patrick.net

I know what the damn word is that gets my message deleted automatically. It is So-ciali-st. What the hell!

Shit --you're right, OO!
I tried So-cial-ist and So-cial-ism and both triggered the delete!

Bullworth:
"Yeah, yeah
You can call it single-payer or Canadian way
Only socialized medicine will ever save the day!
Come on now, lemme hear that dirty word - SOCIALISM!"

If Aussies play their cards right, I think they have a hell of a future ahead of them.

I agree. In case there is a nuclear war, it is going to be relatively safe down south.

I agree. In case there is a nuclear war, it is going to be relatively safe down south.

hmm, guess who supplied the uranium....

Sydney is probably the dirtiest and most polluted part of Australia.

Sydney is nice is if you have a yacht, a $10 million place on Middle Harbour, and perhaps a helicopter to make dealing with the traffic congestion easier. Otherwise just invest in a chauffeur so you can keep working in Military Rd traffic jams. Of course, then you would own a TV station and a stable of magazines or newspapers...

CME housing futures will start trading on 5/22.

Sydney is nice is if you have a yacht,...

How is Gold Coast?

How is Gold Coast?

hmm, also nice if you have a yacht. if you like hot weather and don't mind getting skin cancer, it's OK. not been to qld much, but some people don't like it - qld was described to me as 'too many blokes walking round with beards', i.e. fairly mediocre small-town mindset. and there's high rise condos right on the beach, many originally two-tier marketed. in fact, qld was the home of the two-tier property marketing scam, used to get naiive investors (from sydney or NZ work best) to overpay $50K for investment properties...

but i suppose it could also be a laid-back tropical paradise, just depends what you find there to like, heh... it's a warm place to retire on a reduced income for many, much like florida once was/is... qld has a lot of nice old weatherboard places on stilts for cooling, which are similar in design to US frame houses...

Peter P,

I'm still working on a macro "hedge" model for CME Housing Futures. Check by cap20 sometime next week (hopefully) when I have something we can kick around.

I'm thinking something along the lines of a macro hedge fund approach which follows a RE macro model but exploits the internal correlations between RE and other trade-able concerns.

Frify,
perhaps I misunderstood the context of your comments above, but in the statement you made about "red state republicans voting against their economic intrests, as they are poorer", I'm not sure if I neccesarily agree, as this is more of a state to state case. I can tell you in the case if TN, TX and NC- both republican states-that I can't think of a government that has been more aggressive in encouraging new growth. Lamar Alexander (republican) and Bill Purcell( democrat) recently spent the last few years flying back and forth to LA negotiating with Nissan, which they suceeded in getting North American operations moved to Nashville. TN alone spends millions in producing educational materials for companies and individual citizens who have moving to a more affordable place on their mind. The state also makes huge tax breaks for out of state companies moving in. NC is the same. All I have to mention is the I-80 tech corridor, which is on of the fastest growing tech and research sectors in the country to point to evidence of the sucess that NC has had in converting their economy from being heavily reliant on textiles to technology in less than 10 years.TX has several cities that are breaking into the entertainment and games sectors. I can't tell you how many agencies I've discovered that were once in CA and now reside in Austin. TX is also another section of the country that's having record growth in manufactoring and tech research. Clear Channel is the biggest media advertiser in the world, and they're located in Houston, which is yet one more city that's on the top 10 list this year in Forbe's magazine.
Put frankly, it isn't that hard to make a point to any company in CA that costs would be cheaper in any other state. Just the tax and electricity savings is in the millions. Employee cost is substantially lower, and the kicker is that even if you are paying your employees less, even if you move them to another region, they are still going to be able to afford more than they ever could here.
If there was any state that is doing the least to stop businesses from hemoraging from their borders, it's California and Arnold. The state has the most crippling taxes, the highest environmental costs, the highest developmental costs, the highest employee cost, and the list goes on and on. I can't think of anything else to describe CA's business model other than stupid. Eventually, the rest of the country will( and to some extent) is catching up to California's level of technological expertise. When they do, there will be no competitioin, and if California wants to stay at all competitive, either they'll have to cut salaries in half, or find something else to make money in. Either that or they'll just trade houses back and forth like they've been doing for the last 5 years.

