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| 5/23 |
| 2006/3/6-8 [Finance/Investment] UID:42110 Activity:moderate |
3/6 Where's Swami? We owe Swami a beer.
"Housing Slowdown Ripples Through Economy"
http://news.yahoo.com/s/ap/20060306/ap_on_bi_ge/housing_slowdown
\_ "There seems to be little concern that a much-touted
housing bubble will lead to a collapse in sales and prices."
\_ We need an equivalent of http://fuckedcompany.com
\_ Which contradicts what a lot of other articles are saying,
but whatever. I recommend http://www.housingbubblecasualty.com
\_ it depends on what the meaning of "collapse" is
\_ "Alex Barron, an analyst in San Francisco for JMP Securities, said
builder stocks have been trading at relatively low multiples of
their earnings since the late 1990s because investors always
believed the strong housing market was too good to last."
Investors kept saying, 'Next year housing will go down,'" Barron
said. "I guess they're finally right."
Tell us something we haven't been predicting (incorrectly) for
a long time now.
\_ Swami is not the "investors" this guys is talking about.
Swami made just one specific prediction: peak in Q4 2005,
nadir in Nov 2007.
\_ Yeah, so he is late with his prediction.
\_ So if I keep saying "oil > $80 barrel next year" every year, do I
get a beer when it finally happens?
\_ No, because you chose a specific number, which might make your
prediction useful to someone. You'd have to say something more
like "oil will be more expensive next year" to really match
the brilliance of dim. -tom
\_ warren buffet gave no specific number or date when he says
he avoids tech, but he still comes out looking pretty
good when the tech bubble bursts. his opinion, if followed,
would've been useful for all those people who lost money.
\_ Warren Buffett has never said to avoid tech. He said
that *he* avoids tech because he doesn't understand it.
(That is, he doesn't understand how to fairly value
tech companies).
And you know, if you bought tech any time from, oh,
1970 up through 1998, or from 2001 on, you're probably
doing pretty well. -tom
\_ yes, during the bubble years, warren buffet says
he avoids tech. that's what I was saying.
\_ What you're saying is a non sequiteur; Buffett
is not making a prediction when he says he avoids
tech. -tom
\_ and I am just pointing out to you that
what you accused dim of doing (not attaching
a "specific number") is just what buffet
does, which is a very reasonable thing to
do. And it is also useful, since if you
take what he is saying into consideration
and reduced your exposure to tech, you would
have emerged from the bubble in a better
shape.
\_ You're not paying attention. Buffett is not
making a prediction, so of course he doesn't
attach a number to his non-existent
prediction. Please find a quote where
Buffett tells *other people* to avoid
tech. Buffett avoided tech in 1990, too,
and if you invested in tech in 1990 you'd
have done better than Buffett. -tom
\_ You're not paying attention. Nobody
claimed that Buffett was making a
prediction. Go reread. Also, you can
chart BRK-A against
Nasdaq since 1990 and you will see BRK-A
leading all the way except for a small
approximately one year period centered
around mid-2000. You should do some
research so you don't continuously
make wrong claims like the above or
like "Median sale prices [of homes]
go down in 4Q *every year*".
around mid-2000.
\_ "Buffett avoided tech in 1990, too,
and if you invested in tech in 1990
you'd have done better than Buffett."
Talking about ill-defined un-specific
claims, the above fits the bill
perfectly.
\_ I didn't make any predictions. I just know the market
has been overvalued for some time now. --dim
\_ is that why it's gone up 40% in the past two years?
