The week flashed by for me. Oldest received a job offer on Tuesday and starts working in a week. Daughter flew south for orientation at UCLA. Top level resignation at my company on Thursday. Dinner with 'ex pats' from one of past jobs last night. The side job- we initiate a lawsuit against one of our employees for breach of contract on Monday.
Life outside the markets. Life inside the markets. What's funny is that after my initial read of tof's GOING OUTSIDE post, my first impulse was to ask 'Where do I go to read about this new virtual interactive company?'- I kid you not.
At last night's dinner, someone filled me in on 'Ruby,' who retired a few years ago. Her first husband passed away long ago. She ran into an old boyfriend last year, a man she had been forced by an abusive father to break up with when in her teens. He asked her to marry him, and they now reside in Washington state!
The person that uploaded the Sterile Cuckoo video wrote the best synopsis I've come across:
'Two students from neighboring colleges in upstate New York are swept up in a tragic romantic interlude calling for a maturity of vision beyond their experience of capabilities. Pookie Adams - a kooky, lonely misfit with no family and no place to go, insists on calling all those who won't participate in her world, "weirdos," clings to a quiet studious Jerry, who has the ability to make a choice of living in Pookie's private little world or be accepted by the society that Pookie rejects. Unwittingly, it is through their awkward relationship that Pookie actually prepares Jerry for the world of "weirdos" that she doesn't fit into or wish to be apart of.'
TOF - "if rates rise I think that motivates ppl to buy before rates move up in a meaningful way."
Yes eventually perhaps, but not now in any meaningful way, IMO. The mechanism of rising rates (or the threat of) has been known to occur before in the past, but in order for that to happen, I think other positive conditions/indicators must preexist, such as the presence of demand capable of absorbing overcapacity (in terms of manufactured goods, for example). During times of extreme circumstances, even low rates aren't enough to bring buyers to the table until overcapacity (or in the case of housing, oversupply) concerns recede and prices begin to stabilize (notwithstanding false signals, ie: the dead-cat bounce?).
Can increasing inventory, falling prices and rising unemployment simultaneous with rising rates be indicators of improving conditions in the housing market? They can, theoretically, be an indicator of looming default or greener pastures (http://greenpasturesrestaurant.com/page/o96a/The_Victorian_Home.html) elsewhere.
Additionally, we have the indicator of default potential built into the currency trend. Some economistas like to point out that a failing currency due to QE essentially equates to default. I think for now, it indicates a healthy rebalancing of trade deficit and lowered real wages (so housing can go nowhere in general but maybe down really, depending on the particular regional market). Ah, the conundrum of conflict!
So which is the current situation? Not much doubt in my mind we remain in a buyer's market in terms of real estate, the parabolic move has formed and we're looking at buying the fishing line. When I see a well situated property on the market with an assessment of $250k and an ask price of $145k (a $100K spread!), I wonder to myself if I won't be able to swoop it up for around or less than $100k in a few years (now that's a real haircut, right?). Each time I check, I see more and more homes listing for less than they cost to construct. My impression is, the weak hands are still folding. Some of these weak hands have very deep pockets extending into public coffers so deep as to effect currency valuation, and it's my impression they're still in denial mode (as a test, just try making an offer on a bank owned property and see if they respond to inquiry). I believe their time horizon isn't as long as mine, b/c they were the ones guilty of continuing to extend loans which they knew, or should've known, would default. Famously, their complete lack of financial discipline led them into a false sense of complacency? Or was it fraud for which the market will fully punish? Of course this disturbs me greatly, I don't intend to eat losses on their behalf while they continuing living high on the hog (ie: Screw 'em!).
So generally, IF/WHEN prices AND rates are increasing simultaneously, THEN the mechanism of demand vs increasing rates has a much better chance of occurring from my perspective. The housing market is too massive a ship to maneuver so quickly, considering the magnitude of shock experienced. I think we're looking at years, approaching at least a decade or more, before we can expect the mechanisms you're sighting can begin to take effect. The FED seems to agree, and my impression is they consistently underestimate magnitude of event.
Not having access to reliably honest big-picture data, it's difficult to gauge precisely. We'll have to monitor these data closely and perhaps you have been, but my personal observation is that momentum remains unfavorable and is more likely to decay with rising rates, considering there remains plenty of cash sitting persistently on the sidelines and little demand for credit (How profoundly unusual are those particular circumstances?!?!?).
It seems uncharacteristic for me to think perhaps your time horizon is much longer than mine and so, you're willing to add to your position as the knife continues falling.
Okay, that's rather twisted... Is the word "apart" misspelled, or was it a carefully chosen Freudian slip? She doesn't wish to be a part of, or apart from?
And shame on you 2nd, for being so preoccupied as to not take an occasional break outside! As a result, your pool is a mess and your lawn looks like hell! ;)
"Foreclosure Reality Distorted by Processing Delays"
July 14 "It would be nice to report that foreclosure activity is dropping as a result of improvements in the economy or the housing market," said James J. Saccacio, chief executive officer of RealtyTrac. "Unfortunately, with unemployment rates inching back up, consumer confidence weak and home sales and prices continuing to languish, this doesn't appear to be the case.
