Thursday, April 30, 2009

Wrightwood Market Chaser

Apr 15, 2009 Price Changed $249,000 -- SoCalMLS #P650549
Mar 28, 2009 Price Changed $279,000 -- SoCalMLS #P650549
Feb 15, 2009 Price Changed $299,000 -- SoCalMLS #P650549
Nov 12, 2008 Price Changed $329,000 -- SoCalMLS #P650549
Oct 05, 2008 Price Changed $349,000 -- SoCalMLS #P650549
Aug 28, 2008 Price Changed $379,000 -- SoCalMLS #P650549
Aug 06, 2008 Listed $419,000 -- SoCalMLS #P650549
Jun 23, 1998 Sold $195,000 -- Public Records

Do we need anything more? Aug '08 $419k. Apr '09 $249k. Why even bother? -$170k over 8 months.

Skittles in NorthEast Riverpark

Fellow blogger (and Venturan) Effective Demand took the same neighborhood from yesterday and ran it through a NOD/NTS/REO filter.
P = NOD filed
A = NTS filed
B = Back to the Bank / REO / Foreclosure

119 properties currently in the foreclosure process at some point for just 1 development.

At this point an earthquake would be a kindness.

Here is the view from RealtyTrac:

Crocus Sighting

March existing home sales fall by 3% nationally
Ventura County’s median price for existing homes also increased, growing 1.5 percent from February to $364,920. But it is down 27.6 percent from $504,210 in March 2008.

The last time the county had a month-to-month increase was in August, when it grew by 0.7 percent. The last time it had a year-over-year increase was in May 2007, when it ticked up 1.6 percent to $699,481.
At 1.5% per month we can erase this last year of price declines in less than 2 1/2 years getting back to all time highs by 2015. Then again it might snow here this month.


Wednesday, April 29, 2009

California Shutdown

without Proips 1a-1e California is insolvent and illiquid.

SouthWest Nowheresville

I think I've found my poster child for the SoCal housing bubble. Check out this neighborhood in Palmdale.

That black line across the top of the picture is the California aqueduct. Also while you cannot see it, running through the center of this development is the San Andreas Fault.
Here are a couple examples:

How would you like to be number 3 asking $450 for a smaller house on a smaller lot with a higher cost basis than number 1 above asking just $275k?
Oh, and those "Last Sale" numbers were first sales so these beauties will not show up in the Case-Schiller Index.


Our good blogging budy Jean Valjean writes in the comments:

Yesterday, I recited this oath:

“I hereby declare, on oath,
that I absolutely and entirely
renounce and abjure
all allegiance and fidelity
to any foreign prince, potentate, state, or sovereignty
of whom or which I have heretofore
been a subject or citizen;
that I will support and defend
the Constitution and laws of the United States of America
against all enemies, foreign and domestic;
that I will bear true faith and allegiance to the same;
that I will bear arms on behalf of the United States
when required by the law;
that I will perform noncombatant service
in the Armed Forces of the United States
when required by the law;
that I will perform work of national importance
under civilian direction
when required by the law;
and that I take this obligation freely
without any mental reservation or purpose of evasion;
so help me God.”

The next words I heard: “Congratulations and welcome - You are now a Citizen of the United States of America


Tuesday, April 28, 2009

Make Me a Millionaire

All salt, no water.

Not much more than $1000 per square foot and only a half dozen houses from the beach. Why not?

May 24, 1989 $169,000
Asking: $1,199,000

Case Schiller Loss Trend

Slightly modified by a CR suggestion:

Saturday, April 25, 2009

$15 Trillion?

When I first saw this I thought there was a missing decimal point. $15t is like $140,000 per family and as we all know that isn't distributed evenly. Despite this being from The Center For American Progress (progressive idea for a strong, just and free America) and leans... ummm.. progressive there is still food for thought here.

In the following pages, we will examine in detail the free fall in household wealth since the beginning of this current crisis to understand how that $15 trillion in lost wealth since June 2007 came about. In the end, we believe you’ll agree that increased savings, more asset diversification, and more prudent borrowing will enable American families to create more private wealth. We also believe you’ll agree government policymakers have a role to play making these things happen.

Download this report (pdf)

Aside from their hardwired response of "more government" it makes for interesting reading.

Wednesday, April 22, 2009

Free Swim

I just couldn't leave that previous post up.

Lansplatter California

Check out these beauties.

