Carl leason

Is the US Printing Money Like Mad?

I must say that the article is very thought provoking and explains why we are not in an INFLATIONARY period now, but, no mention is made of the huge quantity of bad home loans and the effect that will have on the economy. Someone has to "eat" all those bad loans and what affect will that have on the economy ? Perhaps just some lenders, investors, etc.going broke ? On top of that question, what will be the result of the fast dropping of home prices plus Huge credit card debt. Fast rising energy prices, etc....
There are a lot of loose ends not being considered in the explanation above. I think the final and full explanation is not fully understood yet and that it will take some time for the "Final" answer to be fully known.
The final answer is probably going to be the subject of many books in the future, but not right now ! LC

Subprime Mess: No One's Fault But Our Own

Let's place the blame where it rightly belongs and it not "all of us ", as you say ! Builders only build what people will buy,..Period ! Same goes for Realtors,..show what the buyers want and will buy !
Remember please, that the "bubble" would not have happened if the Mortgage industry had done it's job, "by the book "!
We had negative amortization mortgages going back to the 80's and it caused a disaster then and is causing another disaster now.
Any bank or financial instution that bought these super high risk mortgages were just plain stupid ! No other word for it. !
Mortgage brokers pushed the appraisers to OK the prices, the bankers wanted to look good by writing a lot of loans, and the institutions that bought these loans, were just as stupid !
As a 25+ year realtor, I could see this coming, long ago, but what do I know,...I'm just a Licensed Realtor and not a banker or Mortgage Broker,..right !
Another factor that people overlook is that investors have a herd mentality and whatever their rich buddies do, must be great, right ? So follow the herd and get slaughtered with the rest !
I have no simpathy for these people who were so totally careless with their money ! LC

Subprime Mess: No One's Fault But Our Own

Let's place the blame where it rightly belongs and it not "all of us ", as you say ! Builders only build what people will buy,..Period ! Same goes for Realtors,..show what the buyers want and will buy !
Remember please, that the "bubble" would not have happened if the Mortgage industry had done it's job, "by the book "!
We had negative amortization mortgages going back to the 80's and it caused a disaster then and is causing another disaster now.
Any bank or financial instution that bought these super high risk mortgages were just plain stupid ! No other word for it. !
Mortgage brokers pushed the appraisers to OK the prices, the bankers wanted to look good by writing a lot of loans, and the institutions that bought these loans, were just as stupid !
As a 25+ year realtor, I could see this coming, long ago, but what do I know,...I'm just a Licensed Realtor and not a banker or Mortgage Broker,..right !
Another factor that people overlook is that investors have a herd mentality and whatever their rich buddies do, must be great, right ? So follow the herd and get slaughtered with the rest !
I have no simpathy for these people who were so totally careless with their money ! LC

What's in Store For the Housing Market?

The one Economist at NAR already left,..or was fired, for so much bad reporting and forecasting and Yun is on the same track !
Nar is being criticised by everyone and rightly so ! Being a Realtor for the past 25+ years , it gripes me that I have to pay dues to these guys !
LC

Greenspan Seemingly Suffers From Acute Amnesia

I pretty much agree with everything that has been said above, but
in the late 80's and early 90's we had "negative amortization" Not good ! But now we have the same result but with different names.
Zero down,..adjustable rates, ...No documentation, etc,...
Lets all get honest and lay the blame where it belongs, and that's with the lenders,.. mortgage applications that were full of lies,.. underwriters who didn't care,...Appraisers who jacked up the property values to keep their mortgage writers and lenders happy,...Bankers who wanted to look good in the eyes of their bosses that they are originating so many loans,... and buyers who would willingly lie to get their dream home,..etc,...etc. !!
To be sure, Greenspan wasn't the worlds best, and didn't really care look at the results of his actions, but the politians wanted to keep the economy on a roll,..ever upward,..to make the themselves appear great and unemployment low ! Everyone's making money, right ??
Well, anyone with any brains could see that prices were going way up past reasonable, but that's the next guy's problem !! right.? Just look the other way and everything will turn out OK.
But Bush also needed a LOT OF BUCKS to finance his wars too ! So the Fed....ever obedient, just ran the printing presses , print more greenbacks to fund the war, import everything, ...Not to worry,...
You see,. what really happens is that the dollar has now been made so weak that housing is becoming cheap to the people in Canada, China and Europe and that will start a house buying binge that will save us all from loosing our homes or money,...right ??
Problem solved. !! Unemployment has never been a problem, regardless of who's in office,..that's a non problem. There are plenty of jobs flipping hambergers ! LC

