Can anyone see desperate sellers propping up the home improvement market? I remember in the boom days any leaky, falling apart brick box was selling, but now they have to improve the property as much as they can to increase chances for a sale..
By the way CR and all - has anyone heard that the Egg credit card cutoff was not because customers were not "risky" bad, but "risky" too good?
--
That is one reason that OFHEO's HPI is biased on the upside and doesn't show the declines shown in other series. There was a Home Modernization Bubble was fed by Home Price Bubble. Water is drying up at the source. It will show up downstream. Dominos will fall one-by-one.
Watch earnings of Mohawk Industries, reported on Feb 15. MHK
$7 billion annual wholesale supplier of carpets, tiles and floor coverings. Mohawk is the 2nd largest wholesaler in the industry. The largest, Shaw Industries, is part of Berkshire Hathaway.
Analysts are still bullish, expecting $1.54 per share for MHK. If they make $1.54, I'll eat my hat.
Since mid-2004, wholesale lumber prices have declined by more than half. But floor covering has stayed strong. There is relatively more lumber used in new home construction vs. renovation, compared to floor covering.
Floor covering is a good barometer of home renovation.
I've seen some numbers where the return to remodeling is far short of 100%. Yet people still believe that if they fix the bathroom or install new countertops, then they can "more than" pay for the upgrades.
Contractors have certainly got the masses drinking the Kool Aid.
I'd much rather have a chance to pick my own upgrades, than pay for someone else's remodeling decisions (which likely are far different from mine).
The pop of the housing bubble makes me [i]more[/i] likely to spend money on home improvement, not less. I bought my place in 2005, so there's no way I can sell it anytime soon. So I might as well make it nice, eh?
Of course, I'm cheaper then your average renovator... I priced curtains and other good window treatments and opted to buy a sewing machine. One window down so far 8)
Even if the absolute volume of home improvement projects remains constant -- even if it rises -- the dollar volume will drop because the contractors are desperate for work, and materials prices are falling.
You can enjoy life more by spending less. It's a message that Yeager has been preaching for quite some time. He's become the go-to-guy for NBC's "Today" show on cheapness.
Slightly OT, but...
One aspect of the market that seems under-appreciated is that it appears that many move-up buyers in the bubble years had put down 20% on their previous home purchase, and were able to re-extract that equity plus a substantial profit and then lever themselves into a much more expensive home on which that amount was a 5% down payment.
As prices decline, anyone who has done that has, in effect, removed themselves for years to come from the pool of future move-up buyers. Moreover, since so many can't or won't sell at a loss, but will have to move due to transfers or job changes, they will be a source of relatively cheap SFH rentals until that distant date when prices rise back above bubble levels plus selling costs.
"I'd much rather have a chance to pick my own upgrades, than pay for someone else's remodeling decisions (which likely are far different from mine)."
Couldn't agree more. I do hope all this granite and stainless will go the way of the dodo. My husband and I were out walking the other day and saw a sign on some over-priced condos that read "Stanless [sic] kitchen." The Far Side, anyone?
To make the above a little less OT ...
The people who levered their equity into the most expensive home a bubble-era mortgage would allow are probably so strapped for cash flow that they'll have none free for renovation, and with negative equity won't be able to finance any with a HELOC.
So much renovation has been financed with HELOCs, declining home prices seem certain to have a strong effect.
MHK is beginning to look better as a short, since the massive late Jan rally put some lipstick back on. Caution - PUTs have a pretty serious spread and plenty of premium. I made some dough from Dec-Jan, and bailed, thankfully. Their short interest has gone up substantially. Worth another look when they top out.
An honest question: it looks like this has been corrected for inflation. I wonder what this data would look like if it were corrected for:
a) Population;
b) House size (square footage);
c) Household size (residents per unit);
d) Disposable income.
AB&D are pretty straightforward, direction is obvious, magnitude one can guess at.
Household size is what really interests me - I wonder if there is not some base "amount" of home improvement that each 'family' has. This would imply that, possibly, if household size stops falling (as CR has indicated may be happening), the growth in home improvement could stop.
(Major causality issues and statistical junk to work out, but still be interesting). G
I've always assumed that remodeling ran counter-cyclical and would go up when new construction went down. However, the facts and I seem to be in disagreement and one of us will have to change.
