UT: Foreclosure trend rising as hopes fall

[Anonymous]

AfF,
Don’t be so quick to shortsell your observations as idle speculation. What you are reporting on is anecdotal evidence of the next wave of the meltdown, which we are actually a couple of months into. As I said yesterday, the elephant in the corner that the mainstream media is either intentionally ignoring or doesn’t understand the significance of is the shutdown of the retail economy. Take a look at the monthly same store sales reports of the major drivers of the US retail economy – Walmart, Target, Home Depot, Lowe’s, GM, Ford, Chrysler, Best Buy. Just in the past few weeks retailers themselves have been pulling the plug on new store development projects because they sense they can no longer ignore the slowed pace of spending. Sales have been slowing down at a not insignificant pace since last year. Retail spending has stopped because the home equity spigot has been completely tapped in the bubble markets of the country. Elsewhere, spending is down because the middle class just doesn’t have the money to buy things. People who can buy houses aren’t because they are scared of where values are going. On the other hand, people who would buy HDTVs, boats, new cars, and vacations aren’t because they can’t. The home equity that fueled those purchases since 2000 has evaporated. And when this great consumer economy that has driven things for so long totally hits the skids, that’s the time ‘look out below’ mentality takes hold.

[Anonymous]

AfF,
Don’t be so quick to shortsell your observations as idle speculation. What you are reporting on is anecdotal evidence of the next wave of the meltdown, which we are actually a couple of months into. As I said yesterday, the elephant in the corner that the mainstream media is either intentionally ignoring or doesn’t understand the significance of is the shutdown of the retail economy. Take a look at the monthly same store sales reports of the major drivers of the US retail economy – Walmart, Target, Home Depot, Lowe’s, GM, Ford, Chrysler, Best Buy. Just in the past few weeks retailers themselves have been pulling the plug on new store development projects because they sense they can no longer ignore the slowed pace of spending. Sales have been slowing down at a not insignificant pace since last year. Retail spending has stopped because the home equity spigot has been completely tapped in the bubble markets of the country. Elsewhere, spending is down because the middle class just doesn’t have the money to buy things. People who can buy houses aren’t because they are scared of where values are going. On the other hand, people who would buy HDTVs, boats, new cars, and vacations aren’t because they can’t. The home equity that fueled those purchases since 2000 has evaporated. And when this great consumer economy that has driven things for so long totally hits the skids, that’s the time ‘look out below’ mentality takes hold.

[Allan from Fallbrook]

dm investor: I agree completely. If I remember correctly, I read an article that says that consumer spending accounts for nearly 70% of the economy. Wow. If so, and since housing and consumer spending are inextricably linked by the availability of easy cash and credit, then the resultant “turning off of the spigot” is going to create one helluva hole.

A friend of mine went furniture shopping in this mall off of the 215 in Murrieta. He said that virtually all of the stores were deserted and he nearly got assaulted by an eager salesperson in the Wickes store. Every one of the stores was in “Let’s Make A Deal” mode and he claims he cut a deal on a living room set that was about 40% off list. Again, anecdotal, but, if true, it is telling.

I have another friend in banking who is getting inundated on a daily basis with email notifications from his bank and other banks about repo vehicles up for sale.

[Allan from Fallbrook]

dm investor: I agree completely. If I remember correctly, I read an article that says that consumer spending accounts for nearly 70% of the economy. Wow. If so, and since housing and consumer spending are inextricably linked by the availability of easy cash and credit, then the resultant “turning off of the spigot” is going to create one helluva hole.

A friend of mine went furniture shopping in this mall off of the 215 in Murrieta. He said that virtually all of the stores were deserted and he nearly got assaulted by an eager salesperson in the Wickes store. Every one of the stores was in “Let’s Make A Deal” mode and he claims he cut a deal on a living room set that was about 40% off list. Again, anecdotal, but, if true, it is telling.

I have another friend in banking who is getting inundated on a daily basis with email notifications from his bank and other banks about repo vehicles up for sale.

