The solemn tradition of burying St. Joseph in the earth began hundreds of years ago in Europe. During those times, an order of nuns prayed to St. Joseph (the patron saint of the family and household needs) when they needed more lands for convents. The Sisters were encouraged to bury their St. Joseph medals in the ground. The medals evolved into statues, culminaing with the complete "Underground Real Estate Agent" Kit currently available. Today, thousands of homesellers and real estate agents nationwide continue this successful tradition; they are looking for a little divine intervention.
Thursday, June 28, 2007
Wednesday, June 27, 2007
Mr. Esmael Adibi, the Director of Chapman University's Anderson Center for Economic Research, and Mr. James Doti, the president and Donald Bren Distinguished Chair of Business and Economics of Chapman University, both claimed today that over the short-term fewer people will be migrating to Orange County, California.
Why? Here's the article from the Daily Pilot.
"Orange County is going to be a strong economy no matter what, but there will be fewer people moving in because of high housing prices and unaffordability," said Doti, the president and Donald Bren Distinguished Chair of Business and Economics at Chapman. "But we hope in the coming years, that will subside because of the natural amenities this county offers."Those amenities, Doti said, included the county's landscape, its educational system and its bustling arts scene.
Also, he said, the increased reliance on exports would turn the area into a trading hub."Global trade will be greatest with Asia, Southeast Asia and the trading port for much of that will be Southern California," he said.
A problem for the county, according to Doti and Adibi, was the housing market, which was slowing due to high mortgage rates and a decrease in the population — between the ages of 25 and 49 — that usually bought homes. Adibi said the average Orange County family paid 49.8% of its gross income on mortgage payments last year, a record amount.
While we keep reading how the National Association of Realtors and the California Association of Realtors wish to position themselves and staunch advocates of affordable housing, it's not quite making it happen on the streets of Orange County.
Median home prices in Orange Country rose again in May by 0.8% to $635,000.
I mean, when you think about it, why would realtors want home prices to come down to affordable levels when that would have an adverse affect on their income (6% of the home value sale)? I guess, you'd have to assume then that a home sale at any price, even if it's lower, is better than no sale at all. And a commission check is better than no commission check at all.
Good to be clear about what's important to realtors - and to what extent they are truly interested in affordable home prices in Orange County.
Friday, June 22, 2007
Indeed there are thousands of special interest groups executing their plans every week in Washington D.C.. Now it is possible to track whether your own representative in Congress is being influenced monetarily, by whom and by how much. Just visit the website: Maplight.org.
In our main area of interest, real estate, there are some interesting surprises.
So who in Washington is getting the most slap-back cash from real estate industry special interest groups including realtors, subdividers, ?
Top 10 Recipients Funded by Real Estate Industry (all groups)
Joseph Lieberman: $966,665
Hillary Clinton: $632,830
Jon Kyl: $352,994
John Isakson: $325,810
Bob Corker: $290,403
Richard Santorum: $279,423
Bill Nelson: $227,330
Harold Ford: $219,633
Charles Schumer: $219,514 (Mr. SubPrime-Bailout-Program)
Michael DeWine: $183,630
Top 10 Recipients Funded by Real Estate Agents & Managers
Hillary Clinton: $530,058
Joseph Lieberman: $356,660
John Isakson: $199,200
Charles Schumer: $193,812
Jon Kyl: $170,932
Richard Santorum: $162,825
Bob Corker: $157,465
Robert Menendez: $154,930
Bill Nelson: $151,280
Mel Martinez: $143,900
Gee, with some of these nice payouts, these Congressional problem solvers might - just might mind you - be able to afford a down payment on an Orange County single family home!
Wednesday, June 20, 2007
Grab the 2007 PMI mortgage study report and proceed to sit down in your seat and fasten your seatbelt. California real estate values are predicted to go "down town" in two years:
Some homeowners in California, Florida and the southwestern U.S. now face more than a 60 percent chance their property will be worth less in two years, according to a new study by a mortgage insurer.
