Anonymous writes:
doesn't matter
Anonymous | 03.20.08 - 3:05 pm | #

Anonymous writes:
They're coming to take me away, ha-haaa,
They're coming to take me away, ho-ho, hee-hee, ha-haaa.
To the happy home. With trees and flowers and chirping birds and basket
weavers who sit and smile and twiddle their thumbs and toes and they're
coming to take me away, ha-haaa!!!
Anonymous | 03.20.08 - 3:06 pm | #

Mike in AZ writes:
This must be why the home builders are up so much today.
Mike in AZ | 03.20.08 - 3:06 pm | #

NSA writes:
Mr. William M. Later, your house is ready.
NSA | 03.20.08 - 3:13 pm | #

Nemo writes:
Obviously we have hit bottom on this crisis.
Nemo | Homepage | 03.20.08 - 3:15 pm | #

Rob Dawg writes:
But the Census Bureau reports sales as Sales(new) only, and they ignore both factors of cancellations (if a house was sold previously, then cancelled, then resold, it isn't included in the sales numbers). This works fine as long as cancellation rates are fairly steady and the home builders are reporting their activity consistently.
That's a very weak link IMO.
Rob Dawg | Homepage | 03.20.08 - 3:16 pm | #

cd writes:
OT ?-
Know I'm late already but this looks like short beat down today! Liquidate and lose or hold till next week?
I can hold but I'm losing patience and beginning to believe Seb..

ppt will keep it range bound and are all highs for shorts done?
cd | 03.20.08 - 3:19 pm | #

TCA writes:
Somewhat OT,

Does this look like a system that's about to fly apart or what?

U.S. Stock Volatility Climbs to Highest in 70 Years, S&P Says
TCA | 03.20.08 - 3:20 pm | #

ac writes:

This must be why the home builders are up so much today.

*sigh*

I don't know how many times I have to explain it, but the fact that a stock trading on the NYSE bears the same name as some company operating in the US is simply an outdated formality from a bygone era.

I don't know why they still do this. It causes an awful lot of confusion.

ac | 03.20.08 - 3:23 pm | #

ac writes:
OT ?-
Know I'm late already but this looks like short beat down today! Liquidate and lose or hold till next week?
I can hold but I'm losing patience and beginning to believe Seb..

ppt will keep it range bound and are all highs for shorts done?

It could take one hell of a clearing rally to pave the way down, unless another financial shockwave comes through the markets.

If the Fed keeps up the liquidity in the markets, I expect the hedge funds will use it to squeeze the shorts with great effect.

ac | 03.20.08 - 3:32 pm | #

VennData writes:
But...but.. what about the other 57% that aren't canceled? See, it's a bull market!
VennData | 03.20.08 - 3:33 pm | #

giacutter writes:
So....treasuries are less than 1%, you've just sold all your commodities and gold, and you just exited your carry trades. You've got an enormous pile of cash and TwoDollar Bennie says you can borrow up to $800 billion for two points under the vig.

So you lever up and pull the buy handle on everything you can get your hands on. Get the shorts to cover, drive the momentum traders up, and sell once you sniff a plateau. Easy money, baby.

Or do I have it wrong?
giacutter | 03.20.08 - 3:34 pm | #

cd writes:
AC-Thanks-I value your track record...
Gia-That seems to be the gig..it's hurting this little guy..

The vix post above makes me hesitant to sell today though..could drop 300 monday..

Happy Easter to all
cd | 03.20.08 - 3:37 pm | #

Semantics writes:
It's not a recession, or housing cancellation..
the politically correct term is Diet.

Were having an economic Diet.
The economy is in a process of restrictive intake for it's own health. At a moments notice we can all go out and consume more; more housing, more mini-malls, more see's candies...etc.
No one will suffer because of our diet, and we'll all feel much better once it's complete.
Now for the Hydrotherpy.
Semantics | 03.20.08 - 3:38 pm | #

MikeinMT writes:
If they really wanted to reduce cancellations, wouldn't it make sense to simply hike the deposit requirements? Sure, it would result in fewer homes going under contract, but at least those that did would be more likely to close. What am I missing?
MikeinMT | 03.20.08 - 3:43 pm | #

Emma Anne writes:
Bear markets are generally more volatile anyway, right?
Emma Anne | 03.20.08 - 3:45 pm | #

Anonymous writes:
The Federal Reserve's first Term Securities Lending Facility (TSLF), to be held March 27, will be worth $75 billion and will expand on the types of collateral accepted, the New York Fed said on Thursday.

