Viewing with alarm,

CR is the perfect accompaniment to a smooth cab on a Friday night.

Paging Dryfly re: upper midwest hotel standards, paging Dryfly!

I would think hotel development or ROW would be Africa/Chindia/E & C. Europe.

A home bought today at 55% LTV in Sonoma county would likely be at 95% LTV in 3 years...

please help explain the scale of the graph.

left vertical axis is in millions?

so the peak of 450,000 investment non residential ex lodging is 450 thousand times one million ?

sorry for being dense.

We are truely cr junkies to be reading a post on Hotel Financing on Friday night. First, but I need a life!

I don't know about you, but after reading that blog, I'm thinking of opening a hotel. Let's see 55% LTV,...I just need to save $48,000,067 more.

48 mil +/- 0.000002% ....damn you're good

Off-topic...

Linens 'n Things files for bankruptcy protection 
NEW YORK - A Chapter 11 bankruptcy filing by Linens 'n Things is the latest sign that the retail sector is becoming leaner and meaner amid a difficult consumer environment.

On Friday, the bedding- and home-furnishing retailer filed a petition in bankruptcy court in Delaware and said it would close 120 underperforming stores, almost a quarter of them in California.

Here's a terrific comment from a Realtor on the blog post that Cal mentions above:

The saddest thing about property values declining is that they don't have to be! The housing market....even in the most over-heated of markets... is fundamentally strong. Housing formations and the population keep going up. There was a reason that the markets that over-heated did so. Because they were desirable!

If they "fix" the credit markets, the housing markets will come roaring back and there will be no need to paint scarlet "D"s on any body's front door!

By "great sponsorship" they mean somebody who is good for 25% recourse. That is very different from last year, even if they only went from 75% LTV to 70%.

CR - What would that do to residential?

What IS it doing to res in CA. That is very close to what is happening in Jumbo land.... the lender promises 70% LTV, comes in low on the appraisal, then the appraisal manager slashes another 15% from the appraisal "just in case". BINGO 55%

“you just made $20,000 in equity...”

Good one. And Your debt service increased $180,000 so that $20,000 in instant equity is costing you ~70% APR provided there is no depreciation. Indeed for this to make any sense as a purely financial exercise the new house would need to appreciate 5-6% per annum minimum.

The a$$hats in that article are the worst form of pump and dumpers. “anyone buying a home right now is the smart buyer,” Ritke said. And what does Ritke do? He sells houses. He's President of Will-Grundy Counties Home Builders and Associates. Always ask yourself why they are doing the exact opposite (selling) of what they are advising others. The only thing that comes close is Sam Zell recently.

I forget his name but the guy from UCSB economic forecast was on the radio yesterday saying ABSOLUTELY no recession.

He's President of Will-Grundy Counties Home Builders and Associates.

Ever been to Will or Grundy County? We're talking Romeoville, Joliet & Morris Illinois.

Its another one of those 'walk away' counties... way out suburb/exurbs of Chicago with way too much building & development & far to few good local jobs (meaning hellacious commutes for most - straight into the teeth of some of Chicago area's most congested highways).

And Rob't we aren't talking 'Ventura County Chablis' vintage exurbs - we're talking 'mass produced plastic sided cookie cutter interstate exit development' exurbs. The OTHER kind of exurb...

I would expect there would be VERY significant 'discounts' in those counties - there would have to be to draw bids from any would be knife catchers... especially with $3.50 gas driving a four year old SUV (with three more years of payments to go).

dryfly, too funny. VC Chablis! Seriously though, Ventura County developments are nothing special. Substitute "foam and stucco" for "plastic". Right on the freeway, they all lead onto the 101 and major congestion into either Santa Barabara or LA.

dryfly writes:
...Will or Grundy County? We're talking Romeoville, Joliet & Morris Illinois.
...And Rob't we aren't talking 'Ventura County Chablis' vintage exurbs - we're talking 'mass produced plastic sided cookie cutter interstate exit development' exurbs. The OTHER kind of exurb...

If it weren't so early here on the left coast I'd lift my glass. Will a mug of Dunkin' Donuts coffee suffice?
For all their evil google does quick mapping pretty darn well.
Romeoville: romeoville, il - Google Maps
Kinda like Oxnard with snow: htttp://tinyurl.com/5hgfvs

It isn't so much the exurbs that will get killed as the recently developed product types independent of location.

