Something about that word.

Collapse.

The twin towers just collapsed.

The stock market just collapsed.

There was an earthquake and hundreds of homes collapsed.

Your mother in law came down stairs and just collapsed on the floor.

The economy is collapsing.

The persons heart just collapsed and they died instantly.

Collapse.

Interesting word it is.

CR,
Will you consider doing a plot of
YOY growth in consumer credit VS
recessions?

Calculated Risk,

This is not just in Southern California. Anyone who was access to MLS in bay area will tell you that August sales where 60% off August 2004 levels. Currently September sales look even worse. I suspect September might be down 70% off 2004 level. This is pretty serious.

Every time I read these reports the only thing I can think of is "Who is buying a home these days?"

Well, I have a friend who just purchased an almost new home for $1.1m, not too far from us (he moved closer, which means we'll probably meet more often now).

He perfectly understand that his home will drop another $300k in price. So what? The quality of life now is more important than losing $300k, he can afford that. Two year-end bonuses will make the difference.

Where's deb? She's usually got the first hand, "in the trenches" take on this.

Sorry, 8000+. edit. Still, 2007 will give 1996 a run for its money, 2008 should blow it out of the water.

Vader,
I liquided all my apartment buildings
back in 2003-2004. No regrets because
I put some of that money in Gold and some in Put--options on Homebuilders.

If the lenders had not come-up with all that creative financing back in
2004-2006, No-one would be getting laid-off now(i.e. the downturn would have been managable) Now I am not so sure.

I realize we have the War to finance,
but people like Mozzilo took advantage of the situation to their own ends. I hope they get what they deserve.

CR,
It's lonely at the top. You know that
better than anyone.

The smarter you are, the more idiots you have to deal with.(Corollery)

need i go on?

vader,

Did I read correctly in a previous thread that you had just recently lost your job? If so, I hope you find a new one soon.

As much as I want to see a return to a "normal" RE market, I'm aware that there is going to be a lot of pain for a great many people involved. While I have no feelings of pity for those who took advantage of others and are now losing their jobs, there will be lots of collateral damage, and for them I do feel sorry. It's easy to talk about the economy in an abstract way ("unemployment is up this month"), but those are real people losing their jobs (or about to).

Anyway, sorry to go all sappy and all.

I became a US citizen in 1989. I love USA and what it stands for.

It pains me to see some of our political and corporate leaders bring USA down for just a few bucks.
Hell, thats why I left the OLD country?

BITTER-SWEET feelings indeed.

All I can say is that in my little corner of LA in the Pico/Robertson section just south of Beverly Hills, houses are still selling for top of the market prices. Just last week a 2br/2ba 1400 square foot 1930 house sold for $875,000. That same house five years ago would've traded for $225,000-$250,000. Oh, and I rent a 2BR/1BA 1930-built house`1000 square feet, four houses down for $2200/month. Go figure!

His theory is that supply is limited and co-op governing boards keep out speculators and the sub-prime riff raff.

Did he explain why the prices weren't this high before the boom, since both those conditions existed prior?

CR,
Stunning!! CR are you implying a quality associated with beauty?

You dog.If you start a REIT in a few years, count me in.

Zarkov,

"A friend who lives in New York City tells me that it’s different there (Manhattan). Prices are not falling and he thinks (absent a Wall Street recession) that prices will continue to rise and that real estate remains a good investment. "

I live in Manhattan and as you point out, NJ, CT, even Queens and Brooklyn provide a buffer for Manhattan's prices. All said, the infamous median prices keeps on going up. I live close to 4 realties, Corcoran and the like. there is stuff in their windows that's being sitting there for more than a year! Seller's anchoring/denial keeps on surprising me as prices are not being reduced.

Coops used to represent 75% of the supply but since 2000, all the new developments had been condos. So much is being built that both accounted for the same number of transactions last year. Also the requirements on coops are strict for outsiders, not for insiders. It's not a transparent process and got relaxed lately. So it cannot provide the protection that used to (this was explained by Jonathan Miller, as I also thought that coops will prevent a big drop in prices).

"Is Manhattan that wonderful that it’s worth any price?" not in my opinion. i'm very happy living here, but i could be happy in a trailer in oklahoma too.
if wall street has a couple of bad years not only bonuses and lay offs are going to hit the city badly. also city revenues (public employment) and indirect jobs (like fancy restaurants-bars-clubs) are going to feel the pain.

DH: you are a kick ass investor! congrats!!!

all said, i would like to know to what extent the availability of jumbo loans has been hurt. that's key for nyc, california, florida, ...