The expansion in the array of collaterals can further help primary dealers, TSLF's targeted borrowers, to repair balance sheets that have been slammed by mortgage-backed securities that soured during the housing slump.

http://www.reuters.com/article/ b...022117520080320

Won't be long and they be taking used Tampax's
Anonymous | 03.20.08 - 3:46 pm | #

scotty in the heather writes:
TCA,

Re: he U.S. stock market is the most volatile in 70 years, according to a Standard & Poor's study of daily price swings in the S&P 500.

The benchmark for American equities has advanced or declined 1 percent or more on 28 days this year. That's 52 percent of the trading sessions so far, which is the highest proportion since 1938, said Howard Silverblatt, S&P's senior index analyst. The S&P 500 lost 12 percent in 2008 through yesterday following $195 billion in bank losses related to subprime mortgages.


That is even more interesting if you connect volatility to an overvalued S&P 500 and this:

The rate on the three-month bill, viewed by investors as a haven in times of trouble, dropped 32 basis points, or 0.32 percentage point, to 0.56 percent at 5:30 p.m. in New York, according to bond broker Cantor Fitzgerald LP. It's the lowest level since May 1958.


50 year+ low on yield and 70 year high on volatility and stocks skyrocketing.....yah
scotty in the heather | 03.20.08 - 3:48 pm | #

psychodave writes:
"don't know why they still do this. It causes an awful lot of confusion."
ac | 03.20.08 - 3:23 pm
lol, well done.
psychodave | 03.20.08 - 3:50 pm | #

Ed writes:
Didn't Michael Milkin get tarred and feathered for much less than this? Seems to me we have simply massive fraud in the real estate markets. There should have been some adult supervision!
Ed | 03.20.08 - 3:50 pm | #

Lucky Jim writes:
Do people put down deposits before or after they get final approval on their mortgages? I'm just wondering how many cancellations could be caused by people not being able to get financing or getting their financing revoked before they close.
Lucky Jim | 03.20.08 - 3:55 pm | #

Yossarian writes:
In my part of Oregon (South Portland - Salem corridor) there aren't so many ginormous development towns... that's because the laws have somewhat limited sprawl.
You do have smaller infill developments. On my 30 mile drive to work, I count about ten abandoned infill developments. The lots have been permitted, cleared, and sometimes started... but I'm not seeing a great deal of work continuing.
Almost all these small developments are up for sale as 'buildable lots'.
These towns I drive through have a very wide range of median incomes ... from almost 180k per year, down to incomes of 60k per year.
This is why we don't trust even the Case-Shiller positive 'price appreciation' statistics in our area.
Yossarian | 03.20.08 - 3:55 pm | #

Mike in AZ writes:
...but the fact that a stock trading on the NYSE bears the same name as some company operating in the US is simply an outdated formality from a bygone era.

D'oh! That's what I get for reading outdated investing books. Damn you Benjamin Graham!
Mike in AZ | 03.20.08 - 4:01 pm | #

Optimistic Joe writes:
50 year+ low on yield and 70 year high on volatility and stocks skyrocketing.....yah
scotty in the heather

It really can't get any easier than this to see what to buy. Vola will come down from these crazy heights and t-bill yields will go up from crazy lows. As always, the masses are wrong. They now panic and buy risk free t-bills instead of stocks.
O-Joe
Optimistic Joe | 03.20.08 - 4:01 pm | #

neil writes:
TCA writes:
Somewhat OT,

Does this look like a system that's about to fly apart or what?

U.S. Stock Volatility Climbs to Highest in 70 Years, S&P Says

I'm always comforted when the last relavent example was during the Great depression. How about you? Ok, 1938 was a year we pulled out... but it still wasn't a great year...

