patrick.net

Ca housing starts down 57.45%, median price down 12.3%

I have a suggestion, when posting meaningless data, name your fucking source.

The homebuilders rallied hard today, on the expectation that the housing boom will continue, albiet at a slower pace.

I think California home prices will go down 5-10%, nationwide they will be stagnant.

The economy will bumble along, with slower reported GDP than today, but still not in an official recession.

I think inflation will pick up a bit and will continue to outpace incomes, making most people feel like they are treading water.

Corporate profits will remain strong and lending costs will remain low.

SQT, shit man, whoops.

Mr. UP, I'm sorry, especially about the whole "wife with an ass an axe handle wide" comments. But then again, you can drink em pretty but you kain't drink 'em thin.

Just an opinion, but...

All markets will revert to 2000 levels, with approximately 3% per year inflation since then taken into account, which is pretty much in line with the reversion to the results of the recent national housing study that said (for example) that Naples FL is 84% overvalued.

It will take several years, it's a long way down, and everyone who bought after 2000 will take a hit in real terms by the time it is over.

I've sat in on a number conference calls over the last several weeks and the over riding theme has been, "more of the same". At least where equities are concerned, so while not a great deal to get excited about it's good to see the market return to some semblance of fundamentals.

I will revisit "tech" for the first time in a long time. Mort. "Backed" Securities may well become the lead story in the debt paper arena. With so many "homeowners" commiting serial re-fi and "buying time" as ARMS/IO's reset how will investors ever be repaid? This will become a serious disruption to their income stream. Think "seasoned" loans if you need exposure to this asset class. Selectivity and "special situation" stocks will continue to provide the majority of the thunder. Don't be afraid to take concentrated positions. Be nimble!

For the consumer, I think Jimbo nailed it when he talked about an un-official recession and people feeling like they are treading water. Any prediction of YoY home price increases will not mean much to people that are underwater.

2006 will be about having OPTIONS! As consumers and investors. Those with liquidity will be able to exploit short term trades for respectable profits and those with an albatross (RE leverage) well, it will boil down to how to "dispose" of it and somehow save face.

Any discussion of "tightening lending standards" in 2006 will be moot. These are conversations that should've taken place in 2003. Damage control will be the order of the day and lenders/appraisers/sales will be subjected to the same level of scrutiny as the "Mutual Fund Scandal".

NOT INV ADV.

Finally some news on Santa Clara County, thanks Patrick for that link.....finally showing some signs of a slow down.....whew, lets hope it continues....

FYI, we did a thread on this last August: "Fucked County.com"
I will stand by my original predictions.

http://patrick.net/wp/?p=55

Serial refinancing or surreal financing?

anotherfuckedborrower.blogspot.com/2006/01/serial-refinancing-or-surreal.html

surfer-x Says:

"I have a suggestion, when posting meaningless data, name your fucking source."

Yeah, name that source. And if we don't like your source, then you will be declared a giant goofball...And once declared a giant goofball, you'll never be able to buy a house in Silicon Valley again!

NOW NAME YOUR SOURCE, damn it. Hurry up!

"38% ROE on 20% down is fantastico!" --Harry Rich

Wow, that sure is a great return! This guys investment plan for the new year is to "wish upon a star." Boy, if I imagine myself getting a great return on an investment, it will surely happen to me, because I am surely blessed. All is well in my little world! Right guy, and any second now monkeys will fly out of my butt.

http://moneycentral.msn.com/content/Experts/jim_jubak.asp?msn

Hi, Harry,

Thank you for your participation. It's reassuring to know that no matter what the RE market does, there will always be clueless arrogant trolls like you around to use as foils.

Oddly enough, CSFB, the home to the troll'ist of all trolls, MP, has offices in Sao Paulo.

Is Sao Paulo PRIME?

This is a very good post, and I will be very happy to answer your questions:

Sunnyvale_Renter Says:

1. "HARM you’re bringing up just what I’ve been wondering about: Let’s say we have a big crash and RE drops 50%. So, Joe Blow Homedebtor is suddenly “worth” say $250k instead of $500k. Where did $250k go?"