Bob in Ma,
I've stayed at those extended stay places while on long projects. They charge about 3 times going rents, but are furnished. I think those are all about location. If there's enough consulting or other large firms with high paying jobs AND they bought well, I think they'll fair OK.
For example, we were paying $3,400 for a one bedroom that would have sold for, say $200-250k at peak. If they bought at peak, I don't think they would survive lean times. If they bought before 2002, I think they'd be fine.
Just outside DC, FYI.

It isn't so much the exurbs that will get killed as the recently developed product types independent of location.
Rob Dawg | Homepage | 05.03.08 - 10:32 am | #

Exactly - that's why I haven't joined in on the 'pile on dog' over exurbs per se... there are the right ways to do it 7 the wrong ways & lotsa stereo-types to over come.

That also applies to 'urbanism' - it can work but you have to get past stereotypes - good & bad.

Point is Will & Grundy are mostly the worst examples of 'exurb nation' - unsupported stand a lone energy inefficient developments with far too few good local jobs. Ironically - Romeoville is one of the exceptions... there are a lot of pretty fair mfg & mfg-service support jobs along I 55 corridor into Chicago. More than enough to support the development there.

Not all automotive either - lotsa commodities, chemicals, transport, etc. Good jobs, real middle class money.

But that's the exception out that way - not the rule. Jobs at the 'Empress' are the 'rule'...

Dry, Did you feel double crossed when the price of deisel went up $.80/gal? What's that about? A family member bought a deisel about a year ago and now regrets it.

All my colleagues drive Lexus, BMW, Infinity, so I had to splurge myself. I bought some Turtle Wax and put two (2) coats on my Accord. One colleague even told me what a nice looking car I had.
lama | 05.03.08 - 10:39 am | #

Nope. My Jetta gets 50 mpg consistently. Plus the engine will last FOREVER - I'll be handing it down to kids even as the body falls apart - a great opportunity to 'Bondo' with my kids.

There is no gas powered vehicle out there that is as economical AND does heavy over the road high speed driving for cheap like the manual tranny diesel Jetta... the smaller gas powered Honda's do upper 30s & low 40s and are as economical considering the gas/diesel differential... but they do not hold up to heavy over the road pounding - I've tried small gas powered vehicles & they don't cut it - too light, too flimsy.

However if I were doing a lot of city driving, shorter haul commute - then I would definitely buy one of those instead. Or maybe even a hybrid (if a lot of the commute was stop-go city) If I change my job - and I'm considering doing that due to the frustrations of dealing with the knuckleheads I currently work for - then I'd maybe not own a Jetta diesel.

If I continue on this path though I will definitely start looking to buy another one. Maybe as soon as this next fall/winter. Probably used - they are out there if you really look.

Cal posted: "Cal writes:
Thornburg thinks California unemployment will top 8%, Nationally 7%:

Beacon Economics produc...hamberapr08.pdf"

I would have to say that this is a very compelling and well-documented argument.

Yet, still no recession, even though there have been compelling, well-documented arguments for a long time.

Clearly, there's a critical factor that's missing, otherwise we'd have been in recession long ago.

I think that key factor is our location on the business cycle. We're still in the middle and not at the end, and that trumps all the indicators "proving" that we're either in a recession or on the verge of one.

We won't see recession until the Fed starts tightening at the soonest, and probably not until it tightens by quite a bit.

Sebastia

You think that VW diesel will live forever? I wish you luck. I love the feel of VWs, but my experience is that the mechanical reliability and durability are not in the same league as the better Japanese cars - and even some US cars.

Sebasatian,
This is really insulting: "I know you're not really interested, but..."
You know nothing of the kind and it is beyond presumptuous to claim you know my mind. Cheap sophomoric debating trick at best.

The 2001 recession call was not manipulated very much because it conveniently fit the existing political calendar and certain political agendas. The Oct '07 - Sept '10 recession serves no political expediency and is thus earning the title "An Inconvenient Economy." I'd like to thank the members of the Nobel selection committee for their...

Lots of CRE was justified by assuming the capture of future appreciation. Imagine how little would have been built with any speculative component if there were a model incorporating an assumption of flat to declining asset valuation.