A decline of only 15% is far too optimistic a projection. A big part of the increase since 2000 was flippers who buy, renovate, and then resell property. They are either now out of this business, or deep underwater on a few properties they did not unload in time before the bubble popped.
Further, the rapid decrease in home equity since late 2006 is now being reflected in appraisals, so there is less credit available for home improvement projects.
Finally, as the economy heads into a recession and consumer confidence plummets, those few Americans who do have cash or enough home equity to back a home improvement loan are going to be feeling too insecure to spend the money on it.
Someone mentioned that the cost of home improvement labor is going down. While that by itself may stimulate demand for home improvement investment, the cost of home improvement materials is going up much faster than the cost of labor is decreasing because (1) the dollar is weak and getting weaker (2) Chinese demand for raw materials continues to increase by more than 20% per year.
The most dangerous show on TV is Flip That House. A lot of innocents are being sucked in to what they see as easy money. Not in this market! It is all so sad.
Virtually every house on my block has had renovation projects in the past year. None of these folks are selling-they are doing it because it makes more sense to renovate than move. We put in a spa tub this summer. To increase the value of the house? No, because it gives my wife pleasure and she deserves it. By the time we sell in 10 or 15 years, who knows what impact, if any, it will have on selling price. Haven't any of you heard of doing something just because it gives pleasure? Is that not part of your world?
The North County Times. Several banks issued statements this week saying they were temporarily suspending withdrawals from open home equity lines out of concern that borrowers could owe more than the house is worth even on people who are current on their mortgage payments.
You have to look at in a continuum. When people decide to scale back, those who would have otherwise bought a new house, instead stay put and remodel. Those who were planning on remodelling a room or two, either scale back their plans or put it off for the time being.
My brother in law, a small contractor, has been very slow since 11/1 and is getting calls from all sorts of guys looking for work.
I'm home shopping in an urban area with a lot of rehabs and new construction. Houses which are perfectly fine but which could use some rehabbing and upgrading just do not sell at all. Obviously that's in part because the sellers are unwilling to drop their prices, but the fact is they face competition from all of the freshly rehabbed and upgraded places and they just can't compare with them.
interestingly, the last time I looked, homebuilders made up less than 50% of the XHB. HD, MHK, Ethan Allen, Lowes were the highest %. Evidently because the HB's capitalizations are a mere shadow of their former selves (although palpably unsustainable). I do think MHK and the rest of that index will get a shellacking as well. I don't know about puts, and shorting is dicey - I got squeezed out of it at one point last fall.
TidyCat,
What you say is true, but the question is would they actually get more net money if they do the upgrades? If they could drop their home price by less than the upgrades cost and sell then that is their better option. But re-modelers and flipping show fools try to convince you that you'll come out ahead. The evidence contradicts that, and for a reason someone else mentioned above, someone else's modifications are less useful than your own to making you happy with your own home.
No it isn't, it is human beings doing all the things human beings have done for centuries. This isn't the first bubble, it won't be the last and after this is long forgotten the same human race some where will be doing the same stupid things as their ancestors.
Hey Jas,
OT, but I also read the housingbubbleblog, b/c Ben puts up good articles and there are some good links to articles in the comment area. However, much of the actual comments are fluff. It is herd mentality. Everyone has the same ideas (which are generally rudimentary) and pats themselves on the back about them. Kind of the People magazine of comments (guilty pleasures are okay in moderation and as long as nobody catches you). I see you commenting there all of the time. Despite your sometimes hostile tone and self-loving nature, I think you say some good things. Why do you waste so much time there? Do you have a blog problem ("My name is Jas and I'm a blogaholic")? If so, perhaps you should seek counseling or just go cold turkey on the housingbubbleblog comment section (still read the links) for awhile. Just some advice from someone who has noticed your questionable tendancies..
"Obviously that's in part because the sellers are unwilling to drop their prices"
Ha! What people fail to understand until it's far too late is that in a bear RE market this IS a race for the bottom time. Regardless of condition it's find a price that can attract a bid NOW because a couple of months down the road that price will be ancient history. REOs now set the market price AND the negotiating terms. RE bears own the market here.
"real home improvement investment will slump 15% to 20%"
Guess again CR. I'd say double that at the absolute minimum. How long have Loew's and Home Depot been giving warnings about future earnings, almost a year now?
And can you, can you imagine fifty people a day,I said
fifty people a day walking in singin a bar of Alice's Restaurant and
walking out. And friends they may thinks it's a movement.