The index found that 15 of the 50 largest metro areas in theU.S. have a
greater than 50 percent chance of seeing price drops.Eleven of those markets are
in California and Florida, including Los Angeles and Miami. These are areas that
enjoyed some of the largest price run-ups during a five-year housing boom
that ended nearly two years ago.
"What the markets with the greatest risk of decline have in common is a
history of price volatility: rapidly rising rates of price appreciation above
the long-term average followed by a recent sharp slowdown in the rate of
appreciation," said Mark Milner, PMI's chief risk officer.The riskiest of all
markets are Riverside, California; Phoenix; Las Vegas and West Palm Beach,
Florida — each with a greater-than-60 percent chance of depreciation.
Realtors throughout California love to pat themselves on the back for the fantastic appreciation in home values over the last 5 years.
Do these new findings by PMI mean that one can expect to see Realtors flogging themselves over the next 2 to 5 years when the market comes to a complete and horrifying crash?
The answer is yes, only they won't be doing so literally. Maybe verbally.
"All real estate is local. We're just going through a slight market correction right now."
"Now that the only the serious buyers remain and the speculators have been removed from the market, we can fully expect normalcy of supply and demand to continue as before."
"What we're experiencing is a normal adjustment of the real estate market business cycle."
"We're bound to experience a few bumps along the way."
Hey, have you ever noticed how the real estate sales pitches sound so similar to that of the airline industry's intercom announcements from the pilot?
"We're experiencing a little turbulence. Please take your seat and fasten your seatbelts."
"We'll be serving a little snack"
"We're gonna be a little late."
So yeah, the next time you hear a realtor say to you: "Hi! It's a great time to buy a house", just take your seat and fasten your seatbelts. This means the housing market is about to crash.
Unfortunately, thousands of realtors in the United States of America believed and drank in every word that the NAR served up to the main stream media, no questions asked. No critical thinking necessary as to what might be best for consumers- like, oh I don't know, let's say the truth -that homedebtors, given their incomes, should never have been cheerleaded into homes they could never otherwise afford using risky instruments from the "mortgage broker I know" to seal the deal and the sales commission.
Monday, June 18, 2007
The OC Business Journal reports that unemployment in OC stayed at 3.5% in May, the same rate as recorded in April 2007. This still constitutes a year on year increase in unemployment for Orange County, California of 0.3% from May 2006.
California state-wide unemployment fell from 5% to 4.9% in May 2007.
Jesus, are things really this bad? Here are some of Dr. Weller's sobering observations:
Wage growth is weak . Factoring in inflation, hourly wages were 2.3% higher and weekly wages were 1.5% higher in April 2007 than in March 2001.
Benefits are disappearing. The share of private sector workers with a pension dropped from 50.3% in 2000 to 45.0% in 2005, the last year for which data are available, and the share of people with employer-provided health insurance dropped from 63.6% to 59.5%.
Family debt is on the rise. In the first quarter of 2007, household
debt fell relative to disposable income for the first time in five years, but
still stayed at a comparatively high 130.7%, the third highest on record. In the fourth quarter of 2006, families spent 14.5% of their disposable income to service their debt—the largest share since 1980.
Families feel the pressure. The share of new mortgages entering
foreclosure was 0.5% in the fourth quarter of 2006, the highest level on record since 1979. The default rate on credit cards grew to 3.9% in the first quarter, an increase of 29.5% over the first quarter of 2006. And the personal bankruptcy rate, measured as bankruptcy cases relative to the U.S. population, grew by 51.5% from the first to the fourth quarter of 2006.
Housing market slows. New home sales increased in April 2007, spurred by an unprecedented decline in prices. The median price of new homes sold dropped by 11.1%, the largest one-month drop since the Census first recorded these data in 1963.
