For the blogger party/dinner this Sunday e-mail wannabuy3@gmail.com or see the previous thread. :)
You've probably heard about the low sales of new homes. The WSJ provides a little more information:
About 68,000 homes were sold last month, down from 74,000 in July, the government said. At the end of August, 531,000 homes were on the market -- and only about a third of them were finished. That means builders could be stuck with large inventories as the market weakens further.
"This is staggering," said Joseph Brusuelas, chief U.S. economist at IDEAglobal, a research firm that advises investors. Further big price declines, he said, are "going to be debilitating."
Only about 6,000 new homes priced at $500,000 or more were sold in August, down from 9,000 in each of the previous three months and 11,000 in August 2006.
WSJ Article
What struck me was the strong drop in home sales above $500k. I would like to know how sales at higher brackets are doing. Does anyone have such information? Its interesting enough to see August, a strong sales month, weaker than July. I'm curious to see September sales. This credit crunch is definitely taking on a life of its own.
I still haven't heard a single proposal on how the commercial paper market will be saved. That's about $400B worth of paper that is looking for a home within 60 days. Oh... I have no doubt they'll be able to partially dodge the bullet... but not fully. Those pier loans are weighing down the I-banks a wee bit, so the normal relief channels are constrained.
Got popcorn?
Neil
Friday, September 28, 2007
Tuesday, September 25, 2007
Blogger party: ITs happening!
Want to meet up for some bearish fun?
Please RVSP in this thread or e-mail wannabuy3@gmail.com
Address:
Cheesecake Factory
605 N Harbor Dr
Redondo Beach, CA 90277
When: 6pm on 9/30/2007 (Sunday).
Count: 34+
Neil +2
Bearmaster +1
John ? (please verify)
M.B.A (+2)
Cereal (from HBB)
SpeedingPullet +1
Mike (maybe)
Lorna (+ Mike)
elvismcduf
larenter +1
GaudiaRay
LA_FiatWoman
Houseless +1
Captain Crunch +1
Sunrise +1
oc-ed + 1
OcInvestor + 1
Redondo Beach dude +1
H
Nightowlsix +1?
Please let me know if there are any changes. For two days all of gotten is span on the e-mail. ;)
But this will be so much fun!!!
We've had a few dropouts, but not many. :) Please let me know if anything's changed. Want to show up early? I'll be there. It apparently is required to show up early to get a table for a big group.
Got popcorn?
Neil
Please RVSP in this thread or e-mail wannabuy3@gmail.com
Address:
Cheesecake Factory
605 N Harbor Dr
Redondo Beach, CA 90277
When: 6pm on 9/30/2007 (Sunday).
Count: 34+
Neil +2
Bearmaster +1
John ? (please verify)
M.B.A (+2)
Cereal (from HBB)
SpeedingPullet +1
Mike (maybe)
Lorna (+ Mike)
elvismcduf
larenter +1
GaudiaRay
LA_FiatWoman
Houseless +1
Captain Crunch +1
Sunrise +1
oc-ed + 1
OcInvestor + 1
Redondo Beach dude +1
H
Nightowlsix +1?
Please let me know if there are any changes. For two days all of gotten is span on the e-mail. ;)
But this will be so much fun!!!
We've had a few dropouts, but not many. :) Please let me know if anything's changed. Want to show up early? I'll be there. It apparently is required to show up early to get a table for a big group.
Got popcorn?
Neil
Monday, September 24, 2007
GM on strike
"This is horrible, but we're die-hard union, so we have to," Ahrens said. "We got a mortgage, two car payments and tons of freaking bills."
That is the quote that struck me. You have 73,000 people striking because GM cannot afford the health costs for 339,000 retirees. Ouch. 73,000 trying to pay for 400,000. No wonder GM and Ford are losing market share. :(
But look what the stock market did as soon as the strike was announced. The cause or coincident? I don't know.
GM on strike
Its going to be interesting when the house sales and Case-Shiller come out tomorrow for August. Since only two weeks of August were part of the credit-crunch, I'm expecting a 3% to 15% decline in sales over July. August should have stronger sales than July... From what I'm hearing September is down, but not enough to calibrate.
We're in a cycle of moderate price drops. I expect the peak rate of drops to match the peak rate of price increases: 2.5% to 4.0% per month. The question is when do we get to that accelerated rate (we're at 0.5% to 1.5% per month now) and for how long?
Got popcorn?
Neil
That is the quote that struck me. You have 73,000 people striking because GM cannot afford the health costs for 339,000 retirees. Ouch. 73,000 trying to pay for 400,000. No wonder GM and Ford are losing market share. :(
But look what the stock market did as soon as the strike was announced. The cause or coincident? I don't know.