$80,000 [$47/sf]
Sep 26, 2005 Sold $270,000
May 30, 1996 Sold $51,500
Aug 08, 1995 Sold $80,826
Jun 30, 1989 Sold $113,000

$49,999 [$47/sf]
Jun 13, 2005 Sold $210,000
Nov 05, 1998 Sold $45,000

Now Lancaster is... well... Lancaster but these pencil out as disposable rentals. $270k->$80k in 38 months. $210k -> $50k in 40 months. Both back to late 1990s prices. We live in interesting times.

Tuesday, April 21, 2009

Freeman Dyson

[pictured, latest NASA Sunspot activity]
FOR MORE THAN HALF A CENTURY the eminent physicist Freeman Dyson has quietly resided in Prince ton, N.J., on the wooded former farmland that is home to his employer, the Institute for Advanced Study, this country’s most rarefied community of scholars. Lately, however, since coming “out of the closet as far as global warming is concerned,” as Dyson sometimes puts it, there has been noise all around him. Chat rooms, Web threads, editors’ letter boxes and Dyson’s own e-mail queue resonate with a thermal current of invective in which Dyson has discovered himself variously described as “a pompous twit,” “a blowhard,” “a cesspool of misinformation,” “an old coot riding into the sunset” and, perhaps inevitably, “a mad scientist.”

I wouldn't describe his residence a "quiet" but you get the idea. One of the greatest minds in history applies his intellect to a modern problem and is excoriated for the answers.
Sure keep watching the data. Follow the arguments. Listen to all sides.

Realitter Brain

You just have to read this to believe it. From the Press Enterprise:
Inland residents find ways to cope after foreclosure

Facing Reality
Carol Byrd, a 42-year-old real estate agent, earlier this year tearfully watched her lender foreclose on a house with a pool, spa and view she had bought for $525,000 in Riverside and that had fallen in value to about $275,000.

The divorced mother of three children had fallen on hard times like others in her industry. Once pulling down an annual income of $200,000 to $350,000, she earned a fraction of that in her new job working for a company that lists bank-repossessed houses.

It was her boss, a broker at Re/Max Results in Moreno Valley, she said, who advised her to stop struggling when it was obvious that, on her current $3,200-a-month salary, she could not afford the modified monthly mortgage payment of nearly $4,000 a month that her lender offered her.

Her biggest worry, she said, was whether anyone would rent a house to her because her credit was poor.

When a friend withdrew an offer to let Byrd's family room with her, she appealed to a landlord who had listed a house for rent. She went to see him armed with a recommendation from her employer.

"I literally sat down and explained my whole situation for an hour, begging and crying. I was desperate," she said.

She said she landed the lease after paying a $2,100 deposit and the first month's rent of $1,625. She said the landlord also insisted on examining the condition of her former house to be reassured she would make a good tenant.

Byrd said it is a relief to have enough income to cover her household expenses, and she advises friends who are over their heads in mortgage debt that foreclosure is not such a bad alternative.

One of the biggest changes in Byrd's life, she said, is how she handles her finances. "I just pay cash for everything," Byrd said.

Her goal is to save enough to buy small investment homes that she can rent out to boost her income. She said she knows she will have to pay cash for the houses because she doesn't have a hope of getting a mortgage for a long time.

Irrational pricing, failure to save, ruthless default and her goal is to own rental property?

Monday, April 20, 2009

15 Minutes

Yes, 15 minutes is how long it takes the Federal government to spend $100 million dollars.

This guy needs to focus and fast.


The red line is Apple.
The blue line is Intel.

The difference is the time scale.

Stock Market Catalyst?

April 20 (Bloomberg) -- Citigroup Inc.’s credit losses are growing at a “rapid rate,” undermining Chief Executive Officer Vikram Pandit’s efforts to stabilize the U.S. bank, according to Goldman Sachs Group Inc.

While Citigroup posted first-quarter net income of $1.6 billion last week, the New York-based bank suffered an “underlying” loss of 38 cents a share, Richard Ramsden, a Goldman Sachs analyst, wrote in a research note dated yesterday. He repeated a “sell” rating on the stock.

The markets are as fragile as I've seen them since 12,000. Just don't forget I was wrong. I didn't think the Dow could spend more than a few days above 8000 either.

McClatchy delisting is another event that might start a rapid decline.

