barely writes:
There will be a few builders that go WHEEEEEEEEEE down the same slide as BSC, NEW, NFI....

Which brings me to a puke term used non-stop on bubblevision - "Liquidity crisis". That should be eliminatd from the current vernacular - PERIOD.

BSC proved that the current phase of the financial debacle has now morphed into a SOLVENCY CRISIS. Get used to it bubblevision addicts.
barely | 03.27.08 - 5:26 pm | #

Marcus Aurelius writes:
It's contained.
Marcus Aurelius | 03.27.08 - 5:29 pm | #

Marcus Aurelius writes:
OT From MarketWatch:

Chairman James Cayne sold $61.3 million in Bear shares on Tuesday, according to a Securities and Exchange Commission filing late Thursday.

_____

Cayne: The Captain always goes down with the ship! Lucky for me, I'm the Commodore. See ya'!
Marcus Aurelius | 03.27.08 - 5:33 pm | #

Elvis writes:
Cancellations of 26% of new homes at zero or negative margins doesn't seem like a good indicator. As new home prices continue to collapse, new home sales will continue to fall as homebuilders go bankrupt as they lose money and cannot compete with bank REOs. This is a near to mid term situation. Housing won't bottom for about 18 months and prices will continue to deteriorate beyond that. As a result, the housing led recession will continue to lead the economy down until 2010, and, then, will likely lead it sideways for a few more years.

I have no idea while home revisions are moving upward other than bad data and/or bad motives.
Elvis | 03.27.08 - 5:34 pm | #

energyecon writes:
MA,

That was his entire holdings BTW. Along that OT, the first ERISA suit has been filed: Schiffrin Barroway Topaz & Kessler, LLP Files First ERISA Fiduciary Breach Class Action on Behalf of Participants and Beneficiaries of the Bear Stearns Companies, Inc. Employee Stock Ownership Plan Against the Bear Stearns Companies, Inc. and Other Plan Fiduciaries
energyecon | 03.27.08 - 5:35 pm | #

CalculatedRisk writes:
barely, yes, I've argued all along that there is far too much home building capacity in the U.S. Just a few years ago, the builders were selling close to 1.4 million units per year rate - now they are selling at a 600 thousand rate - less than half!

I expect a number of builders to go under this year.

Best to all.
CalculatedRisk | Homepage | 03.27.08 - 5:37 pm | #

Marcus Aurelius writes:
energycon:

I hear a giant sucking sound.
Marcus Aurelius | 03.27.08 - 5:37 pm | #

energyecon writes:
Elvis,

Alternatively it could be good motives - they might not be trying to feather the numbers any longer - so we end up with some random +/-...
energyecon | 03.27.08 - 5:38 pm | #

halbhh writes:
So which is better for Builders?: a faster foreclosure-speeded slide to a bottom and thus a price bottom and then eventual upturn OR a continuing series of interventions to transfer mortgage risk to taxpayers and slow down the slide, prolonging it but slowing it?
halbhh | 03.27.08 - 5:40 pm | #

Misean writes:
Isn't a good chunk of current sales REO?

Perhaps the desperation of the seller (bank) is the driver. If so, it should help bring about a bottom, unless owners continue to delude themselves, believing that their house is different than a REO.

Just a bit of musing on my part.

Cheers,
Misean | 03.27.08 - 5:41 pm | #

daddyo writes:
Good news - We're at the bottom of the new home sales market.

Bad News - We may be here a while.
daddyo | 03.27.08 - 5:42 pm | #

Marcus Aurelius writes:
Here are the latest numbers from the Federal Government:

4,000

64.5%

$4 Trillion

3.5%

eleventy-leven

Plan accordingly.
Marcus Aurelius | 03.27.08 - 5:43 pm | #

Misean writes:
energyecon,

Yeah, read that last week. Likely some more of those coming.

Cheers,
Misean | 03.27.08 - 5:43 pm | #

Jas Jain writes:
--
"This "unfavorable supply and demand relationship" will probably continue for some time..."

Is that your conclusion, CR? How could it be when the demand is 1.7M and the supply of all units is getting close to 1.0M? Is there an inconsistency here?

Also, you have never commented on the fact this bubble gave rise to a far greater supply in SFH than the past booms. Therefore, the new housing starts and sales of SFH would have to go below the previous lows of around 400K.

If I may say do politely, there are lots of holes in your analysis and thinking when it comes to forecasting the future of housing supply and demand. This is because you refuse to reconcile your demand “estimate” with the actual data.

I know you got yourself in a tough spot with a bogus estimate following other economists who also were too lazy to reconcile their estimates with the data. This sort of thing happens to economists a lot. For example, most economists lie about the actual recession forecasting record of ECRI because they have never fully checked it out. So, they all repeat the same lie that ECRI wants them to.

Jas
Jas Jain | 03.27.08 - 5:44 pm | #

rich writes:
>energyecon writes:

Along that OT, the first ERISA suit has been filed:

Thanks for this!

You know, this sounds like pretty seirous stuff. In an ERISA suit, a lot of plan fidicuaries can be named and all are personally liable for losses.


The Complaint generally alleges that Bear Stearns and certain of its
officers and directors allowed the imprudent investment of the Plan's
assets/participants' retirement savings in Bear Stearns equity throughout
the Class Period, despite the fact that they clearly knew or should have
known that such investment was imprudent due to, among other things, (a)
the Company's failure to disclose material adverse facts about its
financial well- being including its ability to continue as a going concern;
(b) the foreseeable deleterious consequences to the Company resulting from
its substantial entrenchment in the subprime mortgage market; (c) the fact
that, as a consequence of the above, the Company's stock price was
artificially inflated; and (d) the fact that heavy investment of retirement
savings in Company stock would therefore result in significant losses to
the Plan, and consequently, to its participants.

Specifically, Plaintiff's complaint alleges that Bear Stearns stock was
an inherently imprudent Plan investment vehicle because the Company: (1)
was grossly over-exposed to the potential for substantial losses as
conditions in the subprime industry deteriorated; (2) actively concealed
the ominous dangers it faced; (3) failed to take accurate and timely
write-downs for losses resulting from the collapse of the subprime market;
and that the (4) Company's statements about its financial well-being and
future business prospects were lacking in any reasonable basis when made.
rich | 03.27.08 - 5:45 pm | #

Nemo writes:
Marcus Aurelius --

Cayne: The Captain always goes down with the ship! Lucky for me, I'm the Commodore.

Oh come on. The value of Cayne's stake in BSC has been annihilated. He could have sold any time in the last 6 months at 6 or 8 times the price. At least this sale is obviously not based on any inside information...

What do you expect him to do as ousted CEO? Wait until they turn into JPM shares?
Nemo | Homepage | 03.27.08 - 5:45 pm | #

Elvis writes:
Misean writes:
Isn't a good chunk of current sales REO?

Yes, a good chunk is. However, buyers are still scarce due to inability to sell homes and inability to get financing. When these current buyers are gone, who will buy next? My guess is not many people, so sellers will so far outnumber buyers that prices will continue to collapse.

Get use to a high (and often increasing) REO sales to low new homes sales ratio for several years.
Elvis | 03.27.08 - 5:45 pm | #

Anonymous writes:
CR,

That is wunderbra; nice work!
Anonymous | 03.27.08 - 5:47 pm | #

Misean writes:
Sorry,

I misread. These are NEW home sales.

Durrr.

Cheers,
Misean | 03.27.08 - 5:48 pm | #

Outsider writes:
Oh come on. The value of Cayne's stake in BSC has been annihilated.
$60 million is annihilation?
If only I could be as annihilated....
Outsider | 03.27.08 - 5:49 pm | #

calculator fun writes:
I notice a pattern here on this blog. Please don't take me wrong, but Calculated Risk seems to be biased towards the housing market types reporting news with that slight twinge of optimism for housing.

So I suppose we've finally arrived at the "permanently high plateau?"

