $1000 a year. No services, of course, no well or septic, but if you want a place to pitch your tent, it's there.

I wonder if that might be "one" wave of the future. Outdoor primitive living, maybe clustered around groups of common interests. Communes back in style?

Mark wrote on Sun, 04/19/2009 - 2:11pm. CDT

Could it be that home builders are still sitting on their new homes in order to avoid bankruptcy -- which would follow if they sold the homes at today's prices?

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:14pm. CDT

" ghostfacedinvestah wrote on Sun, 04/19/2009 - 2:25pm.

Just wait until all the new foreclosures hit the market, you ain't seen nothing yet. Four months of pent up foreclosure demand, coming soon to a RE market near you."

You're right, and this, combined with an upcoming GM BK may be the thing that finally kicks some sense into the stock market's head.

Kung Fu Panda wrote on Sun, 04/19/2009 - 2:17pm. CDT

Brad Setser says that there's probably still a housing bubble in China:

"And if Cao Jianhai of the Chinese Academy of Social Science is right, China retains a lot of underlying vulnerabilities, not the least that home prices are over ten times urban income, and thus there is underlying downward pressure on property prices."

uno mundo wrote on Sun, 04/19/2009 - 2:17pm. CDT

Who will end up with any money in the General Growth Properties bankruptcy as it plays out from here in this economic environment?

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:17pm. CDT

"uno mundo wrote on Sun, 04/19/2009 - 2:41pm.

Does anyone blogging at CR want to buy a home now? Got down payment? Got excellent credit? Wanna buy in a neighborhood with more pending foreclosures? Is your job secure for the next 30 years?"

Yes, yes, yes, no, no-

bearly (member) wrote on Sun, 04/19/2009 - 2:20pm. CDT

["I believe we won't" have to request additional funds from Congress, he said on ABC's "This Week" program. "But I haven't seen the stress tests," he added."]

This suggests to me that either he's an idiot or an imbecile. An imbecile if he knows the stress tests are rigged to pass every lender so he's dumb enough to stumble into that leak, or an idiot because the stress tests might be at least marginally meaningful and he's guessing the banks are pretty close.

Obama's administration is a joke.

patientrenter wrote on Sun, 04/19/2009 - 2:20pm. CDT

affordable_housing, even the best areas are affected in downturns, after perhaps a substantial lag. But the current govt efforts to avoid accurate asset price discovery in general are so enormous that it's possible the best areas will get off lightly this time. My guess is that there will be a slow grind down at the top of the market for another 5 years or so, offset by an unknown extent by increasing CPI inflation starting in another year or two.

Marco Didio Falco (member) wrote on Sun, 04/19/2009 - 2:22pm. CDT

Cinco-X ---> ready to entry, no reforms needed

http://www.destination360.com/north-america/us/washington-dc/images/s/wa...

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:24pm. CDT

"Lavrenti Beria wrote on Sun, 04/19/2009 - 2:47pm. ghostfacedinvestah, A valid and most interesting observation. Imagine yourself in the situation of an Ohio autoparts manufacturing worker, recently laid-off, with his eight year old home worth about 70% of what he owes on it, unable to sell so as to seek work in a more favorable location, and with no prospect locally for any kind of work."

I would feel bad for this person, but I'd also note that this is why purchase price should be in some way related to potential rental income. Our first house was purchased in the late '80's, about 6 mos. after the peak, and we though we were getting a great deal. We later decided to move into my wife's sister's house (in a much nicer neighborhood in a much nicer town) and rent ours out, since we were really underwater at that point. Fortunately they let us rent for the amount of rent we could collect on on our house, but if that hadn't been the case, we either would have been in trouble, or moving wouldn't have been an option. Just one more data point.

es wrote on Sun, 04/19/2009 - 2:25pm. CDT

CR
couple ways to look at your distressed gap going forward,..existing sales dropping, or new sales increasing.
the sum of the two is the demand for homes, there would need to be a decrease in overall demand for existing sales to drop much, especially since new is already so low. i dont think it will happen. i think new will stay depressed because of all the cheap existing inventory coming to market. as a result, i think the distressed gap will be with us for some time until the inventory of existing coming to market slows down enough and prices are such that it is worth it to build more new.

back in mid 90s total sales was about 4500, today we are at about 4800. adjusted for population, i would guess we are at or below mid 90s sales levels.
also, in addition to a "shadow inventory" of homes avail for sale, i think there is also a substantial shadow supply of buyers who are waiting for housing to bottom out to buy. i know many folks who are very ready to buy and have been waiting for years, but many are waiting for prices to stop dropping (actually, some are starting to buy now as affordabily is comperable to them renting and they arent concerned about buying exactly at the bottom).

es

lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 2:25pm. CDT

Heavens, nobody's job is or ever was secure for 30 years. It may have actually lasted that long in reality. Or people may have thought so. But that kind of stability simply doesn't exist.

lawyerliz--finance the REOs.

anon wrote on Sun, 04/19/2009 - 2:26pm. CDT

Former Federal Reserve Chairman Paul Volcker said Congress will probably review the authority granted to the Fed following emergency credit programs doubling the central bank's balance sheet to $2.19 trillion.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ainh3qdHJuoM

Hmmmm, cracks in the united front.

Black Star Ranch (member) wrote on Sun, 04/19/2009 - 2:28pm. CDT

The Americana @ Brand - Geeze.......what would happen to your Association dues once the shops started dropping out like flies? Increase maybe? $2-5K rent/mortgage per mo + $2-5K association fees p/mo..........nice. Pretty tho........where do you keep the dog, your cow, and the chickens, btw?

- - - - -

Black Ranch

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:28pm. CDT

"Ben Frank'll Tank Bernanke wrote on Sun, 04/19/2009 - 3:00pm. David Simon, Bill Moyers http://www.pbs.org/moyers/journal/04172009/watch.html Good night
Good night, moon. Good night, PoPo. Goodnight hustlers, scammers, hoppers.
Good night, hoboes, grifters, system gainers.
Good night America.
Goodbye virtue and plenty. "

Whatever else happens, the hustlers, scammers, grifters, and system gainers will be here, along with the cockroaches.

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:30pm. CDT

" Samdog (member) wrote on Sun, 04/19/2009 - 3:07pm.
_____

Just playing it safe: I'm long on rice and beans ...."

With that diet, you better not forget the TP-

lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 2:31pm. CDT

When you see one cockroach, you know there are another 40 smart enough to stay in hiding.

Off to spend some money.

lawyerliz--finance the REOs.

lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 2:31pm. CDT

Better get some canned tomatoes with the beans & rice to avoid scurvy.

lawyerliz--finance the REOs.

lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 2:32pm. CDT

Ya don't need tp if you have leaves!!

lawyerliz--finance the REOs.

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:34pm. CDT

" Marco Didio Falco (member) wrote on Sun, 04/19/2009 - 3:22pm.

Cinco-X ---> ready to entry, no reforms needed

http://www.destination360.com/north-america/us/washington-dc/images/s/wa..."

Too much house keeping, and in a lousy neighborhood ruined by the folks at the other end of the Ave.