No one can tell ahead of time what will prove the catalyst. The mind boggling lack of concern over all the government missteps in their misguided policies hasn't seemed to impact the markets for but one instance.

Sunday, April 19, 2009

Quote O'Note

[Inspired by Barry Ritholtz]

What say we incentivize nuclear power plant operators with performance bonuses?

Won't we get more power cheaper and to more people that way?

Beggar Thy Neighbor Pt 2

Check out these two studies in contrast. About 5 miles due east of the previous houses this is Greentree Drive. In the lower right corner is 6350 Greentree. On the upper left, 6460 Greentree.

6350 W Greentree Dr
Price: $788,388
SQ. FT.: 2,376

6460 W Greentree Dr
Price: $3,400,000
SQ. FT.: 7,900

We've been through this before apparently.

Must Read: The Economist

The Economist comes through with this:
Shelter Or Burden?
The disaster began with defaults on American subprime mortgages, a financial instrument designed to spread home ownership among the poor. It gathered pace after the failures of Fannie Mae and Freddie Mac, two government-sponsored enterprises that provide cheap home loans. As a result, the home-ownership rate in America has fallen for four years, the first time that has happened in a quarter of a century.

Beggar Thy Neighbor

Let's see what happens over time to a neigborhood when the bulldozer pays a visit.

This is the Saticoy Country Club. Here are the 4 houses currently for sale but this time it isn't about prices, this is about foolish land use and development policies.

4690 N Clubhouse Dr
SQ. FT.: 2,400

4970 Northridge Dr
SQ. FT.: 4,495

4689 Northridge Dr
SQ. FT.: 7,417

5030 Northridge Dr
SQ. FT.: 6,793

Note that in 1973 Clubhouse Drive and 2400 sq ft was considered high end executive housing. When we talk about the US being massively overbuilt for housing it isn't just the number of dwelling units that matters. What does your $2.5m for that last one get you? A freakin' Mausoleum.

Saturday, April 18, 2009

Almost Free

Middle of nowhere but a peek at things to come: Glendora Ave.

8544 Glendora Ave, Hesperia, CA 92344
Price: $149,900
BEDS: 6 BATHS: 3.5 SQ. FT.: 3,452
$/SQ. FT.: $43 LOT SIZE: 7,350 Sq. Ft.
ON REDFIN: 37 days
FIXER-UPPER: 2 story Fixer - New Home - Tile - Kitchen stripped - Faucets gone - Open floor plan - Spacious kitchen and master.
Gosh, do you think we'll hear this story again? And the kicker?: Oct 12, 2006 Sold $454,000

Tax Revenue Implosion

From the California State Controller:
Actual General Fund revenue in March was down $178 million, or -5.2 percent, from estimates in the recently adopted 17-month State Budget, which contained actual revenues through February 2009. Sales tax receipts were down $218 million, or -11.8 percent and corporate taxes were up by $43.4 million, or 2.6 percent. Personal income tax totals surpassed estimates by $404 million, or 32.6 percent.

The State started the fiscal year with a $1.45 billion cash deficit, which grew to $22.3 billion on March 31, 2009. That deficit is being covered by a combination of Revenue Anticipation Notes (RANs) and internal borrowing from special funds.

Those are monster holes in the budget. Sadly, those "projections" include the assumption that on May 19th voters will approve 6 special tax increases.

From Capitol Weekly:
Polls show that five of the measures placed on the ballot by the Legislature and backed by Gov. Schwarzenegger face an uphill climb next month. Schwarzenegger’s political team has attempted to lump all of the measures together as one comprehensive budget package.

In the next month we'll have Chrysler, GM, and California. No doubt some surprise guests as well.

Thursday, April 16, 2009

Go Jim

Nightline has finally scheduled Jim the Realtor for tonight. Must see TV.

Paintball season Opens!

The 800,000-square-foot warehouse in Rialto has all the proper pedigrees: easy access to the 10, 215 and 60 freeways, state-of-the-art fire control, secured truck court, spacious parking. It's got the kind of neighbors -- Unilever, FedEx, Home Depot, Energizer -- that show it's in the sweet spot of the nationwide cargo distribution system.

The only thing it doesn't have is a tenant.


Tuesday, April 14, 2009

Google Translate FAIL

"It’s a foundation built upon five pillars that will grow our economy and make this new century another American century: new rules for Wall Street that will reward drive and innovation; new investments in education that will make our workforce more skilled and competitive; new investments in renewable energy and technology that will create new jobs and industries; new investments in health care that will cut costs for families and businesses; and new savings in our federal budget that will bring down the debt for future generations. That is the new foundation we must build. That is our future."

