patrick.net

At least I have to agree with one thing : that nobody really knows what’s going to happen next few years...

Yes, but we must act according to our best projection and react to any change in such projection.

RE: CNN Money article (btw, Mocha46 --check out TinyUrl.com)

"Homes: Cashing out might freeze you out - Is it ever a good idea to try to time the real estate market?"

The advice from the real estate industry pros is: Resist this temptation. It's almost impossible to time this market.... "To make a decision on your home on a purely financial basis makes no sense," argues Liebman."

Riiight..... So, according the real estate "pros" we should RESIST the TEMPTATION to "time the market" and sell at/near what we believe to be a price peak. But... buying multiple "investment" properties with $0-down no-doc NAAVLPs is a FINANCIALLY RESPONSIBLE move. And using multiple cash-out refis/HELOCS for 50" plasmas/Humvees/vacations is the height of FISCAL PRUDENCE and conservative decision making.

And they KNOW cashing out's a bad idea because "...many experts predict that the strength of the housing market will continue for the near term", and "They're not making any new land..."

RE: sales volume

It is only 7.7% down because some counties (Solano/Napa/Sonoma/Contra Costa) had big gains in volume. Santa Clara county had double digit decline in volume.

HARM, nice fable. :)

Fake P Says:

Waiting in Vegas: Why puke? The article makes a good point, and it makes the point in relative terms with the use of the word “might” (Homes: Cashing out might freeze you out) instead of absolute terms (like “must” or “will”) often preferred by Bubbleheads, even in fact of so much uncertainty. You have placed your bets when you chose not to buy a house, so lets see who end up the wiser…:p

Fake - the article was overwhelmingly slanted AGAINST cashing out and actually used "not making any more land" as a justification (along with biased RE insider opinions). Good points my ass....

"So PLEASE offer some constructive advice or none at all."

Be a better person. It's hard and the reward, if you are not religious, is unclear. But it is the right thing to do.

Oh, so easy to say... Oh, so hard to do...

Cheers,
prat

Thanks, Peter. Is this the first time you've read it?

Who is MarinaCrime? It is one of us. :)

there was never any promotion of speculation in the article

Well, this is certainly true --and that's not what bugs me about it. What galls me is the appalling hypocrisy (and lack of awareness thereof) on the part of these RE insiders. Gee, when you're "market timing" in favor of rising prices/broker commissions, that's just good decision-making! But hedge against falling prices? Bad "gamblers"!

I don't know if my "bubbly head" is swelling, but my stomach's sure churning.

Your bubbly head is about to burst with so much anger, bitterness and hatred…:p

Fake P, I am sure you hate me more than I hate you.

Hmm... MarinaCrime's writing style sounds suspiciously like TWITs.

So, here's a meta-question:

Why have the trolls come out in such force the past few days? Ben's LA times coverage?

Cheers,
prat

you are currently so Bubbleheaded that you missed the whole point of the article. The gist of the article is merely to let people know that cashing out for the sake of fearing a bubble burst alone is bad.

I seriously doubt that. Case in point: calling people cashing-out "the biggest gamblers". Biggest gamblers --excuuuuse me??? No, not the RE seminar day-trader style "investors", no. Not people who have sucked out most of their existing home equity to finance current consumption --no, not them, either. It's people who are selling their homes to sit out the market a while.

Show me an article quoting the SAME insiders denouncing flipping and debt-financed RE speculation and maybe I'll reconsider my position.

hellboy, you described my position quite accurately. But I am expecting more of a credit market event than a housing market event.

And Btw, I think the REAL point of the article was very self-serving -- to postpone and/or minimize damage from what they know to be the inevitable crash. Yes, agents/brokers get a commission if people buy foreclosed REO property later on. But they will get much smaller commissions then, not to mention the sales volume after a crash is bound to be much lower.

So, here’s a meta-question:

Why have the trolls come out in such force the past few days? Ben’s LA times coverage?

The meta-answer is: trolls are metaphysical begins coming out of metamorphosis. Why now? Planet alignments.

hellboy, MarinaCrime is not the original MarinaPrime though. The newest one is sort of a parody.

hellboy - re-read the last post

I’ll get to continue my education. My first class is 7th grade math. I hear that we learn about negative numbers — Whatever they are.

Also note the name change (MarinPrime to Marina"Crime"). I think we have a Sauce impostor here. ;-)

hellboy, I maintain that the credit market is already rotting from the inside. It is just going to take the usual September/October volatility for us to see it.

