From the WSJ:
Inflation Rate Seen Outpacing Home Prices for Years
The ailing housing market is unlikely to return to health before 2016 and is weighing on the two-year-old U.S. recovery, which finally is showing signs of picking up steam.
That’s according to economists in the latest Wall Street Journal survey, who expect home prices will begin to increase in 2012 but—by an 8-to-1 margin—don’t see prices outpacing inflation over the next three years. That means that the value of the largest investment for most consumers—their home—would fail to keep pace with increases in the cost of other items, such as food, clothing and gasoline.
The economists expect home prices as measured by the Federal Housing Finance Administration will be down 2.7% in 2011, but up slightly next year. They forecast that inflation will remain below 2.5% through at least 2014 after hitting 3.3% at the end of this year.
During previous recoveries, home values held down by recession climbed back. In the 1980s, home prices were outpacing inflation by the first full year of recovery, while in the 1990s that took three years. If the economists’ forecasts prove true, the pace of growth in home prices would still be below that of inflation after at least five years of a recovery that began in 2009.
Historically, housing has been a driver of recoveries. But the bursting of the real-estate bubble of the 2000s has turned the sector into a drag on growth. An excess supply of homes has held back construction and price declines have weighed on consumer sentiment.
“Expectations for continued home-price appreciation, built upon the experiences of the post-World War II period, set the tone for the strategy to buy a home today in anticipation of capital gains down the road. This ended with the Great Recession,” said economists at Wells Fargo.
Good Morning New Jersey
From HousingWire:
NY Fed: House flippers contributed to bust and boom
Four years after the housing bust, researchers at the Federal Reserve Bank of New York are putting some of the blame on real estate speculators, saying they played a key role in blowing up the housing bubble that eventually popped, causing home prices to tumble nationwide.
In a report titled “Flip This House: Investor Speculation and the Housing Bubble,” four researchers claim borrowers who owned multiple homes for investment purposes played a key role in running up national home values right before the 2007 housing meltdown.
In fact, the report found a third of U.S. home purchase lending in 2006 was issued to borrowers who already owned property. In California, Florida, Arizona and Nevada, investors made up 45% of the 2006 transactions, suggesting the deep pain in these markets was rooted in excessive levels of real estate speculation.
…
The report describes these investors as over-leveraged borrowers, consuming large doses of non-prime debt with high interest rates and low-down payments to fuel their appetites for quick acquisitions that could be flipped for profit.
What these investors created was an insidious cycle, where their excessive buys pushed prices higher for all buyers. When the bust came, these overleveraged house flippers escaped by abandoning their second liens, while innocent homeowners ended up underwater on their mortgages.
…
“In the 2000s, securitized nonprime credit emerged to allow leverage to increase, with effects that extended far beyond this sector, including spillovers from defaulted mortgages to the value of other properties. Effective regulation of speculative borrowing, like what is being attempted in China today, may be needed to prevent this kind of crisis from recurring,” the report concluded.
Even during the previous recoveries at least the ones I’ve been through, there were always those fortune 500 and wall street jobs with bonuses, pensions, benefits, and perks waiting and I just don’t see that coming back this time.
Homes for $1, bread for $10. Dont worry about it.
Larry Summers, who was Treasury Secretary under President Clinton and a top Obama economic advisor, apparently has forgotten the IMF’s role in the world economy. In an oped column he told readers that:
“From the problems of Britain and Italy in the 1970s, through the Latin American debt crisis of the 1980s and the Mexican, Asian and Russian financial crises of the 1990s, the IMF has operated by twinning the provision of liquidity with strong requirements that those involved do what is necessary to restore their financial positions to sustainability. There is ample room for debate about precise policy choices the fund has made. But the IMF has consistently stood for the proposition that the laws of economics do not and will not give way to political considerations.”
This is arguably wrong as a general proposition, but it is certainly wrong in reference to the East Asian bailouts in 1990s that were largely engineered by Larry Summers and the U.S. Treasury Department, which controls the IMF. The conditions demanded in the East Asian bailouts required the countries in crisis in repay loans to western banks in full.