With publicly-traded homebuilders cutting prices AND increasing incentives in the sale of new homes, just how much renovation will an existing homeowner have to make to sell their homes?
It does seem like race to the bottom?
How to compete against the builders that need to generate CF? Stay tuned for a neighborhood near you.
"The key difference is that the ECB rescue operation in Spain has been disguised. A veiled method is necessary since the eurozone lacks a clear-cut lender of last resort. The IMF has warned that this gap in the architecture of of the single currency could prove serious in a crisis."
isn't their ECB analogous to our FED and aren't they acting as a lender of last resort by buying their bad mortgage paper?
CR - I've tried to load the comments from the previous thread several times this afternoon without success. I've experienced slow loading threads before, but never no-loading threads. Any suggestions???
There is no race to the bottom here in KC, this place may actually really be different. The emails from realtors describe a buying frenzy, basically if you don't have a contract now then you can go live under a bridge. And prices are not coming down.
I'm preparing to do some major home renovations soon myself, but then I'm a cheap bastard who paid 60% down on the house and still have cash in the bank for the work. I guess I'm a bit of a statistical anomaly. Also, the house is over 100 years old and I'm one of those Realtors who now has plenty of time on his hands to do the work.
I've been waiting for this day of reckoning for a couple of years now but it's turning out worse than I even expected. The funny thing is that almost all Realtors I know are dimwits who honestly believed their own line of BS. Sure they were corrupt sleazballs, but in the end most over leveraged themselves and are in a world of pain now. About 3 years ago when I was doing RE continuing education (in Scottsdale, AZ) I ended up in a gigantic class full of Realtors to be doing their initial 90 hours and there was nary a clue to be found among them about where the market was heading.
The sad thing is, I'm still seeing crappy Man Homes selling (and being appraised) for thousands over the asking price with the seller kicking in 6% costs plus a retrofit foundation to get FHA financing. Underwater on day 1.
FOB, Well, KC may just join the party at a later time. OK & TX may actually make it through this recession (depression) OK. It's the reverse of the mid '80s oil bust. This time around the oil patch may actually do well, by comparison.
The house prices in Oklahoma never recovered. I have a house there that I bought in 1989, worth about what it was in 1985... These dang KC people have me stumped though, the inventory is like nothing I've ever seen and they are still building.
Rich, that MHK stock certainly looks tempting to short, I'll prob put it on this week to go with my homebuilder/REIT/retail/banking shorts. might as well be short every sector that's gonna blow.
i see from Mohawk's summary on Yahoo that they do carpets, tiling, and wood flooring and roofing...stock only 20-25% off the all-time highs, surely there is no way it can do well in this business line in the current environment?
here in the UK (where the housing bust is barely a few months old), we had a profit warning early January from a sofa company, and others like carpet or tile companies have seen their shares hammered...most are ~50% off their highs, stocks like Carpetright, Topps Tiles, Land of Leather etc...I would think the US should be getting harder hit than the UK since you are so much further into the crash...
"Does anyone have any theories as to what happened in the 1970's that switched the trend from flat to increasing?"
Absolutely. Boomers entered the family-forming years. The current slump poses some risk - it might also coincide with the end of that mega-trend. If so, housing will not recover for decades.
I am doing my part to keep "home improvements" from going into recession. $8K for the new floor the renter ruined. $12K to put the house back in minimal rental condition. At $2k monthly rental you can figure out when I will get back to positive cashflow. We don't rely on that income but it is nice to have.
Ah! the joys of being a landlord.
I watched the bubble expanding on the way up and now I get to watch it deflate on the way down.
Keeping the rental as it is paid for and prop 13'd. The kids will be happy when I'm gone.
Past 4 weekends I have built a 1st floor bath for my 90 year old aunt so she no longer has to do the stairs in her home.
Anyways:
1. The 4 Home Depots I have been using (you think they may be past saturation at this point?) are ghost towns. Employees jump you to help just to keep from getting bored. Only time you have to wait is Saturday mornings when folks buy a gallon of paint to smarten up a room.
Hired a licensed plumber for the dirty work. Came well recommended. From the day he came over and we agreed to the work, until he was done was 3 days including ordering the shower, toilet , sink etc. No shortages of labor or parts in the Boston area.
The contractors are getting hungry. To those of us who did not mortgage our lives for granite tops and a stainless steel gas stove, a great season is coming to get quality work done quickly without headaches or insane bills.
