I don't think the Fed is going to let house prices fall another 30%.
Well, not in nominal terms, anyway.
From Mish:
Older job loss reports are still being revised down, and the BLS revised the January number down a second time:
http://globaleconomicanalysis.blogspot.com/2009/04/time-to-remove-l-from...
The Fed can't stop it.
They can delay the course of large scale economic realities but they can't stop them or change them.
The price for making things easier in the short term is always to make things worse in the long term.
Meredith wasn't "the first" to talk negatively about the financials - maybe the first on CNBC!
Nemo, Meredith is just talking the more adverse scenario from the Fed and Treasury. That was 22% house price decline in 2009 and 7% more in 2010 (based on Case-Shiller Composite10).
best wishes.
How are banks going to start making money with home prices falling another 30%? Might that impact "legacy" assets just a bit?
I think the strength of the current housing market is being vastly underestimated...
CR Kudos to you were one of the 1st but John Talbott wrote about a housing bubble in 2003
Agree with Nemo.
Housing IMO will never really bottom and in real terms housing will continue to fall as an asset class. Take it for what it is a "prediction" but team Obama's projections are way too rosy
The housing market cannot survive a 30% drop from current levels. That wipes out virtually every homeowner who bought in the last decade. The mathematics of politics cannot allow that.
Don't get me wrong, I too think 20-20% is in the cards. I'm just saying it forces a reset.
Listened to video. New York could see declines from 60-70% from the top IMO.
50% haircut
That's misunderestimated....
Well Miami was off 44% as of the end of January, which would maybe make 48% off now.
7% more would be 55% off, which is my personal Miami worst case scenerio (except for the towers, always except for the towers.
And by the way, I got spoiled and only notice a new thread when I see I'm talking to myself.
Maria tried to game her to make bullish statements. Hold On Maria
could somebody lighten us up with some roubini?
"I think the strength of the current housing market is being vastly underestimated... "
---------------------------------------------------------------------------------------------------
Pray tell... Please tell me you have some reasoning behind that bold statement.
Rob Dawg
We will see these declines. Rob You better hold on to something immovable... like a new Hummer H2 on the dealers lot
Of course housing will decline 50% from the peak in inflation adjusted terms.. It is possible that in current dollars we will perhaps not see this decline Most of us here are aware that current efforts to save banks and prop up housing prices could lead to inflation. If the feds pull this off smoothly enough, they may leave us with the illusion that housing prices haven't collapsed as much as they really have. Then again, maybe we will stay in the current liquidity trap, and deflation will continue longer -- in this case we will see more than a 50% drop in current dollar amounts.
Isn't economics fun. Everything seems possible all of the time.
I am seeing some movement.
It is now "less than hideous". Not good, mind you, but less than hideous. Falling slower.
Could get worse again, but falling slower.
Tim--hahahaha
how do you get out of a liquidity trap? do you have to convince the bankster that he has to let go of his vig?
Looks like some people are not happy with the ratings agencies bonanza of 400 million in fees from bailout money..,
http://www.usatoday.com/money/economy/2009-04-06-credit-rating-agencies-...
Hey Kristina, how is your loan app coming along?
Lawyer Liz
Yves Smith on Nakedcapitalism was looking for lawyer for her book. Maybe you might check it out.
If CNBC were fair, they'd have a 'pro' who believes house prices will go up 30% this year.
Well the first company I dealt with were scam artists but I did at least get our credit ratings out of it. He's only been on his new job a month now so we just now have all our paperwork we need. Now I'm shopping around to see who I want to deal with, so tired of scammers. I am also looking into a loan mod via the new program. So far my company, Saxon, has only offered to freeze the current rate which is of little help. I'm going to contact them again and see if they want to make a better offer via the Federal program...
Thanx Tim. Don't know if I have the nerve.
I hope you gave them little to no money!
For the record, here's Eric Janszen from iTulip:
Commentary - August 20, 2002
Yes. It's a housing bubble.
http://www.itulip.com/index_old.html
I think that counts as being one of the first.
My wife and I have been keeping track of prices and sales in our small retirement community in Sun Lakes, AZ. We purchased here in 2000 then sold in 2005. From our admittedly anecdotal survey of some 60 -70 homes, it seems successful selling prices are below the 2003 level and heading to the 2000 mark. In the case of the home we sold, that would be a 51% decline in price from 2005 till now. There is a bottom somewhere, but time and tide will tell the tale. For us at least, we continue to lease and wait on opportunity and price.
"I don't think the Fed is going to let house prices fall another 30%."
What mechanism, other than QE can they use to stop it? Somehow, I do not see people lining up to buy a depreciating asset. At least until a house is seen as a stable place to park cash in an inflationary environment.
So, while poking around on Google looking for the origin of the term "hoopajoop" in the CR context I came across this guy. Hero or villain?
Salmon P. Chase
http://en.wikipedia.org/wiki/Salmon_P._Chase
Yeh, Meredith. Home prices go down 30%, but there are some banks that will make money. Something to be said about quitting while one is head, eh?
It's time for Meredith to book lunch with Elaine Garzarelli. If she can find her, that is.
Question: what interest rate on mortgages are people assuming if the Fed is successful in reviving inflation?
sm_landlord,
That link to Mish has a great chart on the NFP Birth/Death model and the recent systematic error of underestimating job losses...
Link to Birth/Death model job adds:
http://4.bp.blogspot.com/_nSTO-vZpSgc/SdcH0P5CKTI/AAAAAAAAF1c/ZPnSbw-Z9A...
I think it will stop being a bubble, when I can comfortably afford my own house. Nowhere close yet.
This is Merritt Island, not South Florida. I could afford the house I sold in early '96 in South Dade.
No, gave them nothing. They sent me the mortgage papers and nothign was what they said it would be. They claimed because I have a balloon at the end it effects my balance...My statement clearly states what my principle balance is, the mortgage they sent me was for 176K with no money coming back to me, my balance on the mortgage is 129K...The rates were different as well and they had fudged the income statements...Incredible these people are still at it...