It allowed them to get the money needed to make the repayments by having the dollar rise in value against the currencies of the region (i.e. Robert Rubin’s strong dollar policy).It was not only the East Asian countries that deliberately lowered the value of their currency against the dollar, developing countries throughout the world adopted a policy of accumulating massive amounts of reserves in order to avoid ever being in the same situation as the East Asian countries.
This led to the enormous trade deficits that the U.S. has incurred in subsequent years. This situation was not sustainable, contrary to Summers’ assertion that the IMF puts countries on a sustainable course.
In fact, the trade deficit between the United States and the rest of the world was the major imbalance in the global economy in the last decade. It created the gap in demand that was filled by the stock bubble in the 90s and the housing bubble in the last decade. It is striking that the Post’s opinion pages are only open to people who try to conceal this fact rather than economists who try to explain this history to readers.
Dean Baker
>>>In a report titled “Flip This House: Investor Speculation and the Housing Bubble,” four researchers claim borrowers who owned multiple homes for investment purposes played a key role in running up national home values right before the 2007 housing meltdown.<<<
This is a bunch of damn bullspit. We helped the damn economy and created jobs and to be blamed for this mess, which was created by real estate terrorists, is total bullspit. Real estate investors didn't cause the subprime lending crisis. Hell, we helped create a bunch of damn jobs in construction, mortgage lending and in real estate before all of this was upended with negative talk and a determined attempt on the part of some to undermine our work. Real estate terrorists, who came to hate us because we made a little money, are 100% responsible for this mess. I really resent this.
Well, it’s not foreclosures we’re tearing down, but this is a good start!
From the Record:
U.S., state to spend $16 million on Passaic flood-plain buyouts
More than $16 million in public money has been earmarked to buy 84 storm-damaged homes in Passaic County, drawing from billions in disaster-relief funds, federal lawmakers said Thursday.
Statewide, 149 homes will be bought — more than half of them in Passaic County — in an effort to turn floodplains into open space and prevent the kind of large-scale havoc in residential areas wrought by Hurricane Irene in August.
New Jersey will receive $37.7 million, 75 percent of which will come from the Federal Emergency Management Agency. The rest will be drawn from local governments or state agencies such as the Office of Emergency Management or the Department of Environmental Protection, according to the office of Sen. Frank Lautenberg, D-N.J.
…
The Passaic County towns slated to share the $16.5 million are Wayne, Pompton Lakes and Little Falls.
“That’s real money,” said Ella Filippone, executive director of the Passaic River Coalition, an environmental group. But she and others agree more is needed.
In Little Falls, for example, some 150 homes, battered by repeated flooding over the years, need to be bought out or razed, said Joanne Bergin, the FEMA program administrator there. So far, the town has put in two “powerhouse” applications, resulting in $10 million in federal aid to purchase or level 67 homes. The new funding announced Thursday should be enough to buy another 15 properties along the Passaic River.
“We have massive amounts of devastation in Little Falls,” Bergin said. “There is no way to go into this slow and steady. We have to go in big and go in strong.”
Of the eight municipal recipients of this week’s grants, Wayne will get the largest share: $8.4 million to buy 56 homes. Earlier this year, FEMA awarded the town $19 million to buy out more than 70 properties. But the money has not met the demand, said Assemblyman Scott Rumana, R-Wayne, a former Wayne mayor who was on the governor’s flood commission that recommended more buyout assistance earlier this year. He described the buyout program as short-term relief for homeowners that “spotlights” the region’s flooding problem but does nothing to solve it.
30-yr;
The entire notion of buyer’s agents paid by the seller is flawed.
Agree. So is the notion that anyone at the closing table is paid by the seller.
neanderthal #4
If the S$%T hits the fan
I have a great bread recipe that I can give you…. you can make your own for about a buck a loaf.
A moron buys a home in a flood plain,and the feds buy him out . Nice .
It’s like buying MF Global stock,
8 – I disagree.
There is not one seller. If there was only a single house to sell, with a single seller, I might agree with you. Because if this is the only available transaction to execute, what else is there to sell? I’m either selling this single house, or selling nothing.
