j-dub

Why Did Housing Go into a Bubble?

It has changed so many times in last 5 years that I forget what it was originally called!!! It is now called Mandaly on 4th.
It is the last complex on 4th Street on the right when you're heading onto 275N towards Tampa.


On Dec 06 11:17 AM milkchaser wrote:

> Just curious, j-dub, what was the name of the complex. I lived in
> StP until 2003.

Why Did Housing Go into a Bubble?

I believe there are numerous factors that went into creating the housing bubble and I'd like to think the mob mentality was a large one.
The way it fed on itself was a site to behold. I took a step back, looked at the situation an based on all the available information, shook my head in disbelief

It was 2005 and a company from Georgia was coming into St. Petersburg, FL to buy up a apartment complex. It's an above average complex with nice grounds and a good location. I was upset that I had found a nice, affordable place to live and these guys were gonna come in, make the apartments and grounds much nicer and then turn it into a condominium community. Renters, because of Florida law, had six months after your converted apartment was purchased to find a new place to live.
NOW, I could not believe the panic in some people's eyes. The 10, 15 people I talked to were very concerned about finding a new place to rent as fast as possible before someone else found that same place. I likened it to a level 5 hurricane coming and they're trying to get out of dodge.
What is the point of my story?
That nobody took the five minutes necessary to stand back and think. The average person in Pinellas County, FL makes around 35k a year, give or take. My apartment, a studio with 600 square feet of living space would be up for sale for around 135k. HUH?
I saw the price list for all the models and realized that this business plan of the Georgians was unsustainable. Aparments built in the 80's, interiors redone, going for over 200k. And all of a sudden it hit me-no one in the world would buy these things. My apartment would NEVER sell at these prices. They were catering to a certain group of people that DID NOT EXIST.
So while 95% of the renters fled to find another place to rent before their (they believed) apartments would be sold, I hung back and enjoyed the newly minted grounds all to myself. Yep- they beautified the landscape, everyone fled, no one bought and I had the run of the place, with a few others, all to myself. It was like my own resort. If anyone, for some ridiculous reason, were to buy my place at that time and try to negotiate the lease with me, I would simply contact them, go over some simple math and tell them to do everything in their power to get out of the purchase contract if they can.
The mob mentality has to be a big consideration because these business people who bought the place never once sat down to realize that NO ONE living in Pinellas County could afford the condos they were trying to sell. This is not 4 or 5 times the average salary. but 8 or 9. They received anecdotal evidence (I assume) of this model being sustainable Potential buyers (renters) assumed that this was the new normal and that was that. Everyone was living in the fantasy world and for a time, no one questioned what reality really looked like. Those that did, kept their cool. A lesson that will stay with me for a while.

Foreclosure Rates Continue Their Steady Decline

If the fed funds rate is kept this low 12 months from now, we will either be in a middle of a full on depression or the inflation boogy man will be breaking out of the closet.
Neither will be good for the housing industry.
There are NO good answers.


On Nov 12 10:32 AM AJMB wrote:

> This is very true that interest rates are lower, currently. However,
> this is not an indication of lower payments. In fact, with the option-arms
> loans, payments may very well go up even with a lower rate, since
> the loans will be recast with all the additional unpaid interest
> tacked on as principle. So, a lower rate v. more principle to determine
> the payment...you do not know who wins out.
>
> Further, rates for at least some loans (maybe a lot/most) will not
> adjust that much lower, as they were financed at already-artificially-low
> "teaser" rates.
>
> Moreover, there is a murmur amongst the Fed presidents that they
> may increase rates despite unemployment being high (See Atlanta's
> Lockhart's statements). In fact, he mentioned that "Going forward
> I intend to include asset price movements as one of the things to
> be watched [when determining whether or not to push for an increase
> in rates]." If you theory is true, stabilizing prices (and eventually
> rising prices), this would likely put the Fed under some pressure
> to engage a tightening policy. So, I do not think it wise to bet
> that rates will remain low through the period when J-dub claims the
> majority of Alt-A and Option-arms will reset.