"And by the way, I got spoiled and only notice a new thread when I see I'm talking to myself. "
Yeah, I kind of miss the CRBot giving the heads up RE: a new thread. It would be kind, if CR implemented an automated notification.
Meredith jumped the shark. She's also lost her looks over the past 10 years. Nice woman though.
Repeat of earlier post:
"At the end of 2008, the price-to-rent ratio (Ratio of the Case-Shiller Home Price Index and the
Owners’ Equivalent Rent of the Consumer Price Index) showed a noticeable improvement (see
chart 2), with the ratio in the fourth quarter of 2008 (107.97) closer to the long-term average of
98.05 (see table 1, which covers the period 1987-2001). The fourth quarter price-to-rent ratio is
well within the range of the mean (109.77) of the entire historical period (1987-2008) which
includes the go-go years of 2001-2008. The main take-away from this chart is that home prices
are most likely to decline in the months ahead, given the elevated level of inventories; but the
pace of decline will be assuredly small. "
http://web-xp2a-pws.ntrs.com:80/content//media/attachment/data/econ_rese...
The buffering is horrendous, but some of that must be my POS system.
"Question: what interest rate on mortgages are people assuming if the Fed is successful in reviving inflation? "
Somewhere between 11 and 21%?
The federal funds rate, which had averaged 11.2% in 1979, was raised by Volcker to a peak of 20% in June 1981. The prime rate rose to 21.5% in '81 as well.
http://en.wikipedia.org/wiki/Paul_Volker
salmon is underated as a man's name. i thought the fiat currency was italian, but now i see it's new english.
I have done some pretty serious analysis of LA/Orange County prices and economics. Some of it was in The Great Housing Bubble, and much of it appears on the Irvine Housing Blog.
My models show about 65-70% off peak prices for LA/OC in 2011. If you bought in 1999 with 20% down and didn't do a cashout refi, you'll break even. If you bought in 1997 with 10% down, you might be ok.
At least 60% of LA homeowners will be underwater. Prices will not get back to 2006 levels here for at least a decade (if general inflation is ~3-4% annually).
If it turns 80s-like, 17 1/5 %
The hub just read that the Mass Supreme Court held that 14k Mass mtges can't be foreclosused by Fremont because they were unconscionable.
Wow. I guess the Supreme Supremes will be hearing this in a year or 2. In the meantime Mass defaulters, don't move.
Nothing was said about reforming the mtges, one way or the other. Of course, you can sue on the note and then try to levy on the house. . . bk anyone?
Agree, NYC is toast...see 1973-1974 for the photos...Warriors, come out and play
Banks were told to buy FNM/FRE paper than the Fed went in to buy creating billions in paper profits. Wonderful
Meredith on banks: "They all have these different mechanisms through which they can not lose money."
Meredith is 39. She looks great and is granted the extra grace of being smart and brave. What do her looks have to with anything? sheesh
The banks are protected while Rome burns
17 1/2% was the highest I closed, but I heard of a few 19%-ers.
This rich lady was making my life miserable complaining in an 80s closing and finally I said, you are
a person of means, why not pay cash. And she admitted her money was out at 21% and she shut up and signed.
People would sit there with pen poised over note, in a state of shock. But we didn't lie to 'em; they knew what was coming.
My word, 'Bu, what's the median now?
I'm so glad I live here in L.A., which is apparently part of some weird alternate reality. According to many realtors and sellers, house prices here have bottomed at about %10 off peak. Guess I better hurry and buy, prices should be zooming back up right away!
/bitter angry sarcasm
Central Valley of Ca is down 45-70%...
What do her looks have to with anything?
a women has to look pleasing to a man sitting at a cheetos dusted keyboard, with a butt crack and a paunch the size of a watermelon
I don't eat cheetos.
i can tell you all something big is on the financials horizon. I used to get all kinds of credit card offers. for the last 3 months none, today American express Gold says i have what they want and "selected to apply"... american express, the same company offering 300 dollars to turn in your card? not sure whats up but i have never had an unsolicted offer from AE... and i am not even looking for credit. Hell i paid off all my cards and lowered them, 3 of thenm to 100 quid a piece..... and that was back in October......really making me paranoid. 8>}~
you should stay anonymous then! a can of spinache
Paunch.
Speaking of which, I'm hungry. Off to eat Nicaraguan food. Parsely garlic sauce to die for.
I attended the foreclosure auction in Phoenix this week-end. Your average 3 bedroom 2 bath house was going for 125-130K
woops 1000 quid...
Most definitely will prices fall another 30%. The reason is that job loses will increase for the foreseeable future, adding more inventory to the mix. Also expect an overshoot below the case shiller historical average. So many people I know have never seen a down market before and this is perhaps why there is so much denial out there. In the end, housing will no longer be thought of as an investment (as it should be)
i can tell you all something big is on the financials horizon. I used to get all kinds of credit card offers. for the last 3 months none, today American express Gold says i have what they want and "selected to apply"
Banks trying to earn their way out of the hole using the TALF.
all should be concerned if i am the new poster child for credit card holders is all i'm saying...if i charge 500 bucks by june i get round trip tickets for two airfare.... then 300 dollars back to close out my account.... scooby something doesnt smell right....
TALF to the hand
@lawyerliz
"Blumenthal said he subpoenaed the companies for documents last week and asked Federal Reserve Chairman Ben Bernanke in a letter sent Monday to revise the bailout program to stop favoring the three rating agencies."
Looks like hush money to keep them from downgrading the "legacy" assets. We would not want the world to know we are over paying or someone might take advantage of us. Besides the banks that stand to be rewarded handsomely, of course.
lawyerliz,
In what way were they unconscionable? Negative amortization, unrealistic debt to income, ... ?