Elves. That's where the money went. Santa's Christmas Home Equity Elves mysteriously swept in and made off with the residual $250K to be spent on presents for all the good little kids around the world. You see the population is increasing and Santa ran out of money so he got together with Alan Greenspan of the Fed (a former Christmas Elf himself, or hims-elf, if you please) and cooked up a Merry little method of wealth transfer from the greedy, to the needy.

2. "This is the problem with paper, fiat, Weimar money. I can take say $1000 in it out of the bank and burn it, and it’s gone. I don’t get to go back to the bank and get replacement pieces of paper. Now, I could have $1000 in gold and melt it, or even vaporize it and it would settle on the surfaces around here and have to be carefully collected again, but it doesn’t disappear. Gold and silver are elements, right there on the periodic table. They’re real. Fiat money and the consensus illusion called home “value” are not."

Look, you can't eat gold or fiat money. But you can drive a Fiat!
Plus, if you take a $100 dollar bill and roll it into a super-duper Baby Boomer-sized doobie, you can smoke it, Bill Clinton style.

So even if it "vaporizes" you at least get a residual high from it.
It's the hippy-ass Boomer way.

I don't advocate it, but fiat money is used for many things besides buying McMansions in the Golden Ghetto of Silicon Valley...

Oops, I think I lost my marbles...

I predict that I will continue my strong tradition of incorrectly predicting the future:

* Stocks up 10% (As money flees real-estate)
* Gold goes up or down. Or up.
* Dollar moderately tanks.
* Median price down 10% nation-wide (20% in CA, FL)
* Google hits my original predicted value of $50 a share as investors realize that online ads are an easily commoditized technology, and google gives away everything else for free.
* Roe v Wade is overturned within 18 months. _ducks_

Hell, I've been wrong for four years now (nearly 15% of my life!). What's one more?

Cheers,
prat

“Doom and gloomer?” You bet, and proud of it.

_smile_

"He is a sane man who can have tragedy in his heart and comedy in his head."
-GKC

Cheers,
prat

"Economic Predictions 2006" you ask?

Well, on a macro level one could expect the following scenario:

Since the "nesting instinct" in women is such a force, when the
housing bubble collapses, you can expect a gaggle of them to be
running around like chickens with their heads cut off because their
"nests" have just been shaken out of their trees. Soon feathers will
begin to fly!

In a micro, or individual level, I expect Surfer-X to keep his priorities straight, old-school-Cali-style, & just keep on surfin...!

Food for thought, grounds for further research:

http://www.newsmax.com/archives/articles/2006/1/10/220213.shtml

Here's an excerpt from an article entitled "America's Superpower Days are Over":

In 2005, for the first time on record, consumer, business and government spending exceeded the total income of the country. Net national savings actually fell.

America can consume more than it produces only if foreigners supply the difference. China recently announced that it intends to diversify its foreign exchange holdings away from the U.S. dollar. If this is not merely a threat in order to extort even more concessions from Bush, Americans' ability to consume will be brought up short by a fall in the dollar's value, as China ceases to be a sponge that is absorbing an excessive outpouring of dollars. Oil-producing countries might follow China's lead.

Now that Americans are dependent on imports for their clothing, manufactured goods and even high technology products, a decline in the dollar's value will make all these products much more expensive. American living standards, which have been treading water, will sink.

A decline in living standards is an enormous cost and will make existing debt burdens unbearable. Stiglitz did not include this cost in his estimate.

Even more serious is the war's diversion of attention from the disappearance of middle-class jobs for university graduates. The ladders of upward mobility are being rapidly dismantled by offshore production for U.S. markets, job outsourcing and importation of foreign professionals on work visas. In almost every U.S. corporation, U.S. employees are being dismissed and replaced by foreigners who work for lower pay. Even American public school teachers and hospital nurses are being replaced by foreigners imported on work visas.

The American Dream has become a nightmare for college graduates who cannot find meaningful work.

This fact is made abundantly clear from the payroll jobs data over the past five years. December's numbers, released on Jan. 6, show the same pattern that I have reported each month for years. Under pressure from offshore outsourcing, the U.S. economy only creates low-productivity jobs in low-pay domestic services.

