patrick.net

I love The Thin Red Arrows.

Especially FNM. :-D

If that were the case, the housing market in the US would be indistinguishable from that in Mexico, which has no MLS and no licensing for realtors.

I thought the main difference is the mortgage industry.

Not directly housing-related, but relevant nonetheless. Anyone ever heard of the "hindenberg omen?"

http://tinyurl.com/d6bgx

Quite a down day for markets today....

We all know what comes after Paul Von Hindenburg. It is not going to be pretty.

I think perhaps Mr.Up has the simplest explanation of their scheme. It's really a sale and repurchase as joint owners. So, the co-owning "stealth" company has a private agreement with the original owners regarding terms of payment for the cashed-out equity, etc. But, Peter points out that there is still massive counter-party risk because if this company ever went bye-bye, you'd be stuck as the remaining co-owner with the whole bag of obligations and (I think I'm right here), the residual claimants of "stealth" company would have claim on a portion of your home. Assuming this ever happened, you'd be forced to buy out the claimants portion of sell your home as a court mandate of "stealth's" bankruptcy.

What a terrible scheme! It's brilliantly devious and bound to attract lots of unwary people, I have no doubt! What a wonderful scheme! I wish I were a grifter.

Also, the "stealth" company will most likely go bye-bye exactly when you need it, namely a significant "market correction".

So let's start a bunch of these "stealth" jobs ourselves. If we can IPO them fast enough, we can create then a hedge fund that trades them short, wait for the correction and create our own money machine. Of course, we'll need to move to the Cayman Islands, but hey, who said you don't get something for nothing?

Of course, we’ll need to move to the Cayman Islands, but hey, who said you don’t get something for nothing?

No need to move ourselves. As a "foreign" entity, we will only need to fly to Toronto for the annual meeting just like LTCM.

Should we call ourselves LTCM - Long Thread Capital Management? ;)

I love Bill Gross. My husband brings home his articles for me to read (he gets them at work) and I always find them very informative-- I've learned a lot from them.

I have not read much Bill Gross before, but I will definitely do so in the future.

Buffett and Soros also offered great wisdom long ago.

Soros - reflexivity of the market, boom/bust cycles of credit
Buffett - dangers of OTC derivatives and risks they pose to the market

Pop!

Such investment advice is difficult because it is voodoo to time any market, the stock market being one of the worse. The fundamentals and technicals are right for a correction, but they have been before without correction and corrections have occurred outside of these indicators; so it's your gut feel in the end.

Simple diversification away from high beta funds should be sufficient to protect most people, I think. But remember, your 401k (for most of us here I assume) is a very long-term investment so year-on-year movements up and down are to be expected.

Beta: http://www.investopedia.com/terms/b/beta.asp
(taking an earlier request for definitions)

***not investment advice***

Simple diversification away from high beta funds should be sufficient to protect most people, I think. But remember, your 401k (for most of us here I assume) is a very long-term investment so year-on-year movements up and down are to be expected.

Also, remember dollar-cost averaging?

Bill Gross' article: he uses a 50% consumption rate for the 7% of all aggregate personal disposable income (total consumption) that is funded by people cashing out equity in their homes. This is _tremendously_ conservative. The consumption rate is much closer to 100%, probably well above 90% by any measure. Therefore you can extrapolate that his prediction of a 0.5 -1.0% hit to GDP would could be double that amount. I think he is dead on, but a bit optimistic about hoping for the 1-2% GDP growth soft landing scenario.

When the housing ATM'ing stops, recession is inevitable, IMO. A lot of economic restructuring has been delayed because of RE equity-driven consumption. By the way, this is why I believe economists are correct that building home equity is not investment activity, but savings activity. No capital is created or accumulated, only paper valuations which are ultimately consumed or saved elsewhere.

Vaguely on-topic, I watched my first four episodes of Flip This House or whatever it's called recently, and there was a bizarre pattern. Dippy real estate investor chick goes out scouting for houses, does a quick drive-by, doesn't even get out of the car to look at the house, buys it on the courthouse steps, then starts remodeling the crappy old run-down house.

Then everyone is quite shocked to discover that Crappy Old Run-Down House has...mold!...water damage!...termites!...wiring problems!...more termites!...structural problems! Why doesn't she ever figure out ahead of time that the house is going to have termites? Everything costs way more than expected in the remodel, but in the end, Dippy Real Estate Investor Chick's house often sells for a hefty profit.

I'm not sure what this says about the housing market. It seems to me it might encourage even more amateurs to jump into flipping houses, figuring, hey, if that dippy chick can do it and make money, so can I.

In other bizarre news, did anyone see the article recently about the mad rush to buy land on the Mississippi gulf coast?

http://tinyurl.com/dh5gr

I dearly hope these are the last death throes of the housing insanity.

I saw a comment early on the Japanese property crash and another after asking how many people will end up living under trees...

SactoQT this one is probably of interest to you.

Take a look at this picture, I took it late last year in Tokyo, the people are literally living under trees, most of the them are Japanese, not immigrants - you see men getting up and putting on threadbare suits so who knows what their story is?

http://tinyurl.com/7cohz

Anyway it's not something you would have seen previously in Japan. Maybe I should title it 'The new wave in affordable housing' :)

Where are you going to find any information on the rate of sales (market turnover) and sales prices?

You’re not.

You can purchase all that data and more from DataQuick.
http://www.dataquick.com/default.asp

DataQuick data is cross validated and far more accurate than MLS derived data. In fact, even the Chief Economist for the California Association of Realtors uses DataQuick instead of MLS data in her reports.