[NotCranky]

Hi Allan,

I enjoy reading your bearish statements and those that others bring as well.JWM has been saying for as long as I can recall “why don’t people get this?” I think I was using the term “chicken little” for the really “negative” types at that point even though I was one of the most bearish ,especially for of the RE licensees. My apologies JWM(if you are reading).

My guess, many people still think it is about “me”. My house value, my chance to time the market ect. ect. Something about forests and trees. I don’t understand the level of intellectual investment in the thought that this is going to be a rational correction and will go according to some schedule. I am not talking about people in the street either. Some decent percentage of people on the bearish blogs seem to think this way too. That seems to be changing to though,. Maybe we are just tracking the normal change in pyschology through a cycle? IMHO it is way too early to take it for granted that anything close to normal is going to mark the course of things to come. I definitely don’t think we will have an instant replay of the last bust. That would be nice though.

I wonder if there is still a lot of custom building going on around your area. It appears the pace is pretty good here in Jamul. If you recall I told you once that Fallbrook and Jamul have similiarites. My wife asks me to explain all the building in light of the doom and gloom. I told her that I think it is a mixture of the last credit bingers and folks that do things the “sustainable” way, on land they have owned for a long while. Not sure though.
Good job on the football coaching.
Best wishes

[NotCranky]

Hi Allan,

I enjoy reading your bearish statements and those that others bring as well.JWM has been saying for as long as I can recall “why don’t people get this?” I think I was using the term “chicken little” for the really “negative” types at that point even though I was one of the most bearish ,especially for of the RE licensees. My apologies JWM(if you are reading).

My guess, many people still think it is about “me”. My house value, my chance to time the market ect. ect. Something about forests and trees. I don’t understand the level of intellectual investment in the thought that this is going to be a rational correction and will go according to some schedule. I am not talking about people in the street either. Some decent percentage of people on the bearish blogs seem to think this way too. That seems to be changing to though,. Maybe we are just tracking the normal change in pyschology through a cycle? IMHO it is way too early to take it for granted that anything close to normal is going to mark the course of things to come. I definitely don’t think we will have an instant replay of the last bust. That would be nice though.

I wonder if there is still a lot of custom building going on around your area. It appears the pace is pretty good here in Jamul. If you recall I told you once that Fallbrook and Jamul have similiarites. My wife asks me to explain all the building in light of the doom and gloom. I told her that I think it is a mixture of the last credit bingers and folks that do things the “sustainable” way, on land they have owned for a long while. Not sure though.
Good job on the football coaching.
Best wishes

[NotCranky]

Hi Allan,

I enjoy reading your bearish statements and those that others bring as well.JWM has been saying for as long as I can recall “why don’t people get this?” I think I was using the term “chicken little” for the really “negative” types at that point even though I was one of the most bearish ,especially for of the RE licensees. My apologies JWM(if you are reading).

My guess, many people still think it is about “me”. My house value, my chance to time the market ect. ect. Something about forests and trees. I don’t understand the level of intellectual investment in the thought that this is going to be a rational correction and will go according to some schedule. I am not talking about people in the street either. Some decent percentage of people on the bearish blogs seem to think this way too. That seems to be changing to though,. Maybe we are just tracking the normal change in pyschology through a cycle? IMHO it is way too early to take it for granted that anything close to normal is going to mark the course of things to come. I definitely don’t think we will have an instant replay of the last bust. That would be nice though.

I wonder if there is still a lot of custom building going on around your area. It appears the pace is pretty good here in Jamul. If you recall I told you once that Fallbrook and Jamul have similiarites. My wife asks me to explain all the building in light of the doom and gloom. I told her that I think it is a mixture of the last credit bingers and folks that do things the “sustainable” way, on land they have owned for a long while. Not sure though.
Good job on the football coaching.
Best wishes

[Allan from Fallbrook]

Rustico: Thanks for the compliments. On the topic of building, we have a new custom built home going up right down the road from where I am and I keep musing about who would build in this market.