Talk about the real liquidity crisis, House Arrest Nation™ (title of book I will write, so you can't have it.... it's good, no?)
just to say thanks Ken and a small chip-in... more later
EHP:
While a trademark can be a title to a book (e.g. XYZ for Dummies), the title itself is not a trademark. Legal FYI BS.
ken,
is there a way when we refresh comments, if there was a reply to an individual comment, can the refresh take us back up to it? provided the masses agree....seems retorical arguements that may have merit might get missed, and if then we simply respond to a comment by ordinary means, do we need the reply button?
Problem with the 50% off call is it wont be spread evenly.
Case shiller says XYZ city is 25% off peak prices. However, within that city garbage areas have fallen 25% from peak, good areas down 5-10% - so far we are halfway to the bottom.
Next half (2009-2011) will be the same thing - garbage areas fall to 50% from peak (assuring whitneys prediction) good areas will then be 10 - 20% off, leading to many angry snarky comments on this blog...
Tim waiting for 2012 wrote on Mon, 04/06/2009 - 3:02pm.
Rob Dawg. We will see these declines. Rob You better hold on to something immovable... like a new Hummer H2 on the dealers lot
I bought a used Honda Pilot two weeks ago. Does that count? Oh, and since I haven't mentioned it in a very long time; the murdercycle is maintained in working condition along with the generator and a supply of LNG tanks for cooking. I've long thought we could avoid the break moment but this Bush III administration seems hellbent on finding the needle in the haystack. As long as I can extract my eldest from UCLA we can hunker down for months while things get crazy. We are lucky because it is possible to manufacture luck.
Civilian Hummers are pretenders. No clearance, fuel hogs, delicate. Chevy trucks with bling.
My point is that declines like Whitney is (correctly) predicting go off the reservation. Will the sheep go into slaughterhouse? Will they turn into Killer Sheep?
Even at 10% unemployment you have 90% employed living life and doing normal life things. Until something monumental happens you will go forth and see restaurants full, people shopping and housing being sold.
Truly the only thing that would freak out the masses is a bank holiday or the failure of the CC/Debit system. Keep up the day to day pretenses of normalcy and we might skate through this rough patch. Personally the local and state government talking huge service cuts that are niggling at my pretense of normalcy.
A big question in my mind are where these huge state deficits appeared from. Have they been using ridiculous models of growth to decide what to borrow or have there been some sort of state/muni covenant violations that have triggered interest rate rises? Is it having to pay so much more as they roll over old debt into new debt? Is the debt obligations what is really behind these huge budget deficits? Inquiring minds want to know.
Chicago owners are now forced landlords, and they are reducing thier rent prices. This is a new one though: Apr 6 - $1650 / 3br - $1650 with lake views with **Free Flat screen 26" LCD HDTV** - (East Rogers Park) <
House Arrest Nation™:
deadbeat homeowners are required to install a sort of large hamster wheel that they must keep turning in order to feed current into the grid, meeting a quota in order not to fall further behind to their overseers, the banksters
linked wrote on Mon, 04/06/2009 - 3:44pm.
Even at 10% unemployment you have 90% employed living life and doing normal life things.
Hey buddy, how does it feel when you are with a group in the desert and only 9 out of 10 of you are allowed water?
RD Hear hear
A big question in my mind are where these huge state deficits appeared from.
State deficits are counter-cyclical, raised to the tenth power during a "balance sheet recession"/asset bubble.
Declining revenues across the board, especially those based on asset appreciation (e.g. real estate) + increasing expenditures (pension funds, health care, unemployment, etc). throw in wild cards like record public school enrollment and the credit crunch (ARS screwed over a lot of munis), and it's a clusterfk.
Liz:
LA median $299k in Feb 2009. Peaked at $550k in 2006. 70% off of peak is $165k, last seen in 1996. 65% off peak takes you to 1998.
I originally had a 43% drop when I did my forecast in 2006. Since then, the recession has added to the projected drop. Almost as importantly, the number of homes with cashout refis and helocs wasn't as easy to get data on in 2006. Those cashout refis and helocs provide additional fuel to the downturn. That's because they make more homes unaffordable to their current owners, and make the loan balances too high to sell without a foreclosure or short sale. That makes the mix of homes for sale tilt even more toward distressed homes.
There is no way the FED can change economic reality. In nominal terms, housing prices are going to fall. The key is underlying rents. Rent arbitrage is back in effect. As longs as mortgage rates are in the normal range, that means fair value vs rents is in the 120-150 times rent. In bubble areas...rents are still way low relative to values.
A friend of mine is renting a house in the Bay area for $2000 per month. It was just pulled off the market because the owner could not sell it for $995K!
By my math, that house is worth no more than $300K...based on what rents it can support.
Don't fool yourself...housing has a long way to fall. Peak values are meaningless. So what if it falls 70% Peak to trough. The peak was 600x rent!
Ferrari California, Ford Mustang, Tata Nano.....Fungible?
"Even at 10% unemployment you have 90% employed living life and doing normal life things."
That is 10% collecting benefits? That totally precludes the part time, underemployed, gray market and those who have given up and moved in with mom and/or dad. No way, no how are we at 90% utilization and the BLS would be jumping for joy if we were.
Now I am a member of this posting...
30% frompeak selling....maybe? I am in DC MSA. Myt particular county have ridiqulous YEARS of inventory of 300+ and 400+ many repos are not on MLS. However, folks, many 98 % cant sell still after 2 and 3 yrs on and off market because they wont lower to the apporpriate price, some folks 2-3 % come out with reasonable 380's and selling within a month on a house that built and sold new in 98 99 for mid to high 200's. I think its fair.... my house the owners once asked 730 and no lookers, they would jump on 425K but want 600's so i continue to rent and pay their 298K mortgage payment from 2009 as the largest model home from when the subdivision was new... so we still need to realize an appropriate drop is due... but we have a defer moritorium of 120 days on repos here in MD...I tell my realtor friends that actually know real estate business that they will move more and bring in a check if they will force the owners to lower.... wishing dont make it so...