In reality, I’m paid by all sellers, and not a single seller. I’m not beholden to try to sell any single house. Therefore, the single seller is irrelevant to me. The sellers disappear into the ether, it’s only inventory.
The constant in my activities, is the buyer (and I only represent buyers). It is her decision and her choice, it’s her I answer to, and her I represent. Sure, the buyer needs to buy for me to get paid. This isn’t really a model that’s unique to the real estate business.
The fact that the commission structure is set by the seller, in agreement with their agency, is simply due to the process and rules of broker cooperation. Sellers are already signing binding listing agreements. These agreements are the basis of the MLS system, and lets everyone have access to everyone’s inventory. Trust me, you wouldn’t want to operate in a real estate market without broker cooperation. If you thought the market was opaque now, it’d be the dark ages. As a member of the MLS, I agree to broker cooperation. If I list, I share, if you list, you share. The ability to better match buyer and seller helps everyone. So, this is where the commission structure lives. Maybe in a parallel universe the model evolved with buyer’s signing those binding agreements, and paying commission. But in our world, buyers don’t sign agreements.
So in my opinion, my commission is paid out of the disbursement of funds at the closing table, period. I’m paid when all parties are satisfied and an agreement is executed. I’ve gotten paid commission on short sales where the seller didn’t have a pot to piss in. Did they really pay my commission?
Many parties are coming to the table with assets, cash, commitments, and services to execute the transaction. Parties leave with assets, cash, new debts, settled debts, services performed, etc. Not to get into an argument about the fungibility of money, but the party typically bringing the largest sum of cash to the table is the mortgage company. So, the dollars coming to me are likely coming out of the dollars provided by them. So who on earth do I represent in that transaction?
By the way, I will gladly work under a model where I am compensated by the buyer directly. In this transaction, the selling price would be reduced by the amount of commission that would have applied to buyer’s agents, for example, 2.5%. In this case, I would work under time and materials, and take no commission at closing. Agency rules allow either party to pay commission, but not both. My rate is $225 an hour, plus associated fees and expenses, billed monthly.
No.7 That is good but when you do the math the average comes out to 150,000 to 190,000 per home on average. So will these residents be buying other homes in the area or renting?
Neither buyer nor seller need to use agents. There are huge amount of sales executed every year with nary an agent in sight. My parents bought, sold, leased plenty of properties, and not once ever used an agency.
Find a house, shake a hand, meet at the closing table and your done. It’s not rocket science. Word of mouth and neighborhood transactions are probably the easiest deals that take place.
I told the story here a few times, I’m sure. Good friend of the family purchased a house in Franklin Lakes for a song, one of the best deals I’ve ever seen (this was pre-bubble). He drove by the house every day on his way to and from work. Loved the house. Said he’d buy it if it ever came up for sale. Well, one day, he drove past the house and the owner was out doing some yard work, he decided to stop. Talked with the guy and told him if he ever wanted to sell, to call him. Owner said, “you know what, we’ve been thinking of moving down to Florida”. Shook hands, done deal.
No spreadsheets, no market analysis, no listing agreements, no zillow, nothing. Agreed on a fair price in a driveway, done.
I’m not even talking about using FSBO channel, Craigslist, etc. These all attempt to mimic the agency model without the agent (in hopes of extracting large fees from the transaction without doing any work).
Drive around town, note 100 houses you like, mail them all a letter telling them you are interested and would like to buy. Be at least somewhat sincere and personal, so your letter doesn’t get tossed in the trash two lines down.
I guarantee you that you’ll get takers. Agree on a fair price and you’ll close.
Hell, in the world before broker cooperation and MLS, almost every listing was exclusive to the agents that represented it. Look up “pocket listings”. Buyers basically had zero representation, if you wanted the house, dual disclosure was the only option, and the selling agents took “both sides of the commission”.
#13 Got new neighbors in 2004. They told us that they sure loved our house and their family would be interested if we ever thought of selling.
