JP, Case-Shiller will be released tomorrow - and that is the best measure of prices. New home prices are based on a median, and I suspect the mix has changed (fewer McMansions!)
I'd feel better if we had some idea of three more statistics; new home construction approvals and new homes under construction and completed properties on the pink sheets before believing the inventory numbers.
"when will the market be done pricing in an Obama win ?"
LOL
If this is what an Obama win does to the market imagine how much will tank if McCain pulls it off. Then imagine what happens if he gets hit by a truck and President Palin "rears her head"....
As I understand it (and I may not) most (all?) sales contracts are contingent on the buyer finding financing. In the current credit market is there going to be a problem with a lot of cancellations because banks won't make the loans?
"First stated by Henry IV of France as, "I want there to be no peasant in my realm so poor that he will not have a chicken in his pot every Sunday," and later in the United States during the Hoover campaign for presidency as part of an advertisement."
RonBurgundy writes:
That inventory number is total bullshit. anyone who believes it is dumber than Sarah Palin
I might believe the same thing but around these here parts we need more than exposition to back it up. Why do you think that/
Personally I am familiar with "on the pinks" which refers to essentially completed homes that haven't asked for a final inspection from the city. When you look up massive developments like Riverpark in Oxnard list a half dozen units available for sale but once in the sales office it is clear that dozens of similar models are equally available for immediate sale.
In my area builders will not start a place with less than 20-40% down. The place I stopped at Friday was 35%. Small local builder. If you couldn't finance and gave up your deposit he could easily sell the new place for the balance. BTW...This builder was selling 1800 sq/ft,3/2/2, including lot for 89k. This is less than half of peak prices. You can get the deluxe with a pool and screened enclosure for 109k. A lot of people are not even screwing with a used home for that price...
A lot of people are not even screwing with a used home for that price...
Oh... you mean "meticulously maintained, extensively upgraded throughout classic residences that exude pride of ownership." "Used houses" what are those?
"Used houses" what are those?
Rob Dawg | Homepage | 10.27.08 - 10:45 am | #
That would be the condo I looked at.
At the asking price of 25k it was a little high for the needed inside work. Price was just cut to 14k. Not a great deal,but not horrid. This is about 2 years at my current rent. The fees aren't all that bad...
I could pay cash and hunker down for a couple of years until land prices drop some more. The larger,2+ acre lots,are still stuck...I think a lot of people paid cash and are just sitting hoping the market comes back.
For several months I have checked the same loan on eloan every day - $650k loan (after 20% down) with an excellent credit rating. Last week the rate was in the mid 6's for a 30 year fixed. The past few days, eloan is only offering a five year ARM at 9.75% and will only loan $595k vs the $650k on the same house. (This is in Bay Area, CA, so the conforming loan limit is over $700k).
Also, bankrate lists only 5 banks that will now make this loan.
It seems like credit is getting tighter, much tighter. Silicon Valley is in bigger trouble than I thought if this continues. Plus the new conforming loan limits are coming out on 11/07, which will most likely be lower than the current limit.
I think I just heard the only interesting thing ever said on CNBC. Apparently Walmart was tracking sales and has noticed an increase in the sales of baby formula on typical paydays leading them to believe people are out of cash.
Nostrovia,
Comrade Misean is Dope | 10.27.08 - 10:51 am | #
If you want to do this let me know. I'll send you a list of adresses in my area that do not have alarms installed...Heck the county even has lawn companies mowing the yard for ya.
--
Housing Price Defaltion would show up in overall CPI SOOOOOOOOOOON...
TIPS Already Have PRICED-IN Deflation!
I realize that Inflationists are smarter than the US Treasury markets. But for those of who look to the markets for clue, DEFLATION IS COMING SOONER THAN ANYONE EXCEPT A CRANK LIKE ME THINKS.
Local Gas-Wars
I was thrilled at getting my gas tank filled @$2.899 on Friday. On Sunday my two neighbors stopped by and told me that due to gas-wars the same station now is selling @2.659 and the other warring station @$2.679. That is down $1/gallon in about 3 months.
CR, a few years ago you used to provide the new home sales y-o-y change while highlighting recessions. And if I recall correctly, the change at -30% correlated well with recession beginnings. Since the y-o-y change must be improving somewhat, I'm wondering if you would be kind enough to include that chart sometime again. Thanks a ton.
I think you can take out the blue "possible recession" portion of that graph. Been in one since last year..
If you are waiting for confirmation from our wonderful gov't agencies you're not going to get it from this administration.
Gas here in the Twin Cities is 2.15. You've got a ways to go.
By the way, Diesel is 3.19. I can't recall a time when there was such a disparity on the two fuel types. I guess it's a "winter blend" issue, but that's a huge middle finger to all the people who rushed right out and bought diesel cars. Oh, and truckers/shipping.
(unashamed schaudenfreude at the neighbor who has a F-350 Ford Diesel Cummins to tow his boat and snow machines)
Gas here in the Twin Cities is 2.15. You've got a ways to go.
By the way, Diesel is 3.19. I can't recall a time when there was such a disparity on the two fuel types. I guess it's a "winter blend" issue, but that's a huge middle finger to all the people who rushed right out and bought diesel cars. Oh, and truckers/shipping.
(unashamed schaudenfreude at the neighbor who has a F-350 Ford Diesel Cummins to tow his boat and snow machines)
your chart linking home sales to periods of recession is interesting. But I think that chart that links home sales to change in Fed funds interest rates would be even more interesting. In the past a recession was usually the result of Fed. tightening. I would therefore expect to see a pretty good correlation between change in interest rates and homes sales. What makes this time so interesting is that the decline is coming after rates have been cut. It would therefore suggest that the rebound will not be as easy to engineer.
anyone else experiencing slow performance with CR's main page.....those ads seem to screw up everything lately? I know they are necessary however recently they have really slowed the load times on everything I have open.
OT- I've been lurking here for quite some time and have done what I could to prepare for whatever is coming. Part of that preparation was selling a building lot in coastal carolina. I owner financed the property and was paid by the purchaser to build a cottage which he paid for with cash. I have first lien on the property which has now been improved w/ a small cottage. I hoped the purchaser would do a cash out refi asap and pay me off. The purchaser has about about $275,000 in the cottage and lot combined. It would probably appraise around 350-385. I received 20% down payment and agreed to finance i/o for 2 years with a balloon payment due in about 18 months. I have first and only lien on the property and my note is $140,000. After a conversation this morning with the purchaser he casually told me he was going to sell a 1/2 interest in the cottage to his brother and use the money to invest in a restaurant. My quesion-Is there any thing I can do to force him to pay my note instead of using the money to invest in a restaurant? I'm just a simple carpenter and thought I was doing the right thing to protect my family. My intention is to use the money to pay down my own mortgage- 30 yr fixed under 6%. Thanks in advance.
If Obama is not elected expect to see a free fall in the US Dollar. I think the recent strength of the dollar in part is due to his increase in the polls. It is clear that the world would prefer an President Obama to a President McCain. But the prospect of a President Palin scares the **** out of them- I would personally would use the current dollar strength to get out if there is any chance of her being near the Oval office.
That is CNN's headline for the same story. and they even found an "analyst" to explain the increase:
"We're clearly seeing some pick-up in regional areas where home prices have fallen," said Mike Larson, a real estate analyst with Weiss Research. "The drops have spawned some bottom fishing.""
"(summer 2007), are we approaching Peak Doom now?"
With what USA is going to start rising from the bottom? GenX/Y/Z were almost all raised to be a hedonistic "consumers", not worker bee producers.
Math is uncool, physics is uncool, computer science is for nerds. Only thing cool is selling and owning stuff, mostly made abroad.
Americans would need to set up huge reeducation camps for these millions of American idol wannabes in order to start changing the attitudes towards producing, making things.
(OT: The ticker tape won't be as crowded when these former hi-fliers enter single digit territory:
C 12, UBS 13, BCS 12, MS 15, SCHW 15, AMTD 10, DELL 11, ORCL 16, NOK 14, GE 17, PFE 16, BMY 17, SGP 13, JCP 18 and hundreds more. Lots of good buys out there down another 50% or more, and plenty of time to the bottom).
crazyvermonter...I geuss you don't understand the unwinding of the carrytrade. So you'll also contend that the Yen is strengthening because of Obama as well?
--
Why TIPS in deflation? Aren't they designed to keep up with inflation? Apologies if you have already answered this Jas - what can i say, I'm a DOPE."
sterlingerl,
Anyone who asks a question is NOT a dope, at least in the area in question.
USTs trade in two different "models" -- (1) those that pay a certain yield + Inflation Rate calculated by BLS and (2) those that pay a fixed nominal yield determined at the auction. They both trade in the open markets and one can calculate what Inflation Rate is priced in 2's 5's, etc. If the Inflation Rate priced-in is negative then the market is pricing-in a negative inflation rate in the future. That future, according to The Fearless Forecaster is 2009Q2/Q3.
Another commenter on earlier thread posted chart which seemed to conclude that TIPS was better investment in present environment. At least, that's what I think he said.
I put kids' college funds in TIPS via 529 option about a year ago and was doing nicely until several weeks ago and found that has lost about 5%. It makes no sense to be in inflation hedge in deflationary environment so will change.
Only question now is whether the MM fund option is participating in the Fed/Treasury MM Facility.
Don't get upset with the MSM saying sales are up, if the idiots run the market up, use this as a time to load up on EFT shorts...it worked for me a year ago - don't be negative, capitalize on the sheeple and steal their money!!
Only question now is whether the MM fund option is participating in the Fed/Treasury MM Facility.
It doesn't matter, for your money.
That insurance only applies to money you had in the fund as of that day (9/17, I think). If you sell your TIPS and put them in the MM fund, by definition, that money will NOT be insured.