"Processing and procedural delays are pushing foreclosures further and further out - we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later. This casts an ominous shadow over the housing market, where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number."
Study: Home ownership rate stable or still falling?
Note: Sophisticated article, so must read entire text to properly comprehend the motivations for homeownership, otherwise these are the concepts I took from article:
July 14 * "The homeownership rate has declined from an all-time high of 69.2 percent in 2004 to 66.4 percent in the first quarter of 2011."
* "From the late 1960s to the mid-1990s, U.S. homeownership rates were relatively stable between 64 and 65 percent."
"Analysis showed that the rise in homeownership between 2000 and 2005 were driven entirely by changes related to ease of access to homeownership. During that time shifts in household socio-economic attributes alone would have caused homeownership rates to decline. During the period 2005-2009 the pattern reversed and, all things being equal, changes in household socio-economic traits and house prices would have boosted homeownership rates but the effect of deteriorating credit conditions offset those factors. Over the entire 2000 to 2009 period the changes in access boosted homeownership enough to offset adverse shifts and resulted in a 1 percentage point net increase in homeownership. In other words, a combination of changes in mortgage credit standards and attitudes towards investment in homeownership likely contributed to much of the boom and bust in homeownership over the decade."
"The authors say that taking the various estimates into account it appears that homeownership rates may have bottomed out by early this year. However, it is more likely that the rates may decline further, by as much as one or two percentage points, over the course of the next few years."
CP- I thought your analysis was spot on. It's funny, I just got a call a few minutes ago from a friend to look at a house with them tomorrow here in town. Take a look.
This is a very good location. It's would cost me over 1M just to build this. Of course, it would be better built and up to code, but how else do you gauge the cost. We have a ways to go.
From one vantage point, I can argue the similarities between trading and a neurotic relationship.
ReplyDeleteThe week flashed by for me. Oldest received a job offer on Tuesday and starts working in a week. Daughter flew south for orientation at UCLA. Top level resignation at my company on Thursday. Dinner with 'ex pats' from one of past jobs last night. The side job- we initiate a lawsuit against one of our employees for breach of contract on Monday.
ReplyDeleteLife outside the markets. Life inside the markets. What's funny is that after my initial read of tof's GOING OUTSIDE post, my first impulse was to ask 'Where do I go to read about this new virtual interactive company?'- I kid you not.
At last night's dinner, someone filled me in on 'Ruby,' who retired a few years ago. Her first husband passed away long ago. She ran into an old boyfriend last year, a man she had been forced by an abusive father to break up with when in her teens. He asked her to marry him, and they now reside in Washington state!
ReplyDeleteThe person that uploaded the Sterile Cuckoo video wrote the best synopsis I've come across:
ReplyDelete'Two students from neighboring colleges in upstate New York are swept up in a tragic romantic interlude calling for a maturity of vision beyond their experience of capabilities. Pookie Adams - a kooky, lonely misfit with no family and no place to go, insists on calling all those who won't participate in her world, "weirdos," clings to a quiet studious Jerry, who has the ability to make a choice of living in Pookie's private little world or be accepted by the society that Pookie rejects. Unwittingly, it is through their awkward relationship that Pookie actually prepares Jerry for the world of "weirdos" that she doesn't fit into or wish to be apart of.'
I can imagine rewriting that paragraph as an illustration of the trading world we inhabit.
ReplyDeleteI think it was meant to read 'experience or capabilities,' but I copied the paragraph verbatim.
ReplyDelete2nd > where do you find this stuff man?
ReplyDeleteSo speaking of Uncle Warren > isn't it weird Berkshire's stock appears to be moving in the opposite direction of his words?
Ruby. That's wild. Good for her!!
ReplyDeleteTOF - "if rates rise I think that motivates ppl to buy before rates move up in a meaningful way."
ReplyDeleteYes eventually perhaps, but not now in any meaningful way, IMO. The mechanism of rising rates (or the threat of) has been known to occur before in the past, but in order for that to happen, I think other positive conditions/indicators must preexist, such as the presence of demand capable of absorbing overcapacity (in terms of manufactured goods, for example). During times of extreme circumstances, even low rates aren't enough to bring buyers to the table until overcapacity (or in the case of housing, oversupply) concerns recede and prices begin to stabilize (notwithstanding false signals, ie: the dead-cat bounce?).
Can increasing inventory, falling prices and rising unemployment simultaneous with rising rates be indicators of improving conditions in the housing market? They can, theoretically, be an indicator of looming default or greener pastures (http://greenpasturesrestaurant.com/page/o96a/The_Victorian_Home.html) elsewhere.
Additionally, we have the indicator of default potential built into the currency trend. Some economistas like to point out that a failing currency due to QE essentially equates to default. I think for now, it indicates a healthy rebalancing of trade deficit and lowered real wages (so housing can go nowhere in general but maybe down really, depending on the particular regional market). Ah, the conundrum of conflict!
