patrick.net

Jack, now that MP is gone, are you more of a bull or a bear? Or an optimistic bear? Or a cautious bull?

Agreed - higher rates would certainly accelerate the pace of price corrections, but at this point, people are already stretched so thin (especially in CA, FL, MA, etc.), it's not even a necessary catalyst. Prices will plateau and fall when enough people realize that the "20%/year forever" era is over.

Another distinction worth noting: Only fixed-rate mortgages are based on the 10-year bond rates, and these are becoming rarer every day. ARMs, and option-ARMs (neg-ams) will begin adjusting upwards right after the "teaser" rate period ends (usually 1 year). Greenspan's 2.5% of hikes are AREADY making a difference for many people.

I am so surprised that flippers/sellers are whining already. It is like someone complaining about water being too warm in a cannibal’s pot, not knowing what is going to happen next.

But didn't they see the guy/gal across the signing table with the bone through their nose?? :lol: Ok...that was bad. (slap on the hand) Bad, QT!

BayQT~

But didn’t they see the guy/gal across the signing table with the bone through their nose?? Ok…that was bad. (slap on the hand) Bad, QT!

They are thinking those bones are from the veal chops...

Dinner after "spa" ? :twisted:

B. R. A. C.

I must be more stupid because I don't know that acronym.

I’ll even do it for you 1700*2=3400.

Looks like it is beyond greed... it is stupid greed simmered in the emotion of pride.

B. R. A. C.
I must be more stupid because I don’t know that acronym.

DoD's Base Realignment And Closure 2005
www.defenselink.mil/brac/

Oh how I can’t wait to do the crazy miner dance.

When the time comes, we're going to have to organize a "crazy miner" square dance, so we can all do it together.

When the time comes, we’re going to have to organize a “crazy miner” square dance, so we can all do it together.

How about November 1, 2005? ;)

4) $3.00/gallon ahahahahahahahahahhahaha

How about

"$6.99/gallon HAHAHAHA"

I have already paid $3.19 a gallon already... $3 is nothing new. :(

When asked if they were worried about having a mortgage where their payments could increase while the vaule of their house was going down almost all of them said they will refi if rates start to go up (they said this after the obligatory “real estate never goes down” response).

When asked if they were worried about falling house prices almost all of them said they will sell if the market drops. ;)

These people are delusional. The point is that they do not want to bear the pain (sell/refi). Instead, they hope for a quick turnaound.

Every time a hurricane roles through it will knock down the partially built condos so the supply won’t be able to catch up to the demand, driving prices higer.

LOL :lol:

Her “expert opinion”: the more hurricanes the higer the price of condos. Every time a hurricane roles through it will knock down the partially built condos so the supply won’t be able to catch up to the demand, driving prices higer. One of my favorite bubble interviews thus far.

I wonder how long it took her to come up with THAT ridiculous statement.

BayQT~

I’m not sure I like the TONE of that question! (What would you like me to be?)

Relax, Jack. I like you just the way you are. Just curious. :)

It was like watching Fox news– you eventually burn out from the constant “sameness” of it all.

But... but we all care about that poor girl who is missing in Aruba, right?

I meant; ‘Blog BULL its a tough job but somebody has to do it’

Jack, I know you have a tough job. That's why I admire you so much. ;)

RE the BRAC list, if we're talking about CA, the list I saw showed the state losing about 2000 jobs total, including military and civilian combined. I'm not sure if that number is accurate given the recent announced changes to the proposed list, but 2000 doesn't seem to be enough to make much impact when it's spread across the entire state. Is there something I'm overlooking?

Seems like CA had a much bigger loss during the previous BRAC.

Or if we're talking about the nation overall, I couldn't find anything that showed the number of total jobs lost or gained nationwide. I doubt it's a a significant number though, with so many thousands of troops being moved from German bases back to US ones. But I guess it could be that some local areas will feel a bigger financial impact, and I could see BRAC being one of many factors that cause a downturn in some bubbly markets.

