SoCalsurfbum's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/147963/comments http://seekingalpha.com/article/135330-pending-home-sales-up-does-that-mean-anything?source=feed#comment-490363 490363
The more I see stuff like this, the more I realize the market is not paying attention and takes everything at face value.

This is a bogus number. Of course pending home sales are higher in March than in February... this has happened since housing records have been kept... it is called seasonality.

Let me make a prediction and I would love to bet anyone on this, April pendings will be higher than March. Dec.-Feb. are the slowest sales months every year, March picks up a bit... April is when the spring selling season really gets ramped up and lasts through July, then slowly falls off.

Seasonality doesn't make a housing recovery. By the way the real number is a 1.1% increase in pendings vs. 2008 and as was mentioned earlier, a pending does not mean a closing.

Back when the market was good, our close rate on pendings was about 75-85%... I can only imagine how many pendings will fall through in this market. Between difficult financing conditions, required down payments, getting short sale approvals and the inability to unload the old house at an acceptable price (which is probably the largest impediment) will make for either very long escrows or sales that just don't close.

What is happening now is not what a market bottom in housing looks like. People have a very short memory when it comes to history.]]> Tue, 05 May 2009 12:01:52 -0400
The more I see stuff like this, the more I realize the market is not paying attention and takes everything at face value.

This is a bogus number. Of course pending home sales are higher in March than in February... this has happened since housing records have been kept... it is called seasonality.

Let me make a prediction and I would love to bet anyone on this, April pendings will be higher than March. Dec.-Feb. are the slowest sales months every year, March picks up a bit... April is when the spring selling season really gets ramped up and lasts through July, then slowly falls off.

Seasonality doesn't make a housing recovery. By the way the real number is a 1.1% increase in pendings vs. 2008 and as was mentioned earlier, a pending does not mean a closing.

Back when the market was good, our close rate on pendings was about 75-85%... I can only imagine how many pendings will fall through in this market. Between difficult financing conditions, required down payments, getting short sale approvals and the inability to unload the old house at an acceptable price (which is probably the largest impediment) will make for either very long escrows or sales that just don't close.

What is happening now is not what a market bottom in housing looks like. People have a very short memory when it comes to history.]]> http://seekingalpha.com/article/127429-existing-home-sales-sign-of-a-thaw?source=feed#comment-437477 437477
Calling this a "positive sign" because you have sales data for one of the slowest sales months of the year is ridiculous. You need months in a row of actual data to make a trend before anyone has any credibility when saying things are beginning to thaw.

You point to Calculated Risk, and then don't draw the conclusion they spell out for you. February sales are down YoY from last year in every market except the West.

Overall, sales are down -10%... Northeast -20%... Midwest -18%... South -16%... West +24 (off of a really low 2007). If you combine both January and February sales, the total is -9% lower YTD than 2008. Where is the thaw?

One last thing. If you use "seasonally adjusted annual rates" (SAAR) to draw any conclusion from sales data... you are obviously a complete amateur at this real estate game. Please, do yourself a favor and learn why comparing month-to-month SAAR performance is analytically useless.

Let me give you a hint… There was a 560,000 unit variance between the High SAAR and Low SAAR announced monthly in 2008… or 11.4% of the FY actual (aka not statistically predictive of anything). If SAAR increases month-over-month (like the press release just announced) and the YoY monthly actual declines (-10% but this wasn’t in the press release)… this means that February fell “less fast” than January, but it still fell. Of course all of this is predicated on how confident you are in the “% of total year sales” value they assign to any given month as well. Useless.]]> Mon, 23 Mar 2009 21:03:19 -0400
Calling this a "positive sign" because you have sales data for one of the slowest sales months of the year is ridiculous. You need months in a row of actual data to make a trend before anyone has any credibility when saying things are beginning to thaw.

You point to Calculated Risk, and then don't draw the conclusion they spell out for you. February sales are down YoY from last year in every market except the West.