Basel Too,
Law schmlaw, bribe the right judges and you can draw out an injunction until the copyright expires (beer icon)
Elmer Fudd wrote on Mon, 04/06/2009 - 3:47pm.
House Arrest Nation™
I think I used that on the housing Bubble Blog back in '06.
Interesting worldwide perspective plus some interesting (but not as pretty as CR's) graphs here: http://economistsview.typepad.com/economistsview/2009/04/a-tale-of-two-d...
@maliburenter;
Were you able to do any fine-grained analysis that allowed you to model prices down to one or a few zip codes?
The reason I ask is that I have seen huge anomalies from one local area to another as the bubble has collapsed, for example the well-know "West LA effect". I am also interested in what prices are doing in Malibu - I see lots of signs along PCH but there don't seem to be many sales. And of course, Malibu is stratified between the condos, the McMansions, and the estates.
Just curious...
average 3 bedroom 2 bath house was going for 125-130K
everyone's average is different... got an address for one of the sales?
Regarding this hyperinflation that many of you think is going to same home valuations (nominally, that is): do you really expect to see wages increase significantly anytime in the next five years? We will very likely see stagflation - high unemployment, high inflation - but that's not going to help housing prices. Mortgages are still given out according to incomes, and incomes aren't going up.
Fiduciary Doodie, I have an odd suspicion. I think that the FICO scoring is changing. I think the negative hit your credit used to take for the consumer closing an account which had no past due payments has vanished. Either that, or particular lenders have figured out how to ignore it.
american express, the same company offering 300 dollars to turn in your card? not sure whats up but i have never had an unsolicted offer from AE... and i am not even looking for credit
they want you to pay to be a member to get the benefits of a Debit card....don't be a dope.
Sorry for trying on the "green shoots appearing" posing poster. Beautiful spring day in the Pac NW and hope springs eternal. Now switching back to the pragmatic pessimist grounded in the "neither the fundamentals or demographics lie" identity.
First a walk along the river in the sun.
......Basel Too is right .....title of the book itself cannot be trademark......but it used as a series for long time therefore people can recognize it and know belong to specific person or group , it can be protectable......when other people use the same title , that is infringement of IP.........
linked wrote on Mon, 04/06/2009 - 3:44pm.
Even at 10% unemployment you have 90% employed living life and doing normal life things. Until something monumental happens you will go forth and see restaurants full, people shopping and housing being sold.
http://research.stlouisfed.org/fred2/series/EMRATIO?cid=12
You didn't notice the BLS chopped 731,000 out of the labor force in January such that unemployment only rose by 10,000? Come on
For the record, here's Eric Janszen from iTulip:
Commentary - August 20, 2002
hmmm.... what was my handle back then...i wonder if I'll recognize my writing
Danny,
What we have now is severe asset price deflation with consumer goods prices staying almost level. In order to bailout homeowners on a nominal basis, you would need at least 30% inflation. To do that without making a huge mess, you would need to spread it over several years. In that case, wages would probably also go up, but not quite as much. One problem would be that there is a mild correlation between interest rates and home prices. Running up inflation would raise interest rates, and exert some downward pressure on home prices.
ok, ok, I have no interest in writing a book today... I don't even like the title, it sounds like a TV feature report or a Best Seller's list book that you don't need to read once you have read the title.... I just had a momentary enjoyment of the pun 'House Arrest'
What do you think a book I might write would look like, probably 30 chapters of "(blank) is stupid"
malibu,
president and EO of FICO has said as much...he said they were having to come up with a new formula for calculating...one that would include income and debt and history to pay... but ability to pay as well... i always thought it was stupid to say a pewrson wasx credit worthy with knowing their ability t repay, simply looking to see if they paid their aarons rents big tv for 4000 and rooms to go furniture with 3 years same as cash and these 2 items got them a 720 plus....
maybe i should check my FICO, but quite frankly, the folks that never had time for me when they were wigger rich, i have no time for them as i get their personal emails asking for us to email family and friends to help them rent out their ocean condos caused they havent sold a car or mortgage in 8 months...
FICO should change... if you cant put your income, that should be a risk that should be calculated in a score, past history spending and reaying will help self employeed but income and debt should play a huge part in your vanilla consumer... i would rather lend to someone with 10 years of multiple loans/credit that were late 30 days 10 times but lived up to their deal rather than the person with 2-3 items in 7 yrs that paid back ok ..with no regard to income...
When this crap was reaaly bad and unknown, i wanted a boat loan, lets say i found a boat for 101K and i had `100K wanted a loan for 1 K... local credit union didnt care about type of boat, cost of boat only that i reported boat as collateral for the loan, they wrongly assumed boat wa 1000 dollar boat... would not "loan that little " either...but they never asked...wasn't a blank to fill out in their software and this is the worlds largest credit union so go figure...
that was when i realized...i am smarter than they are and their "telemarketing phone service providers"..... I am cash only now through this recession... and give my cash to those they did right even in the good times....not many of those...
If anyone wants, http://actionplan.gc.ca/eng/index.asp is the Canadian version of recovery.gov, the blue is part of a very expensive endeavour by the incumbent government to do psychological marketing stuff (every party in Canada has 1 main colour associated with them, conservatives=blue / liberals=red / new democrats = orange / greens = green... weird spontaneous unofficial organization)
Fica scores have always been gamed...with fha at 580 with 3% down, why keep a good fica score...I stated here before that a one time adjustment to fica scores is coming...