Gas prices rise sharply. In the first week of June, gasoline prices
averaged $3.15 per gallon. In inflation-adjusted terms, gasoline was at its highest level since June 1981 and it was 91.9% more expensive than in March 2001.
Savings plummet. The personal savings rate of -0.8% in the first
quarter of 2007 marked the eight quarter in a row with a negative personal savings rate.
Already weak job growth slows. Monthly job growth since March 2001 has averaged an annualized 0.6%. Over the past 12 months, the average monthly job growth was 160,400 jobs, compared to 213,400 in the preceding 12 months.
Poverty climbs. The poverty rate increased to 12.6% in 2005, the last year for which data are available, from 11.3% in 2000.
The government’s finances deteriorated. In 2001, the CBO anticipated that the government balance between 2002 and 2011 would be in the black to the tune of $5.6 trillion. Today, the CBO projects deficits between 2002 and 2011 of $2.9 trillion. This constitutes a deterioration for the period 2002 to 2011 of $8.5 trillion.
These deficits won’t shrink: Between 2007 and 2016, the CBO predicts cumulative deficits of $1.8 trillion. If AMT reform and permanent tax cuts for the wealthy are included, the total deficit for the next decade would come to $3.5 trillion—even if the costs for the wars in Iraq and Afghanistan drop below current projections in a few years.
This endangers our economic independence. Foreign investors bought 82% of new Treasury debt and the share of U.S. foreign-held debt grew to 46% from 32% from March 2001 to March 2007. The quarterly interest payments from the federal government to foreigners rose to $38 billion in the fourth quarter of 2006 from $21 billion in the first quarter of 2001.
Trade deficit remains high despite strong export growth. In the first quarter of 2006, the trade deficit rose slightly to 5.3% of gross domestic product from 5.2% in the fourth quarter of 2006. Yet these last trade deficits are still larger than any trade deficit since the Great Depression recorded before the third quarter of 2004.
Dammit! If it weren't for the high rates of foreclosures in the states of California, Nevada, Florida and Arizona, this media circus about the national housing bubble crash would easily blow over like a Phoenix tumbleweed, or a category 2 hurricane approaching Orlando.
"Those states have special circumstances that do not reflect what is happening in the rest of the country." - Doug Duncan, MBA's Chief Economist and Senior Vice President of Research and Business Development
In other words, nothing to see here people! Move along. Nothing to see here!
So what will it be the index score be from the National Association of Home Builders which will be released at 10:00 a.m. PST today? A score of 50 means positive sentiment about the market. The economic propeller heads on Wall Street are predicting the scoring will be around 30, which is statistically equivalent to the English word: "shitty".
There you have it. The housing market in the United States of America is hereby predicted to be "shitty".
Thursday, June 14, 2007
After living and working in Europe for 9 years (1996-2005) and then returning to the United States in early 2005 I soon discovered that the United States of America I left was not the same country to which I returned. I am ever fascinated by how the people of America and the society at large has changed so profoundly in such a short time. Perhaps it was Bill Clinton. Perhaps it was the internet. Perhaps it was 9/11. Perhaps it was the resurgence of Christian spirtuality. Perhaps all of the above in equal doses.
Of particular interest to me has been the impact of the national, public and local media, and how Americans like me get their information and form public opinions about events both local and further afield.
I left the United States of America in the summer of 1996 with Bill Clinton in the White House, the Chicago Bulls winning their 4th NBA title, the Summer Olympics in Atlanta, and the birth of a cloned sheep named Dolly. I returned to what I now call the Divided States of America in early 2005 with George W. Bush in the White House, no NHL hockey season, north Korea with nuclear weapons and virtually little if any conventional war coverage as to what is happening on the ground in Iraq.