Feel free to provide your own translation in the comments.

Monday, April 13, 2009

A Lotta Lots

Seems there's a bubble in auto dealerships according to CoStar

According to the National Automobile Dealers Association (NADA), approximately 900 dealerships closed and 200 dealerships opened in 2008, for a net loss of 700 dealerships, leaving the country with approximately 20,000 franchised auto dealers. According to Detroit-based research and advisory firm, Urban Science, 2008's decline in auto dealership count is the largest the firm has recorded since it started collecting data in 1991. For 2009, the NADA forecasts a net loss of 900 additional dealerships.

I'll take the over on that 900.
Considering the NADA's estimate that 900 dealerships could close in 2009, this translates into another 13 million to 16 million square feet of buildings and 3,600 to 4,500 acres of land becoming vacant.

Breuer added that the industry is over-saturated with domestic brands (approximately 70% of the 20,000 dealerships are domestic brands), so even if the "Big Three" pull through, there will inevitably be a high level domestic dealership closures. At most risk are dealerships selling only one brand of domestic cars. Of dealership closures last year, 66% were single-brand, and according to Urban Science, about 80% were domestic-brand.

The municipal sales tax revenue declines for some local governments is going to definitely trigger defaults.

Saturday, April 11, 2009

Ben Dover

culled from the public comment responses to the PPIC:

From: Benjamin N. Dover III []
Sent: Sunday, April 05, 2009 3:48 PM
To: LLPComments
Subject: Legacy Loans Program
Ms. Bair:
I'm confident that I speak for most Americans when I note that the proposed PPIP is grossly unfair to the banks, investors and asset managers. This sweetheart deal for taxpayers would penalize banks for finding themselves in an unforeseeable predicament for which they bear no responsibility. It would also require selfless investors and asset managers to bear an unconscionable portion of the risk in return for minimal reward. If we're going to get through this crisis, everyone's going to have pitch in and sacrifice -- and that includes the taxpayer.
So, unless you want the global financial system to be Lehmaned again, I suggest you change the terms of the program as follows:
1. Given that the underlying loans are sound, performing and cash flow positive, they should be priced at the banks' "mark-to-model" valuations plus, of course, a premium in order to induce the banks to make the sacrifice of parting with these valuable legacies. I suggest that market-driven price discovery occur in a range of 120-140% of par depending on the specific assets at issue.
2. The Government would put up 100% of the capital plus 100-1 leverage in the form of non-recourse financing funded by a combination of the FDIC fund for deposit protection and the Social Security endowment. (Medicare and Medicaid could also be asked to chip in as necessary -- I see no reason why the poor and elderly should not pay their fair share here).
3. Once bought, these assets would then be gifted to large hedge funds and private equity firms. In order to properly allocate risk, they would be forced to accept 100% of any profit and 0% of any loss. (And remember: hold your ground if the investors try to haggle over this.)
4. A small number of asset managers should be selected in secret to manage the assets in return for guaranteed fees to be paid by the Government. Typically, hedge funds are paid 2% of the value of the assets under management plus 20% any gains. That seems fair here. Because investors will be entitled to 100% of any gains, the Government will need to come up with the extra 20% for the asset managers. (I suggest diminishing handouts to socialist programs like Head Start and AIDS-research organizations.)
5. Obviously, you'll need to guarantee all parties that in exchange for rescuing the taxpayer they won't be subject to any Government meddling before, during or after the transactions are completed. I suggest you lobby Congress to pass a law prohibiting it and all regulators (you too, Ms. Bair) from engaging in any interference or exercising any oversight over the program or the parties involved. In addition, Congress should grant a pre-emptive amnesty and pardon to all parties for any wrongdoing that they later may be unfairly accused of in connection with the program. (Remember, contrary to what certain populist muckrakers may claim, "gaming the system" is just another word for "nothing to lose".) I hope it goes without saying that none of the fees or profits resulting from the PPIP should be subject to any ordinary (much less special) taxes.
Finally, I think it would be appropriate for you, Mr. Geithner and Mr. Bernanke to send letters of gratitude to all parties involved for their generous effort to bail out the American taxpayer. Their magnanimity, propriety and responsible leadership during this crisis should be examples to every American.
Benjamin N. Dover III

Friday, April 10, 2009

The Senator Who Saw This Coming

The Senator Who Saw This Coming
North Dakota Sen. Byron Dorgan expressed his fear of "exotic new derivatives called 'swaps' " way back in 1994. Five years later, when Congress passed legislation lowering the barriers between brokerages and banks, Dorgan told The New York Times, "I think we will look back in 10 years' time and say we should not have done this. "

I suppose a cynic could make the argument that if you let 100 Senators babble for 15 years eventually one of them would say something profound.