Viewing is correct that Flip that House program suckered a lot of clueless idiots. I like to guess what year the episode is by how insane or real the prices seem. The 2007 shows are great watching fools/owners find out their castle/ATM is actually underwater 150K. I can only imagine what the 2008 episodes will have.
Rural Oregon, 1997, 1.5 ac, 1100 sf, 3/2 for $135. Per Zillow 2007 $250
well...i live in rural Oregoon and its really hard to compare stuff cause its not tracty...but have seen very good appreciation here on tillable land with water rights..house aint much, but its were we live until we cant, due to physicality issues...
Also, i used to do a lot of remodel and flip in CA and in order to be successful, one must find a really discusting house that most people cannot see thru the mess to invision what would it could look like after a remodel. Also, infrustructure problems were some of the most profitable. Termites, dry rot and stuff..And, frankely, I dont get people adding stainless and granite in hopes of selling. They are probably loosing money. This kind of remodeling usually doesnt produce a dollar for dollar ROI. IMO, better to price accordingly, if your against a wall and dont sink more money into a rathole. I could write a book on this...
the Bay Area and most of California for that matter still has plenty of correction left in its housing mkt ...however since when does the left coast ( esp affluent bay area or OC ) become a barometer for the rest of the country ? even if it is in the " middle income " housing mkt ! .. it seems to me that areas like California , Nevada , AZ and Fla are microcosims with boom bust housing mkts . i dont think you will walk into houses in say Ohio or Michigan (which have separate but still critical housing issues) and wonder about the stainless steel appliances , granite counter tops or mid tier furniture from pottery barn ...housing is soft but softer in some areas of the country than the rest
Be Alerted to the Hottest Stock Picks!!
Join Emerging Growth Alert Newsletter !
By joining the team at Emerging Growth Alert you will be in position to receive stock alerts profiling stocks about to move or already in motion. Our alerts are sent in time for you to research, investigate and make a decision about whether this opportunity is right for you. You will not be bombarded with junk mail. There is ABSOLUTELY NO OBLIGATION, and the service is entirely FREE. byethehost13.com byethehost13.com Cash Stocks
P.S.
You may think this is spam but this is only an invitation for those interested to receive Stocks alert ONLY stock alerts... Thanks to those who subscribed
i think such an increase in home improvement investment is expected. after all, commodity in the market also increase especially here in the Philippines. thanks for the info and thanks as well to american home shield
Home Depot can attest to this. My local Home Depot is on a hiring freeze. Generally they start hiring about now for Spring, but not this year.
Can anyone see desperate sellers propping up the home improvement market? I remember in the boom days any leaky, falling apart brick box was selling, but now they have to improve the property as much as they can to increase chances for a sale..
By the way CR and all - has anyone heard that the Egg credit card cutoff was not because customers were not "risky" bad, but "risky" too good?
this is from the brit PA wires:
The article requested is no longer available.
If this is so, wonder what the implications are for this twisted kind of "tightening"..
home depot had high profits before the fourth quarter earnings but the economy is going the crappier with everything and Now bush gives us more debt in the form of $600.
Lively Money: BUSH IS GIVING AWAY $600 SO HERE ARE TWO THINGS YOU CAN DO WITH THE MONEY!.
CR
Where are the home improvement data available?
--
That is one reason that OFHEO's HPI is biased on the upside and doesn't show the declines shown in other series. There was a Home Modernization Bubble was fed by Home Price Bubble. Water is drying up at the source. It will show up downstream. Dominos will fall one-by-one.
Jas
Well, there's the "if you can't move, remodel" trend, but with MEW and HELOCs tightening, we're probably at the end of that, now.
Watch earnings of Mohawk Industries, reported on Feb 15. MHK
$7 billion annual wholesale supplier of carpets, tiles and floor coverings. Mohawk is the 2nd largest wholesaler in the industry. The largest, Shaw Industries, is part of Berkshire Hathaway.
Analysts are still bullish, expecting $1.54 per share for MHK. If they make $1.54, I'll eat my hat.
Since mid-2004, wholesale lumber prices have declined by more than half. But floor covering has stayed strong. There is relatively more lumber used in new home construction vs. renovation, compared to floor covering.
Floor covering is a good barometer of home renovation.
Can anyone see desperate sellers propping up the home improvement market?
