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May 31, 2007 An RV Equivalent of the iPOD
Put this in the category of "mobile housing". The Dutchman T@B trailer, at less than 2,000 pounds can easily be towed by a full sized car. Exteriors are available in colors such as 'orange crush', 'cherry red' and 'mellow yellow'. Interiors Posted at 01:03 AM | TrackBack May 29, 2007 S&P/Case-Shiller Home Prices Fell 1.4% in March, Index Shows From Bloomberg News: Home prices in the U.S. dropped last quarter for the first time in almost 16 years, as 13 out of 20 cities reported declines in March. Posted at 01:28 PM | TrackBack May 24, 2007 Curtain Call (Th-Th-Th-That's All, Folks!)
The news came out today that severely slashed new home prices have spurred surprising sales gains, and it cemented something that's been brewing for me: That it's time to put this aside for a while. I mean, for two years now I've been saying that the only way to get people buying homes is to slash prices and reduce inventory. While it's gratifying in an egotistical way, it's also depressing to see how long it's taken the market to catch up to what the blogerati knew back in '05. I'm very proud of the fact that I got to stand shoulder to shoulder with people like Bubble Meter/David, the Marinite, Keith, and many others as we discussed the dismal state of modern real estate. I'd like to think I helped a few people get better advice about their mortgages, and not fall into the trap of interest-only loans and million-year deals. But this seems like a good time to call it a day. Lereah is gone, Nardelli is out to pasture, Casey Serin's turning his flipping into a media empire, and there's only so many times you can parse Bernanke's nonsense before it just becomes tiresome. It's been a real honor to do this. I've learned a lot and hopefully taught a bit as well. Now the best thing we can do is ride this accelerating rollercoaster all the way to the end, dust ourselves off, and prepare for a (hopefully) better, saner, stronger real estate market. Maybe I'll pick this up again down the line....you never know. So, peace to one and all, and watch out for specuvestors! Posted at 02:20 PM | TrackBack May 21, 2007 Mortgage & Loan: The All-Broad Fraud Squad
This entire article is made of concentrated pure awesome: Nearly a decade ago, concerned that mortgage fraud was threatening their pastoral towns, the women — two full-time mothers and a mortgage executive then in their 40s — got together to write down license plate numbers of suspicious cars in their neighborhoods, scour public documents for housing titles and deeds and seek the help of local law enforcement. At first they were ignored, written off as bored housewives. Today, the three women — Ann Fulmer, Alicia Sheppard and Julia Barrette — are helping train F.B.I. agents, speaking to lending associations across the country and lecturing college students on how to identify mortgage fraud. Good stuff. Much like ol' Nancy Drew mysteries, it really comes down to the town busybodies unearthing all of the skeletons and secrets. Imagine how much more mortgage fraud could have been exposed if we'd had more people like these working the streets and speaking truth to power, eh? Keep in mind that they were doing this during the height of the last housing boom, yet, when even the slightest mention of flipping or specuvesting got you labeled a "hater." Who's laughing now, eh? Posted at 01:59 PM | TrackBack Credit & Debt: Housing Woes Drag Down Economy
Despite Ben Bernanke's protestations to the contrary, it seems that the housing slump is going to drag the economy down more than estimated: Real gross domestic product, the government's broadest measure of economic output, is expected to advance 2.3 percent in 2007. That is down from an earlier estimate in February for 2.8 percent growth, a survey conducted by the National Association for Business Economics found. The lower forecast came after the government reported anemic 1.3 percent GDP growth during the first three months of this year..."Residential investment remains a dominant force dampening growth in 2007," NABE wrote, adding that almost half of those surveyed expect the bottom in housing will not be reached until the fourth quarter. A third of those surveyed think problems in the subprime market are delaying or deepening the housing correction. This should come as no surprise to anyone who's been reading this blog, other blogs like it, or following the markets in general. Any time someone makes a prediction as to how long a bubble or bust will last, take that figure and tack on another six months to it. I like to call it the "Lereah Extra." So buckle in, strap down, and hold tight for at least the remainder of 2007, because that's how long it's going to take for the market to flatten at bare--or is that bear?--minimum. Posted at 12:02 PM | TrackBack May 20, 2007 Buying & Selling: Realtors Reel In Redfin Reviews
I've had occasion in recent months to write positive news about the dissassembling of the MLS-Realtor monopoly, which is why it was so depressing to find out that the Seattle-area MLS was successful in shutting down the Redfin reader review blog: Redfin Chief Executive Glenn Kelman said he had no choice but to comply, noting that the listing service had threatened to shut off its daily feed of for-sale listings. "Access to listing data is our lifeblood and we just can't afford to mess around," Kelman said. "We have gone back and forth with the Northwest Multiple Listing Service and according to their rules, you can't advertise another broker's listing. We argued that it was in no way an advertisement, it was really a review." Kelman said he was disappointed by the disciplinary action, noting that Redfin was trying to disseminate different perspectives on homes from what one might receive