\_ you're such an idiot
\_ BTW, I read a Roper poll which said that 78% of
investors feel homes are overvalued. This this swami
those polled feel homes are overvalued, including
72% of those who already own a home. This swami
guy isn't exactly out on a limb here. --dim |
| 5/23 |
|
| news.yahoo.com/s/ap/20060306/ap_on_bi_ge/housing_slowdown AP Housing Slowdown Ripples Through Economy By DAVID KOENIG, AP Business Writer 2 hours, 59 minutes ago DALLAS - The five-year housing boom is indeed over, judging from growing statistical evidence and the performance of some of the nation's leading builders, and the slowdown is already rippling through the economy. Commerce Department reported that January sales of new single-family homes fell 5 percent -- the fourth decline in seven months -- and the backlog of unsold new homes hit a record. And the National Association of Realtors said used home sales slipped 28 percent in January, the fourth straight drop and 5 percent below January 2005. said signed contracts in the November-January period fell 21 percent from a year ago, and KB Home reported more buyers backing out of contracts. Still, the prospect of a housing slowdown appears less frightening than it did a few months ago, according to those who track the industry. There seems to be little concern that a much-touted housing bubble will lead to a collapse in sales and prices. Federal Reserve Chairman Ben Bernanke said last month housing would enter a moderate slowdown but not a crash. William Mack, a housing analyst for Standard & Poor's, predicted "a soft landing. Many people bought homes during the past five years and are staying put. And interest rates have been rising, especially for adjustable mortgages that allowed people to buy more expensive homes than they could have afforded with a 30-year loan. "We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed," said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation's largest private builders. Rising prices and interest rates pushed more buyers out of the market. When prices finally did cool, sellers couldn't command a high enough price on their old house to buy the new one, said Marceau, who believes the slowdown is temporary. Builders don't like to cut prices -- it angers customers who paid more -- but last week, Centex Corp. advertised $25,000 off on select homes in the Dallas area after making a successful similar offer in California. Around the country, builders are throwing in incentives ranging from financing help to free upgrades like swimming pools and granite countertops. The median price of an existing single-family home has declined since peaking at $219,700 in July to $210,500 in January, according to the National Association of Realtors. Few analysts expect a sharp drop in national averages, although they say there could be further declines in some areas that have been among the hottest markets in recent years. David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, DC, area "have the largest potential for a price slowdown." The rising prices in those markets were fed by speculators who bought homes intending to "flip" or sell them for a quick profit, Seiders said. "The biggest fear I have is investor-owned units coming back on the market in large numbers," he said. Analysts said markets in Florida and the Carolinas seemed to be holding up well. reported last week that home contracts jumped 61 percent in the Southeast but fell nearly 11 percent in the Southwest and 37 percent in the West during the November-January period. The slowdown that is showing up in national statistics hasn't reached all parts of the country. "Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes." Mishler, president of the local builders association, says Texas markets are holding up because they are affordable -- the median price in Dallas is $145,000 compared to the national average of $213,000. But even in Dallas, the inventory of unsold homes rose to a record in the fourth quarter. By price, the middle and upper ends of the new-home market did best in 2005, with solid increases in everything above $200,000, reflecting strongest markets were in high-priced areas along both coasts. That pattern mostly continued in January, although there was a dip in the $400,000 to $750,000 segment compared to January 2005. Housing has played a major role in the economic recovery since 2001, so even slower growth in home sales and prices could have major repercussions. in Chicago, estimates housing created 43 percent of all new jobs from late 2001 until mid-2005. That included the obvious, such as jobs in construction and mortgage services, but also retail and service jobs that were created because consumers tapped their rising home equity to buy more things. "The housing slowdown that we are seeing is very modest, not alarming, but I think the ripple effects are going to be enormous because of the employment factor," she said. For now, home builders are busy finishing the houses that customers ordered last year. In a sense, their 2006 results are already on the books, and they expect another good year. Its profits rose about 50 percent in 2004 