I actually might be able to get some unique info/insight into the base closures. My father-in-law is a General in the Air Guard, in fact he's the head of the Air Guard in Ca. He was drafted into the military during Vietnam so he's been around awhile and probably has some good insight. He's in Germany right now, but I'll ask him when he gets back.

California has one of the largest economies in the world, so a lot of people should be concerned about a RE bust in Ca because it'll affect people who don't even live here. It goes without saying that a lot of jobs in RE, mortgages and construction are going to get cut. I also think businesses like Home Depo and Lowes are going to see a major loss of revenue. After the obvious, I'm not sure. Let me think....

Let's see, what do people do when they refinance? They buy cars, so the auto industry is going to take a hit. And interest rates are going to affect the auto dealers big time because they won't be able to offer the 0% interest rate deals (yeah right) anymore. (My dad's in the business, and all he has to say about the 0% interest specials is that car dealers never lose money on a deal, they just find different ways of taking it out of your pocket.)
What else do people buy? Vacations, so the travel industry may be affected too.
Still thinking.

SactoQt, I think most businesses will be affected. Foreign oil companies may be exceptions because they have pricing power beyond strong demand... especially when many US operations are offline. Just a guess.

(at least that typical American who is 7,200 dollars in credit card debt…not to even speak about those who have multi-thousand invested in a bloated real estate market).

The scary part is that lavish spenders are in serious revolving debt while many "frugal investors" are in housing debt, thinking that they are ahead. Either type will not fare so well.

Hi all, I just found this site (by googling "real estate bubble", of course!) & have really enjoyed the commentary .
Current market data is difficult to find, but below is a pretty good site that shows homes currently on the market, pending sales, & closed sales...but only for south-ish San Jose neighborhoods. It also shows current ask prices...and if a price has been reduced, it shows the reduced price in red font...this I think is quite valuable! It seems the data is contributed by local agents. I'm quite sure it doesn't show ALL list price reductions...but there are some that can be seen...especially in higher-end neighborhoods.
Anyways, just thought I'd share this source of almost-real-time data. Oh, and the data is updated several times a day, as well (time stamps are EDT).

http://www.southsanjose.com/realty.php

Enjoy!

My husband was telling me today that the people who bought his friend's house and are negative cash flow on that are considering buying another investment property. :!:

I don't know if they're high or stupid.. or both. The market in this county is down 16% from last year, most people I talk to figure the writing is on the wall and are leery about the prospect of buying right now. But these guys are still merrily buying figuring that the party is still going. Talk about the greater fool. I will not feel bad when they crash and burn because I know they have been told the risks and they choose to ignore them.
Greed is bad.

SJ_Jim, thanks for the information. I am watching South and East Bay closely because I believe the decline will start there.

BTW, I have been running casual searches and it seems that inventory in South and East Bay has been climbing steadily while inventory in North Bay is quite stable. Are you happy, Jack?

No problem...yeah, at least one recent article mentioned San Jose as primed for bust.
My story...got outbid on a 1bd/1ba condo in early May (386.5 beat my 365 on 359 LP)...I decided that was the best I could do, & that there was a lack of sanity among the crazed bidders, & so I just had to wait and hope for a change since rent is cheap & not going anywhere. Time'll tell, huh?

Time’ll tell, huh?

Yes. Time will ...

Inevitably
Inexcorably
Indelibly

... tell.

SJ_Jim,

The total lack of correlation right now between PITI and rents/cash-flows for equivalent units is the biggest red flag that something is SERIOUSLY out of whack here, with the incomes-to-price disparity coming in a close second. You may want to trawl some of our blog archives for more in-depth material on this (the regulars here have already covered this ground before).

I especially recommend “I See Debt People” (July 12th, 2005) & "Too Big to Fail?" (July 9th, 2005) patrick.net/wp/index.php?paged=4 and Housing Bubble Glossary (August 12th, 2005) patrick.net/wp/index.php?paged=2.