from a real estate agent. Some notes on the decision from the Redfin blog itself: The Seattle and Bay Area real estate markets have now lost a voice that on the whole was not only good for everyday people, but for the real estate industry itself. Consumers want candor about homes they can buy, and if as brokers we refuse to provide it, we will lose the authoritative, trusted position we've cherished for decades. As MLS rules force our sites to act as listing brochures, other websites will develop a monopoly on the truth, and we will pay those websites for traffic we should have had in the first place. We are not only giving away our brain and our heart, but our wallets too...The question at the center of almost every skirmish in the modernization of real estate is who controls the information. Being able to get honest perspectives on a home's condition is essential for any buyer. Realtors rely on coded language ("Cozy first-time fixer-upper" = "one room piece of crap that only a first-time buyer could afford"), cheesy stagings, and rushed viewings to keep the buyer off-balance and unaware of the home's potential defects. A service like this could have potentially provided major benefits to Redfin users, and it's a shame to see it get squashed so that realtors can continue to control the information flow. Word to Techdirt. Posted at 04:29 PM | TrackBack May 17, 2007 Credit & Debt: The Many Faces Of Ben Bernanke Although Bernanke was completely wrong in his estimates of how long housing failures would affect the economy, he continues to insist that the troubles are contained. Bernanke pledged that the Fed will do all it can to prevent abuses in the subprime sector, which would be a lot more impressive if it wasn't five years too late. More typical of Bernanke was his stressing that any regulation not actually affect the market overall. So, to recap...everything is okay, but we need more regulation, but don't actually stop subprimes from lending, because there's just so much gosh-darn homeownership! All of the aforementioned comes from a single speech on the subprime market, mind you. Is it any wonder we're in the fix we're in, with leadership like this? Posted at 03:57 PM | TrackBack May 16, 2007 Mortgage & Loan: More Bad Housing News
Although the overall economy is demonstrating resiliency and flexibility, the housing market continues to sag like Zsa Zsa Gabor's breasts: The Commerce Department reported Wednesday that construction of new homes and apartments rose by 2.5 percent in April compared to March to a seasonally adjusted annual rate of 1.528 million units. Even with the improvement, housing construction is 25.9 percent lower than a year ago. And in a worrisome sign for the future, builders cut their requests for new construction permits by 8.9 percent in April. That was the sharpest drop since a 24 percent fall in February 1990, another period when housing was going through a significant downturn. And NAHB economist David Seiders' forecast doesn't quite pack the rosy punch of his old buddy David Lereah: David Seiders, chief economist for the home builders, said the survey found that the rising defaults in the subprime mortgage market were adding to concerns about the ability to reduce a huge inventory of unsold new homes and causing builders to cut back on their plans. "We're now projecting that home sales and housing production will not begin improving until late this year and we're expecting the early stages of the subsequent recovery to be quite sluggish," Seiders said. What, no sunny forecasts about how the market has nowhere to go but up? Why isn't Lereah spinning his gospel on this? Posted at 02:53 PM | TrackBack May 15, 2007 Credit & Debt: CNet Vs. Casey Vs. "Haterz"
Peep this profile of the "most hated blogger alive," complete with comments from our old pal Robert Cote. It's ironic--I wonder how much more traffic I could have generated for this blog if I'd jumped on the Serin hate train and devoted my posts to chronicling his misadventures. People thrive on negativity and controversy. Positive news is often boring. And certainly, given the deluge of crappy developments in the real estate market over the past two years, there was no small amount of negativity to go around. But ultimately, what does it serve? Guys like Serin thrive on the attention and get money from the site hits. The "haterz" become so obssessed with criticizing Serin that they lose any interesting viewpoints of their own. And it doesn't change any root causes of why things like this happen in the first place. It's really the Internet equivalent of the gladiatorial games--as guys get mauled for the crowd's amusement, we forget about the crumbling of the world beneath our feet. Posted at 11:29 AM | TrackBack May 14, 2007 Mortgage & Loan: Motley Fool Profiteers On Subprime
Or, as Richard Gibbons put it, "Cash In On The Subprime Crisis": Almost all the players in the subprime market have been hit in the last two months. New Century Financial, Freemont General, and Accredited Home Lenders (NYSE: LEND) have suffered the worst carnage. But even lenders and bankers as diverse as Wells Fargo (NYSE: WFC), Washington Mutual (NYSE: WM), Merrill Lynch (NYSE: MER), and Bear Stearns (NYSE: BSC) have been affected. I think it's too early yet to dive into the subprime lenders. But it's clear to me that this industry will still be around in 10 years. This crisis will clear the marginal players out of the industry, leaving greater opportunities for the survivors. Now is the time to begin researching who has the best chance of survival. "Too early"? Yeah, I'd say so. The frakkin' corpse isn't even cold yet. It's going to take many months for the shakeout to play across the financial markets, and for anyone to advise digging into subprime is not only ghoulish, but, well, foolish, as well.
