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Punchbowl Says:
a social science degree containing a mix of political science, ethics, philosophy, social policy and sociology ought to prepare one pretty well to debate political economy, shouldn’t it?
I tremble at your mighty …. er …. pseudo-intellectual puffery.
yo' mama... anyway, you're just jealous. I can help you with foreign policy too, it's on my resume... PS what did YOU study at community college?
What if all these FB's get together with a class action suit against the lenders and win big $$? This would save all the FB's that didn't lose their house yet. This is a very real possibility that would actually rape all the bubblesitters and keep prices up at the same time. This would really suck big time!
allah,
Jeffollie is a treasure, I just wish he would post here more often!
You're 100% correct, we are in uncharted waters here. No one has been on "the other side". I'm really torn here. The shear weight of this thing may be more than we can handle. Barney Frank is already creating an uproar and with or without his aid there will be considerable debate.
Some time back *Glen made the point that it would be laughable to walk into a lender's place of business and ask for a 1/2, 3/4 or a million dollars to "do a little trading" in commodities yet we'll loan it out against RE speculation all day! Ever since RE agents became "investment advisors" and mortgage brokers became "financial planners" it's been a mess. The complete lack of effect regulation is glaringly obvious. A distinction Punchbowl just can't seem to make.
FormerAptBroker Says:
While the average (average not every) IQ of Rader fans is at least one standard deviation below the mean it is well above the average IQ of the people working for the TSA (and most other “government†jobs)…
_____
Yeah?
We know about the IQ of "Rader" fans.
How about Raider fans?
DinOR, you're regulated so you think it might work for real estate too. It's possible but, to me, it seems worth it to let the free press and financial hardship and if necessary the tort system get first crack at this recent sordid real estate con. I realize there's a trend - more of that fabianism that DS touts - to wrap everyone in cotton wool 24/7. I suggest that human nature is better described (and better prescribed) by Edmund Burke.
"Example is the school of mankind, and they will learn at no other."
@ allah,
How about counter suits claiming applicants submitted fraudulant applications?
Punchbowl,
Like I said, I'm torn. My intincts (and framework of knowledge) tell me to let FB's rot in debtor's prison! This is simply Darwin at his best. What FB's want is "riskless investment" and now that they've banged their knee, they want us to rush in with band aids and training wheels?
Now that I've mellowed some w/age I'd almost prefer to find some kind of resolution? Let's face facts here, a class action suit will utterly fail these people. In the end, the suit will fail too.
Where I take exception is when the securities industry gets compared with NAR. If you still don't believe me (and that is your right and privilege) just go ahead and get registered and then find a firm that will let you get on the phone, tout stock target prices, make statements like "15% is in the bag", charge outrageous commissions where YOU are making more money on the trade than they are and see how long you last!
Welcome to the 90's!
The industry has been forced to change so much, many wouldn't even recognize it. All the "newbies" fresh out of college are being trained not only in the "art" of compliance but also the spirit of the law. Everything has moved toward a "managed money" platform. Most private firms have gone "fee based only". Discretionary Accounts are a thing of the past (and a sure fire way to get you flagged). Industry standard for ROA is 1%. Most firms have internal mechanisms to notify BOTH the client and the broker when limits are exceeded. The client has to sign and return the letter stating they are "o.k" with excessive commissions. Fat chance of that happening. End of relationship.
Going after stockbrokers about their commissions is a lot like hunting for dinosaurs. Mostly it's just fossils. It's frustrating to me (with all of the changes we've been through) when people say there's no hope to reign in realtors and mortgage brokers. It can, and it MUST be done. We'll all be better off for it.
DinOR, I see your point of view wrt securities but I don't see that the transition has helped clients very much. Now it's harder to be blown up by a rogue broker but the long term damage from the fat fees on all those compliant managed accounts isn't much smaller. Have stockbrokers had to stop driving Beemers? Let's face it. The industry has just found a friendlier way to make its money.
If you think similar regulation in real estate will do the same job there, then I still wonder whether realtors will have to trade down from their own Lexi. I doubt it very much. They will find a new way to keep their cars.