and nearly doubled last year. Investors, however, have been bidding down the stocks of home builders since July, prompting executives to complain that their companies are undervalued despite record earnings. The nine largest publicly traded builders have seen their shares fall 14 to 44 percent since their peaks, with Toll Brothers and Hovnanian the biggest losers. Alex Barron, an analyst in San Francisco for JMP Securities, said builder stocks have been trading at relatively low multiples of their earnings since the late 1990s because investors always believed the strong housing market was too good to last. "Investors kept saying, 'Next year housing will go down,'" Barron said. A house for sale sits on Gretna Green Way in the west side of Los Angeles in a file photo from Feb. The five-year housing boom is over, judging from growing statistical evidence and comments by some of the nation's leading builders, and the slowdown could ripple through the economy, from the loss of construction jobs to lighter furniture sales. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press. |
| www.housingbubblecasualty.com Looks like the media is starting to catch a whiff' of this bubble leaking some air. It is as if they are walking downwind in a cow pasture, but they won't admit something 'stinks' until they step in it! Right now, all the realtors are trying to rationalize that things don't smell at all, and if you put on enough cologne, things smell just great! Let's look a some of the information that is STARTING to come out of the media. the bubble' word propping up in more and more headlines. Let's be honest, most people don't read the whole article. I forgot the statistics I read a while ago, but most people scan the headlines and the first paragraph, and read on an 8th grade level. I'm not too worried about the average joe' pondering the inverted yield curve, supply & demand, inflation, "medium" home prices, etc. They will be focusing on words like bubble and bursting. Here is the FIRST sentence that most will read: "The Valley housing boom is over, with home prices in some neighborhoods dropping $50,000 in just the past two months." Don't worry those of you on the East Coast, there is a bit of news for you as well! No, it is not something you can just take out a HELOC to repair. Here are the first 3 sentences: Massachusetts house sales plummeted 21 percent last month, stoking fears that the housing bubble may have burst and could send shock waves across the economy. It was the biggest year-over-year sales drop in almost 11 years - as Realtors recorded the slowest January since 1996. What's more, one of the worst fears of homeowners appears to be coming true: House values have dropped nearly 8 percent since August. Let's take a tour down South and see whats going on in West Palm "RE never goes down" Beach. Home sales, prices continue downward slide is what is going on. The first sentence: Maybe the housing bubble hasn't burst, but it's losing air fast. Imagine you are on a completely full 737 cruising along at altitude when you feel uneasy that something happened. The Captain comes over the speaker and says "We are not going to crash, but we are losing altitude fast". Here is more from the story: The median price of an existing home sold in Palm Beach County in January fell to $393,700, well below the November peak of $421,500 and the first time the typical home has sold for less than $400,000 since July. I do want to pause to let people know that I found an honest RE agent. Check out this quote from the same article: "Palm Beach County has a mini-blood bath going," said David Dweck, a Boca Raton real estate agent and investor who heads the Boca Real Estate Investment Club. I'm not a professional PR guy, but I think that the term blood bath' probably doesn't have a positive connotation with most people. First sentence: South Florida's five-year housing boom is over. that we wouldn't be running into another bubble so soon. Since about a third of the houses were bought as investments', people are counting on appreciation and making easy money. As you can see, once people realize the party is over, watch demand start to dry-up'. Once people realize they can't make 10k a month on a condo conversion, or by painting a house and cutting the grass, they will stop doing it. The problem is that there is going to be quite a large supply of homes, and not near as much demand for them. I happened to catch an episode of "Flip that House" this past weekend. I'll admit, the house had a LOT of problems, and the guy did a great job fixing things properly and not cutting corners. The first one is that more time should have been spent inspecting the house before purchasing it. If that had been done, the $25k that was budgeted wouldn't have grown to $75k. That extra $50k was a 'surprise' that really eats into the profitability. The second is that in the end, the RE agent said the house was worth' $480,000. If you take the $435,000 invested then you are looking at a profit' of $45,000. By the time the transaction costs are figured in, I don't think there is much of that $45,000 left over, even IF it sold