Got Popcorn?
Neil
neil | Homepage | 03.20.08 - 4:04 pm | #

cd writes:
Well I guess last weekend was the bottom...The financing drug is back...

I thought I saw the needle but I forgot how rich the ppt is...

Tribute to the bottom or was it...

needle and the damage done!

http://www.youtube.com/watch?v=k...h? v=k0t0EW6z8a0

For foreigner fans
the damage done..

http://www.youtube.com/watch?v=p...h? v=pX88ZLQIR1I
cd | 03.20.08 - 4:04 pm | #

Journeyman writes:
"cancellation rates will likely decline as builders require larger deposits"

Why haven't they already? Will the reasons that they haven't already keep them from doing so in the future? If they do require larger deposits, will they do it in time to stay alive?
Journeyman | 03.20.08 - 4:05 pm | #

Bob_in_MA writes:
It does seem amazing that at this point, 43% of buyers are so unsure they're willing to put down a deposit and then, 3-6 months(?) later, abandon it. Aren't a lot of these new home sales now already built?

I can see how someone who put down a deposit on a condo in Miami in 2006 may want to abandon it in 2007.

It just seems odd there are still so many people in this situation.
Bob_in_MA | 03.20.08 - 4:08 pm | #

Blue Ridge guy writes:
"They now panic and buy risk free t-bills instead of stocks."

Given the uncertainty of direction, it might be better to buy straddles rather than stocks.
Blue Ridge guy | 03.20.08 - 4:09 pm | #

Mike in AZ writes:
cancellation rates will likely decline as builders require larger deposits

Larger deposits should also cause sales rates to decline.
Mike in AZ | 03.20.08 - 4:11 pm | #

CalculatedRisk writes:
Lucky Jim, potential buyers usually make a deposit long before they are approved for a loan. For several years, you could hold a new home for a year with a 1% or less deposit.

Talk about a nice call option!

The builders with the lowest cancellation rates tended to require the largest deposits (no real surprise). Now more builders will be doing the same thing.

Of course many cancellations are because existing home owners couldn't sell their home - so they can't go forward with the purchase.

Since I expect cancellation rates to fall, I expect the Census Bureau to under report sales this year. I think this is an important point.

Best Wishes.
CalculatedRisk | Homepage | 03.20.08 - 4:12 pm | #

Topher writes:
Didn't you all get the memo? CNBC & Bove have called the bottom.

Bottoms up.
Topher | 03.20.08 - 4:17 pm | #

Lucky Jim writes:
Thanks, CR.

In that case, I wonder how correct this statement from Dow Jones is: "Many contracted buyers, spooked by falling home prices or suddenly unsure of their financial state, are fleeing before closing."

I expect a fair number of them are falling victim to the higher underwriting standards. They're not fleeing, they're being forced to abandon their deposits because they can't get a loan anymore.
Lucky Jim | 03.20.08 - 4:17 pm | #

Robyn writes:
Regarding this thread - and comments on another thread today talking about "scumbags" - there is a big ad in a recent Florida Bar news where a lawyer is advertising that he will help people to get out of their contracts to buy houses/condos on a contingent fee basis. FWIW - I've heard that most of these lawsuits have - to date - been unsuccessful in Florida. Robyn
Robyn | 03.20.08 - 4:22 pm | #

Elvis writes:
"It just seems odd there are still so many people in this situation."

Of course, CR just stated this but it cannot be overstated: PEOPLE ARE CANCELLING BECAUSE THEY CANNOT SELL THEIR HOMES.

As a corollary, people who don't sell first and still buy are gettting hammered by double mortgages, because THEY CANNOT SELL THEIR HOMES.

That is part of the down cycle. Activity starts to stagnate. This will not change until home prices collapse much further.
Elvis | 03.20.08 - 4:23 pm | #

cd writes:
The hedgies got me today! But I think mother nature still likes me..

This lady-I don't think so..