This has a lot more to go down. The bullish trend has definitely reversed.
calculator fun | 03.27.08 - 5:49 pm | #

barely writes:
I think Bernanke should open the window to Hedge funds, so they can have even more leverage & flexibility to ravage the economy, pensions, 401ks... and finish Wall St off for good.

What a mess the Fed is making.
barely | 03.27.08 - 5:51 pm | #

Elvis writes:
Jas,
Nice work in politeness. Your point comes across so much better when you aren't being openly hostile. Must be the spring weather or something.
Elvis | 03.27.08 - 5:52 pm | #

Anonymous writes:
CR, this goes back to your prior post:

Re: ""Concurrently, lower consumer confidence has quieted demand among prospective homebuyers and deterred them from a buying decision, while contraction in the lending markets has reduced the availability of credit for those prospective homebuyers that do wish to buy a home.""


Key words: availability of credit for those prospective homebuyers...

The issue is "qualified" prospective buyers, versus the previous flood of unqualified fraudulent sales
Anonymous | 03.27.08 - 5:53 pm | #

deuces wild writes:
Calculator Fun,

I've been a reader of this blog daily for the past several years and I find CR to be extremely objective about the housing market. I see no bias of the type you imply....and I'm not in the RE business...nor any type of financial business for that matter. However, I do want to purchase a larger house than I currently own at a good value some day!
deuces wild | 03.27.08 - 5:58 pm | #

Anonymous writes:
Re: I notice a pattern here on this blog. Please don't take me wrong, but Calculated Risk seems to be biased towards the housing market types reporting news with that slight twinge of optimism for housing.

>> That might be related to:

CR4RE Newsletter
FREE! Here is the January 2008 Newsletter as a sample (858kb PDF file).
If you'd like to subscribe ($60 per year), here is the sign up page. Thanks!
Anonymous | 03.27.08 - 6:03 pm | #

Elvis writes:
"That might be related to:

CR4RE Newsletter
FREE! Here is the January 2008 Newsletter as a sample (858kb PDF file).
If you'd like to subscribe ($60 per year), here is the sign up page. Thanks!" Afraid and Cheap

Afraid and Cheap,
I'm not sure how that has any relevance to whether CR would be biased to optimism. However, if you cannot afford the $60, perhaps you should get a better job or spend time working another part-time job rather than wasting your time (and ours) on this website.
Elvis | 03.27.08 - 6:07 pm | #

Taos writes:
Does anyone else have a mental picture in their heads as they read the posts of the posters? What they look like, what they are drinking, what their house looks like?

this is better than the movies for me!!
Taos | 03.27.08 - 6:07 pm | #

Bob Dobbs writes:
In my particular bubble town, prices haven't fallen much.

Sales have fallen, yes: a RE friend tells me that almost nothing is moving, especially at the "low" end (under 600k).

But prices, no. The bubble here is in existing real estate, not new, many homesellers are well-heeled, and they're hanging in there.

So as far as I'm concerned, the decline hasn't even really started yet. And how many towns are like mine?
Bob Dobbs | Homepage | 03.27.08 - 6:08 pm | #

Elvis writes:
Bob,
Many are like yours. Prices are set at the margins. When people have to move and sell, prices will fall. This is only a matter of time. Reasons for moving will include loss of job, divorce, BK, suicide, and clown and stuntman school enrollment.
Elvis | 03.27.08 - 6:11 pm | #

Elvis writes:
Taos,
I envision most people to be scantily clad, buxom women in prison.
Elvis | 03.27.08 - 6:12 pm | #

barely writes:
SO, who gets LEH, @ $2/sh? WFC already made themselves available. I think they're first in line.
barely | 03.27.08 - 6:15 pm | #

SweetHomeKilla writes:
CR seem awefully optimistic IMO.

So far we've seen speculator demand drop off quite a lot, and increased lending standards eliminate potential buyers.

However, a lot of current types of buyers are going to be eliminated over the next 12-18 months.

1) Knife catcher capitulation will cause an even greater drop in speculator demand as price drops accelerate.

2) "Responsible" buyers outside the "bubble zones" finally coming to the realization that their area isn't different(many people are okay with flat prices, but will think twice before buying when prices are surely falling).

3) Accelerating job losses remove potential buyers and will put a new supply of homes on the market. So far it's the speculators, the home builders, and those that truly couldn't afford their homes who are making up the majority of the supply, but millions of job losses will seriously increase this supply.

4) Eventually.......we will get rising rates(I'm talking 10% and up). It might take a failure of one or more GSE's, or foreign unloading of treasuries, but it will happen, unless or course we get a hyperinflationary collapse first.
SweetHomeKilla | 03.27.08 - 6:16 pm | #

blueridge writes:
Elvis writes:
Taos,
I envision most people to be scantily clad, buxom women in prison.
Elvis | 03.27.08 - 6:12 pm |

yep, that fits me to a T!
blueridge | 03.27.08 - 6:17 pm | #

Rob Dawg writes:
Taos writes:
Does anyone else have a mental picture in their heads as they read the posts of the posters? What they look like, what they are drinking, what their house looks like?

We all wear steel toed bunny slippers now.
Rob Dawg | Homepage | 03.27.08 - 6:18 pm | #

blueridge writes:
I envision most people to be scantily clad, buxom women in prison.
Elvis | 03.27.08 - 6:12 pm |

yep, that fits me to a T!
blueridge | 03.27.08 - 6:17 pm |

Well, in the interest of full disclosure, the gender is wrong and I keep lots of clothes on, since the thermostat stays low. However, the man-boobs are coming along nicely....
blueridge | 03.27.08 - 6:21 pm | #

Elvis writes:
Blueridge,
Are you sure you aren't a hermaphrodite? Perhaps you should let a young kitten try to feed on those. If you do and it gets milk, chances are you are a man/woman.
Elvis | 03.27.08 - 6:25 pm | #

Jas Jain writes:
--
"That is wunderbra"

Anon,

CR is doing a wunderbar job with wunderbra? New improved version of CR.

Jas
Jas Jain | 03.27.08 - 6:25 pm | #

bluestatedon writes:
"BSC proved that the current phase of the financial debacle has now morphed into a SOLVENCY CRISIS."

Mish (among others) has been yelling this same point for months now. The knuckleheads on the boob toob are always the last to catch on.
bluestatedon | 03.27.08 - 6:26 pm | #

Jas Jain writes:
--
SFH would Bottom Around 200K!

To add to my earlier comment on SFH, the number of total vacant SFH is so high that we will need 0 new units for few years to work off the inventory. I realize that it is beyond CR's ability to think that such a thing is possible. I do agree that we wouldn't have 0 new units even during depression but 200K is extremely likely.

Jas
Jas Jain | 03.27.08 - 6:27 pm | #

cd writes:
Taos- lots of smart ladies and gents in here and great read/comments but I seem to mentally envision this 1/2 mile left point that's an N. Peru at 6 feet solid with a cerveza, some ceviche and my favorite lady waiting on shore! Yes even as I'm reading!
cd | 03.27.08 - 6:27 pm | #

Dodo writes:
The Cayne Mutiny...happened in BSC lobby yesterday. Lucky his liferaft was stuffed with $1000 bills.
Dodo | 03.27.08 - 6:28 pm | #

Taos writes:
WOW

My visions of everyone are so much tamer!!

I better start drinking what you all are drinking!
Taos | 03.27.08 - 6:32 pm | #

Elvis writes:
"To add to my earlier comment on SFH, the number of total vacant SFH is so high that we will need 0 new units for few years to work off the inventory." Jas

You are correct, sir. However, homebuilders won't all go away, so you'll have continuing building with negligible margins during next five to seven years. Zero makes sense. 200,000 would be acceptable. But probaby somewhere in the 300-400k for lows. Too many people know how and like to build homes now. Just stoking the fire instead of letting it burn out.
Elvis | 03.27.08 - 6:35 pm | #

Anonymous writes:
Bottom will be in when these nice 'new shoes' become cheaper than fixing or selling their old ones.
Anonymous | 03.27.08 - 6:37 pm | #

Harsh Realty writes:
The number of sales is not as margin x number of sales. Already a shift towards smaller homes is occurring. As energy prices increase, the economy worsens, and small becomes the new in thing, the downsizing trend will continue.
Harsh Realty | 03.27.08 - 6:39 pm | #

SweetHomeKilla writes:
Elvis-

At some point I think we will get close to 0 for new homes, unless you include those homes built by the owner.

