patrick.net

PAR said:
EBguy, the Shiller index is already adjusted for inflation.

You are thinking of the Shiller graph on Randy's website www.capitalism2.org, which takes into account inflation. The S&P/Case-Shiller Home Price Indices are NOT adjusted for inflation.
http://www.homeprice.standardandpoors.com./spf/pdf/index/SP_Case_Shiller_Home_Price_Indices_Methodology_Web.pdf

If I offended you yesterday, I apologize.

You have overestimated your ability in offending me. :)

BTW, when might you have offended me?

The British Meseum is a place that I’ve always wanted to visit.

I have never been there.

I always prefer a science, technology, or natural history museum. I am not too patience with art, although I do love Vincent van Gogh.

I have never been to Victoria, mainly due to the difficulty of getting there.

Just drive up and take a ferry near the border. The buffet on the boat was not very good though.

http://www.mercurynews.com/ci_5387915

It's virtually impossible to find a reputable expert who believes a basic home purchased in the Bay Area today will be worth less 10 years from now. History, and continued restrictions on new residential construction, indicate prices will rise over the long term. But the value certainly can drop or stagnate during any 10-year span.

Mark Martel and his wife, Anita, are renters in Mountain View who began looking to buy a townhouse in the middle of last year. They say the conditions for buyers were kinder last summer than they have been early this year, because there are fewer homes on the market now, and more competition. They made their first purchase offer, on a Mountain View townhouse, last month and lost out in a field of seven. They offered 6 percent more than list price, Martel said, but the winning bid was 12 percent over.

"There are a few people I've talked to who are listening to the nationwide hype, who think the market is declining," Morgan said. "In the Bay Area, we're in a unique bubble ... we're not really seeing prices go down per se."

That's that. Fortress Mountain View.

"I don’t think the housing will crash this year. No way. I am uncertain that I made the right choice to sell my condo now, as opposed to selling it in 6 months."

You know better than to hold out for the last marginal dollar...

Some people are always drawn to listings that are under-priced. It seems more reasonable to find something a little bit overpriced and have my agent break theirs. :)

Anyone here ever taken the ferry up Alaska's Inside Passage? I'm thinking about doing that for my big trip this summer (before all the Glacier melts)

Anyone here ever taken the ferry up Alaska’s Inside Passage? I’m thinking about doing that for my big trip this summer (before all the Glacier melts)

I haven't. But I love cruises. Choose one with good food, they may have lobsters!

PS - Anyone here (other than GOOG employees, you know who you are) played around with Google's new custom search? I would love to build a patrick.net housing bubble metasearch...if you guys are willing to help...

Peter P,

I can't afford a good cruise (I have very little after tax money after student loans, living costs, Roth 401K and I spend most of that on clothes and books and kitchen implements) .

I was thinking of the government runned ferries that goes between Seattle and Alaska.

Astrid, they may have good cruise deals from time to time. Last time we took Princess to Vancouver and the food was decent (though not mindblowing) and it cost us less than $100 a person-night. An Alaskan criuse may cost more though.

http://res.cruisecheap.com/travel/cruise/sailplan.rvlx?CruiseItineraryID=78375

I heard good things about Crystal but they are very expensive.

THE BAY AREA IS SPECIAL

What is not special? ;)

What is your philosophy on ordering daily specials in restaurants?

Pretty quiet here.

The print edition of WSJ has a nice article about the yen carry trade. (Couldn't find it online and even then it will be subscription based.)

So the article says, currency trading is gone retail in a major way. People come back from office, sit in front of the computer and do night-trading. Mostly on margin. Common ratio is 1 to 20, but sometimes it can be 1 to 100. Talks about a trader who deposited like 15K (USD equivalent) and shorted USD 1.5M of British pound.

The striking fact was the retail trades total the same amount as the hedge fund trades. Astounding. The people are desperate to earn some investment income as interest rates are almost zero.

The "globalness" of the economy was the most illuminating aspect I learned after I started researching the housing bubble. Not good or bad. I am simply awed.

Astrid,

scenery on the Washington to Alaska ferry is the same as on a cruise - you can get a stateroom and if you dig the back-packer in Europe travel style, you'll probably like it, for a fraction of the cost.

