The vicious housing cycle

From the Atlantic:

Home Sales Are Falling: Will Consumers Force a Double Dip?

As the bad news continues to pile on, Americans appear to be taking note by closing their wallets. The latest brutal report indicates that home buying demand is likely falling to even lower levels. Mortgage applications for purchases were the weakest in more than a year, according to the Mortgage Bankers Association. In fact, its index last week was second lowest that we’ve seen since 1997. This period includes the huge drop that sales experienced after the home buyer credit expired last year. Consumers are clearly nervous.

Mortgage purchase applications have been slowly declining since early April, but last week they dropped 9.1%. This data doesn’t account for all potential home sales — some all-cash transactions also occur. But cash purchases primarily occur with investors, so mortgage purchase applications should provide a fairly clear picture on how consumer demand for home buying is changing. At last week’s level, demand was extremely weak.

The MBA’s report is a useful for two reasons. First, it provides a very early indicator for home buying demand. For example, the National Association of Realtor’s existing home sales report that comes out on Thursday provides sales that closed in July, which means it really provides buying demand for as far back as May and June. The MBA report shows us how consumer demand for homes looked just last week.

Second, the report provides a way to gauge consumer confidence on a weekly basis. Big sentiment declines don’t always translate into big drops in consumer spending on a whole, because a fair amount of spending isn’t discretionary. But most home buying can be delayed until consumers are more comfortable with the economic situation. Assuming that no housing market specific shocks are playing a role, a big decline in mortgage purchase applications implies a big drop in consumer sentiment.

This wasn’t just any week during which mortgage applications for purchases plummeted. It occurred during a week when mortgage interest rates hit a new record low, according to Freddie Mac. As a result, mortgage applications for refinancing are experiencing a mini-boom. But those ultra low rates weren’t enough to convince more consumers to purchase homes; indeed, we saw the opposite. Sentiment must have been so low that even the benefit of ridiculously low mortgage interest rates couldn’t prevent a big 9.1% drop in purchase applications.

So what we’re seeing here is a sort of tragic cycle. The nation isn’t seeing the unemployment rate decline, because consumers aren’t comfortable spending freely. But one of the chief reasons that they aren’t comfortable spending freely is because unemployment is so high. As long as consumers see a huge number of Americans out of work, they won’t feel that the nation’s economy is completely stable. That’s why we have been seeing such sluggish job growth, even when the unemployment rate appeared to be declining a little.

But if sentiment drops and remains low, then even that anemic job growth will disappear. At that time, the chances of double dip become much greater. If consumers pull back in a meaningful way, then it’s hard to see how firms will be able to resist additional layoffs, which of course would result in sentiment and spending to decline even more.

This entry was posted in Employment, Housing Bubble, Housing Recovery, National Real Estate. Bookmark the permalink.

134 Responses to The vicious housing cycle

  1. Mike says:

    Good Morning New Jersey

  2. grim says:

    From the Record:

    Fitch lowers NJ general bond rating from ‘AA’ to ‘AA-‘

    The credit rating agency Fitch has lowered New Jersey’s general bonds, citing unfunded pension and employee benefit liabilities.

    The agency wrote that making an increased pension payment, which Christie has said he will do, will “conflict with other long term challenges, such as property tax relief, school funding, and infrastructure needs.”

    “The state’s budget remains structurally imbalanced inclusive of unfunded pension contributions,” the agency said in the downgrade announcement. “Reserve balances are expected to remain narrow, offering limited flexibility to absorb unforeseen needs.”

    Fitch dropped the state’s rating from “AA” to “AA-”

    The governor’s office referred comment to the Department of Treasury.

    Christie said last week ago that Treasurer Andrew Sidamon-Eristoff and Chief of Staff Richard Bagger had traveled to New York to meet with some of the credit rating agencies and try to persuade them to increase the state’s rating in the wake of passage of pension and health benefit overhauls.

    “It was received very well by the agencies,” Christie said last week.

    When the state’s rating was downgraded in February by Standard & Poor, Christie blamed Democrats in the Legislature for not passing the public employee benefit overhaul he had proposed. The package has since been passed, but in a different form then he initially proposed.

    “The sky started to fall in today,” Christie said of the change in the credit rating. He added “You’ve already seen this morning what the Legislature’s inaction has cost the state of New Jersey.”

  3. grim says:

    From the Star Ledger:

    OneWest Bank can now resume pending foreclosures, N.J. court rules

    OneWest Bank can now resume its 3,800 uncontested residential mortgage foreclosures pending in state court, a Superior Court judge ruled yesterday.

    The decision comes two days after the court allowed four of the country’s biggest banks— Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — to resume its foreclosures.

    Ally Financial, or GMAC, is still waiting for court approval on its foreclosure cases.

  4. grim says:

    From CNBC:

    Ahead of the Bell: Home sales

    More people likely bought previously occupied homes in June. But the sales pace probably won’t be enough to signal a rebound for an industry beset by falling prices, foreclosures and paltry demand.