Ford U.S. Sales Fall 14%

I would love to be a Ford fan again but they are not producing anything that looks interesting and yet they keep on pumping out pick up trucks that get 12 miles per gal. and expect to make money ??
They really need to NO.1,..Get some really good looking cars again !
Think of the days of the 4 pasenger T Birds, the early mustangs, the 57 Fords , 55 Mercurys, TurnPike Cruisers, those were exciting times. Now we are stuck with a company that only looks at the other makes and produces look alike cars ! Cookie cutter cars that look so ordinary !...What ever happened to excitement when the new models came out every Sept. in the good old days ??
Fords biggest problem is that they have no more Lee Iacoccoa's (sp) No more imagination, just a focus on the ordinary !
At least GM and Chrysler are trying by coming out with some "Different" looking cars , if not exciting ! Ford needs someone who can put excitement back into the way cars look ! LC

20 Observations On This Market

How about "illequipped" ?

Five Reasons Why the Fed Will Cut Rates

One thing that isn't being mentioned at all is the continuing increase in imports form China and other low wage countries. All the talk about building a wall between here and Mexico is pure Geo. Bush lies !
Now the Fed . Gov. is planning to build a super expressway going from Mexico right up thru the center of the USA.
The reasons for this is that Mexico will unload and ship containers of goods,...NOT INSPECTED, from Mexican ports right up thru the center of the states. So, it will create a further loss of jobs, a huge increase in consumer goods from China and other countries and drive up the number of dollars being printed by the Fed. making the dollar even more worthless.
The weaker dollar will create a support level for housing prices because the Euro and Canadian dollars will continue to become stronger and stronger . That will create what amounts to cheap housing costs in this country but at the same time stop the drop in housing prices.
End result, it truly appears that Bush and the Fed. are trying to
destroy our economy ! At this point I don't see inflation being a problem at all since our Gov. appears intent on destroying our economy from the bottom up. Eliminate all the low wage jobs, make housing cheaper for foreign buyers, more expensive for us and continue to make the dollar ever weaker by running the printing presses. The Fed. solution, always, just print more bucks ! At this rate, even war isn't a problem because China and the mid-east will just buy the whole damn country with Bush's help !!
Am I angry,...? YEP !

Why Do We Want People to Own Homes?

Paul,....You need to wake up ! Not everyone is a single person or a couple who just want a place to flop when they get home from work.
All one has to show when renting is a pile of receipts, and those monthly rent checks could have purchased a lot of equity , which you obviously don't care about ! Also, what if you had 2-3 kids to support ? If you did, your rent would be far greater than a single or 2 people living in a rental. Some people like raising families and having a "Home" not just a temp. place to sleep ! Also, when one buys a home with a fixed mortgge, the monthly payment stays the same, year after year, while your equity increases every year. Add appreciation to that and it's a very good deal ! If you rent, I guarantee those rent payments are going up in cost every year !Large expensive repairs to a home are very few and far between, and if a tree falls on your home, ...that's why you have insurance !!
In addition, you can't even paint the walls a different color or update your appliances without getting permission, and the owner of that rental isn't going to buy you new aappliances when the old ones still work well. But, I guess you just like having no responsibility and couldn't care less about the kind of place where you live. Frankly, I feel sorry for you ! You have other investments, right, but you could have a lot more assets if you bought a home ! And, what happens when you retire, still going to rent in that old place, with ever higher rent and try to stretch your finances until the day you die ! Any way one looks at it, home ownership is not a simple luxury, it is a "hame" with increased value and , hopefully paid off so that you don't have to make morgage
payments, ..or rent payments which are going to very much higher in the next 10-20-30 years, at least look at the cost of a home 2o years ago where you live and look at the cost today. Then go cry in your beer about the lost opportunity ! LC

Housing Prices To Return All the Way To Pre-Bubble Levels?

