CR when do you think new home construction or starts will bottom?

Does this report take into consideration unemployment, under employment and the fact that people who are finding jobs are making less money?

The gap between new home sales & existing will have to close. You have to believe all the FHA programs are keeping that existing number artificially high. Existing home sales esp distressed generate almost 0 economic activity so the macro economy will suffer as capital is diverted to knife catching housing assets.

Agree with MS unemployment and business investment seem to be leading the recession. I know many people that spent money as normal until the got the pink slip. Now its Survivalist mode with unemployment checks paying the bills.

CR Gracias wish I was in Santa Monica

"...I really mean the end is here, as in the absolut end, becuase there are more of these loans outstanding then sub-prime...that is also when the stock market plunges 80% plus and we get great depression II capitulation."

Do you mind providing some links to substantiate these dire claims?

uno mundo wrote on Sun, 04/19/2009 - 2:45pm.

Want to buy a home near a mall that's going under?

Near a mall that's going under? I can do better than that. I'm going to buy $1 million condo IN a mall that's going under... in Glendale.

The Americana at Brand

Yes, but an immobile workforce will also have political implications. People who are stuck in one place tend to get cranky. This tendency has been heretofore masked by the freedom to move around.

It also slows recovery because people can't move as easily to where the jobs are.

I saw a classified ad in a magazine recently offering land to pitch your tent/motor home/camper/whatever on for $1000 a year. No services, of course, no well or septic, but if you want a place to pitch your tent, it's there.

I wonder if that might be "one" wave of the future. Outdoor primitive living, maybe clustered around groups of common interests. Communes back in style?

" ghostfacedinvestah wrote on Sun, 04/19/2009 - 2:25pm.

Just wait until all the new foreclosures hit the market, you ain't seen nothing yet. Four months of pent up foreclosure demand, coming soon to a RE market near you."

You're right, and this, combined with an upcoming GM BK may be the thing that finally kicks some sense into the stock market's head.

[“I believe we won’t” have to request additional funds from Congress, he said on ABC’s “This Week” program. “But I haven’t seen the stress tests,” he added."]

This suggests to me that either he's an idiot or an imbecile. An imbecile if he knows the stress tests are rigged to pass every lender so he's dumb enough to stumble into that leak, or an idiot because the stress tests might be at least marginally meaningful and he's guessing the banks are pretty close.

Obama's administration is a joke.

Cinco-X ---> ready to entry, no reforms needed

http://www.destination360.com/north-america/us/washington-dc/images/s/washington-dc-white-house-s.jpg

"Ben Frank'll Tank Bernanke wrote on Sun, 04/19/2009 - 3:00pm. David Simon, Bill Moyers Bill Moyers Journal . Watch & Listen | PBS  Good night
Good night, moon. Good night, PoPo. Goodnight hustlers, scammers, hoppers.
Good night, hoboes, grifters, system gainers.
Good night America.
Goodbye virtue and plenty. "

Whatever else happens, the hustlers, scammers, grifters, and system gainers will be here, along with the cockroaches.

When you see one cockroach, you know there are another 40 smart enough to stay in hiding.

Off to spend some money.

Ya don't need tp if you have leaves!!

" lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 3:25pm.

Heavens, nobody's job is or ever was secure for 30 years. It may have actually lasted that long in reality. Or people may have thought so. But that kind of stability simply doesn't exist.

lawyerliz--finance the REOs."

Actually, there are some folks in Congress that refute this rule, though for the general populace, it's true-

" lawyerlizinMI (member) wrote on Sun, 04/19/2009 - 3:32pm.

Ya don't need tp if you have leaves!!

lawyerliz--finance the REOs."

The you BETTER know how to identify poison ivy. My Mom made that mistake when she was a little girl. Ouch!

Cinco-X (member) wrote on Sun, 04/19/2009 - 3:30pm.
" Samdog (member) wrote on Sun, 04/19/2009 - 3:07pm.

Just playing it safe: I'm long on rice and beans ...."

With that diet, you better not forget the TP-

Maybe I should add corn to the list--the cobs can double as a TP replacement.