    Economists expect the July sales pace rose to a seasonally adjusted annual rate of 4.9 million homes, according to a survey by FactSet. The National Association of Realtors will release the report at 10 a.m. EDT Wednesday.

    Sales of previously occupied homes fell in June for a third straight month to a seasonally adjusted annual rate of 4.77 million. This year’s pace is lagging behind the 4.91 million homes sold last year — the fewest since 1997. In a healthy economy, people buy roughly 6 million homes per year.

    Falling home prices have kept many people from selling their houses and taking jobs in growing areas. They have also made people feel less wealthy. That has reduced consumer spending, which drives about 70 percent of economic activity.

    Purchases made by first-time homebuyers are dropping. Bigger down payments, tougher lending rules, high debt and a shortage of desirable starter homes have kept many would-be buyers away. Even some with good credit and enough money for a down payment are holding off because they are worried home prices will keep falling.

    Since the housing boom went bust in 2006, sales have fallen in four of the past five years. Declining home prices and super-low mortgage rates haven’t been enough to boost sales this year.

    Wealthy buyers are still purchasing homes prices at more than $1 million in the affluent Northeast and growing Midwest. And investors are scooping up dirt-cheap homes in the battered South and West for less than $100,000. Investors are targeting deeply discounted homes in hard-hit areas, such as Phoenix, Las Vegas and Tampa, Fla.

  5. grim says:

    Maybe Burt should team up with the Apple Pie lady..

    From ABC News:

    Burt Reynolds On His Money Woes

    In his heydey, Burt Reynolds was one of Hollywood’s highest-paid and most-beloved movie stars. But as the 75-year-old actor has aged, his troubles have mounted.

    In this latest round, Reynolds faces losing his 4-acre waterfront Florida estate to a mortgage lender seeking to collect $1.2 million. Merrill Lynch Credit Corp. filed a foreclosure lawsuit against the “Smokey and the Bandit” star Aug. 9, claiming he hadn’t made a mortgage payment since Sept. 1, 2010, on his home in Hobe Sound.

    “I am as surprised as everyone,” Reynolds told ABCNews.com in a statement about the foreclosure action. “I thought my career and my life could not be going better. To all of the people who have had such faith in me and stuck by me through thick and thin, thank you. I know it is not the end of the world.”

    “There are a hell of a lot of other people worse off than I am, and my heart goes out to them,” he added. “I will do like I’ve always done, keep my head up high and continue to move on down the road.”

  6. grim says:

    From the Record:

    A fifth bank is cleared to start foreclosing in NJ again

    OneWest Bank was cleared Wednesday to resume uncontested foreclosures in New Jersey, two days after four other large lenders got the go-ahead in a case involving reports of sloppy legal documentation by lenders.

    OneWest, which is based in Pasadena, Calif., showed that it has set up procedures to ensure that its representatives would follow the rules when acting against homeowners in default, Superior Court Judge Mary Jacobson ruled in Trenton. OneWest was one of six large lenders, responsible for about half the foreclosures in the state last year, that were ordered in December to show that their representatives were not “robo-signing” affidavits and other legal documents – that is, signing them without verifying them.

    While the lenders worked with the courts on this issue, foreclosures slowed to a trickle in the state. In 2010, 58,445 foreclosures were filed in New Jersey; this year, only 6,090 were filed from January through July, according to the state Judiciary.

  7. Mikeinwaiting says:

    Need a good laugh , from 2006 but very relevant.
    http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff

  8. Mikeinwaiting says:

    Futures down big time, another roller coaster ride today.

  9. Kettle1^2 says:

    Shore

    if the reports of radioactive steam coming up from the ground around fukushima are correct then we may have the first real world china syndrome event.

    http://ex-skf.blogspot.com/2011/08/fukushima-i-nuke-plant-worker-no-steam.html

  10. Kettle1^2 says:

    Shore

    When does godzilla pop up

    http://www.youtube.com/watch?v=XNzDg4O9dkw&feature=player_embedded.

    If radio active steam is being emitted from the ground, even only intermittently, then this disaster just set an entirely new scale and makes Chernobyl look like a minor slip up.

  11. Mikeinwaiting says:

    Ket the guy in 10 seems to know his stuff. I wonder why no one in the MSM is on this, Oh wait I know.

  12. Mikeinwaiting says:

    Italian , Spanish & German markets down over 4 % with France & England not far behind. Great times in Europe!

  13. Mikeinwaiting says:

    Time to turn on CNBC & watch the talking heads sh*t their draws.

  14. Mikeinwaiting says:

    Things are just peachy!

    Initial Jobless Claims: 408K vs. 400K expected, 395K last week. Continuing claims 3,702,000 vs. 3,688,000 prior.

  15. Mikeinwaiting says:

    Use the link to dig into the numbers, interesting.

    Consumer Price Index – July 2011

    The Consumer Price Index for All Urban Consumers (CPI-U) increased
    0.5 percent in July on a seasonally adjusted basis, the U.S. Bureau
    of Labor Statistics reported today. Over the last 12 months, the all
    items index increased 3.6 percent before seasonal adjustment.