Chicken or the egg? I like to eat both. :)

BTW, I think the credit market will be the first to have troubles. I will look for hedge fund failures.

Let me think about it for a while. I am detecting some flaws in my line of thought.

Troll alert. No response policy applies.

hellboy, the Russian debt crisis still caused a lot of pain in the hedge funds (and even some bond mutual funds).

Even if the FED can contain the hedge fund failures this time, the resulting knee-jerk action will trigger a new wave of flight-to-quality. Many exotic MBS will become tough-sells.

For example, if NAAVLPs are to go, many speculators who count on being able to refinance every year to new NAAVLPs will freak out.

I will put more though into this.

Truth is, RE agents don’t want everyone putting their houses up for sale now and glut the market.

Yes. In fact, there is already a glut of houses on the market in Vegas.

hellboy, in your opinion, how much can the FED do to maintain the credit spread without the effect showing up on the CPI?

hellboy, do you think that we have to wait for a retreat of collateral values for the credit/housing bubble to collapse? Or you you think it is possible that a "10-sigma event" (that happens onces every couple year for some odd reasons) will cause panic in the credit market?

hellboy, I am thinking about the possibility that they may already be "bailing out" the mortgage industry before the fact. When there is no panic, it is relatively easy to cover-up problems. The recent TOMO trades may be for precisely this reason.

If the credit market remains orderly, home prices will take longer to correct and busts will less less contagious.

What do you think?

MarinaPrime Says:
Hey hellboy,
Thanks for your message.

hellboy,

See what happens when you feed the troll? I know you meant well, but... Oh well, I had to learn my lesson the hard way too. :-)

now all of a sudden the Fed official purchases are up from historical norms. I think they bought, I want to say $68 billion last quarter ...It's kind of ironic becasue they come out with this joint lending statement about lending standards and then they turn around and start buying up a bunch of mortgages; effectively helping to keep this game going.

Great observation - btw, so you have the link for this? I tend not to take anything that comes out of AG's mouth at face value --the Fed's (and government's) interests are too closely aligned with the credit/lending industries they're (in theory) supposed to regulate. IMO, the only reason AG & Co. issued those spring warnings/criticisms about Fannie/Freddie was to prepare the public for the likelihood of a future GSE default, and to deflect any blame for the credit/housing bubble AWAY from the Fed.

RE: another bubble

I doubt that the FED has control over which asset class excess liquidity will go into. But when housing goes down, money will go to other assets, most likely stocks and bonds again.

Do you think that Bush will try to eliminate dividend tax again? This will channel money into certain stocks.

Check out the latest and historical DataQuick data
for your favourite Californian County here

http://www.housingbubblebust.com/DQTrack.html

Here are the recent TOMOs (Temporary Open Market Operations) of the FED:

http://tinyurl.com/8zygh

On the site, I do not see much recent permanent operations though.

Thanks Peter,

Btw, agree about the Fed not having control over where the bubbles happens. I doubt they "wanted" the housing bubble to happen --it was probably just an unintended side effect. I think their main aim was to contain the damage from the tech bubble and prevent long-term deflation/recession.

If Bush is successful in eliminating the dividend tax, then at least we'll have some idea of where the next bubble could start: dividend-paying stocks. That would include lots of non-tech/IT mature comapnies, S&P 500, etc.

HARM, one thing though, many tech companies will start paying dividends if the tax is gone.

Peter - here's a fun "what if?":

What if... the Dtax is gone and tech companies do start paying big dividends. Housing collapses under the weight of bad debt, and those speculators smart/lucky enough to cash out early go and start a new Tech stock bubble. This eventually collapses, and the money rushes back into housing.... so the whole cycle starts over.

Could the Fed's easy money policy keep this thing going indefinitely? At what point do the accumulated losses of wiped out suckers --er, investors-- prevent new bubbles from forming?

HARM, hellboy, it seems that the TOMOs are mostly short-term repurchase agreements (http://tinyurl.com/a9rew). Is it possible that the FED is just providing liquidity of MBS?

On the other hand, I do not see recent purchases on their permanent account (SOMA). Am I missing something?

Could the Fed’s easy money policy keep this thing going indefinitely?

So long as the rest of the world allows it to continue for whatever reason. Other countries are not dumb, but they may have reasons to keep US consumption going.

Waiting in Vegas, please do not feed the troll.

TWIT, what do you propose?

Do you agree that Dollar weakness will continue unless the bubble bursts and deflation descends upon us?

BTW, US dollar can remain weak so long as the exporter countries make their currencies weaker.