Saturday, November 24, 2007

Blogger party deux: December 8th

Two weeks notice! I'm going to so a 2nd blogger dinner.

Now, the cheesecake factory worked really well... But I've been asked for a location outside of the south bay.

How is old town Pasadena for everyone? For that's the location! Il Fornaio* is going to be it. December 8th, for dinner (6pm... blogger dinners are long dinners!)

Note: I'm asking on the location, but we'll pick this date! If Old town Pasadena doesn't work...

So either post in the comments, or e-mail Let me know an RSVP (yes/no/maybe), how many, and if you can make old town pasadena. (Also let me know if reverting back to the south bay would or wouldn't work.)
Got popcorn?

* oops... edit on spelling.
edit: We're set on Old Town Passadena, Il Fornaio, 6pm Dec 8th.

Wednesday, November 21, 2007

Real Estate Emotions November Update

Is it the holidays keeping the real estate emotions stuck in fear? Quite bluntly, no one but a few of us seems that concerned with real estate this holiday season. Yes, the markets are going down due to real estate and sellers are scared... but everyone knows this is the slow season and that seems to be slipping the real estate emotion timeline to the right. As to the Kübler-Ross grief cycle, just a small shift from immobilization to denial and a bit more into bargaining. No major shift, but a trend that is looking good from the buyer's perspective.

To the Kübler-Ross grief cycle and what fraction of the population seems to be in each emotion.

Stability: 50% (Old homeowners and bubble bloggers)
Immobilization: 23% (Prices dropping? Can't be.)
Denial: 6% (No! Real estate only goes up!)
Anger: 8% (This one must be discussed)
Bargaining: 4% (Ok, we can cut the price and lead the market)
Depression: 3% (We're going to lose our home. Just let them take it...)
Testing: 4%
Acceptance: 2% (Walk away, we're toast)

Here is the text version of the emotions. Changes in bold

1. Optimism
2. Excitement
3. Thrill
4. Euphoria (market price peak) Peaked in late 2005/early 2006
5. Anxiety (I'm a long term investor, not a speculator.)
6. Denial (Reached in October of 2006 until mid-May of 2007)
****7. Fear (Reached in mid-May of 2007). *****Current state****
8. Desperation Predicted to start in early 2008 shifts to right by two month
9. Panic: Mid 2008 looks to be the start. More shifting to the right
10 Capitulation: Moved to start of 2009; that brutal January/February market will get it going.
11 Despondency (start of market price bottom) I've gone from "possibly 2010" to definitely 2010. .)
12 Depression (end of market price bottom) Not over before summer 2011, probably later.
13 Hope (hey, this investment has picked up off its bottom) 2012 is the earliest
14 Relief (Its almost what I paid for it...)
15 Optimism (cycle starts again) 2017

So for this month we again have more anger and a stronger presence in fear. But desperation seems determined to let the holidays happen first. Real estate emotions move slower than you would think; all of my corrections have been to the right. I did some pretty major shifts to the right this month and believe this timeline should hold for a while. The conclusion? Price drops through 2008 and at a faster pace in 2009. The start of the "long flat" in prices in 2010. The end of the flat? 2012. People like to believe real estate will recover in a "V" shape. Nope. This will be like real estate in the 1990's ("L" shaped recovery with a long bottom) or the dot com stocks (years of flat prices before growing).

Got popcorn?

Bankruptcy Rumors At Countrywide

Bankruptcy Rumors At Countrywide

Countrywide Financial Corp shares plummeted as much as 22 percent on Tuesday on speculation the largest U.S. mortgage lender might run short of cash, but recovered most of that loss after the company said it has ample liquidity and will not go bankrupt. In a statement late on Tuesday, Countrywide said it believes it has "ample liquidity and capital" to ride out the U.S. housing downturn, and will benefit from mortgage market consolidation.

"Nobody's got any faith in anyone telling the truth, or knowing what the truth is," said Anton Schutz, a portfolio manager at Mendon Capital Advisors in Rochester, New York.

Wow... read the whole Minyanville article.

News on Fannie, Freddie, and now Countrywide. We're going into the liquidity crunch.

You'll have an emotions article from me in time for Turkey day. :) But this was something that really caught my eye.

Got Popcorn?

Thursday, November 15, 2007

slump is a result of a weakening economy and troubled housing markets

Its not looking to be a merry Christmas. Quite a few retailers aren't doing so hot

Yahoo finance on mid-level retailers

Both Kohl's and Penney reported drops in same-store sales, or sales at stores open at least a year, a key indicator of retailer health. Kohl's reported a 2.6 percent drop, while Penney's fell 3.5 percent.

---------snip out the mid article and continue -----------------

Penney Chairman and Chief Executive Myron E. "Mike" Ullman III was quick to point out that the slump is a result of a weakening economy and troubled housing markets. The company, he said, was not doing anything wrong.