There are a trio of custom built homes on Mission Road (the main drag in Fallbrook) that have been sitting unsold for the better part of a year and a half. As I stated in an earlier post, there are literally thickets of “For Sale” signs in and around certain developments and neighborhoods in Fallbrook and Bonsall.

A friend of mine that works for Lockton (another big insurance broker) in LA said that the big builders (Pulte, Lennar, KB, etc) will continue to build houses on those pieces of land that they couldn’t unload or walk away from their option on. Developed land is apparently a better bet for them than empty lots.

I used to live in East County, by the way. When I had my motorcycle, I used to ride through Jamul all the time. There was this great little dive called The Green Tomato in Boulevard that made the best guacamole I think I have ever had. The Harley crowd loved that place, and I don’t think I was very welcome there with my BMW K100.

[Allan from Fallbrook]

Rustico: Thanks for the compliments. On the topic of building, we have a new custom built home going up right down the road from where I am and I keep musing about who would build in this market.

There are a trio of custom built homes on Mission Road (the main drag in Fallbrook) that have been sitting unsold for the better part of a year and a half. As I stated in an earlier post, there are literally thickets of “For Sale” signs in and around certain developments and neighborhoods in Fallbrook and Bonsall.

A friend of mine that works for Lockton (another big insurance broker) in LA said that the big builders (Pulte, Lennar, KB, etc) will continue to build houses on those pieces of land that they couldn’t unload or walk away from their option on. Developed land is apparently a better bet for them than empty lots.

I used to live in East County, by the way. When I had my motorcycle, I used to ride through Jamul all the time. There was this great little dive called The Green Tomato in Boulevard that made the best guacamole I think I have ever had. The Harley crowd loved that place, and I don’t think I was very welcome there with my BMW K100.

[Allan from Fallbrook]

Rustico: Thanks for the compliments. On the topic of building, we have a new custom built home going up right down the road from where I am and I keep musing about who would build in this market.

There are a trio of custom built homes on Mission Road (the main drag in Fallbrook) that have been sitting unsold for the better part of a year and a half. As I stated in an earlier post, there are literally thickets of “For Sale” signs in and around certain developments and neighborhoods in Fallbrook and Bonsall.

A friend of mine that works for Lockton (another big insurance broker) in LA said that the big builders (Pulte, Lennar, KB, etc) will continue to build houses on those pieces of land that they couldn’t unload or walk away from their option on. Developed land is apparently a better bet for them than empty lots.

I used to live in East County, by the way. When I had my motorcycle, I used to ride through Jamul all the time. There was this great little dive called The Green Tomato in Boulevard that made the best guacamole I think I have ever had. The Harley crowd loved that place, and I don’t think I was very welcome there with my BMW K100.

[JWM in SD]

“JWM has been saying for as long as I can recall “why don’t people get this?” I think I was using the term “chicken little” for the really “negative” types at that point even though I was one of the most bearish ,especially for of the RE licensees. My apologies JWM(if you are reading). ”

When am I not reading (much to the chagrin of my wife).

“My guess, many people still think it is about “me”. My house value, my chance to time the market ect. ect. Something about forests and trees.”

You are probably right and deep down I know that is true as well because that is how I started out with my research into this when the Piggington site was really obscure and I had just moved to SD from Chicago in the Fall of 04. I started looking into the market when because I didn’t understand how the income levels could support prices of RE here. That was when I had discovered the exotic financing link. It took at least a year before I connected all of the dots into the mortgage lending industry and the excess liquidity spigot. At that point it became obvious that something nasty was brewing all across the country with some of the worst examples being here in SD.

The decision to not buy a house in 2005 was the smartest thing I have ever done in my entire life. Period. And that decision was hard fought because my wife was furious about it and I had her whole family railing on me over it. Now they don’t talk about it anymore.

[JWM in SD]

“JWM has been saying for as long as I can recall “why don’t people get this?” I think I was using the term “chicken little” for the really “negative” types at that point even though I was one of the most bearish ,especially for of the RE licensees. My apologies JWM(if you are reading). ”

When am I not reading (much to the chagrin of my wife).