Overall, sales are down -10%... Northeast -20%... Midwest -18%... South -16%... West +24 (off of a really low 2007). If you combine both January and February sales, the total is -9% lower YTD than 2008. Where is the thaw?

One last thing. If you use "seasonally adjusted annual rates" (SAAR) to draw any conclusion from sales data... you are obviously a complete amateur at this real estate game. Please, do yourself a favor and learn why comparing month-to-month SAAR performance is analytically useless.

Let me give you a hint… There was a 560,000 unit variance between the High SAAR and Low SAAR announced monthly in 2008… or 11.4% of the FY actual (aka not statistically predictive of anything). If SAAR increases month-over-month (like the press release just announced) and the YoY monthly actual declines (-10% but this wasn’t in the press release)… this means that February fell “less fast” than January, but it still fell. Of course all of this is predicated on how confident you are in the “% of total year sales” value they assign to any given month as well. Useless.]]> http://seekingalpha.com/article/126805-as-mortgage-rates-plunge-30-year-fixed-rate-of-3-5-seems-likely?source=feed#comment-434148 434148
Who cares when your equity is dropping at 10% a year. Home prices are still readjusting... you are still losing money. And when interest rates go up down the road as 'yellowhoard' mentions, you will have to drop the price of your house even more to compensate.
]]> Fri, 20 Mar 2009 19:54:57 -0400
Who cares when your equity is dropping at 10% a year. Home prices are still readjusting... you are still losing money. And when interest rates go up down the road as 'yellowhoard' mentions, you will have to drop the price of your house even more to compensate.
]]> http://seekingalpha.com/article/126021-goldman-and-morgan-stanley-banks-of-choice-barron-s?source=feed#comment-427179 427179
GS has huge exposure to AIG (AIG just released a presentatin on this)... they changed business models to get access to government support (seems more desperate than strategic)... Banking is much less profitable than their old business. Combine that with how new and immature their banking business is and I wouldn't be too confident in their stock.

But besides that Mrs. Lincoln, how was the play?]]> Mon, 16 Mar 2009 01:54:58 -0400
GS has huge exposure to AIG (AIG just released a presentatin on this)... they changed business models to get access to government support (seems more desperate than strategic)... Banking is much less profitable than their old business. Combine that with how new and immature their banking business is and I wouldn't be too confident in their stock.

But besides that Mrs. Lincoln, how was the play?]]> http://seekingalpha.com/article/125211-is-it-a-bear-market-rally-or-something-more?source=feed#comment-421130 421130
One of the dumbest sentences I've ever read from an analyst, and I've seen some doozys. Statements like this remind me that if stock analysts knew even a little about what they write about... they wouldn't be an analyst. They would be printing money as a trader.

This reminds me of a guy at a roulette table looking at the screen where 8 reds hit in a row and is thinking to himself "Black is due".

My question is why did he pick 25? Why not 100 and up his chances of being right. Every day is a 50-50 chance of being right. Please be the bottom, Please be the bottom... {holding breathe}]]> Tue, 10 Mar 2009 19:34:39 -0400
One of the dumbest sentences I've ever read from an analyst, and I've seen some doozys. Statements like this remind me that if stock analysts knew even a little about what they write about... they wouldn't be an analyst. They would be printing money as a trader.

This reminds me of a guy at a roulette table looking at the screen where 8 reds hit in a row and is thinking to himself "Black is due".

My question is why did he pick 25? Why not 100 and up his chances of being right. Every day is a 50-50 chance of being right. Please be the bottom, Please be the bottom... {holding breathe}]]> http://seekingalpha.com/article/122356-which-is-the-best-home-price-index?source=feed#comment-401994 401994
OFHEO information comes from Fannie / Freddie and because of this it only tracks homes that are within it's "conforming loan" limit... which was up until a little while ago only $400k+.

This basically eliminates a lot of California, New York and several other important markets whose median price is well above that limit. This could be part of the variance you see...