Just one other comment related to my last. I have one of my pension plans (not big money) in Index Linked Gilts, only because 12-18 months ago I thought we would be facing stagflation and I am forced to choose pooled funds in my company plan. It seemed like the least horrible alternative. I was thinking if we are looking forward to deflation I should now be moving out of index linked and into a gilts fund, no? (UK equivalent to treasury bonds). Too late? Sorry about the dumb questions I have worked 25+ years in equities but this whole bond thing is a bit of a mystery...
Eric, not the spammer writes:
Only question now is whether the MM fund option is participating in the Fed/Treasury MM Facility.
It doesn't matter, for your money.
That insurance only applies to money you had in the fund as of that day (9/17, I think). If you sell your TIPS and put them in the MM fund, by definition, that money will NOT be insured.
This is correct. After a bunch of messing around, I ended up putting my brokerage cash into a mm fund that is bases on treasuries. Hope it will be ok.
homedad writes: I put kids' college funds in TIPS via 529 option about a year ago and was doing nicely until several weeks ago and found that has lost about 5%. It makes no sense to be in inflation hedge in deflationary environment so will change.
Correct me if I'm wrong but isnt the principal repaid at par when these are redeemed? IE if the $1000 of face value is indexed to say $750 because of massive deflation and then the bonds redeem doesnt the Gov pay $1000 and not $750.
I suspect after Obama wins, the stock market will rise. There is still doubt about who will win, so an Obama victory isn't fully reflected in the numbers.
I am surprised no one has cited this research from UCLA:
"Looking at the 72-year period between 1927 and 1999, the study shows that a broad stock index, similar to the S&P 500, returned approximately 11 percent more a year on average under a Democratic president versus safer, three-month Treasurys. By comparison, the index only returned 2 percent more a year versus the T-bills when Republicans were in office." Stock markets historically do better under Dems than Reps. - Jan. 22, 2004
That study did not include the Bush administration, which would have brought the average return under republican administrations to a negative number overall. When Bush took office, the S&P 500 was at 1342. This morning it is at 876. There is a dividend yield which must be taken into account, but still, returns are strongly negative during the Bush administration.
Even if you feel like blaming someone else for the dot com bubble, the returns during Bush's second term are also quite negative. From 1142 at inauguration to 876 today.
While we're at it, remember this bit of news? "President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year's record surplus of $122.7 billion." President Clinton announces another record budget surplus - September 27, 2000
By comparison "The U.S. budget deficit will widen to a record $482 billion next year, the Bush administration projected, constraining the next president's ability to cut taxes or increase spending.
The projected deficit for the fiscal year that begins Oct. 1 is higher than the $407 billion forecast by President George W. Bush in February. The bigger shortfall reflects dwindling tax receipts because of the U.S. economic slowdown, the cost of a $168 billion economic stimulus package and spending on the wars in Iraq and Afghanistan." Bush Aides Project Record $482 Billion 2009 Deficit (Update2) - Bloomberg.com
some investor guy writes:
I suspect after Obama wins, the stock market will rise. There is still doubt about who will win, so an Obama victory isn't fully reflected in the numbers.
Can anyone tell me what caused the spike in sales after the 2nd qtr 1980, and do we have the same potential to see a false bottom this time around? If that was an anomaly caused by artificial stimulus could we see another similar bounce and then 3+ years of stagnation in home sales?
Demand for housing is low new or otherwise. With the recession now taking hold homeowners that have 2nd and 3rd homes will be putting many of these on the market. Investor speculation based on historic trends/tax treatment have been the main drivers to the housing market, as this group continues to be underwater both from the recession and bad RE market conditions we can expect record levels of inventory and foreclosure/shortsale.
crazyvermonter writes:
"If Obama is not elected expect to see a free fall in the US Dollar. I think the recent strength of the dollar in part is due to his increase in the polls. It is clear that the world would prefer an President Obama to a President McCain. But the prospect of a President Palin scares the **** out of them- I would personally would use the current dollar strength to get out if there is any chance of her being near the Oval office."
You obviously don't have a clue about what is going on in the currency markets. Majority of the worlds debt is denominated in US$. Debt deflation occurring and the rest of the world scrambling for scarce dollars right now.
On top of that Asians have been scrambling for $ cause they want to eat. This has NOTHING to do with American politics.
A thought: Your lien papers may have a clause that allows you to foreclose on the lien if you have reasonable grounds to believe the debt is undersecured or at risk. If there is a such a clause, you would need objective evidence to back this up. If you have the evidence and the clause, you could threaten to foreclose on your lien or actually foreclose in an effort to accelerate payment. This would be a pretty hard-core, strong-arm course to follow, and coulkd poison the well between you and the debtor forever. You could also offer to discount the debt in exchange for early payment, which would help maintain good relations. In the end, sort of a default in payment or promise, the debtor can do with the property and his money what he wishes.
Just one month ago, Sebastian reassured us that this crisis was not everywhere, but was concentrated in financials. "In the real-world (non-financial) economy things just aren't that bad, and certainly nowhere near crisis.", he said. Thanks for that, buddy. Glad it's contained!
Heck no, I'm gonna be front and center and fully cognizant when I yank the plug on the boomers' life extension. Wanna live forever by putting more coins in the slot for extra life, don't rob the piggy bank when I was 5 and then expect me to pay for it.
Funny I had my retirement money in 50/50 split in S&P index and Barclays EAFE index, two years ago approx i pulled it all out of S&P and 100% in EAFE.... Then pulled everything out but employers matching in June, left it in..
Down quite a bit...29% but almost 41% in a month...
The only way to prevent this is to get housing pricing back to very unaffordable levels (from the current unaffordable levels) and get everyone back into debt and keep them there. Because, as well known, unaffordable housing is good for 'merika, and so is too much debt!
Hahaha! Housing here in Maryland still starts at about 5x income for anything worth buying since this place wasn't overrun with subprime, but instead was ruled by Alt-A and Option Arms. Until prices decline a long way, I don't see any end to a lack of sales.
Hey uh-oh - what are the terms of your note? You shoulda put in a clause saying that severing any portion of his obligation accelerates the entire debt. Otherwise, don't think there is anything to stop him from doing whatever he wants with his interests. You should probably talk to a local attorney.
I was just in Pittsburgh and you can buy yourself a massive house for 90K but then you would have a house in Pittsburgh and what would you do with that?
just checked with the 529 folks and the MM is part of the Fed Facility, but only a three month duration for the facility and money had to be in there as of 9/19 for participation.
Nades:
Not certain as to the answer to your question.
What the hell, I'm unable to make any changes until 1/2/09 since I made the earlier change in '08 and am permitted one change annually.
NakedCap says "A big reason for the worsening of mood in Japan is that its banks, which have heretofore looked solid by global standards, are suddenly looking as if they too might need to raise capital. The reason? Japanese banks, a legacy of the zaibatsu days, hold substantial equity positions in other companies (note these stockholdings are much smaller than they were in the bubble years, when banks were important members of industrial groupings, later called keiretsu as the linkages weakened). The BIS, in a concession to this Japanese peculiarity, allowed a portion of the value of these shares to be counted towards regulatory capital requirements (forgive me for not checking the current rules, but it used to be 50%)."
So some of these Japanese banks are still zombies from 10 yrs or more ago. They never changed their structure to conform to a more conservative capital structure. We've entered a night of the living dead. Zombies that we thought had been put to the stake are re-emerging everywhere.
I think I just heard the only interesting thing ever said on CNBC. Apparently Walmart was tracking sales and has noticed an increase in the sales of baby formula on typical paydays leading them to believe people are out of cash.
particle9
Actually, it would be more accurate to say that people are out of credit and need to use cash-but they only have any spare cash right after they are paid. People are getting their credit limits dropped, and for many that means getting cut off, so there are less credit purchases during the week between paychecks. Also, more people are averse to charging stuff now and it's generally cheaper to buy food less frequently and in larger quantity. If you're paying cash instead, you might be a little pickier about what you buy as well.
Correct me if I'm wrong but isnt the principal repaid at par when these are redeemed? IE if the $1000 of face value is indexed to say $750 because of massive deflation and then the bonds redeem doesn't the Gov pay $1000 and not $750?
Yes, the minimum payment is the bond's face value regardless of changes in the CPI.
Which is fine if you can pick them up at face value, and not at the significant premium to par that I've heard many of the TIPS maturities are trading at these days.
uh-oh: you should definitely check with actual counsel, but my understanding is that your lien should also attach to the restaurant as the proceeds of your collateral.
More in the way of somewhat interesting things reported on CNBC, apparently Citadel is asking their clients to pull their money out of other funds and into Citadel to keep the apparent gravy train rolling. Hard to see how this goes wrong.
Subject: A Letter from Andreas Renschler - 3rd Quarter Results
Dear employees,
Daimler released its business results for the third quarter of 2008 today. Earnings at Mercedes-Benz Cars were lower than in the third quarter of 2007. Sales declined in the wake of the global financial crisis. Negative factors were an unfavorable model mix, the weak pre-owned vehicle market, unfavorable exchange-rate effects, and the high price of energy and raw materials. Mercedes-Benz Vans and Daimler Buses were able to increase their sales and earnings, however. Financial Services was able to expand new business, contract volume, and earnings in the third quarter, although the financial crisis is also leading to higher default risks at that division. Group EBIT in the third quarter totaled 648 million.
Despite the ongoing difficult market situation in the U.S. and Japan, we at Daimler Trucks were able to sell 122,700 vehicles worldwide from July to September 2008, which corresponds to an increase of four percent from the same period in the prior year.