Only a paltry number of private sector jobs were created -- 94,000. Of these 94,000 jobs, 35,800 -- or 38 percent -- are for waitresses and bartenders. Health care and social assistance account for 28 percent of the new jobs, and temporary workers account for 10 percent. These three categories of low-tech, nontradable domestic services account for 76 percent of the new jobs. This is the jobs pattern of a poor Third World economy that consumes more than it produces.

America's so-called First World superpower economy was only able to create in December a measly 12,000 jobs in goods-producing industries, of which 77 percent are accounted for by wood products and fabricated metal products -- the furniture and roofing metal of the housing boom that has now come to an end. U.S. employment declined in machinery, electronic instruments, and motor vehicles and parts.

Two thousand six hundred jobs were created in computer systems design and related services, depressing news for the several hundred thousand unemployed American computer and software engineers.

When manufacturing leaves a country, engineering, R&D and innovation rapidly follow. Now that outsourcing has killed employment opportunities for U.S. citizens and even General Motors and Ford are failing, U.S. economic growth depends on how much longer the rest of the world will absorb our debt and finance our consumption.

How much longer will it be before "the world's only remaining superpower" is universally acknowledged as a debt-ridden, hollowed-out economy desperately in need of IMF bailout?

BA,

Good call! I've had my fill of Bulls trying to feed us that, "Yeah, there might be a bubble "here and there" but not here. Whatever. Everyone in America has pretty much the same access to mort. money and we've all been feeding at the same trough. Taking endless pains to quantify which areas are and which aren't in a bubble has gotten tedious. When you're getting a steady diet of hard evidence from places as far flung as Madison, WI? Some may be quick to ask what hard evidence?

Let's look at the fact that by virtually any parameter you so choose, things are either cooling or crashing depending on how much you were leveraged and where you bought. There was a time when folks that stayed in a home for the duration of the mortgage referred to it as an "investment" meaning that it was paid for! As in, "don't laugh, at least it's paid for". The impact on their retirement was primarily that they wouldn't be making mort. payments anymore and could afford to live on less. That "Old World" value has been totally dismissed. Now it's, "keep current on the payments for two years and you're retired baby"!

"How many US cities have to be considered overvalued before we go ahead an call it a national housing bubble?" --SQT

I'll call it one, because the areas that are over-valued are the major cities that are the major economic drivers of the US economy. That means that if those areas pop, it WILL affect the national economy and thus we have a national bubble. It doesn't matter if bum-fuck nowhere Iowa is over or under valued because the place is virtually inconsequential to the US economy.

Seems to me that I've been sucking it long and sucking it hard for about 42 years now, and I'm only 39. My prediction? The price of knee pads will skyrocket as us peons realize that we can be more comfortable whilst sucking it.

I'm tired of it. My other prediction? China will invade the Spratlys, Japan will send 3 or 4 destroyers in response, China will fire on them. The Shrub will thumb his chest but ultimately do nothing. China now embolden will invade Taiwan, the Shrub in response will send a squadron of F-22's to Guam and the Nimitz, Stennis, Vinson and Reagon to the South China Sea. In response the Chinese will stop buying Merikan debt instruments, and issue the following proclamation (translated from the original Middle Earth dialect) "suck it long, suck it hard". The McDebtors will rise up in protest but will ultimately be defeated by the collation of burrito folders against sucking it longer. In short burrito prices will skyrocket*

*Note: Not investment advice.

We don't think home prices, either new or resale, will advance in 2006, as they have in the past three years," Alan Nevin, chief economist at the California Building Industry Association, said in a conference call.

I also have articles written which indicate the Earth is flat, penned by the Flat Earth Society.

Consider the source, but my recommendation to you is buy now before it's too late. You clearly have done your homework and richly deserve the rewards coming to you. Again, buy now, real estate only goes up, remember the clear disconnect from thermodynamics means nothing, yes Timmy, something can always do just one thing, and Bay Area RE ONLY, I repeat ONLY goes up. Besides with the fat ass bonai Intel keeps doling out will only add yet another gold brick to the already paved with gold BA streets.

Buy now, before it's too late, you don't want to miss out now do you?

Exaclty - don't trust Realtors or builders to EVER predict a market decline let alone crash.

PS My question to these rosy forecasts is how low can affordability go - 2%, 1%? It's already in the single digits!!