    The gasoline index rebounded from previous declines and rose sharply
    in July, accounting for about half of the seasonally adjusted
    increase in the all items index. The food at home index accelerated
    in July and also contributed to the increase, as dairy and fruit
    indexes posted notable increases and five of the six major grocery
    store food groups rose.

    The index for all items less food and energy increased as well,
    though the 0.2 percent increase was slightly smaller than the two
    previous months. The shelter index accelerated in July, and the
    apparel index again increased sharply. In contrast, the index for new
    vehicles was unchanged after a long string of increases. The index
    for household furnishings and operations was flat in July as well,
    and the recreation index declined slightly.

    The 12 month change in the all items index remained at 3.6 percent
    for the third month in a row. The change in the index for all items
    less food and energy continued its upward trend, rising to 1.8
    percent in July, with the shelter and apparel indexes contributing
    notably to the acceleration. The energy index has risen 19.0 percent
    over the past year.
    http://www.bls.gov/news.release/cpi.nr0.htm

  16. 3b says:

    #15 MIke: Oh and how many articles I read last week, that the decline to 395K was so indicative of a turn around on the jobs front since it is below the 400K mark.

  17. Outofstater says:

    Photo collection of empty commercial buildings within a ten mile radius of Hamilton, NJ. Kinda reminds me of “Carnival of Souls.”

    http://animalnewyork.com/2011/04/vacant-bowling-alleys-empty-parking-lots-other-sad-things/

  18. Mikeinwaiting says:

    Here you go , let’s start another “Action”, is that what they call it?

    President Obama calls on Assad to resign, the first explicit demand from the U.S. that the Syrian strongman leave power.

  19. Happy Renter says:

    This is all just so … so … what is the word I’m looking for … “unexpected.”

  20. Mikeinwaiting says:

    3b 17 My sister’s a**! This should go well with post 16:
    July Real Earnings: -0.1% for real average hourly earnings M/M, -1.3% Y/Y. Real avg. weekly earnings -0.1% M/M, -1% Y/Y. Avg. workweek +0.3.

  21. Mikeinwaiting says:

    Happy Renter LOL!

  22. Confused in NJ says:

    19.Mikeinwaiting says:
    August 18, 2011 at 9:05 am
    Here you go , let’s start another “Action”, is that what they call it?

    President Obama calls on Assad to resign, the first explicit demand from the U.S. that the Syrian strongman leave power

    I wonder what Obama would do if Assad called upon him to resign? He could turn over all his campaign contributions to the Poor, which would be a definate plus.

  23. Xroads says:

    I’m renting a house in the White Mountain’s and there is a big picture of Obama in the living room with the word “HOPE”.

  24. Mikeinwaiting says:

    Xroads 24 think positive, built in dart board.

  25. Mikeinwaiting says:

    This open is going to be a hoot.

  26. Al Mossberg says:

    Gold margin hike. 3—2—-1

    Sometimes it pays to be inpatient.

  27. Mikeinwaiting says:

    Confused 23 “He could turn over all his campaign contributions to the Poor, which would be a definite plus.” We can only “Hope”!

  28. Mikeinwaiting says:

    Al 27 not unexpected. Oh the word I used the word, silly me.

  29. BC Bob says:

    Double dips, singles scoops, ceilings, floors, stabilization, zombies, etc..

    The only hope for long term, sustainable growth is short term crash and burn. Otherwise, you will all turn Wantanapolous.

  30. BC Bob says:

    Al [27],

    The schemers can hike margin to 100% cash. It won’t make a difference in the long run. The stallion has left the barn, a long time ago. He’s not coming back.

  31. Al Mossberg says:

    31.

    Bob,

    I know this. 2200 by next Febuary because I am a betting man.

  32. xroads says:

    30 Bob
    I agree but the Gvt has been protecting the banks and financials through all of this and as the European banks are under pressure this morning the talking heads are saying how our banks are in much better shape

  33. Confused in NJ says:

    BEIJING/SHANGHAI (Reuters) – Coca-Cola (NYSE:KO – News), the world’s largest soft drinks producer said on Thursday it will invest $4 billion more in China over the next three years starting from 2012.

    By the end of 2011, Coca-Cola and its China bottling partners would have invested more than $3 billion in the country over the last three years, bringing the total investment to $7 billion by the end of 2014.

    “China is one of our most important growth markets in the world,” said Muhtar Kent, Coca-Cola’s chief executive, in a statement.

    I guess Coke & GE are both becoming Chinese companies?

  34. BC Bob says:

    X [33],

    The talking heads are my best friend. No need to reiterate, just go back and read their crapola since the peak of this bubble. Since RE crashed, a vacuum has been created. All futile attempts, monetary/fiscal policy, has simply been sucked into this vacuum, as will QE3, 4, etc..

    They can talk all they want; the market is beginning to catch on.

  35. BC Bob says:

    Philly fed -30, expected +3. The Philly fans are puking on the index.

  36. Al Mossberg says:

    Barry Soetoro lounges at Marthas Vineyard while blood runs through the streets of Manhatten.