Trucks Europe/Latin America increased sales by 12 percent to 47,300 units in the third quarter, whereby sales development was particularly positive in the Middle East (+64%) and Western Europe (+13%), especially in Germany (+26%).
The Bitch in question is Diane Swank (she has irritated me with nonsense one too many times), an economist and an author of nonsense like Economist With a Heart or some such title. Use your head, you dopette.
When she was asked why govt., that help create the problem by pushing homeownership, should now get involved by trying to help certain mortgaged people, the Bitch replied, The govt has to because we are all in the same boat. She was not challenged by others on this false assertion. Americans are not only BRED to be dopes and dopettes they are bread to be morally bankrupt on economic issues and govt role in the economy whereby govt helps the bad businesses and bad individuals at the expense of the rest. This is not just bad policy but an attempt at creating a morally bankrupt society and population. The US govt has succeeded in doing just that. When govt promotes immoral behavior we know the end game.
"Cobradriver, do you mind if I ask you where you live? I'm curious where you can buy a home for 90k."
Fascist Rupert | 10.27.08 - 11:46 am
I live in Port Charlotte/Charlotte County Florida. If you want to see some good deals go to the MLS and type in Cape Coral. Look at the number of listings under 100k. 3 years ago this was almost a zero. It was north of 3k listings a week ago. They changed the MLS so I have no idea what it currently is...
BTW,there are lots of areas in rural Ohio where I grew up that you can buy livable small homes for under 50k.
sanity clause writes: apparently Citadel is asking their clients to pull their money out of other funds and into Citadel to keep the apparent gravy train rolling. Hard to see how this goes wrong.
Isn't this cutting pretty close to being a Nigerian scam? I.e., everything is going great but we have these new expenses we need you to front for, and then the fortune is yours?
"Actually, it would be more accurate to say that people are out of credit"
Doc,
Exactly. I've informally polled typical cash businesses I patronize such as shoe repair and dry cleaners. They have been complaining for over a year now. The credit based businesses are just cushioned a bit on timing. I think you could gather better info from 100 dry cleaners than all metrics the Fed uses combined.
If Bernanke were still at a university, where he belongs, he could give me an "F" for my shallow analysis and not damage the global economy as he does in his current position.
My uncle moves there in '04 (I think) and six weeks later a hurricane strolled through there....moved to Georgia shortly after. He had a place right on one of the channels....house was flooded. I think it was '04....could have been '05.
Can anyone tell me what caused the spike in sales after the 2nd qtr 1980, and do we have the same potential to see a false bottom this time around? If that was an anomaly caused by artificial stimulus could we see another similar bounce and then 3+ years of stagnation in home sales?
dave
We entered a short-lived recovery in 1980 before heading back downhill big time in 1981. It wouldn't surprise me if we have a repeat of that "double-dipper" phenomenon this time as well. September 2008 could be analogous to early 1981. This is the real meat of the recession now, IMO.
I saw a law school classmate who works in the midwest this weekend. He's prosecuting contested foreclosures for banks. Two interesting tidbits.
loan workouts happen when the borrower challenges who owns the loan and it's been sold so many times that it's too much time and trouble to find the paperwork. It doesn't go to trial, and the bank would ultimately win, but having to show evidence of ownership is powerful motivation for the bank to deal.
A significant number of home sales were made in his city where the price was too high for the rough neighborhood, the loan came through easily and no payments were ever made. Example, 100k loan for a house worth ten. I've got a lot of sympathy for individual homedwellers in trouble, but it looks like a lot of mbs was backed by con artist bs from the start.
Thanks for the responses. I'll have another look at the note to see if there is an acceleration clause. 99% sure there isnt one. Perhaps a discount for accelerated payoff is the way to go. Thanks again.
sanity clause,
That is interesting info re Citadel...it makes sense from Citadel's perspective but I imagine there is quite a bit of scrambling going on amongst their investors as they calculate whether going along with this makes sense individually. If Citadel is asking for the cash, perhaps the preferred alternative is to pull your investment with Citadel?
Doc, Exactly. I've informally polled typical cash businesses I patronize such as shoe repair and dry cleaners. They have been complaining for over a year now. The credit based businesses are just cushioned a bit on timing.
I was actually wondering about this wrt the fuel cushion CR was speculating on yesterday(?).
Is there some available metric of cash v. credit purchases at fueling stations?
It seems to me like any kind of "fuel cushion" is just going to slow the upwards velocity of consumer debt revolver balances, and might even generate an increased spending (indebtedness) "wealth effect" near the Christmas season, unless consumer credit is so straitened that consumers in the aggregate are unable to "shop away" the savings until monthly servicing fees eat the additional income.
CSpan now has Heritage Foundation seminar on sub-prime mortgages and criminal law. Panel stressing that execs. shouldn't be prosecuted for bad judgement.
Charlie. The parents just put a new metal roof on. The only house in a 2 block radius w/o water damage inside. I transferred here in November 04 and we were still fixing up the parents place...Your uncle picked a good time to get out...
Hey uh-oh - obviously, you should consult a real estate attorney (whoever did your closing can probably recommend someone) -- nonetheless - original purchaser is still going to owe you interest every month and a balloon payment in 18 months - otherwise, he/she is free to screw up their own personal finances in any way they like, as long as they pay you.
I don't think the "50% interest" can be recorded on the property without changing the terms of the note - so, it's just a side deal between the property owner and his brother, and shouldn't encumber the note you hold. Nonetheless, you'll sleep better when you hear it from a law degree holder. Keep us posted.
UH-OH
If all you are going to do with the money is pay down your mortgage why not just wait for 18 months? Without a due on sale acceleration clause he can pretty much do as he wishes but he will have to sell any interest subject to the note you hold. You're in good shape. The worst that happens is he goes BK in the rest. business and his brother makes the payments. If teh brother dafaults you pick up a cottage for cents on the dollar.
A significant number of home sales were made in his city where the price was too high for the rough neighborhood, the loan came through easily and no payments were ever made. Example, 100k loan for a house worth ten. I've got a lot of sympathy for individual homedwellers in trouble, but it looks like a lot of mbs was backed by con artist bs from the start.
Ren,
I'm sure there were plenty of completely fraudulent scams, but I doubt that the pure unabashed fraud was only a small fraction of the problem.
I think most people just had no clue how badly they were over-paying.
"What area r u talking about?
I am guessing Lee County, FL."
Vega | 10.27.08 - 12:10 pm | #
Actually the builder had lots in both Sarasota County/North Port and Charlotte County/Port Charlotte. Most people don't realise we started this collapse almost 3 years ago. Sarasota proper is just starting to see massive declines. You should hear everybody at work bitching..."I CANT SELL MY 1M DOLLAR HOME" as I giggle.
Barley writes:
I like the long term graphs - puts things into perspective.
Yes, I completely agree. And the message is not nice :
After an overshoot there will be an undershoot!
From the '96 to '07 overshoot (over 600k) you can (as a very rough 1st order guess) infer the '08 to '19 undershoot.(simply invert the overshoot) '19 ??? whoaaaa..
(you may reduce it a little by assuming that by '19 the 600k avg may have shifted to ?700k; so the undershoot may have run its course by maybe '15.)
An ugly picture, but am I wrong??
I was actually wondering about this wrt the fuel cushion CR was speculating on yesterday(?).
Is there some available metric of cash v. credit purchases at fueling stations?
It seems to me like any kind of "fuel cushion" is just going to slow the upwards velocity of consumer debt revolver balances, and might even generate an increased spending (indebtedness) "wealth effect" near the Christmas season, unless consumer credit is so straitened that consumers in the aggregate are unable to "shop away" the savings until monthly servicing fees eat the additional income.
Byzantine_Ruins
Yes, I would like to see such a metric if available as well. I am aware of people getting cut-off at the pumps with credit cards-while pumping! Since you have to pre-pay with cash and it's inconvenient, people are using debit cards instead. You make a good point about the "wealth effect" at Christmas time. Actually, I think the best of both worlds would be for credit to get pinched for shopping in the next few weeks, while people have to use the extra earned cash (from cheaper fuel) to spend instead.
What's your opinion of Detroit Diesel engines relative to Cummins and Cat? I used to work for a regional distributor for DD. When I left Daimler was switching Mercedes engines for on-highway apps.
Kung Fu Panda | Homepage | 10.27.08 - 12:18 pm | #
Cummins and Detroit both are pretty bulletproof if maintained. I have zero experiance with Cat. I also haven't worked on the new MBT heavy truck engine. I will say this...the Sprinter/Dodge vans are throw aways. When they come apart it is terminal. I have seen them explode with 100k up to 200k. I haven't had a single one clear 250k.
The new common rail/high pressure injection used to meet emissions is very pricy on all the trucks...think 500.00/injectors vs 50 for reman mechanicals...
Chris
BTW...Just had a good friend go over 3.5M miles in a Freightliner/Detroit combo. At 2.3M he did an inframe and it really could have went a little longer...
Hurricane Ike and the disruption Ike caused for Southeastern gasoline supplies might have skewed these numbers and might still be skewing them. I don't think we're going to have anything like Ike-free numbers till November.
OT- I found the clause! SALE OF THE PREMISES. grantor agrees that if the premises or any part thereof or interest there in is sold, assigned, transferred, conveyed or otherwise alienated by Grantor, whether voluntary or involuntarily or by operation of law[ ]without the prior written consent of beneficiary, Beneficiary, at its own option, may declare the note secured hereby and all other obligations hereunder to be forthwith due and payable. Any change in the legal or equitable title of the premises or in the beneficial ownership of the premises, including the sale, conveyance or disposition of a majority interest in the grantor if a corp. or partnership, whether or not of record and whether or not for consideration, shall be deemed to be the transfer of an interest in the premises. This may be what I need. Thanks again all. CR thanks for hosting this blog.