Eagle ray jumps out of water and kills tourist..

http://www.reuters.com/article/ e...K32064420080320

So glad I never speared one of those and concentrated on the grouper..
cd | 03.20.08 - 4:23 pm | #

scotty in the heather writes:
neil,

I'm looking at earthquake harmonics and various engineering crap to see if this financial market harmonic vibration is a simile of some (weird) kind. Ever sensor is going off and it's like pressure building higher or like a barometer plunging before the wind hits. Very weird time, if you are used to normal conditions and this is very weird!!!! If "they" have a model to go by, it's probably highly stressed and not stable! How could it be? 70 year high on volatility, bond yields crashing, stocks being pumped, housing crashing, commodities and currencies all over the place.....hmmm, maybe we just have a new quantum leap in risk and this is the new market, i.e, living in fear on the edge?

Re: In usual applications to earthquake engineering problems, numericalmethods are used to solve for the relative dis-placement of the SDOF mass because of the irregular nature of ground acceleration time histories....

A response spectrum is a graphical relationship ofmaximum values of acceleration, velocity, and/or displacement response of aninfinite series of elastic single degree of freedom (SDOF) systems subjected totime dependent dynamic excitation.This report reviews the formulation and solution of the equation of motionfor a damped linear SDOF system subjected to time dependent dynamic excitation.

This study is part of the work entitled “Design Response Spectra For Structures” sponsored by the Civil Works Guidance Update Program, Headquarters, US Army Corps of Engineers (HQUSACE)
scotty in the heather | 03.20.08 - 4:26 pm | #

CalculatedRisk writes:
Lucky Jim, yes, the inability to obtain financing - due to tighter underwriting standards - is probably driving cancellations too.

I agree "forced" is a better word than "fleeing". We have to remember that cancellations in Q4 (the most recent data) was for contracts signed in Q2 (for the most part) - before the credit crunch really hit (started in August).

Potential home buyers that signed contracts in Q4 will show up as cancellations in Q2 2008. I suspect these people were somewhat aware of the worse market conditions - both in trying to sell their existing homes, and the tighter lending standards. So we will probably see cancellation rates fall.

Best to all.
CalculatedRisk | Homepage | 03.20.08 - 4:28 pm | #

Ray writes:
OT: Problem in collecting HOA dues... and Princeton-West Windsor-Plainsboro is not even a subprime area.

http://www.wwptoday.com/dcforum/...mID12/ 2245.html
Ray | 03.20.08 - 4:29 pm | #

JoeB writes:
How can you run a business where nearly half of your customers bail out on you? I guess this is the way this industry works. It would be interesting to see if the sale price of cancelled homes is higher or lower than the original price. And then, what is the rate of cancellation on the re-sales of cancelled homes?

Wouldn't it be better if the industy just reported final closed sales? Sure there would be a delay - but it would be far superior than dealing with the iterations on this 40%+ cancellation rate. Closed recorded sales are what gets counted for the sales of existing homes, right?
JoeB | 03.20.08 - 4:32 pm | #

Noble writes:
Ray,
I live in Princeton and my association has a law firm that send outs dues notices (including lien threats) if homeowner doesnt pay. It seems to work. By the way, "Its not a sub-prime area" ...we're all subprime now. Seriously.
Noble | 03.20.08 - 4:34 pm | #

Bob Dobbs writes:
"OT: Problem in collecting HOA dues... and Princeton-West Windsor-Plainsboro is not even a subprime area."

That's not OT, that's one of those negative-feedback factors in an emptying HOA. If houses prices drop and people walk or just stop paying the dues, the HOA can't pay for upkeep, things get frowsy, housing prices drop more, etc. etc.

In California, all the HOA can do is slap a lien on the non-payer and get their share when he sells. But -- and I asked Tanta about this -- on a foreclosure, that's lien's nowhere near first in line. The HOA will probably get nothing.
Bob Dobbs | Homepage | 03.20.08 - 4:35 pm | #