"Look at your data"... agreed. I would add to that know exactly how that data is captured and analyzed. ]]> Tue, 24 Feb 2009 16:56:36 -0500
OFHEO information comes from Fannie / Freddie and because of this it only tracks homes that are within it's "conforming loan" limit... which was up until a little while ago only $400k+.

This basically eliminates a lot of California, New York and several other important markets whose median price is well above that limit. This could be part of the variance you see...

"Look at your data"... agreed. I would add to that know exactly how that data is captured and analyzed. ]]> http://seekingalpha.com/article/119001-four-key-points-from-visa-s-fq109-conference-call?source=feed#comment-378730 378730
But at the current price, get real. Visa is a mature business in a well developed market, yet current pricing is assuming they will increase the size of the company by 4-5 times (which is what they will need to do to justify this price). Looks like Google at $700 to me.

Their big growth push is in $3 transactions? You need 10 of these to match one $30 purchase. How much of a boost can this possibly give to earnings? Their marketing costs vs. earnings on these low-end transactions can not be anywhere as profitable as their traditional business. ]]> Fri, 06 Feb 2009 15:24:25 -0500
But at the current price, get real. Visa is a mature business in a well developed market, yet current pricing is assuming they will increase the size of the company by 4-5 times (which is what they will need to do to justify this price). Looks like Google at $700 to me.

Their big growth push is in $3 transactions? You need 10 of these to match one $30 purchase. How much of a boost can this possibly give to earnings? Their marketing costs vs. earnings on these low-end transactions can not be anywhere as profitable as their traditional business. ]]> http://seekingalpha.com/article/116329-will-2009-be-the-year-of-the-bull-for-shippers?source=feed#comment-376141 376141
Shipping is driven by only 2 factors. 1) capacity utilization and 2) freight rates. That is it.

Right now there is a glut of capacity that cannot be fully utilized in the coming years so capacity utilization of the ships is way down. By the way they are reporting that 7% of global capacity has been anchored so far, which the companies you want to buy still have to pay for (un-utilized capacity)... and there still is too much capacity. And this over-capacity leads to severly depressed freight rates.

Good luck with your speculative play. ]]> Wed, 04 Feb 2009 17:35:42 -0500
Shipping is driven by only 2 factors. 1) capacity utilization and 2) freight rates. That is it.

Right now there is a glut of capacity that cannot be fully utilized in the coming years so capacity utilization of the ships is way down. By the way they are reporting that 7% of global capacity has been anchored so far, which the companies you want to buy still have to pay for (un-utilized capacity)... and there still is too much capacity. And this over-capacity leads to severly depressed freight rates.

Good luck with your speculative play. ]]> http://seekingalpha.com/article/117602-peter-schiff-answers-his-critics?source=feed#comment-371489 371489
People that defend him so vehemently need to examine themselves. He is another self promoting talking head that spends time writing and promoting books, making appearances, and responding to bloggers. If my financial advisor did any of these, he is obviously not spending enough time paying attention to my account. And this is proven out by the negative returns even he admits to in the accounts he is responsible for.

If he had any foresight, like he claims, he would have had gains this year... since he claims he saw everything happening before volitility spiked in May. Some nice Puts on financials, bond purchases, hell even cash since he "saw the crash"... If he really saw it coming, this would have been the easiest year ever to make money and beat the indices... I know good managers that did. It is people that went along with Wall Street groupthink that got burned.

I made money this year and I am not even a professional... the difference is I don't claim I can see the future.

And on his supposed "hits"... financials, housing, gold... way to go captain obvious. Those were really bold choices. But wait, If you knew those were going to be hit... how come your clients lost money!???
]]> Fri, 30 Jan 2009 16:15:54 -0500
People that defend him so vehemently need to examine themselves. He is another self promoting talking head that spends time writing and promoting books, making appearances, and responding to bloggers. If my financial advisor did any of these, he is obviously not spending enough time paying attention to my account. And this is proven out by the negative returns even he admits to in the accounts he is responsible for.