George,

It's hard for me to resist these "where's the body" HB crime scene investigation type comments. Some of the "Clouseau-esque" observations would have made Peter Sellers himself proud! They ask, no DEMAND to be escorted to the scene of the crime, shown the point of entry, evidence of the struggle, exhibit A (the fireplace poker) complete with matching fingerprints, chalk outline and STILL they aren't "say that it is for certain" that a crime has been commited!

Ahem, I'm having white silk gloves with pink embroidered "HB's" done up on them to leave at the scene of foreclosures and short sales as we speak.

Boy, goober, you sure like that term! :-)

@DinOR,

:lol: --it was Professor Plum in the library.

I’m still working on a macro “hedge” model for CME Housing Futures. Check by cap20 sometime next week (hopefully) when I have something we can kick around.

It is going to be interesting. :)

If it is implemented in time perhaps the cascade failure can be avoided.

IMO America still has a lot of karma, luck, and fortune. It will be ugly but we will survive.

(It is too early to tell whether the Iraq wars will harm America's Karma. Let's pray for peace.)

“Ok last year we said next year prices will come down (Mid 06) now we say by next year. How long can we keep pushing the dates? ”

I have become LESS bearish on Bay Area housing since last year.

One reason is that rent level is significantly higher in some desirable places. This will soften the eventual mean reversion of rent-price relationship.

However, there will still be a lot of pain. I think anything under 500K - 600K is still very dangerous.

HARM,

I just had to admire George's calm reserve. Whenever I see a post that breathlessly exclaims that for all of the "hub bub" prices are still escalating in his/her neck of the woods I just want to go off! Now that the housing starts are off what, 7.4% and back to the pre-insanity of 2005 levels are we going to have to ward off yet another offensive on "how 2004 was still a pretty good year?"

Thanks, George.

God I love numbers.

Peter P,

I don't get nearly as technical as yourself and Randy H, but isn't it just possible that rents in some areas have firmed due to the sudden realization that the outrageous upside is no longer there? I mean, if I'm paying 9 or 10% for margin money but my leveraged position is appreciating at 18 or 20% then who cares. As my appreciation slows to or below my margin expense then I have to re-think my position, no?

WW2,

Yes, it's true that electing officials who can bring home the pork because they belong to the dominant party is a good economic move for red states, but consider the middle-income 30-something who votes to 1) reduce his own taxes by 2% 2) reduce the upper income earners by 4% 3) increase the national debt by X-trillions.

There are two likely (one possible) outcomes that most of us on this board fear:

A) massive dollar depreciation (a future tax in disguise)
B) Future tax increases when the 30-something is in his prime earning years
C) (unlikely) Fed spending is cut back to Military and Debt service (2/3rd currently). This implies killing Social Security (1/3).

Possible strategies: You can either save now, praying A) doesn't happen ("hoping" B happens) or else spend-spend-spend and go into debt up the wazu and "hope" that A happens and praying that B doesn't happen. The latter strategy appears to be quite popular these days.

If you're rich (big tax savings now) or old (no risk from future tax increases as your income will drop; no fears of C happening - in your SS-lifetime, that is...), the tax cuts are great. Most of the nation's millionaires are in blue states, so aside from Florida oldies, red state voters are screwing themselves along with the middle class.

