Sunday, April 27, 2008

What company will ensure the crash of Bend real estate?

Well, last week's "experiment" was a bust.

Everyone seemed to not want to hear from me the week before, and that's cool. And coincidentally, I noticed that while we have a tendency to just hammer away at some of the local RE schill's, and that some of that "bile" has seeped into hammering away at Bend in general. Seemed like we were starting to beat the shit out of each other.

And a long perusal of the comments gave me a little eye-opener: I know what I think are quite a few people in Bend, and I in fact know or have casually met many of the local luminaries that we all collectively hammer on periodically, and you know what?

They're not all that bad.

Timmy, Marge, Dunc, Brucey, rdc... and on and on. Most of the people making comments here are not the pathological locusts we whomp on. And neither are most are most of the people I know personally. Most of the people I know are work-related in some way, and many of them came from... California. And what's funny, is they are... dare I say... decent?

I know several ex Cali-bangers who came to Bend to escape. They feel like CA is an alien landscape, and they didn't really belong. Like transvestites: Born a woman in a man's body, these people are normal decent people, who were born in California. They knew something was wrong pretty quick.

So I wanted a week which was devoid of my take on things (Hallelujah), and just had the comments of you guys. Not many appreciated it, which I suppose is understandable; if I bought a copy the Wall Street Journal and all it had that day were letters to the editor, I guess I'd wanna roll it up & cram it up their corn chute.

Now the flip side is that people are selfish, they act in their own best interests, virtually at all times. And we are going to endure a crushing death blow, especially to Bend's local economy. And some of these people, decent, hardworking, and personable as they may be up close & personal, they may end up like the infamous "Raisin Face" (Heather Clark? Dang, she hot), and just leave a long-term bad taste in your mouth after really getting to know them.

But most people ain't that bad.

Most. Buster.

OK, I love the Buster as much as anyone, but the bitch got on my last nerve this week. Here's a snippet:

Yes, if your an intelligent investor, and your young, and you like to fix shit, there has NEVER ( in 25 years ) been a better time to buy in Bend.

Only fools can call a bottom, and you don't want to compete with man-twats on after the trough, thus right now when all the man-twats are panicking is a great time to buy.

I mean, what the fuck, did you join COBA this week? Bitch you been talking this thing DOWN 90% at times (remember $0.0006/ac?), and with medians down to a wimpy $275K or so, it's the best time to buy in 25 years? Are you fucking kidding me?

Needless to say, I strongly disagree with this crap. Things are going LOWER, something you've harped on HARDER than anyone here Buster. Way harder. I think it is still, overall, a crappy time to buy, and it will remain so for many years. When we have medians in the $100's... then maybe.

The RE market is a bell curve, some dumbshits asking WAYYYY too much, and a scant few offering a decent deal. In the bubble, the latter disappeared. And I mean, DISAPPEARED, extinct. I personally looked DAILY, all day, for a house from 2004 on that represented a decent deal around here, and found NOTHING. Hundreds, and hundreds, and hundreds of properties. Nada.

And it is still very close to those conditions. Is it lower than the absolute top? Hell yeah, but that don't mean dink. Ask marge:

Anyone that buys a rental in Bend before 2012 is a retard and will be feeding the pig forever. Buy it with cash and it's still going to go backwards for a long long time.

OK Buster, on to point 2:

Above click on "Bend Economy" BEM, last month, 30 days exactly BEM published "How to Fix Bend".

This is what we should be discussing, the upside, the down is over. It's Over, its going to take years for Bend to recover. In the meantime we need to stop government spending on PR&MARKETING. 90% of BEM's proposals are good. This is what we should be discussing.

Now here's where I am gonna catch shit, cuz we're about to go into Bizarro World, where I am contending what BEM & Buster are saying is mostly wrong. Hold on BEM... it gets better. Here is a summary of BEM's points about how to fix Bend:

  1. Raise taxes
  2. Increase funding for essential services & parks
  3. Suspend master planned projects
  4. Cut the destination resorts loose
  5. Lobby for a 4-year University
I disagree with 80% of these points. Buster, you'll have to tell me what 90% of 5 is... you agree with 4 1/2 of these things?

Anyway, I STRONGLY agree with #4. These chameleon subdiv's out in the scratch are simply end-runs around Oregon's land use laws, plain & simple.

And the recent piece in the Bulletin shows that NONE of the requirements are really being enforced. There was a purpose to WHY the destination resorts were given exemptions to traditional land use statutes, and now poor downtrodden pentamillionaires like the Pronghorn developers are claiming destitute poverty, and they don't want to build 99.999% vacancy units equal to 1/3rd of their housing stock. They are hoping for something closer to 0%.

This of course, makes them a regular subdiv. They must have their cake & eat it too. Dunc's summation:

Pronghorn gets it's fifth extension.


This the old-boy network in full-swing, and if you re-read the piece, you see they are actually in essence subverting OR land use laws by granting never-ending extensions. Unbelievable.

Now, for the other 4 points, I don't agree with. Let me put my objections in the form of an anecdote (you lucky devils):

Say some poor redneck schlub, LeRoy, wins the lottery. LeRoy wins $100MM. Now LeRoy ain't Einstein, and like 99.97% of all dudes, he wants to do 2 chicks at once, and basically live the good life after a hard life of fucking sheep.

So LeRoy lives it up, and I mean MC Hammer style. If he even thinks he wants it, he buys 20 of 'em. He gets jets, takes out his now lengthy list of friends to $1,000 plate dinners, $10,000 hookers, in short he goes berserk. He do it right.

OK, now it's 5 years hence, and LeRoy finds himself in a 1 bed apartment, $200 in the bank, shooting the cracker, no furniture, strung out, hitting rock bottom, wondering what the fuck happened.

LeRoy is Bend. We ain't got shit, we're fucked.

So back to BEM's well meaning list. Drawing a parallel to LeRoy, it's like he stood up, dusted he-self off, and proclaimed in Scarlett O'Hara fashion, "I'll never be poor again!". All I have to do is invest wisely (ie "Raise taxes"), spend wisely (ie "Increase funding for essential services and parks"), spend within my means (ie "Suspend master planned projects"), and keep a rainy day reserve (ie "Lobby for a 4-year University").

OK, these are all good ideas. Hell, they're Great Ideas.

But it's too late. LeRoy is down to his last $200. He's got nothing, and the days of making hay are over. He should have done all this to START. Can he take his $200, and turn it into $100MM again with his Good Ideas? Maybe. But it would have been a hell of a lot easier had he done it from the start.

My own philosophy for running a Country, State, County, City, or your life, is to Save when times are good, so you can spend when times are bad. If you do that, and the bad times are not really protracted, or they are evened out by protracted good times, then you should be OK.

If you do what LeRoy did, and spend every single penny on extravagant crap, well, you will go down hard.

Of course, this is exactly what Bend has done.

We can't raise taxes without cratering an already bad local financial situation. We should be LOWERING TAXES right now to stimulate... but we don't have ANY MONEY. We're $20MM in the hole. We are WORSE OFF than LeRoy.