  37. Libtard in Union says:

    Ten year – 2.04. Soo much for nailing the bottom. Glad I asked Carl about the float-down option.

  38. Al Mossberg says:

    Come on 1 handle on the 10 year.

  39. hughesrep says:

    39

    1.99

  40. Libtard in Union says:

    Not yet…but close

  41. Libtard in Union says:

    Could you imagine being able to buy the ten year at the dollar store?

  42. me@my.other.job says:

    look out belooooooooooooooooooooooooooooow

    -500 and gaining momentum!

    sl

  43. BC Bob says:

    “Could you imagine being able to buy the ten year at the dollar store?”

    Stu,

    F-Ing hilarious. NJRER hall of fame.

  44. Libtard in Union says:

    2.01

  45. yo'me says:

    Fear !!! Your move chopper Ben

  46. Libtard in Union says:

    1.98 crossed the ticker. Wow! Just wow.

  47. Painhrtz - Salmon of Doubt says:

    Since the stock market is in freefall. Here are some nice depression era recipes

    http://www.wildliferecipes.net/Game_recipes/Small_game_recipes/Squirrel_recipes/index.asp

  48. Mikeinwaiting says:

    Washington, DC, August 18, 2011

    Existing-home sales declined in July from an upwardly revised June pace but are notably higher than a year ago, according to the National Association of Realtors®. Monthly gains in the Northeast and Midwest were offset by declines in the West and South.

    Total existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.5 percent to a seasonally adjusted annual rate of 4.67 million in July from 4.84 million in June, but are 21.0 percent above the 3.86 million unit pace in July 2010, which was a cyclical low immediately following the expiration of the home buyer tax credit.

    Lawrence Yun, NAR chief economist, said there is a tug and pull on the market. “Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” he said. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”

    According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.55 percent in July, up from 4.51 percent in June; the rate was 4.56 percent in July 2010. Last week, Freddie Mac reported the 30-year fixed rate dropped to 4.32 percent.

    Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price – were unchanged in July, reported by 16 percent of NAR members. In addition, 9 percent of Realtors® report a contract was delayed in the past three months due to low appraisals, and another 13 percent said a contract was renegotiated to a lower sales price because an appraisal was below the initially agreed price.

    http://www.realtor.org/press_room/news_releases/2011/08/july_ehs

  49. Mikeinwaiting says:

    August 2011 Business Outlook Survey

    Responses to the Business Outlook Survey this month suggest that regional manufacturing activity has dipped significantly. The survey’s broad indicators for activity, shipments, and new orders all declined sharply from last month. Firms indicated that employment and average work hours are lower this month. Price indexes continued to show a trend of moderating price pressures. The broadest indicator of future activity also weakened markedly, but firms still expect overall growth in shipments, new orders, and employment over the next six months. The collection period for this month’s survey ran from August 8-16, overlapping a week of unusually high volatility in both domestic and international financial markets.
    All Indicators Show Declines

    The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009 (see Chart). The demand for manufactured goods, as measured by the current new orders index, paralleled the decline in the general activity index, falling 27 points. The current shipments index fell 18 points and recorded its first negative reading since September of last year. Suggesting weakening activity, indexes for inventories, unfilled orders, and delivery times were all in negative territory this month.

    Firms’ responses suggest a deterioration in the labor market compared with July. The current employment index fell 14 points, recording its first negative reading in 12 months. About 18 percent of the firms reported an increase in employment, but 23 percent reported a decrease. The percentage of firms reporting a shorter workweek (28 percent) was greater than the percentage reporting a longer one (14 percent). The workweek index fell 9 points.

    http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2011/bos0811.cfm

  50. Mikeinwaiting says:

    S&P bouncing off the 1140 level again, some more bad news (like it needs to get worse), black swan etc and it will no longer be support. Then we will get “Look out beloooooooooooow”.

  51. Libtard in Union says:

    or 11,000 (approx.) on the DJIA. Seems a tough nut to crack so far.

  52. 3b says:

    Fed’s Dudley says no diuble dip. Is that because we are going from double dip, to the triple dip?

    http://www.marketwatch.com/story/feds-dudley-sees-low-risk-of-double-dip-2011-08-18?link=MW_story_latest_news

  53. Mikeinwaiting says:

    I want a triple dip Rocky Road, does that count?

  54. Mikeinwaiting says:

    Stu 52 I think our friends in Europe will supply the catalyst.

  55. Happy Renter says:

    [55] Vive la oblivion.

  56. BC Bob says:

    “Existing-home sales declined in July from an upwardly revised June pace but are notably higher than a year ago”

    MIW,

    Last July’s #’s are insignificant. July, 2010, represented a cyclical low. Demand was pulled forward with the June, 2010, home credit expiration. The great unwind continues.

  57. BC Bob says:

    “I think our friends in Europe will supply the catalyst.”