No pool, though.

tsusiat,

That sounds very good. I've done a decent amount of *budget* travelling in China including the long hellish boat ride from Shanghai to Port Arthur (The cabins were hot and suffocating and really disgusting, everybody was sea sick, and the company wasn't all that great either.)

I can barely swim anyways and I would be way too tempted to pig out at a cruise buffet.

Can I camp on the ferry?

D Says:

March 9th, 2007 at 4:14 pm
Hello PEOPLE THE BAY AREA IS SPECIAL JUST READ THE SJ MERCURY to know better …Propaganda perhaps
http://www.mercurynews.com/ci_5387915

Not only is the Bay Area special...."experts advise" on what to do. I feel better already.

Q What would we do without those handy-dandy experts?

A Basic economics and common sense.

I heard today that the market was flat because people are waiting to see who has loaned money to the people who are now bailing out of the subprime loan industry. Apparently there was a lot of money lent to those folk from unexpected places.

GC,
San Francisco has several good museums. The Legion of Honor has good European art, Monets, etc. The De Young is in a really amazing new Herzog and DeMeuron building and has some very interesting new collections, including an amazing Papua New Guinea collection. The Asian Museum and the Museum of Modern Art are also quite good.

We will soon have an absolutely astounding natural history museum. The new California Academy of Sciences will open spring 2008 in an amazing Renzo Piano building.

The British Museum is wonderful. It is one of those amazing, enormous museums with something for everyone. They have enclosed the courtyard and opened the reading room up to be part of the museum (it was private to scholars when I was in grad school). It is worth a trip to see.

If you don't like the Met or Louvre type museums the British might be overwhelming for you, though.

Hot off the presses:

Countrywide Financial ends no down-payment lending

I am still not buying the argument that has often been made here that BA housing prices are strong and will remain strong. Statistics never tells the complete story.

I am not the only one. Here is a supporting view.

Here is Realty Times
http://realtytimes.com/rtcpages/20070309_lowervalues.htm

Calhoun says the month-to-month price jump likely doesn't signal the flat and falling prices trend is changing.

"There's a huge geographical diversity in how fast properties are selling. The expensive geographic areas are making up a large percentage of sales and they are selling with multiple offers. Other areas are having price depreciations. It shows you the market is not in equilibrium," Calhoun added.

It is physically impossible for Bay Aryan house prices to go down. Just look at the typical BA first-time buyer:

Countrywide Financial ends no down-payment lending

I can see some anal-ist pulling this out ...

"We are encouraged by the steps taken by CFC to reduce risks in the face of rising uncertainties. Our model indicates that this move will lend a good support to the bottom line on a going forward basis. We reiterate our buy rating. CFC continues to be our top pick in the mortgage industry."

(Then turns around and whispers ... "Mr. Mozilo, you can now proceed to place your sell order with us.")

EBguy, sorry ’bout that. I was referring to the irrationally exuberant graph…
A copy of which I carry around in my wallet...

Very interesting.

Debt is like using drugs – useful and constructive if used properly. But destructive if abused. Addictive and pleasurable while using - and painful or deadly in withdrawal or overdose.

ROFLMAO!!! The current banner ad is:

Mortgages at Countrywide
Fast Home Refi, Good Credit or Not.
Countrywide 4 out of 5 approved!

What poetic irony! The keywords in this thread have summoned the very sleazy demon we've been bashing for days! And here it is, touting its incredibly low lending standards for all to see...

Astrid,

I took a cruise to Alaska on the inside passage... in fact, I asked my wife to marry me on that cruise. Maybe that biases me in favor of it, but I highly recommend it. Did I mention bacon at every meal plus all you can eat lobster night? ZING!

Miami-based Related, the nation's largest condo developer, has trotted out a rebranded "affordable housing division," to build condos for buyers priced out of the market.

The firm has presold 497 of 500 loft condos in a planned downtown Miami high-rise. They're priced from $159,000, about half the median price of existing condos. That's a fraction of the price of many new condos, which often now go unsold.

Related expects to make a return of around 15%. That's about half what its luxury units typically fetch, but the company's not complaining.

"You make less money, but the demand for this type of housing is so great that the volume you can do justifies the concession on the returns," said Oscar Rodriguez, senior vice president of Related's affordable housing division.

http://biz.yahoo.com/ibd/070301/realestate.html?.v=1&.pf=real-estate

Unfortunately she died of breast cancer. She was a hoot.