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:35pm. CDT

" lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 3:25pm.

Heavens, nobody's job is or ever was secure for 30 years. It may have actually lasted that long in reality. Or people may have thought so. But that kind of stability simply doesn't exist.

lawyerliz--finance the REOs."

Actually, there are some folks in Congress that refute this rule, though for the general populace, it's true-

FFDIC wrote on Sun, 04/19/2009 - 2:36pm. CDT

http://www.chron.com/disp/story.mpl/front/6381211.html
Houston Chronicle/AP
Officials: Government unlikely to take over a big bank

Cinco-X (member) wrote on Sun, 04/19/2009 - 2:37pm. CDT

" lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 3:32pm.

Ya don't need tp if you have leaves!!

lawyerliz--finance the REOs."

The you BETTER know how to identify poison ivy. My Mom made that mistake when she was a little girl. Ouch!

O H Chick (member) wrote on Sun, 04/19/2009 - 2:40pm. CDT

I dnon't think we are near the bottom yet in new home construction. The main problem is that most builders still have substantial inventories of developed lots that were purchased at bubble prices. Building hard costs for a typical McMansion have dropped to $65 per SF in the southeast, and operating overhead has dropped significantly due to employee reductions. But the high lot costs, high local impact fees & the ever so sticky downward real estate commissions put the cost of a new house over $150 per SF in most southeastern markets. The bottom in the southeast new home markets will be when high end houses can be built and sold for a profit at $130 per SF or less.

Samdog (member) wrote on Sun, 04/19/2009 - 2:40pm. CDT

Cinco-X (member) wrote on Sun, 04/19/2009 - 3:30pm.
" Samdog (member) wrote on Sun, 04/19/2009 - 3:07pm.
Just playing it safe: I'm long on rice and beans ...."
--------------------
With that diet, you better not forget the TP-
=============

Maybe I should add corn to the list--the cobs can double as a TP replacement.

linked wrote on Sun, 04/19/2009 - 2:40pm. CDT

Communes back in style?

----------

Artist colonies are all over the midwest according to several articles I have read. Why set up a tent with no services if you can buy a home in a neighborhood full of homes ready to be dismantled and reused. Might even get the municipality to give you the lots if you return them to a usable state.

Anonymous wrote on Sun, 04/19/2009 - 2:43pm. CDT

I stopped paying in March 08, and it was just sold in March 09. I purchased in November 04, before the peak, and it sold for at least 100k less than I paid- and my financial situation was good, and remains good. I was forced to leave due to my wife's illness. Countrywide would not accept a short sale. Divorced couples got better treatment. The price slide below what we paid in a matter of 6 months. We saw the smart ones who sold right before the crash, and they took a hit on their profit, but cleared without a loss in late 2006, early 2006. My wife's nesting instinct with a baby on the way prevented me from selling at the peak. I will never listen to the irrational side of home ownership again.

I expect new and existing sales to be weak through 2010, which is 5 years out from the peak. The government will keep interest rates low in order to keep millions of ARM loans from falling delinquent. In California, something like 40-50% of all loans in the boom period were interest-only, 5/1 ARMs or something equivalent. Now all of them are underwater; millions of mortgages are underwater. The only way out for them is inflation or foreclosure. I have come to appreciate foreclosure as a form of deleveraging. Banks and investors get to do it all the time, so why can't we?

nova (member) wrote on Sun, 04/19/2009 - 2:45pm. CDT

Funny, a foreclosure next to us, not the vandalized one, has had a steady stream of traffic looking at it today. The first day of its open house. The nursey owner across the street said "What recession? Business is great! " We were buying plants and pots.
The mall was booming at Tysons where my wife bought a Le Cruset? 2 1/2 quart dish for $99.00.

I still believe we have not seen anything yet, but I don't know what the hell is going on anymore.

http://afterthecrash.net - Home of the Doomer Story Portal and Other Stuff

uno mundo wrote on Sun, 04/19/2009 - 2:45pm. CDT

Point is Lawyer Liz if you buy a home and sign a contract to pay for 30 yrs in this unstable economic environment, is that more 'wreckless' or 'ruthless' borrowing knowing you may not have a job soon or even in the next few years and are committing to a lifetime of payments that you are instantly 'underwater' on.
Buying a home now is like buying a car, you are probably instantly underwater in most cases as prices continue to fall and nobody can really predict when the decline will end!
So is it really responsible to buy now?

kensanfran wrote on Sun, 04/19/2009 - 2:49pm. CDT

Artist colonies are all over the midwest

Paducah Artist Relocation Program

Very interesting idea from near my hometown. Many artists will struggle for a while and some won't make it, but it has helped turn around this old river city's slide into cultural oblivion.

uno mundo wrote on Sun, 04/19/2009 - 2:50pm. CDT

I mean in many cases is buying now going to mean even more foreclosures later?

Samdog (member) wrote on Sun, 04/19/2009 - 2:51pm. CDT

Anonymous wrote on Sun, 04/19/2009 - 3:43pm.
Countrywide would not accept a short sale.

Countrywide was a criminal enterprise.

If banks can burn in Hell, BofA will be there soon ....

Black Star Ranch (member) wrote on Sun, 04/19/2009 - 2:52pm. CDT

I still believe we have not seen anything yet

..........these are the days you'll remember as, "I should have (____?____) in the spring of 09, what was I thinking?".

- - - - -

Black Ranch

fried (member) wrote on Sun, 04/19/2009 - 2:55pm. CDT

Ben Frank'll Tank Bernanke wrote on Sun, 04/19/2009 - 3:00pm.

I love the Wire too. Course the folks on the show found a way to utilize the vacants in Balto.

Samdog (member) wrote on Sun, 04/19/2009 - 2:59pm. CDT

nova,

Don't overspend on "Le Creuset." Go to your local restaurant supply store--you get high grade cookware cheap. Nuttin' fancy, but functional and durable.

Rob Dawg (member) wrote on Sun, 04/19/2009 - 3:04pm. CDT

We pulled forward many years of housing consumption over the bubble years. Casey Serin "bought" a lifetimes worth and will never buy another.

IMO we have another 4 years of absorbing the existing housing supply at current demand levels. I expect demand levels to decline over that time by another year and over those 5 years we will build another 1-2 years worth of inventory.

That's 7 years to return to normal new construction and resale rates. Subtract from this the massive misallocation that means places like Upper New York State through the Rust Belt will forever remain overhoused and I see a return to sustainable housing industry activity in 2013.

Bob Dobbs (member) wrote on Sun, 04/19/2009 - 3:06pm. CDT

"I still hear plenty of smart and experienced people say that this is but a temporarily glitch in the matrix and it is all going to go back to the previous levels and now is the buying opportunity of the lifetime (get in now or you will be priced out forever)."

I pulled a teacher's magazine out of the junkmail trashbin at the post office because the cover story was something like, "The Mind Was Not Designed for Thinking." The author, a cognitive psych guy, held that people don't really like to think (because it's hard) -- and think as little as possible. What they do like to do is remember, and apply past lessons and facts to current situations. They'll only start thinking when the old "truths" from memory don't work.