I just don't see many people lending capital to build new homes when they can pick up existing nearly new homes for pennies on the dollar.

I think they will continue building this year, but by mid-2009 you will likely see new home construction under 100k.

The negative positive feedback loop is not contained to wallstreet. Smaller banks and private money that provided much of the construction lending are going to stop lending either because they are out of capital or because they are getting smart.
SweetHomeKilla | 03.27.08 - 6:41 pm | #

Elvis writes:
As small becomes the new thing, energy prices will decrease, and big will become the new thing again.
Elvis | 03.27.08 - 6:42 pm | #

Anonymous writes:
"Bottom will be in when these nice 'new shoes' become cheaper than fixing or selling their old ones."

Lennar CEO Stuart Miller: "The U.S. economy has now slipped into recession. Home prices continue to be under pressure.

Land prices are under greater pressure. Prices for new homes are generally BELOW those for existing houses."
Anonymous | 03.27.08 - 6:43 pm | #

Scotty's Wormhole writes:
Just to keep things in perspective, here is what's going on with Bernanke's comrades @ The Reserve Bank of Zimbabwe:

Sources indicated that manufacturers were yesterday warned that should they fail to supply the market adequately within 24 hours, interest on BACOSSI loans, pegged at 25 percent, would be raised to 2 000 percent, while the Zimbabwe dollar component of foreign currency given to the manufacturing companies would be exchanged at parallel market rates, currently close to $90 million per greenback against the official exchange rate of $30 000 to the United States unit.

Efforts to obtain comment from RBZ spokesman, Kumbirai Nhongo, were unsuccessful as he was in a meeting when contacted last night.

The National Incomes and Pricing Commission chairman, Goodwills Masimirembwa, who attended yesterday's meeting, was not reachable on his mobile phone number.

A number of companies, which had used the cheap funds to meet operational expenses like salaries, could be forced into bankruptcy should they fail to charge the high interest rates and pay parallel market rates for foreign currency received from the central bank under the BACOSSI.

See Also: The name "wormhole" comes from an analogy used to explain the phenomenon ( of a 'shortcut' through space and time.)

If a worm is travelling over the skin of an apple, then the worm could take a shortcut to the opposite side of the apple's skin by burrowing through its center, rather than travelling the entire distance around, just as a wormhole traveler could take a shortcut to the opposite side of the universe through a topologically nontrivial tunnel.

See also: JPM using The Fed to negotiate antitrust takeover of Bear Stearns
Scotty's Wormhole | Homepage | 03.27.08 - 6:45 pm | #

John writes:
CR
based on the new home sales/recession chart you posted earlier, it seems that 3.5MM extra homes were built from 96-07. Do you agree that this is an example where we will see reversion to the mean? If so, then we will build 3.5MM fewer homes over some period because existing stocks would meet demand for the next 5-6 years if building goes to zero. Another possibility is for building to decline to 300k/y for ten years...
Also, who is qualified to buy if lenders want to see what used to be a traditional 20% dp?
a) existing owners with equity... but this group is declining fast as their equity declines. ANd, these will have a home to sell, so no homes are removed from market as those with sufficient equity move up.
b) Those with a good job and the required dp in cash... but, most of these already have homes, so we must have young people diligently saving their money... we're not breeding many of these nowadays.
c) If we are really in recession, some of those who might consider their first house will i) lose their job, ii) worry about their job, and/or iii) wait for lower prices.
d) we might see owners walking away from at least half of all homes sold 05-07 with no down... might this be 2MM? Most of these are young, they can just move back in with mom/dad. So, the glut might total 5MM, and they're still building!

Meanwhile, consider demographics. Boomers are about to retire, for the first time they are thinking of smaller nests... this might eventually help the Fl condo glut, but again, all such types have something to sell... where will the demand for houses come from?

California looks particularly weak. Prices still too high, boomers retiring into cheaper states... IMO NY and nearby will see the same soon as the financial crisis plows thru all those high paying jobs.
John | 03.27.08 - 6:45 pm | #

Elvis writes:
SweetHomeKilla,
That makes sense intellectually, but, I believe under 100k will never happen. Look at long term graphs of home sales. Lows are scrapping the bottom around 400k. Going four times lower than that must be some serious standard deviations. Doubt it, although I also doubted that Pauley Shore would stop making hit movies, and that happened.
Elvis | 03.27.08 - 6:46 pm | #

cd writes:
Elvis
Pauley shore made a hit movie? like paris hilton?
cd | 03.27.08 - 6:49 pm | #

Periwinkle writes:
I have been thinking that cancelations would have to drop for another reason. Any manager worth his salt should be realize after a few months of outsized cancelations that he needed to implement risk management procedures.

1. Ask for larger deposits.
2. Review contracts and eliminate loopholes
3. Retrain sales staff on how to close the deal

The lower rate could reflect a more pro-active tighter management style.
Periwinkle | 03.27.08 - 6:51 pm | #

R writes:
It seems quite logical that cancellation percentages are falling, because fewer buyers are signing up in the first place. Or, fewer buyers are backing out because they already know that the market is declining when they sign up--there's no surprise when they're ready to pull the trigger. Months ago, the situation was different: People signed a contract, then prices declined unexpectedly, so they backed out.

I don't see how the change in cancellations is a positive indicator.
R | 03.27.08 - 6:51 pm | #

Elvis writes:
cd,
Encino Man. Hello?
Elvis | 03.27.08 - 6:52 pm | #

metabear writes:
"So as far as I'm concerned, the decline hasn't even really started yet. And how many towns are like mine?"

Berkeley - it hasn't really started. A few declines in the flats but in the hills... the house two doors down had an open house 3 weeks ago. Wife and I smirked - It'll take a while we said. Open house cramed. Sold first week for 1.2 mil. Previously bought 2.5 years ago for 860K.
metabear | 03.27.08 - 6:56 pm | #

barely writes:
"I don't see how the change in cancellations is a positive indicator"

Well, it's not when viewed in the context that includes 60% sales declines. I suppose it leads to fewer spec homes and fractionally lower carrying costs.
barely | 03.27.08 - 6:58 pm | #

Jas Jain writes:
--
"California looks particularly weak."

John,

The weakness is spreading to former fortresses like Palo Alto.

Latest on hot markets (towns) in Silly.con Valley -- Active Listings keep going up faster than the general area. Cupertino, Los Also and Palo Alto listings are up 60-70% during the past three weeks. Just the opposite was the case a year ago during this time of the year.

Also, SF and SJ metros continue to do worse than the rest of CA. SC (Sacramento) and SD were the leaders and SJ was the laggard until recently.

The situation in outlying areas of Santa Clara Co in South is bizarre. Look at these in Gilroy (I don’t know if these are builder listings):

717 GAGE CT $739,000
727 GAGE CT $739,000
737 GAGE CT $739,000
716 GAGE CT $749,000
726 GAGE CT $749,000
707 GAGE CT $749,000
747 GAGE CT $749,000

945 WILDFLOWER CT $1,532,621
940 WILDFLOWER CT $1,540,400
910 WILDFLOWER CT $1,542,988
955 WILDFLOWER CT $1,544,300
925 WILDFLOWER CT $1,600,612
950 WILDFLOWER CT $1,608,400
920 WILDFLOWER CT $1,622,642
960 WILDFLOWER CT $1,655,042
935 WILDFLOWER CT $1,661,521
900 WILDFLOWER CT $1,665,000
930 WILDFLOWER CT $1,674,480

Listings keep piling up, sales are slow, and people still aren’t dropping listing prices much.

There is a G-L-U-T of SFHs in CA to supply the demand for the next ten years unless we have an economic boom.