If he had any foresight, like he claims, he would have had gains this year... since he claims he saw everything happening before volitility spiked in May. Some nice Puts on financials, bond purchases, hell even cash since he "saw the crash"... If he really saw it coming, this would have been the easiest year ever to make money and beat the indices... I know good managers that did. It is people that went along with Wall Street groupthink that got burned.

I made money this year and I am not even a professional... the difference is I don't claim I can see the future.

And on his supposed "hits"... financials, housing, gold... way to go captain obvious. Those were really bold choices. But wait, If you knew those were going to be hit... how come your clients lost money!???
]]> http://seekingalpha.com/article/116463-housing-crisis-positive-spin-or-simply-misinformation?source=feed#comment-366874 366874
This is a little naive. Media is a business... and at the time, the real estate / home loan sectors were the largest advertisers in the country. I personally saw a real estate company threaten to pull millions of dollars of advertising from the LA Times when they published an article suggesting that homes could drop in value.

It is impossible to remove this bias, which has always been in the media since the first paper came off the presses or TV broadcast went over the air. Their bias is tilted towards their advertisers.

Of course we could make it non-profit / governement funded to get the bias out of the news... oh wait, we already have NPR... no bias there, right? By the way NPR didn't report negatively on the coming market situation either.

... and is it really shocking to you that PR and industry sponsored hacks put misinformation out there? *Gasp*... ]]> Mon, 26 Jan 2009 16:44:13 -0500
This is a little naive. Media is a business... and at the time, the real estate / home loan sectors were the largest advertisers in the country. I personally saw a real estate company threaten to pull millions of dollars of advertising from the LA Times when they published an article suggesting that homes could drop in value.

It is impossible to remove this bias, which has always been in the media since the first paper came off the presses or TV broadcast went over the air. Their bias is tilted towards their advertisers.

Of course we could make it non-profit / governement funded to get the bias out of the news... oh wait, we already have NPR... no bias there, right? By the way NPR didn't report negatively on the coming market situation either.

... and is it really shocking to you that PR and industry sponsored hacks put misinformation out there? *Gasp*... ]]> http://seekingalpha.com/article/116530-existing-home-sales-rebound?source=feed#comment-366780 366780
I just want to note that the Seasonally Adjusted Annual Rate is a distorted and misleading metric... and it is used because the NAR can issue a press release every other month calling a bottom in housing market by showing "improving" sales, even when sales go down.

The real number is in their press release... home sales went down 3.5% in December vs last year using the real accurate way to adjust for seasonality... YoY.

So the picture is actually bleaker... falling prices and unit volume is still dropping.

By the way... if they were really attempting to be consistent, they would seasonally adjust the Inventory number as well since housing inventory fluctuates seasonally just like home sales.]]> Mon, 26 Jan 2009 15:13:04 -0500
I just want to note that the Seasonally Adjusted Annual Rate is a distorted and misleading metric... and it is used because the NAR can issue a press release every other month calling a bottom in housing market by showing "improving" sales, even when sales go down.

The real number is in their press release... home sales went down 3.5% in December vs last year using the real accurate way to adjust for seasonality... YoY.

So the picture is actually bleaker... falling prices and unit volume is still dropping.

By the way... if they were really attempting to be consistent, they would seasonally adjust the Inventory number as well since housing inventory fluctuates seasonally just like home sales.]]> http://seekingalpha.com/article/110463-scary-foreclosure-numbers-scarier-prospects?source=feed#comment-327920 327920
Talk about a drop in the bucket... That will allow them to buy 200 homes at $250k a piece (below the current market price)... those 200 are a fraction of what is available and many more homes for sale will be coming on the market real soon...

What a waste of money... ]]> Fri, 12 Dec 2008 18:59:23 -0500
Talk about a drop in the bucket... That will allow them to buy 200 homes at $250k a piece (below the current market price)... those 200 are a fraction of what is available and many more homes for sale will be coming on the market real soon...