“My guess, many people still think it is about “me”. My house value, my chance to time the market ect. ect. Something about forests and trees.”

You are probably right and deep down I know that is true as well because that is how I started out with my research into this when the Piggington site was really obscure and I had just moved to SD from Chicago in the Fall of 04. I started looking into the market when because I didn’t understand how the income levels could support prices of RE here. That was when I had discovered the exotic financing link. It took at least a year before I connected all of the dots into the mortgage lending industry and the excess liquidity spigot. At that point it became obvious that something nasty was brewing all across the country with some of the worst examples being here in SD.

The decision to not buy a house in 2005 was the smartest thing I have ever done in my entire life. Period. And that decision was hard fought because my wife was furious about it and I had her whole family railing on me over it. Now they don’t talk about it anymore.

[JWM in SD]

“JWM has been saying for as long as I can recall “why don’t people get this?” I think I was using the term “chicken little” for the really “negative” types at that point even though I was one of the most bearish ,especially for of the RE licensees. My apologies JWM(if you are reading). ”

When am I not reading (much to the chagrin of my wife).

“My guess, many people still think it is about “me”. My house value, my chance to time the market ect. ect. Something about forests and trees.”

You are probably right and deep down I know that is true as well because that is how I started out with my research into this when the Piggington site was really obscure and I had just moved to SD from Chicago in the Fall of 04. I started looking into the market when because I didn’t understand how the income levels could support prices of RE here. That was when I had discovered the exotic financing link. It took at least a year before I connected all of the dots into the mortgage lending industry and the excess liquidity spigot. At that point it became obvious that something nasty was brewing all across the country with some of the worst examples being here in SD.

The decision to not buy a house in 2005 was the smartest thing I have ever done in my entire life. Period. And that decision was hard fought because my wife was furious about it and I had her whole family railing on me over it. Now they don’t talk about it anymore.

[Allan from Fallbrook]

JWM: We bought our house here in Fallbrook for $425k. That represented the single largest purchase I had ever made in my life. I literally lost sleep thinking about possible market reverses, whatever. Then as things really started to jump (the run-up in housing), I went from thinking that I must have been some kind of genius to really sensing that something was waaaaaaay outta whack.

I had arguments with people during ’03, ’04 and into ’05 about the SD market and why it was not only different this time (all the usual RE propaganda), but that the SD market somehow had the ability to defy gravity apparently in perpetuity. Having grown up in the SF/Bay Area, I know that certain markets (like San Francisco city) have remained resilient regardless of external factors.

After a while, you start thinking that maybe YOU are the idiot and everyone else is right. But, I remember having had the same feelings during the NASDAQ/dot.com run-up as well. Listening to some twenty-something CEO of kozmo.com, or webvan, or eToys going on and on about the “New Economy” and realizing that the emperor really wasn’t wearing any clothes.

The NASDAQ implosion erased $4Tn. How big a bust is this one?

[Allan from Fallbrook]

JWM: We bought our house here in Fallbrook for $425k. That represented the single largest purchase I had ever made in my life. I literally lost sleep thinking about possible market reverses, whatever. Then as things really started to jump (the run-up in housing), I went from thinking that I must have been some kind of genius to really sensing that something was waaaaaaay outta whack.

I had arguments with people during ’03, ’04 and into ’05 about the SD market and why it was not only different this time (all the usual RE propaganda), but that the SD market somehow had the ability to defy gravity apparently in perpetuity. Having grown up in the SF/Bay Area, I know that certain markets (like San Francisco city) have remained resilient regardless of external factors.

After a while, you start thinking that maybe YOU are the idiot and everyone else is right. But, I remember having had the same feelings during the NASDAQ/dot.com run-up as well. Listening to some twenty-something CEO of kozmo.com, or webvan, or eToys going on and on about the “New Economy” and realizing that the emperor really wasn’t wearing any clothes.

The NASDAQ implosion erased $4Tn. How big a bust is this one?

[Author]

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