And the same goes for each of the other items. New parks? With what? We're dead broke. Suspend Juniper Ridge? OK, this is one where I sort of also agree. But what do we do with it? Let it rot out there? Sell it? Is selling it even remotely possible? Give it to Les Schwab? My Lord, the City is actually still thinking they can move forward on this thing.

A 4 year University? Again, a great idea whose time has passed. We're busted.

During the boom, we spent on flagrantly idiotic crap. And to make things worse, we exacerbated the situation by lowering our SDC's BELOW COST. And just like underpricing insurance, you can actually watch the money pile up in impressive fashion by doing so. But you'll also ultimately go broke. This happens with amazing regularity in the insurance gig.

We under-priced city services, people rushed in to POCKET OUR MONEY by building homes in roughshod fashion, and now it's time to pay. $300MM to upgrade our sewers, and such. But what are we going to do? Where's the money? What's your answer Buster?

OK, and here's some good shit:

I have been demanding this for months, and BEM picked up the ball. Not one of you fuckers even read BEM's proposals. But what do you expect from a bunch of lazy retarded renters?? Like you think they actually care about Bend??

OK, Buster, fuck you.

You claim to be a landlord, and you are living off the largess of... who? Yeah, fucking renters. So fuck you & your elitist "owner" bullshit. Were it not for renters, you'd be cracker ass broke.

And that fucking lame false dichotomy about "Owners Care About Bend, Renters Don't"... Christ, how fucking moronic. I mean, think that if you want, but cripes... that loses you credibility.

No one, NO ONE, has been enumerating an exhaustive LITANY of prescriptive measures for CURING BEND than me. Maybe BEM. Fuck, as recently as 6 months ago, I held out hope that BEM's list was at least in some measure implementable. I don't anymore. LeRoy is sitting with a needle in his arm and $200 bucks in the bank. My money ain't on fucking LeRoy anymore, cuz I told the motherfucker time & time again to GET UP & DO SOMETHING and stop wasting his money, cuz this was a ONE SHOT DEAL & WHEN IT'S OVER, IT'S FUCKING OVER, AND IT WILL NEVER HAPPEN AGAIN.

Well, LeRoy said Fuck You. You know what, Fuck You Too, LeRoy.

This town is broke, We spent when we should have saved. Even under-priced insurance might be sold by salvageable issuer, IF they invest very well. IF we had done all the things on BEM's list, there MIGHT have been some way to save this place.

Juniper Ridge could have been a fantastic industrial center. But what is it? It's 1,500ac of scrub, whose de facto owner & sole tenant is Les Schwab. Could have been a billion. We actually LOST MONEY on this thing.

4 Year University? Could have been a reputation maker. Could have made Bend a REAL destination, not a Bachelor motel dive. No. We did not pursue it AT ALL, and we briefly had the money.

Parks? Fuck that never had a chance, cuz that's about making things good for those that live here, and the City fathers have clearly shown they have NO REGARD for indigenous folks who they've already landed.

So yes, in this strange Bizzaro World, I actually stand alone on this triad against BEM & Buster.

And Buster, a lot of people care about Bend, whether renters or owners, Westside or Eastside, MBA or not, or what the fuck ever sort of categorization you want to put on them. OK Bitch, I bought a fucking house right when I got here, and sold when it just got too much for me to hold. I have been renting ever since, and I don't regret it at all.

I missed the bubble, and by my own investment predilections, I ALWAYS WILL. I may own at +2 STD... but never at 3+. EVER. So I ain't buying, and I won't until IT PENCIL'S against renting. And you stupid fuck, I do have an MBA, which neither confers intellectual greatness on me or not. I never ask people what their educational pedigree is, cuz I don't give a shit.

The smartest & most interesting people I know graduated from some ho-hum college or not at all. Probably like you, Buster.

And were I to ever meet you, I'd probably like you, cuz I like crotchety fuckers who made it despite the odds. OK, but just cuz you may be a slightly bigger than average polywog in a pathetically small pond, don't make you the shit. You're just one of the masses trying to scratch out a living, like the rest of us.

And if throwing the rest of Bend under the bus due to some arbitrary division you've made up in your head, and just cuz your old gristle-ly ass has carved out some small scale pile, well, then you're a pathetic fuck. You sound like you're angry & waiting to die.

OK, Buster? As Brucey would say: Flame on, motherfucker. Really. Flame on.

Cuz the larger issue, is that you & me be birds of a feather, bitch. We've both been banished to the netherworld of Bend RE blogging, cuz we outside the mold. And I am just letting you have it once as just a taste of the smackdown you've given me at least 100X, brother. So now it's your turn for another 100 hits on me... and hopefully you appreciate the knowledge that you CAN throw my fat ass under the bus, and I won't delete it. I won't delete it, but you better expect the occasional blowback on this shit.

And, let me tell you what the real root problem is here: It's not that we don't have good ideas, and that we couldn't implement at least some of them. It's that the governing structure in this town is so thoroughly inbred, corrupt, and Boss Hogg-ridden, that THEY are the real impediments to change.

Does anyone think our current, local government leaders are even capable of doing anything remotely right? They haven't so far. We'll NEVER get anywhere with the current City Council. Every single one is bought & paid for by someone, most by Bend RE.

So I'm all for implementing BEM's plan, or at least starting on one of them, but the current local government has got to go. Until they are gone, I don't believe Bend has a chance.

And moving on...

Man, I thought the fucking weirdest, most alarming news of the week was that rice rationing story!

Sam's Club, the membership warehouse division of Wal-Mart Stores Inc., is limiting how much rice customers can buy because of what it calls "recent supply and demand trends," the company said Wednesday.

The broader chain of Wal-Mart stores has no plans to limit food purchases, however.

Sam's Club said it will limit customers to four bags at a time of Jasmine, Basmati and long grain white rice. Rice prices have been hitting record highs recently on worries about tight supplies as part of broader global inflation in food costs.

Even KTVZ ran a video piece on this:

Rice shortage fears prompt some restrictions (4/24)

I saw that piece Wednesday, and figured it was going to stay a little marginal piece that I'd have all to myself. Hell no, it was The Leading Piece on Thursday's nightly news!

Food rationing? In the U.S.A? What the fuck is going on? And the public calls to not stockpile & hoard rice was something out of Rwanda or some shit.

I mean, I knew there would be some strange crap as the result of this housing bust, but food rationing? Shit, even I didn't see that one coming. But I probably should have; the last bout of monster stagflation was accompanied by rationing.

Damn, this is starting to get shades of Soviet Russia before they blew up. Bare store shelves, a government out of control, what's next?

Anyway, this is Yet Another Unexpected Consequence of the Unraveling Of The Biggest Bubble Of All Time. Try to stay ahead, try to capitalize, and not be run over by these things.

OK, now for the headliner. Google will be the death of Bend RE in the long run.

And I should warn you this is more of a personal intellectual exercise, than anything.

I think it's pretty well known that pre-bust, California had some of the most perennially overpriced real estate on the Planet, and it still does. I meekly put forth many moons ago that Cali might actually lead a charge lower in RE prices that would take it to ::gasp:: parity with the rest of the country. Yes, medians in CA within eyeshot of the rest of the country.