"It's not as if we got dumb all of a sudden," Ullman said.

No, but we (as a country) were dumb to let it go on like it did

Normally ra ra for the sheeple predicts a lousy holiday retail season

With Dec. 25 about eight weeks away, the retail industry is struggling with shoppers’ eroding confidence amid higher daily living expenses and problems in credit availability.
Could it be debt fatigue? Hmmmm???

At this point, there may not be much retailers can do to salvage the holiday season. And it hasn't even officially started.

It was weak across many sectors in October, from mall-based apparel stores like Limited Brands Inc. to department stores like J.C. Penney Co. Even the world's largest retailer, Wal-Mart Stores Inc., posted sales below expectations despite heavy discounting. The few standouts were warehouse club operators such as Costco Wholesale Corp. and BJ's Wholesale Club Inc. as consumers sought

out lower prices than even discounters offered.
(from above link)

The question isn't if we'll have a bad Christmas, but how bad. Since MEW is alive and well, I think it will be a single digit decrease YOY in sales. But I also predicted a stock market correction in October. :( So what is everyone else's prediction?

As far as real estate, I'll do my emotions update next week. Its really slow now. People just aren't that interested in real estate. Projects are coming due or family events are on their minds. In fact, only a few fellow bears and an occasional seller even talk about it. But there will be more discussion on the anger out there. Its the holidays, but quite a few people are not happy. But the mortgage pinch can't be helping things.

I'm thinking most of this winter's decline will be January/February (I know, the historical norm). But not just for the usually reasons. Partially due to a poor Christmas season driving the housing market down further.

Oh well.

Got popcorn?

Tuesday, November 13, 2007

Mortgage Woes to Sink Property Values

WASHINGTON (AP) -- An expected surge in home foreclosures will cause U.S. property values to sink by $223 billion, with the most severe impact in minority communities, a new report says.

Article on Yahoo Finance

This will just start to give J6P some perception there is a problem. However, this "survey" is such fluff it totally misses the problem. But hey, its getting the news out.

We're one downgrade away from Countrywide going under. E-trade is in trouble and need I describe the debacle of the "super-fund" SIV bailout? Prices will go gown a bit in 2008 and a lot in 2009.

I am beginning to wonder if the slow sales rate (seasonal and mortgage driven) is artificially hiding price declines. Oh well. Its not like I didn't know to wait until 2010 anyway.

And California is hurting. "As California goes, so goes the nation." Its just going to be a matter of degree. Even some of the normally "anti-Aerospace/defense" publications are starting to wake up to the job bleed.

I wish I had more information today on aerospace job transfers. I'm unusually in the dark.

Got popcorn?

Wednesday, November 07, 2007

Neighbor's observations

I have a really nice neighbor renting the townhouse next to me. He told me his "renting story" yesterday.

In sum:
1. He was ready to buy in early 2006, but a relative's health problem consumed too much of his down payment.
2. He now recognizes that the home he was going to buy has "lost so much value" that not buying saved him more money than he paid for his realative's health care.
3. He is a J6P (Zero math or forecasting skills. I mean that in the nicest way possible... but its the truth.)
4. He'll renew his lease (yea! Good neighbor) and continue to save for his down payment.

Basically, if this guy knows the market is going to continue to drop for a year, everyone does. Now I should be nicer, his skill set pays more than mine. :) Hey, good for him. No one would buy a script from me! ;) And yes, this conversation came out as he discussed being on the picket lines. But a sad turn of events is all that kept him from being financially ruined. :(

Why does this matter to those of us that are not sheeple? Simple: The sheeple are going to the sidelines. When they do, they camp there at least 18 months. The first six months of their stay on the sidelines results in a moderate price drop. The last 2/3rds of their time on the sidelines? Fast price drop.

Don't buy in 2007. Don't buy in 2008. Heck, if you read my real estate emotions series, you'll see that previous patterns point to the greatest price drops occurring in 2009! Sit back, relax and make sure you

Got popcorn?

Tuesday, November 06, 2007

News always worst at the bottom

Just a thought, the news in the papers is pretty upbeat. Its not doom and gloom. Very little space is devoted to layoffs.

Bearmasters nice articles in three parts

Take some time to read those above headlines and recall, the news is always the worst at the bottom.

We've just begun the slide.

Got popcorn?

Thursday, November 01, 2007

Now That Housing Has Soured, Renters Are Glad They Didn't Buy

This article's title is the headline from a Yahoo Article.

The best quote:
Now, she says, some of her friends regret making those buys and are funding expensive home repairs a home inspection might have revealed.

Basically, MSM news on how if rent were closer to the cost of owning, more people would own. Since its far cheaper to rent and the rent increases are "manageable" while the mortgage payments are insane, people will rent. I liked the example of one guy being subsidized by a friend.

Got popcorn?