Jas
Jas Jain | 03.27.08 - 7:05 pm | #

Anonymous writes:
"Land prices are under greater pressure. Prices for new homes are generally BELOW those for existing houses."

Bullshirt. Maybe in out in BFE, but not near established neighborhoods.
Anonymous | 03.27.08 - 7:06 pm | #

SweetHomeKilla writes:
CR's most recent housing starts chart

Starts are diving much quicker than any of the past downturns, and were previously at a higher level.

People always talk about incomes vs. prices, but not about incomes vs. costs.

There is a certain cost to build a new house that is dependant on the costs of materials, labor, licensing, and these days financing.

The majority of these costs have risen a lot compared to incomes since the last bottom.

In the early 80's when rates went into the high teens, starts bottomed around 300k. This was after much less overbuilding, and much better income fundamentals. Also the general economy in reality was much stronger than it is today.

I see demand being less, financing being tighter, and sentiment(towards building for profit) being much
worse than any time in the past.
SweetHomeKilla | 03.27.08 - 7:06 pm | #

Kid Clu writes:
SweetHomeKilla:
You got it right. And the banks have already stopped lending to builders for any houses that are not pre-sales.
Kid Clu | 03.27.08 - 7:10 pm | #

Sebastian writes:
Speaking of the Census Bureau and housing...

The Census Bureau came out with a list of the fastest-growing cities in the U.S. from 2006 to 2007.

#3 at 4.7%, Raleigh-Cary, NC. (Where I live.)

Although there aren't many matching data-points between the fastest-growing cities list and readily-available house-price data, there were a few I thought were relevant.

#3 Raleigh-Cary, NC, +4.7% pop. growth, $254,900 median home price.

#18 and #19, Las Vegas-Paradise and Phoenix-Mesa-Scottsdale, +3.3% pop. growth, $266,000 and $265,000 median home price, respectively.

#58 Riverside-San Bernardino-Ontario, +2.2% pop. growth, $315,000 median home price.

So, housing prices in my area are now approximately the same as in Las Vegas and Phoenix, but we clearly have higher population growth.

As for Riverside, et al, our population growth is more than double, but houses are nearly 22% less expensive here.

Not bragging, just pointing out the relative fundamentals.

Sources.

http://www.census.gov/Press-Rele...08- 49table2.xls

http://www.housingtracker.net/


S.
Sebastian | 03.27.08 - 7:11 pm | #

M-F writes:
I figure 90+% of the posters in the comments are male.

I also figure 90% of posters have been financially responsible, not rich maybe, but not in big debt.

I think about 40%-50% of posters are renters desperately hoping that the prices come back down to earth, and lower even, so that they can maybe buy a house for a steal. Most all of these renters are single men, who don't have a spouse telling them to get into a good "home" in a school district before the kids are 18 and in college. Most of them see housing demand mostly in financial terms only and are frustrated by the inasnity.

I think 20% of posters are doomsday inclined and think they have the whole crash all figured out, ending in a great depression. But they didn't allow for government intervention in their calculations. Every time the Fed or treasury or Congress (in the future) does something to prop up the market, they get frustrated and cry foul, probably cause their short positions just got burned or all that cash on hand just got devalued, again.

I think 95%+ of the posters are American and I think more than 50% of the posters are neither democrat or republican.

I thnk 100% of the posters have something good to contribute but only 98% of the posters are polite. Some posters may be quite mad.
M-F | Homepage | 03.27.08 - 7:12 pm | #

Elvis writes:
SweetHomeKilla,
Demand is weak and oversupply is enormous, but I think you are overly pessimistic. BTW, did those guys in the Nike tennis shoes who killed themselves ever get to the spaceship behind the comet or were they wrong?
Elvis | 03.27.08 - 7:14 pm | #

M-F writes:
By the way - there is one surefire way to increase demand for US housing - Speed up the processing of hundreds of thousands of educated and wealthy immigration applications!!! This would really help.
M-F | Homepage | 03.27.08 - 7:14 pm | #

Anonymous writes:
Anybody else curious how much total money Sebastian invested in those stocks the other day?
Anonymous | 03.27.08 - 7:17 pm | #

Shakin' all over writes:
"Citigroup dismissed the popular co-heads of its prime brokerage group on Thursday in the latest shake-up of senior management at its embattled investment bank."

http://dealbook.blogs.nytimes.co...-up/#more- 22022
Shakin' all over | 03.27.08 - 7:17 pm | #

Clyde writes:
Saw head of the Cleveland Fed, Sandra Pianalto speak today. Very guarded, but she did slip when answering questions and say that the Fed was trying to support asset values in this crisis. If that is what she truly believes, this adjustment period is going to stretch out well into Obama's second term.
Clyde | 03.27.08 - 7:17 pm | #

SweetHomeKilla writes:
Elvis-

Wouldn't I be overly optimistic? We have to work off the inventory in order to get a bottom in prices. Lower starts means the inventory is worked off quicker and the bottom is soon and shallower.

I think you are being overly pessimistic.
SweetHomeKilla | 03.27.08 - 7:19 pm | #

Bob Dobbs writes:
I see most of the posters as grizzled old guys, or young guys with thick contacts and thinning hair blued to their screens 24/7.

Misean has a beard, longish hair, and wears an open-necked oxford shirt on the job. Rob Dawg has a Labrador. Dryfly has an "I'd rather be fishing" bumpersticker on his VW diesel and looks like the head of a Lutheran church council. Sebastian has a Van Dyke which he trims religiously; his favorite cable channels are CNBC and Fox News. Tom Stone is an old hippie, but clean-shaven. Jas Jain has a big belly, suspenders, and and a grey-white UNIX-guru beard. Marcus Aurelius -- I only see the breastplate. ac is some kind of artificial intelligence. MaxedOutMamma is kind of hip-looking in an IT sort of way. CR is Hal the Computer -- but Good Hal, from the second movie. Tanta is one of those soft-spoken grey-haired 50-something high school English teacher with an iron ruler that she wields mercilessly. And Elvis...

...has left the building. Sorry barely, no image.
Bob Dobbs | Homepage | 03.27.08 - 7:24 pm | #

lama writes:
M-F, I demand a source for those numbers.
lama | 03.27.08 - 7:27 pm | #

DEFLATION---HOWSWEETITIS writes:
With the unemployment rate under 5%, I fail to understand how CR can boldly call for a bottom in new homes sales.

Not saying it can't happen, just don't understand the strong conviction.
DEFLATION---HOWSWEETITIS | 03.27.08 - 7:29 pm | #

barely writes:
"Anybody else curious how much total money Sebastian invested in those stocks the other day?"

No. He indicated that he qualifies for the $1200 government handout. That suggests he doesn't have much to play with. Whatever it is, he does a bang-up job of picking a near term top to throw his (tiny and getting tinier)sum of money away.

He's cannon-fodder for the Kudlow-Bush economy.
barely | 03.27.08 - 7:30 pm | #

Rob Dawg writes:
I am cat person actually. The chimeric Dawg persona was specifically adopted at the suggestion of one "Homey Da Klown" to create a false image. I do however have a walrus mustache.

Tanta. Now Tanta was pretty good except you forgot the legs under the wool skirt. And she, by her own admission, is not afraid to use them.
Rob Dawg | Homepage | 03.27.08 - 7:31 pm | #

Sebastian writes:
Bob Dobbs said: "Sebastian has a Van Dyke which he trims religiously; his favorite cable channels are CNBC and Fox News."

I think I can respond to this without rancor.

Beard, but nothing so fussy. Only watch CNBC to see what the market's doing if I'm away from my computer. Never watch Fox News, ever. The closest thing I get to watching any news on television (on a regular basis) is the Jon Stewart/Stephen Colbert NewsHour, which can be shockingly more informative and revealing than any of the "serious" network or cable news shows.