Are we seeing that these days, or what? It's probably the sustaining factor behind so many long bubbles. Especially a long one like this one, with guys in their '40s or later who've _never_ seen a real financial or economic breakdown setting the tone.

On another note, my cube neighbor at work was arguing with her BF yesterday on the phone. He was ready to do something dire because his parents had just stopped making payments on their house -- they were too under water to care anymore -- and he was sure they were going to be tossed out on the street immediately. I told her about notices of default and the whole schedule.

It's everywhere. It's really everywhere.

http://www.talesfromthecoast.blogspot.com

Rob Dawg (member) wrote on Sun, 04/19/2009 - 3:07pm. CDT

Black Star Ranch (member) wrote on Sun, 04/19/2009 - 12:52pm.
These are the days you'll remember as, "I should have (____?____) in the spring of 09, what was I thinking?".

I can play this game:
"I should have flooded Craigslist with every discretionary item in my basement, garage and attic to raise cash in the spring of 09, what was I thinking?".

Bob Dobbs (member) wrote on Sun, 04/19/2009 - 3:09pm. CDT

"The mall was booming at Tysons where my wife bought a Le Cruset? 2 1/2 quart dish for $99.00."

I'm glad to hear that. Your mall is owned by the same people who own my mall out here, which has lost/is losing two of its four anchor stores and is about to lose a bunch of others at other locations (Gottschalks stores, mainly). Hope they can keep their head above water.

http://www.talesfromthecoast.blogspot.com

Samdog (member) wrote on Sun, 04/19/2009 - 3:10pm. CDT

"Bob Dobbs --people don't really like to think (because it's hard) -- and think as little as possible."

Interesting. I'll have to think about it ... maybe later ....

picosec (member) wrote on Sun, 04/19/2009 - 3:10pm. CDT

May have been commented on earlier, but the new home market is going to come back in a much different form than a couple years ago. Prices (and especially margins) are a going to be lot lower now, which will change the builder business model. True, materials are cheaper but labor will be about the same and a lot of the price will depend on whether the land was bought at premium prices or more recently at the "2009 discount rate."

Also going to depend on local conditions. I would think that in severe bubble areas the only new construction would be infill in desireable neighborhoods. There's already an excessive number of almost new homes everywhere else.

Rob Dawg (member) wrote on Sun, 04/19/2009 - 3:18pm. CDT

Here's an almost new almost free house I blogged about yesterday:
http://exurbannation.blogspot.com/2009/04/almost-free.html
8544 Glendora Ave, Hesperia, CA 92344
Price: $149,900
Oct 12, 2006 Sold $454,000
----
How can home builders justify even buying raw land as long as this is the competition?

FFDIC wrote on Sun, 04/19/2009 - 3:25pm. CDT

http://www.daveperrymiller.com/details/325744.html
$900,000 reduction from $6,795,000 to $5,895,000 a mile from the Bushes in Preston Hollow N. Dallas, TX. The Mediterranean style home at 1005 Meadowbrook was built in 2008 by noted builder Sadd Chehabi. Open today from 2 to 4 p.m. It corners busy six lane Walnut Hill a major Dallas east/west artery. There are NO east/west freeways in N. Dallas south of 635/LBJ freeway only six lane streets with many traffic lights and school zones.

RockyR (member) wrote on Sun, 04/19/2009 - 3:30pm. CDT

"The mall was booming at Tysons where my wife bought a Le Cruset? 2 1/2 quart dish for $99.00.

I still believe we have not seen anything yet, but I don't know what the hell is going on anymore. "

I see a lot of this, too. I think the recession is much worse online than it is in the real world. At least it has been so far. Prognostication is further down the road to ruin than is reality.

ecoshift (member) wrote on Sun, 04/19/2009 - 3:30pm. CDT

re: David Simon, Bill Moyers

Thanks for that. One of the more insightful interviews I've seen in awhile.
Almost inadvertently says more about the causes of the meltdown than most analysts seem to understand...

~e

bobn (member) wrote on Sun, 04/19/2009 - 3:31pm. CDT

Some estimates say 50% of all option arm mortgage borrows are making minimum payments, that is they are in negative amortization,

The numbers I've heard, year or 2 back, were 60% to 80%.

It wouldn't surprise me at all if was higher now.

RockyR (member) wrote on Sun, 04/19/2009 - 3:31pm. CDT

'$900,000 reduction from $6,795,000 to $5,895,000 a mile from the Bushes in Preston Hollow N. Dallas, TX. The Mediterranean style home at 1005 Meadowbrook was built in 2008 by noted builder Sadd Chehabi. Open today from 2 to 4 p.m. It corners busy six lane Walnut Hill a major Dallas east/west artery. There are NO east/west freeways in N. Dallas south of 635/LBJ freeway only six lane streets with many traffic lights and school zones."

I finally got some CMAs on a couple of DFW suburbs that has shed some light on distress. I'm about to start doing some low-balling. The abovementioned property is unfortunately well out of my price range

Lavrenti Beria wrote on Sun, 04/19/2009 - 3:32pm. CDT

Anonymous wrote on Sun, 04/19/2009 - 11:29am

"Yes, but an immobile workforce will also have political implications. People who are stuck in one place tend to get cranky. This tendency has been heretofore masked by the freedom to move around."

My point entirely. The filth that our politicians have allowed to purchase them, whether the financial interests or the foreign policy lobbies, have lit the fuse to an explosive that could easily put an end to the system that has so unrestrainedly nourished them. Out of work with homes collosally underwater and not able to move to find employment, perhaps the Evangelicals who so thoughtlessly supported war in the Middle East imagining that in doing so there was somehow "christian" about it, or the netroots schmucks that saw Abraham Delano Obama as a vehicle for "change", or those today conducting the Republican Party inspired "tea parties" that would have only a tax objective as their purpose, will come to recognize that they've been used about as horribly as as one might imagine. When they do, you won't be able to put Humpty Dumpty back together again.

Samdog (member) wrote on Sun, 04/19/2009 - 3:35pm. CDT

RockyR,

Are you thinking recovery soon?

Feckless Ness wrote on Sun, 04/19/2009 - 3:43pm. CDT

Here ya go. Feng shui the house or bury a St. Joseph statue under the For Sale sign. That'll do it.

http://www.latimes.com/business/la-na-realestate-saint19-2009apr19,0,569...

Lobbyi$t Ben Dover wrote on Sun, 04/19/2009 - 3:46pm. CDT

"Especially a long one like this one, with guys in their '40s or later who've _never_ seen a real financial or economic breakdown setting the tone."

This is why we need a recession every eight years to remind us and educate the young ones.

TA wrote on Sun, 04/19/2009 - 3:48pm. CDT

The OTC/OCC report shows the number of home forfeitures during 2008, in their 35 million mortgage reporting base, to be about 450,000. The estimates quoted above would put the number of distressed sales between 1.5 million and 2 million. How would one reconcile these numbers?

Broker (member) wrote on Sun, 04/19/2009 - 3:49pm. CDT

CR, I told you 4 years ago that builders can not compete with banks, and in the final stage it would be a price war between banks. If I can buy more or less the same house (1-2 year old) why would I pay 40-50% more? Try to use some logic. What the builders are doing now is living on borrowed time.

