patrick.net

Just stepping in here..
Randy, it is true that American farmers are perhaps the most prolific productive farmers in the moderm world, but this is due mainly on factors relating to the high risk involved. Just one or two seasons of bad productivity can put a farmer under. As a result, many farms have elaborate systems to prevent this. I'll use my uncle as an example. He has a masters degree in agriculture and electronic engineering. He installed a system on his dairy farm that monitors all the cows via a small plastic computer chip mounted on an ear tag. When the cow comes under a scanning device, the computer knows how much of what certain types of grain it will eat to produce the most milk, if it has special dietary needs, whether it is in need of having medications updated, and even if she is now pregnant. A shuttle on the feeding belt measures the correct amount of food, medicine, and so forth for each specific cow. The farm operates like a efficient factory, with the lives of the cows prolonged, and their productivity maintained with minumal waste of feed and maximum amount of healthcare. Most farmers operate in this manner, and this is why US farmers are as advanced.

I also wanted to mention something I heard this weekend that sums up the stupidity of the American economy in general, including home buying of late. Me and my wife went to Home Depot because I had a gift card from Xmas, and since I hate going there, I haven't used it yet. But while we were in there, a pre-recorded voice came over the PA system:" Do you want to buy a major purchase from the Home Depot? Buy now and pay later!" blah blah blah, no interest for 6 months! blah blah blah. Only at the Home Depot."
My wife turns to me and says:" Did you hear that?" "yup" I said. I couldn't believe how amazingly stupid it sounded, yet it sums up how people"buy" things.They don't buy them at all. They've been conditioned like dumb animals that money is a mysterious concept that exsists in banks somewhere, yet they never actually see any of it.
This weekend I was a little depressed because with the good weather came a TON of open houses. It has been raining for 3 months. Nobody at all had been looking at any houses in those 3 months, but on Saturday, It seemed like it was back to lots of Subaru outback and Volvos filled with purple fleece, running shoe, silly ski hat wearing 30 and 40something yuppies lining up to look at these things. I've even saw a "sale pending" sign hanging from a 850k house that's been for sale since November. I want this thing to crash damn it, and now I'm starting to see the same carnival circus that occured last year.

peterus said:

I think we are going to see hyper-inflation. The apartment manager just told me that my rent (2bd 2ba 1000sf) is going to raise 10% from $1460/month to $1606/month.

This is no where even close to hyperinflation. Hyperinflation is 1% PER DAY average price increases. Your rent would need to rise from $1,460 per month to somewhere around $14,000 per month within 1 year to qualify as hyperinflation.

Keep this in mind. There is a huge difference between inflation, even high inflation, and hyperinflation.

I say invest in seeds, shovels, and ariable land. Gotta' eat..

I understand that CPI includes rental prices, but not house purchase prices. Also, I understand that energy prices are excluded as well. What I'm wondering is, does CPI include home utility bills? What about rents that include utility costs? Does this "allow" energy prices to creep into the rent aspect of CPI?

nomadtoons2,

Take heart shipmate! Couples do what couples do, and when they get bored they go to open houses! My wife and I do from time to time and it doesn't mean a thing. We've fairly committed that we will not look in earnest until at least the fall (that is after the "Summer of George"). Or the "Summer of IT" as George prefers. My big concern right now is getting up to SAFECO Field while the Chicago White Sox are in town. It is the only time this year they will be within driving distance! Who makes up these schedules anyway?

With all of this "ZIRP" talk (and I will get up to speed on that issue) it seems no one noticed the article "They had a plan, then reality intruded". Oh guys, TOO funny! I'm sorry, but when it comes to money (particularly money management) I am way too self conscious to have my name attached to debacle like that. Man, if word ever got out? In brief, four knuckleheads decide at the height of the market to do a flip in Palm Springs. Cost over runs and a market gone south they are now considering "plan B" which includes "renting it out" they're told for as much as $1,500 a week? That's your plan huh?

O.K now here's my plan o.k. DON'T rent these steaming piles out O.K? Please people, please do not bail these guys out! While in Seattle (to see the *2005 WORLD CHAMPION CHICAGO WHITE SOX*) my wife and I will be staying at the BEST WESTERN O.K?

Had "plan A" worked they would have been splitting up 60K. I hate to sound arrogant here guys but I am not driving out to the middle of no where for who knows how many weekends for 15K. I'm not, so when this crash is all over please don't call me saying you want to do a "flip" and would I help hang some drywall or something. Now, when it's completed and "turn key" then I will stop by provided the only thing I'll be asked to do is run to the store and get bamboo skewers Oh, and MORE CORONA then fine. I'm all over it.

John M,

O.K. The crash has been suspended until....... November?

Honestly, I don't think there is any "last minute salvation" even the most bullish among us could cook up to salvage this thing now. Lord only knows we've tried everything under the sun including NAAVLP! Oh wait! There is one thing we haven't tried! The "lease w/option" to buy! With *gauranteed* rental income and none of the hassles of being a landlord!

Correction:

The following site is for FHFB, a whole different set of numbers from OFHEO:

http://www.fhfb.gov/GetFile.aspx?FileID=4437

I think the latest FHFB is due out any day. That may give a more current snapshot than OFHEO. Plus, there may not be the same distortions from excluding Jumbo loans, though I'm not sure about that.

I don't know if FHFB numbers include refinancings. I've decided that including financing "prices" in the OFHEO "price" index is dubious at best (garbage?). How do you get an updated "price" when you re-fi? They must be including the re-financing appraised value. Two problems with that inclusion: 1) you're not gauging the price at the real margin since the re-fi house is not really in the margin 2) result-oriented appraisals.