GM on strike
Its going to be interesting when the house sales and Case-Shiller come out tomorrow for August. Since only two weeks of August were part of the credit-crunch, I'm expecting a 3% to 15% decline in sales over July. August should have stronger sales than July... From what I'm hearing September is down, but not enough to calibrate.
We're in a cycle of moderate price drops. I expect the peak rate of drops to match the peak rate of price increases: 2.5% to 4.0% per month. The question is when do we get to that accelerated rate (we're at 0.5% to 1.5% per month now) and for how long?
Got popcorn?
Neil
Sunday, September 23, 2007
WSJ on weakening dollar
Please go to two posts earlier for the blogger dinner/party RSVP's for September 30th.
Its a very real world example that makes sense, but I never expect the WSJ to use strippers as an example of how a weakening dollar can effect a US 'industry.'
http://tinyurl.com/create.php
or a more direct link:
Canada Is Giddy
The owner of five strip clubs in Detroit and Windsor, Ontario, says American dancers are heading to Canada to earn the strengthened Canadian currency, and Canadian customers are heading to Detroit because their dollars go further there.
Later in the article:
Economists fear that Canadian exporters will face an uphill battle since their goods just became more expensive. For Canadians living in the U.S. who are paid in U.S. dollars, it's also not such great news.
and still later:
Mr. Katzman, the Windsor strip-club owner, is philosophical. He says that, last year, 90% of his dancers were Canadians. About 200 of them drove down from Toronto and Montreal to take advantage of the U.S. dollars American men typically paid with.
This year, he has more American women dancing in his Canadian clubs -- about 160 -- than he has Canadians.
Umm... yea... this could be impacting immigration trends. ;)
So let's see... weaker dollar means higher cost services in the US, 'workers' leave the US and probably smaller imports. And people who export to us are going to have a much tougher time. And my wife wonders why I agreed so readily to buy her imported Christmas gift... today.
Not if we can get the Yuan to float. Cest la vie. Either way, I'm predicting a drop in the imbalance of payments in 2008.
Got popcorn?
Neil
Its a very real world example that makes sense, but I never expect the WSJ to use strippers as an example of how a weakening dollar can effect a US 'industry.'
http://tinyurl.com/create.php
or a more direct link:
Canada Is Giddy
The owner of five strip clubs in Detroit and Windsor, Ontario, says American dancers are heading to Canada to earn the strengthened Canadian currency, and Canadian customers are heading to Detroit because their dollars go further there.
Later in the article:
Economists fear that Canadian exporters will face an uphill battle since their goods just became more expensive. For Canadians living in the U.S. who are paid in U.S. dollars, it's also not such great news.
and still later:
Mr. Katzman, the Windsor strip-club owner, is philosophical. He says that, last year, 90% of his dancers were Canadians. About 200 of them drove down from Toronto and Montreal to take advantage of the U.S. dollars American men typically paid with.
This year, he has more American women dancing in his Canadian clubs -- about 160 -- than he has Canadians.
Umm... yea... this could be impacting immigration trends. ;)
So let's see... weaker dollar means higher cost services in the US, 'workers' leave the US and probably smaller imports. And people who export to us are going to have a much tougher time. And my wife wonders why I agreed so readily to buy her imported Christmas gift... today.
Not if we can get the Yuan to float. Cest la vie. Either way, I'm predicting a drop in the imbalance of payments in 2008.
Got popcorn?
Neil
Friday, September 21, 2007
Real Estate Emotions September Update
For the blogger party/dinner on September 30th (6pm), please RSVP on the previous thread.
I'm going to add to my real estate emotions column. I'm also going to start tracking where we are in the The Kübler-Ross grief cycle. I'm not going to say which Kübler-Ross emotion we're in, but rather the fraction of the population in each emotion. Most of the discussion skips three of the emotions, but they are important. Don't worry, I'm also keeping with my "investment related emotions," but as its going on a timeline that's been there for months. The only change is I've moved a chance of desperation starting earlier than what I predicted a month ago. I'm less confident of my further out emotions now. But I'll discuss that later.
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: 30% (Prices dropping? Can't be.)
Denial: 5% (No! Real estate only goes up!)
Anger: 5% (This one must be discussed)
Bargaining: 2.5% (Ok, we can cut the price and lead the market)
Depression: 2.5% (We're going to lose our home. Just let them take it...)
Testing: 3%
Acceptance: 2% (Walk away, we're toast)
The dangerous ones are the ones in the "Anger stage." Notice on many blogs the counter is brutal? They are practically screaming real estate "facts" that have never been true. For example, I loved a comment "No market has ever dropped 40%." Oh... how about 90275 in the 1990's downturn? Hmmm... ?