Let me propose a simpler solution. Legislate that realtors and mortgage brokers and everyone else involved in the process be fiduciaries. Make them liable at law to act in the best interest of their client, whichever party that client is. When a seller's broker refuses to present an offer, it's a prima facie violation of that duty and they lose their license. When a buyer's broker pushes a buyer to raise a bid in order to get a deal done, let's dock her commission dollar for dollar because she's a fiduciary and only acting in the buyer's interest, or let her surrender her license. When a mortgage broker touts an IO with a lockin, force a rebate to the borrower of the higher payout or let the mb surrender his license for allowing personal gain to affect their fiduciary duty.
There is no doubt that FBs can still get into trouble under this scenario. It wasn't actually necessary for realtors to lie and mortgage brokers to fill their pockets to drive house prices sky high this time around. People chase prices higher. It's human nature. They do it with more than real estate. Eventually the chickens come home to roost and they learn something. We'll be seeing a lot of learning for years to come.
You'll have to excuse me for the rest of the day. I have to go help with some maintenance and yardwork at the house of a friend who got hit riding his bike and is just home after nine weeks in hospital. Of course, in a perfect Fabian world, the government would look after things like this and I guess we could all just loll around.
http://money.cnn.com/2006/02/13/real_estate/twomarkets_fortune/index.htm
February 13, 2006: 5:27 AM EST
NEW YORK (FORTUNE) - If you want to know where real estate prices are headed in California's Orange County, the man to talk to is Gary Watts. The Mission Viejo broker has 35 years of experience and doubles as a spokesman for the O.C.'s Association of Realtors.
...
Fifteen percent is pretty much in the bag for Orange County in 2006," he says. "It's impossible for prices to go down this year."
They will be against big homebuilders, for shoddy construction.
Someone the other day was telling me a story about a co-worker who bought a new built. Everytime the heater turned on, bits of metal would suddenly be floating in the air.
Apparently, the insulation was installed inside the vent pipes, instead of around them. Or something like that.
Weird.
Here's an interesting idea on how to retire:
A Contrarian View: Save Less, Retire With Enough
Could it be possible that you are saving too much for your retirement?
Such an idea would fly in the face of almost every exhortation to a nation of spendthrifts that saving more is an imperative. After all, even as people are living longer, corporate pension plans and Social Security can no longer be relied on to ease most Americans through their retirement years. Fidelity, the nation’s largest provider of workplace retirement savings plans, says the average 401(k) account balance is only $62,000.
Beyond that, the national savings rate — the difference between after-tax income and expenditures — is actually negative, government statistics show.
Nevertheless, a small band of economists from universities, research institutions and the government are clearly expressing the blasphemy that many Americans could be saving less than they are being told to by the financial services industry — and spending more — while they are younger. The negative savings rate, they say, is wildly distorted.
According to them, the financial industry, with its ostensibly objective online calculators, overstates how much money someone will need in retirement. Some, in fact, contend that financial firms have a pointed interest in persuading people to save much more than they need because the companies earn fees on managing that money.
The more realistic amount could be as little as half the typical recommendation made by Fidelity, Vanguard or any number of other financial institutions.
I really don't know what to think of this piece. The "Against Common Sense" aspect of it appeals to me, but it's so far against common sense.
DinOR? :)
eburbed Says:
> Here’s an interesting idea on how to retire:
> A Contrarian View: Save Less, Retire With Enough
It seems like most “Retirement Planning†forgets about inflation. Over the past 40 years the cost of everything has gone up about 10 times (yes I know that some things have gone up more and some less) and I don’t see any reason why things will not cost at least 10 times more than today in 40 years.
Most retirement planners (and web sites) talk about plans that will give a person an income equal to about 70% of what they are currently making and seem to forget that they should be trying to get an income equal to 700% of a current income to get an “inflation adjusted†70% retirement income.
Open house frenzy!
Today on a whim, I decided to drop by this Open House:
$595k for a 1321 3/2.5.
HOLY SH!T. There was practically a line to get in. There were so many families looking!
Afterwards I got a coffee and stayed outside for a little bit - the volume let down a little bit, but still there were so many people looking. Indian families, korean families, chinese families.
I'm not sure these were lookie-lous either. I overheard a few of them seriously discussing buying it. Throwing around prices.