As an ABS underwriter, a late on child support never really made it into equation and we didn't even used to count arrears owed in the approval process. I would approve iloan if borrower had bk for medical reasons all day if income and story made sense...BTW-Application penetration is up in the auto market..
my big question that i havent heard talked about is on drudgereport where the link says Obama will not let financials that took tarp give the money back now....
what is up with that? Why would someone not accept repayment..we joke that now that "mark to market" is off the table we dont need no stinking stimuls but.....
http://online.wsj.com/article/SB123879833094588163.html
Speaking of rent vs buying and how prices couldn't go down, anyone from the Sac area? I lease a place with views off the river in West Sac, similar to this http://sacramento.craigslist.org/apa/1105378502.html but a much better location for 1975 a month. My commute to downtown is 12 minutes. So if you are using 100/120 as the buy mark for an investment, what would the price of this house have to come down to? Add in HOA and MRs into the equation and cashflowing in Sacramento is a myth until we lose another 25% at least.
yep free first year 150 fee every year after that.... suckahs
One has to wonder how much longer this can go on.
http://www.financialsense.com/fsu/editorials/wilson/2009/0406.html
In Santa Cruz (coastal California), "real" prices have dropped maybe 25 percent from peak; which means that houses that would have moved at $750-$800K three years ago are now on the market at $575-625K. And these are houses that would rent for $2500 a month, so you do the math. A further 25 percent drop from peak would put them within distance of reality, but just barely. And if layoffs pick up in high tech over the hill, "reality" may well shift downwards.
All that's supporting prices are all the sellers who are underwater and can't afford to admit it; and haven't been forced to sell yet by circumstance or a resetting option-ARM. Option-ARM resets in the next year or two may break prices loose around here, or not -- just guessing.
Good houses are can still be sold around here in the $500-$575 range; lord knows who's buying, but it's true. But the only people who are selling that low have been in their houses 15 years or more and didn't do equity withdrawal. They're taking the money and running.
Add in HOA and MRs into the equation and cashflowing in Sacramento is a myth until we lose another 25% at least.
Looks like whoever bought the place paid $750k in 2007, so $2300/month is not even close to sustainable. Even a 4% IO would put the monthly over $3K.
The recent landlord sales I've been tracking are not good investments. These are knife catchers, pure and simple.
In Santa Cruz (coastal California), "real" prices have dropped maybe 25 percent from peak;
Here is how to make everything clear:
In Santa Cruz (coastal California, College town), "real" prices have dropped maybe 25 percent from peak;
Wait until the late great state of kalifornia turns off the spigot.
Bob Dobbs,
I too amlooking at the houses purchashed with option Arms and Alt A.... whole hoods still have folks in them.,,,,, so far unscathed... the cooll thing was these were later developments... i look back and see the developers were smart...instead of houses one right next to the other they put house here and there and sold them filling in the lots between so that you would not have BK's or FC's right next to each other.... problem is no one will buy because of who is in there ..... there are some of these subdivisions here that have no sides of the streets available because 12 cars belong to each house now..... once when all the riff raff is out they will be nice houses, provided the banks and sherriffs can get the folks out before too much damage is done to the interiors...of course schools are falling down now in Annual Yearly Progress
Spoke to a mtg broker recently. Owns seven properties with seven mtgs. Tick tock tick tock
This don trump wantabee is feeling the squeeze. Oh the sympathy.
Houses will continue to tank until they become affordable with local incomes. Probably overshoot to the downside...the nature of bubble explosions.
The NYC metro housing market imo is in the midst of a crash. Of course the realtwhores I have spoken to are calling the ___ __ bottom. Lost track how many times these bloodsucking leeches have called a bottom.
EvilHenryPaulson wrote on Mon, 04/06/2009 - 2:56pm.
of course that neoclassical economic thinking ignores credit, and it's power to decrease consumption and investment in an unwind. which means the government needs to increase spending by even more to get ahead of the credit unwind, and make a last ditch attempt at resuscitating the money multiplier.
Pimco's take:
http://www.pimco.com/LeftNav/PIMCO+Spotlight/2008/Cyclical+Outlook+McCul...
http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2008/GCBF+Jan...
Minsky’s “Ponzi” debt units are only viable as long as the levered asset appreciates in prices. But when the price of the asset declines, as is presently the case in the U.S. housing market, it becomes clear that the emperor has no clothes. Minsky tells us we must now go through the process of increasing risk taking in reverse, which is what we are seeing with all its consequences.
"ok, ok, I have no interest in writing a book today"
Book of mine coming out probably this spring.
"
In Santa Cruz (coastal California), "real" prices have dropped maybe 25 percent from peak;
Here is how to make everything clear:
In Santa Cruz (coastal California, College town), "real" prices have dropped maybe 25 percent from peak;
Wait until the late great state of kalifornia turns off the spigot.
--Like it or not, there will be an Exurban Nation--"
Oh Rob; Mad Max ain't happening. Sorry. As soon as somebody waves the bloody flag and says, "feed us or die," we're socialist faster than you can say "I Heart Stockholm." Now grant you, having _seen_ the Inland Empire and the (yech) San Gabriel Valley, I can see where you get that attitude. The whole area's like a space station. Cut off the supplies, and it falls apart. But they won't go Mad Max, they'll just .... leave. And end up somewhere like Santa Cruz where the crops grow up to the city limit and the bay is brimming with (yech) squid. Worst case we'd have gov't relocation programs; CCC rah-rah-rah. Whatever.
Universities didn't go down during the Great Depression, and they won't go down now. As you well know, I work at one; and though life is tough and getting tougher, there's no chance of closing down. If the state pulled every bit of funding, we could carry on with tuition funding -- ugly, and I probably wouldn't be here. But could be done.
We have had 3 foreclosures out of our cluster 14 or so houses. 2 out of the 3 took the electrical outlet plates. Is that just something you do or is it part of the unofficial forclosure process?
Meredith always delivers a shot of reality on CNBC. You have to be on your A game to be invited back (repeatedly) and maintain the same clear-headed attitude. Maybe they think she'll turn into a happy-happy bobblehead if they bring her on just. one. more. time.
"We have had 3 foreclosures out of our cluster 14 or so houses. 2 out of the 3 took the electrical outlet plates. Is that just something you do or is it part of the unofficial forclosure process?"
Weird. Even the shiny metal ones sell for like a buck a piece. Plastic? Half that.