What a waste of money... ]]> http://seekingalpha.com/article/105660-reasons-to-bail-out-gm?source=feed#comment-304567 304567
All of the guys running the companies now were running it 8 years ago when they had a lot more money and a mandate to change and you can see what they did with it.

Buy it and clean out the C-suite. Float it for a couple years then flip it. ]]> Wed, 12 Nov 2008 18:12:15 -0500
All of the guys running the companies now were running it 8 years ago when they had a lot more money and a mandate to change and you can see what they did with it.

Buy it and clean out the C-suite. Float it for a couple years then flip it. ]]> http://seekingalpha.com/article/104521-digging-into-shipping?source=feed#comment-300285 300285
You are missing the bigger picture. Ships are expensive capital intensive machines that require a certain utilization rate and pricing in order to cover their "mortgage" with positive cash flow. If they don't get the capacity utilization or pricing, the companies start burning equity at a very rapid rate. Having a ship sitting idle exacerbates this problem. Combine that with the massive amount of new capacity that has come online and is coming, while demand is dropping... and you have a lot of shipping companies with negative cash flow from operations.

I would wait and see who buys the ships when shipping lines go bankrupt (as they always do in these cycles) and buy their stock then. These lines have about as much transparency as Lehman Bros. but with a lot higher fixed costs.

By the way, the fact that they need the cash flow to try to cover some of their loan payments/cash flow problem is why you know that what Forbes rumor about ships being anchored intentionally is wrong. That would be very counter-productive for the companies. ]]> Fri, 07 Nov 2008 14:07:51 -0500
You are missing the bigger picture. Ships are expensive capital intensive machines that require a certain utilization rate and pricing in order to cover their "mortgage" with positive cash flow. If they don't get the capacity utilization or pricing, the companies start burning equity at a very rapid rate. Having a ship sitting idle exacerbates this problem. Combine that with the massive amount of new capacity that has come online and is coming, while demand is dropping... and you have a lot of shipping companies with negative cash flow from operations.

I would wait and see who buys the ships when shipping lines go bankrupt (as they always do in these cycles) and buy their stock then. These lines have about as much transparency as Lehman Bros. but with a lot higher fixed costs.

By the way, the fact that they need the cash flow to try to cover some of their loan payments/cash flow problem is why you know that what Forbes rumor about ships being anchored intentionally is wrong. That would be very counter-productive for the companies. ]]> http://seekingalpha.com/article/99642-are-analysts-being-fooled-by-the-data?source=feed#comment-282533 282533
whoever wrote that line "I heard from a friend who heard from his father"... understands Letters of Credit as much as Sarah Palin understands Fannie Mae...

A Letter of Credit is, in it's most simple explanation, an escrow account for international transactions so that money isn't released until an order is fulfilled correctly. Banks would always accept them because it means money will be deposited in their accounts.

If this guy is talking about short term funding for his vessels, he is probably referring to his "Line of Credit" from the bank... which is completely different.

If the line of credit is what they are talking about then the Baltic Dry index is actually more of an indicator than you think... if he can't sail, there is less capacity and shipping costs should go up... but that isn't happening.

Yank... if you can't trust the US gov't statistics (which you shouldn't), why do you believe you can trust the Chinese gov'ts economic statistics? The very fact that China is doing a major economic stimulus proves that they are not hitting the 10% GDP number... which are you going to believe, government statistics or your eyes?]]> Tue, 14 Oct 2008 20:54:00 -0400
whoever wrote that line "I heard from a friend who heard from his father"... understands Letters of Credit as much as Sarah Palin understands Fannie Mae...

A Letter of Credit is, in it's most simple explanation, an escrow account for international transactions so that money isn't released until an order is fulfilled correctly. Banks would always accept them because it means money will be deposited in their accounts.

If this guy is talking about short term funding for his vessels, he is probably referring to his "Line of Credit" from the bank... which is completely different.

If the line of credit is what they are talking about then the Baltic Dry index is actually more of an indicator than you think... if he can't sail, there is less capacity and shipping costs should go up... but that isn't happening.