I know, this one is still pretty hard to imagine.

Then you'll love it when I say they might go even lower than that.

And what got me thinking this was the recommendation to read Taleb's Fooled by Randomness, as recommended by Timmy. Tim is smart, so I am usually interested in what's on his reading list.

And Taleb's book is actually pretty good, being a rather flowery, and sometimes overly intellectual read about how humans many times underestimate the effects of statistical distributions, how some distributions are different from others, how chance can make life appear contradictory in the extreme, even to the extent of ensuring the survival of the least fit in a species, and so on.

There's more to it than that, but much of it was material I was vaguely aware of, but Taleb is very good at distilling some of the strange & inexplicable aspects of chance, and is especially good at pointing out long term winners are many times in immediate losing positions, and vice versa, and the reality of the now should be very suspect. Holding period returns, whether in life or love or roulette, are strangely bound to the holding period you happen to be in.

And so we come to California.

California may be one of those places that is playing a long-term losing game with extreme distributions in returns, that happens to be having an inordinately lucky holding period return, and that period has just ended.

This may be a fairly tired illustration, but it is quite possible to win huge amounts in a losing game. If you enter a game with a dollar, and a coin is flipped & each time you call it right, your money is doubled, and when you call it wrong, your entire stake is wiped out... you will ALWAYS ULTIMATELY LOSE if you play enough times. Always.

But you can also have a hell of a run. And as Taleb points out, someone somewhere will always have a hell of a run, if the initial population is large enough. And if the lottery teaches us anything, the more skewed & extreme the payoff, the more people will play. And the more people that play, the more fantastic will be the winnings of the outlying winners.

If you can win 100,000,000 times your initial investment, but the chances of you winning are incredibly small, many people will play. It seems they are unable to comprehend that betting $1 in a game having a 1 in 200mm chance of winning $100mm is a Bad Bet.

Change the odds to something comprehendable, like roll a dice & hit 6 and I give you $3, otherwise you give me $1... most will quickly see the poor payoff matrix of such a game. Extreme, almost ludicrous payoffs & chances to win are required to make paupers of the players.

This is what California is.

In all it's incarnations, California is a place of almost unbelievable extremes. The distributions of "returns" is huge.

People go there to hit it big in Hollywood, with almost mind-numbingly tiny chances of doing so. The local restaurants are littered with starry-eyed immigrants who work for next to nothing, just to be close to the action. And what's better, they're intelligent WHITE PEOPLE who will do grubby crap work for a pittance. And like any sharecropper, these amenity business owners are happy as hell to have this vast field of moronic dreamers to choose from & exploit.

Do we see this? No. America does not broadcast losers. We broadcast winners only, and the cruel irony is that a vast swath of losers is the main byproduct of broadcasting winners stories.

But surely, Silicon Valley is different, right?

Hmmm. I don't think so. I would put to you that the current Bay-area "business model" is a horrendous loser, that happens to have had a hell of a holding period runup. So what is this business model?

Well, in short, it is a lottery.

But first, back up, way up... like to Des Moines.

What kind of businesses do you picture being started in Des Moines? Car repair? Maybe a deli? Comic book shop, right?

What do you think of when you think of the Bay? Do you think of it like Des Moines? I don't. I think of the Paris Hilton and Brad-Jolena super powers of the technological World.

Google. I think mainly of Google.

Why? Why do I think of Google, and not Amiga,,,, or even Steve Jobs' neXt, or even O/S 2? Because the U.S.A does NOT broadcast losers, it broadcast winners, and Google is a winner. And what happens to those who start up a winner like Google? Well Sergey Brin & Larry Page get their own Boeing 767's, and a 11 digit net worth, and become kings of the World. We remember Winners & Losers are abandoned to anonymity.

So what is the process by which the Google's of the World are created? Venture Capital.

And what is Venture Capital about? VC's plays a game with companies that is much like the lottery, where the odds of winning are fairly small, but the payoff's are potentially enormous. Again, a situation where the odds & payoffs have become so extreme that there exists the distinct chance of dire investment consequences. And remember that VC is predicated on credit, lots of it, and that game is over.

The situation faced by VC's is this: We have $5 billion, and we can make 100 investments of $50MM each. And there exists a Google-like payoff out there of $25 billion. Do we do it?

Many answer "Yes", without asking the most important question: How many companies are out there to invest in? What are our overall chances of winning? All they see is a HUGE payoff, and they do realize their chances of winning are small, but they don't realize just how small the chances are.

And you might say, "No person would rationally buy a money losing investment, especially those with huge amounts to lose". It happens EVERYDAY. Don't believe me, go look at the lottery payoff. They tell you straight up that they are going to take HALF YOUR MONEY, but many GLADLY buy such claims on future... poverty?

I'll admit it. I have bought lottery tickets. And it is the same reason: My utility for a single dollar is low, but my utility for $100MM is so high, that I am willing to overlook the ridiculously small odds of my winning, and buy one anyway.

VC's can & will buy money losing investments. And what will make them willing to play an even WORSE game? Simple, just skew the odds & payoffs to even greater heights. aka Google.

Google has probably single-handedly kept alive the vast grindings of the VC trade. It's payoff was so spectacular that there again exists, post-NASDAQ bust, enough faith in the monstrous upside of the VC lottery to keep money flowing to losing enterprises for years.

I think the jig is up in Silicon Valley. It certainly did have some true innovative successes in the past. But the VC lottery of today is a long term loser. VC is to Silicon Valley as RE is to Bend. It may not be the entire economy, but it's damn big. And Google, the paradoxical poster child of perennial VC losses, will keep alive the dream for so much longer that, like Bend, the economic demise of the Bay region will be just that much worse & protracted. Mike Hollern & Brooks Resources is our Google. A single beacon of such huge gains that it inspires such a vast army imitators, that the entire game is fucked.

So just exactly how will the success of Google depress the Bend housing market in the long-term?

Google inspires the long-term playing of a losing game, and Bend has long been the beneficiary of the California miracle. The miracle is over. The chain of events, while seemingly convoluted, should be clear:

  • California plays a coin-fliping game of extreme risk/reward.
  • They have a good run, as statistics dictates... someone was going to have a good run.
  • Like LeRoy, they spend like hillbillies in a snowmobile store (Bend).
  • They lose it all.
  • Hillbilly snowmobile shop closes

The California economic miracle looks iron-clad, durable, and well-founded in fact & reality. It's something like the 6th largest economy in the World, for Gods sake!

Such is the nature of all losers before their streak abruptly ends.

Google & it's enormous success, ironically, will probably have the effect of prolonging the downturn in CA and, by extension, Bend than just about any organization anywhere.

Except for maybe, Bend City Council.


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IHateToBurstYourBubble said...

A good graph of the magnitude of the housing implosion, long-term:

hank said...

"Except for maybe, Bend City Council."

I love the bottom line. Exceptions make the rule. Bend City Council is exceptional.

IHateToBurstYourBubble said...

This talk about Google, and VC and all might seem pretty far removed from Bend RE, but it's seemingly becoming a part of this countries business ethos.

People have started starting up businesses that don't have any sort of revenue plan, and their sole long-term vision is getting bought out by VC.