"This builder was selling 1800 sq/ft,3/2/2, including lot for 89k"
Cobradriver,
I see lot of properties in Lehigh Acres and Cape Coral north of Hwy 78 that are in the $50 sqft range like u mentioned.
I am biding my time, waiting for them to hit $25-$30 range.
Should be there in 6 to 9 months.
On the 2+ acre category, wonder if it might be cheaper to get a lot and have the home built, as opposed to buying an existing property. Coz those sellers are indeed holding their prices as of now, in Lee county as well.
Of course that will change a year from now though.
I think waiting is the name of the game.
Hahaha! Housing here in Maryland still starts at about 5x income for anything worth buying since this place wasn't overrun with subprime, but instead was ruled by Alt-A and Option Arms. Until prices decline a long way, I don't see any end to a lack of sales.
While affordability is a key component to the RE market most have yet to understand how our tax and lending system has created a large overstock of housing which is not considered excess but during times of stress this overhang suddenly appears.
U.S. excess housing inventory has been viewed through the lens of empty houses for sale rather then a wider picture that captures the impact of RE speculation along with multiple home ownership. The tax and generational trends during the past 40 years encouraged a massive overbuild in housing which has been over looked since investor/multi home ownership has not been properly understood as excess inventory, as a result we are now beginning to experience on a national scale investor dumping
of housing in the current case a byproduct of the sub prime mess but underneath the next wave will be the recession induced dumping of the 2nd and 3rd etc homes owned by the former employed members of the financial sector and as the recession gets deeper we can expect a wider net of RE investors/speculators dumping property adding to the inventory.
The result is that the effort of the Federal Gov't to create a price bottom for the RE market is hopeless and it will take more then just affordability to generate meaningful turnaround in the RE market.
I agree, re most people. But I wonder how many scam artists noticed and taught each other as the lending spigots got looser and looser. A few artists can do a lot of deals, esp if they're willing to use many names.
Mostly it just angers me that the gov't is bailing out mbs at all. businesses that don't do due diligence should fail, full stop. Gov't money, if any, should have gone to protect small people.
Inventory is all about the healthcare.
Sarah Palin | 10.27.08 - 10:37 am
You got that right, four-eyes.
Long-term, assisted living condominiums. with fabulous amenities and structured entertainment. The ticket on these deals I've been told runs $200K - $350K, cold cash, non-refundable and non-transferrable, plus monthly vig $1,200 - $4,000.
Do you have any grip on current vacancy-rates? Market size and value?
You are right, of course, about the Cummins diesel being in a Dodge and not a Ford. I almost corrected it after my post, but thought, "hey, nobody here reads my nonsense." My bad.
But I'm sure it's a F350 because it's so damn big it won't fit in his garage!
I tried a post with Java off and it complained. When I tried again after enabling, it says "You've already said that (duplicate post)". I even closed the browser and restarted. I don't see my post, anybody see it (about TIPS) 5 or 6 times now?
Which is fine if you can pick them up at face value, and not at the significant premium to par that I've heard many of the TIPS maturities are trading at these days.
You just missed a chance today to buy 5yr TIPS from the treasury at 92.38¢ on the dollar. Coupon 0.625%, yielding 3.27%. According to Bloomberg, only the 30yr TIP sells above par, and currently 5yr is priced at 89.06.
OT--last thread, somebody asked a legal Q & wanted to venture one too-- am in the Hampton Roads Va MSA (Norfolk, Virginia Beach, Portsmouth, etc.)& tho home prices here about doubled during the bubble, so far they've only declined about 5% so am renting again & just signed a new lease.
There's a clause in it that says, paraphrased 'You may not record this lease, or any portion thereof, in any place of public record, & if you do, landlord can void the lease...'
Which got me curious. Is this type of clause usual in a lease? What's its purpose? So the landlord can claim "owner-occupancy"?-- either for tax, or mortgage note terms, or maybe home insurance purposes?
Its seems intended to hide the fact the home's being rented. And am wondering about this-- because heard some TV-heads this morning, on about the bailout terms for modifying foreclosures. One woman insisted each loan must be looked at individually, to "kick out" those who can actually pay the nut, but are choosing not to, and also to kick out multiple home owners, & speculators, & people who lied on their mortgage apps. (sounds good to me!)
Another panelist argued it'd be impossible to check each loan individually. But 1st woman said-- because the Fed gov't was ordering these mods to be done, this meant servicers could legally access the databases holding people's private financial info-- via SSN #'s & tax returns-- to compare to the docs the borrower was showing-- to ensure that only deserving folks qualified for workouts, & "uncover" those who signed off on fraudulent mortgage papers-- eg., those who claimed "owner occupied", but really owned multiple properties.
So, how exactly DO the servicers currently doing the "loan mods" under Hope Now, FHA, etc., confirm they're being given true information by the borrowers? (maybe my suspicions are the effect of reading 1 too many of Eric the Spammer's "fake paystubs" posts here lately-- but what actually is in place, to stop people from committing more fraud, just to get their loans reduced??
when will the market be done pricing in an Obama win ?
Prices prices prices. That is still a major problem.
I like the long term graphs - puts things into perspective.
JP, Case-Shiller will be released tomorrow - and that is the best measure of prices. New home prices are based on a median, and I suspect the mix has changed (fewer McMansions!)
Best to all.
I'd feel better if we had some idea of three more statistics; new home construction approvals and new homes under construction and completed properties on the pink sheets before believing the inventory numbers.
"when will the market be done pricing in an Obama win ?"
LOL
If this is what an Obama win does to the market imagine how much will tank if McCain pulls it off. Then imagine what happens if he gets hit by a truck and President Palin "rears her head"....
Once Obama has spread the wealth, how much will each person get?
.07 Ponies
That inventory number is total bullshit. anyone who believes it is dumber than Sarah Pali
As I understand it (and I may not) most (all?) sales contracts are contingent on the buyer finding financing. In the current credit market is there going to be a problem with a lot of cancellations because banks won't make the loans?
AIG's Toes -
You'll get nothing and like it!!
That inventory number is total bullshit. anyone who believes it is dumber than Sarah Palin
And what if Sarah Palin believes it?
wow, 700 homes per state on average.
AIG's toes,
Only ponies are allowed. If you are exceptionally needy, you might get two ponies.
Inventory is all about the healthcare.
["when will the market be done pricing in an Obama win ?"
LOL]
I am seriously trying to figure this out. See.... The more the market drops ahead of Jan 20, the more it has to fall in the event of a DEM landslide.
The proverbial negative feedback loop.
.07 Ponies
Zero | 10.27.08 - 10:34 am | #
a chicken in every pot - Wiktionary
"First stated by Henry IV of France as, "I want there to be no peasant in my realm so poor that he will not have a chicken in his pot every Sunday," and later in the United States during the Hoover campaign for presidency as part of an advertisement."
thank gawd there is no recession.
RonBurgundy writes:
That inventory number is total bullshit. anyone who believes it is dumber than Sarah Palin
I might believe the same thing but around these here parts we need more than exposition to back it up. Why do you think that/
Personally I am familiar with "on the pinks" which refers to essentially completed homes that haven't asked for a final inspection from the city. When you look up massive developments like Riverpark in Oxnard list a half dozen units available for sale but once in the sales office it is clear that dozens of similar models are equally available for immediate sale.
(waiting)
(waiting)
(waiting)
uh...., It's a great time to buy?
OT did MS do something that requires some bonus time in the woodshed today? I mean, more than usual?
vtcodger | 10.27.08 - 10:35 am | #
vtcodger,
In my area builders will not start a place with less than 20-40% down. The place I stopped at Friday was 35%. Small local builder. If you couldn't finance and gave up your deposit he could easily sell the new place for the balance. BTW...This builder was selling 1800 sq/ft,3/2/2, including lot for 89k. This is less than half of peak prices. You can get the deluxe with a pool and screened enclosure for 109k. A lot of people are not even screwing with a used home for that price...
Chris
A lot of people are not even screwing with a used home for that price...
Oh... you mean "meticulously maintained, extensively upgraded throughout classic residences that exude pride of ownership." "Used houses" what are those?
But Marketwatch headline said sales were up 2%, how could this be bad?
AIG's toes writes:
Once Obama has spread the wealth, how much will each person get?
AIG's toes | 10.27.08 - 10:33 am
not enough to make us whole after Bush spread the debt
The MSM continues to want to report only the good news. CNN Headline:
Sales of new homes up 2.7%
watch unemployment jump 1% nationally, and throw 3million people out of work--how many will be thrown out of homes?
I don't predict that we'll see the same pattern as these charts show. They don't go far enough back.
/two cents placed in tin can/
Take a page from Lexus, and call the non-new homes "Certified Pre-Owned"
Isn't it amazing what a totally different world we live in compared to early 2006?
Why buy when you can bando?
Nostrovia,
"Used houses" what are those?
Rob Dawg | Homepage | 10.27.08 - 10:45 am | #
That would be the condo I looked at.
At the asking price of 25k it was a little high for the needed inside work. Price was just cut to 14k. Not a great deal,but not horrid. This is about 2 years at my current rent. The fees aren't all that bad...
I could pay cash and hunker down for a couple of years until land prices drop some more. The larger,2+ acre lots,are still stuck...I think a lot of people paid cash and are just sitting hoping the market comes back.
Chris
jump on the bando-wagon?
For several months I have checked the same loan on eloan every day - $650k loan (after 20% down) with an excellent credit rating. Last week the rate was in the mid 6's for a 30 year fixed. The past few days, eloan is only offering a five year ARM at 9.75% and will only loan $595k vs the $650k on the same house. (This is in Bay Area, CA, so the conforming loan limit is over $700k).
