Posts filed under 'News'
Continue Reading January 5th, 2009
David Lereah, the National Association of Realtors’ former chief economist who famously denied that the housing bubble existed even as it started to pop, is finally admitting that he was wrong.
Lereah, whose book “Why the Real Estate Boom Will not Bust and How You Can Profit From it” was published in February 2006 just before the bubble went bust, suggests in a new Money Magazine interview that his rosy outlook might have had something to do with his position as top spokesman for the Realtors. Lereah, now a private real estate consultant, says he’s bearish about the housing market and has been for a year and a half.
“I worked for an association promoting housing, and it was my job to represent their interests,” Lereah said. “If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it.”
The damage Lereah caused, of course, was serious, especially for the many home buyers who bought the hype. Lereah said he now expects only a modest recovery in sales activity this year.
“I was wrong,” Lereah told Money. “I have to take responsibility for that.”
UPDATE:
I just spoke with the Realtors’ current chief economist Lawrence Yun, who has also been criticized on blogs such as the “Lawrence Yun Watch” for his overly optimistic predictions.
Yun, who worked as a number cruncher for the industry group during Lereah’s tenure, said he “disassociates” himself from the way his former boss did things and is careful not to let his role as lobbyist for the group influence his work as the group’s chief economist.
“I don’t see my job as somehow spin,” Yun said. “I share the housing data and say ‘What does it mean and what it may imply about the future.’”
If people want to discount his predictions, they can, Yun said. And he doesn’t think Lereah’s admission hurts the credibility of the National Association of Realtors, though “it might hurt his [Lereah’s] credibility,” Yun said.
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Continue Reading January 5th, 2009
Question: I’m refinancing my mortgage, and my lender tells me that I need to get a new title insurance policy, which will cost more than a thousand dollars. We haven’t made any changes to our home, and there aren’t any outstanding liens on the property. Is there any way around this fee?
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Continue Reading January 5th, 2009
Blue Rock Village (pictured), a 560-unit multi-family complex in Vallejo, Calif., has been sold for $54.4 million to a San Francisco-based private ownership group.
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Continue Reading January 2nd, 2009
Economists at Wells Fargo predict the economy will improve by the second half of 2009.
“The ongoing impact of $2 trillion in government stimulus, with other factors such as pent-up consumer demand and returning consumer confidence, will finally lead to a turnaround, and the third quarter of next year will be “better than expected” by many,” says Dr. Jim Paulsen, chief investment strategist of Wells Capital Management. “It’s like you’re at a cookout and you’re trying and trying to get your charcoal going and you keep squirting on lighter fluid and all of a sudden it goes ‘poof!’”
Dr. Scott Anderson, senior economist for Wells Fargo & Company, predicted that the housing sector will lead the way. “One bright note is that the sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out,” Anderson said.
Dr. Eugenio Aleman, senior economist for Wells Fargo & Company, said he was most concerned that the injecting of hundreds of billions of dollars into the economy through the financial sector – is not helping those who need it most.
“Current monetary policy will help only those households that do not need help – those that have plenty of money and have a stable job,” he said. “They will refinance, buy homes and consume. It will not help those who are struggling to make ends meet, or have lost their jobs or may soon lose them, because no financial institution is going to lend them money to buy a home, no matter what the interest rate is.” He said it is up to the new administration to help these households through fiscal policy, with government spending that will create jobs.
The current job market is one of the worst in decades, with another 3.7 million jobs expected to be lost this year. That means that job losses in this recession will total 5.5 million, twice as many as were lost in the 1981-1982 recession, the second worst since World War II. The unemployment rate will rise to 8.8 percent by the end of 2009, Wells Fargo predict and will average 8.2 percent for the year. Gross domestic product will decline in the first two quarters before expansion resumes in the third quarter.
Economist Paulsen blamed “fear mongering” by government officials to persuade Congress to pass the $700 billion Troubled Asset Relief Program in the fall for the depth of our problems today. That, he said, “froze everyone in their tracks” and resulted in “economic paralysis.”
Anderson said the U.S. government will provide the primary support for the economy in 2009. This will come in a stimulus package from the new administration with infrastructure spending and middle-class tax cuts, plus “natural stabilizers” such as unemployment benefits, food stamps and other welfare payments. The infrastructure spending will be too narrow to help everyone, he said – but the middle-class tax cuts will offer more sustained consumer spending than recent one-time stimulus checks. Savings rates may also rise to 5 percent.
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Continue Reading December 31st, 2008
Rates on mortgage loans are the lowest in the 37-year history of the Freddie Mac Primary Mortgage Market Survey, according to a weekly report released Wednesday.
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Continue Reading December 30th, 2008
Home prices posted another record decline in October, falling 18% in October compared with a year earlier, according to a closely watched monthly report released Tuesday.
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Continue Reading December 30th, 2008
Where were you in March 2004? Because that’s the last time home prices were as low as they are now, according to the Standard & Poor’s/Case-Shiller 20-City Composite Home Price Index for October 2008, which was released on Dec. 30.
Back then, prices were going up. Now they’re going down. The nation’s mood could not be different. Euphoria then; a deep purple funk now.