Foreclosure Rates Continue Their Steady Decline

check out the first chart:

www.doctorhousingbubbl.../


On Nov 12 07:53 AM Rob_W_ wrote:

> And the data you are supporting this conclusion with are .... ? I
> think it is pretty clear that the current meltdown in the RE market
> is turning around. That doesn't mean that continued economic weakness
> won't cause NEW problems, but beating the drum that we have only
> seen "the beginning" is beginning to look as silly as the year long
> "this ain't a rally, just you wait and see" crowd.
>
> --RW
>
> On Nov 12 07:29 AM j-dub wrote:

Foreclosure Rates Continue Their Steady Decline

We are IN BETWEEN the devastation of the sub prime storm and the decimation of the alt-a/option arm disaster.
Otherwise, what great news!!!!

Local Media Agrees: U.S. Housing Outlook Improves

I believe ultimately Dave is saying that the tax breaks render any "improvements" artificial at best.


On Nov 11 08:43 AM The Good News Economist wrote:

>
> Yes Dave.
>
> Did you bother to read the second paragraph?

Homebuyer Tax Credit: Not a Done Deal

If you can't afford a home,
Then you don't buy a home!!!!
America-life is not about instant gratification

"Let a few people be helped in
the United States rather than a world of people who don't give a
rats a-- about us! Stop complaining that it's our "tax dollars" when we're handing out money to every Tom, Dick & Harry anyway."
I agree BUT two wrongs don't make a right and it will just cause people to lose money on their home when the value inevitably drops when the punch bowl is removed.
NOT MY AMERICA


On Nov 02 01:15 PM Dani Watson wrote:

> There are a lot of people who have not been able to save a nest egg,
> and can handle the monthly payments just fine, have a little in the
> bank, but not enough for the "paper trail" that usually follows purchasing
> a home! The closing costs in most states are just ridiculous! <br/>All
> of us pay our taxes, and to see some people get into a home and fix
> up something that was decaying in a neighborhood that was once in
> pristine condition, then so be it! Let a few people be helped in
> the United States rather than a world of people who don't give a
> rats a-- about us! Stop complaining that it's our "tax dollars" when
> we're handing out money to every Tom, Dick &amp; Harry anyway. We
> might as well have something "nice to show for the money"!! I for
> one hope this continues at least until tax time next year 2010!

Homebuyer Tax Credit: Not a Done Deal

"More than 1.25 million taxpayers have taken advantage of the tax credit to pursue the American dream of home ownership."

Persue? Who are you kidding? It's a handout.
I thought the American dream was a privledge, NOT A RIGHT.


You are so backwards with your thinking, it scares me what a weak nation we have become.
NOT MY AMERICA

Case-Shiller's Recent Strength: It's Not Just Seasonality

Fantastic article Tom!!!

I was at work earlier today and after spending a good 20 minutes at my desk ignoring reality and 10 minutes more creating my own, I came to the exact same conclusions.

Is Housing Back?

If nonsense were to be banned, I'd have very little to say.............


On Aug 26 02:51 PM HardwoodFlooring wrote:

> Wake-up thank you. Than nonsense should be banned.

Housing: Strong Recovery Ahead

I actually disagree with your assessment that the factors are in place. I think small businesses are too scared to do any hiring with Obama's lust to tax and spend. They make up 80-90% of all hiring.

He makes no mention of the 8k tax credit that is about to expire and the fact that many first time homebuyers are taking advantage of the affordability of the less than $200k houses and that is what driving house sales-THAT ALONE!!!

When that pulled foward demand is gone.....................


> for a recovery


On Aug 24 04:53 PM HardwoodFlooring wrote:

> j-dub Wow. yeah hard to get consumer sentiment up and people motivated
> to buy when they don't have a job or they are worried about losing
> their house.
>
> I do think that there is some truth to what Tom said above you. the
> problem is the head winds of reality which you just can't talk your
> way out of. Not until unemploymnet actually starts to improve will
> sentiment begin to get strong. Sure all the factors are in place
> for a recovery but there are some very real things that need to happen
> to make those under pinnings come true.

Housing: Strong Recovery Ahead

"But once an economic recovery starts and young people find work, they will move out of their parent’s homes as quickly as they can afford to do so, adding incrementally to housing demand and meaningfully to the existing imbalance between new construction and demographic housing needs.

So, rather than expecting a weak housing market for the next few years, we anticipate that housing will rise quite sharply, even accelerating over the next year or two, and becoming a strong contributor to GDP and job growth over the visible horizon."