I still believe we have not seen anything yet

..........these are the days you'll remember as, "I should have (____?____) in the spring of 09, what was I thinking?".

nova,

Don't overspend on "Le Creuset." Go to your local restaurant supply store--you get high grade cookware cheap. Nuttin' fancy, but functional and durable.

"I still hear plenty of smart and experienced people say that this is but a temporarily glitch in the matrix and it is all going to go back to the previous levels and now is the buying opportunity of the lifetime (get in now or you will be priced out forever)."

I pulled a teacher's magazine out of the junkmail trashbin at the post office because the cover story was something like, "The Mind Was Not Designed for Thinking." The author, a cognitive psych guy, held that people don't really like to think (because it's hard) -- and think as little as possible. What they do like to do is remember, and apply past lessons and facts to current situations. They'll only start thinking when the old "truths" from memory don't work.

Are we seeing that these days, or what? It's probably the sustaining factor behind so many long bubbles. Especially a long one like this one, with guys in their '40s or later who've never seen a real financial or economic breakdown setting the tone.

On another note, my cube neighbor at work was arguing with her BF yesterday on the phone. He was ready to do something dire because his parents had just stopped making payments on their house -- they were too under water to care anymore -- and he was sure they were going to be tossed out on the street immediately. I told her about notices of default and the whole schedule.

It's everywhere. It's really everywhere.

"The mall was booming at Tysons where my wife bought a Le Cruset? 2 1/2 quart dish for $99.00."

I'm glad to hear that. Your mall is owned by the same people who own my mall out here, which has lost/is losing two of its four anchor stores and is about to lose a bunch of others at other locations (Gottschalks stores, mainly). Hope they can keep their head above water.

May have been commented on earlier, but the new home market is going to come back in a much different form than a couple years ago. Prices (and especially margins) are a going to be lot lower now, which will change the builder business model. True, materials are cheaper but labor will be about the same and a lot of the price will depend on whether the land was bought at premium prices or more recently at the "2009 discount rate."

Also going to depend on local conditions. I would think that in severe bubble areas the only new construction would be infill in desireable neighborhoods. There's already an excessive number of almost new homes everywhere else.

Dave Perry-Miller & Associates - Luxury Realtor - Dallas, TX
$900,000 reduction from $6,795,000 to $5,895,000 a mile from the Bushes in Preston Hollow N. Dallas, TX. The Mediterranean style home at 1005 Meadowbrook was built in 2008 by noted builder Sadd Chehabi. Open today from 2 to 4 p.m. It corners busy six lane Walnut Hill a major Dallas east/west artery. There are NO east/west freeways in N. Dallas south of 635/LBJ freeway only six lane streets with many traffic lights and school zones.

re: David Simon, Bill Moyers

Thanks for that. One of the more insightful interviews I've seen in awhile.
Almost inadvertently says more about the causes of the meltdown than most analysts seem to understand...

~e

'$900,000 reduction from $6,795,000 to $5,895,000 a mile from the Bushes in Preston Hollow N. Dallas, TX. The Mediterranean style home at 1005 Meadowbrook was built in 2008 by noted builder Sadd Chehabi. Open today from 2 to 4 p.m. It corners busy six lane Walnut Hill a major Dallas east/west artery. There are NO east/west freeways in N. Dallas south of 635/LBJ freeway only six lane streets with many traffic lights and school zones."

I finally got some CMAs on a couple of DFW suburbs that has shed some light on distress. I'm about to start doing some low-balling. The abovementioned property is unfortunately well out of my price range

RockyR,

Are you thinking recovery soon?

CR, I told you 4 years ago that builders can not compete with banks, and in the final stage it would be a price war between banks. If I can buy more or less the same house (1-2 year old) why would I pay 40-50% more? Try to use some logic. What the builders are doing now is living on borrowed time.

O/T

deBasement!

Zimbabwe's national currency will remain suspended for at least a year following the legalisation of foreign currencies, officials say.

"There was nothing to support the value of the Zimbabwean dollar," Economic Planning Minister Elton Mangoma said.