    MIW,

    Our friends, idiots, in Europe decided to lay the blame game on short sellers. The short sale ban was instituted and today many Euro banks are down 10% or more. I guess they did not learn from Dick Fuld? They have only created a giant vacuum. They eliminated the main line of defense, shorts. Can you imagine holding a long position with no hope of shorts supporting the market? Did the shorts halt interbank lending to a trickle?

    In 2008, swap lines from the fed to Europe were on fire. It was liquidity on steroids. They kicked the can down the road to 2011. Unfortunately, the can is being kicked down a dead end street.

  58. 3b says:

    See I told you things were getting run down in the land of Unicorns. And this is sad because the town’s homes were always well taken of.

    http://www.northjersey.com/news/127525633_Code_enforcement_officer_s_hours_may_increase.html

  59. xroads says:

    Bob 35

    is the market catching on or are they demanding QE3? are they forcing Ben to make a statement about supporting the markets in his Jackson Hole speech?

    “They can talk all they want; the market is beginning to catch on.”

  60. grim says:

    Good god I step away from my desk for 5 minutes and the whole economy goes to shit.

  61. grim says:

    Need to finish the renovations to refi.

    Cmon!!!! Home stretch now. Kitchen and baths are just about done. Plumbers finishing up the rest of the radiant install today as well as clearing all the pipes off the basement ceiling so that we can drywall and not have to do soffits or a drop.

  62. freedy says:

    grim: when is the open house?

  63. Libtard in Union says:

    “Need to finish the renovations to refi.”

    I know how you feel. We took advantage of a 0% interest 1-year credit card loan 4 months ago and it nearly screwed up our current refi. Man have we come a long way from 2006.

  64. Barbara says:

    I just called my guy asking about refinancing after having just done this in June….If I save 150 a month I’m doing it.

  65. Anon E. Moose says:

    You can choose a ready guide in some celestial voice
    If you choose not to decide, you still have made a choice

  66. Barbara says:

    I can’t believe that grim, stu and gator and myself have not been able to positively effect this economy with our recent cash and credit benders.

  67. Painhrtz - Salmon of Doubt says:

    Barb don’t worry wife goes back to work next week. I’ll be back to flowering green shoots on the house again after a few weeks.

    Anyone wonder if Chairman O and the Congress Critters will come back from vacation. I would hate to interupt their land of the unicorns, pie in the sky, rose colored beer goggles, page molesting time off but maybe someone should try and do something.

    you know what never mind, we are in better shape when they are away

  68. Comrade Nom Deplume says:

    Another example of tax practitioner chutzpah

    http://www.ustaxcourt.gov/InOpHistoric/Bulas.TCM.WPD.pdf

    And where does this latest tax hack reside? You guessed it. New Jersey.

  69. Juice Box says:

    re: # 68 – and cancel perhaps hundreds of fundraisers?

  70. They blew up the Chicken Man in Philly last night.

  71. x (33)-

    Least sick of the dying wildebeests. In the end, they all get eaten.

    “I agree but the Gvt has been protecting the banks and financials through all of this and as the European banks are under pressure this morning the talking heads are saying how our banks are in much better shape.”

  72. 3b says:

    #64 Lib: I still don’t understand why more people are not going FHA, and why the media keeps referring to tight lending standards as negatively impacting the housing market? FHA 3.5% down is a tight lending standard? Just saying.

  73. Comrade Nom Deplume says:

    This week, I got field-audited by the New Jersey Office of Attorney Ethics. No issues, but they can randomly audit you, and as soon as they found out about my new practice, I was “randomly” selected.

    Now my practice is miniscule. Really tiny. All of my bookkeeping entries, across all accounts, from the time I started this practice, could fit on one half of one page of paper.

    One thing they must do is reconcile my client trust accounts to my bank statements. There were all of 5 entries on my books. Yet the auditor kept having to call me to explain how to read the bank statements. Exasperated by this, I sat down and walked him through his own report so he could complete it.

    If this is an example of the sort of folks in state government looking out for you, the hapless citizen, then Yikes!

  74. al (37)-

    Can’t a brother chill with a pack of Kools and a couple of cold 40s?

  75. freedy says:

    is their a Popeyes at Bo’s vacation site?

  76. BC (58)-

    Too bad the foot kicking that can is now gangrenous and about to fall off.

    Perhaps the stench in the air today is that of gangrene and not of death.

    Shit, who cares? Death comes in the end, anyway.

    “In 2008, swap lines from the fed to Europe were on fire. It was liquidity on steroids. They kicked the can down the road to 2011. Unfortunately, the can is being kicked down a dead end street.”

  77. Painhrtz - Salmon of Doubt says:

    Nom I can totally sympathize. I had to walk a FDA inspector to find the bodies in a suspected clinical investigator fraud investigation reported by my employer. dumb a$$ called me about 20 times during the inspection for guidance. Asked him if he would like for me to write the warning letter as well when he was done.

    government where the lesser of us go for employment.

  78. Barbara says:

    4.
    “and a shortage of desirable starter homes have kept many would-be buyers away.”

    Finally some small mention of the piss poor quality of the majority of US housing stock. Price was 50% of the problem for us. The other 50% comprised of houses I would not want to live in at any price regardless of renovations.