Frify,
Perhaps on paper what you're saying is absolutly correct. Perhaps there are future implications unforseen in " red states", but from simply looking at what's on the table now, Most of the "blue states" are already screwed. Big time in more ways than one, from crappy public education, high taxes, crippling business taxes, outdated protective laws that protect older homeowners, high home prices,low wages in relation to cost of living, and extremly high population densities. All the progressiveness in the world won't save these areas either. Perhaps they will be wonderul places for the rich, but as for middle income americans, these areas are toast.
I think the view that " blue states" are sucking dry money out of the pockets of the blue sections is oversimplified. The fact of the matter is that more real economic growth is occuring in these newly developed areas while RE has taken over the Blue zones. The actuality is that places like CA, and NY are bigger threats to the national economy than anywhere else. If they fall, then we all fall because they still have signifigant influence. A shifting of commerce from these regions will be the best thing for the country for the long term, that is until populations in the newer areas rises to the level of California's, which could be decades from now.
A simple observation of mine is the distinct lack of anything close to a blog devoted towards overpriced housing in any of the aforementioned "red" areas, except of course florida, which is a freak simply because of the intense NE based retirement communities.

Conor,

"80% finance related, 20% price related"

While the two are definitely inter-twined that pretty much sums it up for me as well. Or you could say "It's the financing stupid!"

When I first got out of the service in the late 80's having an "honorable discharge" was a big deal b/c you didn't want to lose your most important VA benefit. The VA Loan. Back then Vet's were the only guys able to buy w/Zero Down! As the years went by FHA loans (among many others) became at least as attractive as VA loans. G.I's are a little different financially (there aren't a lot of rich kids in the service to begin with) and with their pay scale this was one way to address this issue. Now with "zero down" financing available to everyone w/ a FICO above the mid-500's who needs to bother w/ saving for a down payment? While we're at it who needs a decent FICO?

Wow, seems I have my very own fucking troll. Astrid, kindly delete the My new blog is here:

And don\’t fucking respond with facts, as I am only interested in opinions which agree with my own.

As I didn't write it. Nice work troll!

Yeah X
I was wondering if you were losing it.

(surfer-x,

I've erased the blog link. However, I'm not comfortable with open disclosure on IP addresses and emails on my threads, therefore, I'm erasing the remainder of this post.

astrid)

(content erased to protect the privacy of "little maggot troll")

Whats the matter little maggot troll, can't get the 4th refi and the wife with the bfa (not bach fine arts, big fat ass) is going to leave you?

Hey ya'll,
check this out. Pretty interesting read. Long winded. The best part is that the guy that wrote is an investor, and even he is sure the bubble is overdue to pop anytime now.
http://biz.yahoo.com/prnews/060515/lam134.html?.v=14

How can it possibly NOT be CA with the least equity?

I wondered about that myself, then noticed the source: First American Real Estate Solutions in Santa Ana, Calif.

Hmmm...

"CHARMING BIGMAC INTANGIBLES" :lol:

CA should have homeowners with the most equity, you can’t spend money as fast as your house generates it in CA.

Oh right, I forgot --they're counting those 200-300% price increases over the past 6 years as permanent "equity" gains. Of course CA "owners" have the most equity of any state, how could they not?! We'll see how well we rank a couple of years down the road...

Damn --someone created their own spoof X-blog! Amazing how much time these trolls have on their hands.

On second thought, given the current market, maybe not so amazing after all.

I am actually more bearish than last year. Rents seem to have gone up, but will still have to rise a lot to justify current home prices. Don't see how that can happen.

I used to believe, the dual income techies in BA will be able to keep the market strong. It's not that much a stretch to buy a 800K home on a 200K+ income for Asian families. They live well within their means - except when it comes to houses.

But they are no making any more dual income techie families ! The buyer pool is shrinking and the inventory is growing. The prices will have to adjust to this new supply-demand equation.

The "crash" has not happened. YET. That's true. But BA is no the verge of beginning one. I do not have any predictions for depth. But 20% drop seems very reasonable. Don't know when it will happen. Within next 12-24 months seem very reasonable.

I can see that happening in peripheral areas already. Houses have been sitting, prices have been reduced as much as 50K. Of course they were too high, so the reduction is not very meaningful. But it clearly shows that sellers expectations have completely changed. It will start happening in Sunnyvale Cupertino as well. But not before summer is over.