Mikey,...Whoever said that single family home prices rose an average of .5 pct. during the 2 decades, 1975-1995 is absolutely nuts. During the late 70's and early 80's home prices were going up like crazy !
Especially, if you purchased income property, at that time, the IRS rules said that 40 pct. of the capital ganes were forgiven and one only had to pay cap. gains on the remaining 60 pct.
I for one was buying small apartment buildings 6-10 units , holding them for a year and a day and reselling for a big profit ! One place I purchased was a small mobile home park for $300,000. and sold a year later for $475,000. That was from Jan. 1980 to Jan. 1981 !
I think that's a bit more than .5 pct. return any way you want to
figure it and at time, those kinds of returns were common. Things fell apart to a large extent during the Reagan / Herb Volker ( Fed.chief ) years during which time interest rates were about 17-18 pct. for home loans, but by the end of Reagan/Volker terms, interest rates fell below 10 pct and increases in sales and values restarted !
Can't believe everything you read,..I don't care who makes the comments. I only deal in facts ! LC

Housing Prices To Return All the Way To Pre-Bubble Levels?

Home prices dropping by 25 pct. I don't think so !!!!
All the really bad news I read on home prices seem to forget that
the US dollar is in a "free fall" and the dollar as compared to the Euro and the Canadian dollar indicates that the weak US dollar means that it's bargain time for Canadians and Europeans ! I fully expect that housing prices will continue to fall moderately during the next year or so, but I have been selling R.E. for 25+ years and
have seen the interest pick up even now by Canadians and Europeans. In addition, China is holding so many greenbacks that they could buy just about the whole inventory of homes for sale and still have a surplus !
In essence, a weak dollar will prop up US home prices simply because they are already priced cheaper than Canadian home prices and many places in Europe.
My big hope is that the new Fed. Chief won't do anything to screw up the economy any more than it is. Another worry is that congress doesn't seem to have the guts to stop Bush from asking for sums of money like the recent request for "another 50 Billion",..like it was nothing but pocket change. ! Whats wrong with these people. ??
Just run the presses and print more bucks, seems to be the Feds. response ! Bush makes statements like he is getting ready to wind down the war, but in the meantime is putting the finishing touches on the worlds largest embassy in the heart of Bahgdad !
What we really have is government gone nuts ! LC

Long-Term Investors Shouldn't Heed Confused Housing Data

I make it a point to forget everything the Government tells us !
After 26 years in Real Estate, Broker /sales, etc. I can tell you with total certainty that the market is down, but that it is also a State by State situation. Fl for example has experienced huge R.E.Tax increases to the point that people no longer ask about the price, they only ask about the taxes and Insurance.
During the past year, I have seen condos, for example have a price go from $145,000. to 129,900. to 119,900, to !09,000. and now to $105,000. and still not selling. And this is the low end of the market ! Slightly over a year ago, that condo would have sold in a heart beat for $145,000.
Our new Gov. ran for office on a promise to bring down RE taxes but now is backing off, saying that he only promised to TRY to bring down taxes....boy how fast politics can change a persons words !
In other places prices are coming down because investors overpaid by a huge amount for small waterfront condos,...a million $$ plus in many cases when in fact a price of about $250,000. $300,000. may have been more realistic. Now North Carolina is the investor "Hot spot". On raw land no less !
Last couple years Phoenix and San Diego were hot spots, now all are headed down . Unfortunately, investors have a "herd" mentality and always go where the "big boys" go ,...but always after the action is on it's way down. They pay too much and then watch their investment drop like a rock ! They simply don't do the math. When one places money in a CD for example, people usually shop the Banks for the highest rate of return, but when it comes to real estate, they leave their brains at home ! They simply don't even try to figure the rate of return,..they seem to think that just because someone else "flipped" a home, they can do the same ! If one doesn't know the market and the return on investment ,..if they have to rent it out, they are certain to loose. Right now on Clearwater beach there are approx. 1,000 condos for sale, all overpriced,..and condo sales there last month was 30 units !
For those who may read your column, I certainly hope they learn to deal in things they know about and not just follow the herd ! LC