Yank... if you can't trust the US gov't statistics (which you shouldn't), why do you believe you can trust the Chinese gov'ts economic statistics? The very fact that China is doing a major economic stimulus proves that they are not hitting the 10% GDP number... which are you going to believe, government statistics or your eyes?]]> http://seekingalpha.com/article/91990-interview-with-jim-rogers-part-ii-china-as-worlds-best-long-term-profit-play?source=feed#comment-235946 235946
America in 1908 had a lot of inventors, big thinkers, a developed financial system, room for expansion and a lot of untapped natural resources. Combine this with a competitive, battle tested, entrepreneurial do it on your own mentality with lighter regulation… and you get a boom town.

I have a lot of Chinese colleagues and it is a lot different over there. Name the last major invention or innovation that came out of China... you can't because their system is not set up to nurture innovation.

When a Chinese, Indian, (place nationality here), is an innovative thinker... they tend to move to a country like the United States that has a system in place where their accomplishments will be fostered, recognized and rewarded. If you look at all of the geniuses in Silicone Valley it looks like the UN.

While the Chinese society is shifting, it has a very long way to go and a lot of baggage to shed before I would compare it to the US...

I think a better comparison would be to Russia of the last decade, where you would be naive to trust the accounting and good luck playing the stocks.

Chinese entrepreneurs have only known one market direction… up. I’ll wait to see how “built to last” this economic boom is when they have to face an actual business cycle. Then we’ll see what the market and businessmen are actually made of. ]]> Thu, 21 Aug 2008 17:21:17 -0400
America in 1908 had a lot of inventors, big thinkers, a developed financial system, room for expansion and a lot of untapped natural resources. Combine this with a competitive, battle tested, entrepreneurial do it on your own mentality with lighter regulation… and you get a boom town.

I have a lot of Chinese colleagues and it is a lot different over there. Name the last major invention or innovation that came out of China... you can't because their system is not set up to nurture innovation.

When a Chinese, Indian, (place nationality here), is an innovative thinker... they tend to move to a country like the United States that has a system in place where their accomplishments will be fostered, recognized and rewarded. If you look at all of the geniuses in Silicone Valley it looks like the UN.

While the Chinese society is shifting, it has a very long way to go and a lot of baggage to shed before I would compare it to the US...

I think a better comparison would be to Russia of the last decade, where you would be naive to trust the accounting and good luck playing the stocks.

Chinese entrepreneurs have only known one market direction… up. I’ll wait to see how “built to last” this economic boom is when they have to face an actual business cycle. Then we’ll see what the market and businessmen are actually made of. ]]> http://seekingalpha.com/article/92009-really-brokers-trade-lower-on-citi-call?source=feed#comment-235837 235837
What... an expected 35% increase isn't big enough for a buy rating?

I find it amazing how "Analysts" are never paid on their abilities to analyze... ]]> Thu, 21 Aug 2008 15:10:55 -0400
What... an expected 35% increase isn't big enough for a buy rating?

I find it amazing how "Analysts" are never paid on their abilities to analyze... ]]> http://seekingalpha.com/article/91417-goldman-readying-short-position-initiation-sequence?source=feed#comment-233214 233214
Why not short it when the price is higher so you can make a couple bucks?]]> Mon, 18 Aug 2008 12:41:48 -0400
Why not short it when the price is higher so you can make a couple bucks?]]> http://seekingalpha.com/article/91137-don-t-believe-the-lies-ride-the-bank-stocks-bull?source=feed#comment-231596 231596
If it is "all about the spread" as you describe and make a compelling arguement for... then how do banks fail in this environment? Why are they failing?

Why are they not making more loans (since they will make billions of dollars off of them) and instead relying only in FNM FRE to fund new mortgages? This is widely reported around the mortgage community. Banks aren't bringing these new loans with great rates onto their books...