Elvis writes:
Builders are aware of the risk of falling prices. Buyers are aware of the risk of falling prices. There is little builders can do about this risk except lowering prices. However, lowering prices just adds fuel to the problem. Ultimately, builders cannot lower prices anymore without going out of business. Buyers can just watch the mess unfold. They don't need builders. They can buy existing houses. Builders, though, are screwed. They will not have a chance until prices bottom and then get back to a point where they can make margins. This is several years away. That is why builders are dead men walking.
Elvis | 03.20.08 - 4:37 pm | #

scotty in the heather writes:
O-Joe

In theory, a speculator could see your point in equilibrium if the mechanics were going to be normal and classic, but the extreme nature of this divergence is not classic and thus simply tipping the scale for stocks to go up does not work as a sustainable mechanism. I continue to harp on the fact that stocks are overvalued in general and thus they have a low yield with low earnings as we enter a recessionary era. If the market is pushed up with the forces of synthetic volatility and artificial fundamentals, stocks will increase in short term value with decreasing earnings yield, which will quickly push them into highly overvalued bubble dynamics. All the while, one would continue to think that yields for bonds will remain low during this recession period, so the flight to overvalued stocks is very illogical. It is more likely that we will see more recession impacts and the stocks will come under pressure and in time realign with more stable bond yields.

The case of equilibrium will see a balance, not distortion. Stocks will correct big time IMHO.
scotty in the heather | 03.20.08 - 4:38 pm | #

Elvis writes:
If you want to lose a lot of money for the next few years, be a homebuilder. I don't understand at all how people could be buying HB stocks right now. It shows a complete lack of understanding (or, better yet, incompentence) about homebuilding cyclical dynamics. An oversupply of housing just doesn't go away. For the vast oversupply of today, it will takes years to correct. Nothing except fires or bulldozers or the sudden birth of 4 million highly qualified buyers will change that.
Elvis | 03.20.08 - 4:47 pm | #

Optimistic Joe writes:
The case of equilibrium will see a balance, not distortion. Stocks will correct big time IMHO.
scotty in the heather

As always, we shall see. I appreciate you explaining your VP other than the usual bull-slamming on this blog. Thank you.
O-Joe
Optimistic Joe | 03.20.08 - 4:50 pm | #

Elvis writes:
OK. Enough of my rants. Just exacerbated by the fact that the obvious is so hard to grasp for most everybody in positions of political and financial power.
Elvis | 03.20.08 - 4:54 pm | #

Elvis writes:
exasperated.
Elvis | 03.20.08 - 4:54 pm | #

AlphaBeta writes:
Yearly tractor production figures of glorious former Soviet Union were probably much more reliable than the crap coming out of US government.

"What you wanna the numbers be today, sir!?"
AlphaBeta | 03.20.08 - 5:02 pm | #

Mike in AZ writes:
I don't understand at all how people could be buying HB stocks right now.

Hopefully just a blip because of Fannie/Freddie news and options expiration.
Mike in AZ | 03.20.08 - 5:02 pm | #

Bob Dobbs writes:
OT, but I hate these people:

"Borders Book Stores May Be Sold"

http://www.sfgate.com/cgi-bin/ar.../ f131607D36.DTL

Now that they can't get cheap credit, they can't get their giant chain of shoddy bookstores alive.
Bob Dobbs | Homepage | 03.20.08 - 5:03 pm | #

scotty in the heather writes:
O-Joe,

Why thank you, I try not to slam bulls too much, but I do pontificate at times (like now):

One thing I posted earlier was that this stock market reaction of late may be related to some type of consolidation of hedge fund-like entities that are all playing hard core all-or-nothing casino bets on the ups and downs.

This would help explain the extreme nature and dis-connect of reality, and it would also send up a very large waving red flag for the average Joe to use extreme caution going forward and to not place yourself to close to the gravitational pull of this black hole, because the old girl may go super nova before this over.

What if The Dow, S&P and NASDAQ are being influenced by a large consolidation of winner-take-all casino players? if these players are from hedge funds, they have many comrades that have fallen in this battle lately, and as we learned a few weeks ago, these people can bet every penny and never win (in the long run). IMHO, I would embrace extreme caution and wait for more realistic valuations!!!!
scotty in the heather | 03.20.08 - 5:08 pm | #

Turbo writes:
Normally I would agree with the notion that extreme lows in tbill yields and extreme highs in the Vix should mark some sort of tradable low, but when a 6% rally in financials is sparked by a relatively obscure analyst who looks and sounds like Foster Brooks saying on bubblevision that even another major financial firm failing will be a non-event stikes me as a short-covering rally in a bear market. The notion that one could be safely long financials, short Vix and t-bonds in the event of another major failure is truly crazy.
Turbo | 03.20.08 - 5:10 pm | #

eh writes:
Whatever happened to pre-approval? In this climate, why in the world would anyone put a deposit down on a house before getting approval for a mortgage?

