Not Dead Yet

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Not Dead Yet

The worries about my demise were certainly understandable. Some were downright flattering (thank you Maureen McCabe) ... I appreciated the attention, and I'm happy to say this blog is not dead yet.

More than 216,000 readers have visited these pages, and here I am, still waiting ... still frustrated ... still filled with ideas and observations about all the issues that led you here.

It's a long story, but one I hope you'll want to read.

Whether you're one of the many former regulars at this blog, or a newcomer, you probably need a refresher or some serious background.

So, let's start two years ago, when I said:

This is how the bubble will pop — slowly. Over the next year it will take more and more time to sell a home. The inventories will grow. Speculators will panic when they can't find renters to cover the whole mortgage. If mortgage interest rates go up, all of this will be exascerbated.

Of course, who didn't see that coming (Not including the government or the real estate industry, or people who bought houses anyway)?

But, this blog isn't about predictions so much as it's about the market and me. So, I should first refer you to this post, also written two years ago, prior to when I went poof (not 'pop'):

For the life of this blog, I've tried to focus on news, and on being objective. But lately it seems my objectivity is slipping away. I don't blame any one person, or group. The real estate agents are doing their jobs, earning a living. So are the mortgage brokers and the escrow companies, title companies, appraisers, inspectors, etc... I don't blame the speculators, whose actions have helped to drive up the cost of housing. They are chasing their version of the American Dream, even if it means denying the dreams of others. I blame none of them. Not Greenspan. Not Bush. Not any of the economists or journalists. No one person did this.

But, still, here I am, standing on the roof of my crap apartment building in the valley, looking across this desert of metropolitan LA, a wonderland of seemingly endless rooftops stretching from Ventura County through Los Angeles County and into Orange County, a collection of more than 70 cities in all, and none of them contains a home that belongs to me. I envy every rooftop, even the ones that cover shotgun shacks of 500 square feet. I'd settle for that to start. I'd settle for a duplex, a condo, a fixer, anything.

Every weekend we continue to visit open houses to no avail. I ask the agents questions about what's what in the neighborhood, knowing the answer is unfavorable and waiting for them to lie. And, of course, they lie most everytime, lie like experts with perfect smiles and pearly white teeth, the blood stains of their last kill wiped away. This past weekend we were at an open house in a neighborhood with streets like a maze. The Mapquest print-out looked like stereo directions: "left at 2nd, right at Pear, slight left at Cherry, right at Bloodwood, left at Ellison, right at Carlson …" It was a ranch-style home, run down in appearance, a timewarp to the '70s complete with wood paneling throughout, those old hanging swag lamps, and a backyard atop a 40-foot, unreinforced cliff that overlooked an industrial park dominated by collision shops. The pricetag? $850,000 for 1,265 square feet! On top of that, the hair-gelled, skateboarder agent had the nerve to tell us that the shops never start work before noon. It doesn't matter. We can't qualify for that hell of a house either. We make a combined income of close to $100,000 a year, and yet, we can't qualify for a 30-year-fixed loan on the median-priced home in this state.

Now is not the time to buy. I understand that. I explain it to people here, but still, we look the way some people look at garage sales weekend after weekend, thinking this will be the day we find the greatest deal of all time, a forgotten Van Gogh painting for $15, or a Ming vase for $9.

It's affecting my mood. I get increasingly irritated with the woman in her Land Rover who double parks and blocks me in so that she can run in to the Starbucks and wait for the pimple-covered Barista to jerk her a Frappacino. I honk and yell at her, not because she's inconvenienced me for a couple minutes, but because she's in a Land Rover. I tailgate the guy in the BMW who cuts in front of me on the freeway because he's in a BMW. I am using the car horn more. Perhaps of greater concern is how I'm treating wealthy people in the course of my job. Everyday I encounter them, the whining property owners at XYZ City Council hearings and lesser committee meetings, all complaining about the static they have to endure from neighbors who refuse to trim their hedges to commuters who use residential streets as thoroughfares. These whiners own homes of 3,000-plus square feet, top-of-the-line automobiles, have their kids in private schools, take European vacations every year, Christmas in Hawaii, etc... and yet, they waste the time of city leaders with this nonsense. Meanwhile, no one is doing anything about the lack of housing affordable to those earning middle and lower class incomes because no one in an elected office cares. They have homes. They don't feel the pain, at least, not until their kids grow up and can't afford to live in the community on their own.

This is not the way the American Dream is supposed to work. I don't even know what that dream is supposed to be anymore. You work your entire adult life to earn a living, climb up the salary ladder by battling your boss who keeps saying "maybe next year," stuffing all that BS down your throat about how everybody in the newsroom deserves a bigger salary, blah, blah, blah. I'm tired of that blowhard excuse.