A company with real revenue, possibly profits, and a real product can certainly look for a VC buyout, and actually make something of itself. But TONS of people start these worthless shells whose only purpose is a VC buyout. These things are lottery tickets at best.

I see the VC market like anything... like the TV or car market. It had it's heyday, and American's kicked ass & ran the thing for decades. Then it got competitive, and others started, and it became marginally profitable, at best. And I think there's been a strong survivorship bias that has skewed returns higher.

I see us losing the VC market, and when we do, Cali, especially the Bay, will go down harder than anyone thought possible. Be like Flint MI. And when Cali goes down, Bend will die.

IHateToBurstYourBubble said...

Real Estate the Tip of the Iceberg

On one side you have the upside down home owner, who is about to walk away and give the bank the keys. But the other side, the bank paid the seller real money for the house and the new owner signed a note to pay the debt. Many suggest that this serves the banks right for loaning the money so carelessly in the first place. Think twice about that, the money paid wasn't the bank's, it belonged to a depositor. Banks don't lose money, people do!

Today the Bank of England announced that they are offering to swap 100 billion of government bonds for mortgage securities. Welcome to the Bernanke bailout party. Amazingly we are 8 months into this mess and still, no one has lost a dime.

If we can agree that real estate is only the tip of the iceberg, then it becomes apparent that the financial banking system, is in a very precarious position. Throw in hedge funds and the visual aid is no longer to scale, it's not big enough (use your imagination). The Iceberg represents real money borrowed from someone who works for a living or has money in an investment vehicle. It doesn't belong to a hedge fund, bank, IRA or 401k, it belongs to real people.

Industries are downsizing and laying off people. The big auto companies and the airlines have reset their pay scale to be more competitive. The housing industry has [fill in the blank]. More people are looking for work. These major events should raise some alarm, but curiously no one seems to notice. The unemployment numbers are starting to add up.

Look for a major bankruptcy's like the one in 1932 when Ivar Kreuger the famous Swedish Match King committed suicide. The guy was the "Warren Buffet" of his time.

This is a slow but methodical meltdown. Real estate is where all of the castles have been built, and the stock market is our sand box to play in. Maybe Icebergs are a little like our government, most of it is hidden from view.

To a majority of Americans "The Economy" is just a concept, little understood. Most people have never studied basic economics. The "Group Think" is that Congress can fix what is broken. Congressional solutions are a little like trying to use your clothes dryer to dry the kitchen dishes and glassware. When the buzzer goes off, you can rest assured that everything is dry! You end up getting what you were promised, but it's not quite what you had in mind.

IHateToBurstYourBubble said...

Read the comments in that Tip of the Iceberg blog. They're great.

Oh tip of the iceberg is a GREAT the first poster, don't be amazed by the optimism - it's all media manipulation to dump this junk real estate in Southern California. These suckers are now eating it as reality sets in and their 500K or 700K little house isn't worth half that. With the reality of this now, the economy, the markets, the country when could they ever sell these places? They can't! ...A fool and his money is soon parted, and that includes all these suckers who bought into the idea that little shacks in LA from Santa Monica to Culver City were ever worth 500K, these houses in 1975 were under 75K people. How dumb are people? It's greed. It is simply hilarious the stupidity of people and the BS they will buy into, now lets see what these get rich quick simpletons are going to do with their 500K (or worse) dumps that they now couldn't give away. Two lessons learned in round of LA BullS. 1. A fool and his money are soon parted. 2. There is no such thing as making big money fast.

IHateToBurstYourBubble said...


Anonymous said...

Great article. I will post it on my site The "doomsday" clock is ticking, but instead of a countdown to nuclear war it is a countdown to the SECOND GREAT DEPRESSION. Withdraw your bank deposits, sell your stocks, transfer your retirement accounts to Credit Unions (as CD's), learn a trade that is useful, stock up on food, provisions, and tools that you will need in your new occupation. Get ready to DUCK AND COVER. All of us can learn to be prudent survivalists. Be cautious of Realtors, bankers, and anyone who gets paid for not doing real work.

IHateToBurstYourBubble said...

Just cuz I love ya Brucey:

Firehouse Magazine Reports
WTC: This Is Their Story

Firehouse: Other people tell me that there were a lot of firefighters in the street who were visible, and they put out traffic cones to mark them off?
Hayden: Yeah. There was enough there and we were marking off. There were a lot of damaged apparatus there that were covered. We tried to get searches in those areas. By now, this is going on into the afternoon, and we were concerned about additional collapse, not only of the Marriott, because there was a good portion of the Marriott still standing, but also we were pretty sure that 7 World Trade Center would collapse. Early on, we saw a bulge in the southwest corner between floors 10 and 13, and we had put a transit on that and we were pretty sure she was going to collapse. You actually could see there was a visible bulge, it ran up about three floors. It came down about 5 o�clock in the afternoon, but by about 2 o�clock in the afternoon we realized this thing was going to collapse.

Firehouse: Was there heavy fire in there right away?
Hayden: No, not right away, and that�s probably why it stood for so long because it took a while for that fire to develop. It was a heavy body of fire in there and then we didn�t make any attempt to fight it. That was just one of those wars we were just going to lose. We were concerned about the collapse of a 47-story building there. We were worried about additional collapse there of what was remaining standing of the towers and the Marriott, so we started pulling the people back after a couple of hours of surface removal and searches along the surface of the debris. We started to pull guys back because we were concerned for their safety.

7 WTC DID have significant damage. The fucker burned ALL DAY. Parts of the towers fell smack on it. It was buckling from the combination of these things. They could see the fucker losing structural integrity. OK, so I'll throw WTC Conspiracy Threorists a bone:

Collapse of the World Trade Center

FEMA's provisional study was inconclusive[22] and the collapse of 7 WTC was not included in the final report of the NIST investigation into the collapse of the World Trade Center when it was published in September 2005. With the exception of a letter to the Journal of Metallurgy, which suggested that some of the structural steel had been exposed to temperatures sufficient to melt it,[23] no studies of the collapse of 7 WTC have been published in scientific journals.

OK, is it odd that FEMA's study was "inconclusive". I don't know. Maybe.

I would say it is, if you want it to be. And anti-Bush nuts REALLY, REALLY want it to be.

I hate Bush, he's a fuckin idiot. Did he bomb WTC with towel-headed maniacs to go into Iraq? Maybe. But the FAR MORE LIKELY theory is that towel-head fanatics learned to fly jetliners into buildings, cuz they wanted to nail 600 vestal virgins in the hereafter. Something that the Iraq war demonstrates on a daily basis is the most likely explanation.

Fuckin' Soviets couldn't subdue those crazy fuckers, why did we think we could?

OK, Brucey, I'll give "Conspiracy" as a 1,000:1 shot, mainly based on the idiocy that is the Bush presidency. But focusing on the collapse of 7 WTC is just weird. WTF would it have to do with ANYTHING? What does it mean? Who cares? It was a footnote to a footnote, and conspiracy nuts are acting like it's The Thing based on "inconclusive" evidence from a FEMA report.