Worth reposting, today's NYTImes on how discussing real estate prices has become socially taboo....the losses, both current and future, are too painful for owners in Manhattan.
A RE crash happened in Manhattan in 89-93, with prices going lower each year. Not an event from ancient times, but middle-aged New Yorkers are acting as if a downturn was a new, and unheard-of event. Even folks old enough to have lived thru the last one.

Don't Even Say the Words - NY Times

Somebody lock Greg Makiw up...

ECONOMIC VIEW; Maybe the Fed Should Go Negative - NY Times

Talking about the need for a "negative interest rate" to kickstart the economy, he's got just the answer:

If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations.

Maybe preferable to you, Greg. He starts the article with the idea of a tax on savings to stimulate the economy, and equates inflation as the real world way of doing this. So all of us who were prudent would pay right now for the sins of the few. And for the sake of those "future generations," of course.

I think I'm taking my money out of money. It's not just the idea of it, it's the .... smugness of it all. Which no doubt is still the reigning attitude of our economic overlords.

"It's everywhere. It's really everywhere"

Around 2004 I started replacing my long-term payments (house, car) for short-term discretionary spending (movies, food, etc).
I'm impedance-matched to the "new economy".

One thing that's annoying is this constant reference to the "5 million lost jobs".

They're not "lost".
I know exactly where they are.... overseas.

First we impoverish those who got into debt over their ability to pay (or they've lost their jobs and landed in this status).

Next, the Feds and banks go after those who are debt-free and saved their wealth, and take their savings via inflation.

The clear objective of the banks is to wipe out their customers to save their banks.

Sounds a lot like 'we had to destroy the village in order to save it'.

NYT: FED go negative on IR?

ECONOMIC VIEW; Maybe the Fed Should Go Negative - NY Times

Oh, somebody beat me to this one. And Lucifer's already put in his two-cents worth ....

Capitalism Dead of Self-inflicted Wound

O H Chick- you make a good point but one additional thing to consider. Much of the land was purchased at a price that assumed a bigger sized house. I think what builders are going to discover is that with tighter financing the demand for large homes will just not be there. Perhaps we are going to have to reverse the trend of the last 50 years and move back to smaller homes. This will really screw the builders land inventory.

If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

Just to reiterate the whole problem with this idea is precisely that it gets people to spend when spending is structurally unproductive and to borrow when additional borrowing is simply going to lead to more defaults and more bad credit. It simplistically assumes that economic growth is uniformly good and economic contraction is uniformly evil. It totally ignores any notion of structure or allocation and hence results in the liquefaction and ultimate destruction of the underlying economic and financial foundation that leads to sustainable growth.

It is motivated either by ignorance or short-term political goals, and it is this type of thinking that is rapidly turning the United States into 3rd world economy.

crazyv wrote on Sun, 04/19/2009 - 2:39pm.

O H Chick- you make a good point but one additional thing to consider. Much of the land was purchased at a price that assumed a bigger sized house. I think what builders are going to discover is that with tighter financing the demand for large homes will just not be there. Perhaps we are going to have to reverse the trend of the last 50 years and move back to smaller homes. This will really screw the builders land inventory.

And in Califonria, land use policy. Since Prop 13 limited increases in property tax, many cities resorted to increased "fees" up front -- many tens of thousands of dollars -- to front-load expenses for police, fire, public services on the new properties. With that sort of surcharge, it only made sense for builders to build larger, more expensive houses, so that the fees would be only a relatively small amount of the sale price. They wouldn't have made near as much money selling cheap, small homes. Higher-density developments were often able to cut deals with the city, but not always.

I am shocked that the ATM did not bend over backward when our harvard boy used it..

Better Through Whose Eyes?
11:33 PM Tuesday April 14, 2009
- Bloomberg.com

By Scott Anthony

Over the weekend I stopped off at the local Bank of America Automated Teller Machine to deposit a few checks. The company had recently upgraded the ATM to an advanced machine it began rolling out nationwide in 2007. A sign proudly touted how the machines' optical scanning technology enabled consumers to deposit cash and checks without using envelopes.