Also, bankrate lists only 5 banks that will now make this loan.
It seems like credit is getting tighter, much tighter. Silicon Valley is in bigger trouble than I thought if this continues. Plus the new conforming loan limits are coming out on 11/07, which will most likely be lower than the current limit.
And what happens to months of inventory when interest rates start to rise?
I think it's premature to say this is the peak months of inventory.
I think I just heard the only interesting thing ever said on CNBC. Apparently Walmart was tracking sales and has noticed an increase in the sales of baby formula on typical paydays leading them to believe people are out of cash.
Why buy when you can bando?
Nostrovia,
Comrade Misean is Dope | 10.27.08 - 10:51 am | #
If you want to do this let me know. I'll send you a list of adresses in my area that do not have alarms installed...Heck the county even has lawn companies mowing the yard for ya.
Chris
It seems like credit is getting tighter, much tighter. Silicon Valley is in bigger trouble than I thought if this continues.
Nonsense. I've been informed repeated (even on this blog) that it's different there.
--
Housing Price Defaltion would show up in overall CPI SOOOOOOOOOOON...
TIPS Already Have PRICED-IN Deflation!
I realize that Inflationists are smarter than the US Treasury markets. But for those of who look to the markets for clue, DEFLATION IS COMING SOONER THAN ANYONE EXCEPT A CRANK LIKE ME THINKS.
Local Gas-Wars
I was thrilled at getting my gas tank filled @$2.899 on Friday. On Sunday my two neighbors stopped by and told me that due to gas-wars the same station now is selling @2.659 and the other warring station @$2.679. That is down $1/gallon in about 3 months.
Enjoying Deflation,
Jas
The charts look like they are approaching their historic norms.
If one can get financing, you would probably be able to name your price.
I think that the time is right to start thinking about buying if you are in the market.
Just as the time to sell is when there is Peak Euphoria (summer 2007), are we approaching Peak Doom now?*
*I am merely an interested amateur, not a financial advisor. Just another teenager on the interwebs.
edit:
Nonsense. I've been informed repeatedly (even on this blog) that it's different there.
Why is the AP reporting that new home sales increased? What am I missing....?
"Stocks improve after home sales show surprise gain"
Expired
CR, a few years ago you used to provide the new home sales y-o-y change while highlighting recessions. And if I recall correctly, the change at -30% correlated well with recession beginnings. Since the y-o-y change must be improving somewhat, I'm wondering if you would be kind enough to include that chart sometime again. Thanks a ton.
Hartford Ins. Gp. down 12%
I think you can take out the blue "possible recession" portion of that graph. Been in one since last year..
If you are waiting for confirmation from our wonderful gov't agencies you're not going to get it from this administration.
Ciao
MS
Why is the AP reporting that new home sales increased? What am I missing....?
Lower prices = more volume.
"Why is the AP reporting that new home sales increased? What am I missing....?"
Sales up MoM but down YoY but they that's a malicious fact that should not be in the headline.
Lower prices = more volume.
And more good money after bad.
doh! I read CR's headline as "lowest since 1981" (completely not processing the "lowest September" bit, which was rather, um, important.
Never mind. (say in Rosanne Rosannadanna voice)
blackhat writes:
Lower prices = more volume.
And more good money after bad.
Let's not get too pessimistic here. There will be a day when it's not good-money-after-bad.
I think that day will be around 2013.
Jas Jain,
Gas here in the Twin Cities is 2.15. You've got a ways to go.
By the way, Diesel is 3.19. I can't recall a time when there was such a disparity on the two fuel types. I guess it's a "winter blend" issue, but that's a huge middle finger to all the people who rushed right out and bought diesel cars. Oh, and truckers/shipping.
(unashamed schaudenfreude at the neighbor who has a F-350 Ford Diesel Cummins to tow his boat and snow machines)
Jas Jain,
Gas here in the Twin Cities is 2.15. You've got a ways to go.
By the way, Diesel is 3.19. I can't recall a time when there was such a disparity on the two fuel types. I guess it's a "winter blend" issue, but that's a huge middle finger to all the people who rushed right out and bought diesel cars. Oh, and truckers/shipping.
(unashamed schaudenfreude at the neighbor who has a F-350 Ford Diesel Cummins to tow his boat and snow machines)
Of course, the fact that sales increased in September means that we bottomed in August, right? Right?
/snark
your chart linking home sales to periods of recession is interesting. But I think that chart that links home sales to change in Fed funds interest rates would be even more interesting. In the past a recession was usually the result of Fed. tightening. I would therefore expect to see a pretty good correlation between change in interest rates and homes sales. What makes this time so interesting is that the decline is coming after rates have been cut. It would therefore suggest that the rebound will not be as easy to engineer.
Not unless they want to panic the citizens into supporting some other money transfer scheme.
MS
"If you are waiting for confirmation from our wonderful gov't agencies you're not going to get it from this administration."
anyone else experiencing slow performance with CR's main page.....those ads seem to screw up everything lately? I know they are necessary however recently they have really slowed the load times on everything I have open.
Anyone? Bueller?
Ciao
MS
OT- I've been lurking here for quite some time and have done what I could to prepare for whatever is coming. Part of that preparation was selling a building lot in coastal carolina. I owner financed the property and was paid by the purchaser to build a cottage which he paid for with cash. I have first lien on the property which has now been improved w/ a small cottage. I hoped the purchaser would do a cash out refi asap and pay me off. The purchaser has about about $275,000 in the cottage and lot combined. It would probably appraise around 350-385. I received 20% down payment and agreed to finance i/o for 2 years with a balloon payment due in about 18 months. I have first and only lien on the property and my note is $140,000. After a conversation this morning with the purchaser he casually told me he was going to sell a 1/2 interest in the cottage to his brother and use the money to invest in a restaurant. My quesion-Is there any thing I can do to force him to pay my note instead of using the money to invest in a restaurant? I'm just a simple carpenter and thought I was doing the right thing to protect my family. My intention is to use the money to pay down my own mortgage- 30 yr fixed under 6%. Thanks in advance.
The mix of sales has moved toward cheaper homes. CR, is there another source which shows the number of bedrooms or square footage?
I'm curious if new homes are merely cheaper, or if they are also smaller.
If Obama is not elected expect to see a free fall in the US Dollar. I think the recent strength of the dollar in part is due to his increase in the polls. It is clear that the world would prefer an President Obama to a President McCain. But the prospect of a President Palin scares the **** out of them- I would personally would use the current dollar strength to get out if there is any chance of her being near the Oval office.
Sales of new homes up 2.7%
That is CNN's headline for the same story. and they even found an "analyst" to explain the increase:
"We're clearly seeing some pick-up in regional areas where home prices have fallen," said Mike Larson, a real estate analyst with Weiss Research. "The drops have spawned some bottom fishing.""
typical MSM garbage
JP,
"Let's not get too pessimistic here. There will be a day when it's not good-money-after-bad."
That would be bad money after good then, right?
Nostrovia,
Remember a while back I asked if it's time to buy?
I got my answer today:
Time to Abandon Buy and Hold No Time To Buy: Tech Ticker, Yahoo! Finance
Expired
Cheapest Valuations in Decades Will Trump Panic Selling -- Seeking Alpha
3 of the samples of the mindset still out there tell me: Too many knife-catchers!
Contrarian philosophy would say this is not a bottom yet. Will look into buying again when there's more despair in the market.
I just wanted to drop in my $0.02 in case anyone is asking the same thing.
Hey MS--yes, I am experiencing some page load delays and I have a very fast connection--pay extra every month to get fast load times.
Why TIPS in deflation? Aren't they designed to keep up with inflation? Apologies if you have already answered this Jas - what can i say, I'm a DOPE.
Wait until you see October's numbers...ouch! September's will lool like a dead cat bounce.
"(summer 2007), are we approaching Peak Doom now?"
With what USA is going to start rising from the bottom? GenX/Y/Z were almost all raised to be a hedonistic "consumers", not worker bee producers.
Math is uncool, physics is uncool, computer science is for nerds. Only thing cool is selling and owning stuff, mostly made abroad.
Americans would need to set up huge reeducation camps for these millions of American idol wannabes in order to start changing the attitudes towards producing, making things.
(OT: The ticker tape won't be as crowded when these former hi-fliers enter single digit territory:
C 12, UBS 13, BCS 12, MS 15, SCHW 15, AMTD 10, DELL 11, ORCL 16, NOK 14, GE 17, PFE 16, BMY 17, SGP 13, JCP 18 and hundreds more. Lots of good buys out there down another 50% or more, and plenty of time to the bottom).
Steady As She Sinks.
I've been informed repeated (even on this blog) that it's different there
It is different. It's much more expensive and the jobs are easier to outsource.
crazyvermonter...I geuss you don't understand the unwinding of the carrytrade. So you'll also contend that the Yen is strengthening because of Obama as well?
I log on to g-finance and the screaming headline is: Sales of new homes up 2.7%
I come here and find the truth.
I'f anyone is interested in a hoot check out how the calc'd the 2.7% increase New home sales up 2.7% - Oct. 27, 2008
......
--
Why TIPS in deflation? Aren't they designed to keep up with inflation? Apologies if you have already answered this Jas - what can i say, I'm a DOPE."
sterlingerl,
Anyone who asks a question is NOT a dope, at least in the area in question.
USTs trade in two different "models" -- (1) those that pay a certain yield + Inflation Rate calculated by BLS and (2) those that pay a fixed nominal yield determined at the auction. They both trade in the open markets and one can calculate what Inflation Rate is priced in 2's 5's, etc. If the Inflation Rate priced-in is negative then the market is pricing-in a negative inflation rate in the future. That future, according to The Fearless Forecaster is 2009Q2/Q3.
I hope that it helps.