The kids graduated high school, property taxes were edging upward, we gave them a call. They came right over, they gave us a price, we said too low, went back and forth for about 1/2 hour, and we agreed on a price. We also agreed that we would have the house for 1 month after closing, rent free, so we could have plenty of time to move. Their attorney kept trying to muck up the deal, of which we would just tell him to have the buyer call us and we’ll work it out, which we always did.
Closing had no hitches. Total cost of selling our home- $500.00 for attorney fee. At the time we had gotten the highest price ever in our town, and much more than a realtor aquaintence had told me she would list the house.
grim [13],
Top ten post in the history of this blog.
Interesting watching the fake gains on Wall Street as they drive up results to pad their 2011 bonus checks. Watch out for 2012 as the S.H.T.F.
#13 – Grim,
Good story, and probably something very possible in the past. Nowadays with the blanketed solicitations, there is also an agent in everyone’s rolodex. Neighborhood sales, as you call them, have always been popular and I agree that this is going back to old sales fundamentals, but these days, for some reason, everyone calls an agent. Fortunately and Unfortunately…
I interviewed a client the other day. Before I give my price recommendation, I ask them what a fair sales price would be to them. Her home was worth $550k on a bad day. She guessed $415k. If someone sent her a letter and took the house for $415k, that would be a great deal to the buyer and possibly a great deal for seller if she thought it was fair. Bad neighborhood comp? Yes. Is this a way to determine fair value? Yes…homes are only worth what people will trade it for. Problem is, that transition to that kind of sales market won’t be happening anytime soon….Fortunately and Unfortunately…
Grim,
I’m mostly in agreement with 11 and in total agreement with 13.
My dissagreement with 11 is your hourly rate, plus fees and expenses. I don’t know enough about you but I wouldn’t pay that rate for nearly anyone. It might just be an over-inflated sense of ego but when someone tells me an hourly rate that exceeds my own I really begin to question the true value of something.
At 10$ an hour you can pretty much go unsupervized and I can check in on you once a week to make sure that things haven’t gone to crap. At 25$ an hour I want written weekly reports that show me not only can you work but also communicate intelligent thoughts. At 50$ an hour you had better have 10 years of experience or degrees hanging on the wall. At 100$ an hour I’m working beside you to make every hour you work count double. At 225$ you had better have nice tits and can shake dat thang.
I just about laughed when I read 225$ an hour to be a buyers agent. Mostly because it made me think of strippers. Perhaps I am in the wrong buisness afterall.
RealEstateGuy,
I have heard that argument so many times it that it is losing its power. I heard that argument right before I heard the argument that if you try to sell your own home that someone could come in and take you hostage and steal your things.
There are studies that show RE agents get more for their own homes than they do for the people they represent. If you also subtract out their fees then you can also surmize that people who use RE agents are losing money as well.
I think that it is poor form to use the argument that all people are ignorant and thus need to seek protection from RE agents. I conceed that some people are ignorant and need help, but many others would do just fine without help and possibly even better.
Ron Paul warming up the Torpedoes. Got Popcorn.
http://politicalticker.blogs.cnn.com/2011/12/08/paul-i-have-to-expose-gingrich/
Nic
Sorry, for a second there I thought I was an attorney.
If you count all the time invested in the blog, it’s barely minimum wage.
That said, if I can save you $40,000, what’s that worth to you? 10 an hour?
By the way, my tits are fabulous.
re: #21 – FAB – most people have forgotten Gingrich was screwing his congressional aid during the 1990s and during Clinton-Lewinsky adultery scandal, even as he proclaimed family values and bitterly criticized Clinton for his adultery all the while he was leading the impeachment drive.
Does anyone really want this couple in the white house?
http://news.makemeheal.com/images/callista-gingrich-plastic-surgery-1.jpg
Mike
12
I wonder if those homes are worth anything. I hate this idea on principle. It sounds like another bailout (albeit prob not 100 cents on the dollar for everyone, but who knows). I know it costs less to do this than keep sending them FEMA money, but we shouldn’t be doing that in the first place!
(not yelling, just my opinion – the govt is so messed up, at every level)
grim (22)-
You beat me to that response.