I dutifully put in my stack of six checks, and the machine started whirring. The machine easily recognized five of the checks (including a handwritten one). But it just wouldn't take that sixth check (which looked indistinguishable from three other machine-printed checks). I tried three times, and gave up. Either I would have to go to the bank branch to deposit the check or I would have to get a new check.

As I walked home, I grumbled to myself, "This is new and improved?"

Of course, I can easily imagine how this kind of service is better to Bank of America, because it cuts costly data entry errors. And there are some clear consumer benefits. You can get a receipt with images of the deposited checks, which can help those of us who still obsessively manage their finances in Quicken. And of course most of the time I'm sure the system works absolutely flawlessly and saves consumers the hassle of adding up checks at home.

Rightly or wrongly, my check-deposit struggles left me with an image: Bank of America is innovating to help itself, not me.

If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.

One other thing, it's worth reiterating that we've seen precisely this type of policy prior to every major economic catastrophe in the past century:

In 1891, 1927, 1998, 2001-2003, 2007, and prior to the massive bubble in Japan.

Negative interest rates created by the government are the one element common to all these disasters.

crazyv, I'm not sure where you're talking about, but I imagine most places that wouldn't be a big problem. In California the houses got much bigger, but they were still being packed like sardines. You throw a few extra feet between the houses, some setback or a yard, and voila, smaller houses.

" JimPortlandOR (member) wrote on Sun, 04/19/2009 - 5:30pm.
First we impoverish those who got into debt over their ability to pay (or they've lost their jobs and landed in this status).
Next, the Feds and banks go after those who are debt-free and saved their wealth, and take their savings via inflation.
The clear objective of the banks is to wipe out their customers to save their banks.
Sounds a lot like 'we had to destroy the village in order to save it'."

Jim,
We can only hope that this is their approach; I'd prefer that to having them take 401k's, Roth IRAs, IRAs and such, and forcing us to buy the federal deficit with them. 0.1% interest forever. At least with your approach, we'll get to enjoy 18% interest rates a la the early '80s. Additionally, it's effectively a "claw back" from the folks that "really" profited from these shenanigans.

They will, unless the townsfolk chase into the abandoned watermill and kill them..

Will the Next MBA Grads Take More Risks?
07:46 PM Tuesday March 24, 2009
By Stew Friedman

Samdog,

Sure, there are grades of crap.. but I would not eat any of them

"Ever been to Riverside California, the I-15 foreclosure corridor?"

Is this in "the Valley" that is ridiculed on TV and in a Frank Zappa song?

ac writes: "Just to reiterate the whole problem with this idea is precisely that it gets people to spend when spending is structurally unproductive and to borrow when additional borrowing is simply going to lead to more defaults and more bad credit. It simplistically assumes that economic growth is uniformly good and economic contraction is uniformly evil. It totally ignores any notion of structure or allocation and hence results in the liquefaction and ultimate destruction of the underlying economic and financial foundation that leads to sustainable growth."

Thanks, I was too angry to complete the thought.

Forty percent work for the gov't, 40% are in real estate, and remaining 20% are here illegally--makes sense to me....

"The valley is the San Fernando Valley north of LA. Riverside, etc. are far to the east of LA. "

Thanks; I always hear about it, but I've never been there, and wasn't sure exactly.

Please lynch this guy.. Only his first suggestion is good.. and it is common sense

Biotech Survival Guide

Here are some key tips on how to stay the course during the global economic crisis.
PRINT - Biotech Survival Guide - 04/13/2009 - The Journal of Life Sciences

PETER WINTER

The global financial meltdown has created an unprecedented situation for the biotech industry. After having enjoyed more than 40 years of easy access to capital, the rules of the game have forever changed. The capital markets have permanently restructured, making capital more difficult and expensive to secure. This environment is new and unfamiliar to the industry. Though biotechnology companies have experienced sharp market downturns in the past—and lived to tell the tale—the recent collapse of financial institutions has choked off the industry’s financial life-blood. Scores of private and public biotech companies are now at risk of running out of cash. In reality, the crisis is helping to accelerate changes already underway, which are being shaped by such forces as globalization, healthcare reform, and climate change. In order to survive the next 12 to 18 months, companies will need to quickly adapt to these changes, or run the risk of closing their doors.