So which is the current situation? Not much doubt in my mind we remain in a buyer's market in terms of real estate, the parabolic move has formed and we're looking at buying the fishing line. When I see a well situated property on the market with an assessment of $250k and an ask price of $145k (a $100K spread!), I wonder to myself if I won't be able to swoop it up for around or less than $100k in a few years (now that's a real haircut, right?). Each time I check, I see more and more homes listing for less than they cost to construct. My impression is, the weak hands are still folding. Some of these weak hands have very deep pockets extending into public coffers so deep as to effect currency valuation, and it's my impression they're still in denial mode (as a test, just try making an offer on a bank owned property and see if they respond to inquiry). I believe their time horizon isn't as long as mine, b/c they were the ones guilty of continuing to extend loans which they knew, or should've known, would default. Famously, their complete lack of financial discipline led them into a false sense of complacency? Or was it fraud for which the market will fully punish? Of course this disturbs me greatly, I don't intend to eat losses on their behalf while they continuing living high on the hog (ie: Screw 'em!).
So generally, IF/WHEN prices AND rates are increasing simultaneously, THEN the mechanism of demand vs increasing rates has a much better chance of occurring from my perspective. The housing market is too massive a ship to maneuver so quickly, considering the magnitude of shock experienced. I think we're looking at years, approaching at least a decade or more, before we can expect the mechanisms you're sighting can begin to take effect. The FED seems to agree, and my impression is they consistently underestimate magnitude of event.
Not having access to reliably honest big-picture data, it's difficult to gauge precisely. We'll have to monitor these data closely and perhaps you have been, but my personal observation is that momentum remains unfavorable and is more likely to decay with rising rates, considering there remains plenty of cash sitting persistently on the sidelines and little demand for credit (How profoundly unusual are those particular circumstances?!?!?).
It seems uncharacteristic for me to think perhaps your time horizon is much longer than mine and so, you're willing to add to your position as the knife continues falling.
And maybe I'm wrong...
"she doesn't fit into or wish to be apart of."
ReplyDeleteOkay, that's rather twisted... Is the word "apart" misspelled, or was it a carefully chosen Freudian slip? She doesn't wish to be a part of, or apart from?
And shame on you 2nd, for being so preoccupied as to not take an occasional break outside! As a result, your pool is a mess and your lawn looks like hell! ;)
GRN - Volume was 375 shares yesterday...
ReplyDelete"Foreclosure Reality Distorted by Processing Delays"
ReplyDeleteJuly 14
"It would be nice to report that foreclosure activity is dropping as a result of improvements in the economy or the housing market," said James J. Saccacio, chief executive officer of RealtyTrac. "Unfortunately, with unemployment rates inching back up, consumer confidence weak and home sales and prices continuing to languish, this doesn't appear to be the case.
"Processing and procedural delays are pushing foreclosures further and further out - we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later. This casts an ominous shadow over the housing market, where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number."
http://www.mortgagenewsdaily.com/07142011_foreclosures_realtytrac.asp
Beware spin, and exercise proper DD...
ReplyDeleteStudy: Home ownership rate stable or still falling?
Note: Sophisticated article, so must read entire text to properly comprehend the motivations for homeownership, otherwise these are the concepts I took from article:
July 14
* "The homeownership rate has declined from an all-time high of 69.2 percent in 2004 to 66.4 percent in the first quarter of 2011."
* "From the late 1960s to the mid-1990s, U.S. homeownership rates were relatively stable between 64 and 65 percent."
"Analysis showed that the rise in homeownership between 2000 and 2005 were driven entirely by changes related to ease of access to homeownership. During that time shifts in household socio-economic attributes alone would have caused homeownership rates to decline. During the period 2005-2009 the pattern reversed and, all things being equal, changes in household socio-economic traits and house prices would have boosted homeownership rates but the effect of deteriorating credit conditions offset those factors. Over the entire 2000 to 2009 period the changes in access boosted homeownership enough to offset adverse shifts and resulted in a 1 percentage point net increase in homeownership. In other words, a combination of changes in mortgage credit standards and attitudes towards investment in homeownership likely contributed to much of the boom and bust in homeownership over the decade."
"The authors say that taking the various estimates into account it appears that homeownership rates may have bottomed out by early this year. However, it is more likely that the rates may decline further, by as much as one or two percentage points, over the course of the next few years."
http://www.mortgagenewsdaily.com/07142011_homeownership.asp
CP- I thought your analysis was spot on. It's funny, I just got a call a few minutes ago from a friend to look at a house with them tomorrow here in town. Take a look.
ReplyDeletehttp://www.marinmodern.com/idx/residential/21115665/details.html
This is a very good location. It's would cost me over 1M just to build this. Of course, it would be better built and up to code, but how else do you gauge the cost. We have a ways to go.
new post
ReplyDelete