I hate to say that I am right, but I am right.

Today the dollar is kind of, shall we say, stable. It probably has some more downside, but it's hanging in there.

The Tokyo stock market on the other hand is crashing. Europe is not crashing yet.

I think the American market will crash.

So, the Fed is good to its word: it will protect the dollar, but equities and other assets have to take care of themselves.

Today I passed a very dejected looking sign spinner in WeHo, sitting under a tree taking a break. I wish I'd had a camera. This could be the new Time cover for 2007.

Now it's just a race to the bottom, as every 2 bed 1 toilet bungalow in the city goes begging for $600K, $500k, 300K and on DOWN.

I completely agree with you. It just boggles my mind that some folks are still buying at near-peak price levels. Do they read the papers? Perhaps they see this as a buying opportunity, perhaps they are relatives of Sebastian for sure. My friend at web design company too earlier have faced a similar fate so its really heart rendering...

Things to consider going into a period of increasingly worse economic news and fundamentally deteriorating conditions-

1) More leverage than anytime in our history.

2) The greatest concentration of financially engineered, "illiquid" assets held by IB's, hedge funds, and conventional banks across the globe.

3) A Fed which is dramatically behind the curve.

4) Confidience levels that are rapidly deteriorating.

5) The all-or-nothing move into Treasuries.

6) A Housing situation which will likely deteriorate into 2009.

7) Default rates on HY which have nowhere to go but up.

8) Peak corporate earnings.

As this situation takes hold, the need to liquify illiquid assets will increase. The liklihood of a repeat of the August scare is pronounced and the potential for a much larger problem exists.

The commercial paper fiasco poses serious risks, the crisis of confidence that could potentially result would be devestating.

You read that many are touting this asset class versus another in this environment, the funny thing is that they have very recently been proven completely wrong in most cases. The leverage in the system is so great that August showed that hedged strategies were child's play and useless.

That said, tak away all of the "noise".

A step back shows you specifcally what lies ahead, a very difficult period.

Armegeddon, no, tough period, absolutley.

Suppose that suddenly a lot of Americans needed jobs? Just suppose.

Where would those jobs come from?

Who's hiring?

Real estate agencies?

lama-

I am beside myself knowing that "Britney" is making her comeback appearance, no time really to concentrate on anything else.

Shoulda bot Wheat

"Why should NYC be immune? It might take longer, but sooner or later they have to feel the pinch. "

NYC will be the last to fall. They're the very epicenter of the bubble. Hell, the NY Times will still be publishing pablum about the Loyfstoyles of the Rich and Famous long after the rest of the country is eating out of cat food cans.

In other words, don't look to NYC for any indicators of reality. In fact, I think 50 years from now, Manhattan will be the world's most exclusive gated community.

FFDIC and Doc,

most of the agencies and state banking departments do not have the front-line talent to perform thorough exams of problem institutions. how do you think a situation like coast bank happened. inexperienced examiners coupled with strict limits on the amount of time that can be spent on-site performing an exam. the bonus system for executives is calibrated to time savings, not performing an effective exam. they will mouth some BS that an examiner can expand the scope of an exam if necessary but in reality, it is a zero-sum game. if you use hours here, they must come out of somewhere else.

some have speculated that an examiner with less than 12 years experience does not have the ability to identify a problem situation as they have only been trained to do "drive-by" examinations. we have seen this movie before and we all know how it ends.

NYC will be hit by a fall in financial jobs and year-end bonuses in early 2008 (these make up a huge % of the local economy on Manhattan), plus there are a lot of new condo projects finishing up or still under construction.

Real estate people there think foreign buyers will keep things going because the dollar is cheap. But why would a European buy a depreciating asset valued in a depreciating currency, just because the current currency exchange rate makes it somewhat cheaper than it was 6 months ago?

Re the LA stats, I can only say wow...

Phoenix and Las Vegas must be just as bad or worse. And Florida, already reeling...

Just the other night my husband and I watched a program on the Discovery channel on Mega Cruise Ship building in Finland. We are talking the largest and most elabrate cruise ships in the world, all destined for the US market. Finland can compete and build these incredibaly large vessels( the other major cruise ship building countrys are France and Italy)and provide high quality jobs because they have nationalized medicine. Per capita income for Finland versus the US in dollars for 2006 is Finland $37,178; US $33,050.
When are our politicians going to make this a must issue. When are Americans going to realize that there standard of living is dependent upon nationalized medicine.

Trying to grow an economy on housing and high cost low value added financial products and credit just isn't going to work anymore. We need to make products that people are going to buy. And our young people can make a living on.