What I am really waiting for is a complete reversal in psychology. That is more important than actual numbers. Once the invincibility of the BA market is shown to be an illusion, things will get far more interesting. I am not betting on that happening till 2007 summer.

In Colorado, 28.5 percent of homeowners have 5 percent or less equity in their homes, and 47 percent have 15 percent or less equity

Not to be a total stats dork here, but these figures are meaningless without more descriptive statistics.

For example, are the distributions in the state-to-state comparisons identical? I doubt they are. Somewhere like TN is going to have a much more normal-dist than somewhere like CA, which is probably bimodal.

Well, apparently Riverside is finally starting to crumble. The IE(Inland Empire) has been the last haven in So Cal to buy a reasonable home under 500K.
A guy I know put his house on the market at a 'sell it today price' and it is just sitting. He's had to discount it 20K and that may not even help.Yeeehaaaww!
They've been building like madmen and selling like theives.
What I've noticed here is...If you can't afford a house on the Westside...try the SF Valley...if you can't afford in the valley...try the IE...once the IE is gone....what?...trailer parks???
The greatest fools may have disappeared.
Time for 'the great reversal'

I concur with Peter P,

I'm less bearish by the following measure: I was biased much closer to a hard-landing than a soft-landing, assuming that there was a tipping point past which all hard-landings are equally as bad.

What I am now convinced of is that the "range of soft-landing" up to that tipping point is much wider than I initially thought. This is propelled by both fundamentals and financial reasons, not the least of which being (in the BA) wage inflation, rent inflation, and job growth.

I still think starter homes are in for a "harder" correction, but even there I'm not counting on that class of homes passing the tipping point in many areas.

WWII,

Good article and I especially like where Bruce Norris addresses the speculative tangent of buying a 450K home and renting it out $1,500 a month b/c the specuvestor believes it will sell for 550K next year. When the "demand" decreases either people stop buying OR (they will try to raise the rents!) *Raise the rents* my comment, not his. And why not? Now that I'm stuck with this "steaming pile" and unable to sell it anywhere near what I owe on it I might as well give raising the rent a shot in an effort to fill some of this black hole? There's raising rents b/c you're coming from a position of strength and then there's raising rents b/c you have no choice.

What I didn't like: Now that "MY" bubble (because I found it damn it) is in full bloom it's a heck of a lot easier to get on the band wagon and not have to endure at least a solid two years of rude stares at neighborhood cook outs. Lastly, (and I hate to beat this to death) no credible discussion of the HB can take place until we acknowledge the impact of the 500K cap gains exemption. It starts there, it ends there. Everything else is just the "frilly lace on the windows". Every school child above the age of 8 should be taught this before they can move on to the next grade. It's really just that simple. If we had 500K of tax free gains on Harley's or beenie babies (and allowed you to write off the points, interest and taxes) you're gonna get a bubble there too.

This is propelled by both fundamentals and financial reasons, not the least of which being (in the BA) wage inflation, rent inflation, and job growth.

Huh?

What wage inflation? What job growth (outside RE)? As far as rents go, in SoCal I'm only seeing rents trending up on par with inflation (real inflation - approx. 5-6%/yr, not hedonically adjusted CPI).

Has someone hijacked Randy H's & Peter P's identities, or are we finally seeing the ultimate sign the bubble has peaked: Bear capitulation.

New thread: "Why Not?"

Yeah X
I was wondering if you were losing it.

Christ, I thought it was real -- and not too bad either, heh.

I like the 63 Mustang on the gen-u-wine site tho -- reminds me of the car they used in the video clip of Australian Crawl's 'Reckless' -- but you can't find it on the net, which is a shame, it's about the same vintage as Duran Duran or similar...

John A, as a physicist, can't you appreciate the potential for geometric effect with feedback situation of slow RE sales causing RE lost jobs causing slow RE sales causing...etc, etc, etc?
Well, I'm sure you appreciate all the possibilities!
What will happen? Who cantell?!?!
It will be interesting to see!