Whether you as a reader are politically a conservative or a liberal (or libertarian given today's PC, semantic-driven culture), you cannot deny the fact that our country has been completely divided and polarized by poltical dogma. If you don't support the Iraq war, you are painted with the blue brush. If you support faith-based charities receiving government funds, then prepare to be painted with a red brush. Like NASCAR? You're red! Do you watch HBO comedy specials? Your blue! Believe in God? You're red! Agree with Darwin's Theory and understand Ocham's razor? You probably blue, or a just a communist.
It's all a huge joke.
I find myself wondering just what in the hell happened to the United States of America I knew?
There is a complete and utter lack of focus on important national issues. And as a result of political compartmentalization (right or left) and the consequent discounting of public opinions, public dialogue about the important issues and ways to solve them has been stifled to a whisper:
National Trade Deficit
(i.e. racial prejudice. The word "racism" is a useless term anymore in American
society. It's too loaded.)
Health Care Crisis
Protection of privacy and consitutional
The 5:00 p.m. national news in America has morphed into "national irritainment" with names like Sean Hannity or *gasp* Katie Couric, and more coverage of the deaths or incarcerations of buxom blondes than any of the national or international events that shape our world, nation and local communities. Entertainment has replaced journalism altogether and crushed the American spirit and thirst for being properly informed, responsible citizens. The most popular source of national and international news in United States of America is FoxNews. In 2007, that sentence alone pretty much speaks for itself.
Since coming back to the USA, Americans around me seem to support the notion that one should "toe the line" politically on all issues. Either you are Republican or Democrat. There should be no "waffling" or "flip-flopping".
Well, this has pissed me off to no end. And I'm sure that I'm not alone.
I agree with the sentiment of comedian Chris Rock who once complained in a very funny way during a recent stand up act about this "toeing the line" on issues in America. It's the issues that matter, not the political allegiance. Personally, as Chris Rock stated, I am conservative or liberal depending on the issue at hand.
When it comes to crime, indeed I am as conservative as it gets. When it comes to the arts and freedom of speech, privacy rights, access to information, I'm a "bleeding heart" liberal.
Is that in an of itself an oxymoron or contradictory? No, it is not. And yet perhaps it is, but again, it would depend on the specific issue at hand.
Ain't it cool? It's called being American.
I, for one, am hoping for significant change in the future of American culture. I am optimistic about this because even for a country like the United States shit can go horribly bad for only so long. I believe that goodness and common sense can prevail again. Americans are innovative and inventive. They want the latest, the greatest and the best. They love the underdog. They value modesty, common sense, respect for the fellow man. They value self-sacrifice and self control.
Today I'm picking a horse for the 2008 presidential election and I recognize already that it is a long shot. No one believes he will be nominated by the Republican party. Nevertheless, I am supporting Ron Paul for President in 2008. And if I may be so bold as to say so, my fellow Americans, you should too. Here's why.
Interest rates for 30 year fixed-rate mortgages increased by .21% to 6.74% from 6.53%. The result will add insult to injury for Ajustable Rate Mortgage holders who face monthy payment adjustments in 2007. The recent hike in mortgage rates also serves as a sort of fire-breathing dragon in the path of prospective homebuyers, many of whom even without the rate hike face new challenges qualifying for home loans given their current take home pay.
"For people on the margin, any increase (in rates) will be bringing more people into the danger zone," says Susan Wachter, professor of real estate and finance at the University of Pennsylvania. "When we have a number of people already unable to make their payments and unable to refinance, these increases are significant."
Buyers who got an ARM loan in June 2005 and are facing their first payment adjustment now are in for a shock. Their monthly payments, assuming they bought a median-price home, would soar $558 a month to $1,929, according to Genworth.
Meanwhile, in Southern California median home prices (condos, single family homes, multiple-family homes) rose again in May 2007. But how much longer can the high prices sustain themselves in the middle to high range?
Median take home incomes are not rising and remain completely out of alignment (i.e. 10 times less than most single family home prices in OC) with reality. Inventories of homes in Orange County Southern California continue to rise. Tighter state lending standards such as SB 385 may pave the way to greater prudence, responsibility and financial oversight in the mortgage lending game.
