ABC News reports that Obama “won’t rule out middle class tax hike to pay for Obama Care.” Well of course he wont; he can’t. The only people foolish enough to believe the Messiah’s campaign pledge not to do exactly that are the pixie dust believers, the ones who thought we could spend $12,000 on every family of four in America and pay for it all with tax hikes on those damn rich folks and, of course, “efficiencies”. I’d say I told you so but those opportunities come daily now, and it would get boring. Hope and shame indeed.
Daily Archives: June 28, 2009
Republican Saxby Chambliss has put a hold, at least temporarily, on Cass Sunstein’s nomination to be Regulation Czar. The Harvard (need you ask?) professor is on record as supporting the right of animals to sue people in court and also advocates a bqan on hunting. There’s much more, naturally, but do we want this man in charge of regulating Agriculture? PETA does, I don’t.
Click on Greenwich Time’s web site or the Hartford Currant’s and you see mom’s cure for yellow teeth advertised all over the page. Fair enough; they go nicely with the disgusting pictures of belly fat which can also be cured by Mom. And how often do I go to those sites anyway? But now the same advertiser has invaded Instapundit.com, which I check countless times a day. Can there really be that much money in correcting yellow teeth or is this just some personal vendetta aimed at me? Aaahggh!
The ex-Goldman Sachs boy is really giving Cos Cob a bad name as the details of the bills he voted so willingly and ignorantly for start crawling to the surface. How about this?
I assume $2.7 billion is chump change to a man of Mr. Hime’s wealth but unless inflation really takes off, I will work the rest of my life and my children, their children and their children’s children will work the rest of their lives paying taxes to Hime’s government and never approach paying this amount of wasted money. It is a lot of money to most people – Himes and his crowd tossed it onto the bonfire like it was – well, someone else’s money. Let’s get rid of this man before he becomes entrenched.
This story, with full evidence to back it up, has been all over the Internet the past week but remains untouched by the NYT and other mains stream media because it might make the One look like Bush or something, you know?
That’s what this guy thinks. Homeowners (and, in Greenwich, spec builders) who figure they’ll just rent out their unsold house for a year and wait for the market to come back are in for a really rude awakening. I don’t disagree but judging from the lack of sales and the increased number of rentals, many in town do. Good luck, guys.
Mark Hanson of the Field Check Group continues to write great analyses of the housing market. Mark remains extremely bearish, and he attributes the recent pick-up in sales velocity to seller capitulation rather than renewed buyer demand.
Mark thinks the next segment of the market to crash will be the mid- to high-end, where many smug homeowners are now telling themselves they’ll just rent their houses for a year while they wait for the market to “come back.” Needless to say, Mark thinks these folks are dreaming.
The mid-to-high end housing markets are on the ropes and taking a barrage of body and face blows. Entire communities are being re-priced lower, literally overnight. Sales transactions have increased over the past couple of months because sellers are finally capitulating.
Most of the properties being sold are from:
a) those with lots of equity who know they better sell now or they will lose their opportunity
b) those that know they will be able to steal the new house that they buy so it’s a wash
c) short sales being approved more often
d) foreclosure resales.
Prices coming down to a point where the market clears is key to finding the ultimate bottom of the market, but before a bottom is celebrated the market has to enter a very dark place.
Remember, in early 2008 — as prices were only about a third the way off of the highs — falling prices was viewed by the pundits as a great thing and needed in order for the market to heal. But in reality long before a bottom can occur, the falling prices create a negative-equity loan default and foreclosure domino effect that does the real damage.
This overnight house price re-valuation freefall is exactly what we saw in 2007 and 2008.It’s simple — as values fall, more go into an incurable negative equity position, which lead to increased loan defaults, foreclosures, supply and lower prices. Then this fall in prices lead to even greater amount of negative, loan defaults, foreclosures and lower prices – rinse and repeat. Prices then keep falling until supply and demand fundamentals neutralize. This is what we saw at the low end this year as a result of artificially low rates, foreclosure moratoria, mortgage mod initiatives and finally seasonal factors after prices were down 55% at the median.
And now, Hanson argues, the same price collapse is coming to the mid- and high-end of the market–where owners are now deciding that prices are about to “come back.”
Check out the anecdote below:
Because of the epidemic negative equity across the mid-to-high end, a large percentage of high-leverage exotic loans still in place, and the belief amongst the upper-crust (or severely over-leveraged depending upon how you want to look at it) [that the market will come back] many are resorting to renting vs. selling. In every case, the homeowner or Realtor managing the lease says “we want to wait a year or two until the market comes back”.