  79. BC Bob says:

    Here you go Clot. The world’s largest leech at the fed window in 2008. Today, down 14%. Sure glad the fed saved us in 2008. When the fed sells its balance sheet [ha,ha] who is buyinhg this corpse? Sell? Sell to whom?

    http://uk.finance.yahoo.com/echarts?s=DEXB.BR#symbol=dexb.br;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

  80. 3b says:

    #79 Barbara: Who wants to pay 12k a year or more in property taxes for a starter hovel??

    I have to seriously start looking soon, and my heart is not even in it; at all.

  81. Simply Ravishing HEHEHE says:

    “I agree but the Gvt has been protecting the banks and financials through all of this and as the European banks are under pressure this morning the talking heads are saying how our banks are in much better shape.”

    Europe needs to change a few accounting rules and make everyone solvent again.

  82. Libtard in Union says:

    3B: Why we didn’t go FHA.

    First, there’s quite a premium you must pay to go that route (1%). If you plan to jingle mail, you better do it in the first few years of the loan. We did an 80/10/10 so we only put 10% down. If you do the math, unless you bought the home to screw the banks, rather than plan on living in it for 7 or 8 years, it simply costs you more. Wouldn’t it just be easier to rent and you’d get to keep your credit clean?

    FHA is great if you plan to lose your house, or your goal is to save some scratch over renting. But just like when renting, you will hesitate to make any physical improvements to your household as it will not be yours for more than 3 years or so. If it still is, then you would have been better off going traditional.

  83. Juice Box says:

    3b – if you wait longer the O administration will pitch you a rent to own foreclosure.

  84. 3b says:

    #83 Lib: Don’t plan to jingle mail, but not crazy about putting alot of money down, as I firmly believe prices will continue to drop. And property taxes will continue to rise. (Oh and I like my money better than a house, the less I put down, the more I have)

    Have to leave the current rental, too young for the condo (and I hate condo’s anyhow),and don’t want to do another rental in case we have to leave every couple of years (moving is a pain to say the least), and I don’t know what I want, just not into it.

  85. 3b says:

    #84 Juice: Maybe that will be announced with the much awaited jobs initiative that he has planned after Labor Day.

  86. Al Mossberg says:

    72.

    Meat,

    Packs of starving hyenas and jackals hover over the wounded but not yet dead carcass of a filthy wildabeast. Vultures and flies peck away at the dying corpse waiting to inflict the lethal blow as they search for the aorta of death.

    See you in hell Bank of America.

    http://www.youtube.com/watch?v=sqrThbOG5rs

  87. Al Mossberg says:

    75.

    You can chill with your 40’s but when you have a job to do the “You aint gonna give me no mop to slop yo sh_t wit” attitude only goes so far.

    Sign up for a teaching position at an Abbot district if that is your style.

  88. freedy says:

    barry slips out the back door with two cartons of kools and the mother in law

  89. Libtard in Union says:

    3b: You got to do the math.

    In the short run, you’ll have more. In the long run, you’ll have less. And it shouldn’t be long before rents increase to cover the taxes. Trust me, I can’t believe how much my multi in Montclair is generating. It’s like I’m renting it out to unicorns.

  90. Happy Renter says:

    [78] Those who can, do. Those who can’t, teach. Those who can’t, and can’t stand kids, work for the government.

  91. 3b says:

    #90 Lib: I know and Thanks. Just have to motivate myself. If the Unicornians had not ruined th town with out of control spending/tax increases, at least I could stay there, so on top of being less than enthusiastic about buying, we still have to figure out where we will go.

  92. Happy Renter says:

    [90] “And it shouldn’t be long before rents increase to cover the taxes.”

    Not sure that’s a good advertisement for buying :-)

  93. Al Mossberg says:

    How high will gold go? How high will it go?

    I find it peculiar that I look fondly upon Hugo Chavez ‘s latest actions even though I despise him and everything he stand for. Perhaps this is how the US tolerated Stalin during WW2.

  94. Anon E. Moose says:

    Barb [79];

    I suspect the reference to ‘a shortage of desirable starter homes’ is a back-handed slap against so-called McMansions. Though I do agree that the 60-year old capes leave MUCH to be desired.

  95. Libtard in Union says:

    “Not sure that’s a good advertisement for buying :-)”

    Unless you plan to buy an investment property.

  96. Libtard in Union says:

    Remember just a few years ago when everyone was complaining how housing prices are not dropping in their locale?

    Today we are now complaining that house prices are dropping so quickly that we are afraid to buy.

    It’s funny how quickly the perception has changed.

  97. Happy Renter says:

    [96] But I think 3b is looking for a house to live in, not an investment rental property.

  98. Libtard in Union says:

    Happy Renter,

    See, if 3B owned right now, the uncertainty would be solved.

  99. 3b says:

    #99/99 Yes just a house to live in, and true If I did not put a lot down, I would not worry about prices falling further, as my purchase is really just a long term rental. Gotta figure out where we are going first, plus having to move in and of itself, is just making me not into it.