Amazing how many people think RE agents pocket 100% of all fees paid, have free insurances and no cost of sales…
Someone should also inform Nicholas that $10/hr comp is also borderline poverty level existence, and $25 ain’t exactly the high life. No reports would be forthcoming.
box (23)-
I don’t want any couple in the White House, as my real wish is to fire an exocet missile into it.
joyce (24)-
The only alternative left is to become stupid and qualify for the bailouts that are now almost guaranteed to follow people’s stupid acts.
We all increasingly pay a penalty for not doing stupid things.
(25) meat,
I caught that. I could go legal grunt work in the city but it pays about $30 per hour. Factor in tax and commuting cost and you get to $15 per hr.
Unemployment pays that before tax. So why would I even get off my ass for a differential of a few bucks an hour?
Guess that’s the difference between me and Nic, I won’t pay someone a penny if there isn’t value in the service, I don’t care if it is 5, 15, 25, or 225. It ultimately boils down to value.
Don’t get me wrong, my history here shows I’m a cynic, but I know the difference between price and value.
That and a sense of….
Anything you can do I can do better, I can do everything better than you!
First timer, here. Long, long time lurker, though. I am finally breaking through my reticence on responding to this forum. Concerning response #13, I have finally seen a true to nature example of how to purchase a house at a fair (or better than that) price relative to market. I was taught by a real estate agent almost 30 years ago (and I never was involved in RE brokership, sales, etc. and same to this day) that you never ask a person directly if he/she is interested in selling their home. The polite way to do it is to ask if he/she knows of anyone in the neighborhood who is thinking of selling. This method is non-confrontational and does get results. Ask me how I know. BTW, it does help if you get your face known in that neighborhood first. Names need not be known. You can jog by and wave, be patient, and get rewarded. Make note of the elder generation types. They appreciate you knowing of their presence.
Congratulations, Camden!
Camden Named 2nd Most Dangerous City in America
Sometimes, just for a moment, I find myself forgetting that Camden actually exists. It’s not that I actively choose to block it out of my mind, like my 15th birthday party, but it’s probably because Philadelphians only go to Camden for one of two things: the Aquarium or a Phish show.
But Camden, like a “troubled teen” who’s appeared on multiple episodes of Maury, just can’t get its act together. And much in the same way said troubled team needs discipline from an overbearing, ex-military/security guard, Camden needs help.
Yesterday, for the second year in a row, Camden, which has had 48 homicides so far (not going this morning), was named the 2nd most dangerous city in America according to the 2011 CQ Press City Crime Rankings. Flint, Michigan, which has appeared in more than one Michael Moore documentary, came in first, with Detroit, St. Louis and Oakland not far behind.
City officials and police have stated that massive budget problems and a deteriorating infrastructure have eroded the city’s ability to keep the peace. In an article for The Inky, one resident summed up Camden’s woes with what is surely the scariest quote you’ll hear all day, “We don’t have any real policing in Camden. They’re just out here to pick up the bodies.”
Seems we may want to start calling the Delaware River “River Styx” for good measure.
http://news.yahoo.com/blogs/philadelphia/camden-named-2nd-most-dangerous-city-america-164956103.html?bouchon=501,ny
By the way, my tits are fabulous.
Who can argue with that?
#7 – How would bailing out the flooded areas in Litlle Falls affect the rest of the town? Little Falls is where my landlord is looking to sell his commercial space. We are not in the flood zone.
I am not in a position to buy the space yet, just doing my research.
con’t [33];
[all in good fun] ;-)
(22) grim
Bull. You’re as flat as a board.
#23 Juice
What I find amazing about this hatchet piece is that its from 1989.
How much baggage has he built up since?
http://m.motherjones.com/politics/1989/09/master-disaster
Jersey map goes viral
http://news.yahoo.com/blogs/philadelphia/jersey-map-goes-viral-175102166.html?bouchon=501,ny
Grim[30], I see your point it is amazing that people don’t see the correlation. In my field I always laugh when a hiring manager says ‘I can’t find the type of qualified people I am looking for’, which is really code for I’m not offering enough money for the people with the skill set and intelligence I need. The thing is people are very dense when it comes to the cost of a service provided, truth be told one person who can do the job is infinitely better than someone who costs half the price but cannot begin to get done what needs to be done. The truth is if I’m paying $10 per hour I expect to get $10 per hour of work out of the person not really more or less, I’m satisfied at the end of the day if they deliver work amounting to $80 if it’s more than it’s gravy, which isn’t much work, if it were equivalent to something that would take me 2 hours it’s fair because I earn more than that in 2 hrs.