Why in the world would there be such an overwhelming sense of hope among the mid-to-high end homeowners that the prices of expensive homes would come roaring back? If not for interest only loans, Pay Option ARMs, stated income and 100% HELOCs the mid-to-high end would have never got there in the first place.
Two years ago, a household income of $100k a year could legitimately buy an $800k home with almost nothing down and afford the payments using a Pay Option ARM. Now to buy the same house, you need $160k down and an income of $200k a year. The $800k home went from the majority being able to afford it, to only a few. Remember, in the upper price bands most have to sell a home for the down payment and debt-to-income ratios required for a new loan.
Even in San Francisco City , long thought to be safe-haven for house prices, owners are resorting to renting. A savvy money manager and real estate investor I know sent me this note yesterday I thought was worthy of sharing. He has been scouting properties for an associate moving to town from NYC.
“Mark, I walked through a beautiful home in Pac Heights yesterday. Was listed at $6M about a month and a half ago. Price has been cut three times now and it currently listed at $4.95M. The amazing part is that the owner is now trying to rent it for one year (and I quote the agent) “and then sell it when the market comes back.”
When I asked her what made her think the market would come back when rates were going higher, availability of credit was down, incomes were down, unemployment was up and willingness and availability of people to spend was down, she had no answer.
Even more amazing was that we looked at four places in a similar price range and almost all of them had a similar strategy…”rent it out for a year and then sell when things get better”…
All these high-end people think they’ll just keep burning through capital and that everything will self-correct in 12-months and then go right back to the idiotic pricing levels that they themselves were crazy enough to pay.
Are people really this clueless???? (that was rhetorical so no need to answer…)… J
… Looking at median household incomes in every mid-to-high end area in [California], I come up with the same conclusion…the mid-to-high housing bands are still 33% to 50% overvalued on average.
Bottom Line– I don’t remember ever seeing such a massive supply of quality SFR’s for rent in CA. Rents are falling fast. Why in the world would someone want to put down $500k cash and make payments greater than that of rent in order to buy in a falling market? Prices have much further to go on the downside. Dump your McMansion while you still can.
Ethan Allen is shutting mills and lumberyard operations in Maine and New Hampshire in response to a 40% drop in sales. That’s a sad story – I’m familiar with Andover, Maine and the closing of that factory and the loss of several hundred jobs will be devasting. But the company is facing reality. Our own legislature, faced with about the same drop in revenue and a looming $4 billion deficit, raised taxes on residents and businesses alike, increased spending and went home, mission acomplished. Not a single job was cut because, as they know from their careful spending in the past decaders, ever single state employee is essential. No fat there.
Greenwich Boys and Girls Club celebrates life of Michael Jackson. By holding a pajama party, no doubt, with counselors and campers all in their PJs. Sweet.
Robert Tate provided choral music for the event, legal defense for counselors sponsored by the Law Offices of Phillip D. Russell.
UPDATE: Here’s one bright spot on an otherwise dark day for humanity: Jackson died before completing a new song on Global Warming. Although it would have been fun to see Al Gore step out to the tune. Question for Al: which has the bigger carbon footprint, Neverneverland or the Gore Tennessee mansion?
What is it about Harvard that turns so many of its graudates into amoral schemers? George Bush II being a notable exception of course, but from Walter Noel to John Kerry to, now, Greenwich’s Congressmen Jim Himes, seemingly able minds go up to Cambridge and emerge as little conniving, ambitious weasels who abandon whatever morals and principles they had in order to climb to the top of their little world.
After graduating from Harvard (with a degree in Social Studies, but heck, it’s Harvard, man) Hime went to work for Goldman Sachs. It sounds as though he didn’t make partner since he left so early, but he must have done at least a few business deals with his betters and riddle me this: can you imagine any business deal involving Goldman Sac hs where, three hours before the transaction closed, the seller added a 300 page addendum to the 1,000 page contract and said, “this is part of the deal too – eat it” where the GS guys would have closed withut insisting on reading it?” I’m not Goldman quality but I did manage to negotiate my way through a number of business transactions over the years and I insisted on reading and understanding what was in the package before signing off on it on behalf of my clients. I would expect Mr. Himes to operate at at least that low level of watchfulness but he didn’t last Friday. Faced with what he and his bosses claimed was a transforming law, something that will effect our entire economy and every single resident of the United States, Himes scrawled his X on a bill he didn’t read and thus could not have understood.
Himes was elected pretty much on his promise that he wasn’t Chris Shays, which is fine, but he implied that his Goldman Sachs career, however brief, would be put to work for his constituents. Faced with his biggest vote so far, however, he punted and relied, I assume, on his social studies training at Harvard that taught him to follow authority so long as that authority was a large, Democrat-led government. What a wuss.