Notice most people are in stability. If you bought a home pre-2003 and didn't HELOC, there isn't much reason to worry outside of flipper havens. Expect this group to shrink; but note that a majority of the people in stable group will remain stable. e.g., my folks live in a neighborhood of homes bought in the early 1970's. Unless medical problems crop up, they'll be living in a neighborhood of homes mostly bought in the early 1970's a decade from now.
The "Immobilization" group is interesting. Expect them to play quite a role during the spring selling season as they go from passive to active emotions. They'll be forced to transition through their emotions fast. But fast means an emotion a month; don't expect anything more. This is a slow process.
This feeds the overall investment emotions:
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 October/November 2007
9. Panic: Early mid 2008 looks to be the start. Exactly when? Depends on the credit markets.
10 Capitulation Could it be summer 2008 2009?
11 Despondency (start of market price bottom)
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)
14 Relief (Its almost what I paid for it...)
15 Optimism (cycle starts again)
Basically I've lost confidence in my predictions post 2009. :( Why? As I look back over my bubble blogging history, I notice a trend that I'm always expecting things to happen faster than they do. But that doesn't change the overall conclusions:
1. Do not buy today. Heck, unless you can bargain well, do not buy in 2008 or 2009. When to start buying? Let's discuss Fall 2009. ;)
2. Preserve your cash. I'm not an investment expert, so pick your own strategy (goldbug, foreign currency/stocks, "sin stocks", etc.)
3. Sales will continue to slow (buyers doubt/calculation, tighter credit)
4. Prices are getting primed for a sharp drop world wide. Yes, world wide. There are no markets left where "its different here."
5. Whatever you do, don't listen to a salesperson on what to do.
6. Remember, real estate occurs in the margins. It doesn't take even 20% of the people panicking to tank a market. So don't worry about my low predictions. Its going to take 18 months to move a large fraction of the population over.
Got popcorn?
Neil
I'm going to add to my real estate emotions column. I'm also going to start tracking where we are in the The Kübler-Ross grief cycle. I'm not going to say which Kübler-Ross emotion we're in, but rather the fraction of the population in each emotion. Most of the discussion skips three of the emotions, but they are important. Don't worry, I'm also keeping with my "investment related emotions," but as its going on a timeline that's been there for months. The only change is I've moved a chance of desperation starting earlier than what I predicted a month ago. I'm less confident of my further out emotions now. But I'll discuss that later.
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: 30% (Prices dropping? Can't be.)
Denial: 5% (No! Real estate only goes up!)
Anger: 5% (This one must be discussed)
Bargaining: 2.5% (Ok, we can cut the price and lead the market)
Depression: 2.5% (We're going to lose our home. Just let them take it...)
Testing: 3%
Acceptance: 2% (Walk away, we're toast)
The dangerous ones are the ones in the "Anger stage." Notice on many blogs the counter is brutal? They are practically screaming real estate "facts" that have never been true. For example, I loved a comment "No market has ever dropped 40%." Oh... how about 90275 in the 1990's downturn? Hmmm... ?
Notice most people are in stability. If you bought a home pre-2003 and didn't HELOC, there isn't much reason to worry outside of flipper havens. Expect this group to shrink; but note that a majority of the people in stable group will remain stable. e.g., my folks live in a neighborhood of homes bought in the early 1970's. Unless medical problems crop up, they'll be living in a neighborhood of homes mostly bought in the early 1970's a decade from now.
The "Immobilization" group is interesting. Expect them to play quite a role during the spring selling season as they go from passive to active emotions. They'll be forced to transition through their emotions fast. But fast means an emotion a month; don't expect anything more. This is a slow process.
This feeds the overall investment emotions:
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 October/November 2007
9. Panic: Early mid 2008 looks to be the start. Exactly when? Depends on the credit markets.
10 Capitulation Could it be summer 2008 2009?
11 Despondency (start of market price bottom)
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)
14 Relief (Its almost what I paid for it...)
15 Optimism (cycle starts again)
Basically I've lost confidence in my predictions post 2009. :( Why? As I look back over my bubble blogging history, I notice a trend that I'm always expecting things to happen faster than they do. But that doesn't change the overall conclusions:
1. Do not buy today. Heck, unless you can bargain well, do not buy in 2008 or 2009. When to start buying? Let's discuss Fall 2009. ;)
2. Preserve your cash. I'm not an investment expert, so pick your own strategy (goldbug, foreign currency/stocks, "sin stocks", etc.)
3. Sales will continue to slow (buyers doubt/calculation, tighter credit)
4. Prices are getting primed for a sharp drop world wide. Yes, world wide. There are no markets left where "its different here."
5. Whatever you do, don't listen to a salesperson on what to do.
6. Remember, real estate occurs in the margins. It doesn't take even 20% of the people panicking to tank a market. So don't worry about my low predictions. Its going to take 18 months to move a large fraction of the population over.
Got popcorn?
Neil
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