The thwarted move up buyer scenario makes more sense.
eh | 03.20.08 - 5:11 pm | #

CalculatedRisk writes:
JoeB, yes, existing home sales are reported at the close of escrow, so cancellations don't really matter (except for the pending existing home sales index).

The Census Bureau is trying to report sales in real time - that is why they are heavily revised - but I think they could change the way they handle cancellations. Oh well, as long as we know ...

Best Wishes.
CalculatedRisk | Homepage | 03.20.08 - 5:13 pm | #

Billy Shears writes:
Anyone notice that the number of stocks today making 52-week lows is swamping those making 52-week highs? On the NYSE, AMEX, and Nasdaq the disparity is amazing. You would think it would be the opposite.

This happened on Tuesday also, a day the Dow was up 400 points. I guess this is another buy signal and shows that the entire market (minus commodities) is participating. NOT.
Billy Shears | 03.20.08 - 5:14 pm | #

CalculatedRisk writes:
eh, it's common for people to put a deposit down on a new home six months or more before they can actually buy the home. Sure, it would be nice if they were pre-approved, but that would probably be contingent on changing underwriting standards, and the ability to sell their existing home. Both are a problem.

Best Wishes.
CalculatedRisk | Homepage | 03.20.08 - 5:15 pm | #

AlphaBeta writes:
Why the hell is it so difficult to Americans provide reliable statistics?!

Germans do it, Japanese do it, Nordics do it, even friggin Italians do it better!

Ding-ding-ding-ding, here it is Mr. Müller! No friggin "revised" and other crap.
AlphaBeta | 03.20.08 - 5:16 pm | #

quartz writes:
"Unplanned" Okay, I can see unsold and unwanted, but what do they mean by unplanned? Perhaps unexpectedly still on the books? or did these houses just spring into existence without any planning or forethought? Hmmm, perhaps it was the latter after all. Nevermind.
quartz | 03.20.08 - 5:17 pm | #

Lawyerliz writes:
Robyn--I've seen those ads to get deposits back and marvelled at them.
Unless there is fraud, or the contract is worded in some unusual way, there is no basis for a refund of deposit.

By the way, in South Florida the builders were demanding 30% down from speculators, thinking that this amount would either save them if there were tons of walkaways, or drive off the weaker speculators. The speculators were putting that much down!!

And on condos, value has dropped more than 30%, so the developers weren't protected after all. But I guess 30% is better than 10% under the same circumstances.
Lawyerliz | 03.20.08 - 5:19 pm | #

FiveAcres writes:
When we moved from Texas to Colorado in 1992, we had a company sponsored buyout if we failed to sell our house in Texas. We had a cash offer on our Texas house and the closing date on our Texas house ended up the day after the closing date on our Colorado house, so we briefly owned both houses. Despite the documentation of the buyout, the fact that we had the closing costs in our bank, and the fact that we probably could have qualified for an amount double the mortgage on either house, the underwriter was still having conniptions and we nearly had to hold up the closing on the Colorado house. This is why I am always astonished when I hear that people end up paying two mortgages.

It was a different world, wasn't it?
FiveAcres | 03.20.08 - 5:36 pm | #

HOA with an idea writes:
In Florida HOA have lots of power to foreclose. Essentially they can file at will and one late step they will file so as to be first in line.

I have often tried to suggest that HOA or POA automatically charge their assements to a credit card. This can be done automatically and homeowners hae they option of paying the bill when received or paying over time. It is also non recourse debt when paid with a CC. At least the POA/HOA can not force a sale of your home quicker than the bank.

Most lawyers are not in favor of this method of payment. It then recognizes their particular line of work as being overpaid and useless.
HOA with an idea | 03.20.08 - 5:36 pm | #

Anonymous writes:
Billy S,

Great post there!!