SHEER BUFFOONERY

Where are they going to find work that pays decent?
Are you gonna hire them as research assistants?
Where is the growth and recovery going to come from?

AHHH, why deal with logic when you can envelop yourself in fantasy world economics?


On Aug 24 02:37 PM Think-About-It wrote:

> Are you serious?
>
> "Housing will rise quite sharply, even accelerating over the next
> year or two..."
>
> For this guessing game I would use history as my guide. The history
> of bubbles popping suggest that they do no reflate "quite sharply."
> Occationally there is a dead cat bounce but that's all it is. I would
> look to a different asset class than the one that just imploded when
> searching for the next wave of accelerating growth.

Housing: Strong Recovery Ahead

If you shut your mouth and open your ears, you'll hear that the singing is always coming from the top of the heap, from those that have no connection to the real world.

Unemployment @ 12%-doesn't matter, foreclosures through the roof-won't make a difference and on and on.
Congrats on what you consider "recovery."

Ever heard of the old saying- "Every economist knows 100 different ways to make love, the problem is they don't know any women."

More Signs of a Housing Bottom

May I make a request?
Please recommend this post if you, as an SA reader, feel the two words, housing and bottom, should not be allowed together in the same title until, oooooooooooooohhhh, let's say April 2010.

Hmmmm...........my guess is this author has called 10 of the last 8 bottoms in housing.
I'm not sure what his agenda is...has he tried to catch a falling knife with a couple of "investment" properties? Did he buy over his head in 2002 and is praying he stays above water? Is a dear relative of his in financial distress?

Not sure, but every month is a bottom and every sputter is a roar.

Does he know that unemployment (U3) will fall between 10%-13% and that there is another wave of....
Never mind.

Enough already- I'm beginning to believe that these authors ignore all forms of reality just to be able to put those two words in the title!!!!!

How Much Longer for This Rally?

ONE MORE TIME.........



LaLa Land (wall street's new game plan)

GM chapter 11 = PRICED IN
125K+ jobs lost from GM chapter 11 = PRICED IN
unemployment @ 9% = BETTER THAN EXPECTED
unemployment @ 10% = DOW SOARS
unemployment @ 11% = GREEN SHOOT RALLY
unemployment @ 12% = ALREADY FACTORED IN
unemployment = 35% = DOW DROPS 100 POINTS
housing price =1% = RECESSION ENDING
housing collapses = GREEN SHOOT
Housing falls 20% = STABILIZATION
Government spends 1 trillion of OUR dollars = STIMULUS
North Korea fires nuke = RALLY
Israel bombs Iran = 30 MINUTE END OF DAY RALLY
world explodes = ASIA RALLIES
PMI crashes = HUGE RALLY
No jobs are created = RECESSION ALMOST OVER
U.S. debt overwhelming = TOO BUSY RALLYING TO CARE
Consumer stops spending = RETAIL RALLY
Banks are insolvent = SIGNS OF STABILIZATION
American auto industry BK = GOOD THING
Banks pass scam stress tests = HUUUUUUUUGE RALLY
Banks "only need 75 billion = OUT OF THE WOODS
Banks pass a real stress test = NEVER WOULD HAPPEN
Banks pay back tarp = LATE DAY SURGE
Banksw can't pay back TARP = EARLY MORNING SURGE
12% mortgage delinquency = GOOD FOR STOCKS
Hundreds of thousands of mortgages underwater = HOUSING BOTTOMED
California BK = THE WORST IS OVER
Dollar rises = RALLY
Dollar crashes = RALLY
Inflation = BULL MARKET
Deflation = BULL MARKET CONTINUES
REFLATION = MASSIVE SHORT COVERING RALLY
Gold rises = STOCKS RALLY
Gold falls STOCKS RALLY BIG
Banks' fake earnings = SIGNS OF STABILIZATION
CRE stablizing= 1000 POINT RALLY
CRE CRASHING = STOCKS SHAKE IT OFF TO RALLY
CONSUMER INSOVENT = CONSUMER IS SPENDING
OIL @ 50 = BULL RALLY
OIL @ 60 = GREEN SHOOT
OIL @ 100 = IMPORTANT RECOVERY SIGN
OIL @ 20 = TAX BREAK

And the one we should all interpret corrcectly:
NO ONE IS BUYING STOCKS = BILLIONS ON THE SIDELINES