S.
Sebastian | 03.27.08 - 7:32 pm | #

ron writes:
According to housing permit data supplied by the Construction Industry Research Board, total housing starts in California dropped to 2,540 units in February, based on building permits issued. That was nearly a 60 percent decline from 6,326 permits the previous February, and it’s down 5 percent from 2,675 in January
ron | Homepage | 03.27.08 - 7:33 pm | #

cd writes:
m-f: did you work for KMPG? BSC?
your numbers are a little off..Again!
a blind artist's painting doesn't look like art to everyone
cd | 03.27.08 - 7:35 pm | #

Scotty's Wormhole writes:
Zimbabwe has to have a banking connection, i.e, re-packaged notes with embedded JPM derivatives, sold to Goldman, then swapped as collateral with LEH and now at the discount window. Zimbabwe, fascinating!

March 2002 the Israeli government sold riot control vehicles to the Mugabe government, shortly before the nation's 2002 elections.
Scotty's Wormhole | Homepage | 03.27.08 - 7:36 pm | #

Bob Dobbs writes:
"I think I can respond to this without rancor."

I'm glad, because it's a mental image, nothing more.
Bob Dobbs | Homepage | 03.27.08 - 7:37 pm | #

Misean writes:
M-F,

"Some posters may be quite mad."

Do you expect me to take that as an insult or a compliment?

Cheers,
Misean | 03.27.08 - 7:40 pm | #

malabar writes:
The interview below of Jim Grant on Bloomberg really nails it, IMO! (hattip Big Picture)

Jim Grant on the Fed actions

With the Fed taking crappy collateral and providing Wall Street a backstop at taxpayer expense - we've passed the looking glass. Its clear the Helicopter is carrying out what he said earlier - that he would purchase any security. When does he start to LBO all the Wall Street firms to provide Bob Rubin and Hank Paulson some nice windfall profits? And as Jim Grant says in the interview all this 30s style actions and we are barely in a recession.

Helicopter Ben is tanking the dollar! When do the Chinese and Arabs say no mas??
malabar | 03.27.08 - 7:43 pm | #

Misean writes:
Bob Dobbs,

More of a biker goatee. Hair correct. Shirt occasionally correct, although I am also partial to Hawaiins.

Cheers,
Misean | 03.27.08 - 7:46 pm | #

crispy&cole writes:
Recession (the movie):

http://sf.curbed.com/archives/ 20...n_the_movie.php
crispy&cole | Homepage | 03.27.08 - 7:53 pm | #

Misean writes:
C&C,

Bwahahahahhaaha!

Cheers,
Misean | 03.27.08 - 7:56 pm | #

barely writes:
Hey, guys, any of you have an opinion about whether Barron's can move stocks - short term? I've been considering a subscription since I seem to think Barron's plugs have an impact... but would like an opinion.
barely | 03.27.08 - 8:00 pm | #

Anonymous writes:
"although I am also partial to Hawaiins."

Is there any other shirt to wear? Christ,three years in Florida and I have YET to put on a pair of long pants...Man I don't miss the snow in the least.

Chris

Heck,I currently have my garage door open and the 81 year old neighbor stopped by with a beer...
Anonymous | 03.27.08 - 8:01 pm | #

rich writes:
>"Citigroup dismissed the popular co-heads of its prime brokerage group on Thursday in the latest shake-up of senior management at its embattled investment bank."

Why? A lot of times heads roll before bad news is announced.

Did the prime brokerage unit let margin lending to hedge funds get out of hand?

When they tried to tighten margin, did it cause hedge funds to crash?

Maybe we'll know soon.
rich | 03.27.08 - 8:02 pm | #

Misean writes:
Legal fight for monoline FGIC and insured.

http://www.bloomberg.com/apps/ne...Nxc4& refer=home

Response:

http://www.reuters.com/article/ r...WEB988520080327

Gosh, and they we're all SUCH good friends during the bubble.

"Can't we all just get along?"
Rodney King during the LA riots.

Cheers,
Misean | 03.27.08 - 8:02 pm | #

jm writes:
... all this 30s style actions and we are barely in a recession.

Kind'a makes you wonder whether he may not be a Wright Model B believer, doesn't it?
jm | 03.27.08 - 8:04 pm | #

Beemer writes:
Cayne, what a joke. He wakes up on Monday a week and a half ago with his shares worth $2. Then he puts the wheels of greed and power in motion for a week to get the shares to $12 on Tuesday and bails out. Comes out smelling like a rose with $61 mil instead of a possible wipe out. No wonder people are sick of pricks like this.
Beemer | 03.27.08 - 8:05 pm | #

jm writes:
The Wright Model B now predicts only a 2.0% chance of recession.

http://politicalcalculations.blo...- recession.html

That Bernanke sure is clueless, eh?
jm | 03.27.08 - 8:07 pm | #

Weather Helm writes:
Stupid question: what's the meaning of the Wright Model B references?
Weather Helm | 03.27.08 - 8:09 pm | #

Misean writes:
Beemer,

I'm kinda leaning Nemo's way on this one. He could have sold on the way to the Friday debacle at something 50+. That would have netted $300M. He would have had to have done it over a period of several weeks, but this hardly a Mozillo move.

Cheers,
Misean | 03.27.08 - 8:09 pm | #

Misean writes:
Weather Helm,

Poster Sebastian, a decent guy who is a perpetual bull (and takes alot of slings and arrows here for it), uses a model to analize the economy, esp. the stock market. The Wright Model BS Flying Pig is that model. I've not researched it nor heard of it accept here.

I think I'm being lazy. Maybe I'll google it now.

Cheers,
Misean | 03.27.08 - 8:12 pm | #

Beemer writes:
I think we need to learn a lesson from Cayne's ugly Friday: Always interrupt your Bridge game when your broker is on line 1.
Beemer | 03.27.08 - 8:17 pm | #

Misean writes:
Wright Model B:

Here it is. Just scanning but it appears to be a yield curve model.

http://www.federalreserve.gov/pu...7/ 200607pap.pdf

Yield curve models are relatively silly in the current environment, as the model was developed before the current solvency crisis and after the 1929 solvency crisis. A web model exists. But it's from 1996:

http://politicalcalculations.blo...- recession.html

Cheers,
Misean | 03.27.08 - 8:18 pm | #

Misean writes:
Sorry 2006 above post for the model. It's in the link.

Cheers,
Misean | 03.27.08 - 8:20 pm | #

Ironman writes:
jm,

The method behind that 2.0% chance of recession looks ahead to determine the probability of recession at the end of the next 12 months. The probability that applies now is the one that was calculated a year ago, which peaked at a probability of 50% on 4 April 2007.

In other words, now is the most likely period in which the NBER will find the U.S. to have been in recession. I say "have been" since the NBER often makes the official call well after a recession has begun, and has often done so well after it's already ended.

Meanwhile, it's pretty unlikely that they'll find the period a year from now to be in recession.

Hope this clarifies things!
Ironman | Homepage | 03.27.08 - 8:28 pm | #

Kicker writes:
But prices, no. The bubble here is in existing real estate, not new, many homesellers are well-heeled, and they're hanging in there.

That's the "ratchet effect" of
existing home prices.

I had access to MLS data for my area a couple of years ago and spent a day crunching the numbers.

In a housing crunch, existing homes tend to be listed at or near peak prices. Some of it is due to human nature, darn if they are going to sell for less than the Jones sold for! Part of it is just financial reality. If you've got a $500K mortgage you aren't going to sell for less than $530K.

So, looking at a broad swath of the MLS data housing prices for existing homes looked "stuck" during a slump. A person looking to buy an existing homes would be hard to convince housing prices had "declined".

There are "deals" but most of them in a housing crunch are for new homes.

Builders are much more rational when it comes to pricing. They bleed buyers from the existing home market by offering new homes as existing home prices (what would you rather buy?)

In the later stage of a housing bust inventory tends to build almost exclusively in existing home inventory. The existing home inventory doesn't start to clear until builders costs (labor, materials, etc) force them to raise prices to reflect a premium for a new home.

Once new homes are more expensive than a existing home the existing inventory starts to clear.