Actually, I understand there is quite a slowdown here too.

"Dead"--looks that way to me. Just yesterday, I noticed a home in Kentfield that included approved design plans as part of the deal. I'm guessing a flipper saw the market and decided to bail. $1.1M for an old house on a 8200 sqft lot ("prime central location").

Regarding Sonoma...I think that county will be hurt worse than Marin: growing inventory of homes, higher incidence of foreclosure (already). Sebastopol is one of the higher in greater BA.

Naples has almost 20% of its housing stock "for sale."

http://www.marketwatch.com/news/story.asp?page=2&param=archive&guid={72B37618-A32C-4715-BEFF-B565FF3F7732}&siteid=google

Las Vegas is in almost as bad a shape, with over 5% on the market, which is huge for a Western city.

I think the areas that are going to get hit the worst are those regions most dependent on construction in the local economy. So outlying suburbs, like Riverside and Vacaville will be hit the hardest. I think Las Vegas is in for a ride, too.

Less hurt will be diversified urban economies, who never depended on construction or real estate for as many jobs in the first place.

Still predicting no recession, though if oil keeps going up, we will have one.

SJ_Jim,

Welcome! Great site! Now, if I could only find something similar for the Tri-Valley area. Hmmmm.....

BayQT~

This is my last post. I am evicting myself. You cant fire me, because I quit!

What!? You can't do that!

I am going to Lost Vegas this week again. Perhaps I will take a look at the Ivana Tower and the Trump Tower. ;)

Where did that little piss ant MP go? I miss his arrogance and BS comments.

He is probably arrested by an MP (Military Police).

Peter P,

Jack isn't going anywhere. I think he's just messing around. Too many double espressos. :-D

BayQT~

I think (I hope) Jack's comment was poking fun at a certain someone's departure.

When dealing with the pit vipers (agents, loan officers etc) what is the best way to keep your ass from being violated?

Just insist on 30YR or 15YR fixed. When they try to talk you into something else, cover your ears and say LA LA LA LA LA.

So... you are not waiting for the bubble to pop here?

am I totally off target to think that GSEs cannot really ‘fail’? They are not really the ones who are liable for the risk… the housing market could fail and the GSEs could be having steak for dinner.

Shend Rick, I don't think you're off target at all, in fact that was the whole point of that thread --everyone has a different take on what will happen to the GSEs when this thing really pops. The GSEs still hold a substantial percentage of the MBSs they issue ($500 billion or so the last time I checked), and the Fed has been pressuring them to reduce this exposure in recent months (Gee, I wonder why...?). There's obviously some direct risk there.

tinyurl.com/5btoe

So let’s look a little closer at this GSE’s leverage situation. The most common way to measure leverage is to divide total liabilities by total equity—this is generally deemed a company’s debt to equity ratio. This ratio is used to assess the long-term solvency of a firm. The higher the ratio, the more questionable the firm’s long-term solvency becomes. Using the applicable figures, Fannie Mae’s debt to equity ratio is 43 to 1. Considering that a debt to equity ratio of 12 to 1 is considered acceptable for a bank, Fannie Mae’s leverage is disturbingly high. Consequently, I would judge this firm’s financial condition to be fragile at best.

In addition to retaining a mortgage portfolio of $902 billion, Fannie Mae had a sizable off-balance sheet exposure to mortgage backed securities (MBS). At 12/31/03, the unpaid principal balance of mortgage backed securities guaranteed by Fannie Mae, and held by investors other than Fannie Mae, amounted to $1.3 trillion. It is no trivial matter that this GSE guarantees the payment of interest and principal on over $1 trillion of mortgage backed securities. If just a small fraction of the mortgages (retained or bundled into mortgage backed securities) goes into default, Fannie Mae’s equity position would evaporate thus rendering this lending institution insolvent.

Of course the GSEs and GSE-issued debt (MBS) have the "implicit" guarantee of the U.S. taxpayer. Oh wait, Greenspan recently made statements to the contrary. (Oops...)