So back to the question. Where were you in March 2004? Negotiating for a nifty option ARM? Scouting out a home in a new subdivision in the remotest exurbs? At the time–and this was before things really got crazy on prices and crappy mortgages–everything seemed possible.
I searched the Factiva database for housing-related articles that appeared in local newspapers in March 2004. Here are a few I found.
From The Desert Sun newspaper in the Coachella Valley, east of L.A. and San Diego:
“World Development, the Palm Desert company putting up Waring Palms, is having a hard time keeping up with Coachella Valley’s sizzling demand for new homes, said Executive Vice President Scott Stokes. He and other builders say they can’t find enough skilled workers in the valley to build as fast as customers are buying their homes.”
From The Patriot Ledger of Quincy, Mass.:
“Another big boom emanated from the South Weymouth Naval Air Station property this week, but it had nothing to do with planes.
“Rumors started flying that 3,000 or 4,000 homes could be part of plans for the 1385-acre property that lies in Weymouth, Abington and Rockland. Numbers like that scare the wits out of local residents and officials because of the impact so many homes would have on local services. The reaction was predictable.”
From the San Antonio Express-News:
“Jaime Arechiga - a Laredo land developer who expanded his horizons to San Antonio four years ago - is carving up lots all over Bexar County and New Braunfels.
“‘I’m in the community. I’m here to stay,’ said Arechiga, who now maintains residences in Laredo and San Antonio.”
From the Las Vegas Business Press:
“New legislation and rising land prices are helping fuel Southern Nevada’s condominium market. In 2003, vacant land prices averaged $202,100 an acre in the Las Vegas Valley, a 27 percent increase from the previous year, says Applied Analysis, a locally-based economic research firm. The southwest submarket reported the largest land appreciation at $244,200 an acre, a 32 percent increase over 2002.”
From The Washington Times:
“As home prices climb in the Washington area, buyers in the upscale home market can expect to spend more than ever before for a home with opulent features.
“Home price is not simply a function of the quality of construction and finishes, nor is it based solely on size. Prices often are based more on location. Buyers of luxury homes are sometimes looking for an exclusive, gated community; sometimes wanting plenty of land for privacy; and sometimes desiring a home as close as possible to Washington.
“Many buyers want to live in a planned community with recreational amenities and the convenience of a local retail center. Some luxury homes are found in developments with these amenities, often including a golf course.
“Other expensive homes are smaller homes in fashionable enclaves on small homesites.
“Priced from the $700,000s and up, upscale homes do share an abundance of opulent features such as hardwood flooring throughout the main level; two- or three-piece crown and chair-rail moldings; oversized ceramic-tile flooring; or even marble flooring in the baths and a master bath with a tub and a separate shower upgraded with more space, a seat, steam showers and multiple shower heads. ‘Walk-through’ showers with two doors or even without doors and just perhaps a glass-block divider are becoming popular for those homes with the space for an extended master bath.”
How silly that seems now.
Last but not least, here’s an excerpt from an article by Michael Gregory in Investment Dealers Digest that all of us should have paid more attention to:
“But despite the benefits of structure that allow them triple-A-status, events in recent years have shown that asset-backed securities have their own risks. The collapse of Heilig-Meyers in late 2000, the messy servicing transfer that followed and the ultimate disturbing recoveries to the once triple-A-rated bonds offer the clearest lesson of the huge risks for ABS investors.”
Happy new year!
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Continue Reading December 30th, 2008
SL Green Realty Corp. has slashed a planned dividend payment in efforts to pay down debt and conserve funds for future investments. The company set the new dividend payment at $0.375 per common share for the fourth quarter of 2008. The third quarter dividend was $0.7875 per share.
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Continue Reading December 26th, 2008
The hot water goes cold, the air conditioner goes hot or maybe the washing machine’s spin cycle is starting to sound like a Harley-Davidson rally. Alas, your warranty on the appliance in question expired long ago. Suddenly you’re faced with a tough, potentially pricey decision: fix the broken item or replace it? Repair would cost less in the short term, but you’d hate to invest in something that could spring another problem soon. These guidelines will help you decide.
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Continue Reading December 25th, 2008
My favorite movie, hands down, is It’s a Wonderful Life. Director Frank Capra’s tale of a small town banker who realizes in the midst of a banking panic who his true friends are is holiday classic for good reason.
I got this email advice recently from life coach Patrick Wanis:
“George Bailey experiences an epiphany and has a renewed zest for life. We can do the same but we must first lower our expectations and let go of the myths that even the movie created while still seeing the beauty and magic that does exist. Yes, we all would love to have the perfect family and perfect life but we must accept that it simply doesn’t exist.
Learn to become grateful for whatever you have and to become aware of your significance. If all you have is your health, be thankful for that; if it is cold outside, be grateful that you are warm and have shelter. If you are feeling alone, useless or invisible, write a list of the people whose life or lives you are impacting in a positive way. If you cannot come up with one name, then go out and donate one hour to serving at a soup kitchen or the like. You will realize how you can bring joy to others and you will realize that your life isn’t so bad after all.”
“May your Holidays be blessed and may you find love, joy and inner peace,” he concludes.
I couldn’t have said it better myself.
Happy Holidays!
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