Also, aren't only the banks with Fed access able to get 2-3% rates? What about the rest of the banks?

I know this might read a little smart-ass like a lot of the other responses, but it isn't intended to... I'm really curious and I'm trying to wrap my brain around this.]]> Fri, 15 Aug 2008 18:50:25 -0400
If it is "all about the spread" as you describe and make a compelling arguement for... then how do banks fail in this environment? Why are they failing?

Why are they not making more loans (since they will make billions of dollars off of them) and instead relying only in FNM FRE to fund new mortgages? This is widely reported around the mortgage community. Banks aren't bringing these new loans with great rates onto their books...

Also, aren't only the banks with Fed access able to get 2-3% rates? What about the rest of the banks?

I know this might read a little smart-ass like a lot of the other responses, but it isn't intended to... I'm really curious and I'm trying to wrap my brain around this.]]> http://seekingalpha.com/article/89376-note-to-nyt-dick-syron-is-not-clairvoyant?source=feed#comment-223977 223977
The government lifted capital restrictions because the company lobbied heavily to take on more loans so that they could make more money even though they were undercapitalized even at that time.

Syron's 'Foresight' comment is about as believable as Mozillo's "No one saw this coming"... a lot of people saw it coming in 2003-4 when housing was overpriced then... and we prepared for the end of the mania appropriately.

If Syron truly believed a 3 standard deviation move in housing price and volume was sustainable and appropriate... his resume might have a lot of pretty titles on it but he obviously didn't have enough real world experience to hold that job.]]> Wed, 06 Aug 2008 10:12:27 -0400
The government lifted capital restrictions because the company lobbied heavily to take on more loans so that they could make more money even though they were undercapitalized even at that time.

Syron's 'Foresight' comment is about as believable as Mozillo's "No one saw this coming"... a lot of people saw it coming in 2003-4 when housing was overpriced then... and we prepared for the end of the mania appropriately.

If Syron truly believed a 3 standard deviation move in housing price and volume was sustainable and appropriate... his resume might have a lot of pretty titles on it but he obviously didn't have enough real world experience to hold that job.]]> http://seekingalpha.com/article/81050-is-the-long-commute-still-worth-it?source=feed#comment-184185 184185
Temecula and places like that outside of Los Angeles are where people bought "the house of their dreams" for a reasonble price... and then they spend all of their time on the roads so they never get to see it. ]]> Thu, 12 Jun 2008 11:08:05 -0400
Temecula and places like that outside of Los Angeles are where people bought "the house of their dreams" for a reasonble price... and then they spend all of their time on the roads so they never get to see it. ]]> http://seekingalpha.com/article/77231-2009-home-price-forecasts-up-or-down?source=feed#comment-167632 167632
How useful is a home price forecast when what it is forecasting (average home price) is a grossly inaccurate measure in and of itself, heavily affected by vagaries such as sales mix and misrepresented selling prices? How can it help anyone make a better decision? Are these the same forecasters that didn't see the downturn happening in the first place?

What would be more helpful is if you had some insight on market drivers or other factors that will change the nature of the current market and cause an inflection point for buyers / sellers. ]]> Wed, 14 May 2008 16:02:32 -0400
How useful is a home price forecast when what it is forecasting (average home price) is a grossly inaccurate measure in and of itself, heavily affected by vagaries such as sales mix and misrepresented selling prices? How can it help anyone make a better decision? Are these the same forecasters that didn't see the downturn happening in the first place?

What would be more helpful is if you had some insight on market drivers or other factors that will change the nature of the current market and cause an inflection point for buyers / sellers. ]]> http://seekingalpha.com/article/67851-ubs-u-s-bailout-for-homeowners-will-arrive-by-october?source=feed#comment-124697 124697 Mon, 10 Mar 2008 11:50:39 -0400 http://seekingalpha.com/article/64205-standard-pacifics-fiscal-house-needs-restructuring?source=feed#comment-115934 115934
The problem with StanPac is not that their operational cost structure is broken… The problem with StanPac is that they loaded themselves up with assets that are only worth a fraction of what they paid for them... this cannot be solved with a contract re-negotiation or a debt restructure. The situation that this has caused is that StanPac is selling houses and land for less than they paid for them. Even if all debt is forgiven tomorrow, Standard Pacific’s continuing operations are running cash-flow negative.