ARGHHHHHHHHHHHHHHHHHH.
Oh yeah, the place was at:
695 S KNICKERBOCKER DR #00009
Sunnyvale, CA 94087
Still open for another 35 minutes if you want to go by. When I left, people were waiting for my parking spot. WTF.
austingal,
I find it so funny that your rental agents are warning you about out-of-state investors. Wouldn't these investors mean more future rental inventory? Are they telling you to wait for better rental deals or something? :)
eburbed,
How much would a similar place rent for?
It basically comes down to enjoying life with or with out a frigging house. I agree things are real uncertain with mixed signals in the national markets. Prices falling in some area's sticky in others. Sure I'd like to own a house and have done my part by keeping my Fico high and having some cash stashed. But It may take awhile for conditions to be just right.
I feel it's more important to just live where you'd feel most at ease. Stay where you enjoy working and have a good base of family and friends. I'm in the process of facilitating that as we speak. It took me a little over a year to figure out that changing geography doesn't always work out. So if I have to rent at a higher rate with less square footage so what. NY, LA, San Fran, Boston, DC. cost opportunity, better paying jobs, culture and diversity not experienced in smaller rural enclaves most especially the deep south.
$595K doesnt seem all that high for a 3 bedroom townhome in Sunnyvale. Perhaps the Realtor is simply low balling the asking price to generate offers.
How much would a similar place rent for?
This one is kind of near - the satellite maps show that it's not as nice.
http://sfbay.craigslist.org/sby/apa/268474144.html
$1675.
So throw in a $325 per month niceness premium... maybe $2000 a month?
Eburbed,
So - pay $120,000 down, plus $3,000/month in mortgage + $240/HOA + insurance/month + (property tax - mortgage interest deduction)/month
Or pay $2,000/month to rent.
I guess there indeed are lots of knife catchers left in Sunnyvale.
Too many Americans express their right to be an asshole. Hence, the Ugly American. Just because you have the right to be obnoxious doesn’t mean you should go around using it.
Johansson,
I made that "right to be an asshole" comment in the context of a debate about free speech/First Amendment rights. I'm not advocating that everyone out there be as rude as possible at all times. On the contrary, as long as others are polite to me, I generally try to be as polite as possible. And I've found that respectful, reasoned debate generally elicits much better responses, even from those who disagree with me.
My point was, any standard definition of "polite" or "socially acceptable speech" is bound to be arbitrary and cultural. No two people (much less an entire country) will ever have the exact same definition. This is why repressing "non polite" speech is also arbitrary and an anathema to freedom of thought & expression.
Example: the Taliban consider any discussion about "women's rights" to be offensive, or even an insult to their faith. This sounds ridiculous to a European or an American, but that's how they really feel. Some people in the Bible belt consider any speech in favor of abortion or gay marriage to be "offensive". Some ultra-Lefties here in CA consider any criticism of "(illegal) immigrant rights" to be offensive and inherently racist.
If we ban all "non-offensive speech", then who exactly gets to decide what constitutes offensive or non-offensive?
Personally, given the choice between arbitrarily defined, state-enforced "politeness" and free speech (which means occasionally tolerating assholes), I'd rather deal with the occasional asshole.
I have to go help with some maintenance and yardwork at the house of a friend who got hit riding his bike and is just home after nine weeks in hospital. Of course, in a perfect Fabian world, the government would look after things like this and I guess we could all just loll around.
hmm, that's a very balanced view -- you seem to have a massive chip on both shoulders.
I actually like the look of these bikes, which DO wrap you in cotton wool and are statically and dynamically stable. Cost is the only object, and they are trying to bring it down. I've thought about the number of pushbike accidents on roads out there, including a friend of mine recently laid up with a fractured hip, a couple of fatalities on a freeway recently, and so on. I've been in touch with the designer to see if they would add a solar panel option, and a Kammback redesign...
Re the 'affluenza' post earlier, there's an economist and social commentator here, Clive Hamilton, who has written a number of books and spearheaded the 'Wellbeing Manifesto', (http://www.wellbeingmanifesto.net/) but I'm not sure whether he coined the term 'affluenza' or whether it was already about.
