patrick.net

@rp,

:lol: Not sure. Mr. X has already hosted twice, so I'm guessing somebody else will have to volunteer to host next time. Perhaps someone who lives in L.A. or Orange County and has ample yard space (and understanding neighbors).

good effort -- love the t-shirts! maybe patrick.net could start an online shop selling them to fund the site and more blog parties...

actually, a 'girls of patrick.net' calendar might sell even better... ;) always a good fund-raising idea...

Consumer confidence and spending has been down here for quite some time, largely due to excessively high housing payments. Guess the bankers and boomers just don't spend all that money they've sucked from others on the high street, more likely to be in Monaco or at the Mercedes dealership...

Well it sure looks like a good time was had by all!

No insider trading or explosives in my weekend. Managed to make it down to the OR State Fair and had the opportunity to speak with many of the various vendors and strictly from an anecdotal stand point, things are slow. VERY slow! Typically state fair over the last several years has morphed into the "State HOME Show" with everything from aluminum siding to booth after booth of everything from Gutter Guard (TM) to free drawings for a central vac. sys. and of course hot tobs as far as the eye can see! The noteworthy absence of these guys was most pleasant b/c I tend to think kids would rather see more giant pigs and cotton candy and less window caulking systems. Just a guess.

Here was an interesting entry. www.eco-fueler.net/rs1029. 70 mpg AND 0 to 60 in 5.9 seconds? Not bad.

Ahhh be wary of Mrs-X's sangria, and what ever you do, DON'T EAT THE FRUIT. BTW Mrs Cote' was also very attractive, good work Senor Cote'. The little Cote' forturately enough looks like Mom, and is very sweet also. Much to my dismay the little Cote' behaved herself perfectly, strike two in my quest to remain anklebiter free.

Oh and Athena, (who is hot!, but we won't let it leak out as she's also smart), makes a lethal blueberry cobbler. MMMMMM cobbler.

When do we have the NorCal party?

I am sure BayAreans have a lot of notes to compare and talk about...

Athena,

Santa Monica & beach sounds wonderful. Surfer-X can even bring his board with him! If I end up with enough room at my new pathetic rental (moving next month), that's also a possibility.

Looks like it was a blast. Someone should host a party up here in the BA!

Back to the mundane, here's an AP release on the OFHEO 2nd quarter numbers:

http://biz.yahoo.com/ap/060905/home_prices.html?.v=4

"Home Prices Show Sharp Slowdown in 2Q"

National sales down, median price up only 1.17% Q1 to Q2, blah blah blah. The interesting thing I found was how negative the spin was. A housing slowdown seems to be pretty near conventional wisdom now.

There have been a lot of requests to get a better shot of the T-shirts. Let me try here:

RC,

I definitely agree. Again, my point is the MSM spin, which is decidedly turned negative. Another example, from that rah-rah cheerleader, the NYT:

http://www.nytimes.com/2006/09/05/opinion/05tue2.html?_r=1&oref=slogin

Go Boomers!

**********

It Was Fun While It Lasted

Published: September 5, 2006
With economic signals flashing that the housing boom is over, speculation has now turned to how deep the slump will be and how long it will last, with predictions ranging from a smooth descent to a tooth-rattling plunge. Come what may, conventional wisdom holds that as long as you don’t plan to sell your house any time soon, you’ll be OK. The downturn is unlikely to wipe out all of your accumulated gains — the thinking goes — so you can cash in later.

Or can you?

The downturn in housing is overlapping with the retirement of the baby boom generation, which starts officially in 2008, when the first of 77 million boomers become eligible for Social Security. Most of them are homeowners, and many of them will presumably want to sell their homes, extracting some cash for retirement in the process. Theoretically, that implies a glut of houses for sale, which would surely mitigate an upturn in prices, and could drive them ever lower. The result would be less housing wealth for everyone and less to live on for those who had planned to retire on the house.