U.S. Housing Numbers: Bad and Worsening

Tesh, for most people a house is a home, but realistically , many investors see houses as "Investments", and are looking for a higher selling price real fast, or at least rental income that will pay for the mortgage and expenses and hopefully go up in price over the long term. But on the other hand, You are absolutely correct in that people started gambling with homes / condos with complete disregard for return on investment. To make it real simple,...if one can place their money in a Bank savings account at 5 pct. then if they take that money and invest it in a million dollar high rise, ...is it going to give them at least that 5 pct. return on investment ? If real investigation of the market says that it ain't going to happen,..then leave your money in the bank ! It's truly that simple ! LC

U.S. Housing Numbers: Bad and Worsening

Your article is already all too familiar, but ...the one thing that no one seems to want to say is that those metro areas that are experiencing the worst drop in prices are cities with demographics that scream,.."High Crime area",...A great example is that Tampa, Fl has home prices dropping by 7.7 pct. while across Tampa Bay, in Palm Harbor and Clearwater, Countryside, prices are down perhaps 1-2 pct. but nothing like Tampa's drop in prices. Same holds true for San Diego, which is wonderful when it comes to climate but has a super high high crime rate,..as does Detroit, ( most murders in the U S ), Wash. D.C. etc.
The real facts are that no one wants to live in a high crime area, and those cities that have it are suffering for it ! Most cities had a real spike in home prices driven insanely high by investors who didn't "Do the math", and now they are simply coming back to realistic levels. For investors, they have to start figuring the return on investment, if they don't,...they will always get burned. But buying a million dollar high rise water front condo is a sure fire way for an investor to loose a huge amount of money real fast. The income just cannot support the mortgage and expenses. Most of the investors are of a "Herd" mentality, "if John did it, then I'll do it too !" and both got burned !I have been an active Realtor in Fl for
26 years and could easily see this coming, but investors can't seem to see past their nose. LC

Great Society Part II: Fed Tries to Save Itself From...Itself

Having been in Real Estate for 25+ years, and seeing the huge differences in prices from City to city and state to state, NYC and California being the prime examples, it truly appears insane that a home in one city can be priced so differently than another. No one can explain why a house in Florida can cost less than one third of a similar home in California. It just doesn't make sense. Cost of materials are the same in both states, cost of labor is fairly close in both states and the cost of land can't possibly make up the difference. The four most populated states are Ca, Tx, Fl, and NY and the costs even within a state vary tremendously . There is no way a 500 sq. ft. apt can cost a couple hundred thousand in NYC and the same 500 sq. ft. apt in Fl will bring only $75,000. at best. That's a case of people gone mad !
Also, why does a 1500 sq. ft. home in FL have have a price that's 50 pct. more than Georgia, just across the state line ? Taxes in FL have more than doubled in FL so it should bring prices down but doesn't and in GA. taxes and prices are way lower. It comes down to unreasonable Gov. interference in costs of living and peoples notion that moving 10 miles north into GA simply makes a home worth less ! Thats where the insanity come in ! One final example is that one acre lots in Tenn, are selling for $60,000. to 80,000. and are selling like hotcakes, same goes for N.carolina, which is very much more expensive than S. Carolina ! How can one explain all this insanity ?
My feeling is that we are in an economic "shake out" where brains will eventually win out and those people who over pay are going to be the big loosers....No other explanation works ,...LC