Comrade Coinz! wrote on Sun, 04/19/2009 - 4:00pm. CDT

These are the days you'll remember as, "I should have (____?____) in the spring of 09, what was I thinking?".

I should have won the lottery in the spring of 09, what was I thinking?

I should have walked away from my house in the spring of 09, what was I thinking?

I should have stocked up on ammo in the spring of 09, what was I thinking?

Barley (member) wrote on Sun, 04/19/2009 - 4:01pm. CDT

O/T

deBasement!

Zimbabwe's national currency will remain suspended for at least a year following the legalisation of foreign currencies, officials say.

"There was nothing to support the value of the Zimbabwean dollar," Economic Planning Minister Elton Mangoma said.

bgates wrote on Sun, 04/19/2009 - 4:06pm. CDT

oddly enough, the MSM is doing a better job covering the chinese drywall story than blogosphere outposts like this one...

http://online.wsj.com/article/SB123993444645927999.html?mod=googlenews_wsj

maybe TPTB like the idea of knocking down everything built since 2004. I can't say it would be net loss to our architectural heritage.

fried (member) wrote on Sun, 04/19/2009 - 4:10pm. CDT

Worth reposting, today's NYTImes on how discussing real estate prices has become socially taboo....the losses, both current and future, are too painful for owners in Manhattan.
A RE crash happened in Manhattan in 89-93, with prices going lower each year. Not an event from ancient times, but middle-aged New Yorkers are acting as if a downturn was a new, and unheard-of event. Even folks old enough to have lived thru the last one.

http://www.nytimes.com/2009/04/19/realestate/19cov.html?hpw

fried (member) wrote on Sun, 04/19/2009 - 4:14pm. CDT

I think Elvis as leading the charge for bulldozing...now the drywall issue may give it legs. So, who is investigating and how much of this drywall ended up in schools, hospitals and day-care centers, as well as homes.
Funny business model for the Chinese...sell products that kill or maim their clients; the drywall just their latest deadly export.

Bob Dobbs (member) wrote on Sun, 04/19/2009 - 4:19pm. CDT

Somebody lock Greg Makiw up...

http://www.nytimes.com/2009/04/19/business/economy/19view.html

Talking about the need for a "negative interest rate" to kickstart the economy, he's got just the answer:

If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates - interest rates measured in purchasing power - could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations.

Maybe preferable to you, Greg. He starts the article with the idea of a tax on savings to stimulate the economy, and equates inflation as the real world way of doing this. So all of us who were prudent would pay _right now_ for the sins of the few. And for the sake of those "future generations," of course.

I think I'm taking my money out of money. It's not just the idea of it, it's the .... smugness of it all. Which no doubt is still the reigning attitude of our economic overlords.

http://www.talesfromthecoast.blogspot.com

RockyR (member) wrote on Sun, 04/19/2009 - 4:20pm. CDT

"RockyR,

Are you thinking recovery soon?"

No. I think we're in this for the long haul.

Broward Horne wrote on Sun, 04/19/2009 - 4:24pm. CDT

"It's everywhere. It's really everywhere"
-------------

Around 2004 I started replacing my long-term payments (house, car) for short-term discretionary spending (movies, food, etc).
I'm impedance-matched to the "new economy".

One thing that's annoying is this constant reference to the "5 million lost jobs".

They're not "lost".
I know exactly where they are.... overseas.

crazyv wrote on Sun, 04/19/2009 - 4:29pm. CDT

did you catch the story in the WAPO about a couple whose income has declined by 5% (husband took a pay cut of 10%) from 150,000 to 142,500 /year. The life style changes that they are having to make as a result!. They also own a home and are currently making payments on that they purchased for $517,000 that is currently worth 367,000. I don't believe that we will get a five year grind down. I think when the dam bursts at the upper end it will be fast.

JimPortlandOR (member) wrote on Sun, 04/19/2009 - 4:30pm. CDT

First we impoverish those who got into debt over their ability to pay (or they've lost their jobs and landed in this status).

Next, the Feds and banks go after those who are debt-free and saved their wealth, and take their savings via inflation.

The clear objective of the banks is to wipe out their customers to save their banks.

Sounds a lot like 'we had to destroy the village in order to save it'.

Lucifer (member) wrote on Sun, 04/19/2009 - 4:34pm. CDT

Bob Dobbs,

Greg Makiw is from Harvard. Need I say more..

Samdog (member) wrote on Sun, 04/19/2009 - 4:35pm. CDT

NYT: FED go negative on IR?

http://www.nytimes.com/2009/04/19/business/economy/19view.html?em

brewcrew wrote on Sun, 04/19/2009 - 4:36pm. CDT

Fried said;
Funny business model for the Chinese...sell products that kill or maim their clients; the drywall just their latest deadly export.
-----
It worked for the tobacco companies for many many decades.

Samdog (member) wrote on Sun, 04/19/2009 - 4:37pm. CDT

Oh, somebody beat me to this one. And Lucifer's already put in his two-cents worth ....

Lucifer (member) wrote on Sun, 04/19/2009 - 4:37pm. CDT

I find that hard to believe.
___________________
Obama Says He'll Seek 'Accountability' for Bank Aid (Update2)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEZ3KmgjJZQY&refer=h...

By Julianna Goldman and Kim Chipman

April 19 (Bloomberg) -- President Barack Obama said he'll demand "accountability" from any U.S. banks that require additional taxpayer money following "stress tests" being conducted by regulators.

"We'll try to use as light a touch as we can, but I'm not going to simply put taxpayer money into a black hole where you aren't going to see results or some exit strategy so the taxpayers ultimately are relieved of these burdens," Obama said at a news conference today in Trinidad and Tobago as he wrapped up his first Summit of the Americas.

The U.S. Treasury

reptillian (member) wrote on Sun, 04/19/2009 - 4:38pm. CDT

Capitalism Dead of Self-inflicted Wound

Anonymous wrote on Sun, 04/19/2009 - 4:39pm. CDT

>One thing that's annoying is this constant reference to the "5 million lost jobs".
>They're not "lost".
I> know exactly where they are.... overseas

You got that right, not all overseas

1 million: Illegal Mexicans
2 milion: India
2 milion: China

We pretty much got all middle class American jobs covered by foreigners except banker, lawyers, and politics.

But we live in a global economy?

Sorry we DO NOT live in a global economy only corporate America lives in the global economy, WE (labor) live in the United States of America and are restricted by US laws, taxes, and borders.

Try importing some cheap doctors from Cuba and set up a local clinc in your city to reduce health care costs, see what happens. Capital to go globally to the lowest cost of production, but WE (labor) cannot go anywhere.

Globalization started since Reagan is a big fat lie, the lie of the century. Selling out of America.

crazyv wrote on Sun, 04/19/2009 - 4:39pm. CDT

O H Chick- you make a good point but one additional thing to consider. Much of the land was purchased at a price that assumed a bigger sized house. I think what builders are going to discover is that with tighter financing the demand for large homes will just not be there. Perhaps we are going to have to reverse the trend of the last 50 years and move back to smaller homes. This will really screw the builders land inventory.