Yep, when everyone has granite countertops you need an extra something in order to stand out. At least that's what some sellers might believe.
Could this explain (in part) why construction employment hasn't dropped as much as in past busts?
I've seen some numbers where the return to remodeling is far short of 100%. Yet people still believe that if they fix the bathroom or install new countertops, then they can "more than" pay for the upgrades.
Contractors have certainly got the masses drinking the Kool Aid.
I'd much rather have a chance to pick my own upgrades, than pay for someone else's remodeling decisions (which likely are far different from mine).
Rich,
Thanks for this possible tip. I need to research it but I like this stocks PUT potential.
Well, I may be in the minority, but...
The pop of the housing bubble makes me [i]more[/i] likely to spend money on home improvement, not less. I bought my place in 2005, so there's no way I can sell it anytime soon. So I might as well make it nice, eh?
Of course, I'm cheaper then your average renovator... I priced curtains and other good window treatments and opted to buy a sewing machine. One window down so far 8)
Even if the absolute volume of home improvement projects remains constant -- even if it rises -- the dollar volume will drop because the contractors are desperate for work, and materials prices are falling.
Slaying the 'Enoughasaurus' And Embracing Frugality
Michelle Singletary - Slaying the 'Enoughasaurus' And Embracing Frugality - washingtonpost.com
You can enjoy life more by spending less. It's a message that Yeager has been preaching for quite some time. He's become the go-to-guy for NBC's "Today" show on cheapness.
A good companion piece to the Slaying the 'Enoughasaurus'
The Story of Stuff
Slightly OT, but...
One aspect of the market that seems under-appreciated is that it appears that many move-up buyers in the bubble years had put down 20% on their previous home purchase, and were able to re-extract that equity plus a substantial profit and then lever themselves into a much more expensive home on which that amount was a 5% down payment.
As prices decline, anyone who has done that has, in effect, removed themselves for years to come from the pool of future move-up buyers. Moreover, since so many can't or won't sell at a loss, but will have to move due to transfers or job changes, they will be a source of relatively cheap SFH rentals until that distant date when prices rise back above bubble levels plus selling costs.
"I'd much rather have a chance to pick my own upgrades, than pay for someone else's remodeling decisions (which likely are far different from mine)."
Couldn't agree more. I do hope all this granite and stainless will go the way of the dodo. My husband and I were out walking the other day and saw a sign on some over-priced condos that read "Stanless [sic] kitchen." The Far Side, anyone?
CR,
Thanks as always for the great charts - do you think it would be possible to link us to the actual data you used when you post the "source?"
the BEA website has a ton of different measures for a lot of data , and it would be helpful if you could link us to the exact data used for the chart.
Just a suggestion.
To make the above a little less OT ...
The people who levered their equity into the most expensive home a bubble-era mortgage would allow are probably so strapped for cash flow that they'll have none free for renovation, and with negative equity won't be able to finance any with a HELOC.
So much renovation has been financed with HELOCs, declining home prices seem certain to have a strong effect.
MHK is beginning to look better as a short, since the massive late Jan rally put some lipstick back on. Caution - PUTs have a pretty serious spread and plenty of premium. I made some dough from Dec-Jan, and bailed, thankfully. Their short interest has gone up substantially. Worth another look when they top out.
An honest question: it looks like this has been corrected for inflation. I wonder what this data would look like if it were corrected for:
a) Population;
b) House size (square footage);
c) Household size (residents per unit);
d) Disposable income.
AB&D are pretty straightforward, direction is obvious, magnitude one can guess at.
Household size is what really interests me - I wonder if there is not some base "amount" of home improvement that each 'family' has. This would imply that, possibly, if household size stops falling (as CR has indicated may be happening), the growth in home improvement could stop.
(Major causality issues and statistical junk to work out, but still be interesting). G
MHK Mar 80 strike Put at $3.60 is pretty juicy IMO.
WHR may be another interesting one.
I've always assumed that remodeling ran counter-cyclical and would go up when new construction went down. However, the facts and I seem to be in disagreement and one of us will have to change.
A decline of only 15% is far too optimistic a projection. A big part of the increase since 2000 was flippers who buy, renovate, and then resell property. They are either now out of this business, or deep underwater on a few properties they did not unload in time before the bubble popped.
Further, the rapid decrease in home equity since late 2006 is now being reflected in appraisals, so there is less credit available for home improvement projects.