Still, no one can be sure what will happen. Economists agree that the retirement of the baby boom generation will influence housing prices, but differ over how powerful the effect will be. But one thing is reasonably certain. The question would not be such a burning one if Americans, especially those near retirement, had adequate savings to see them through. Even before the personal savings rate went negative last year, Americans were meager savers.

The housing bust may be what it takes to reverse that. Even a shift from profligacy to thrift would not be entirely good news, however. For an economy based on consumption, the change to less free-spending ways could be excruciating.

The house party is over, but we don’t yet know how bad the hangover is going to be.

The MSM is on a roll today!

Now the housing downturn is causing increased unemployment, a prediction many RE bears predicted a year or two ago:

http://money.cnn.com/2006/09/05/news/economy/challenger_layoff.reut/index.htm

"August job cuts soar from six-year low"

"Report shows housing market's cooling has a major effect as U.S. layoffs increase by 76 percent."

Just saw this on the last thread. Methinks this may need to be turned into a T-shirt.:

Muggy Says:

All your equity are belong to us

Oddly enough, HARM struck the exact same pose in both pictures. HARM, is that your rendition of “Blue Steel”? (a Zoolander reference for those wondering if I’m still hung over from the long weekend).

Ok, got it: http://www.imdb.com/title/tt0196229/quotes
No, not intentional, but I guess I know my good side. ;-)

LILLL, thanks.

If we get enough interest in them (and Patrick's approval), I may end up doing a Cafe Press type of thing. Patrick.net shirts, hats, mugs anyone?

"her sib turning 13 has all the earmarks of being the future dictator of a small latin american country."

Not that there's anything wrong with the future dictator of a small Latin American country, so long as your last name is not Bonaparte.

“I caught so much grief for blogging too much at home so now I blog at work.”

And the back of the T-shirt:

"But I work from home."

@RC,

I have *no idea* what you're talking about. :roll:

Peter P, nice one!

HARM,

Great T shirts! Can I get one with "Mr. Housing Bubble" though?

OT. Don't get me wrong, we really like our soon to be "in-laws" and they're wonderful people (but I'm starting to suspect they're flippers).

3rd. home in 5 years? I thought their latest purchase was a bit out there as in a good 20 minute drive just to a town of 10,000 people? They only lived there a little over two years and looks like they'll sell for a hefty profit. (Hey, good for them). Now they're purchasing a 3,500 sq. ft. monstrosity with TWO of everything! 2 kitchens, 2 decks (upper and lower) 2 fireplaces etc. etc. My wife and I drove by for a goof and it's just ridiculous. There's only 2 of them and b/c it's on a block w/really steep lots I can't see where children could play or where any kind of shop or out buildings could be put up. It's all show, in fact I believe it was "the builder's" own home. At over 500K it's pricey for this neck of the woods and makes less than NO sense for two people.

What's the motivation here? Is this the "survivor's bias" we've been hearing about? They are coming off of three very successful flips (so why not just continue to do it). Btw, I hear they're plowing every dime from the proceeds of the latest sale into this one. I hope they're prepared to walk away from that. DOM is growing and prices are going soft. Why the urgency?

Now they’re purchasing a 3,500 sq. ft. monstrosity with TWO of everything! 2 kitchens, 2 decks (upper and lower) 2 fireplaces etc. etc.

I bet it requires 2 mortgages.

DinOR,

Two kitchens you say. That'll make life easier on the 4 families who will soon be living there.

Robert,

Hot applies equally to men and women. Studly, on the other hand, sounds a wee bit gay to my ears.

"I bet it requires 2 mortgages" LOL!

(Probably will too).

Even my son-in-law seemed to be more than a just a little baffled by this out of character decision. It also struck us a little odd that for all of the 3 car garages there were a lot of vehicles parked in the driveways. I can see why. The homes are on such a slant that the driveways have iron hand rails along side. The slightest miscalculation and it's a 4 to 10 foot drop off!

I wish I posted that, but that was all Athena's work. As a verifiable Greek Goddess of wisdom, she is quite a bit wiser than me.

I'm sorry I had to miss the gathering. When the independent documentary "HousingBubble dot Com" comes out I hope to see many familiar faces.