And now the interest rates.
If mortgage brokers, realtors and desperate homesellers considered it a challenge to find buyers back in May, how will the rise in interests rates help?
Now might be an appropriate time for the above parties to pray to the U.S. currency value and inflation Gods that the US dollar miraculously reunites with its previous spending power, otherwise things are going to get very, very ugly indeed.
Bruce Chambers of the OC Register reports today that Orange County home sales declined 29% in May 2007 compared to the same month last year, but median home prices in the county increased a fraction, still hovering around the $635,000 mark.
Real estate agents in Orange County starting to report pick ups in sales in the area as prospective buyers who were previously parked on the sidelines waiting for the market prices to improve have become impatient and have decided "to get back in the game" now and make offers on homes in inventory.
It looks like the housing crash is over and the impending wave of mutilation has subsided. We can now all return safely to our local mortgage broker offices and hammer out that deal for the six figure home. The taps for easy home financing must have been turned back on full blast again!
And thank goodness. Happy days are here again!
Wednesday, June 13, 2007
"Buy me. I'm a house."
Please, oh please, with sugar on it, buy my burned out then fixed-up condo for half a million dollars!
Look, when a condo has been on the market in Orange County California for over 120 days, it usually means that something's not quite right, and last month we dedicated a little time to investigate just what might be going wrong at 23101 Cherry Avenue, Apt #20 in Lake Forest. It could be many, or all of the reasons described, but my simple take on this condo, and much of Lake Forest real estate for that matter, is this:
The price is wrong.
Time to call Bob Barker and make it all "Right".
Maybe now one can imagine what American realtors, and their political spin organization, the N.A.R., must be going through right now? In 2005, the NAR, in it's own patented arrogant fashion, purported that by using a REALTOR(R), homesellers could achieve as much as 16% more value when selling their home.
Even if this statement were not a provocative, unabashed lie, the NAR seemed to forget that by using such rhetoric they removed the left foot from their mouths and proceed to insert their right leg entirely. Sure, the 16% is a considerable, favourable outcome for homesellers. Good job. Now what about the buyers that your members also represent?
Oh! Uh, errrh, ummm.... yeah. Kind of forgot about them. Um, they gladly pay 16% more for that house?????
Listen, the American public can't wait any longer for Penn & Teller to write up a "Bullshit" TV program on cable about American realtors.
Let's all just step aside and let students from some of the Big Ten schools do what they do best - study, research and then lay it all out in a report for others to see and critique.
Economists at Northwestern University and the University of Wisconsin-Madison (GO BIG TEN!) have recently decimated the NAR's, cannibis-invoked 16% theory with an empirical study. The study results indicate that there is, within a normal margin of error, no benefit whatsoever in using a realtor in terms of home sale value achieved:
The report by three economists from Northwestern University and the University of Wisconsin found that homes sold on FSBOMadison.com received an average price of $175,068 during the seven years studied, while homes sold on local multiple listing services (MLS) brought an average price of $173,205. Those averages are essentially equal after taking into account sampling errors.
"The survey validates what we've been saying all along," said Colby Sambrotto, chief executive of ForSaleByOwner.com, a D.I.Y. Web site with a national reach. "Our business is growing very rapidly with listings increasing 50 percent to 70 percent a year," he said. "We're having 60,000 homes listed."
"That 16 percent always smacked us as not true." said Sambrotto. According to him, NAR's data included "non-arm's-length" sales, such as those made to relatives. And, he said, the mix of properties may have skewed toward lower-priced homes.
Glenn Kelman, founder of Redfin, a web-based, discount broker that charges a flat fee of $3,000 to list a house, said, "Consumers are a lot smarter than the real estate industry gives them credit for."
Dammit! If only American real estate consumers would continue their illiterate ways, that 6% realtor commission achieve with nominal effort would continue to be so "in the bag"!