Net, net....

- In a slump, it makes sense to buy new construction (if you buy anything at all)
- If you are buying for maximum appreciation don't buy until just after new homes start trading at a premium to existing homes. The huge inventory of existing homes will keep a lid on prices for a while. Prices will surge once the inventory clears.
- If you buy an existing home during the slump you need to really "shop" for deals (REOs, etc). Prices per finished square foot can vary a lot even in the same neighborhood.

Other tid-bits...

- Home prices/sales spike when interest rates suddenly rise. Everybody wants to get into a home before their rate lock expires so they can meet the payment. The price premium more than wipes out any savings in the monthly payment because of a lower rate.
Kicker | 03.27.08 - 8:29 pm | #

Marcus Aurelius writes:
Kicker:

I don't think we're in Kansas any more.

By the time existing inventory is sold, we'll be living in a different system. We (our country) has woven a web of deception, and it is quite tangled. The stress failure of the housing thread is going to pull quite a few others with it, and in ways we can't anticipate. Someone posted a list economic weak points in our system, the other day, and it was both extensive and realistic.
Marcus Aurelius | 03.27.08 - 8:38 pm | #

mack writes:
Jeebus, some of you guys are harsh on free analysis when it doesn't match your desired outcome. Whatever CR's conclusion, at least he provides his methodology.

No wonder knowledgable, experienced folks give up on blogging and throw up their hands.

Anyway, I'd wager it's as simple as those forced to sell- are selling at any price. If they can't match the shortfall, they walk. Those w/ the ability to carry their homes at former prices are "emotionally" forced to do so. I.e.-market offers are "insulting".

How long will that last? Who knows? If there's 50%+ equity in the property, years I imagine.

This is where economics fails to predict b/c this is entirely irrational behavior in terms of predicting future prices vs. nominal returns.

Seb.-
That's an interesting post re: Raleigh vs. Phoenix.

Size + cost/sq.ft + quality level of parcel and structure make these "median" price numbers difficult to compare in a meaningful way.

But, thanks for the local anecdote.
mack | 03.27.08 - 8:38 pm | #

burnside writes:
CR,

I recognize the chart reflects an inflection of some kind, though I think it could be signaling primarily the close of the speculative bust.

Except where classic patterns show up, viz the lag you identified between residential and commercial downturns, I'm mostly conscious that many buyers who would have been purchasers in the next few years have been drawn in already, which leaves a much-reduced pool of new home buyers.

Of course, if employment takes a hit we may see another year or two of those red stalactites.

To those who cite boomers unable to shed the family home so they can leave the snow and cold, I note that many of the boomers I know have acquired a retirement spot already and have no idea of giving up the 'old home place' any time soon. They'll sell eventually, but a typical pattern is to keep the house and join the snowbirds in Florida, or wherever. Some eventually sell their Summer places, but not a few end up selling the Winter spot after a decade or two and going home.

Just remember, the media report the extremes and the oddities - most people are neither as glamorous nor as foolish as they appear in print or pixels.
burnside | 03.27.08 - 8:39 pm | #

Misean writes:
The Wright Model BS Flying Pig Calculator says a recession is a 0.1% event. Given todays data.

Why aren't you all shopping and buying stocks?

Sheesh.

Cheers,
Misean | 03.27.08 - 8:39 pm | #

Cal writes:
OT: The ATA Tonnage Index sure looks pretty good.


http://www.truckline.com/NR/ exer...D4C4EA3E68A.htm
Cal | Homepage | 03.27.08 - 8:42 pm | #

Maj Tom writes:
Sebastian writes:

As I have *repeatedly* said, I use peak TTM as-reported earnings, as Hussman describes.

Yeah - follow Sebastians models, they must be performing well right now.
Maj Tom | 03.27.08 - 8:44 pm | #

Troy writes:
fwiw, I think M-F is 100% right, above . .
Troy | 03.27.08 - 8:48 pm | #

burnside writes:
Kicker, thanks. That's really useful.
burnside | 03.27.08 - 8:50 pm | #

Joe Six Pack writes:
All this business about new house sales is all well and good, but I know of a dozen neighbors hunkered down with a for sale sign in their garage. At least that many rented their place out and moved to cheaper digs. So you can base a rebound on homebuilders if you want, but I'm not buying that song and dance.
Joe Six Pack | 03.27.08 - 8:57 pm | #

Calculating Risks writes:
The dollar fell against the euro, headed for its biggest weekly decline since January 2006, as traders increased bets that the Federal Reserve will cut interest rates again to avert a recession.

``The U.S. may have already entered into a recession,'' said Michiyoshi Kato, a senior vice president of currency sales at Mizuho Corporate Bank Ltd. in Tokyo, a unit of Japan's second-largest publicly traded lender by assets. ``The Fed will keep lowering rates to defuse criticism that it always falls behind the curve. I am super dollar bearish.''

The dollar may fall to $1.60 a euro next month, Kato forecast. That would surpass the low of $1.5903 reached March 17, the weakest level since the European currency debuted in 1999.

The U.S. dollar has fallen 7.7 percent against the euro this year, heading for its sixth straight quarterly loss and the biggest since 2004 as the Federal Reserve slashed interest rates by 3 percentage points since September to 2.25 percent to kick start economic growth.

Futures on the Chicago Board of Trade show traders increased bets the Fed will lower its benchmark target lending rate by a half-percentage point at a meeting ending April 30. The futures showed a 42 percent chance of a reduction of that size, compared with 36 percent the prior day. The remaining bets were for a cut of a quarter-point.
Calculating Risks | 03.27.08 - 9:00 pm | #

Ironman writes:
Misean,

Thanks for correcting the year! While we've gotten pretty good at looking ahead in time, our time machine always throws fits when we try to go backwards....
Ironman | Homepage | 03.27.08 - 9:05 pm | #

rcyran writes:
RE- what posters look like:

I know two semi-regular posters, but didn't know until recently that they read/posted on this blog. Small, small world.

As for image of Sebastian - obviously involved in biotech (location and stock picks). So New Balance sneakers, jeans, sweaters every day.
rcyran | 03.27.08 - 9:17 pm | #

Ray writes:
I have been collecting data from ZipRealty.com. Basically, going to their home page and plucking out the number in "ZipRealty has XXX active homes Nationwide". Inventory seems headed way above last year.

25-May-2007 1237156
27-May-2007 1241496
28-May-2007 1240699
30-May-2007 1241353
1-Jun-2007 1243126
5-Jun-2007 1239270
11-Jun-2007 1250956
21-Jul-2007 1263511
20-Aug-2007 1330548
29-Aug-2007 1362208
26-Aug-2007 1410188
4-Nov-2007 1348289
5-Jan-2008 1250182
10-Feb-2008 1304666
21-Mar-2008 1373993
27-Mar-2008 1385306

I wonder if anyone has a bit longer term series. It will be interesting to compare last year's March with this years.
Ray | 03.27.08 - 9:17 pm | #

transient writes:
Sebastian,

According to housing tracker, Inventory is up 31% from 12 months ago in your neck of the woods.
transient | 03.27.08 - 9:18 pm | #

DEFLATION---HOWSWEETITIS writes:
The calls for a bottom in new homes sales are a stretch.

Try 75% LTV's in most neighborhoods around the country.

Yeah, I wanna see how many people can pony up a 25% downpayment. And for those that do have a $100,000 sitting around, I'd love to see how many individuals want to place that much equity into a market with so much downside price risk.

Its amazing how many bears have turned bullish in the last couple weeks. I can tell you three very close contacts---all long-term bear--are bullish right now.
DEFLATION---HOWSWEETITIS | 03.27.08 - 9:19 pm | #

Gary writes:
I haven't even registered as a mental image in Bob Dobbs' head?

I have been wasting my time here. Damn.
Gary | 03.27.08 - 9:20 pm | #

Misean writes:
Gary,

I'll give it a shot.

Early to mid 50's, a bit of a middle age pounch, but not fat. Drak, neatly trimmed hair, with a bit of a recedeing hair line. Three piece suit, nice quality.