Who cares about the collapse of 7 WTC? Hardly anyone. Are we in Iraq cuz of 7 WTC? No. Did anyone die? No.

No one wants Bush over more than me, but using 7 WTC as your "Change Vehicle" makes you look like a nut.

I post the above out of LOVE for ya Brucey! LOVE! You're kicking ass & taking names with respect to our WORTHLESS city Council, but brother, you start in on the 9/11 Conspiracy shit, and THAT is all you'll be.

"Hmmm... you know he filed a pretty good report, he's got a lot of solid points about the incompetence of City Council, and it's illegal Executive Sessions. But you know what? He's a 9/11 conspiracy theorist, so we can chuck this 12,000 page report in the garbage."

IHateToBurstYourBubble said...

Robert Shiller on America's 'Speculative Culture'

Given the advantage of the passage of time, historians will surely note that one of the less appreciated long-term effects of the Greenspan term at the Fed was the impact on the American culture. Few are able or willing to make this association today (and certainly no one can prove it) but a link certainly exists, at least to some extent.

Things are now changing rather dramatically (and certainly for the better), but up until the housing boom went bust a year or two ago, we were a nation overflowing with leveraged speculators and everyone seemed OK with that whole idea.

Why not? What's wrong with everyone getting rich?

You'll probably never read in the history books that European Central Bank President Jean-Claude Trichet "looked the other way" or was somehow negligent in his duties when he mumbled about something (e.g., "froth") when maybe he should have used his bully pulpit or regulatory power to discourage bad behavior (e.g., poor lending practices) that would surely, in the long-run, end badly (e.g., the bursting of the largest asset bubble in the history of mankind).

But in America, it was clearly different.

So when you read a comment like the one made by Robert Shiller the other day, you have to wonder if it was a throw-away line or if there was a darker meaning intended, more than what most people would ever read into it.

When talking about the current "housing slump" (aren't we beyond that sort of characterization yet?) Dr. Shiller noted that there's a good chance home prices will fall more than the 30 percent decline experienced during the Great Depression.

Then he commented:

Basically we’re in uncharted territory. It seems we have developed a speculative culture about housing that never existed on a national basis before.

You could have said the same thing about stocks in 2001.

Equities, however, weren't quite inclusive enough. After the turn of the century, those who didn't know the difference between Cisco Systems (CSCO) and seemed more than willing to take the plunge on something they did understand - real estate.

This sort of thing doesn't just happen by itself. It takes an entire society changing the way they think to get an asset bubble as big as the one we had in real estate.

Real estate was (and always should be) a place to live - not an ATM machine or a retirement plan. If you work hard enough, you should be able to make a living buying houses and fixing them up or if you have good connections in the local community and plenty of "positive mental attitude", it's reasonable to expect that you could make a decent living as a realtor.

You have to wonder where we go from here now that the culture has been completely transformed - everyone expects another bubble.

IHateToBurstYourBubble said...

Pain of Foreclosures Spreads to the Affluent

GREENWICH, Conn. — This wooded town of roughly 60,000 on Long Island Sound — home to dozens of hedge funds, many millionaires and more than a few billionaires — is one of the wealthiest enclaves in the country. But even Greenwich is not immune to the wave of home foreclosures sweeping the nation.

On Stanwich Road, for example, a house worth $2.6 million is close to going on the block. On Hettiefred Road, the owner of a 2,720-square-foot, four-bedroom colonial featuring a luxury kitchen, swimming pool and tennis court, has been threatened with foreclosure for months. Several dozen other owners in Greenwich have received foreclosure notices this year.

But there is a difference from most other communities. Auctioning off such homes is a far greater challenge here than elsewhere, as affluent but cash-squeezed owners often find ways to delay losing their homes, sometimes by coming up with just enough to make last-minute payments avoiding a final sale — for a while, anyway.

Just ask John Thygerson, who parked his Jeep sport utility vehicle in front of the empty house on Hettiefred Road on the flawless spring day last Saturday.

As a foreclosure auctioneer, he was scheduled — for the third time since January — to sell the house. But the owner, a construction business owner who has fallen on hard times, made a last-minute mortgage payment and the foreclosure was postponed yet again.

So Mr. Thygerson was there to shoo prospective buyers off the property, nod at inquisitive neighbors and stake out a new spot for a fourth set of foreclosure signs after the first three had been mysteriously torn down.

“We never had a case that had gone through three separate sales attempts,” he said, still dazed that the auction failed to take place. “Greenwich being Greenwich, foreclosures are a rare occurrence.”

Rare, perhaps, but not unheard-of, as the housing industry collapse starts to claim victims among the affluent. Personal traumas like business reversal, illness and divorce play a role. There’s no real pattern, with people as diverse as builders, restaurateurs and poker players at risk of losing their homes.

The town, which typically has about half a dozen foreclosure notices each month, recorded 34 filings in January, according to RealtyTrac.

But even the most financially stressed of Greenwich homeowners have generally been able to ward off actually losing their homes.

RealtyTrac data shows that owners of seven homes received notices of default last month, and another home is about to be auctioned in this town where the average single family home that sold this year went for $3.1 million. The owners of all of them had received notices of pending litigation but were still hoping to rescue their positions. In the last 30 days, none of the three Greenwich properties listed for auction were actually sold.

As millions across the nation face the threat of losing their homes, the few Greenwich owners in trouble are tapping into other resources that most people cannot call upon to help prevent the ultimate indignity.

In Greenwich, foreclosure filings were made against 100 homes last year, according to RealtyTrac. That translates into less than half of 1 percent of Greenwich’s 24,511 households, compared with a rate higher than 1 percent nationwide.

Already one of the richest cities in the country in 2000, when the Census Bureau recorded a median household income of $99,086 — more than double the national average — the town has become far wealthier in recent years, with the exponential growth of many of the hedge funds that have set up business here. A new generation of wealthy Wall Street executives has moved in as well. By 2007, the Connecticut Economic Resources Center reported, the median household income had risen to $122,849, with many homeowners earning far more.

The tearing down of existing homes to make room for new ones has continued despite the mortgage crisis that began last summer. And while prices and sales volume are dropping, Greenwich is not suffering as badly as nearby towns.

Through April 23 this year, 160 co-ops, condos and single-family homes sold for $290,000 to $30 million. That compares with 240 sales, from $385,000 to $12 million, for the period in 2007, according to the Greenwich Multiple Listing Service.

But with the financial system straining under extreme pressure, some Greenwich residents may be facing tougher times in the near future. The New York Independent Budget Office predicts that Wall Street will lose more than 20,000 jobs by the end of 2009. Some start-up hedge funds are having trouble raising capital.

Still, lawyers working on Greenwich’s early foreclosure cases predict that most will never reach the auction stage because their homeowners almost always have other options.

Burt Hoffman, a lawyer in Stamford, Conn., is helping one such Greenwich homeowner sell his property as a “short sale,” in which the price is expected to fall short of the value of the mortgage securing the home. He is also trying to buy three troubled Greenwich homes before they are sold at auction and fielding calls from clients hoping to pick up a bargain.