at $480k. Forums that deals with the Craigslist/Classified-Ad FB's. There are waaaaay to many FB's out there for one blogger to handle. Besides, I think it adds credibility when you see it listed in the real world'. I'm not kidding when I say there is a LOT of good information in the forums. this story pretty much sums it up, especially this part: "How would you characterize the housing market right now? The psychology of the buyers for single-family homes has clearly changed. If I had to pick a time, I would have to say it turned in January." There you have it, from the CEO of the largest mortgage origination company in the country. If the largest originator in the country is being hit by the slowdown, what do you think is happening to all of the other companies? That is what happens why you try and "buy the market" with crazy rates and guidelines that most other companies wouldn't touch. Encore is known for using the "high" FICO score, not the middle of 3 or lower of 2 like the rest of the industry. Some other companies would do it, but with an add-on to the rate. They were also very liberal with pricing for several months there. Maybe that is why they are in the predicament they are in. but at the end of the day, they are taking some large losses on their portfolios. That said, I have seen the writing on the wall for quite a while now. As things have started slowing down even more, I have began working-on and looking-at other options in and out of the mortgage industry. Just bear with me as I'm working on my plans B, C and D at the moment. It takes quite a bit of time to write 5 completely new posts a week. There are over 200 topics, 1300 posts, and almost 250 members. If I don't have a post up, spend some time over on the forums. There are a lot of FB stories, as well as other posters that have a lot of good information to share. Thank you for your understanding, patience, and support! The horse is down, but no matter how much we beat it with data, facts, math, inventories, etc. the horse' will just not believe it one bit that real estate can go down. from 2/28, 3/27, 5/25, 3/1, 5/1, 7/1, 10/1 ARMs, interest only ARMs, option ARMs, fixed rate loans, even 40 year mortgages on up to 100 year mortgages. We have looked at HELOC's (home equity line of credit), seconds, 125% loans, sub 500 FICO score loans, stated loans, NINA loans (no income no asset), no doc loans, and more. We have looked at the data for ARMs and option-ARMs We have seen that in many bubble areas' ARMs are used well over 70% of the time. It doesn't matter if the I/O period is 1 year or 5 years, it is going to adjust. When these loans adjust, people better have equity to refi, or the income needed to support the payment. THIS, I think people just might be a little too comfortable with 50-100k in equity. I have looked at the data, and compared it with my personal experiences, and nothing surprises me based on what I have seen. I have seen the option-ARM become 80-90% of the business at some of my broker shops. I have seen the way they are sold, and how many clueless borrowers fall for the low payment'. We have looked at income, inventories, and housing statistics. There are now over 160 active topics and over 1000 posts in the forums. it isn't going to save things February 22nd, 2006 I have received several e-mails from readers that are feeling like this thing is never going to end because there is talk of a 50 year mortgage coming out. Let's look at a few choice comments from the article: The longer-term mortgages would lower monthly payments. "To the extent more consumers have more products available, it will be a help for affordability," said Douglas Duncan, chief economist at the Mortgage Bankers Association. And you all though I was kidding when I have told you that all most' borrowers care about is "LOWEST PAYMENT". Just stretch the payment out long enough, and everything can be affordable'. Keith Gumbinger of HSH Associates, which tracks the mortgage industry, believes lenders will likely generate some borrower interest with the 40-year loans. There are several lenders that have a 40-year opti... |
| fuckedcompany.com Nice pants Rumor has it Levi Strauss has been forced to sell-off its sinking Dockers business to pay off the debtors. Trilogy Software is packing up shop and sending all development jobs to India. Word is the company is looking into how many customer service jobs can be done from India as well. Knowmadic employees are jumping ship, including the Director of Engineering, some designers, and the entire QA team. According to one employee and FC reader, "We knew it was coming. The funny thing is that by intially you say to yourself, 'at least they are keeping the jobs in the US' -- until you speak to the conversion team in Illinois and find out the majority of them are from India and Russia." Passport Health staff developers were just given a choice by their new onwers, United Wisconsin Proservices: Move to Franklin, TN (just south of Nashville) or you're out of a job in six months. Deloitte Consulting has terminated the employment of all participants in its MBA educational assistance program. |