Finally, as the economy heads into a recession and consumer confidence plummets, those few Americans who do have cash or enough home equity to back a home improvement loan are going to be feeling too insecure to spend the money on it.
Someone mentioned that the cost of home improvement labor is going down. While that by itself may stimulate demand for home improvement investment, the cost of home improvement materials is going up much faster than the cost of labor is decreasing because (1) the dollar is weak and getting weaker (2) Chinese demand for raw materials continues to increase by more than 20% per year.
The most dangerous show on TV is Flip That House. A lot of innocents are being sucked in to what they see as easy money. Not in this market! It is all so sad.
Virtually every house on my block has had renovation projects in the past year. None of these folks are selling-they are doing it because it makes more sense to renovate than move. We put in a spa tub this summer. To increase the value of the house? No, because it gives my wife pleasure and she deserves it. By the time we sell in 10 or 15 years, who knows what impact, if any, it will have on selling price. Haven't any of you heard of doing something just because it gives pleasure? Is that not part of your world?
Rural Oregon, 1997, 1.5 ac, 1100 sf, 3/2 for $135. Per Zillow 2007 $250.
Have approved plans to add 1100 sf. Was going to pull out $80 for remodel and to pay some bills, we are doing a lot of the work ourselves.
Take the 34% drop expected by Martenson to bring prices in line with income gains and our 660 FICO we're shit out a luck.
However, I am glad we didn't jump on this early last year. We would no doubt we'd be upside down.
The North County Times. Several banks issued statements this week saying they were temporarily suspending withdrawals from open home equity lines out of concern that borrowers could owe more than the house is worth even on people who are current on their mortgage payments.
picosec, the data is available in the BEA supplemental tables.
Scroll down to Section 5.
Table 5.4.5BU. Private Fixed Investment in Structures by Type has the nominal values.
Table 5.4.6BU. has the real values.
Note that improvements are near the bottom (line 42) in both tables.
Best Wishes.
--
Based on people who worked in the Home Modernization business, the boom in LA Area was simply unbelievable. I haven't talked to them recently.
Jas
You have to look at in a continuum. When people decide to scale back, those who would have otherwise bought a new house, instead stay put and remodel. Those who were planning on remodelling a room or two, either scale back their plans or put it off for the time being.
My brother in law, a small contractor, has been very slow since 11/1 and is getting calls from all sorts of guys looking for work.
I'm home shopping in an urban area with a lot of rehabs and new construction. Houses which are perfectly fine but which could use some rehabbing and upgrading just do not sell at all. Obviously that's in part because the sellers are unwilling to drop their prices, but the fact is they face competition from all of the freshly rehabbed and upgraded places and they just can't compare with them.
interestingly, the last time I looked, homebuilders made up less than 50% of the XHB. HD, MHK, Ethan Allen, Lowes were the highest %. Evidently because the HB's capitalizations are a mere shadow of their former selves (although palpably unsustainable). I do think MHK and the rest of that index will get a shellacking as well. I don't know about puts, and shorting is dicey - I got squeezed out of it at one point last fall.
Ironically, I am going to do some major home improvements this year. On a house built in 1953, so it's really needed.
Then again, I'm usually completely out of step with everyone else.
TidyCat,
What you say is true, but the question is would they actually get more net money if they do the upgrades? If they could drop their home price by less than the upgrades cost and sell then that is their better option. But re-modelers and flipping show fools try to convince you that you'll come out ahead. The evidence contradicts that, and for a reason someone else mentioned above, someone else's modifications are less useful than your own to making you happy with your own home.
With MEW fading into the sunset, why can't individuals tap credit cards for repair and renovation projects?
"It is all so sad."
No it isn't, it is human beings doing all the things human beings have done for centuries. This isn't the first bubble, it won't be the last and after this is long forgotten the same human race some where will be doing the same stupid things as their ancestors.
Does anyone have any theories as to what happened in the 1970's that switched the trend from flat to increasing?
Disco?
Thanks for the pointer in comments to the data source, in reply to Dunham.
I concur that it would be great if you all would regularly "link us to the actual data you used when you post"
-- rule one of database: one record, many pointers.
That rule is a sanity check that doesn't bounce.
Particularly so for graphics based on data found elsewhere.
Doing this also teaches people how to fish for their own data -- good idea.