I've heard Clive speak a couple of times, and he had a bunch of posters and little Buddhist-style laundry lists of wellbeingness as handouts...
Described as ‘Australia’s most amazing economist’, Dr Clive Hamilton is Executive Director of The Australia Institute, Australia’s foremost public interest think tank. Trained in economics and politics, he has held visiting positions at the Australian National University, the University of Sydney and the University of Cambridge.
He has published widely on development, trade policy, industry economics, environmental issues, community values and ethics, and is the author of seven books. He appears regularly in the media commenting on issues including climate change policy, tax reform, competition policy, measure of well-being and contemporary Australian political developments.
Here's a rundown on his latest books:
'Work, buy, consume, die - there's got to be more...'
"Our houses are bigger than ever, but our families are smaller. Our kids go to the best schools we can afford, but we hardly see them. We've got more money to spend, yet we're further in debt than ever before. What is going on?
The Western world is in the grip of a consumption binge that is unique in human history. We aspire to the lifestyles of the rich and famous at the cost of family, friends and personal fulfilment. Rates of stress, depression and obesity are up as we wrestle with the emptiness and endless disappointments of the consumer life.
Affluenza pulls no punches, claiming our whole society is addicted to overconsumption. It tracks how much Australians overwork, the growing mountains of stuff we throw out, the drugs we take to ‘self-medicate' and the real meaning of ‘choice'. Fortunately there is a cure. More and more Australians are deciding to ignore the advertisers, reduce their consumer spending and recapture their time for the things that really matter."
Too many Americans express their right to be an asshole. Hence, the Ugly American. Just because you have the right to be obnoxious doesn’t mean you should go around using it.
Hm, usually when I think of Ugly Americans - i think of it in a travel context:
‘Work, buy, consume, die - there’s got to be more…’
I recently heard a speaker on the local NPR radio station talk about how our economy must grow at least 5% a year, unemployment would grow as well.
How sustainable that is, was the question.
'Sustainable growth' (as a more responsible alternative to 'insane, unfettered growth at all costs') was a buzzword for a while, but now it's just 'sustainability' -- the very notion of growth is not essential or desirable to the long-term survival of the planet, it's just neoclassical economics voodooism to keep demanding 'growth'. e.g. if a population is static, why do you need economic 'growth'? Apart from the assumption that things must be improving for everyone if GDP is up. However, GDP might be up and things are declining, e.g. the whole country could be polluted, no forests or recreation areas left, etc. (Further, GDP went up because of the housing boom and higher transaction amounts for property. Once the boom ended, GDP figures slumped.) GDP can go up due to a devastating war, or constant internal strife. There was an alternative 'quality of life' measure of GPI (Genuine Progress Indicator) proposed (or Gross National Happiness or what have you), and I think it was calculated to be declining when all was taken into account.
austingal,
Thanks for the information. It sounds like even in Austin, "owning" would end up being twice as much as renting.
I'm sorry my original response wasn't clear. Like you, I was wondering why your realtors were warning you about out-of-state investors.
Anyone see this yet, Lereah Vs. Schiff? I've been waiting to hear these two head to head for quite a while.
eburbed,
Put me in the "your last check (to the undertaker) should bounce" camp!
Oregonians (by and large) picture their retirement as one filled with tending to horses, drift boats and their wine cellar. Not necessaily snobby wines (just not the rot gut stuff of our youth). So expectations in this part of the country are considerably different than say New Yorkers that visualize a "decent place" (insert opulent here ____ ) in Florida along with KEEPING their home back "north".
One of my clients lives on the southern OR coast and after an entire adulthood dedicated to grading commercial loans, I'm the LAST guy he wants to talk to! Normally I communicate through "the wife". When I DO get him on the phone ALL he talks about is...... salmon fishing? As a former bank employee between his defined benefit plan, social, savings and IRA they could WELL AFFORD better! They just prefer to live modestly and have no interest in keeping up any appearances. This is SO typical of Oregonians.
I just checked out my parents' old neighborhood in Leesburg Virginia. Selling prices for SFH down $100,000-200,000 from the peak, or approximately 20% less. Even Zillow valuations are now below the price level at which my parents sold in April 2005. And when I check on recently sold comparables, they're going for about $100,000 less than the Zillow valuation.
