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powayseller
ParticipantMy Omaha friend looked at a Toll Bros home in Phoenix last December for $800K. In February 06, that same home was $827K. Is the Phoenix market still going up? He also told me to buy oceanfront condos in Florida. The housing bubble investment fever has hit Omaha too.
Participantaguho, can you provide more details on the housing and mortgage markets, as seen by your colleagues and friends? Why do they have to prove their income now? Are no doc loans losing favor? Why don’t the mortgage people go after the ARM borrowers and sell them 30 year fixed rate mortgages? That to me seems like a huge market.
I’d also like to hear whether the inventory is up because the listings are just piling up, while sales are down, so the new listings are added to the old ones, bringing up the inventory. At some point, we should see more sellers, like all those ARM people and unemployed title/loan officers. Has there been an increase in listings, or is inventory high only because sales are low?
Are you seeing the outmigration trend?
If anyone else knows the answers, please jump in…
ParticipantIf the FDIC becomes insolvent, the government will bail them out. As they will bail out the Pension Benefit Guaranty Corp, and they bailed out LTCM and hundreds of banks in the 1980’s.
What global superstorm? What collapse of the financial world? I think you are getting carried away here.
The statements about systemic risk of GSEs are coming regularly from the US government. Here is a talk given by a US Treasury Department official last week. He is passionate about GSE reform.
“Past history reminds us that serious financial problems in the GSEs are not only a possibility, but an unfortunate reality. And, I feel compelled to remind you that the federal government has taken steps to assist a troubled GSE in the past.” Emil Henry W. Jr., US Treasury, 6/26/2006
ParticipantRegarding the growth funds: we’ve had some discussions on these boards about the stock market peak, and parking in cash because stocks are likely to go down. Also check the bubble blogger section for The Big Picture. Barry Ritholtz who authors that blog does a great job explaining the bear view.
ParticipantI agree with Jim. Gardeners, nail salons will be the first to go. I posted an article a few weeks back, about just this kind of cutting back in tough times, from an upper middle class Detroit suburb. As the high level auto industry managers were laid off, they stopped using the service workers and non-essential businesses. The local country club, nursery, beauty salon are hurting. The nursery owner’s wife had to cut back on her expenses, because the homeowners drastically reduced their annual flower planting.
On a related note, my friend’s hair stylist said so many of her customers moved out of San Diego, that she went to a 4-day week.
ParticipantCan anyone else make it during the day on the 22nd, probably at lunch time? 2nd choice: Sunday?
I can come anytime the weekend of the 15th or the 22nd of July.
ParticipantMoney market funds are not FDIC insured. When the GSEs go through all that predicted systemic risk , what will be the value of your money market?
So what if the CD has a penalty for early withdrawal? Have you asked what is that penalty? It is usually the loss of 1 month of interest. But never the loss of principal.
The money market does have a risk of loss of principal. They say it has never happened, but they cannot tell you it never will. Maybe the odds are low. Does anyone know the odds of a money market losing principal?
ParticipantBoth are happening. Eventually, prices will be cheap enough for those biotech and Qualcomm and surgeon positions to be filled, and people will return.
San Diego will not be a ghost town. It is a city with a negative population growth and no new business prospects. Putting us back to 2000 population figures doesn’t make us a ghost town.
Perhaps the recession and population decline will entice Sacramento to bring some business friendly regulation back to our state, and employers will start moving here. With cheaper housing prices by 2010, why not?
ParticipantCD’s
Diversify in euros if you think the dollar will keep weakening
5-10% in gold after the gold correction ends (read Zeal and Chris Johnson’s newsletters).
ParticipantThe median was rising for the last year because the distribution of homes sold had shifted. The lowest priced properties went flat in 2004, the lower end softened in 2005, but the high end stuff was still selling like hot cakes, driving up the median. Eventually, the rising interest rates and ripple effect of the first time buyers squeezed out worked its way up the tier of homes. Last month, I think we were down year-over-year for the first time.
The median tells you a trend one year after it was established. It doesn’t tell you what’s going on now. Same with the media.
We sold our house in January 2006, at a time when the bubble articles were still in their infancy. The local media was still high on real estate.
ParticipantThey really believe that RE is going up. Except Roger Showley – the business writer, who has covered the downturn in housing.
A guy who sells materials for commercial construction jobs, and travels widely and looks at real estate in many of the cities he visits, told me that I should use the money I made selling my house to buy beach condos in Florida, because they aren’t making any more land, and prices will only go up.
I started to laugh, because I thought he was joking. His wife said he was serious. He repeated, they are not making more land. I told him the Japanese thought the same thing, and I would e-mail him some on the topic of the island of Japan and their real estate bubble which took 18 years to burst. He hadn’t heard of Japan and doesn’t like to read.
Okay, the writers at the media are like this guy. They believe what the realtors tell them, and they don’t like to read.
Participant“Given the extreme and unprecedented nature of the current housing bubble, I expect a ten- to fifteen-year downturn to follow this boom”
From iTulip’s Housing Bubble Correction: Fifteen Years to Revert to the MeanParticipantI have an idea for you: help people convert ARMs into 30 year fixed mortgages. This strategy helps people avoid foreclosure and bankruptcy. The HELOC is not a good idea right now, since it causes people to take on more debt on a depreciating asset. I would even say it is unethical in this market.
Could you get a list of ARM holders from a database? Go for it…
ParticipantBased on some refinance junkmail that comes here, my landlord has a GRM of about 15. BUT – how often did he refinance to pull out more cash to make more real estate deals?
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