Sunday, December 30, 2007

Beverage of Choice


The LATimes has a classic end of year article.

Despite the scary statistics, things could be looking up in '08
By Kenneth R. Harney, Washington Post Writers Group
December 30, 2007

WASHINGTON -- Queen Elizabeth II once famously referred to her annus horribilis -- a horrible year during which almost everything went badly, from royal family scandals to a raging fire that destroyed parts of Windsor Castle.

The U.S. housing market experienced its own form of annus horribilis in 2007 -- a year when all the sins and excesses of the prior six years were visited upon nearly everyone in the system:
...
Enough. Could 2008 be better? I think the odds are reasonable that it will. Here's why: Even through the grimmest headlines of 2007, there were a number of positive underlying economic forces propping up real estate. If those forces continue, they should help cut the time needed for the correction cycle to bottom out and the historically inevitable recovery cycle to begin.


Happy New Year everyone!

38 comments:

Funny Circus Bears said...

Read it this morning.

Pure comedy.

Funny Circus Bears said...

Happy New Years to you, too from one old buzzard to another.

Rob Dawg said...

Personally 2007 is a good year to have behind me. In much the same hopeful fashion as the article 2008 should be better.

Sweet Cashback said...

First, we should get this year behind us before wishing a happy new year!

Maybe Snowflake will resume blogging on 1/1/08? That would be Murst!

Sac RE Agent said...

Dawg, as much as I'd love to see the market turn, I'm not drinking the kool aid. I believe deep inside, there's still more downward movement in prices as well as an increase in inventory.

Nonetheless, Happy New Year to everyone. May the year ahead bring all of you much love and happiness!

Rob Dawg said...

If I feel better (bad cold) we'll have that was the year and a couple contests. Will 410 Avocado sell? Twice? Any Casey closure? Post suggestions. Wagga has already made several transportation related new years topic ideas.

Akubi said...

410 Avocado?
It really depends upon the koi breading...

Rob Dawg said...

Sac RE,
I was ummm... surprised at the acceleration of the indicators these last three months. I was expecting that the cheerleaders were going to keep things quiet until this spring. The way things are spacing out I'm concerned next spring will see a combination of 05-06 3yr/2yr resets plus investor capitulation. That could be difficult.

At a party an elderly neighbor was talking about selling. He escrowed at 1.1m and when the buyer came back with 1.05 he balked. Normally I know we all here would be screaming, take it and run!!! but I wanted to hear the story. Truth was the buyer got cold feet and wasn't going to close at all. The rationale was to clear out the non-sale and be able to say 1.1m was a good price. The ripple effect is finally reaching up here in the upper middle classes. People with 800k houses are not able to buy our 1.4m houses. Not able. And man are they stupid. They don't understand. Somebody has to have them try to qualify for their current home loan. That would be an eye opener. Then have them go through the motions to try and 'buy' their current house using their then purchase price and current lending standards. Scared straight.

Akubi said...

@Dawg,
You clearly are not upper middle class enough.

Akubi said...

My investment banker cousins who didn't even graduate from decent universities own multmillion dollar McMansions with a view.

Rob Dawg said...

Dawg,
You clearly are not upper middle class enough.


I know, I know.

Akubi said...

Luba makes it all good. I'd like to be Hegre.

Lou Minatti said...

Happy New Year to you too, Rob, and all of the rest of the ENers.

Weird crud is making the rounds. My son and I have been sick the past week as well. Not the flu, not even a massive cold. Just a head cold we can't shake. Earache for the first time since I was a kid.

Akubi said...

Take vitamins, avoid humans and itsallgoood. If you folks choose the mating route we reallly don't care to hear about the fallout.

Akubi said...

I HATE BREEDERS!

Rob Dawg said...

Luba's mom was a breeder.

Old said...

At 6:44 PM, Blogger Akubi said...

Luba makes it all good. I'd like to be Hegre.

You and me both.

H Simpson said...

Much as want this all to be over, we have not had the correction yet.

-The big banks continue to announce losses with trailing zeroes that boggle the mind.
-Pinheads still want crazy money for their abodes, though I have seen a huge correction starting in Mass this year. People have not thrown in the towel, so the correction has not completed.
-People are still paying crazy money for 72 cudas and Shelby Mustangs. Too much money still in the pipes.
-Governments have not had to make hard choices because revenues are still close enough to the recent past that they can cover obligations.
-HD & Lowes have not announced any closures. Been in one lately? The past 3 visits show a ghost town in all of them. All those mfgs who sell to them are going to feel this soon. I expect some closings any day now.
-Though it takes the Fed 2 years to announce a recession has started, it takes the media several months after the bottom to broadcast every 3rd story of the pain. That has not started yet.
-Retrenchments have not started in earnest. People are not in fear of their jobs.
-No mobs calling for the heads of those who got us into this fix.
-Something has to come along that changes the rules and restarts the economy.

Everything in life is based upon negative feedback loops. The loops have not yet kicked into stop the growth, nor have the groups who report on trends been told as of yet.