Jas
With what USA is going to start rising from the bottom? GenX/Y/Z were almost all raised to be a hedonistic "consumers", not worker bee producers.
They learned it from watching YOU, dad.
goBig,
I dont think the Yen is strengthening against much....
Sports Guy Lafleur writes:
Take a page from Lexus, and call the non-new homes "Certified Pre-Owned"
I prefer "encore presentation"
Sterlingerl:
Good question as to TIPS in deflation.
Another commenter on earlier thread posted chart which seemed to conclude that TIPS was better investment in present environment. At least, that's what I think he said.
I put kids' college funds in TIPS via 529 option about a year ago and was doing nicely until several weeks ago and found that has lost about 5%. It makes no sense to be in inflation hedge in deflationary environment so will change.
Only question now is whether the MM fund option is participating in the Fed/Treasury MM Facility.
lol send them down to the countryside
Don't get upset with the MSM saying sales are up, if the idiots run the market up, use this as a time to load up on EFT shorts...it worked for me a year ago - don't be negative, capitalize on the sheeple and steal their money!!
Only question now is whether the MM fund option is participating in the Fed/Treasury MM Facility.
It doesn't matter, for your money.
That insurance only applies to money you had in the fund as of that day (9/17, I think). If you sell your TIPS and put them in the MM fund, by definition, that money will NOT be insured.
Just one other comment related to my last. I have one of my pension plans (not big money) in Index Linked Gilts, only because 12-18 months ago I thought we would be facing stagflation and I am forced to choose pooled funds in my company plan. It seemed like the least horrible alternative. I was thinking if we are looking forward to deflation I should now be moving out of index linked and into a gilts fund, no? (UK equivalent to treasury bonds). Too late? Sorry about the dumb questions I have worked 25+ years in equities but this whole bond thing is a bit of a mystery...
Eric:
Thanks. Will check that out.
Thanks Jas.
MS- Flash tower ad on right side of page is main problem...
Damn aflac duck is everywhere....
Hilipatihippa writes:
With what USA is going to start rising from the bottom? GenX/Y/Z were almost all raised to be a hedonistic "consumers", not worker bee producers.
That is what scares me about this whole thing the most.
Eric, not the spammer writes:
Only question now is whether the MM fund option is participating in the Fed/Treasury MM Facility.
It doesn't matter, for your money.
That insurance only applies to money you had in the fund as of that day (9/17, I think). If you sell your TIPS and put them in the MM fund, by definition, that money will NOT be insured.
This is correct. After a bunch of messing around, I ended up putting my brokerage cash into a mm fund that is bases on treasuries. Hope it will be ok.
homedad writes: I put kids' college funds in TIPS via 529 option about a year ago and was doing nicely until several weeks ago and found that has lost about 5%. It makes no sense to be in inflation hedge in deflationary environment so will change.
Correct me if I'm wrong but isnt the principal repaid at par when these are redeemed? IE if the $1000 of face value is indexed to say $750 because of massive deflation and then the bonds redeem doesnt the Gov pay $1000 and not $750.
TIA
I suspect after Obama wins, the stock market will rise. There is still doubt about who will win, so an Obama victory isn't fully reflected in the numbers.
I am surprised no one has cited this research from UCLA:
"Looking at the 72-year period between 1927 and 1999, the study shows that a broad stock index, similar to the S&P 500, returned approximately 11 percent more a year on average under a Democratic president versus safer, three-month Treasurys. By comparison, the index only returned 2 percent more a year versus the T-bills when Republicans were in office." Stock markets historically do better under Dems than Reps. - Jan. 22, 2004
That study did not include the Bush administration, which would have brought the average return under republican administrations to a negative number overall. When Bush took office, the S&P 500 was at 1342. This morning it is at 876. There is a dividend yield which must be taken into account, but still, returns are strongly negative during the Bush administration.
Even if you feel like blaming someone else for the dot com bubble, the returns during Bush's second term are also quite negative. From 1142 at inauguration to 876 today.
While we're at it, remember this bit of news? "President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year's record surplus of $122.7 billion." President Clinton announces another record budget surplus - September 27, 2000
By comparison "The U.S. budget deficit will widen to a record $482 billion next year, the Bush administration projected, constraining the next president's ability to cut taxes or increase spending.
The projected deficit for the fiscal year that begins Oct. 1 is higher than the $407 billion forecast by President George W. Bush in February. The bigger shortfall reflects dwindling tax receipts because of the U.S. economic slowdown, the cost of a $168 billion economic stimulus package and spending on the wars in Iraq and Afghanistan." Bush Aides Project Record $482 Billion 2009 Deficit (Update2) - Bloomberg.com
That is what scares me about this whole thing the most.
Wonder who showed them the way by robbing the national retirement fund and mortgaging their future for the last 30 or so years.
Hey MS.
I was just making the observations last thursday. I'm not much of a market practitioner. So yes I think you made my statement a little to prophetic!
some investor guy writes:
I suspect after Obama wins, the stock market will rise. There is still doubt about who will win, so an Obama victory isn't fully reflected in the numbers.
Another good thread ruined.
Wonder who showed them the way by robbing the national retirement fund
"I vas just following orders" - GenX.
More Bullish Dollar News:
Trichet Says ECB May Reduce Rates Again Next Week (Update1)
Trichet Says ECB May Reduce Rates Again Next Week (Update2) - Bloomberg.com
.......
Can anyone tell me what caused the spike in sales after the 2nd qtr 1980, and do we have the same potential to see a false bottom this time around? If that was an anomaly caused by artificial stimulus could we see another similar bounce and then 3+ years of stagnation in home sales?
Demand for housing is low new or otherwise. With the recession now taking hold homeowners that have 2nd and 3rd homes will be putting many of these on the market. Investor speculation based on historic trends/tax treatment have been the main drivers to the housing market, as this group continues to be underwater both from the recession and bad RE market conditions we can expect record levels of inventory and foreclosure/shortsale.
crazyvermonter writes:
"If Obama is not elected expect to see a free fall in the US Dollar. I think the recent strength of the dollar in part is due to his increase in the polls. It is clear that the world would prefer an President Obama to a President McCain. But the prospect of a President Palin scares the **** out of them- I would personally would use the current dollar strength to get out if there is any chance of her being near the Oval office."
You obviously don't have a clue about what is going on in the currency markets. Majority of the worlds debt is denominated in US$. Debt deflation occurring and the rest of the world scrambling for scarce dollars right now.
On top of that Asians have been scrambling for $ cause they want to eat. This has NOTHING to do with American politics.
Uh-Oh:
A thought: Your lien papers may have a clause that allows you to foreclose on the lien if you have reasonable grounds to believe the debt is undersecured or at risk. If there is a such a clause, you would need objective evidence to back this up. If you have the evidence and the clause, you could threaten to foreclose on your lien or actually foreclose in an effort to accelerate payment. This would be a pretty hard-core, strong-arm course to follow, and coulkd poison the well between you and the debtor forever. You could also offer to discount the debt in exchange for early payment, which would help maintain good relations. In the end, sort of a default in payment or promise, the debtor can do with the property and his money what he wishes.
Just one month ago, Sebastian reassured us that this crisis was not everywhere, but was concentrated in financials. "In the real-world (non-financial) economy things just aren't that bad, and certainly nowhere near crisis.", he said. Thanks for that, buddy. Glad it's contained!
"I vas just following orders" - GenX.
Heck no, I'm gonna be front and center and fully cognizant when I yank the plug on the boomers' life extension. Wanna live forever by putting more coins in the slot for extra life, don't rob the piggy bank when I was 5 and then expect me to pay for it.
sterlingirl..
Funny I had my retirement money in 50/50 split in S&P index and Barclays EAFE index, two years ago approx i pulled it all out of S&P and 100% in EAFE.... Then pulled everything out but employers matching in June, left it in..
Down quite a bit...29% but almost 41% in a month...
But my money is comfortable with me...
"I suspect after Obama wins, the stock market will rise"
Then if I were you, I would load up the truck on OTM SPY CALLs for Nov.
I am taking the other side of that bet.
LOL Bearly...
Big Truck!
The only way to prevent this is to get housing pricing back to very unaffordable levels (from the current unaffordable levels) and get everyone back into debt and keep them there. Because, as well known, unaffordable housing is good for 'merika, and so is too much debt!
Hahaha! Housing here in Maryland still starts at about 5x income for anything worth buying since this place wasn't overrun with subprime, but instead was ruled by Alt-A and Option Arms. Until prices decline a long way, I don't see any end to a lack of sales.
Cobradriver, do you mind if I ask you where you live? I'm curious where you can buy a home for 90k.
He lives in Florida. (In case he doesnt respond)
Hey uh-oh - what are the terms of your note? You shoulda put in a clause saying that severing any portion of his obligation accelerates the entire debt. Otherwise, don't think there is anything to stop him from doing whatever he wants with his interests. You should probably talk to a local attorney.
pondering, i'm in Charles County MD...
22 months of inventory for 300K plus homes...
its a joke.
I was just in Pittsburgh and you can buy yourself a massive house for 90K but then you would have a house in Pittsburgh and what would you do with that?
Eric:
just checked with the 529 folks and the MM is part of the Fed Facility, but only a three month duration for the facility and money had to be in there as of 9/19 for participation.
Nades:
Not certain as to the answer to your question.
What the hell, I'm unable to make any changes until 1/2/09 since I made the earlier change in '08 and am permitted one change annually.
F***.