Soft landing indeed!
Punchbowl,
Couldn't agree more. I absolutely DETEST fee based management! It works out perfect though for west coast guys/gals that like being at their office, shall we say 9'ish? The steady stream of income appeals the most vice scrambling around taken "indications of interest" on an IPO that may or may not happen!
Dropping "account minimums" at most wirehouses was and is a major mistake! Now you've got rookies "pitching managed platforms" to folks with as little as 50k in assets? Here again the industry is testing the limits of just how many fresh out of college guys you can fit under a bus. YOU CAN'T MAKE IT! And the firms KNOW IT! So they take raw recruits, use them for about 6 to 18 months and then that fateful day comes when the sales manager taps the poor kid on the shoulder, walks him into his office, sits him down and says "Son, maybe this business isn't for you".
I mean think about it, IF you ARE going to "annuitize your book" you have to have "something" TO annuitize. These poor young guys are doomed before they get out of the gate. Now of course "the firm" keeps the assets and divvies them up amongst the usual assortment of former college quarterbacks and kiss ups. It's just criminal.
What the fee based platform DOES do though is it makes it MUCH easier for the firms (and the NASD) to monitor their interactions with retail clients. In that regard I reluctantly approve. Do they still drive Bimmers? I don't think as much as in the past. The "real money" isn't on the retail "sell side" and seldom is having worked the retail side a path toward becoming an analyst or fund manager. Chances are you'll die there.
DinOR,
I think many of those New Yorkers (and Bostonians, Los Angelenos, Washingtonians, Seattleites, etc.) will be lucky to retire to a 600 sq. ft. New Jersey condo and eek out an retirement on their social security checks and their Wal-Mart greeter jobs. I know too many 40+ years old people who are hoping the housing bubble will bale out their retirement and this whole situation cannot end well.
If we look at all we'll find that the financial service model is shifting toward a "total wealth management firm". This means people are paying for legal counsel they don't need, estate planning they'll never benefit from along with son-in-laws and CPA's.
As much as it fries my @ss, I understand WHY things are morphing in this direction. Something strange occurs when people "get referrals". I have no idea how to explain b/c I simply don't think like this, but it's like all of a sudden they CAN'T WAIT to stick it to this poor guy! You mention that you have a client with a tax, lending, legal problem and they're reaching for their belt before you hang up the phone! This is why so many CPA firms are becoming "wealth management" firms. They got dog tired of ref. clients to others in different tagents of the ind. just to get feedback later that the guy botched their divorce or blew up their account! AND got charged a TON of fees to boot!
I personally referred one of my best clients to a MB (on a non-recourse loan) and the client called me back holding back his RAGE! The @ssclown I ref. the guy to tried to slip THREE points on the loan! Pffft. You're kidding me, right? Uh... no. (And this guy has a fico to die for!)
Half of being successful in this business is knowing when you're in over your head. Knowing WHEN to get a family practice atty. involved and who to call when someone needs to set up an LLC. What I've learned (yes the hard way) is to make YOUR expectations and standards known to that other individual! Just come right out and say it! No head games, no "read between the lines" BS. Screw my client and I'll PERSONALLY make sure that not only do you not get paid but I'll do everything I can to get you booted out of what ever organization it is that you're a part of.
Do we u n d e r s t a n d each other?
astrid,
Funny! But this very real possibility seems to have no effect on their decision making process? No effect at all.
Personally the prospect scares the living ____ out of me. But then I grew up in a lower middle class neighborhood and remember being told to go over to Mrs. Shitzengrueber's to help carry her groceries back from the store. Poverty is hard on you, and it doesn't get easier w/age.
Yet there has been a worrisome consequence: Working and middle-class families are moving out — and failing to move in — because they cannot afford a house here.
Is there really such shame in renting?
SP,
Sorry for responding so late, I missed your comments the first couple times around. I also found Flashman's Lady to be the weakest of the four and the Great Game to be the strongest. I enjoyed all of them and look forward to reading the rest.