Ben B. has been trying hard. My fear is it will only take a small movement to knock this house of cards down from a position wall street cannot spin. That could be a flare up in the middle east, some country wanting to take us on, some large country calling in the US ious, or a dirty bomb going off in LA.

My view: Things are never as good as we think, or as bad as we think. And when we do think we are at the extreme, we have already started to revert back the other way.


h.

w said...

h. simpson, Couldn't you just say a dirty bomb going off in NY? Why LA? I do not appreciate it.

H Simpson said...

W

4 reasons:

1. Terrorists will target another large city for new exposure such as they did with Seattle.

2. NYC has taken the time to build a strong police and intelligence gathering infrastructure. LA is a much "softer" city to attack.

3. LA is closer to a porious border.

4. I live 200 miles ne of NYC and as such am directly downwind. Rather someone else gets it in my greedy mind. Guess that is more of a rationalization than a reason eh?

h.

Rob Dawg said...

Terrorists need LA ports. They aren't that stupid. Terrorists are stupid about nearly everything else. Just like they thought the WTC was a symbol of the US economy they might mistake LA as a symbol of US decadent culture but they don't want to anger the Pacific Rim countries who have so many people in SoCal. Besides, LA is indeed soft. So soft that a dirty bomb couldn't do much.
H Simpson, 200 miles is an arc like Manchester to Hyannis. Again, a dirty bomb isn't getting anywhere near you either. Now Providence/Boston. They are dense and indefensible.

Arthur Wankspittle said...

Happy New Year to everyone. Been offline for a few weeks, not ignoring you!

Jim the Realtor said...

I saw a buyer walk from a $20,000 deposit this week, rather than close as agreed (not my deal).

But sellers are optimistically looking forward to the new year, thinking it will somehow be different. Panic should set in around mid-February?

Hapy New Year to all.

P.S. My guess on Avocado sale? $625,000, close in May.

H Simpson said...

Rob

Let me debate a couple of your points:

1. there is a huge Muslim population 10 miles s of the trade towers. More than in LA. They knew they had their own in those towers.
bottom line: THEY DO NOT CARE.

2. What the terrorists did not understand is that all finanical systems are backed and redundent. That came from the 1st WTC attack.
Piss poor planning as my dad used to say. But the government has a hard time as they need to defend against all attacks and not think out only 1 way to attack.

3. The fallout may not be lethal, but what is the long term results for breathing the stuff? I don't believe a thing the AEC says. I grew up in a neighborhood where lots of my buddies, along with my mother and little sister died of a rare form of cancer. Crazy numbers for a small town. 20 years later the goverenment finally admitted to experiments going on just down the street. They only tell you what they want you to know. I am not a comspiratist. I just think the government will lie to cover their asses no matter who is in office.


4th, More important than the initial fallout is the large scale evacuation because of a toxic environment, where are they going to put all those people? Unlike Katrina, the land is posionous. They are going to bunk those souls in the burbs. I rather they put them up at 410 Avacado or your house or some left wing moom bat like Barbara Streishand than mine.

H Simpson said...

interesting housing stats at cnn/money.

http://money.cnn.com/galleries/2007/real_estate/0712/gallery.Best_of_the_best/index.html

Rob Dawg said...

H,
Your list is interesting in that Thousand Oaks and Simi Valley are no longer considered the safest cities in the nation. Gee, could that be because of densification and urbanization?

w said...

Rob, Has anyone talked about how these crime statistics being touted all the time has reduced the number of minor crimes that the police are willing to report? I have lived in Ventura for 10 years and have had my wife's car broken into at least three times. Every other month somebody steals something out of my yard it seems. My neighbor just had his house broken into before Christmas. And I live in a 'great' neighborhood.

jim the realtor, Are you in California? I have always been told by realtors that there is little likelyhood that the seller would ever be able to keep my deposit under any circumstances if it went to court. Is this true? Are we about to see changes in how seriously the deposit process is followed? I think it was really disrespected during the boom.

Rob Dawg said...

W,
Quite the contrary. The lower crime areas if anything overreport and justify their bloated budgets. Thousand Oaks in particular will bump property crimes to felonies given any excuse. Oxnard and Ventura do discourage reporting 'minor' crime because of several reasons. Ventura is in the midsts of ramming an evil 'forms based' general plan down the public gullet. Everyone hates it except staff and the planner cadre on the council.
Jim is indeed a Realtor®, a good one. Heck his blog is bubbleinfo.com so you know there's something there.

simi.uber.alles said...

I first moved to Simi in 1998. At the time it still had a small town feel, which was nice compared to the rest of LA. Lots of open space; I remember being amazed that no one had developed all that land yet.

10 years later, Simi is rapidly becoming indistinguishable from the San Fernando Valley. Too many people and too much traffic. One of the most obnoxious symptoms of this is in the parking lot of the new mall (Simi Town Center). The parking spaces are tiny, barely big enough for my Eclipse, let alone all the SUVs that people who live here are driving. The parking rows are spaced incredibly close together, so that you don't even have enough room to steer the car into the space properly.