And entering bankruptcy the creditors have a decision to make…

1. Liquidate the company (Ch 7) who’s only real value is in the assets, (especially in this market… the ability to build homes is not a unique, desirable, or profitable skill in the foreseeable future) and be the first ones out before other companies go bankrupt and flood the market and depress prices even more. If they close shop and sell the assets they do not have to fund the on-going operations and overhead which just keeps burning more of their money… and with negative margins and falling housing prices, recovering any of the cost of overhead looks like a long-shot at best…

Or

2. The creditors take control of the operations from the current shareholders (Ch 11) and then sell off the company assets in a less “liquidation sale” type way and hopefully recuperate more money... after drastically reducing overhead. This only works if the company can find a way to get positive gross margins. I would think this approach is less likely because it is riskier. The Ch 11 proceedings take a long time and if they finally decide to liquidate a year or two from now… who knows how much the asset prices will have fallen. And you are still paying overhead. ]]> Tue, 12 Feb 2008 13:14:16 -0500
The problem with StanPac is not that their operational cost structure is broken… The problem with StanPac is that they loaded themselves up with assets that are only worth a fraction of what they paid for them... this cannot be solved with a contract re-negotiation or a debt restructure. The situation that this has caused is that StanPac is selling houses and land for less than they paid for them. Even if all debt is forgiven tomorrow, Standard Pacific’s continuing operations are running cash-flow negative.

And entering bankruptcy the creditors have a decision to make…

1. Liquidate the company (Ch 7) who’s only real value is in the assets, (especially in this market… the ability to build homes is not a unique, desirable, or profitable skill in the foreseeable future) and be the first ones out before other companies go bankrupt and flood the market and depress prices even more. If they close shop and sell the assets they do not have to fund the on-going operations and overhead which just keeps burning more of their money… and with negative margins and falling housing prices, recovering any of the cost of overhead looks like a long-shot at best…

Or

2. The creditors take control of the operations from the current shareholders (Ch 11) and then sell off the company assets in a less “liquidation sale” type way and hopefully recuperate more money... after drastically reducing overhead. This only works if the company can find a way to get positive gross margins. I would think this approach is less likely because it is riskier. The Ch 11 proceedings take a long time and if they finally decide to liquidate a year or two from now… who knows how much the asset prices will have fallen. And you are still paying overhead. ]]> http://seekingalpha.com/article/63150-what-the-housing-apocalypse-prophets-aren-t-revealing?source=feed#comment-114964 114964
And during this time even the rosiest assessment of units sold (from NAR) showed a -12.8% decrease in units. Rates are currently at 5.68% and it still isn’t stopping the slide in sales... meaning it isn’t the catalyst you thought it was.

As for ARMs… if you believe people are going to start snatching up ARM loans in large numbers and that is what is going to get us out of this mess, I don’t think you have properly gauged the mood of both buyers and lenders… especially with the specter of inflation peaking around the corner.]]> Wed, 06 Feb 2008 19:42:01 -0500
And during this time even the rosiest assessment of units sold (from NAR) showed a -12.8% decrease in units. Rates are currently at 5.68% and it still isn’t stopping the slide in sales... meaning it isn’t the catalyst you thought it was.

As for ARMs… if you believe people are going to start snatching up ARM loans in large numbers and that is what is going to get us out of this mess, I don’t think you have properly gauged the mood of both buyers and lenders… especially with the specter of inflation peaking around the corner.]]> http://seekingalpha.com/article/63150-what-the-housing-apocalypse-prophets-aren-t-revealing?source=feed#comment-114714 114714 Tue, 05 Feb 2008 14:53:57 -0500