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Quite a lot of debate among us Amerika-and-success-hating Patrick.netters has focused on where to lay the responsibility for the current housing bubble crash (which doesn't exist, btw). For most of us, it's not a strictly either/or binary choice between sellers or buyers, or lenders vs. regulators. There is plenty of blame to go around, and sometimes it seems very hard to sort out exactly who was responsible for what part of this slow-motion train wreck we've been spectators to.
However, I've noticed a recurring theme among some of the big-"L" Libertarians* here and elsewhere: the belief that most (if not all) of the blame and responsibility deserves to be lain at the feet of f@cked borrowers. (*disclaimer: I consider myself a small-"l" libertarian who thinks some regulation of the right kind is not only desirable, but necessary for "free markets" to function in a way that benefits everyone --not just banksters and crooks).
Now, I'm as pro-caveat emptor as the next guy, and I sure as hell do not have much sympathy for lazy, greedy clowns like Casey Serin or Howmuchamonth retards who "can't" even try to understand the terms of a mortgage before signing their names. But somehow, the idea that the banksters, bubble-blowing Federal Reserve, fly-by-night mortgage brokers, hit-the-number appraisers, "it only goes up" Realtwhores, and assorted other professional crooks and lying scumbags have NO responsibility whatsoever beggars belief.
No one put a gun to anyone's head --this is true. But it's also true that no one asked ME whether or not it was *good idea* to start handing out unsecured $million-dollar neg-am loans to unemployed 24-year-old con artists. It's also true that if I choose to buy in the current market, I have *no choice* but to compete against unemployed 24-year-old con artists with unsecured $million-dollar neg-am loans. And guess who's more likely to win that bidding war? Anyone...?
Oh, and thank God for renting. Without it, my only other "free will choice" for shelter would be pitching a tent in the local park or living out of my car.
I completely agree that I, as a prospective buyer, have a certain responsibility to educate myself about any deal --and the risks-- before entering into it. And I agree that there is no risk-free transaction. However, I --like most people-- am not a professional real estate expert nor a financial wizard. Don't I have *some right* to expect that the people who are legally employed as market "professionals" behave in a marginally professional and lawful way (i.e, not trying to anally rape me at every opportunity)? Don't I, as a citizen, have *some right* to expect that the people who I've voted into office and whose salaries I'm paying (Congress, President, state legislators, etc.) will "regulate" on my behalf occasionally ? At the very least, shouldn't I be able to expect them NOT to rig the system to reward my being ass-raped and then hand a jar of Vaseline to my attacker? Am I being ridiculously naive here?
In any voluntary transaction, there are always at least two parties involved --a buyer and seller-- whose actions (ethical or otherwise) will affect the outcome. And when it comes to most mortgage transactions, there often is as many as 5 directly interested parties:
(1) MBS-NAAVLP retail broker/lender (sub-contractor),
(2) realtwhore (acting as seller's agent),
(3) hit-the-number appraiser,
(4) seller,
and lastly, (5) the buyer.
Add to that 3 additional parties that --while not directly involved in any particular RE transaction-- largely determine how the macro-liquidity game is rigged, and in whose favor:
(1) rate-manipulating, bubble-blowing Fed,
(2) MBS investors and foreign central banksters (who front NAAVLP money to retail lenders),
(3) complicit and/or asleep-at-the-wheel Congress & state government.
Consider your average American. Consider your own brother or sister. Do you think think bro/sis really has the financial prowess and intellect to single-handedly defeat a game systematically rigged over decades to favor all the other parties against them? When all the "experts" are using huge marketing budgets, FUD, blatantly manipulated data and government backing that "proves" what a sweet deal the American Dreamâ„¢ is vs. "being priced out forever", what chance does s/he stand on her own? I mean, you're the only one saying otherwise, and your opinions don't count because you're a lowly JBR, right?
Let's be realistic. I'm always rooting for David, but when he's facing 7 Goliaths and God's taking a siesta, his odds don't look so good.
Come to think of it, should I be responsible for policing my own neighborhood, too? Or running my own court system and jails? Have we grown so jaded about being being raped by the very pols and "regulators" (supposedly elected to serve our interests and uphold the law) that we've forgotten WHY they're supposed to be there in the first place?
I forget --aside from lining their own pockets, what exactly is the purpose of government again?
Just wondering aloud...
HARM
#housing