A tidbit from a scan of the morning's action:
NakedCap says "A big reason for the worsening of mood in Japan is that its banks, which have heretofore looked solid by global standards, are suddenly looking as if they too might need to raise capital. The reason? Japanese banks, a legacy of the zaibatsu days, hold substantial equity positions in other companies (note these stockholdings are much smaller than they were in the bubble years, when banks were important members of industrial groupings, later called keiretsu as the linkages weakened). The BIS, in a concession to this Japanese peculiarity, allowed a portion of the value of these shares to be counted towards regulatory capital requirements (forgive me for not checking the current rules, but it used to be 50%)."
So some of these Japanese banks are still zombies from 10 yrs or more ago. They never changed their structure to conform to a more conservative capital structure. We've entered a night of the living dead. Zombies that we thought had been put to the stake are re-emerging everywhere.
Nothing is $#%#$%' safe.
Abso-#$%^#@-lutely nothing.
I think I just heard the only interesting thing ever said on CNBC. Apparently Walmart was tracking sales and has noticed an increase in the sales of baby formula on typical paydays leading them to believe people are out of cash.
particle9
Actually, it would be more accurate to say that people are out of credit and need to use cash-but they only have any spare cash right after they are paid. People are getting their credit limits dropped, and for many that means getting cut off, so there are less credit purchases during the week between paychecks. Also, more people are averse to charging stuff now and it's generally cheaper to buy food less frequently and in larger quantity. If you're paying cash instead, you might be a little pickier about what you buy as well.
Correct me if I'm wrong but isnt the principal repaid at par when these are redeemed? IE if the $1000 of face value is indexed to say $750 because of massive deflation and then the bonds redeem doesn't the Gov pay $1000 and not $750?
Yes, the minimum payment is the bond's face value regardless of changes in the CPI.
Which is fine if you can pick them up at face value, and not at the significant premium to par that I've heard many of the TIPS maturities are trading at these days.
homedad, no problem. I dont understand bond 'funds'. I'm interested in the mechanics of bonds but a fund of them confuses me so I could be way off...
uh-oh: you should definitely check with actual counsel, but my understanding is that your lien should also attach to the restaurant as the proceeds of your collateral.
Mook,
Thanks!
Abso-#$%^#@-lutely nothing.
Homedad has a potty mouth?
I think the fact that they are bringing back layaway at retailers as a response to the lack of credit in the marketplace is pretty incredible.
More in the way of somewhat interesting things reported on CNBC, apparently Citadel is asking their clients to pull their money out of other funds and into Citadel to keep the apparent gravy train rolling. Hard to see how this goes wrong.
Well, they're looking a lot better than Volvo..
Subject: A Letter from Andreas Renschler - 3rd Quarter Results
Dear employees,
Daimler released its business results for the third quarter of 2008 today. Earnings at Mercedes-Benz Cars were lower than in the third quarter of 2007. Sales declined in the wake of the global financial crisis. Negative factors were an unfavorable model mix, the weak pre-owned vehicle market, unfavorable exchange-rate effects, and the high price of energy and raw materials. Mercedes-Benz Vans and Daimler Buses were able to increase their sales and earnings, however. Financial Services was able to expand new business, contract volume, and earnings in the third quarter, although the financial crisis is also leading to higher default risks at that division. Group EBIT in the third quarter totaled 648 million.
Despite the ongoing difficult market situation in the U.S. and Japan, we at Daimler Trucks were able to sell 122,700 vehicles worldwide from July to September 2008, which corresponds to an increase of four percent from the same period in the prior year.
Trucks Europe/Latin America increased sales by 12 percent to 47,300 units in the third quarter, whereby sales development was particularly positive in the Middle East (+64%) and Western Europe (+13%), especially in Germany (+26%).
[...]
--
Hey, Bitch, We Are Not In the Same Boat!
The Bitch in question is Diane Swank (she has irritated me with nonsense one too many times), an economist and an author of nonsense like Economist With a Heart or some such title. Use your head, you dopette.
When she was asked why govt., that help create the problem by pushing homeownership, should now get involved by trying to help certain mortgaged people, the Bitch replied, The govt has to because we are all in the same boat. She was not challenged by others on this false assertion. Americans are not only BRED to be dopes and dopettes they are bread to be morally bankrupt on economic issues and govt role in the economy whereby govt helps the bad businesses and bad individuals at the expense of the rest. This is not just bad policy but an attempt at creating a morally bankrupt society and population. The US govt has succeeded in doing just that. When govt promotes immoral behavior we know the end game.
Jas
"Cobradriver, do you mind if I ask you where you live? I'm curious where you can buy a home for 90k."
Fascist Rupert | 10.27.08 - 11:46 am
I live in Port Charlotte/Charlotte County Florida. If you want to see some good deals go to the MLS and type in Cape Coral. Look at the number of listings under 100k. 3 years ago this was almost a zero. It was north of 3k listings a week ago. They changed the MLS so I have no idea what it currently is...
BTW,there are lots of areas in rural Ohio where I grew up that you can buy livable small homes for under 50k.
Chris
Uh-Oh.
1. Contact attorney.
2. You need cash for the next three yrs. Do whatever is necessary to get hold of cash. Cut a deal.
There ain't no such thing as a sanity clause!
"pondering, i'm in Charles County MD...
22 months of inventory for 300K plus homes..."
Banks do not want to take losses. They want to be made whole by the government and will hold out.
sanity clause writes:
apparently Citadel is asking their clients to pull their money out of other funds and into Citadel to keep the apparent gravy train rolling. Hard to see how this goes wrong.
Isn't this cutting pretty close to being a Nigerian scam? I.e., everything is going great but we have these new expenses we need you to front for, and then the fortune is yours?
"Actually, it would be more accurate to say that people are out of credit"
Doc,
Exactly. I've informally polled typical cash businesses I patronize such as shoe repair and dry cleaners. They have been complaining for over a year now. The credit based businesses are just cushioned a bit on timing. I think you could gather better info from 100 dry cleaners than all metrics the Fed uses combined.
If Bernanke were still at a university, where he belongs, he could give me an "F" for my shallow analysis and not damage the global economy as he does in his current position.
@Byzantine: It's only a matter of time before we see a picture of Kenny G holding up a sign on 419eater.com
cobra-
My uncle moves there in '04 (I think) and six weeks later a hurricane strolled through there....moved to Georgia shortly after. He had a place right on one of the channels....house was flooded. I think it was '04....could have been '05.
Ciao
MS
Can anyone tell me what caused the spike in sales after the 2nd qtr 1980, and do we have the same potential to see a false bottom this time around? If that was an anomaly caused by artificial stimulus could we see another similar bounce and then 3+ years of stagnation in home sales?
dave
We entered a short-lived recovery in 1980 before heading back downhill big time in 1981. It wouldn't surprise me if we have a repeat of that "double-dipper" phenomenon this time as well. September 2008 could be analogous to early 1981. This is the real meat of the recession now, IMO.
re real estate,
I saw a law school classmate who works in the midwest this weekend. He's prosecuting contested foreclosures for banks. Two interesting tidbits.
Robotraders (more likely than the PPT, IMHO) giving it a go today. I'm sure that all the momo bots are taking the otherside of the fundamental bots.
Good show!
Thanks for the responses. I'll have another look at the note to see if there is an acceleration clause. 99% sure there isnt one. Perhaps a discount for accelerated payoff is the way to go. Thanks again.
"(unashamed schaudenfreude at the neighbor who has a F-350 Ford Diesel Cummins to tow his boat and snow machines)"
Sports Guy Lafleur | 10.27.08 -
As a 20+ year medium/heavy diesel tech...
Ford/F-350=Powerstroke v-8
Dodge=Cummins inline 6
Neither is a bad engine. Current Common rail injection systems are allowing damn near 20 mpg in a huge truck...
Chris
sanity clause,
That is interesting info re Citadel...it makes sense from Citadel's perspective but I imagine there is quite a bit of scrambling going on amongst their investors as they calculate whether going along with this makes sense individually. If Citadel is asking for the cash, perhaps the preferred alternative is to pull your investment with Citadel?
Doc,
Exactly. I've informally polled typical cash businesses I patronize such as shoe repair and dry cleaners. They have been complaining for over a year now. The credit based businesses are just cushioned a bit on timing.
I was actually wondering about this wrt the fuel cushion CR was speculating on yesterday(?).
Is there some available metric of cash v. credit purchases at fueling stations?
It seems to me like any kind of "fuel cushion" is just going to slow the upwards velocity of consumer debt revolver balances, and might even generate an increased spending (indebtedness) "wealth effect" near the Christmas season, unless consumer credit is so straitened that consumers in the aggregate are unable to "shop away" the savings until monthly servicing fees eat the additional income.
@Kung Fu - only if you have a time machine, dude. Lockups at Shitadel are brutal.
CSpan now has Heritage Foundation seminar on sub-prime mortgages and criminal law. Panel stressing that execs. shouldn't be prosecuted for bad judgement.
Byzantine_Ruins writes:
Isn't this cutting pretty close to being a Nigerian scam?
They should hire the hoopajoop guy stat. Otherwise yeah, they're just openly admitting it's a flailing pyramid scheme.
"This builder was selling 1800 sq/ft,3/2/2, including lot for 89k"
Cobradriver,
What area r u talking about?
I am guessing Lee County, FL.
MS | 10.27.08 - 12:02 pm | #
MS,
Chris
Hey uh-oh - obviously, you should consult a real estate attorney (whoever did your closing can probably recommend someone) -- nonetheless - original purchaser is still going to owe you interest every month and a balloon payment in 18 months - otherwise, he/she is free to screw up their own personal finances in any way they like, as long as they pay you.
I don't think the "50% interest" can be recorded on the property without changing the terms of the note - so, it's just a side deal between the property owner and his brother, and shouldn't encumber the note you hold. Nonetheless, you'll sleep better when you hear it from a law degree holder. Keep us posted.
Place your bets, how much is the USD slippage against the YEN going to kill holiday sales?