Grim see your point but people are stupid, I’ve tried this with my management where I work. They don’t see that in one 6 month project I can show actual savings of 200k, they don’t recognize the value. They look at it as a project manager should make X, you make X, it’s all good. Not the way they should look at it, which is our average product manager makes X but doesn’t deliver projects under budget, hence from a value perspective you are worth more.
I call it short sided, some people understand what I’ll refer to as cost engineering, most don’t. The only problem with your proposition is that you get paid even if you don’t perform, which is what would make me reticent about entering into such a compensation scheme. Which might be where Nicolas was going with his $10,$25, etc argument. If your rate were sufficiently cheap, I can take the risk that you will not perform and I can mitigate my risk of loss. Now where your compensation scheme is good and actually has been used and is effective, is in the commercial space. If I am frequently buying, need impartial real estate advise, and someone to bring me deals it might make sense. The other issue is without sales commissions you’d take a stimulus for liquidity out of the market, unlike many on this board I have seen that a good broker closes, they make it happen, they work both sides, it is the nature of the compensation structure.
Don’t worry, Camden drops off the list as soon as they finish those bike trails.
New regional map of Jersey sorry if already posted just got back from Europe. didn’t run into JJ while there
http://i.imgur.com/Pwnf4.jpg
bastard chifi just saw that!
Where is JJ?
18. RE Guy,
Why would you ask the sellers what they think a fair price would be prior to giving your professional opinion?
Just ring-fence Camden with razor wire and call it a day.
Our very own penal colony.
Scribe apparently he was to be in Europe this week
To tide everyone over in JJ’s absence.
http://www.amctv.com/shows/mad-men/episodes/season-2/the-jet-set
Camden cops have the Feds on their tail, bunch of cops tried for corruption with something like 200 false arrests and now Camden’s Police Department is to be dissolved in-favor of a county one. They laid off 168 cops last year and have since hired some back.
Perhaps they should just let everyone there open carry? Those marauding, murdering robbers there would think twice if everyone was packing heat.
“Mr. Corzine was evil AND stupid.” Dennis Gartman 10:08AM 12/8/2011
My brush with greatness…..I got to use the urinal next to Peter Schiff.
juice the problem is the majority of people, even with open carry, are too chicken spit to actually use a firearm. Just because you can carry it doesn’t mean you actually have the balls to use it. This is coming from someone who is quite the shot and has no problem taking down a large animal for food. I have no idea how I would react when faced with the idea of shooting another person even if it was for self defense. That is where that pesky moral compass comes into play. the same one that kept me from participating in the housing bubble would probably endager my life.
“Is what Corzine did illegal? No. Was it immoral? Yes.”
Chi fi that is gay!
endager = endanger
I assume he pisses gold…..or at least gold-color…..
The highlight of yesterday was near the end of Mark Faber’s speech and he was running out of time. He put up a map of the entire Middle East/Northern Africa and he was told he only could say as few summary comments. “In short, just assume this entire thing will go down in flames.”
China wants to get the inflation rate of housing down. As a result, the government purposely built smaller housing units (1BRs & studios) so the average price paid will drop.
re # 53 – Chi – we don’t know if any of his clients had agreements which specifically prohibited the use of their money. Jon Boy hired a criminal attorney, he must think there is something there.
http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/
re # 52- Painhrtz – your acute stress response is to freeze and allow your moral compass to take over? You are as much an animal as you are a thinking person. Fight or Flight in these situations usually takes over, no time to worry about taking a life when you have a gun pointed in your face, most men would draw and fire. We could perform a little test and arm 1 out of 10 males in Camden and Flint. Deputize them as marshals or something to make it legal and see if the crime wave and murders stop.