Take a look at this picture, I took it late last year in Tokyo, the people are literally living under trees, most of the them are Japanese, not immigrants - you see men getting up and putting on threadbare suits so who knows what their story is?

I saw those people there in late 2003 too.

I saw some of those homie's in Shinjuku in 2003 also. Shared an Asahi with one of them.

I saw some of those homie’s in Shinjuku in 2003 also. Shared an Asahi with one of them.

That's where we stayed in 2003. Maybe we met before? ;)

Way off topic, sorry, but I love Japan. Going again this fall. What's amazing is how affordable Japan is now, got to love 14 years of deflation. I found it cheaper in Shimokitazawa than in SF. Dinner for 6, including enough great saki to make you do the moonwalk, 140 bucks. No tip required. Wait a minute, on topic, the inflated real estate values in Japan aka the japanese miracle are what ultimately caused the deflation.

Way off topic, sorry, but I love Japan. Going again this fall. What’s amazing is how affordable Japan is now, got to love 14 years of deflation. I found it cheaper in Shimokitazawa than in SF. Dinner for 6, including enough great saki to make you do the moonwalk, 140 bucks.

Food can be very cheap or very expensive.

No tip required.

Yep. Gotta love it. No complex multiplications and additions.

Peter P, probably:)

My realtor said that she could get me something similar in the Marina for $990k, she said she won't even think about any offers for less as the market is about to pick up again around December when all the merchant bankers buy them for their wifes. Maybe we should pick up a few?

My realtor said that she could get me something similar in the Marina for $990k, she said she won’t even think about any offers for less as the market is about to pick up again around December when all the merchant bankers buy them for their wifes.

Mine said that even if the market drops 2% this year, it will go up 12% next year so there will still be good appreciation. Buy Buy Buy.

Mine said that even if the market drops 2% this year, it will go up 12% next year so there will still be good appreciation. Buy Buy Buy.

Mine turned out to be a raging alcoholic, so I had to fire her. Given my situation (bubblesitting), I don't really need one anyway except to keep an eye on the properties I'm directly tracking (because Marin MLS is totally gamed, as we discussed earlier). ...you know, she was entertaining to eat sushi with, though. she could really put away the sake.

Mine turned out to be a raging alcoholic, so I had to fire her.

She sounds like a pretty good realtor - after all 'raging alcoholism' is probably cutting edge stuff so she knows how to stay ahead of the curve, after all it won't be long before all the other realtors join that movement...

you know, she was entertaining to eat sushi with, though. she could really put away the sake.

Randy, where do you live? Perhaps we can have sushi together.

If you are ever down in Alameda, stop by Angelfish sushi, amazing.

If you are ever down in Alameda, stop by Angelfish sushi, amazing.

I will.

Pink Godzilla in Santa Cruz, Kotabuki in Piedmont...yummy!

For those in Peninsula, Kaygetsu in Menlo Park. Excellent.

Pink Godzilla in Santa Cruz, Kotabuki in Piedmont…yummy!

Ahh the Pink, sad to report it's a shadow of it's former self. Food is mediocre at best and the attitude!, I'm saddened as I've been going there for 15 years or so. I guess Mitsu's (the owner) is tired of the housing bubble.

Pop!,

I put ALL my 410K in GLD, CEF, GGN, essentially my 410K is glittering with gold at this moment. If I could, I would have cashed out 410K to buy physical gold, but that is about the best thing I can do now.

For the rest of the taxable money, I'm moving towards 100% target of a basket of foreign currencies, although I am still waiting a few under-water stocks to come above water so that I can cash out.

Except for my home, I don't want any asset in USD at this point. But I am not simply hedging, so I know I am a bit on the extreme. What I am doing is betting against the dollar in the medium to long term.

Frankly I think we are in a much bigger bubble than Japan, lots of Japanese families have a shitload of savings that pulled them through the next 14 years. Savings is an oxymoron in American vocabulary, you mean home equity loans? I just read a piece of a news saying that the national default rate is already 5% on credit card due to the gas price hike, hello, that should only be an impact of 200-300 dollars per household, if people are defaulting for that extra 300 bucks, we are in deep trouble.

*not an investment advice*

Ryan, sushi prices are ultimately tied to real estate costs, one only need to look at the availablity of Toro here, previously when Japan was bumping, there was none to be found. When the Toro leaves so does the real estate market.

I gotta say, I think NAAVLP’s are here to stay. It’s the poor man’s foot-in-the-door product that’s always going to have some suckers who will jump on it, even while prices are going down. That being said, do you think they would soften the blow of a drop in prices, especially at the low end of the market?

I doubt that. Credit standard will be tighted after the housing bubble bursts.

Ryan, sushi prices are ultimately tied to real estate costs, one only need to look at the availablity of Toro here, previously when Japan was bumping, there was none to be found. When the Toro leaves so does the real estate market.

In NY, I paid $60 for 6 pieces of half-sized half-decent sushi. Total disappointment.

I didn’t know this was a restaurant review board.

You really do not know me, do you?

In NY, I paid $60 for 6 pieces of half-sized half-decent sushi. Total disappointment.

I rest my case, sushi prices scale with housing costs.

"didn’t know this was a restaurant review board."

Bring us your tired, your poor, your unwanted thread topics, cast off like so much old sushi--to the Social Effects Thread! We must make 800! There is no thread bubble!

I gotta say, I think NAAVLP’s are here to stay. It’s the poor man’s foot-in-the-door product that’s always going to have some suckers who will jump on it, even while prices are going down. ....

I doubt that. Credit standard will be tighted after the housing bubble bursts.

Right--I'm hardly a banking/finance guru, but I imagine the risk travels upstream to lenders too.