... state deficits.
If California is an example, state income taxes are incredibly progressive. So if everyone's income drops 10%, the income tax collections will drop substantially more than 10%.
Add to that "necessities" are generally not as subject to sales tax as luxuries which are more likely to be cut back on, and the sales tax revenue will be depressed disproportionately as well.
"I too am looking at the houses purchased with option Arms and Alt A.... whole hoods still have folks in them.,,,,, so far unscathed"
That will be interesting. when a prime selling point for a neighborhood, will be the quality of the neighbors loans.
Anon @ 4:27 PDT,
good contribution, Hyman Minsky is on my short list of people I would whole-heartedly trust to have complete power over all things financial at this time (he died in 1996, but was a clear thinker until his end)
Meredith is wrong. The bottom is in.
Weird. Even the shiny metal ones sell for like a buck a piece. Plastic? Half that.
Maybe to pull wiring? Copper? On the latest they also took the toilet.
Yes, I have looked at Malibu separately. You can get the 90265 data from several sources. Prices in Malibu are coming down at about the same rate as the rest of LA County now. Do a google search for Rick Wallace, Malibu Times, and you'll see some of his realtor angst about this. He keeps plenty of stats, and homeowners who read about the downturn call him all kinds of terrible names.
Even in the most overpriced county in the US, Malibu was insanely high at its peak. Quadrupling in a decade, beach homes made it to a median of $10 million in 2007. Landside houses were $3 million at the peak.
I have looked at several houses with 1999-2001 prices which are still sitting on the market. For a while, nothing was under a million. Now, there are some crappy houses under $600k which still aren't selling. The sales volume is a trickle, with a surprisingly high % of foreclosures. If you look at Trulia, check out how many foreclosures are in the pipeline. Last year was the lowest number of units sold in many decades for Malibu.
Oh Rob; Mad Max ain't happening. Sorry. As soon as somebody waves the bloody flag and says, "feed us or die," we're socialist faster than you can say "I Heart Stockholm."
Of course. i said that this morning on another thread.
IMO we will have either a slippery slope or very short term break that both land us in a mild European socialist state. Subject to change I propose that universal medical be nationalized as a way to "save" the automakers and sweep the rest of us in. Phase I.
Bob Dobbs,
I am going to have to disagree with some of your statements. Higher Ed has to be a bubble. The cost has grown faster than inflation for many years now and it has imposed crippling debt burdens on graduating students. This has been okay for the past few decades, as the global debt bubble raised all boats and the transfer of manufacturing jobs "required" a person to get a bachelor's degree to get a service position. However, I would tend to think that the global debt deflation will sink the higher education ship as well. Will there still be universities? Sure, but nowhere near the number. I would also imagine that the less practical of the fields, such as English Lit, will be forced to downsize staff, both support and professorial.
"Universities didn't go down during the Great Depression, and they won't go down now."
Were all private Uni's now?
Bob Dobbs,
Higher ed will continue, but the cost structure has got to change. Tuition cannot increase at 5-10% per year for 2 decades, ditto for required textbooks, ditto for extortionate housing costs. I will leave the insider speculation as to how the costs to the state/student may be brought down to reasonable levels to you
@picosec;
A large of the California Income Tax bill is paid by big earners and options awards. It's a very steep curve when that money isn't there.
Sales tax will have a big impact as well, now that it's been raised to between 9 and 10% (depending on area) as of April 1. There can't help but be an noticeable impact from that, and I'm expecting it to be "surprisingly" negative. The numbers won't be out for some time, though - we should see the impact this summer, right after the legislature misses the next budget deadline.
Bob Dobbs,
You think tuition money is going to keep flowing in? I got news for you. If things get so bad that California shuts off the spigot, people aren't going to be able to afford what U of Cal charges.
This just in! Its all good!
Americans have grown more optimistic about the economy and the direction of the country in the 11 weeks since President Obama was inaugurated, suggesting that Mr. Obama is enjoying some success in his critical task of rebuilding the nation’s confidence, according to the latest New York Times/CBS News poll. http://www.nytimes.com/2009/04/07/us/politics/07poll.html?hpw
/end of line....
This is a new one though: Apr 6 - $1650 / 3br - $1650 with lake views with **Free Flat screen 26" LCD HDTV** - (East Rogers Park)
Flat Screen TVs became the new toasters a couple of years ago, I think.
Who's going to stop it from "going on"? It's always been this way. When Rome was burning, my guess is that the insiders were watching the fireworks from their Tuscan villas.
The new fleet of presidential helicopters - with a price tag of $11.2 billion that was nearly double the original budget- also were considered at risk to be cut in the 2010 budget.
how many does the guy need.
Speaking of Cali & Taxes, there has been a firestorm of posts at zerohedge today.
2 charts, taxes per capita vs spending, of personal and of corporate
Personal
Corporate
I guess California gets to learn from the experience of New York?
Rob Dawg said:
"Subject to change I propose that universal medical be nationalized as a way to "save" the automakers and sweep the rest of us in. Phase I."
Good point on the automakers, and they are only the most well-known of the problem industries. If they manage to pull government workers into the program, it might even work for a while. Most of the doctors I have talked to support a universal medical regime. I just don't have confidence that the government can do a better job of running the health care system, despite the miserable performance of the insurance industry.
But then, what's next? Government-run pensions? Yikes! If it's anything like CalPers, we'll all be invested in the next real estate scheme whether we like it or not.
EHP I think those graphs might be a little skewed by the total corporate revenue per capita in NY and the average per capita income. What do you think?
sm_landlord
I heard the government is planning to retain ownership of all babies birthed at government monopoly healthcare facilities, what next will they grind them up for government subsidized food?
April 6 (Bloomberg) -- General Motors Corp. is speeding up preparations for a possible bankruptcy filing even as directors seek deeper savings this week to avoid that outcome, people familiar with the plans said.
goodness, it's about time....