39 – The reason I wouldn’t tie the fee to the transaction is mainly because my ability to perform isn’t necessarily tied to the buyer purchasing a home.
See, because as much as everyone wants to be focused on the price, when the time comes to pull the trigger all the other intangibles come into play.
I’ve had buyers come to me wanting a screaming deal, they ensured me they would be flexible. I can show buyers screaming deals till I turn blue, very few takers. Turns out, nobody wants a screaming deal. Yeah, the sheetrock needs to be replaced and the bathroom redone, but those will only cost 10 grand, the house is priced 30 grand under market. Does anyone care? No, because it smells like bacon bits and the buyer can’t see (err, smell) past that.
The problem is, they want *that* house over there, at a screaming deal price.
Sorry, but that isn’t possible. If the acceptable inventory consists of one property, there tends to be very little flexibility possible in the terms of the deal. Those are the terms, take it or leave it. I am not a shaman wizard who can convince a seller of otherwise.
I’ve seen screaming deals passed over for the silliest of reasons, only to be snatched up by other buyers a week later. Bacon bits anyone? You think I just made that up?
See, the problem is, not all buyers buy. They might want to buy, but they come to me with expectations that have already been set. Some times, these expectations are not possible to meet, and I need to fire the buyer. Only to be out hundreds (thousands?) of dollars.
I performed, the buyer didn’t.
That said, there is a special class of buyer who wants to buy, but subconsciously can’t pull the trigger. These buyers find a way to scuttle or blow apart every deal they enter into. Self sabotage (masturbation maybe), over and over. I guess they can tell themselves they tried? (Or maybe they just put on a show for their significant other).
You’ve got buyers and you’ve got buyers.
WSJ
BUSINESS
DECEMBER 9, 2011
EPA Ties Fracking, Pollution
By DEBORAH SOLOMON and RUSSELL GOLD
Chemicals found in a Wyoming town’s drinking water likely are associated with hydraulic fracturing, the Environmental Protection Agency said Thursday, raising the stakes in a debate over a drilling technique that has created a boom in natural-gas production.
The agency’s draft findings are among the first by the government to link the technique, dubbed “fracking,” with groundwater contamination. The method—injecting large volumes of water, sand and chemicals to dislodge natural gas or oil—has been criticized by environmentalists for its potential to harm water supplies, which the industry disputes.
The EPA findings spooked investors in Encana Corp., which drilled the Wyoming wells, sending the Canadian company’s shares down more than 6% in New York Stock Exchange trading. The value of some other energy companies heavily invested in fracking also fell, including Chesapeake Energy Corp., which dropped 5.1%.
The findings, which will be peer-reviewed by scientists before being made final, could expose Encana to fines and litigation. The company has been providing fresh water to 21 homes in the area since August 2010, when it began meeting with the EPA and state regulators to find a long-term alternative to well water for the area.
EPA spokeswoman Betsaida Alcantara said the agency is discussing steps with Encana to fix the problems. “Our highest priority is to ensure a long-term source of clean drinking water,” she said.
Doug Hock, an Encana spokesman, said the company—the second-largest natural-gas producer in North America after Exxon Mobil Corp.—wasn’t aware of any pending enforcement action by the EPA but added “they always have that option.”
Mr. Hock called the EPA’s findings “a probability rather than a definitive conclusion. For an agency that prides itself on science, that’s surprising.” He added that Encana has tested the wells at issue and “the results show there has been no issue with wells releasing natural gas or other contaminants into the environment.”
Environmental groups said the finding confirms that fracking poses environmental risk and should be subject to strict rules or banned outright. Supporters of natural-gas production said the report was narrowly focused and shouldn’t be used to draw broad conclusions about fracking’s impact.
The EPA itself said the Wyoming field differs from most fracking sites because the fracking “is taking place in and below the drinking water aquifer and in close proximity to drinking water wells”—unlike most sites where fracking is done far below the water table.
The EPA conducted a multiyear study in response to concerns voiced in 2008 by residents in Pavillion, Wyo., about the smell and quality of their water.