-including financing “prices” in the OFHEO “price” index is dubious at best (garbage?).

+including re-financing “prices” in the OFHEO “price” index is dubious at best (garbage?).

Garth,
Also, I believe existing home sales for March are due out tomorrow. Should be interesting either way.

Yes, inventory and volume are the pulse rate monitors.

Honestly, I dont' know how I know that, but I do.

Garth,
The one thing I am wondering about with the FHFB reports is something on a more broad scale in terms of housing sales nationally. I have been keeping a close eye on the BA and CA in general, but I also monitor reports coming out of a select few regions across the country mainly because I am eyeing 5-6 diffrent areas to move to since (for now) they are cheaper. In essence, it seems that the accelerated action that has been going in in CA for 5 years is starting to pick up steam in places in TX, NC, and several other smaller metropolitan regions. Last week a report came out from TX that shows a 14% increase in home values. For TX, this is SIGNIFIGANT since they are one of the few places nationally that actually had negative property increases. The word got out that TX and the entire south are" undervalued", which sounds like a repo police auction to flippers and speculators.
I've known for a few years that I would likely move to another state, but my biggest worry was that just like myself, everyone else would make the same conclusion at about the same time. The inflation in prices in TX and other alternative regions are starting to almost outpace my rate of annual savings. The plan was to save enough to buy outright, but if things get out of hand, I might have to move sooner.
Anyhow, I think that while Californians may be looking at Local prices and market slowdowns, other regions unfortunatly might just be getting started, which would explain a national report showing less than dismal news.

John M. and Skibum,

Is that the FHFB quarterly report due tomorrow? The last one came out 1/6/06. It covered sales through the end 4th Qtr '05.

Sounds like bear food.

Then again a bear will eat anything. And everything. My brother watched a bear in Yosemite break open his ice chest and drink all his soda pop. The bear bit into the cans one by one and tilted his head back to drink the pop.

I guess he found magical cans of honey.

Garth,
No, tomorrow's report is from the NAR, unfortunately. That means it must be taken with a grain of salt. The new home sales data comes out the next day (Wed 4/26), and that's put out by the Commerce Dept./Census Bureau.

NMDT2,

You might find the PMI Risk Index interesting to correlate prices to income inter alia. Other companies have similar numbers based on OFHEO data:

http://www.pmigroup.com/lenders/media_lenders/pmi_eret06v2s.pdf

As I recall any risk index over 500 means that PMI thinks that metro area will decline w/in 2 yrs.

I don’t vouch for the numbers. Just food for thought.

Mmmmmm, food.

There is no free man or true patriot whose heart harbors not the tiniest spark of treason.
GF

Mondays aren't tough enough, now this. I must admit I've watched in horror as our currency gets trampled on and trade deficits flirt with the insurmountable and irreversible but I've just now made the connection to the HB! There is intelligent life out there! And now everybody knows. We don't have a real economy anymore as we've found the "wealth through debt" model and are perfectly content just to flip houses to one another in our "new permanently high plateau"!

Garth,

Please pardon my "thick" revelation but I've simply been SO fixated on the MBS issue that apparently I've been oblivious to the balance of the planet watch us as we "air out" our dirty laundry for all the world to see. Because we've decided we are now issuing our currency based on "housing dollars" it's a little late to think about putting on our "rain coat".

DinOR,

Through thick and thin, you are THE MAN.

SFWoman,

Detroit is listening to your thoughts.

http://www.nytimes.com/2006/04/23/automobiles/autospecial/23AUTO.html?_r=1&oref=slogin

Garth,

I realize that legal advice is worth what you paid for it but I have a friend with a real problem. His realtor sent the final escrow check to his ex- wife's address for like 6K! (Yeah, she opened it of course) Not only that but it evidently also had the final settlement doc. so now she knows to the penny just how much he made while bailing out of the SoCal bubble! I've never met her (the "ex") but I know enough that she will make this man's life a LIVING HELL until she gets at least some! Should he contact the CAR or some other association to get his commission refunded? This was a really dumb error on the realtors part and can NOT be undone. I told him to have them put a stop payment on the check ASAP just in case she has a "friend" at the bank. Please people, do not flame me as a woman hater! I'm not, I just look out for my clients and if I sent an account statement to anybody's ex I know I would never hear the end of it. This is simply malfeasance of office. Btw, this was OT. I'll take your comments "off the air".

Garth,

Thanks! I mean that! It's just that when you're so close to a problem you can't seem to be able to see around it. I had, repeat HAD a lot of dollars tied up in MBS and after "nursing" the position on a daily basis I concluded that the risk just wasn't worth it. I'm much better now thank you.

Thread suggestion:

"Best of Patrick." May include exchanges/wars. Limit 1 entries per poster per category.

You only need to ID the categories. Stupidest, Foulest, Smartiest, Most Arrogant, Best X impression, Most Foreign Words, etc. Or leave the categories open.

The Simpsons run the occasional retrospective when the writers get lazy. They're still funny, right?

DinOR,

For some reason your name isn't clickable yet.

New thread for ZIRP, dollar devaluation, and related discussion:

ZIRP, Global Imbalances, and Home Prices

Please continue to discuss der Zeitgeist in this thread. It's just that the PIMCO ZIRP thing has exploded into a discussion all its own.

Hey BA,
When you say "really bad", do you mean bad as in nothing is selling and prices are going down, or that houses are going up in price? Reason being is that Austin is one possible place me and my wife might move to, but it seems that the cost of housing in the last 2 years has gone way the hell up. We figured we would wait and see if it's RE markets crashed too.

George
Thanks. I'll take a look.

Garth
I like your idea of 'Patrick,the best of" That is a must do thread idea!