  100. JC says:

    3b re: #84: That foreclosure cape in WT will be under $300K before you know it.

  101. chicagofinance says:

    Went to a diner just to have lunch away from my desk…ate at the counter….there is a TV on the wall with Family Feud being broadcast…..

    “Your wife hasn’t talked to you for 3 hours. What is the reason?”

    1. SHE’S ANGRY 64
    2. SHE’S OUT OF THE HOUSE 14
    3. SHE’S ASLEEP 13
    4. SHE’S TALKING TO SOMEONE ELSE 9

  102. 3b says:

    #01JC I would not be surprised to see that. And I think WT is where we will end up, just not happy about driving to the train thing. Gee!!! I just want it all!!!

  103. 3b says:

    JC Did You see the oen below originally came on at 449k, recently reduced to 399K. Sold in November of 2005 for 535K!!!

    http://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=1125896&dayssince=&countysearch=false

  104. Happy Renter says:

    [99] Not sure I follow, but OK. I’m a renter, you’ll have to spell it out for me.

  105. 3b says:

    #05 I think what he means is that if one owned at this point it would not matter all that much if prices fall further since you would be locked in so to speak.

  106. 30 year realtor says:

    3b – FHA 203K is the way to go. Buy a house that needs a kitchen, bath, carpet, paint, roof, I assume you get the point and have FHA pay to fix it for you before you rent it from them.

  107. 30 year realtor says:

    Why live in a shitty rental when FHA will help customize it!

  108. 3b says:

    #07/08 30 Year: It is tempting!! Once I make up my mind finally where I want to go.

  109. make money says:

    Dow:Shiny ration aproaching a 5 handle.

    BC,

    How long before we get to 2:1?

  110. Juice Box says:

    So the Fed has reopened it’s swap lines with European Central banks. The 2007 swap lines were initially established for up to six months and were renewed to run until Feb 2010.

    NEW YORK Aug 18 (Reuters) – The Federal Reserve provided $200 million of liquidity to the Swiss National Bank in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday.

    The SNB was the sole institution to tap the swap lines in the week ended Aug. 17, swapping the full amount.

    The terms for the SNB swap were not provided.

    The Federal Reserve has established swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Swiss National Bank and the Bank of Japan in an effort to respond to the reemergence of strains in short-term funding markets in Europe. (For the full Fed report, double-click on: here) (Editing by Leslie Adler)

    http://www.reuters.com/article/2011/08/18/fed-forex-swaps-central-banks-idUSN1E77H1OO20110818

  111. Anon E. Moose says:

    Here’s the plan folk, from Harvard’s liminaries:

    In my December 2008 column, I argued that the only practical way to shorten the coming period of painful deleveraging and slow growth would be a sustained burst of moderate inflation, say, 4-6% for several years. Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery. Eventually, it will take place one way or another, anyway, as Europe is painfully learning.

    For those of you following at home, 4%, 5%, 6% annual inflation doubles prices in 18, 15 and 12 years, respectively. If you missed the shiny boat, you can tread water with dirt or equities, but cash is trash(ed).

  112. Anon E. Moose says:

    Con’t [112];

    Don’t even get me started on how ass-backwards the whole Robin Hood aspect of it is.

    Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, …fnck you, bend over.

  113. chicagofinance says:

    The first step to recovery is to admit you have a problem.

    Happy Renter says:
    August 18, 2011 at 3:48 pm
    [99] Not sure I follow, but OK. I’m a renter, you’ll have to spell it out for me.

  114. Happy Renter says:

    6% inflation? Sounds banana republic-y to me. But I’m just a gringo, I must be overlooking the beauty and vibrancy of life where prices double every 12 years.

    Dirt a la Nompound? check
    Equities? check
    Shiny? check
    Brass? check

    One thing I lack is a foreign passport, but working on it.

    Still, I always liked holding on to 12 months of cash reserves. Gonna have to rethink that one and get over that bad habit, I guess. Silly me thinking some cash for a rainy day was a good idea.

    I also think I need a new wheelbarrow.

  115. chicagofinance says:

    The End Is Nigh (Eunuch Edition):

    Man sues doctor for amputating his peni$ in what was supposed to be a routine circumcision
    BY Larry Mcshane

    DAILY NEWS STAFF WRITER
    Court documents entered in Seaton’s case showed the anatomical issue he was suing over.

    My peni$ was amputated by mistake – lawsuit

    When Philip Seaton woke up after surgery in 2007, it was too late – make that way, way too late – to seek a second opinion.

    The Kentucky man was in court Thursday, suing his doctor for amputating his peni$ during what was scheduled as a routine circumcision to relieve inflammation.

    Seaton and his wife Deborah are seeking unspecified damages from Dr. John Patterson to compensate the couple for “loss of service, love and affection.”

    Jury selection in the case began Thursday, with the ponytailed plaintiff seated alongside his attorney.

    An attorney for Patterson said the Louisville doctor had to remove Seaton’s peni$ after discovering cancer during the surgery.