Sad. We need more funding in breast cancer research

dear peter,
check this website out
www.komensacramento.org.

They are doing a fund raising for breast cancer.

OT, but perhaps interesting to credit market watchers...

On Friday China's Finance Minister Jin Renqing announced the formation of an agency similar to Singapore's Temasek Holdings to invest his country's currency reserves. Last year Renqing indicated his ministry would seek to diversify its holdings which have to date been concentrated in ultra-conservative assets.

Our print and broadcast media brushed off Renqing's 2006 comments as a move to preempt protectionist sentiment here but, while they may have been useful in that regard, yesterday's statement makes clear China's intention to take on the role of global investor.

China is a major purchaser of US Treasury bonds and other government securities both here and abroad, and its investments have tended to hold intrerest rates down in recent years. The country's reserves comprise some $1 trillion, and are rising at an estimated $20 billion each month.

It will be interesting to see China participate in the ownership of foreign holdings in addition to its long-held policy of extending credit to its export markets.

While regulation is bad in Theory, I know of other theories that work on paper, but not in practice. Communism is the best thing since sliced bread if you ever read the pamplet:) Govermnet regulation should be minimized, but they should also protect the money supply from the poison we now see. Protecting the value of our money should be the first priority for the Federal Reserve. They should be regulating the money supply.

I am a strong proponent for making a 20% downpayment mandatory for all home loans. For the longest time you were required to have 50% of your money in the pot if you traded on margin in the equities. 20% down is not unreasonable to require if people want to play with other people's money in the home markets. Leverage is a bitch only if you have something to lose, I expect many $0 down people will simply walk away from their mistake and never pay $1 back to the bank that is forced to eat it.

I am wondering if/when the derivatives markets that are intangled in the stock market will be the next smoldering hole in our economy. Buffet is a smart man and he is very afraid of the derivatives.

Space Ace Says:
Miami-based Related, the nation’s largest condo developer, has trotted out a rebranded “affordable housing division,” to build condos for buyers priced out of the market.

Very interesting. How do they do that, given they have to purchase land or a building at inflated prices first? Building affordable housing isn't as easy as just building and selling for less -- unless you achieve it with smaller floorplates...

astrid Says:
PS - Anyone here (other than GOOG employees, you know who you are) played around with Google’s new custom search? I would love to build a patrick.net housing bubble metasearch…if you guys are willing to help…

can't patrick just embed some HTML code from GOOG somewhere on the home page?

PAR, it is tough to be an unloved troll. Without any attention they shrivel up into tiny little yapping dogs. And as we all know, most dogs less than 24" make a lot of noise, but generally don't have a point.

I think he's actually trying to get back on board with the theme of the blog, though. We do complain a lot about over-leveraged boomers in McMansions. :)

Is it complaining about? Or laughing at? I think we may be switching from one to the other.

PAR, it is tough to be an unloved troll.

Is there a loved troll?

I do miss MarinaPrime, aka The Troll. :)

Sometimes trolls are witty. Perhaps those trolls are not loved, but they are not entirely hated either. Their entertaining posts offer a small redeeming quality.

From Yahoo! Finance article "Debating Standards for Mortgage Lenders" by Ruth Simon on March 1, 2007 (http://tinyurl.com/2y8yhr):

Some 2.51% of mortgages were delinquent in the fourth quarter, the highest level since early 2002, according to Equifax Inc. and Moody's Economy.com Inc.

This little factoid escaped me earlier. 2.51% of mortgages were delinquent in 4Q06? How is that even possible? I would expect a much higher foreclosure rate across the nation given that number. Does the delinquent payment number not really correlate well with actual defaults and foreclosures?

Did anyone catch last week’s announcement by Freddie Mac that they would no longer buy loans where there is a “high likelihood” that borrowers cannot meet their monthly payments and which are “highly vulnerable to foreclosure.” Is'nt that tantamount to an admission that Freddie Mac formerly bought loans knowing full well that they would likely end in default?!

http://www.freddiemac.com/news/archives/corporate/2007/20070227_subprimelending.html

"McLean, VA – Freddie Mac (NYSE: FRE) today announced that it will cease buying subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure. First, Freddie Mac will only buy subprime adjustable-rate mortgages (ARMs) – and mortgage-related securities backed by these subprime loans – that qualify borrowers at the fully-indexed and fully-amortizing rate."