Cheers,
Misean | 03.27.08 - 9:26 pm | #

homedad43 writes:
Gary:

You wear a suit to work and enjoy a good beer. Call it dockers on weekends and polos, i.e. smart casual.

Hair is light brown and graying at sides.

How 'dat?
homedad43 | 03.27.08 - 9:48 pm | #

FFDIC writes:
Red meat for Kudlow's rant that all Fed regulators are out of control...
Houston Chronicle: Texas woman claims TSA forced nipple ring removal (with photo)
http://www.chron.com/disp/story....nt/ 5654702.html
FFDIC | 03.27.08 - 9:48 pm | #

Misean writes:
Here's some home price revision music:

http://www.youtube.com/watch?v=O...h? v=Ozc70JPGRMQ

Cheers,
Misean | 03.27.08 - 9:49 pm | #

Gary writes:
Very interesting.

Actually early 30s, paunch has not yet arrived and fortunately, still a full head of blond hair.
Gary | 03.27.08 - 9:49 pm | #

bacon dreamz writes:
we've been through this before. here are the home videos of Tanta and CR:

http:// calculatedrisk.blogspot.c...logging_25.html
bacon dreamz | 03.27.08 - 9:50 pm | #

Gary writes:
And I do love a good beer!
Gary | 03.27.08 - 9:50 pm | #

Gary writes:
While I can't name names, I have to share a bit of delightful irony. 12-18 months ago I was predicting here how much fodder for lawsuits all of this would be.

Well, I'm currently working on the bankruptcy of one defunct mortgage company. We are doing our production work in . . . the shuttered offices of another former mortgage company!
Gary | 03.27.08 - 9:56 pm | #

Misean writes:
bacon,

Damn, I thought this was Tanta:

http://www.youtube.com/watch?v=4...h? v=44XOKr8kips

Cheers,
Misean | 03.27.08 - 9:57 pm | #

Taos writes:
...has left the building. Sorry barely, no image.
Bob Dobbs | Homepage | 03.27.08 - 7:24 pm | #


Does barely have no image beause he is a ...vampire?
Taos | 03.27.08 - 10:03 pm | #

4822 writes:
12-18 months ago I was predicting here how much fodder for lawsuits all of this would be.

if everyone goes BK, how will you get paid?
4822 | 03.27.08 - 10:05 pm | #

barely writes:
"Does barely have no image beause he is a ...vampire"

No image? Hardly. barely has an inflated image of himself, at least. He doesn't really give much of a damn what others happen to think about him.

He wants to skim some scratch out of this ecomonic catastrophe. That's it.
barely | 03.27.08 - 10:07 pm | #

El Cliffo writes:
You can get 15% interest rates in Iceland. The bad news is, the currency plummeted 18% in the last two weeks.

http://www.telegraph.co.uk/ money...niceland127.xml
El Cliffo | 03.27.08 - 10:15 pm | #

ozajh writes:
To add one minor point to kicker's excellent 8:29 post.

Raw land prices will tend to fall during a bust, which can mask rises in other builder's costs.

So the period where new prices undercut wishing prices for existing stock may last longer than you would expect.
ozajh | 03.27.08 - 10:19 pm | #

JJL writes:
On a night of frivolity, how about a little Riverbottom Nightmare Band, from Emmit Otter's Jugband Muppet Show:
http://www.youtube.com/watch?v=a...h? v=a4H8cW7sVuo
JJL | Homepage | 03.27.08 - 10:22 pm | #

Taos writes:
On Bacon Dreamz link the Tanta video was gone...conspiracy?

The other two matched my inner vision perfectly
Taos | 03.27.08 - 10:25 pm | #

Misean writes:
JJL,

That was highly disturbing.

Cheers,
Misean | 03.27.08 - 10:26 pm | #

yyy writes:
M-F writes " apocalyptic types... (that).... get frustrated and cry foul..." Frustrated? Yes! but I never cry Foul, I cry Fowl!
yyy | 03.27.08 - 10:26 pm | #

Misean writes:
how about this:

http://www.youtube.com/watch?v=W...h? v=WElvEZj0Ltw

Cheers,
Misean | 03.27.08 - 10:28 pm | #

JJL writes:
Misean,
You have to see the whole thing, it will make sense! Jim Henson never dissapoints!
JJL | Homepage | 03.27.08 - 10:29 pm | #

mp writes:
Who needs a house when you've got one of these babies! Bulletproof, plus hurricane, flood, and biowarfare protection! (Microwave and refrigerator optional)

http://www.qsleeper.com/
mp | 03.27.08 - 10:31 pm | #

JJL writes:
Wowza Misean,
I just had "Master of Puppets' and "Ride the Lightning" loaded in the cars CD player on the way home today. Great minds think alike! Take a listen to the greatest song ever recored, a live version of "Crazy Train" featuring Randy Rhoades:
http://www.youtube.com/watch?v=7...h? v=7hwq3nNHyPI
JJL | Homepage | 03.27.08 - 10:33 pm | #

Misean writes:
JJL,

Watched the whole thing. It was very Metal.

Cheers,
Misean | 03.27.08 - 10:35 pm | #

Misean writes:
JJL,

Thanks for the link I love Ozzy and Randy.

:)

Cheers,
Misean | 03.27.08 - 10:36 pm | #

Marcus Aurelius writes:
mp | 03.27.08 - 10:31 pm

_____

mp,

best of all, it sits flat on the floor, so the terrists, boogiemen, and assorted other unsavory types can't hide underneath. Now all I have to do is nail the closet door shut and board up the window.

So, I've got a mofo hidin' in his Quantum Sleeper, and I really want to jack him around. What do I do? Padlock his ass in and wait.
Marcus Aurelius | 03.27.08 - 10:38 pm | #

Taos writes:
Does the Quantum Sleeper come with protection from Foreclosure?
Taos | 03.27.08 - 10:41 pm | #

JJL writes:
That live solo is the stuff of legend. You should check out my Friday night rock blogging if you like the good stuff. Glad you are a fan. How about "diary of a madman" set to a Randy tribute?:
http://www.youtube.com/watch?v=w...h? v=wXapGeihiQg
JJL | Homepage | 03.27.08 - 10:41 pm | #

Misean writes:
JJL,

Friday night rock bloggin...I'll be there.

Cheers,
Misean | 03.27.08 - 10:42 pm | #

Barley writes:
Hot dam - I need your HELP

crispy&cole writes:
Recession (the movie):

http://sf.curbed.com/archives/ 20...n_the_movie.php
crispy&cole | Homepage | 03.27.08 - 7:53 pm | #

I would like to hire the creator of this! Bloody good stuff!!

Anybody know the creator? email me at marketingdog yahoo.com
Barley | 03.27.08 - 10:43 pm | #

ac writes:

You can get 15% interest rates in Iceland. The bad news is, the currency plummeted 18% in the last two weeks.

Sounds like Iceland didn't get the decoupling memo.

ac | 03.27.08 - 10:43 pm | #

JJL writes:
Good night board, any chance reality sets in tomorrow on the markets? Didn't think so. Friday rock blogging will be in full effect!
JJL | Homepage | 03.27.08 - 10:45 pm | #

Anne writes:
C&C, thanks for the RECESSION trailor -- hilarious!

I've been following the Seattle market just a little, and my sense is that we have yet to fall in any appreciable way, though found this graph today that quite startled me:

http://seattlebubble.com/blog/ wp...peak_200801.png

Seattle's total decline from peak exactly mirrors Miami's descent.

I note, too, that there are several huge cranes downtown, industrially building hi-rise condos that will start at probably $350,000 for, oh, say 500 sf.

Who will buy these? When Washington Mutual hits the dust, what will be the effect on the local economy re jobs and easy loans lost, etc.?