Similarly, Eileen Pate, a Greenwich lawyer, recently helped one client avoid foreclosure by arranging a short sale with his bank, which agreed to accept payment over time for the difference between the outstanding mortgage and the price the house fetched.

As for the four-bedroom colonial that just avoided going on the block, Zbigniew Skwarek, the 41-year-old owner, came up with his own money to postpone the auction. Court records show he stopped paying on his mortgage on Feb. 1, 2007. But three days before the scheduled auction, he said, he gave his lender a check for $50,000.

Mr. Skwarek may not live in one of Greenwich’s most coveted neighborhoods. But like many residents here, he owns other properties, including an apartment in Greenwich and a home in Florida, and he can tap into that equity.

“I don’t want to lose this house,” Mr. Skwarek said in a telephone interview.

Mr. Skwarek rented out the house after he divorced his wife, Renata, in 2004, because, he said, it felt too big to live in alone. But last year, he said, his renters, John and Arline Josephberg, stopped paying their monthly rent of $10,000.

While living there, Mr. Josephberg — who previously ran the financial firm Josephberg Grosz & Company — was put on trial, accused of not paying his taxes for 29 years. He was sentenced to 50 months in prison. By the time the couple moved out in January, they owed Mr. Skwarek $90,000. Calls made to Mrs. Josephberg and to the couple’s daughter were not returned.

But public records show that Mr. Skwarek had trouble paying his bills even before he rented out his home. Court documents show that he also owes construction and supply companies more than $200,000 for unpaid bills on his home.

In the past four years, he has been in court several times over unpaid bills. He has a felony conviction for not paying wages to his workers and a misdemeanor for issuing a bad check. He was sued in small claims court for not paying his divorce lawyer. His former wife said that his money troubles contributed to the end of their marriage.

“I was sick about how he took care of the bills,” Ms. Skwarek said. “He didn’t change.”

A few of Mr. Skwarek’s neighbors can relate to his financial troubles. Two other homes on the same road have appeared in preforeclosure filings in the past year.

Vincent Scorese, who owns a house next door and also faces the risk of foreclosure, moved out and rented out his home after he went through a divorce. He said that as a builder he became overextended and found it difficult to make his mortgage payments on the five properties he owns in the area. So he has put them all up for sale.

“I feel bad for him,” Mr. Scorese said. “So many guys are in trouble, even guys you wouldn’t expect.”

Mr. Skwarek says he is eager to hold onto his home, especially because it represents the culmination of his longstanding immigrant dream. Mr. Skwarek said he grew up outside of Warsaw and studied construction in Germany, France and Britain.

He arrived in New York in 1993 and soon started his firm, Bishek Construction. In 1998, he bought his Greenwich house for $495,000. He added a second floor and a luxury kitchen to the 53-year old home.

Arline Schmaling, who lives across the street, said that she hoped that Mr. Skwarek figures out a way to return to his home. As she sat on her front porch, she talked about how Mr. Skwarek plowed her driveway and helped install handicap bars for her husband in the bathroom before he died from cancer.

Ms. Schmaling said she missed Mr. Skwarek’s two daughters and son. She liked to bake cupcakes with the girls, who are now teenagers, and play Boggle with them.

“They were like second grandkids,” she said. “It was so fun to have kids in the neighborhood.”

Mr. Skwarek has still not figured out how he will hold on to his home. He will try to rent it again, he said. If that doesn’t work, he plans to move in and rent out his apartment. He remains optimistic that foreclosure will never happen and that his lender will help him find a way to escape his financial trap.

“They want to work with people like me,” he said.

Mr. Thygerson, the auctioneer, agrees that he may never get a chance to do his job.

“You look at this place,” he said, “and foreclosure does not come to mind.”

IHateToBurstYourBubble said...

From Portland, where it's been relatively good till now:

Loan crisis hits home
Local woman finds obstacles abound in trying to work out new deal with lender • Nearly 15,000 borrowers across the state could see terms reset in the next 18 months

By steve law

The Portland Tribune, Apr 22, 2008

Susan Shell dreamed of buying into a nicer Portland neighborhood where she could enroll her son at Grant High.

But the single mom wound up stuck with a subprime mortgage loan she can’t afford and can’t refinance, on a home she cannot sell.

As recession grips other communities around the country, the health of Portland’s economy rests partly on what happens to Shell and thousands like her, who hold shaky home loans poised to unravel in the coming months.

President Bush and mortgage industry professionals advise people like Shell to contact their lenders and negotiate “workouts,” where both parties agree to restructure loans and payment plans.

Then people could remain in their homes. Lenders and investors could keep getting paid. And home foreclosures, which have propelled the nation’s economy into a tailspin, could subside.

But in Shell’s experience, that plan isn’t working.

“It’s all smoke-blowing,” said Shell, 45, who complains she’s gotten the runaround for six months trying to arrange a workout with Countrywide Home Loans.

“It’s like you’re in this big pinball game,” Shell said of her travails. “All the while you’re losing your equity, and the market’s getting worse.”

Shell works part time as a waitress at Jake’s Famous Crawfish and as a massage therapist. Trying to arrange a workout with Countrywide has been like doing a third job, she said.

Countrywide, the nation’s largest home lender, nearly went belly up because of risky mortgage loans. Bank of America rescued it with a $2 billion cash infusion last August, then struck a still-pending deal in January to buy the company.

When Shell phones Countrywide, she gets put on hold for up to half an hour, she said. They bounce her from one staff member to another, and from one department to another. They promise to call back and rarely do.

They won’t divulge the investor that bought her loan, though the investor sets the policies for workouts. And they keep shifting the rules, terminology and policies for doing loan workouts.

“It’s a waste of time, as far as I can see,” said Shell’s lawyer, Carl Neil, a partner at Portland’s Lindsay, Hart, Neil & Weigler law firm.

Neil helped Shell win a $30,000 settlement from her mortgage broker for misleading her about the original loan, because monthly payments turned out to be $700 more than she was promised.

But getting Countrywide to rework the loan – acquired from the original lender soon after the sale – is another matter.
Portland in better shape

Portland has escaped much of the subprime mortgage fallout that’s crippling real estate markets in California, Florida, Michigan and elsewhere. That’s partly because real estate prices here have flattened rather than fallen dramatically.

“We didn’t get as drunk and we’re not as hungover,” Portland economist Joe Cortright said.

But the housing market is starting to turn here, and there are thousands of Portlanders holding risky loans.

There’s plenty of blame to go around for the home mortgage meltdown, Cortright said.

Some consumers should have known better, and took risky loans to get into homes during the housing bubble, he said. But, he also said: “Clearly there were people who were predatory lenders, essentially mortgage brokers who pushed products on people that were not in their best financial interests.”
Loan not what promised

Back in September 2005, Shell sold her St. Johns house in a day, and snapped up one of the cheaper homes near Grant for $272,000. She put $27,000 down for the one-story bungalow on Northeast Prescott Street near bustling 33rd Avenue.

Shell, whose annual income hovers between $30,000 and $40,000, arranged an interest-only loan that would be fixed at $1,180 a month for three years, and then needed to be refinanced. Or so her loan officer told her.

“He had switched the loan, basically,” she said.