    But the lawsuit contends that even if Patterson did find cancer during the Oct. 19, 2007, procedure, it was a non-emergency situation – and Seaton never had a chance to consider other options.

    “It didn’t have to happen that way,” he said in 2008, when the lawsuit was filed.

    His attorney, Kevin George, said in a pre-trial hearing that the case is simple: Whether jurors find Patterson’s decision was “a necessary part of the surgery.”

    Defense attorney Clay Robinson maintains the doctor “had no reasonable option” other than removing the cancer – and the peni$.

    The Seatons have already reached an undisclosed settlement with Jewish Hospital, where the surgery was done.

  116. Neanderthal Economist says:

    “Remember just a few years ago when everyone was complaining how housing prices are not dropping in their locale?”
    Lib, im still surprised at how propped up the prices are in my town, utterly shocked. Sure, we got a 10% correction, maybe 15-20% from peak if its really a pos, but prices were so inflated that a mere 10% is a slap in the face. What’s it going to take to get a 30% across the board price correction in my town? It would have to be a clot scenario or worse, something unthinkable, totally unlikely, ie impossible. Like the zillow study that grim posted yesterday suggests, prices are just really overvalued here, probably always will be.

  117. 3b says:

    #17 No area is immune, as long as it might take, but no area is immune.

  118. Al Mossberg says:

    118.

    You are going to need a high seas capable boat to get your wealth out of here. Capital controls are a b_tch.

  119. Juice Box says:

    Moose – Only problem is you have to get everyone to play along, we cannot expect that
    everyone will play along. Somebody will take the deflation side of the bet in the derivatives market, there is no stopping a repeat of 2008.

  120. Happy Renter says:

    [116] JJ your country needs you.

  121. Anon E. Moose says:

    Juice [120];

    So I guess you’re ruling out equities then. Maybe a more nuanced approach – I’m thinking a utilities play – no competition, cost-plus basis, stable revenues.

    If there was a convenient way to short houses, who here wouldn’t have been all-in back in ’05?

  122. Al Mossberg says:

    124.

    Guess which company JJ works for?

    Is it JP Morgan?

    Muhahahaa! Why so scared of silver? I suggest packing some heat.

  123. Al Mossberg says:

    125.

    Anon,

    The new utilities will be miners. Assuming they arent nationalized like GM. Book it.

  124. yo'me says:

    “Financial conditions are today worse than they were prior to the crisis in 2008,” he said in a telephone interview earlier this week from Thailand. “The fiscal deficits have exploded and the political system [in both the U.S. and Europe] has become completely dysfunctional.”

    Certainly, the unprecedented global stock market volatility in this hot August, including Thursday’s rout, suggests that investors and traders alike are looking for someone, somewhere, to take the wheel. Read more: Confidence is collapsing around us.

    Pin that against a backdrop of fragile economies, inflationary government policies, high unemployment, social and income disparity, military actions and geopolitical tensions in the Middle East and Asia, and you get a good picture of how Faber sees the investment map.

    Faber doesn’t take a contrarian stance in the strict sense; it’s more of a constant vigilance — capital preservation over capital appreciation — so that one can live now to fight for investment gains another day. Read more: 10 investing rules for tough markets

    http://www.marketwatch.com/story/5-money-moves-dr-doom-is-making-now-2011-08-18?dist=afterbell

  125. BC Bob says:

    “If there was a convenient way to short houses, who here wouldn’t have been all-in back in ’05?”

    Moose,

    Many were. There was a clear path, you just had to scratch your head and think a bit.

  126. BC Bob says:

    “If there was a convenient way to short houses, who here wouldn’t have been all-in back in ’05?”

    Moose,

    Don’t get me started, we can go on all night. We discussed the time frame for the fountain to be turned off, back in late 2005. When Hov broke ground, I got out.

    http://finance.yahoo.com/echarts?s=HOV+Interactive#symbol=hov;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

  127. BC Bob says:

    Next we’ll hear; if there was a convenient way to get long shiny, who wouldn’t have been all in back in 2004?

  128. Deb says:

    Al Mossberg: “Barry Soetoro lounges at Marthas Vineyard while blood runs through the streets of Manhatten.” [sic]

    Al, where do you see blood running through the streets of Manhattan? Because I don’t see it. London yeah, Manhattan not yet.

    And I am no defender of Obama’s, but he was never named Soetoro. I can assure you schools use stepfathers’ names all the time for convenience (they routinely did it to my kids, because it was MY name) but there is no evidence this was ever Obama’s legal name.

  129. BC (80)-

    Dexia has been dead man walking since before 2008. They are like Europe’s version of C, except infected with ebola and bubonic plague.

  130. box (84)-

    The gubmint acting as a tote-the-note finance company in a rent-to-own scheme they cooked up themselves is pretty much a sign of the apocalypse.

  131. Juice Box says:

    Meat where is your new market these days? JC? it might as well command a visit from me so lower the shotgun when the door bell rings!

  132. box (132)-

    Not flacking RE anymore, so I can be nice to people and smile at them and shit.

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