Re: The number of stocks today making 52-week lows is swamping those making 52-week highs? On the NYSE, AMEX, and Nasdaq the disparity is amazing. You would think it would be the opposite.

This adds suspicion to the fact that earnings are going down, a recession is here, yields are dropping and a few stocks are being pumped as window dressing. makes me think this sets up the next short play, and a long cycle of volatility where the market is an insane hedge fund casino! Good luck on sucking in the little fish is all I can say.
Anonymous | 03.20.08 - 5:38 pm | #

Robyn writes:
Lawyerliz - I've heard that people were suing because the building was supposed to be taupe - and it's gray - or the pool was supposed to be 50 feet and it's 49 feet. Any little thing.

We spent the better part of the last 3 days looking at all the condos (since almost everything we had to do was in the Brickell area and the Design District). And I just don't understand the whole thing. Who was supposed to live in all these units? There are thousands of them - piled on top of one another. The whole scene is just ugly. And who would want to live in them? Most have crummy views - many are in crummy neighborhoods - and there simply aren't any services around - not even a Publix.

And now that lenders have started to redline various projects - well I don't know what will happen.

Billy Shears - the number of new lows is usually higher than the number of new highs when the market is closer to its most recent bottom than its most recent top. Robyn
Robyn | 03.20.08 - 5:40 pm | #

Anonymous writes:
I need to take this to the newest thread, but go look at nakedcapitalism stories on repos.

Treasury Hoarding Leads to Unprecedented Repo Fails
Today's Bloomberg provides yet another example of how the credit crisis is producing behavior well outside historical norms.
Anonymous | 03.20.08 - 5:46 pm | #

homedad43 writes:
I'm looking at earthquake harmonics and various engineering crap to see if this financial market harmonic vibration is a simile of some (weird) kind. Ever sensor is going off and it's like pressure building higher or like a barometer plunging before the wind hits. Very weird time, if you are used to normal conditions and this is very weird!!!!

-----------------------------------

Classic Chaos Theory.

A Japanese housewife crashes her PC and the NYSE loses 350 points.
homedad43 | 03.20.08 - 5:47 pm | #

JoeB writes:
Robyn,

Aren't they still building even more condos in these areas? Is there anything there that would make sense as an investment?

Thanks!
JoeB | 03.20.08 - 6:06 pm | #

Robyn writes:
HOA with an idea - I'd love to pay by credit card. Get those frequent flyer miles :).

As for general ruminations about the stock and other markets - there are a lot of very vicious rip tides running through them now. Like very leveraged players - including hedge funds - rushing into and out of trades (the latter frequently to meet margin calls). Then there are the technicals. For example - Fidelity Select Construction recently passed through its 50 day moving average. Some people consider that a buy signal. Art Cashin - who I like a lot - has also remarked that this current generation of shorts is a very skittish lot. It runs scared and covers at the drop of a pin. So we are having a lot of huge short-covering rallies. OTOH - you never know when a short covering rally will lead to a new trend - or at least a longer term tradeable move. Markets can make nice moves over periods of weeks or months - and still go sideways for periods of years and years.

You simply must have a plan to deal with the day-to-day volatility unless you're a long term (like forever) buy and hold person - or you plan to stay out of the markets forever - and I would recommend a plan based on technicals. You also have to be prepared to get whipsawed (that's part of the plan - to minimize losses when you get whipsawed). Finally - you have to be unemotional. I've used the same trading system for almost 15 years - and I am totally unemotional about it.

The only time I get emotional these days is when I think the entire financial system may collapse - a thought that has crossed my mind for the first time since the early 80's in recent months. I don't think that would be a good event for the vast majority of people in this country. So - although I sometimes have to hold my nose when I see some of the attempts to deal with the current crisis (because the stench of moral hazard fills the air) - ultimately - I think they're better than the alternative - which is standing by and allowing everything to fall apart. Robyn
Robyn | 03.20.08 - 6:16 pm | #

idahogal writes:
Boy this country must really be hurting, Forbes ranked Boise #2 in places to do business. I've been in Boise for six years and my place of employment has helped a lot of small businesses open shop and then they are gone in less than two years.
idahogal | 03.20.08 - 6:40 pm | #

Lawyerliz writes:
Robyn--
I don't know what the builders were thinking or what the banks were thinking when they allowed this overbuilding. Or the building and zoning dept, or the people who bought.