It turned out that Shell was put into a “payment-option” or “negative-amortization” loan. That gave her three options each month: pay the amount it takes to buy down the loan in 15 or 30 years; pay interest only, at a variable interest rate; or pay a smaller amount – akin to a minimum payment on a credit card – and tack money onto her loan principal.

Shell didn’t realize something was amiss until, after a four-day delay, she was finally summoned to the title office at 4:45 p.m. Friday to sign a mound of closing documents.

Her bed and other belongings were packed in a U-Haul truck awaiting the move. Her loan officer didn’t show up for loan-closing, but promised to fix the problem Monday, Shell said. He never did.

The real shocker came a few months after the purchase, when Countrywide finally began sending payment coupons. She learned she had been making the minimum payment, and the interest-only payment was far larger than promised.

“It would have been $1,900 a month if I was going to pay interest only, and it was supposed to be $1,180,” she said. “My payment in St. Johns was $694.”

If Shell tried to refinance the loan during the first three years, she faced a “prepayment penalty” of more than $11,000.

Unable to make the full interest-only payment, Shell is adding $600 a month to the original loan. As a result, the loan has grown by $17,000, and the resulting interest-only payment now is $2,116.
Effort promotes workouts

In October, the Bush administration announced the formation of Hope Now, a voluntary effort by lenders who agree to workouts with homeowners to prevent foreclosures. Later that month, Countrywide Financial Corp., based in upscale Calabasas, Calif., announced its own $16 billion “comprehensive home preservation program.”

Countrywide’s Web site boasts that it arranged 13,006 loan workouts in January, helping keep 12,000 people in their homes. Most of their loans were modified.

Countrywide’s media relations department declined to grant an interview. Instead, corporate spokesman Rick Simon sent a prepared statement via e-mail.

“Countrywide’s home retention (program) has been working with Ms. Shell and continues to try to find a solution that meets her needs and the investor’s criteria,” Simon wrote. “Privacy restraints prevent us from commenting further on her particular case and any particular difficulties in addressing her concerns.”

Countrywide has completed more than 40,000 “home-retention solutions” the first three months of the year, he added, though a variety of factors can make workouts very complicated and time-consuming.

Neil said if Countrywide’s treatment of his client is any indication, the mortgage crisis could get worse rather than subside.

“I think it means that a lot of foreclosures are going to continue,” he said, “and a lot more are going to start.”
Process can be frustrating

A foreclosure workaround specialist who is working with Shell said her treatment is not atypical.

“Lots of clients get the runaround,” Kevin Sheehan said. “Welcome to my world.”

Sheehan is Portland director of ACORN Housing, a nonprofit that is federally certified to assist people with foreclosure counseling and loan workouts. ACORN stands for Association of Community Organizations for Reform Now.

While negotiating on behalf of clients, Sheehan said, it’s common for lenders to lose documents, take three weeks to acknowledge they received paperwork, or fail to return calls. He just got word from one lender that a proposed workout was rejected. “I submitted it at the end of January,” he said.

Oregon mortgage industry lobbyists, who fended off lending reform bills during the 2007 legislative session and the February 2008 special session, often noted that half the borrowers going into foreclosure never contact their lenders to try and arrange workouts.

A state law passed in February will require lenders to notify borrowers about their options before initiating foreclosures. Official notices will urge customers to contact their lender or foreclosure counselors such as ACORN Housing.

Lenders are growing more receptive to workouts, Sheehan said. A typical foreclosure can cost the lender $45,000, so arranging alternate payment plans or reworking loans can save them time and money.

Sheehan estimated as many as 70 percent of the cases brought to his office get workouts, eventually. The lender may let the borrower pay the amount “past due” in extra monthly payments or tack it onto the original mortgage.

The lender may lower the interest rate, orreset an adjustable-rate-mortgage back to its original interest rate. Sometimes, an adjustable rate is converted to a fixed rate. Sometimes the lender agrees to a “short sale,” in which the home is sold for less than the loan value, and the lender accepts the proceeds of the sale as payback for the loan.

But lenders and loan servicers like Countrywide are overwhelmed, and their staffing levels aren’t keeping pace with mushrooming demand for workouts, Sheehan said.In the past five months, requests for workouts by borrowers in his office have tripled, to about 15 per month, he said.
Lenders make it hard

“It’s really easy to say that people are not calling their lender, but the lenders are not being responsive.” Sheehan said. “They’re making it hard to do workouts.”

Local mortgage experts said homeowners who got into bad loans need to take more responsibility for their actions, and not expect workouts to be a picnic.

“The workout division of Countrywide is in the business of getting paid their money,” said Todd Williams, principal at Evergreen Ohana Group, a Portland mortgage broker and banker. “Part of their job is to be a little difficult.”

Lenders and loan servicing companies like Countrywide are in a tough bind, said Eric Wiley, chief operating officer of Pacific Residential Mortgage, which has offices in Portland and other local communities.

They are obligated to the investors who bought the loans they service, and taking heat from federal banking regulators to straighten out their finances, Wiley said.

“The Fed is really leaning on these banks to shore up their balance sheets, all the while they’re supposed to work out their loans. Those are conflicting goals,” Wiley said.“They are stalling and don’t want to have to write down a lot of their loans.”
Many Portlanders at risk

Subprime loans accounted for 10 percent of Portland-area mortgages at the beginning of the year, according to First American CoreLogic, which provides data on mortgages and other services.

Typically, such loans start with a teaser interest rate that spikes higher after two or three years. Adjustable-rate subprime mortgages are the major culprit behind record foreclosures nationally.

Statewide, it’s estimated that somewhat less than 1,000 subprime loans per month will reset to higher interest rates over the next 18 months, Wiley said. But fears that most of those loans will end in foreclosure are overblown, Williams said.

The Federal Reserve’s multiple interest-rate cuts could drive down interest rates by around 3 percentage points, he said, which – while not directly related – could mean subprime reset rates will be less than anticipated as well.

“That’s one of the huge things that nobody’s talking about,” Williams said.

In 2007, the Portland area had 5,162 foreclosures, the 73rd-highest foreclosure rate among the 100 largest metro areas, according to RealtyTrac. But the rate is climbing fast.

On Feb. 1, there were 2,464 Portland-area properties in foreclosure, double the number a year earlier, according to First American CoreLogic.

The Portland market also has a separate vulnerability, connected with its housing affordability problem. In one out of every six home loans issued in 2007 in the area, borrowers took out interest-only or negative-amortization loans.

Mortgage experts caution that negative-amortization loans often are misused, and wind up causing troubles akin to consumers with huge credit card debts.

The Portland market had the 42nd-highest use of such loans in 2007 among the nation’s 333 metro areas, according to First American CoreLogic. That put Portland in league with many California and Florida cities.

The Portland area had the 33rd-highest incidence of interest-only loans among 333 metro areas in 2007. If home prices drop, those loans can leave people owing more than their properties are worth.

Shell, stuck in a negative-amortization loan that grows larger each month, figures she has about a year left on her current payment schedule.

After that, unless she arranges a loan workout, she fears it may be hard to hold onto her home and stay out of foreclosure.