UH-OH
If all you are going to do with the money is pay down your mortgage why not just wait for 18 months? Without a due on sale acceleration clause he can pretty much do as he wishes but he will have to sell any interest subject to the note you hold. You're in good shape. The worst that happens is he goes BK in the rest. business and his brother makes the payments. If teh brother dafaults you pick up a cottage for cents on the dollar.
A significant number of home sales were made in his city where the price was too high for the rough neighborhood, the loan came through easily and no payments were ever made. Example, 100k loan for a house worth ten. I've got a lot of sympathy for individual homedwellers in trouble, but it looks like a lot of mbs was backed by con artist bs from the start.
Ren,
I'm sure there were plenty of completely fraudulent scams, but I doubt that the pure unabashed fraud was only a small fraction of the problem.
I think most people just had no clue how badly they were over-paying.
"What area r u talking about?
I am guessing Lee County, FL."
Vega | 10.27.08 - 12:10 pm | #
Actually the builder had lots in both Sarasota County/North Port and Charlotte County/Port Charlotte. Most people don't realise we started this collapse almost 3 years ago. Sarasota proper is just starting to see massive declines. You should hear everybody at work bitching..."I CANT SELL MY 1M DOLLAR HOME" as I giggle.
Chris
ew thread.
Barley writes:
I like the long term graphs - puts things into perspective.
Yes, I completely agree. And the message is not nice :
After an overshoot there will be an undershoot!
From the '96 to '07 overshoot (over 600k) you can (as a very rough 1st order guess) infer the '08 to '19 undershoot.(simply invert the overshoot) '19 ??? whoaaaa..
(you may reduce it a little by assuming that by '19 the 600k avg may have shifted to ?700k; so the undershoot may have run its course by maybe '15.)
An ugly picture, but am I wrong??
I was actually wondering about this wrt the fuel cushion CR was speculating on yesterday(?).
Is there some available metric of cash v. credit purchases at fueling stations?
It seems to me like any kind of "fuel cushion" is just going to slow the upwards velocity of consumer debt revolver balances, and might even generate an increased spending (indebtedness) "wealth effect" near the Christmas season, unless consumer credit is so straitened that consumers in the aggregate are unable to "shop away" the savings until monthly servicing fees eat the additional income.
Byzantine_Ruins
Yes, I would like to see such a metric if available as well. I am aware of people getting cut-off at the pumps with credit cards-while pumping! Since you have to pre-pay with cash and it's inconvenient, people are using debit cards instead. You make a good point about the "wealth effect" at Christmas time. Actually, I think the best of both worlds would be for credit to get pinched for shopping in the next few weeks, while people have to use the extra earned cash (from cheaper fuel) to spend instead.
Cobradriver,
What's your opinion of Detroit Diesel engines relative to Cummins and Cat? I used to work for a regional distributor for DD. When I left Daimler was switching Mercedes engines for on-highway apps.
Kung Fu Panda | Homepage | 10.27.08 - 12:18 pm | #
Cummins and Detroit both are pretty bulletproof if maintained. I have zero experiance with Cat. I also haven't worked on the new MBT heavy truck engine. I will say this...the Sprinter/Dodge vans are throw aways. When they come apart it is terminal. I have seen them explode with 100k up to 200k. I haven't had a single one clear 250k.
The new common rail/high pressure injection used to meet emissions is very pricy on all the trucks...think 500.00/injectors vs 50 for reman mechanicals...
Chris
BTW...Just had a good friend go over 3.5M miles in a Freightliner/Detroit combo. At 2.3M he did an inframe and it really could have went a little longer...
Hurricane Ike and the disruption Ike caused for Southeastern gasoline supplies might have skewed these numbers and might still be skewing them. I don't think we're going to have anything like Ike-free numbers till November.
OT- I found the clause! SALE OF THE PREMISES. grantor agrees that if the premises or any part thereof or interest there in is sold, assigned, transferred, conveyed or otherwise alienated by Grantor, whether voluntary or involuntarily or by operation of law[ ]without the prior written consent of beneficiary, Beneficiary, at its own option, may declare the note secured hereby and all other obligations hereunder to be forthwith due and payable. Any change in the legal or equitable title of the premises or in the beneficial ownership of the premises, including the sale, conveyance or disposition of a majority interest in the grantor if a corp. or partnership, whether or not of record and whether or not for consideration, shall be deemed to be the transfer of an interest in the premises. This may be what I need. Thanks again all. CR thanks for hosting this blog.
"This builder was selling 1800 sq/ft,3/2/2, including lot for 89k"
Cobradriver,
I see lot of properties in Lehigh Acres and Cape Coral north of Hwy 78 that are in the $50 sqft range like u mentioned.
I am biding my time, waiting for them to hit $25-$30 range.
Should be there in 6 to 9 months.
On the 2+ acre category, wonder if it might be cheaper to get a lot and have the home built, as opposed to buying an existing property. Coz those sellers are indeed holding their prices as of now, in Lee county as well.
Of course that will change a year from now though.
I think waiting is the name of the game.
Pondering the Mess writes:
Hahaha! Housing here in Maryland still starts at about 5x income for anything worth buying since this place wasn't overrun with subprime, but instead was ruled by Alt-A and Option Arms. Until prices decline a long way, I don't see any end to a lack of sales.
While affordability is a key component to the RE market most have yet to understand how our tax and lending system has created a large overstock of housing which is not considered excess but during times of stress this overhang suddenly appears.
U.S. excess housing inventory has been viewed through the lens of empty houses for sale rather then a wider picture that captures the impact of RE speculation along with multiple home ownership. The tax and generational trends during the past 40 years encouraged a massive overbuild in housing which has been over looked since investor/multi home ownership has not been properly understood as excess inventory, as a result we are now beginning to experience on a national scale investor dumping
of housing in the current case a byproduct of the sub prime mess but underneath the next wave will be the recession induced dumping of the 2nd and 3rd etc homes owned by the former employed members of the financial sector and as the recession gets deeper we can expect a wider net of RE investors/speculators dumping property adding to the inventory.
The result is that the effort of the Federal Gov't to create a price bottom for the RE market is hopeless and it will take more then just affordability to generate meaningful turnaround in the RE market.
"Used houses" what are those?
Rob Dawg | Homepage | 10.27.08 - 10:45 am | #
"Certified Pre-owned" is the new used.
dp,
I agree, re most people. But I wonder how many scam artists noticed and taught each other as the lending spigots got looser and looser. A few artists can do a lot of deals, esp if they're willing to use many names.
Mostly it just angers me that the gov't is bailing out mbs at all. businesses that don't do due diligence should fail, full stop. Gov't money, if any, should have gone to protect small people.
ron,
Helpful analysis, thanks.
Inventory is all about the healthcare.
Sarah Palin | 10.27.08 - 10:37 am
You got that right, four-eyes.
Long-term, assisted living condominiums. with fabulous amenities and structured entertainment. The ticket on these deals I've been told runs $200K - $350K, cold cash, non-refundable and non-transferrable, plus monthly vig $1,200 - $4,000.
Do you have any grip on current vacancy-rates? Market size and value?
oops ...
Sunrise Senior Living: Investor Relations Home
CobraDriver:
You are right, of course, about the Cummins diesel being in a Dodge and not a Ford. I almost corrected it after my post, but thought, "hey, nobody here reads my nonsense." My bad.
But I'm sure it's a F350 because it's so damn big it won't fit in his garage!
****ing Haloscan.
I tried a post with Java off and it complained. When I tried again after enabling, it says "You've already said that (duplicate post)". I even closed the browser and restarted. I don't see my post, anybody see it (about TIPS) 5 or 6 times now?
Which is fine if you can pick them up at face value, and not at the significant premium to par that I've heard many of the TIPS maturities are trading at these days.
You just missed a chance today to buy 5yr TIPS from the treasury at 92.38¢ on the dollar. Coupon 0.625%, yielding 3.27%. According to Bloomberg
, only the 30yr TIP sells above par, and currently 5yr is priced at 89.06.
OT--last thread, somebody asked a legal Q & wanted to venture one too-- am in the Hampton Roads Va MSA (Norfolk, Virginia Beach, Portsmouth, etc.)& tho home prices here about doubled during the bubble, so far they've only declined about 5% so am renting again & just signed a new lease.
There's a clause in it that says, paraphrased 'You may not record this lease, or any portion thereof, in any place of public record, & if you do, landlord can void the lease...'
Which got me curious. Is this type of clause usual in a lease? What's its purpose? So the landlord can claim "owner-occupancy"?-- either for tax, or mortgage note terms, or maybe home insurance purposes?
Its seems intended to hide the fact the home's being rented. And am wondering about this-- because heard some TV-heads this morning, on about the bailout terms for modifying foreclosures. One woman insisted each loan must be looked at individually, to "kick out" those who can actually pay the nut, but are choosing not to, and also to kick out multiple home owners, & speculators, & people who lied on their mortgage apps. (sounds good to me!)
Another panelist argued it'd be impossible to check each loan individually. But 1st woman said-- because the Fed gov't was ordering these mods to be done, this meant servicers could legally access the databases holding people's private financial info-- via SSN #'s & tax returns-- to compare to the docs the borrower was showing-- to ensure that only deserving folks qualified for workouts, & "uncover" those who signed off on fraudulent mortgage papers-- eg., those who claimed "owner occupied", but really owned multiple properties.
So, how exactly DO the servicers currently doing the "loan mods" under Hope Now, FHA, etc., confirm they're being given true information by the borrowers? (maybe my suspicions are the effect of reading 1 too many of Eric the Spammer's "fake paystubs" posts here lately-- but what actually is in place, to stop people from committing more fraud, just to get their loans reduced??