Posted at 02:00 PM | TrackBack May 12, 2007 Buying & Selling: Vultures Plague Foreclosure Sales
From Reuters via Yahoo, we have a look at the "gold rush" brought on by eager buyers looking to make a killing in the foreclosure market: Beneath the shade of a magnolia tree, veterans and "newbies" crowd around auctioneer Gary Oberdalhoff as he lists a property whose owners couldn't pay the mortgage, one of thousands to go on the block in this sprawling, arid region 50 miles east of Los Angeles...A record level of home foreclosures has hit the U.S. housing sector after years of reckless lending to risky borrowers. To those on the courthouse steps, that spells opportunity. Unlike during the Great Depression, investors are still eager to enter the market. "A lot of people's misery is other people's gains," says investor Bryon Bettencourt. "It's just the way of the world, dog eat dog." It's that exact same kind of selfish mentality that provoked the housing bubble in the first place, and now these parasites are looking to profit off its carcass. And yet, until prices come down to reasonable levels across the nation, buying foreclosed properties may be the only way for home buyers squeezed by the credit crunch to get into the market. If you're a homeowner facing foreclosure and don't want to be preyed upon by carrion eaters, there is help available. Talk to your lender, get credit counseling, do whatever it takes to work something out. You should walk away if there are no other options--but only if. Posted at 01:57 PM | TrackBack May 11, 2007 Credit & Debt: KB Home Seeks To Unload French Division
As yet another sign of how tough times are for the homebuilding industry, former mega-giant KB Home is looking to trim its supply of French cuisine, so to speak: KB Home might be tempted by the $783 million such a sale could bring. The company said it is currently evaluating that offer and is also evaluating other strategic alternatives, including a public or private offering of its shares in the French unit or retaining its shares. The money could come in handy as the U.S. housing market continues to buckle. Thomas Smith, an analyst with Standard & Poor's Equity Research, says the company could use the money to bolster its balance sheet, or to fund future land acquisitions if prices fall to the point where the company sees a good opportunity. Either way, "cash gives you maximum flexibility," Smith says. Longtime readers will remember KB Home being notorious for their mandatory arbitration practices, and for their former CEO Bruce Karatz being booted for shady stock options scams. Given that the company's reputation as a homebuilder is generally one of the worst in the business, I'd say they need all the flexibility they can handle. Posted at 04:50 PM | TrackBack May 09, 2007 Credit & Debt: Fed Leaves Interest Rate Unchanged...Again
The Federal Reserve unanimously voted to keep the Federal Funds lending rate (what most lenders index their own rates to) at 5.25 percent: So far, the Fed's plan seems to be working to slow economic growth and lower inflation pressures. But the steep slide in the once-booming housing sector has raised concerns among some economists that the slowdown could worsen into a more severe downturn. Actually, if this information is any indication, the Fed's going to have a tougher time containing the damage by far: Employers added 90,000 positions in February, versus the 113,000 reported last month. Payrolls grew by 177,000 in March, slightly less than the 180,000 previously reported. Workers' wages grew more slowly...Wage growth is important for worker and supports consumer spending, a vital ingredient to the economy's good health. But a rapid pickup — if not blunted by other economic forces — can fan fears about inflation. The slower growth in wages could ease Federal Reserve fears that inflation might not recede as they have predicted. Anything to keep those horrible "labor costs" down, eh? You can read the full text of the Fed's statement here. Posted at 04:12 PM | TrackBack May 07, 2007 Moving & Relocation: David Lereah Comes To Jesus