And yet, here we go again. Today my wife schedules an appointment with the boss to go over her review, at which she plans to ask him again for a raise. It is her annual appeal. I have my review in a couple months. We'll know better where we stand after that. But after arguing about this again this morning, it's obvious that neither of us have much hope that anything will change. Our only real hope is that this bubble will pop.

There's more to come ... Don't count me out ...

-- The Boy in the Big Housing Bubble

Somewhere Out There

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Somewhere Out There

It's been almost a month since my last peep, so I figured I'd better post something to allay the fears of readers, like my prolific friend David over at Bubble Meter.

Rest assured, I did not evaporate.

It got to a point where it felt like we were all saying the same thing again and again. Not sure there's anything new to add to the discussion. Week after week, the all-encompassing "they" issue a new report, a new study, a new survey, or a new statement that everyone on every side spins this way and that. Various factors go up and down. I have a story to tell, just not sure who wants to hear it.

Does anybody read anymore?

-- The Boy in the Big Housing Bubble

The House Always Sometimes Never Wins

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The House Always Sometimes Never Wins.

MarketWatch quotes Robert Shiller, author of "Irrational Exuberance," in a story about the Chicago Mercantile Exchange decision to offer investors the opportunity to gamble on the $20 trillion U.S. housing market. And, of course, when you talk to Shiller about housing, you're going to end up talking about the bubble:

"Protection against a loss in the value of one's home is the big draw of these products," said Shiller, who noted recent polls show about one-third of Americans think the U.S. is in a housing bubble.

"There is vulnerability in a lot of cities where home prices have boomed a lot more than rents or construction costs," Shiller said. Still, forecasting home prices is notoriously dicey for economists because home values aren't explained well by fundamentals such as building costs, population and interest rates.

-- The Boy in the Big Housing Bubble

‘Stocks Took A Dribbing’

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Stocks Took A Dribbing.

This is not good...

CNN:

Stocks took a dribbing Wednesday after a stronger-than-expected consumer inflation report re-ignited fears of inflation.

The Dow Jones industrial average (down 207.64 to 11,212.25, Charts) skidded about 1.8 percent after being down as much as 245 points earlier. The broader Standard & Poor's 500 (down 21.51 to 1,270.57, Charts) index sank 1.7 percent and the Nasdaq composite (down 25.68 to 2,203.45, Charts) stumbled 1.5 percent to a new low for the year.

Not just that...

‘Real estate gains came to an abrupt halt in the first quarter of 2006’.

-- The Boy in the Big Housing Bubble

‘Most Investors Don't Remember’

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Most Investors Don't Remember.

If you're a flipper and you just bought a house and you're not worried, you're also not paying attention.

More interesting words from TheStreet.com, by Dan Fitzpatrick:

The last time we saw a really bad real estate market was back in 1989-1990. Most investors don't remember what it was like back then, and I suspect that a lot of analysts are simply looking at their theoretical models and finding compelling valuations.

-- The Boy in the Big Housing Bubble

I Got Your Single Digit Right Here

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I Got Your Single Digit Right Here.

Single-digit price appreciation, that is.

It's in a story in today's Los Angeles Times, by Annette Haddad:

An almost-forgotten condition has returned to Southern California's housing market: single-digit price appreciation.

The region's median home price rose 9% last month, the first time in 4 1/2 years that the year-over-year increase was under 10%, data released Tuesday showed. Sales took their biggest percentage drop in 11 years.

The figures were the strongest signs yet that the Southland's housing market is ending its 5-year-old boom.

The experts call it a market in transition. It's not the same red-hot sellers' market of the last three years, but it's also not a buffet of bargains for buyers either. Regardless, neither side seems imbued with a sense of urgency.

Read the story at this link.

-- The Boy in the Big Housing Bubble

Here Comes The Cooler

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Here Comes The Cooler.

CNNMoney.com, by Les Christie:

Real estate gains came to an abrupt halt in the first quarter of 2006, with the median price of a U.S. home falling 3.3 percent from the fourth quarter of 2005, according to a report released Monday morning.

Prices were basically flat or lower during the quarter as inventories of houses for sale rose and their time spent on the market lengthened, according to a survey of 149 markets by the National Association of Realtors.

(CUT ...)

… From the fourth quarter of 2005 to the first quarter of 2006, median prices nationwide fell from $225,300 to $217,900, a drop of 3.3 percent. It's the second consecutive quarter that prices showed a sequential decline; in the fourth quarter of 2005, prices fell 1 percent from the third quarter.

(CUT ...)

The report quoted NAR's chief economist David Lereah saying, "With the supply of homes picking up very nicely in many areas of the country, pressure is coming off of home prices."

Lereah is optimistic that the market will soon return to growth. "By the time we report second quarter data, I expect most areas will be returning to normal rates of price growth in the single-digit range."

-- The Boy in the Big Housing Bubble