"but fears of collateral damage to the economy are overblown"

This is the message we need to be getting out with more regularity. Since making money through the accumulation of debt was always more of a freaking HOBBY than anything resembling an actual industry how does FB's problem become mine? I don't wear an orange apron!

I disagree with the venerable RC on the Morgan Stanley research.

I don't think they're saying that the housing market is completely disconnected from the underlying economy. They're just saying that there is far too much pessimism built into those markets, increasingly coming from the housing slowdown.

There are at least as many strong underlying fundamentals as there are reasons to worry. Very likely a recession is in the future; but not economic nuclear meltdown.

Recessions are always investment buying opportunities for value investors.

SFWoman,

The common response we've gotten from housing bulls (now that a downturn is getting tougher by the day to deny) has been; "Be careful what you wish for, if housing goes down the tubes we're gonna take all the rest of you down with us"!

Consumer goods companies have rallied big time in the last month, (Johnson and Johnson, Proctor and Gamble, etc.). No surprise there. Our economy will press forward just without Home Depot getting the lion's share of the consumer's dollar and ALL of his/her attention. All of this "Real Estate RULES" was just fluff and hot air anyway.

They’re just saying that there is far too much pessimism built into those markets, increasingly coming from the housing slowdown.

There are some strong underlying fundamentals but I think not enough pessimism is priced into the markets yet.

SFWoman,

Every time my wife and I drive through an "up scale" subdivision I can't help wondering where all these toys come from either? "Move in day" looks like lottery winners and at the very least The Price is Right! Harleys, bow flex machines, all NEW appliances. And stuff, lots of stuff!

DinOR,

There's still some late sector rotation going on, no? Big funds getting defensive.

As for equities markets (I can't speak to bonds), I definitely think there are sectors that are significantly oversold at this point, depending upon one's horizon.

“Be careful what you wish for, if housing goes down the tubes we’re gonna take all the rest of you down with us”!

I've been hearing this a lot lately too. Both in professional circles and personal/family relations.

I write it off as a predictable, natural reaction. I have some very smart colleagues who bought near/at the top. These guys aren't very likely to get into financial trouble because of that decision. But still, they hate to think they weren't "smarter".

From our perspective, we see them as a herd stampeding off the cliff.

From their perspective, they see us deserters unwilling to fight along side them for their way of life.

Robert Cote'

Well, not entirely accurate. I'm not of the opinion that ONLY shelf stockers at Lowe's will be affected. There will be other pain to be sure. It's just that RE perma bulls seem to believe there's this "joined at the hip" MAD (Mutually Assured Destruction) relationship with RE and the balance of the economy!

New leaders will emerge. They always do.

These guys aren’t very likely to get into financial trouble because of that decision. But still, they hate to think they weren’t “smarter”.

Why do people like to think that they are smart? I am too dumb to comprehend.

RC,

Before banking on residential income property to fuel your golden years you'd do well to arm yourself with that Fed (SF) research study I linked in my last thread on my blog. Their predictive models show a high confidence probability of a secular, generation-long slide in real RE prices, primarily because of demographics + wealth concentration + future debt service obligations (implying taxation).

Randy H,

I'll have to check it out too! I suppose I've been looking to cash in on the "over-correction" as we attempt to revert back to the mean. (Which I suspect could be significant).

Randy H Says:

From their perspective, they see us deserters unwilling to fight along side them for their way of life.

I sense a "shoot the messenger" attitude from those who spout the "be careful what you wish for" warning. There's a palpable fear in the air around many of these folks.

If anyone uses “venerable” or “legendary” with my name again it ain’t gonna be pretty. Look, I’m just Robert.

But would "legend in his own mind" merit a special exception?

Randy,

I think there are potential opportunities in residential housing, especially if much of the current run up gets wiped during a period of relatively high inflation. As you've mentioned before , rents in the Midwest stayed relatively high even as the houses' real values fell. Even if RE becomes less and less valuable compared to wages, there are still plenty of money to be made there.