In what should come as a surprise to no one, the former #1 real-estate shill is revising his economic forecasts downward as he hustles out the door: "We're in a real estate recession," said David Lereah, chief economist for the National Association of Realtors, who surprised many this week when he announced he would leave the Chicago-based trade group on May 19. "I'm projecting the first [nationwide] price drop since the Great Depression," he said. "We're going to have negative home prices in 2007." The article already quotes my boy David Lereah Watch, but CenterBlue also gets a few well-deserved shots in: It’s because of assholes like this that I despise economists. So many of them prostitute themselves to the highest bidder by putting out economic bullshit spin and painting rosy pictures that even people like myself who are untrained in economics but read a lot can see right through. Absolutely. The fact that a bunch of people in different professions could so clearly see what so-called "economists" could or would not says volumes about the overratedness of that profession. Lereah was paid to say and do whatever necessary to ensure people bought homes in the market, and that included fudging figures, facts, and stats to make his point. The guy is a charlatan, a buffoon, a liar, and a fraud. Worse, he's not even denying any of it: In characteristic cheerleader style he demurred when asked whether he ever felt pressure from within NAR to skew forecasts in a positive direction."You'll have to talk to me about that in two or three weeks," Lereah said. "I work for NAR now." In other words, as long as they're signing his paychecks he'll say what he has to say. Who's going to bet that as soon as he's out the door, he'll be shilling for a book that explains why it's a great time to rent? (I don't remember if it was someone at Marinite's blog or Keith over at Housing Panic who made that hilarious image, but kudos to you in any event.) Posted at 01:58 PM | TrackBack Buying & Selling: Washington Post Vs. Housing Market
The Post has published some yeoman articles dealing with the collapse of the housing market in recent months, and the last two days have been no exception. Sunday's edition had a story detailing the fight by lenders to keep their buyers from foreclosing: "We would much rather work with a borrower than go through the foreclosure process," said Steve Bailey, Countrywide's senior managing director of loan administration. "We lose money on a foreclosure, the borrower is out of their home, and nobody is happy. The math works against us." The article includes some detailed advice on what to do if you are falling behind on your payments, including the sobering advice that sometimes it's better to just hand over the keys in a short sale than be foreclosed on. Not to be outdone, today's edition has a look at how mortgage firms such as New Century were pressuring brokers to rubber-stamp bad loans: "The stress in that place was ungodly. It was like selling your soul," said Hardiman, who worked for New Century in 2004 and 2005. "There was instant notification to everyone as soon as you rejected a loan. And you dreaded doing it because you paid for it. Two guys would come with a bat, and they were all [ticked] off because you cut their deals." This is EXACTLY why we need stronger oversight, regulation, and transparency of the markets. Wall Street turned its head and let itself be deafened by the sound of the cash rolling in like ocean waves, and as a result, "sweatshop lenders" like New Century pushed through loans that should never have been approved, under appalling conditions. As long as the market was good, no one gave a damn, but once the delinquencies started rolling in, everyone had one eye on the exit. This cannot be allowed to happen again, and kudos to the Post for shedding light on these issues. Posted at 01:28 PM | TrackBack Credit & Debt: "Credit Crunch" Locks Buyers Out Of The Market As has long been prophesized by myself and others, the tightening of lending standards and reduced access to credit is locking many would-be buyers out of homes they would have qualified for even as recently as two years ago: Rising interest rates and dropping home prices have squeezed a market that had been propped up by risky loans and easy credit during the housing boom. As mortgage bills came due, foreclosures rose, and the easy credit dried up for families like the Shieldses. "Now we're stuck in the apartment," said Shields, 31, a firefighter who lives in Manifee, Calif. His wife gave birth to baby Gabriella at the end of March, and they are running out of space without options for a house. This is a necessary evil to ensure the markets can recover and prices will drop, but it's still heartbreaking to witness people who thought they could have the American Dream realize that it may take longer, if ever, to achieve. And then, on the other hand, you have this: Deborah Beatty recognizes that she and her family could lose their home in Jersey City, N.J., across the Hudson River from New York, because they can't afford the mortgage. The newly constructed three-level home offers a view of the Manhattan skyline and the Statue of Liberty from Beatty's master bedroom window. "I'm going to miss that," said Beatty, 53, who collects disability payments and does not work. "When I come in, I like to see the lady (the statue), especially when it's