Hey Jas,
OT, but I also read the housingbubbleblog, b/c Ben puts up good articles and there are some good links to articles in the comment area. However, much of the actual comments are fluff. It is herd mentality. Everyone has the same ideas (which are generally rudimentary) and pats themselves on the back about them. Kind of the People magazine of comments (guilty pleasures are okay in moderation and as long as nobody catches you). I see you commenting there all of the time. Despite your sometimes hostile tone and self-loving nature, I think you say some good things. Why do you waste so much time there? Do you have a blog problem ("My name is Jas and I'm a blogaholic")? If so, perhaps you should seek counseling or just go cold turkey on the housingbubbleblog comment section (still read the links) for awhile. Just some advice from someone who has noticed your questionable tendancies..
"Obviously that's in part because the sellers are unwilling to drop their prices"
Ha! What people fail to understand until it's far too late is that in a bear RE market this IS a race for the bottom time. Regardless of condition it's find a price that can attract a bid NOW because a couple of months down the road that price will be ancient history. REOs now set the market price AND the negotiating terms. RE bears own the market here.
projected economic impact of the next recession-
http://www.cepr.net/documents/publications/JSDB_08recession.pdf
"real home improvement investment will slump 15% to 20%"
Guess again CR. I'd say double that at the absolute minimum. How long have Loew's and Home Depot been giving warnings about future earnings, almost a year now?
Enoughasaurus.
Story of Stuff.
Rev Billy and the Church of Stop Shopping (Page not found | Reverend Billy & The Church of Life After Shopping.
And can you, can you imagine fifty people a day,I said
fifty people a day walking in singin a bar of Alice's Restaurant and
walking out. And friends they may thinks it's a movement.
risk capital, well, that certainly was a depressing report.
With publicly-traded homebuilders cutting prices AND increasing incentives in the sale of new homes, just how much renovation will an existing homeowner have to make to sell their homes?
It does seem like race to the bottom?
How to compete against the builders that need to generate CF? Stay tuned for a neighborhood near you.
FT-
I was thinking the same thing.
I have to get back into my, "the Giants are going to stomp the Patriots mentality". (:
someone help me understand this:
Under-the-Radar Rescue of Spanish Mortgage Banks « naked capitalism
"The key difference is that the ECB rescue operation in Spain has been disguised. A veiled method is necessary since the eurozone lacks a clear-cut lender of last resort. The IMF has warned that this gap in the architecture of of the single currency could prove serious in a crisis."
isn't their ECB analogous to our FED and aren't they acting as a lender of last resort by buying their bad mortgage paper?
CR - I've tried to load the comments from the previous thread several times this afternoon without success. I've experienced slow loading threads before, but never no-loading threads. Any suggestions???
There is no race to the bottom here in KC, this place may actually really be different. The emails from realtors describe a buying frenzy, basically if you don't have a contract now then you can go live under a bridge. And prices are not coming down.
I'm preparing to do some major home renovations soon myself, but then I'm a cheap bastard who paid 60% down on the house and still have cash in the bank for the work. I guess I'm a bit of a statistical anomaly. Also, the house is over 100 years old and I'm one of those Realtors who now has plenty of time on his hands to do the work.
I've been waiting for this day of reckoning for a couple of years now but it's turning out worse than I even expected. The funny thing is that almost all Realtors I know are dimwits who honestly believed their own line of BS. Sure they were corrupt sleazballs, but in the end most over leveraged themselves and are in a world of pain now. About 3 years ago when I was doing RE continuing education (in Scottsdale, AZ) I ended up in a gigantic class full of Realtors to be doing their initial 90 hours and there was nary a clue to be found among them about where the market was heading.
The sad thing is, I'm still seeing crappy Man Homes selling (and being appraised) for thousands over the asking price with the seller kicking in 6% costs plus a retrofit foundation to get FHA financing. Underwater on day 1.
FOB, Well, KC may just join the party at a later time. OK & TX may actually make it through this recession (depression) OK. It's the reverse of the mid '80s oil bust. This time around the oil patch may actually do well, by comparison.
The house prices in Oklahoma never recovered. I have a house there that I bought in 1989, worth about what it was in 1985... These dang KC people have me stumped though, the inventory is like nothing I've ever seen and they are still building.