Lucifer (member) wrote on Sun, 04/19/2009 - 4:40pm. CDT

Dream on..
______________
APRIL 19, 2009, 2:46 P.M. ET
Auto Task Force to Meet With Salaried Retirees
http://online.wsj.com/article/SB124016633014432579.html

By ALEX P. KELLOGG

DETROIT -- Representatives of some 200,000 white collar retirees of the Big Three auto makers will meet with the Obama administration's auto task force later this week, a person familiar with the matter said.

The meeting is part of an effort by salaried retirees to press the case for preserving their retirement benefits amid the restructuring of Detroit. Unlike union workers and retirees, salaried retirees are often vulnerable in restructurings because their benefit packages are not governed by union contracts and companies often can change terms without consulting their former employees.

Representatives of salaried retirees from General Motors Corp., Chrysler LLC, Ford Motor Corp. and supplier Delphi Corp. have been pushing for weeks to get a meeting with the auto task force, which is overseeing the restructuring of GM and Chrysler.

At the meeting, they plan to outline the hardships retirees will suffer if GM and Chrysler are allowed to slash pensions, health care coverage and other retirement benefits.

ac wrote on Sun, 04/19/2009 - 4:42pm. CDT

If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates - interest rates measured in purchasing power - could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

Just to reiterate the whole problem with this idea is precisely that it gets people to spend when spending is structurally unproductive and to borrow when additional borrowing is simply going to lead to more defaults and more bad credit. It simplistically assumes that economic growth is uniformly good and economic contraction is uniformly evil. It totally ignores any notion of structure or allocation and hence results in the liquefaction and ultimate destruction of the underlying economic and financial foundation that leads to sustainable growth.

It is motivated either by ignorance or short-term political goals, and it is this type of thinking that is rapidly turning the United States into 3rd world economy.

Lucifer (member) wrote on Sun, 04/19/2009 - 4:42pm. CDT

more harvard crap.. but I require my daily dose of entertainment
__________________
How Financial Brands Should Market In a Recession
01:35 AM Thursday April 16, 2009
http://www.bloomberg.com/apps/harvardbusiness?sid=H68b3e26ffddae123b33b5...

By John Quelch

Recent news coverage of the cosmetic name change from AIG to AIU at the failed company's New York headquarters reminds us that a brand is a precious asset. The value of any brand asset depends upon whether it has delivered on its past promises and is believed likely to do so in the future. It takes years of effort to build brand trust but only a few months--or minutes--to squander it. A brand that has lost consumer trust is no longer a brand; it is merely a name.

Merrill Lynch is no longer a brand. Both before and after the collapse of the Internet bubble, Merrill and its commission-based executives were challenged by investors and government regulators for hyping stocks and other questionable practices. The last CEO spent over one million dollars to redecorate his office and pushed through $3.6 billion in executive bonuses the day before he agreed to a takeover by Bank of America. The Merrill Lynch brand is now close to worthless. It drags down Bank of America's brand every time it is mentioned in the same breath. The Merrill Lynch brand is unlikely to ever recover and Bank of America should drop it.

Bob Dobbs (member) wrote on Sun, 04/19/2009 - 4:43pm. CDT

crazyv wrote on Sun, 04/19/2009 - 2:39pm.

O H Chick- you make a good point but one additional thing to consider. Much of the land was purchased at a price that assumed a bigger sized house. I think what builders are going to discover is that with tighter financing the demand for large homes will just not be there. Perhaps we are going to have to reverse the trend of the last 50 years and move back to smaller homes. This will really screw the builders land inventory.

And in Califonria, land use policy. Since Prop 13 limited increases in property tax, many cities resorted to increased "fees" up front -- many tens of thousands of dollars -- to front-load expenses for police, fire, public services on the new properties. With that sort of surcharge, it only made sense for builders to build larger, more expensive houses, so that the fees would be only a relatively small amount of the sale price. They wouldn't have made near as much money selling cheap, small homes. Higher-density developments were often able to cut deals with the city, but not always.

http://www.talesfromthecoast.blogspot.com

Anonymous wrote on Sun, 04/19/2009 - 4:43pm. CDT

How about if Barney Frank and Dodd are dragged across the country behind a pick-up tryck, to build investor confidence

Lucifer (member) wrote on Sun, 04/19/2009 - 4:45pm. CDT

I am shocked that the ATM did not bend over backward when our harvard boy used it..
_____________________________________________________________________
Better Through Whose Eyes?
11:33 PM Tuesday April 14, 2009
http://www.bloomberg.com/apps/harvardbusiness?sid=H535cac6f5d03c105f6b72...

By Scott Anthony

Over the weekend I stopped off at the local Bank of America Automated Teller Machine to deposit a few checks. The company had recently upgraded the ATM to an advanced machine it began rolling out nationwide in 2007. A sign proudly touted how the machines' optical scanning technology enabled consumers to deposit cash and checks without using envelopes.

I dutifully put in my stack of six checks, and the machine started whirring. The machine easily recognized five of the checks (including a handwritten one). But it just wouldn't take that sixth check (which looked indistinguishable from three other machine-printed checks). I tried three times, and gave up. Either I would have to go to the bank branch to deposit the check or I would have to get a new check.

As I walked home, I grumbled to myself, "This is new and improved?"

Of course, I can easily imagine how this kind of service is better to Bank of America, because it cuts costly data entry errors. And there are some clear consumer benefits. You can get a receipt with images of the deposited checks, which can help those of us who still obsessively manage their finances in Quicken. And of course most of the time I'm sure the system works absolutely flawlessly and saves consumers the hassle of adding up checks at home.

Rightly or wrongly, my check-deposit struggles left me with an image: Bank of America is innovating to help itself, not me.

Samdog (member) wrote on Sun, 04/19/2009 - 4:46pm. CDT

Should be AIG to IOU ....

ac wrote on Sun, 04/19/2009 - 4:47pm. CDT

If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates - interest rates measured in purchasing power - could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

One other thing, it's worth reiterating that we've seen precisely this type of policy prior to every major economic catastrophe in the past century:

In 1891, 1927, 1998, 2001-2003, 2007, and prior to the massive bubble in Japan.

Negative interest rates created by the government are the one element common to all these disasters.

Lucifer (member) wrote on Sun, 04/19/2009 - 4:49pm. CDT

I am not going to comment on this one. I wished they understood that risk comes in more than two flavors
______________________________
Will the Next MBA Grads Take More Risks?
07:46 PM Tuesday March 24, 2009

By Stew Friedman

Who cares what games we choose...little to win, nothing to lose.

So goes the chorus of the Strawberry Alarm Clock's 1967 #1 hit song, Incense and Peppermints. This phrase - an iconic representation of '60s counterculture - came to mind the other day as I read what one of my Wharton MBA students wrote in response to this question I posed to them as we began the fourth quarter of their first year: How are you thinking about the future in light of how the economic context has changed since you first arrived at Wharton in August 2008? She said that now is a great chance "for my classmates and myself to find real opportunity in the market mostly because we are starting with so little and have so little to lose."

sanityclause (member) wrote on Sun, 04/19/2009 - 4:47pm. CDT

crazyv, I'm not sure where you're talking about, but I imagine most places that wouldn't be a big problem. In California the houses got much bigger, but they were still being packed like sardines. You throw a few extra feet between the houses, some setback or a yard, and voila, smaller houses.