a beautiful clear night." Her 29-year-old daughter, a graduate student with an annual income of less than $20,000, qualified for a mortgage of $600,000 with no money down, split into two different loans at 8.75 percent and 12.5 percent interest rates. With income from tenants, which didn't come right away, Beatty's daughter thought she could afford monthly payments of nearly $5,000.But she hasn't made a mortgage payment in more than three months, and she's receiving letters threatening foreclosure. I'm sorry, but this is just insane. You're living on disability payments and have a daughter making slave wages and you think you can afford a home that's worth nearly a million dollars? People in their prime earning years with loads of sheepskin to their name often don't make the scratch necessary for a home like that. This is a situation where everyone is to blame: The adults of the family for convincing the daughter to take that suicidal risk, the shady loan brokers for giving them the real estate crack to do it, and the daughter for letting herself believe that real estate would be the key to living beyond their means. It's a perfect example of how lunatics who think they can game the system not only have ruined their own lives, but have screwed things up for rational homebuyers as well. Posted at 01:07 PM | TrackBack May 04, 2007 Credit & Debt: General Motors Affected By Subprime Slump
You wouldn't necessarily think that an auto manufacturer--even one as bedeviled and nearly bankrupt as GM--would be affected by failures in a totally different market, right? Well, behold the price of mass acquisition: GM Chairman Rick Wagoner was quick to point to losses in the residential mortgage business at GMAC Financial Services from continued weakness in the subprime mortgage sector for the earnings decline. GM owns a 49 percent interest in GMAC after selling 51 percent to Cerberus Capital Management late last year. GM lost $115 million from its stake in GMAC in the quarter. GMAC posted a first-quarter loss of $305 million, primarily due to a $910 million loss from its troubled residential loan business. "Housing starts were down 30 percent in the first quarter and that had a great impact on trucks," which contribute high profits, said Erich Merkle, director of forecasting for IRN Inc., in Grand Rapids, Mich. "Those in the skilled trades don't buy a truck when they don't know where their next job is coming from." And the paper pushers on Wall Street are concerned about GM's continued dalliances in the subprime market: GM Chief Financial Officer Fritz Henderson said weaker GMAC results were the major reason earnings missed even the lowest of Wall Street expectations. But analysts raised concerns about both GM's remaining exposure to the riskiest segment of the U.S. mortgage market and the pace of the automaker's efforts to restore its North American operations to profitability. This is another reason why Bernanke's statements about "containing the subprime failures" are so much bullshucks. When you have megacorporations with diverse assets in all these sectors, the losses from one will be felt in all others. If the subprime failures continue, you'll see more stories like this, and the shocks will reverberate throughout the whole economy. Posted at 12:54 PM | TrackBack May 01, 2007 Home Improvement: Do HOAs Hate The Planet?
Switching gears from our usual talk of the bubble, sales, and economics, I wanted to point out this interesting article from AlterNet on the anti-environmental practices of homeowner associations: Many homeowners' associations post their covenants on their websites for the convenience of members. Doing some simple searches, I recently found and read a few dozen such documents. They are often highly detailed in describing what is allowed, what is not and what happens if you don't do what you're supposed to do or fail to do what they require...Alice has received no warnings from her HOA -- yet. But you wouldn't expect such guerilla-style energy conservation to be necessary in laid-back Austin. Alice says, "Yeah, usually people think of Austin and they think of relaxed attitudes. But I think since the housing market boomed, it has made people a lot less relaxed." (Emphases added.) Here we have evidence that the housing bubble wasn't just bad for the economy, but bad for the entire future of the planet. ;) And as far as HOAs go, those friends of mine who live in HOA-overseen communities generally regard them with epithets you wouldn't hear this side of a Lloyd Banks CD. ;) They generally regard HOAs as the root of all evil, and after hearing stuff like this, I'm not inclined to disagree. Posted at 04:49 PM | TrackBack Go back |
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