The agency, after drilling its own wells in Pavillion and sampling water, said it detected benzene, a carcinogen, that exceeded safe drinking-water standards, as well as methane—the primary component of natural gas—and synthetic chemicals such as glycols and alcohols “consistent with gas production and hydraulic fracturing fluids.”
The EPA said that in one well it drilled it measured 246 micrograms of benzene per liter, far above the maximum permitted level of five micrograms per liter. The EPA said it looked at other explanations for the contaminants but concluded fracking was “likely” to blame.
Critics of the report didn’t dispute that the findings raised some concern but said the EPA was a long way from proving a causal link. Kevin Book, an energy policy analyst at Clearview Energy Partners LLC, described the findings as “circumstantial” and said some of the evidence “may be incomplete or inconclusive.”
The EPA has responded to several instances of potential fracking contamination, including in Texas and Pennsylvania. In Texas, the EPA ordered a company, Range Resources, to provide fresh drinking water to residents who said their water was contaminated. The case is the subject of a lawsuit.
The agency ordered Pennsylvania to tighten its standards related to removal of drilling wastewater and recently said it would consider nationwide standards for disposal of such water.
The EPA, which has been looking more intently into fracking under the Obama administration as the practice has exploded, is conducting a broad study to gauge the possible effects on drinking water, with preliminary results expected in 2013.
The ability to extract gas and oil using fracking has triggered a modern-day gold rush, with states including Pennsylvania and Colorado benefiting from new jobs and tax revenue.
Petroleum engineers and other industry experts cautioned against extrapolating the EPA’s Wyoming results to other parts of the country, saying the wells at issue and the region’s geology were atypical of areas that have undergone fracking.
The gas-bearing rock being fractured in Wyoming was only about 1,220 feet deep. And some of the water wells extended down 800 feet. By comparison, in Texas and Pennsylvania most of the rocks being fracked are several thousand feet deeper than water wells.
And, unlike gas-rich geologic formations such as the Marcellus in Pennsylvania and Barnett in Texas, the Wyoming field doesn’t have a rock barrier that sits atop the gas reservoir.
“It is not something we can say, ‘If it’s happening here, it can happen anywhere,’ ” said Ian Duncan, a research scientist at the Bureau of Economic Geology at the University of Texas. “There is such a large difference in the amount of rock between where the fracking is going on and where the water is.”
The report cited problems with how the wells were constructed, including intervals where the wells had no cement casing or weakened cement. EPA officials said this could be related to the age of the wells, some of which date to the 1950s, and varying state regulations over the years.
Environmental groups have cited the potential for poor well construction as a risk and said the report shows the need for tighter rules. “Even if you just set aside the fracking issue, the EPA found a lot of problems. These wells were not constructed properly, they weren’t cemented properly,” said Amy Mall of the Natural Resources Defense Council.
The EPA announcement irked Wyoming authorities. Gov. Matt Mead issued a statement saying the draft analysis “is scientifically questionable and more testing is needed.”
Tom Doll, the state’s oil and gas supervisor, said “more sampling is needed to rule out surface contamination or the process of building these test wells as the source of the concerning results.”
In 2004, Colorado officials found that Encana failed to sufficiently cement a well and caused gas to seep into a creek. They fined the company $371,200. Mr. Hock, the Encana spokesman, said the faulty cement job was “regrettable” but that the company hasn’t had a similar problem since.
Grim, Stu & Gates, Babs et al.,
I recall your respective postings about assorted kitchen remodel vendors/contractors. Care to repost? Thanks in advance.
grim (60)-
Lookers look. Buyers buy.
60 & 63
I agree.
In a market with falling prices, and in NJ where $20K means nothing… is getting a house 20,000 under market value really a steal?
not to mention if you’re buying with leverage/mortgage… low end homes/price via cash, maybe it is a steal
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chicagofinance says:
December 9, 2011 at 4:01 pm
My brush with greatness…..I got to use the urinal next to Peter Schiff.
My brush with greatness #2
I was in Whole Foods on Saturday down by us and my son was running around. He turned the corner and ran into Peter Criss’s leg, who was standing over a barrel holding a full scoop of coffee beans. The Catman was rather gracious about it.
Poke this blog with a fork…..