Wednesday, April 08, 2009

Starve the Beasts

How much "currency" is out there? Amazingly only $2,853 per person in the US. We could break the bank with 1/10th of that on demand. I'm getting subversive ideas.

Monday, April 06, 2009

Where the Deer and the Antelope Go to Die

Welcome to the Los Angeles County area known as the Antelope Valley. Specifically Palmdale.

Nice starter house, decent sized lot, no nasty HOA or Mello-Roos. Heck, if you can scrape together $1500 you too can get a 3% FHA mortgage and pay a whopping $400/month mortgage and $200 in tax and basic utilities. Check out the history:

Apr 02, 2009 $70,000 -- SoCalMLS #F1765456
Jul 14, 2008 $180,000 -- SoCalMLS #F1765456
May 29, 2008 $285,000 -- SoCalMLS #F1765456
May 20, 2008 $325,000 -- SoCalMLS #F1765456
May 02, 2008 $355,000 -- SoCalMLS #F1765456
Jun 21, 2006 Sold $355,000 15.9%/yr Public Records
Nov 14, 2005 Sold $325,000 26.2%/yr Public Records
Mar 14, 2000 Sold $87,000 -- Public Records

Party like it's 1999! $355k to $70k asking (and sitting) in 30 months. 80.3% off and sitting.

Sunday, April 05, 2009

Timmay Learns Newspeak

CBS News 'Face the Nation' transcript ubiquicerpt:
GEITHNER: Bob, banks have a large incentive, now, to clean up their balance sheets, to make it easier for them to go raise equity from the markets, from private investors. So they’re going to have significant incentives to clean up their balance sheets. This gives them a way to do that that did not exist before that.

Just as an example, you know, if you had to sell your home tomorrow, in a world where nobody could get a mortgage to buy your home, you’d have to sell at an enormously low price.

You’d reluctant to sell. You might end up keeping your home longer than you want, not moving to some -- to take a new job, where you can earn more money, going forward.

That’s part of what’s happening to our financial system today.

He really thinks we are stupid. Remember Newspeakers henceforth "toxic assets" are to be called "legacy assets."

The American consumer is suffering from debt exhaustion, debt overdose and debt burden. The collapse in demand for debt is part of the cure. The cure impairs the banks. There is no getting around these fundamentals. The current and previous administrations have only ever had one strategy; play for time. They probably honestly believe that if they can hold the system together long enough it will cure itself. And why not? Every "reputable" economist of every persuasion has repeated the mantra that the modern economy is self correcting. I know that's not true and suspect I'm not alone on this blog in holding that opinion. Problem is despite the general consensus here being correct for years policy makers will not accept the solutions offered.

Friday, April 03, 2009

Taking Bets

I've added some dates to the Chart of the Day.
1973 recession = April 2009.
1920 recession = July 2009.
1910 recession = Feb 2010.
1929 recession = 2012.

Any bets? Right now I'm thinking Q2 2011.

Thursday, April 02, 2009

Casey Must Have Been Busy

Whistling Past Delinquencies
The market’s recent rally continues to defy negative economic numbers pouring from the data mills in Washington and overseas. Even more striking is that the gains are being led by banks and other financials which have their own toxic soup of indicators.

New fourth-quarter loan statistics from the American Bankers Association released Thursday do not break from the trend. Of the eight types of consumer loans the ABA tracks, only one — mobile-home loans — saw a decrease in delinquencies. Home equity, property improvement, indirect auto, marine, RV and personal loans all showed higher default rates.

ABA also said credit-card default rates rose to 4.52% from 4.2%. The trend isn’t good, but the rate is still close to the four-year average, ABA said.

Everybody is Casey now. Tune in, turn on and drop out.

Wednesday, April 01, 2009

New ISP Test

Google has a new service. This post is a test of the connectivity.