The families that moved here in the 70's and 80's are retiring and their kids aren't sticking around. My wife is a teacher and has classes full of poor Latino children in this formerly "rich, white, safe" suburb. Sadly, most of the kids are vatos-in-training, bragging about how they want to be gangsters and go to jail, just like their father (uncle, brother, etc).

I am glad to be leaving. I really wonder what this place will look like in another 10 years.

w said...

Rob, that was a question for Jim not an insult. I want to know if it is true that there is little recourse for a seller to actually hold on to the deposits as I was told during the boom by several realtors. I thought in California the buyer has every opportunity to back out no matter what the contract says. Kind of like buying a car here with the 3 day rule or whatever.

Rob Dawg said...

W,
I didn't detect any insult, I was just praising an honest Realtor®. I even "ran" his blog when he went on vacation. Hopefully JtR will answer as well but a house contract is like any other contract. I'm surprised there wasn't a reason to break the contract but it happens especially when times get tough. Personally I'd demand my deposit back for any milestone slip at all and even if the other party got stinky I'd threaten to spend the deposit on lawyers which would cost them twice as much for their lawyers AND tie up the property in their name in a declining market. You just gotta know the pressure points.

chickenlittle said...

"I am glad to be leaving. I really wonder what this place will look like in another 10 years"

Hopefully tad more affordable courtesy of the folks who "enjoyed" those big run-up in value.

Several years ago I had the pleasure of living and working around Palo Alto. Hanging out at "Zots", I befriended a few locals (really just 30-nothing kids still living at home). Home was usually somewhere around Portola Valley, which might seem like your Simi Valley. All of them wanted to stay but the chance to ever make a life like their parents had was simply priced out of the question.
Why do people think that the decline the in housing prices and concomitant decline in sports car amenities like parking space size is necessarily a bad thing?

Rob Dawg said...

Simi,
I too am saddened at how Simi is more and more looking like "The Valley." The eminent domain taking of a house to build a Walmart driveway and the new mall made the case for me. I'm glad you mentioned the parking spaces. I thought everyone was a bad parker but now that I think about it they are too small.
The problem isn't that the kids are Hispanic. The kids or their parents are squatters. All they know is exploiting and undermining the system. That and they suffer a really nasty streak of racism in their culture that prevents their full participation in society. That same streak has left them exposed to predation in things like exotic mortgages and such.

FlyingMonkeyWarrior said...

Yes Dawg,
Good to have a fresh start in 2008.
Just stoped by to wish you all a Happy New Year.
Goin Downtown by towncar.
Be safe.
See ya'll in 2008.
FMW

Sac RE Agent said...

w, i am a licensed agent in Californis. If one side does not abide by the terms of the written contract, they could end up losing their deposit (buyer) or have to pay a percentage to the buyers. With the dramatic slowdown of the market, more and more agents and brokerages are being more aggressive with enforcing this aspect of the contract.

A smart agent should know of many ways to cover a buyer from having to end up paying the deposit if they were to walk away from the deal. But if you wish not to use one of these agents, you may end up having to lose the deposit if you decided to walk away. But the contract is definitely set up to the buyers advantage in this regard.

H Simpson said...

Happy New Year from East Coast to all of you.

Rob, seeing how you are a ex-Bostonite, I will let you know you missed an evening of 3 Stooges on TV38. Ahhh, nothing like East coast culture....

Newton Mass which is just outside of Boston used to be the safest place in the US for years. Then some retired Dr killed his wife and this knob town lost their claim to fame.
No great loss I assure you (the rating, not the death).

As for stats, in the small NH town I live in, the new police chief kept all kinds of stats. Every year at the town meeting he comes up with all these charts to justify building the force ever bigger. Again, EVERYTHING in NH is funded at the town level so everyone has a say (gotta love it).

Anyhow the chief is in the middle of his presentation when a buddy stands up and says
"it seems like the numbers are going up every year"
The chief agreed to which my buddy says "We never had such crime here before you came along. Maybe we ought to fire you instead" which got plenty of chuckles from the attendees. The chief did not get his extra man that year.


h.

Jim the Realtor said...

w,

Buyers get a free-look for the first 17 days, and if something is found that they don't like, or if they just get cold feet, they can cancel and get their deposit back.

After 17 days the seller's agent has the duty to require that the buyer release all contingencies, putting the deposit at risk.

I agree with Rob that even if the buyer signed off his contingencies, with enough pressure you could probably still get your money back.

In the case I mentioned, it was about 4 months into the transaction, which is the kiss of death in this market - the longer buyers have to think about it, the more chance of them talking themselves out of it. These buyers preferred to give up the dough, rather than proceed. I may have played a part in it by listing a newer house with better view for less money down the street, but they didn't come running down to buy it - they just gave up.

They could have gone back to the seller to re-negotiate instead, but I guess to some people $20,000 isn't much to lose, compared to the alternative.

w said...

Thanks for the explanation.