In order to survive this turbulent period, biotechs will want to consider the following:

Seek partnerships for value creation: The only sensible idea

Conserve capital: aka Fire people

Go into virtual mode: Fire more People

Examine your options: Beg for money from the big bad government.. or Fire even more People

Engage in global arbitrage: Congratulations.. you are your companies only employee

Keep the faith: Dear God!!

Everyone has a real estate licence in Klownifornia

Don't 40% of all Californians work for the government? Is that not kind of like communism?
I also hear that 40% of all Californians are real estate agents? how does that work?

I do not wish to waste my outrage on this one

Businesses still shrinking, but making progress
Durable goods orders, home sales expected to fall

By Rex Nutting, MarketWatch
Last update: 11:40 a.m. EDT April 19, 2009

WASHINGTON (MarketWatch) -- Whether you call it a recession, a depression, or even a banana, economists pretty much agree that we're not out of the swamp yet.
The good news is that the recession is finally entering a phase that looks like familiar territory. The economy may face risks of further credit strains, a larger global meltdown, or a major bankruptcy, but a big part of our problem right now is just a good old-fashioned inventory correction.

The story goes like this: In boom times, making the sale is easy. Everyone expands business to grab as much revenue as possible. But at some point, supply outruns demand. Inventories of unsold goods and services build up and companies are forced to shrink their businesses to cut costs as much as possible.

ac wrote on Sun, 04/19/2009 - 3:12pm.
Don't 40% of all Californians work for the government? Is that not kind of like communism?
Funny how most of the budget crises seem to be occurring in the US Soviet Bloc states.

Say it. Come on. Say it. Blue States. [Nomex suit thus applied]

An even bigger story than TARP is the FDIC backstop on the bankers' debts. Many banks, including our illustrious Goldman Sachs, have received more help from the FDIC backstop than from TARP, and Goldman received billions in TARP aid, not to mention the payments via AIG.

Good interview on bank profits, stress tests & market from NPR Planet Money [4/17/09]

Planet Money Blog : NPR

Can you continue the gang bang..

Why Houses Look Better and Better
Why Houses Look Better and Better - WSJ.com

By DAVE KANSAS

Some people think it's a good time to buy a house. Is it?

In the past few weeks, home-sales data have perked up from very low levels. At the same time, home prices continue to fall in most parts of the country and mortgage rates, while ticking up, are at remarkably low levels.

All these data raise an intriguing question: Is now a good time to purchase a home?

You are kidding..

'The Largest Failure'
J.P. Morgan Chase CEO Jamie Dimon on the lessons of Fan and Fred.
'The Largest Failure' - WSJ.com

'Perhaps the largest regulatory failure of all time." That's how J.P. Morgan Chase CEO Jamie Dimon describes the "inadequate regulation of Fannie Mae and Freddie Mac" in his annual shareholder letter, released this week.

Mr. Dimon devotes nearly a quarter of the 28-page letter to analyzing what caused the panic of 2008, and he hands out plenty of blame all around. But he calls it "amazing" that Fannie and Freddie were allowed to grow "larger than the Federal Reserve" thanks to Uncle Sam's implicit guarantee of their obligations

Something to take the mind off the bailouts

Obama to target Credit Card fees
UPDATE 1-Obama to take aim at credit card abuses
| Reuters

Now, doesn't it feel better to send billions to bankers?

Comrade Coinz - "Slows recovery because people can't move as easily to where the jobs are..."

Where, pray tell, are these jobs exactly? As far as I can see, there really aren't any jobs to speak of right now, anywhere. And still no serious plans from the White House to address this in any kind of large & strategic way. All the states are busy cutting staff and raising fees.

Especially if the folks who are looking are trying to approximate some kind of middle class life (home, car, health insurance, even just at a very modest level).

But I agree with the posters who did note that there are actual benefits - social, political, even physical/mental health - from people being more connected to their communities. In times of trouble, it is your friends and neighbors that count. Especially when you all have pitchforks...