"Meredith jumped the shark. She's also lost her looks over the past 10 years. Nice woman though. "
Classic maie chauvinist pig dismissive remark. The poster is probably someone Meredith wouldn't look twice at, with no claim to fame like Meredith predicting financial markets.
Nice guy though.
EHP:
"I guess California gets to learn from the experience of New York? "
Long-time Californians would tell you that the trouble in Cali started when the ex New Yorkers started showing up. First they came here to escape the mess, then they started missing the big government, then they started lobbying for more taxes and government, etc.
nades,
I didn't make the charts, but valid points. The crux of the problem though is that if average per capita personal and corporate incomes have taken a sudden dive (by hitting those at the top hard), then it is much more difficult for the state to cut spending to maintain fiscal balance
sm_landlord
new york screwed us in one way and one major way only.
two words
The Tan Man.
guess thats three!
Cheers! 
BUT, it's the NEXT bubble too. I work for a large zombie bank, we're gearing up for an increase in student loans. The optimism (self-delusion) is still flowing when it comes to student lending. We've been selling all our loan directly to the Feds for months now. And, this isn't going to stop anytime soon, as the Student Lending "Industry" propaganda is becoming like the Defense Industry propaganda; Student Lending helps make `mmmrca STRONGER for the FUTURE (queue: slow-motion eagle...)
Beside, you don't want young people running around with no jobs. Best to keep feeding them propaganda about the greatness of the future in a controlled environment.
I'm hoping the Student Lending "Industry" becomes the next "Defense Industry", never ending graft going out and goverment fees coming in. I want to line my own pockets with some of this Socalist cash, no point in letting the rich scammers have all the fun.
Virtual Universities. Online will gain exceptance.
EvilHenryPaulson wrote:
"I heard the government is planning to retain ownership of all babies birthed at government monopoly healthcare facilities, what next will they grind them up for government subsidized food?"
Does that mean that Octomom gets extra credits for her next soylent green purchase?
And what will we do for Deltas to staff the hovercraft factories? Oh, wait.
then it is much more difficult for the state to cut spending to maintain fiscal balance ~EHP
cant they just print more? 
...............................
gotcha on the implied dynamic... thanks!
private universities are getting crushed from all sides:
The northeastern liberal arts schools (~60K/annum cost of attendance) are sweating bullets big time.
I work for a large zombie bank, we're gearing up for an increase in student loans. The optimism (self-delusion) is still flowing when it comes to student lending.
It's a shame that there's a private middle man when:
Damn. Got carried away on the ordered lists. Thanks, kcoop.
sm_landlord
I was just teasing you about slippery slope arguments. Sometimes you just have to do what makes sense with no up front guarantees.
I know the US political machine is an unresponsive beast, but as they chant on sunny days in streets all over South America "we the people, united, cannot be defeated" and that's what it comes down to. There's no longer appeasement into apathy that credit/bubbles have provided. The over optimistic expectation of becoming a millionaire evaporates the day people are evicted from their home, you know?
Look at Japan, every day that passes is one day closer to the LDP being defeated. They have deep loyalties after 60 years in power, but that counts for nothing when people see their own wealth slipping through their fingers.
"goodness, it's about time.... "
I waiting for the O' admin to prohibit a BK due to the UAW and CDS implications, IAW the "no, you must keep the TARP funds along with the implied right of the gov to F with you..."
"Virtual Universities. Online will gain acceptance."
How much credit do I get for reading CR?
oh my,
Not to disparage the foreign aid, but... well.., read for yourself the announcement of aid to Italy for the earthquake yesterday
http://www.google.com/hostednews/afp/article/ALeqM5ikJZkXxJ8cJg2RvVbRTqZ...
is there a new thread or something?
Anyone see this Deutsche Bank Table on implied default rates via CDS (source)
great depression doesn't look so great on that basis. maybe a mighty or big depression in retrospect
How much credit do I get for reading CR?
A proud graduate of M.P.U. (Mortgage Pig University)
"Turning Hoocoodanodes Into YouCoodanodes"
rob dawg: a great mind with an owner following around behind with a baggy
Public universities are getting hammered by state funding cuts. This will be offset somewhat at the high-power research universities by increased grants from the stimulus package, at least for a year or two.
EHP, "...implied default rates..."
Hard to believe those numbers for high yield, if high yield is just normal companies and not banks or brokers.
It's tempting to gamble on number like that being wrong when they are so extreme.
is there a new thread or something?
Everyone on the west coast is caught in rush hour right now.
anotherajh - our local public university just announced wage freezes and tution hikes for next year. Hard times for them. And I don't suppose it's a good time to ask the state for more $$.
is there a new thread or something?
there is medication available for this complaint
"Everyone on the west coast is caught in rush hour right now. "
Is "rush hour" like "happy hour" for hippies?
Do a google search for Rick Wallace, Malibu Times, and you'll see some of his realtor angst about this.
Wow, an L.A. realtor who is "real". Be nice to have one of those on the west side.
Is "rush hour" like "happy hour" for hippies?
it's more like moore's law for nerds
I believe there are currently 12 in the fleet, and they were going to bump that to 15. They leave one in NYC, LA, and Chicago, Bush had 3 in Texas, Clinton had 2 in Little Rock that was cut to one since he hardly ever went back after his Mom died, etc...then there is the reserve and stand-by units at Andrews and the "secret" location in West Virginia.
But a good move, at least.
"Is "rush hour" like "happy hour" for hippies? "
I thought it was a movie.
Nostrovia,
Imunna doa profile on Fiduciary Doodie:
Fudge Juicy Airy Doodie:
Fudiciary Duty:
'the Original Candy Crappin Unicorn.
Gay man, Lives in New York,
I am but a deaf laotionary bANK fAILURE.
drink to the pain bitches.
Misean! You're back! Where the heck were you?
Hey Misean,
Were you playing hide-n-seek for an extended period?