Actually the condo disaster was supposed to happen in 06, but the years of the 8 hurricanes stretched the time of the disaster out.

Tibor Hollo is talking about building an edifice in honor of himself even taller and supposedly more elegant than any of the present towers.

Some of them have so much speculator fraud that some banks have black listed them.

Amazing, isn't it?
Lawyerliz | 03.20.08 - 6:42 pm | #

Robyn writes:
JoeB - My husband and I left Miami a decade ago because we didn't like it. So I am not exactly an impartial person in terms of the question you ask. The one thing I can say about Miami - and Florida - real estate in general is it's better to get a good deal on a great property than a great deal on a lousy one. I wouldn't touch one of those Biscayne Blvd. condos 2 blocks away from a slum with a 10 foot pole.

If I were looking at Florida real estate now - I'd be looking at decent property in decent locations - preferably waterfront. Just to give an example - my father sold his house in 2005 for $1.5 million to a speculator. You could probably pick it up now for $1 million give or take. Tear down house on great waterfront lot. Stuff like that is a better bet than one of 30,000 spec condos.

I would stay away from all condos unless they are older (but not too old) - expensive (people can afford to pay high maintenance for good services - good insurance - etc.) - fully occupied after a developer turnover - and running smoothly. Note that I will never live in an another condo (even though the ones I lived in for over 20 years were very nice condos).

Finally - I wouldn't look at anything in Florida as an "investment" these days. You might be able to get a good deal on a house/home - a place to live - or use for vacation - but the last time we had a real estate bust anywhere near this bad (early 80's) - it took almost a decade for things to get back to where they were before the bust. This is the 3rd major real estate bust we've gone through since we moved to Florida. They're a good time to find a place to live - but that's about it IMO.

I am currently looking at some waterfront property where we live (northeast Florida). One acre waterfront ICW lots which were about $150k when we moved here in 1995. Went up to over $400k. Now they're asking $275k. If they went under $200k - I'd consider buying one - to build a new house - not as an investment. Don't tell my husband - I think he'd kill me if he knew I wanted to build another house ;).

BTW - keep in mind that anything in coastal Florida is an insurance nightmare these days. I wouldn't build/buy anything I couldn't afford to self-insure.

FWIW - during our visit to Miami - we stayed at the Four Seasons for $250/night. You could probably negotiate a better rate if you stayed there for a lot more than 3 days. So 100 nights at the Four Seasons next year might cost you $25,000 - about what you'd wind up paying annually for a $250,000 house. I think I'd rather stay in the Four Seasons :). And - of course - people are renting out their spec condos and they're willing to take peanuts to help them pay the costs of carrying the places. So - if you want some sun and fun - and no hassles - renting is the way to go IMO. Robyn
Robyn | 03.20.08 - 6:50 pm | #

sk writes:
The same bankrate article quoted in HousingWire and linked to in the base post by CR said that ARM rates were up sharply ( as fixed rates were dropping. Weird - the Fed has been cutting, LIBOR is down - any ideas why ?


Adjustable mortgage rates were up sharply for the second week in a row, with the average 5/1 ARM jumping nearly one-quarter percentage point to 6.44 percent.

With ARM rates sitting so high relative to fixed-rate mortgages, it’s no wonder that the Mortgage Bankers Association reported this week that ARM share of overall application activity has fallen to near-record lows.


-K
sk | 03.20.08 - 7:45 pm | #

bobn writes:
OK, all you guys still building houses can stop now. We don't need any more unitl, oh, 2025.

Sell your tools, find some other way to occupy your time. Nice to see you, wopuldn't wanna be you.

Ta Ta!
bobn | 03.20.08 - 11:00 pm | #

number2son writes:
So 100 nights at the Four Seasons next year might cost you $25,000 - about what you'd wind up paying annually for a $250,000 house.

Um, a nice plan. I guess. But tell me, where would you stay the other 265 days of the year? A tent?
number2son | 03.21.08 - 9:34 am | #