And now some important questions for American real estate agents:
1.) What value-add services do you now provide to the marketplace?
2.) How do realtor services benefit the consumer (homebuyer and homeseller, respectively) any more than using an online and discount broker services already would?
3.) How much will you be charging for issuing such services, and what makes you as a realtor believe residential real estate consumer will be willing to pay it?
Now is a great time to be a Realtor(R). Now is a great time to be a travel agent.
Thursday, June 7, 2007
So if we know that this is a realtor forecast, and we know that for the most part realtors are duplicitous and lie to make income for themselves and cannot be trusted, then what use is such an article to potential homebuyers and real estate consumers?
OK, I'll admit it. That last paragraph was way too cynical and shamelessly rhetorical.
Is anybody else just pissed off about the complete lack of objective real estate data (prices, sales in units, etc.) available to consumers. The entire real estate industrial complex has become a pathetic joke.
Don't worry, Californians.
California is not in a real estate crisis and doesn't figure to be in one soon.
Mr. Tom Elias of the Daily Breeze (L.A.) asserts that you can hardly go wrong when investing in California real estate. So if you are holding on to that home, or have recently purchased a home in the Golden state at top dollar, you're investment is surely "safe as houses". Indeed, California has experienced it's share of booms in it's history, but rarely are these booms followed by serious busts. Usually the declines are gradual and take many years to reach bottom.
Mr. Elias suggests also that "in-migration" will eventually save California's downward spiral housing market and preserve real estate values. Everyone wants to live here and this feeds the rational exhuberance of California housing demand. Rising tides float all boats. Soon renters earning $75,000 per year will be able to move up the proverbial California housing food chain and afford a home of their own. Though how this phenomanon is theoretically achieved is not precisely explained.
I thought I'd post this article by Mr. Elias to demonstrate the level of denial out there in the state about the California housing market. It is, in a word, quite unbelievable.
Mr. Elias' assertions might hold water if it weren't for some annoying little tidbits of fact facing potential homebuyers in California. The 2006-2007 housing crash, Mr. Elias, is different from previous boom-bust chronologies in California. What we are seeing is home financing for families with median to upper median-level income drying up almost completely. Lending standards are becoming more and more restrictive. While your "in-migration" may very well be increasing slightly each year in California, the incomes of those new residents are unfortunately not increasing proportionately with housing costs in California.
Overbuilt areas and non-overbuilt areas face similar music - that real median incomes in communities like Newport Beach, Long Beach, Irvine, Lake Forest, combined with the California-spend-it-if-you-got-it-lifestyle, simply do not support the magnitude of debt required to leverage a home. Becoming a homedebtor is still possible, but it's not something anyone in there right mind should consider right now. Mr. Elias' article fails to account for the mass emigration of people from the state of California due to housing costs (U.S. Census Bureau and U.S. Department of Finance) being "out of control", among other important reasons.
Even if Mr. Elias' assertion about "in-migration" were true, the notion that this influx of people searching for the good life would contribute to an economic rising tide in the state under which all boats would float, is fantasy. If anything, the result of such a theory would be that demand for rental housing in California would skyrocket to unprecedented proportions in the short run, but homes would remain unaffordable. In the medium to long run, housing values will fall substantially.
An almost perfect storm is brewing in Southern California real estate. Even those that would make the most from selling and financing homes, and who would walk over dead bodies and lie during the entire trek to preserve that earning potential, know this truth.
If you now own a home in Southern California, then you should be using every recourse to sell the living shit out of it. Drop your drawers on price, incentivise like no tommorrow, just get the f*#$ out!
If you are thinking about buying a home right now in Southern California, you should dunk your head in a cold bucket of water and then think again. Now is the worst time ever to purchase a home. Changes in the U.S. economy, the job market, the U.S. dollar, lending standards and price trends are aligning themselves to suggest one thing: Wait.