Samdog (member) wrote on Sun, 04/19/2009 - 4:48pm. CDT

Lucifer,

Financial Brands all = Jesse Livermore at this point.

Cinco-X (member) wrote on Sun, 04/19/2009 - 4:49pm. CDT

" JimPortlandOR (member) wrote on Sun, 04/19/2009 - 5:30pm.
First we impoverish those who got into debt over their ability to pay (or they've lost their jobs and landed in this status).
Next, the Feds and banks go after those who are debt-free and saved their wealth, and take their savings via inflation.
The clear objective of the banks is to wipe out their customers to save their banks.
Sounds a lot like 'we had to destroy the village in order to save it'."

Jim,
We can only hope that this is their approach; I'd prefer that to having them take 401k's, Roth IRAs, IRAs and such, and forcing us to buy the federal deficit with them. 0.1% interest forever. At least with your approach, we'll get to enjoy 18% interest rates a la the early '80s. Additionally, it's effectively a "claw back" from the folks that "really" profited from these shenanigans.

Anonymous wrote on Sun, 04/19/2009 - 4:51pm. CDT

Ever been to Riverside California, the I-15 foreclosure corridor? Lancaster? Pomton...ooops I mean Palmdale, CA?

500K homes now going for 90K, still nobody wants them, soon to be 20K by 2011. The Governator should plow under all homes 5 miles on either side of the I-15 and create a national park corridor for the California Grizzly.

Lucifer (member) wrote on Sun, 04/19/2009 - 4:52pm. CDT

They will, unless the townsfolk chase into the abandoned watermill and kill them..

___________________________________________
Will the Next MBA Grads Take More Risks?
07:46 PM Tuesday March 24, 2009
By Stew Friedman

ninncompoop wrote on Sun, 04/19/2009 - 4:53pm. CDT

How about an incompetent if in his position he has no idea where the stress tests are going to go?

Lucifer (member) wrote on Sun, 04/19/2009 - 4:53pm. CDT

Samdog,

Sure, there are grades of crap.. but I would not eat any of them

Anonymous wrote on Sun, 04/19/2009 - 4:53pm. CDT

California may fall into the sea on its own, no earthquake needed

Cinco-X (member) wrote on Sun, 04/19/2009 - 4:53pm. CDT

"Ever been to Riverside California, the I-15 foreclosure corridor?"

Is this in "the Valley" that is ridiculed on TV and in a Frank Zappa song?

Anonymous wrote on Sun, 04/19/2009 - 4:55pm. CDT

Don't 40% of all Californians work for the government? Is that not kind of like communism?

I also hear that 40% of all Californians are real estate agents? how does that work?

Bob Dobbs (member) wrote on Sun, 04/19/2009 - 4:56pm. CDT

ac writes: "Just to reiterate the whole problem with this idea is precisely that it gets people to spend when spending is structurally unproductive and to borrow when additional borrowing is simply going to lead to more defaults and more bad credit. It simplistically assumes that economic growth is uniformly good and economic contraction is uniformly evil. It totally ignores any notion of structure or allocation and hence results in the liquefaction and ultimate destruction of the underlying economic and financial foundation that leads to sustainable growth."

Thanks, I was too angry to complete the thought.

http://www.talesfromthecoast.blogspot.com

sanityclause (member) wrote on Sun, 04/19/2009 - 4:57pm. CDT

cinxo-x, no. The valley is the San Fernando Valley north of LA. Riverside, etc. are far to the east of LA.

Samdog (member) wrote on Sun, 04/19/2009 - 4:58pm. CDT

Forty percent work for the gov't, 40% are in real estate, and remaining 20% are here illegally--makes sense to me....

Lobbyi$t Ben Dover wrote on Sun, 04/19/2009 - 4:58pm. CDT

" Unlike union workers and retirees, salaried retirees are often vulnerable in restructurings because their benefit packages are not governed by union contracts and companies often can change terms without consulting their former employees. "

I think some of Delphi white collar retirees recently got medical benefits cut by the BK judge.

Cinco-X (member) wrote on Sun, 04/19/2009 - 4:59pm. CDT

"The valley is the San Fernando Valley north of LA. Riverside, etc. are far to the east of LA. "

Thanks; I always hear about it, but I've never been there, and wasn't sure exactly.

Cinco-X (member) wrote on Sun, 04/19/2009 - 5:01pm. CDT

"Forty percent work for the gov't, 40% are in real estate, and remaining 20% are here illegally--makes sense to me.... "

I thought that a small percentage working in and around San Jose were actually productive!? No?

Lucifer (member) wrote on Sun, 04/19/2009 - 5:02pm. CDT

Please lynch this guy.. Only his first suggestion is good.. and it is common sense
______________________
Biotech Survival Guide

Here are some key tips on how to stay the course during the global economic crisis.
http://www.burrillreport.com/printer_article-1281.html

PETER WINTER

The global financial meltdown has created an unprecedented situation for the biotech industry. After having enjoyed more than 40 years of easy access to capital, the rules of the game have forever changed. The capital markets have permanently restructured, making capital more difficult and expensive to secure. This environment is new and unfamiliar to the industry. Though biotechnology companies have experienced sharp market downturns in the past-and lived to tell the tale-the recent collapse of financial institutions has choked off the industry's financial life-blood. Scores of private and public biotech companies are now at risk of running out of cash. In reality, the crisis is helping to accelerate changes already underway, which are being shaped by such forces as globalization, healthcare reform, and climate change. In order to survive the next 12 to 18 months, companies will need to quickly adapt to these changes, or run the risk of closing their doors.

In order to survive this turbulent period, biotechs will want to consider the following:

Seek partnerships for value creation: The only sensible idea

Conserve capital: aka Fire people

Go into virtual mode: Fire more People

Examine your options: Beg for money from the big bad government.. or Fire even more People

Engage in global arbitrage: Congratulations.. you are your companies only employee

Keep the faith: Dear God!!

REBear wrote on Sun, 04/19/2009 - 5:03pm. CDT

"Volcker vs. Kohn on Inflaton "

drama!

Lucifer (member) wrote on Sun, 04/19/2009 - 5:03pm. CDT

Everyone has a real estate licence in Klownifornia
__________________________
Don't 40% of all Californians work for the government? Is that not kind of like communism?
I also hear that 40% of all Californians are real estate agents? how does that work?

reptillian (member) wrote on Sun, 04/19/2009 - 5:03pm. CDT

"
Axelrod pledged that the public would see the test results.

"I believe that the American people and the markets can handle the truth," he said on CBS' "Face the Nation."

"It's important that there is disclosure. And I think the banks are going to want that because they're going to want the markets and the country and the world to know exactly what their condition is," he added.
"

Link

Lobbyi$t Ben Dover wrote on Sun, 04/19/2009 - 5:04pm. CDT

I always hear that government employees make less.

http://www.journalstar.com/articles/2009/04/19/opinion/editorial/doc49ea...