Also, it's friggin' cold here and rains a lot, and the housing stock that does exist is rather ugly. I gotta believe Seattle, though at the end of a rather darkish tunnel, still has quite a way to fall from the current YOY decline of only 1.25 percent.
Anne | 03.27.08 - 10:45 pm | #

Mel writes:
Is Tanta the "10 foot Lucia?"
Mel | 03.27.08 - 10:47 pm | #

Jim writes:
Meanwhile, Cleveland Fed Bank President Sandra Pianalto said a mortgage crisis that is pulling down housing prices is casting a pall over consumer spending and is "very detrimental to our economy."

"Very detrimental," eh? I marvel at the brilliant insights of Fed Bank Presidents. Rare birds they are. One in a million.
Jim | 03.27.08 - 10:53 pm | #

Anon writes:
Bobb Dobbs says:
"So as far as I'm concerned, the decline hasn't even really started yet. And how many towns are like mine?"

Add Los Alamos, NM to the list of towns that have seen no drop in prices. Mostly very highly paid PhD's and engineers working at Los Alamos Nat. Lab are keeping the prices up. The wages support an entry level price of $220,000 for a 1940's vintage two bedroom, one bath, with a single car garage that has been converted by an anature into something??? and the whole house needs to be rewired, replumbed and reroofed. There are more millionaires per capita here http://www.bizjournals.com/albuq...html? from_rss=1 than any other county in America.
Anon | 03.27.08 - 10:57 pm | #

Misean writes:
"Meanwhile, Cleveland Fed Bank President Sandra Pianalto said a mortgage crisis that is pulling down housing prices is casting a pall over consumer spending and is "very detrimental to our economy."

Gosh, if we could only spend 50000X our net worth shit would be fine. Let's lobby for that.

Cheers,
Misean | 03.27.08 - 10:57 pm | #

ac writes:

"Meanwhile, Cleveland Fed Bank President Sandra Pianalto said a mortgage crisis that is pulling down housing prices is casting a pall over consumer spending and is "very detrimental to our economy."

We need people to continue lending out their wealth with no reasonable expectation of getting it back. If they stop doing so it will be "very detrimental to our economy."

ac | 03.27.08 - 11:01 pm | #

Viewing with alarm writes:
I don't care what you say about CR, his charts are out of sight. Great colors and the numbers work too.
Viewing with alarm | Homepage | 03.27.08 - 11:05 pm | #

Nemo writes:
Refresher Course in Finance
Job Market 2009
Nemo | Homepage | 03.27.08 - 11:10 pm | #

transient writes:
Nemo,

Loved the Job Market video.
transient | 03.27.08 - 11:15 pm | #

rich writes:
Regarding Wright B, normally the yield curve steepens near the end of a downturn or recession. But this time, it is steepening sharply at the start of recession.

I think this could be partially due to two huge players that are opaque and have not been very visible: life insurance companies and defined benefit pension funds. This are big traditional buyers of intermediate- and long-term high-grade bonds. They also have fairly tight regulatory standards -- DB plans more so after Pension Protection Act.

Maybe they have greatly shortened maturities to ride out the storm and avoid regulatory capital shortfalls, creating a vacuum on the long end and a crunch on the short end of the yield curve.

There have to be fairly sizeable mortgage losses in both DB plans and life insurance companies that will result in failures. Both have flimsy backstop guarantees in PBGC and state guaranty funds. It could be that the backstops will be blown away in 3-4 years.

Runs on life insurance companies are nasty, and the Fed won't be able to help.
rich | 03.27.08 - 11:24 pm | #

Emma Anne writes:
mp, that Quantum Sleeper is one of the weirdest things I have ever seen. Not sure about the kidnapping protection, though. Why wouldn't the bad guys bring a forklift and take both it and you back with them?

Also, sure some people are buying new houses. I know a couple who just made an offer for a semi-custom or somesuch. I talked to them about housing a little, but they are sure the neighborhood will appreciate in five years or so and and they have plenty for a down payment, so whatever.
Emma Anne | 03.27.08 - 11:28 pm | #

M-F writes:
lama - the source for the numbers is: A very tricky computer scan which ties your Haloscan comment to all the Adware preferences on your home PC as well as uses your IP to look up your data in the master homeland security database and at credit reporting agencies. I can't tell you any more than that.

cd - the numbers are flawless, perhaps you have gone mad and see above, the methodology is flawless.

Misean - if the part about madness really resonated with you, well then, I think that speaks volumes... you may take it as a compliment if you wish though!

Troy - thanks!

yyy - perhaps you have gone mad also, some sort of chromosomal anonaly?

That's it, have a nice night!
M-F | Homepage | 03.27.08 - 11:32 pm | #

Emma Anne writes:
Anne, that Seattle plot is really scary. I have some friends who bought in Redmond at the peak. Not looking good.
Emma Anne | 03.27.08 - 11:32 pm | #

Taos writes:
Add Los Alamos, NM to the list of towns that have seen no drop in prices. Mostly very highly paid PhD's and engineers working at Los Alamos Nat. Lab are keeping the prices up. The wages support an entry level price of $220,000 for a 1940's vintage two bedroom, one bath, with a single car garage that has been converted by an anature into something??? and the whole house needs to be rewired, replumbed and reroofed. There are more millionaires per capita here http://www.bizjournals.com/albuq...html? from_rss=1 than any other county in America

As the locals will tell you there haven't been any acutal HUMANS living in Los ALamos since the 1950's
Taos | 03.27.08 - 11:37 pm | #

BreakOut writes:
Quantum Sleeper - who needs a bank?
BreakOut | 03.27.08 - 11:38 pm | #

Neil writes:
Periwinkle writes:
I have been thinking that cancelations would have to drop for another reason. Any manager worth his salt should be realize after a few months of outsized cancelations that he needed to implement risk management procedures.

1. Ask for larger deposits.
2. Review contracts and eliminate loopholes
3. Retrain sales staff on how to close the deal

The lower rate could reflect a more pro-active tighter management style.

My thoughts too. However, to come to a point of sharply lower cancellation rates would be as the result of the integral in increased standards. We all know tightening standards slows sales. This implies they are getting towards the end of tightening the loopholes and raising deposits.

In other words, I could believe we are within six months of the new home sales trough. Ok... interesting... But as CR stated, years away from the recovery.

Got Popcorn?
Neil
Neil | Homepage | 03.27.08 - 11:41 pm | #

Tom Stone writes:
BOBB DOBBS,cut me some slack,dude! Old Hippie my ASS.I knew some original hippies,and remember some of the Merry Pranksters handing out free Acid on Telegraph Ave when it was legal.I will admit to drinking red mountain at $1.75 a gallon,having long hair for a while in the late 60's and early '70's,and smoking pot when it was $100 a kilo for the good stuff...But...the nonviolent peace and love stuff was too unrealistic,I knew survivors of sobibor and treblinka,had a high school teacher who picked up 3 purple hearts with the 442nd after his family's property was seized while Earl Warren was Governor(his mother and sister died in Manzanar due to poor medical care),And I have been an NRA member for 38 years.of course I am fond of ballet,good food and books,so?
Tom Stone | 03.28.08 - 12:14 am | #

waitinginPNW writes:
Anne-

Friends of mine sold a (really really ) nice house in Seattle last November for minus 20% of where they had started the previous May.

Many Seattle neighborhoods went hyperbolic.

And it started earlier there- back in '97 or '98- which gave the realtors great cover the past couple years to claim "We haven't gone up as much as other cities since 2002!" (Twisted read: we haven't gone up as much so we won't fall as far- but let's not tell anyone we started in on this madness ahead of most other areas in the country).

Seattle's totally screwed. First big mega auction of Bainbridge Island "luxury condos" starts this April.

Downtown's going to be full of luxury/discount condo rentals for decades to come. Too bad downtown Seattle never really became as liveable/pedestrian friendly as other cities, that could hold it back, even for condos being converted to rentals.
waitinginPNW | 03.28.08 - 12:48 am | #

Anonymous writes:
Barley, you can email the person who put the video up on youtube (if you have a youtube acct)
here
Anonymous | 03.28.08 - 1:38 am | #