Rich, that MHK stock certainly looks tempting to short, I'll prob put it on this week to go with my homebuilder/REIT/retail/banking shorts. might as well be short every sector that's gonna blow.
i see from Mohawk's summary on Yahoo that they do carpets, tiling, and wood flooring and roofing...stock only 20-25% off the all-time highs, surely there is no way it can do well in this business line in the current environment?
here in the UK (where the housing bust is barely a few months old), we had a profit warning early January from a sofa company, and others like carpet or tile companies have seen their shares hammered...most are ~50% off their highs, stocks like Carpetright, Topps Tiles, Land of Leather etc...I would think the US should be getting harder hit than the UK since you are so much further into the crash...
"Does anyone have any theories as to what happened in the 1970's that switched the trend from flat to increasing?"
Absolutely. Boomers entered the family-forming years. The current slump poses some risk - it might also coincide with the end of that mega-trend. If so, housing will not recover for decades.
Or it might have been the Whole Earth Catalog.
Or maybe not.
I am doing my part to keep "home improvements" from going into recession. $8K for the new floor the renter ruined. $12K to put the house back in minimal rental condition. At $2k monthly rental you can figure out when I will get back to positive cashflow. We don't rely on that income but it is nice to have.
Ah! the joys of being a landlord.
I watched the bubble expanding on the way up and now I get to watch it deflate on the way down.
Keeping the rental as it is paid for and prop 13'd. The kids will be happy when I'm gone.
Past 4 weekends I have built a 1st floor bath for my 90 year old aunt so she no longer has to do the stairs in her home.
Anyways:
1. The 4 Home Depots I have been using (you think they may be past saturation at this point?) are ghost towns. Employees jump you to help just to keep from getting bored. Only time you have to wait is Saturday mornings when folks buy a gallon of paint to smarten up a room.
The contractors are getting hungry. To those of us who did not mortgage our lives for granite tops and a stainless steel gas stove, a great season is coming to get quality work done quickly without headaches or insane bills.
Viewing is correct that Flip that House program suckered a lot of clueless idiots. I like to guess what year the episode is by how insane or real the prices seem. The 2007 shows are great watching fools/owners find out their castle/ATM is actually underwater 150K. I can only imagine what the 2008 episodes will have.
Rural Oregon, 1997, 1.5 ac, 1100 sf, 3/2 for $135. Per Zillow 2007 $250
well...i live in rural Oregoon and its really hard to compare stuff cause its not tracty...but have seen very good appreciation here on tillable land with water rights..house aint much, but its were we live until we cant, due to physicality issues...
Also, i used to do a lot of remodel and flip in CA and in order to be successful, one must find a really discusting house that most people cannot see thru the mess to invision what would it could look like after a remodel. Also, infrustructure problems were some of the most profitable. Termites, dry rot and stuff..And, frankely, I dont get people adding stainless and granite in hopes of selling. They are probably loosing money. This kind of remodeling usually doesnt produce a dollar for dollar ROI. IMO, better to price accordingly, if your against a wall and dont sink more money into a rathole. I could write a book on this...
the Bay Area and most of California for that matter still has plenty of correction left in its housing mkt ...however since when does the left coast ( esp affluent bay area or OC ) become a barometer for the rest of the country ? even if it is in the " middle income " housing mkt ! .. it seems to me that areas like California , Nevada , AZ and Fla are microcosims with boom bust housing mkts . i dont think you will walk into houses in say Ohio or Michigan (which have separate but still critical housing issues) and wonder about the stainless steel appliances , granite counter tops or mid tier furniture from pottery barn ...housing is soft but softer in some areas of the country than the rest
Be Alerted to the Hottest Stock Picks!!
Join Emerging Growth Alert Newsletter !
By joining the team at Emerging Growth Alert you will be in position to receive stock alerts profiling stocks about to move or already in motion. Our alerts are sent in time for you to research, investigate and make a decision about whether this opportunity is right for you. You will not be bombarded with junk mail. There is ABSOLUTELY NO OBLIGATION, and the service is entirely FREE.
byethehost13.com
byethehost13.com
Cash Stocks
P.S.
You may think this is spam but this is only an invitation for those interested to receive Stocks alert ONLY stock alerts... Thanks to those who subscribed
i think such an increase in home improvement investment is expected. after all, commodity in the market also increase especially here in the Philippines. thanks for the info and thanks as well to american home shield
Thanks for the pointer in comments to the data source, in reply to Dunham.
SONY PSP
rc helicopter
Led Flashlight