Lucifer (member) wrote on Sun, 04/19/2009 - 5:05pm. CDT

You cannot handle the truth!

"I believe that the American people and the markets can handle the truth," he said on CBS' "Face the Nation."

Lucifer (member) wrote on Sun, 04/19/2009 - 5:08pm. CDT

I do not wish to waste my outrage on this one
______________________________________
Businesses still shrinking, but making progress
Durable goods orders, home sales expected to fall

By Rex Nutting, MarketWatch
Last update: 11:40 a.m. EDT April 19, 2009

WASHINGTON (MarketWatch) -- Whether you call it a recession, a depression, or even a banana, economists pretty much agree that we're not out of the swamp yet.
The good news is that the recession is finally entering a phase that looks like familiar territory. The economy may face risks of further credit strains, a larger global meltdown, or a major bankruptcy, but a big part of our problem right now is just a good old-fashioned inventory correction.

The story goes like this: In boom times, making the sale is easy. Everyone expands business to grab as much revenue as possible. But at some point, supply outruns demand. Inventories of unsold goods and services build up and companies are forced to shrink their businesses to cut costs as much as possible.

ac wrote on Sun, 04/19/2009 - 5:12pm. CDT

Don't 40% of all Californians work for the government? Is that not kind of like communism?

Funny how most of the budget crises seem to be occurring in the US Soviet Bloc states.

Rob Dawg (member) wrote on Sun, 04/19/2009 - 5:15pm. CDT

ac wrote on Sun, 04/19/2009 - 3:12pm.
Don't 40% of all Californians work for the government? Is that not kind of like communism?
Funny how most of the budget crises seem to be occurring in the US Soviet Bloc states.

Say it. Come on. Say it. Blue States. [Nomex suit thus applied]

Lucifer (member) wrote on Sun, 04/19/2009 - 5:16pm. CDT

Would you prefer the Carolinas or Georgia or Nevada or Arizona
_________________________________________
Funny how most of the budget crises seem to be occurring in the US Soviet Bloc states.

reptillian (member) wrote on Sun, 04/19/2009 - 5:17pm. CDT

An even bigger story than TARP is the FDIC backstop on the bankers' debts. Many banks, including our illustrious Goldman Sachs, have received more help from the FDIC backstop than from TARP, and Goldman received billions in TARP aid, not to mention the payments via AIG.

Lucifer (member) wrote on Sun, 04/19/2009 - 5:18pm. CDT

Since repeated outrage is a lot like repeated ejaculation.. Have your go.
__________________________________________________________
Alistair Darling: slump to end this year

(Posted on Latest Business News from Times Online about 23 hours ago)
ALISTAIR DARLING will say in this week's budget that the recession should end this year, with a worse-than-forecast contraction in the economy in 2009 replaced by growth next year.

popeye (member) wrote on Sun, 04/19/2009 - 5:20pm. CDT

Good interview on bank profits, stress tests & market from NPR Planet Money [4/17/09]

http://www.npr.org/blogs/money/

.............................

If you don't take your profits, someone else will.

Lobbyi$t Ben Dover wrote on Sun, 04/19/2009 - 5:20pm. CDT

"Say it. Come on. Say it. Blue States."

California Dreaming!

Lucifer (member) wrote on Sun, 04/19/2009 - 5:21pm. CDT

Can you continue the gang bang..
_______________________________
Why Houses Look Better and Better
http://online.wsj.com/article/SB124010083844932175.html

By DAVE KANSAS

Some people think it's a good time to buy a house. Is it?

In the past few weeks, home-sales data have perked up from very low levels. At the same time, home prices continue to fall in most parts of the country and mortgage rates, while ticking up, are at remarkably low levels.

All these data raise an intriguing question: Is now a good time to purchase a home?

Don (member) wrote on Sun, 04/19/2009 - 5:22pm. CDT

Cinco-X wrote
"Lavrenti Beria wrote on Sun, 04/19/2009 - 2:47pm. ghostfacedinvestah, A valid and most interesting observation. Imagine yourself in the situation of an Ohio autoparts manufacturing worker, recently laid-off, with his eight year old home worth about 70% of what he owes on it, unable to sell so as to seek work in a more favorable location, and with no prospect locally for any kind of work."

I would feel bad for this person, but I'd also note that this is why purchase price should be in some way related to potential rental income.

I'd imagine in the example cited the potential rental income in the community has fallen quite a bit as well.

Lucifer (member) wrote on Sun, 04/19/2009 - 5:24pm. CDT

You are kidding..
___________________
'The Largest Failure'
J.P. Morgan Chase CEO Jamie Dimon on the lessons of Fan and Fred.
http://online.wsj.com/article/SB124000889812430591.html

'Perhaps the largest regulatory failure of all time." That's how J.P. Morgan Chase CEO Jamie Dimon describes the "inadequate regulation of Fannie Mae and Freddie Mac" in his annual shareholder letter, released this week.

Mr. Dimon devotes nearly a quarter of the 28-page letter to analyzing what caused the panic of 2008, and he hands out plenty of blame all around. But he calls it "amazing" that Fannie and Freddie were allowed to grow "larger than the Federal Reserve" thanks to Uncle Sam's implicit guarantee of their obligations

bgates wrote on Sun, 04/19/2009 - 5:25pm. CDT

"The Valley" only refers to the SF valley in greater LA. To the rest of California, it means the Central Valley - the gigantic, somewhat hellish artificially irrigated flood plain which could feed much of the planet. Prominent cities include Fresno, Bakersfield, and Sacto, the last depending on your definition.

squidward (member) wrote on Sun, 04/19/2009 - 5:25pm. CDT

Something to take the mind off the bailouts

Obama to target Credit Card fees
http://www.reuters.com/article/marketsNews/idUSN1934733820090419

Now, doesn't it feel better to send billions to bankers?

bgates wrote on Sun, 04/19/2009 - 5:29pm. CDT

Nice article on the above:

http://en.wikipedia.org/wiki/Central_Valley_(California)

Also, "The Valley" is most likely to mean the Santa Clara "Sillicon" Valley, dominated by San Jose, when in the Bay Area. For extra credit, note that Palo Alto is NOT in that valley or any other.

bgates wrote on Sun, 04/19/2009 - 5:31pm. CDT

"Now, doesn't it feel better to send billions to bankers?"

Not like I really object, but if it wasn't for usurious fees, banks like BAC, C, WFC, PNC and JPM would possibly not have a single penny of non-trading profit.

bobnbot (member) wrote on Sun, 04/19/2009 - 5:31pm. CDT

NEW POST at Calculated Risk.

Ways to view:

Dead simple, read only interface at: http://users.thelink.net/bobn/CR - not available for 5 minutes after this post however, to avoid 'first grappling' per request of Ken Cooper.

CRC-like interface at http://realize.org/cr/crcizer/

Full Blown Interface at http://www.hoocoodanode.org/

For live chat, and the new Mishbot feature, as well as notice of new posts on other blogs, join us in IRC.