JBR (member) wrote
"Do a google search for Rick Wallace, Malibu Times, and you'll see some of his realtor angst about this."
Thanks to maliburenter for that. I looked at Rick's blog, and it's pretty much what I expected: nothing moving. Pretty much the same thing I see here in Santa Monica, but more foreclosures...
"Wow, an L.A. realtor who is "real". Be nice to have one of those on the west side."
BWAHaHaHaHahahahahaaaa.
Seriously, I'm sure there must be one somewhere on the west side, I've just never met him.
is it me or meredith weight is off 50% too
Been swamped...spending too much time here, as well.
Saw the new comment engine last night. Much better.
Nostrovia,
Outsider - probably not a great time to raise tuition either. I heard tell of an east cost private (2nd tier) finding that many students didn't return after winter break. One can only speculate, but I'd guess at least some students were told by their parents to transfer to the local public to save money. I suspect the top 10 private will hold up better, and the expensive 2nd tier privates will get hit the hardest. Next in trouble are small publics heavily dependent on state funding, then the high profile privates. Top 10 publics will do the best, but will still feel a lot of pain.
Hi Misean! You really have been staying out of trouble!
What does Meredith's looks have to do with the price of houses in Miami? (I was going to say 'tea in china'.) Plus, not only does she look great, she's a snappy dresser too!
Everytime POTUS flies Marine One from the WH, there are 3 helis in the air, in formation, switching positions (shell game) to avoid rocket attacks. If he flies to NYC on AF1 they have, 3 in DC, 3 in NYC, et cetera. Plus these copters are maintained within an inch of their life, so some more being worked on at Andrews. If POTUS flies abroad, 3 are taken along in cargo jets, for each destination if they are short stops. It all add up. Small cost IMO for keeping POTUS safe.
Discovery Channel (or Nat. Geo, or Science Channel, not sure) has shown hour long shows on the Marine fleet for POTUS. More facts than I'd have guessed they would release - except for the countermeasures that are aboard both the helis and the multiple Air Force Ones. When POTUS flies abroad, two AF1s are taken along. Backup for everything, routinely.
""Banks will make a little money, as little as a penny a share, but they won’t lose money." "
Income from operations: ($100.00)
Income from our Beyatches $99.00
Mark to Ortcloud (thanks FASB) $ 1.01
Earnings/Share $ 0.01
Something like that I suppose.
Nostrovia,
Blackhalo (member) wrote on Mon, 04/06/2009 - 8:35pm.
"Virtual Universities. Online will gain acceptance."
How much credit do I get for reading CR?
I think it should get you an MBA
Misean,
Great to have you back bro - but it's Oort - just sayin'
Everytime POTUS flies Marine One from the WH, there are 3 helis in the air, in formation, switching positions (shell game) to avoid rocket attack.
Wouldn't it be cheaper to have three POTUS (sus)?
i've charted this after Mish post regarding BLS numbers
it's quite amusing
http://images.imagehotel.net/n77xmkjn0s.png
- 2008 was a joke and we are already above 700k
sorry anon...
Straight guy..family man in 40's in DC.. (that might explain alot) raised in the country club of the south...decide privaledge was better earned and spent 6 years enlisted in OPSEC aqnd counter terrorism , explosives and nuke stuff in the mid and late 80's got out during first gulf war and paid my own way through college at Terry school of business at UGA, international law international business.... centered around asian countries.... now an environmentalist.... my friends call me Sybil.
child of real estate family, corp lawyers, bank presidents and mortgage bankers.... one of the original CR gang on my 89 th nom de plume..
not that there is anything wrong with the other wink.....
"i've charted this after Mish post regarding BLS numbers
it's quite amusing"
Whoops, you would think they would adjust their methodology to compensate for their miscalculations. Ohhh, never mind.
""Banks will make a little money, as little as a penny a share, but they won’t lose money." "
pretty babies
I suspect the top 10 private will hold up better, and the expensive 2nd tier privates will get hit the hardest. Next in trouble are small publics heavily dependent on state funding, then the high profile privates.
First tier, 3rd tier, public, private -- the schools that are going to remain swamped with applications are the schools that give great financial aid.
Home Depot has a sale on pitchforks. Buy one get one free with coupon in Sunday's paper.
She is hot, for an analyst.
Six months from now she will be saying that she was speaking only about CA/NV/Fl/AZ dropping 50%, cause ya know she has never been to those other States. I wonder who she will be working for in a year.
In some areas, housing prices have hit bottom. In most areas they have not. The decline in residential real estate continues.
As for banking stocks, Merideth is right on. Because of the Fed and the treasury and TPTB, do not short banks! They will go down but TPTB are holding them up and the premiums on LEAPS are high. Don't go there. Look what has happened to Commercial Real Estate, a true total disaster. But It went up! GGP has been given a lifeline. And other will be as the bond holders would rather get something rather than nothing.
These markets are being manipulated by the banks and their agents (the Fed, the Treasury, etc.) and are dangerous to play. SRS is a trade and not an investment. As is SKF.
We are in this nevernerver land created by TPTB to keep the game going. We are Japan. That is the model to watch.
>sm_landlord (member) wrote on Mon, 04/06/2009 - 3:57pm.
...
>And of course, Malibu is stratified between the condos, the McMansions, and the estates.
Don't forget the million dollar ocean view trailer park.
http://www.usatoday.com/money/perfi/housing/2005-07-05-million-dollar-tr...
I don't think the Fed is going to let house prices fall another 30%. Well, not in nominal terms, anyway.
Have they figured out a way to give everyone a 30% nominal wage increase without increasing interest rates? Because it will take nothing less than that.
Talbott did write about it in 2003, and I thought he was a doomsayer. However, . . . . . . he did look at some situations . . . . . that have come true.
...plus the fact that this would refute your incessant ranting about house prices not being sticky, right Dawg???
Parsley is an abomination on anything other than potatoes.
A sprig next to a piece of fish is allowable, barely.....