To access IRC with firefox, install the chatzilla add-on and go to irc://irc.realize.org:9996/calculatedrisk.

Or set your IRC client for server irc.realize.org port 9996 and /join #calculatedrisk.

Feed back via bobn

barefoot servant wrote on Sun, 04/19/2009 - 5:31pm. CDT

Goods Orders, Home Sales Probably Fell: U.S. Economy Preview

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGWB9t9CkLVA&refer=home

By Shobhana Chandra

April 19 (Bloomberg) -- Orders for U.S. durable goods and home sales probably retreated in March after rebounding the previous month, showing any economic recovery will be slow to develop, economists said before reports this week.

Bookings for goods meant to last several years fell 1.5 percent, the fifth drop in six months, according to the median forecast in a Bloomberg News survey ahead of a Commerce Department report April 24. Combined sales of new and existing homes likely decreased to a 5.02 million annual rate, down from a 5.06 million pace in February, other figures may show...

Bloomberg Survey
================================================================
Release Period Prior Median
Indicator Date Value Forecast
================================================================
LEI MOM% 4/20 March -0.4% -0.2%
Initial Claims ,000's 4/23 18-Apr 610 640
Cont. Claims ,000's 4/23 11-Apr 6022 6120
Exist Homes Mlns 4/23 March 4.72 4.68
Exist Homes MOM% 4/23 March 5.1% -0.9%
Durables Orders MOM% 4/24 March 3.5% -1.5%
Durables Ex-Trans MOM% 4/24 March 3.7% -1.2%
New Home Sales ,000's 4/24 March 337 340
New Home Sales MOM% 4/24 March 4.7% 0.9%
================================================================

Rob Dawg (member) wrote on Sun, 04/19/2009 - 5:37pm. CDT

Sacramento used to be a place the rest of us kept our politicians out of trouble. Kind of an all your rotten eggs in one basket strategy.

People tend to forget just how big and diverse California is. Hey, for perspective if you are in San Diego your state capital is as far away as Raleigh, NC is to NYC.

Anonymous wrote on Sun, 04/19/2009 - 5:51pm. CDT

You are your COMPANY'S only employee, not "companies only employee." Thank you for playing.

patientrenter wrote on Sun, 04/19/2009 - 5:57pm. CDT

Paul Krugman:

"Is inflation the answer?
Greg Mankiw says yes. Since that was the answer I arrived at for Japan more than a decade ago, I have to say that it makes sense in principle.

But here's why it won't work now, at least not yet: we're talking about making a credible commitment to fairly high inflation over the medium term, yet you still have distinguished central bankers appalled at the Fed's 2 percent inflation target.

And again, the inflation commitment has to be credible. So I don't think we're ready for this, not yet."

Translation: "We're not going to be allowed to show the big inflation engines to the general public until we knock Volcker off the train... Almost there... Just one more push...."

http://krugman.blogs.nytimes.com/2009/04/19/is-inflation-the-answer/

Anonymous wrote on Sun, 04/19/2009 - 6:16pm. CDT

Cinco-X and Don,

"I would feel bad for this person, but I'd also note that this is why purchase price should be in some way related to potential rental income."

"I'd imagine in the example cited the potential rental income in the community has fallen quite a bit as well."

Having spent many years living and running a business from rented quarters, eventually to own a modest two-bedroom condo, one is struck so profoundly with the tax economies involved with the condo that one sees immediately the details of the war being waged on little people by those that run our government. They make and have made what Michael Hudson describes as debt peonage inevitable. I was lucky to have escaped with my hide; many others, too many, clearly, either have not or have had a false start. With an income now in excess of $2MM from the business of politics, our dear savior has little to worry about when it comes to this kind of slavery. Neither do the financial and foreign policy lobbyists that fund and foist him on us.

Dirk van Dijk (member) wrote on Sun, 04/19/2009 - 6:43pm. CDT

Keep in mind the folloing mantra, more new home sales good, more housing starts bad. While CR is right that housing starts will not fall to zero because there are probably some areas where housing is in short supply, although I cant think of any off the top of my head, and because some people cant stand the thought of living in a "used" house (why I dont know, but that is a psych issue not an economic one). Still in aggragate we have to many housing units in the country and each new house started represents malinvestment. I think we have to work off the new home inventory before we see a significant up turn in housing starts. We probably have to work off the inventory of existing homes including shadow inventory as well. Until then REO's will simply underprice new homes by too much for a builder to start them.

Zephyr wrote on Sun, 04/19/2009 - 7:26pm. CDT

Zero new homes is extremely unlikely. Don't forget that even with no growth in housing demand there would still be demand for replacement structures as people replace smaller old homes with new larger structures.

Michael LittleBig wrote on Sun, 04/19/2009 - 7:59pm. CDT

The millions that have and those that will loose their home will be looking at housing with a different attitude toward ever buying a house again. Those who have not lost their home, but who are under water or have seen the mental anguish of foreclosure constantly live with that thought, I will be next.

We will know who those people are, because their credit bureaus will tell not to trust these people credit ever again. The credit bureau is the truth as presented by the wealthy and powerful lenders of mortgage money, credit cards and car loans.

These powerful and wealthy lenders will never be held accountable because their oversight by the Congress will never ever bite the hand that feeds them.

Time and again we see the media question those elite who preach the verse of getting on with our lives and not looking back. The need to get over it. Why waste the time and effort to blame and hold those responsible accountable. Those who preach these verses are the very ones who profited.

Those that hype the real estate market believe that it will be business as usual.
The wounds left by those lenders that raped and pillaged millions of home owners have taught us a lesson to never trust again. Those that asked the courts and governments for help but were cast aside know the power of discrimination.

This Great Nation is on its knees, my fear is that our best days are over. It's hard to fight a lie.
It's impossible to hide the truth. The truth appears to be that we as a people have lost our moral compass here at home. It is right to live for ourselves at the expense of others.

Its now everyman for himself.

C in Marin wrote on Sun, 04/19/2009 - 11:29pm. CDT

Comrade Coinz - "Slows recovery because people can't move as easily to where the jobs are..."

Where, pray tell, are these jobs exactly? As far as I can see, there really aren't any jobs to speak of right now, anywhere. And still no serious plans from the White House to address this in any kind of large & strategic way. All the states are busy cutting staff and raising fees.

Especially if the folks who are looking are trying to approximate some kind of middle class life (home, car, health insurance, even just at a very modest level).

But I agree with the posters who did note that there are actual benefits - social, political, even physical/mental health - from people being more connected to their communities. In times of trouble, it is your friends and neighbors that count. Especially when you all have pitchforks...

Anonymous wrote on Sun, 04/19/2009 - 11:39pm. CDT

We are another foreclosure waiting to happen. I'm in CA and bought in 2003. We put down at least 20% on a new home in Orange. We took out a 30 at 6.25%, although they offered us all of the exotic packages. Our dreams (plan or comittment) was to stay here for 30 years.

We both have been steadily employed for over 10 years. My husband was in finance and I worked for a nonprofit before we lost our jobs. He lost his in December, I have lost mine recently.

I'll bitch about this later...

Comments for "Housing Activity Forecast"

Done