“It’s difficult to sell it because of the market,” Shell said. “It’s difficult to refinance it because the guidelines are a lot stricter. And somebody like me, I couldn’t buy another house if I lost this house.”

Anonymous said...

Whoever posted, please self delete (no censureship) comment 7:39am asap, and then this one.

Otherwise, this week will be WTF 7 about WTC 7, 24/7. Please don't feed the Brucey fire.

All other comments are turning out good for the start of a new day, good post.

IHateToBurstYourBubble said...

Backlash grows against the housing bailout
Many Americans want no part of a government-funded bailout for troubled mortgage borrowers.

NEW YORK ( -- Why should American taxpayers have to pay to bailout reckless lenders and borrowers?

The website, launched just last week, has a vitiation demanding that Congress not pass any bailout programs that reward risky borrowing and lending. To wit: "Let the free market sort it out!"

The petition is gathering 40 to 50 signatures per hour, according to spokesman Adam Brandon, who adds that the site is already getting 15,000 visitors a day.

"There's a huge segment of the country saying, 'We don't want our money used for a bailout,'" said Brandon. is backed by FreedomWorks, the conservative, free-market Washington-based lobbying group run by former House majority leader Dick Armey.

"A third of the American public rents," Brandon pointed out. "They're saying 'I've been saving for a mortgage for years. I could have jumped in on a subprime loan too. Now I'm going to have to pay for a government bailout."
'We wanted to buy too'

Many readers agree, expressing outrage at the idea of seeing their taxes used to keep people in homes they never should have purchased.

"We are both working professionals who would have liked to buy," said Matthew Haas, a community development organizer who moved to Los Angeles with his wife in 2003. They opted not to pay bubble prices, and are still renting despite ample income.

"Now we have hit [the alternative minimum tax] and are finding out our tax dollars are going to bail out others." "Where is value, morally, as a country?" he said. "Is it taking taxpayer money and applying it to people who should never have bought, people who were flippers?"

Many people would prefer the government do nothing at all to prop up the housing market -- especially those hoping to buy in a more affordable market.

Patrick Killelea has been blogging about the housing bubble at for four years from San Francisco, where it takes a not-so-small fortune to buy.

"Bailouts reward bad behavior. I've been diligently saving, denying myself lots of things so I can afford to buy, yet the government is saying we have to keep all these people in their homes," said the Web site programmer and author. "Well, wait a minute! Why can't I spend more than I can afford and have the government bail me out."
Fat profits is another newly minted site devoted to the bailout backlash. "I just got really angry," said blogger Morgan Ward Doran, an L.A.-based attorney who isn't professional involved with the housing industry. "Everyone I hear from is against the bailouts."

Doran argues that lenders, brokers and home builders all made huge profits by overbuilding houses pushing through poorly underwriten loans, and now they want taxpayers to cushion their fall.

Indeed, there is a provision in the Senate bailout bill that would give extensive tax breaks to home builders, which has some people especially incensed.

The Laborers International Union of North America calculated recently that many of the largest builders, such as Pulte homes (PHM, Fortune 500) and Lennar Corp. (LEN, Fortune 500), could receive many hundreds of millions of dollars in tax rebates.

"The government thinks it should help the people who cheated and robbed us," writes reader Jordan Fogal of Houston.

Most people who are against bailouts trust the market more than the government.

The fastest way to return to normalcy is to let the market work, according to's Adam Brandon. He acknowledges that the impact on some homeowners will be devastating, but that things will get even more painful if we don't let the free market work its magic.

"I feel terrible for people losing their homes," said Brandon, "but the sooner we let the market sort this out, the sooner we can get back to growth. When the government gets involved, it can delay the inevitable."

IHateToBurstYourBubble said...

For Dunc... maybe too little too late:

When a HELOC freezes over
What to do if the bank tries to put your credit line on ice.

(Money Magazine) -- When Diane Carr, 55, received word in February that her home-equity line of credit would be canceled, she was dumbfounded. The HELOC had been open since 2003, when she bought her Woodside, Calif. home. And Carr had never even tapped it.

"It was just a security thing," she says. No matter. In recent months, tens of thousands of homeowners like Carr have been shut off from their equity as lenders try to stem losses from subprime mortgages and other high-risk loans.

As of September, delinquencies on HELOCs were up 47% year over year, according to; the numbers are expected to be worse in 2008. In response, Countrywide has already suspended an estimated 122,000 lines, many in high-foreclosure-rate states, and USAA has frozen or reduced some 15,000 accounts.Bank of America (BAC, Fortune 500), Chase (JPM, Fortune 500) and Citibank (C, Fortune 500), among others, are following suit.

Not all HELOCs will be frozen or downgraded, but you can be sure lenders will scrutinize every account - including yours.
If your HELOC hasn't been frozen (yet)

Know your risk. Areas where housing prices have fallen by 10% or more are prime targets for freezes, says Susan McHan, president of Opes Advisors, a mortgage banking firm in Palo Alto, Calif. Because of new lending standards, your HELOC could also be in danger if you bought your home in the past few years with little money down.

Last year consumers could easily borrow up to 100% of a home's value through a combination of a HELOC and a first mortgage. Today you'd be lucky to get up to 90%; 60% is the max in areas hit hardest by home-price declines.

Lenders are beginning to apply the same standards to existing HELOC customers. Call your bank and ask what the loan-to-value cap is on new HELOCs. If your house debt is above that, your line could be at risk. A change in credit score or a missed payment could also flag your account. Reread your contract to see if such factors allow the lender to cut you off.

Access cash now. If your line is in jeopardy and you need the HELOC to finish a renovation, you could draw a lump sum. On the downside, you'll cut your equity; you'll owe interest now; and if prices keep falling, your loan values could top your home's value. So borrow only as much as you need and put the cash in a high-yielding savings account or CD until the bills in question come due.
If your HELOC is on ice

Fight for a defrost. The letter from your lender should explain why the line was suspended and how to appeal. Some banks use automated processes to identify troubled markets.

To prove that your house hasn't been affected, ask a realtor to pull prices for houses sold within three miles in the past six months, ask your mortgage originator to intervene, or have your house reappraised. The latter can run $400, but if you were counting on the line, it may be worth it.

If a change in your risk profile is the cause, check your credit reports. Carr was told that her HELOC had been canceled because of a drop in her FICO score. But when she checked, it was above 800, so the lender reinstated her line.

Compromise. If your efforts fail, ask for a lower credit line instead of a total freeze. The bank may be more amenable if you hold your primary mortgage there, as that's an insurance policy of sorts.

Shop around. Not all banks have the same standards. If you have at least 10% equity, you may qualify with another lender. Search at, or click on the link above and to the right.

IHateToBurstYourBubble said...

This one is just great!

BailoutWatch: I Can't Even Keep Up
By Rich Toscano

Wednesday, April 23, 2008 | When I wrote the first installment of BailoutWatch this January, I intended to post occasional updates to keep readers apprised of the ongoing housing bailout efforts. Well, the truth is that I haven't even been able to keep up.

That column wasn't even the first on the subject -- it had followed hot on the heels of this one. Since the January post, the bailout attempts have been coming fast and furious. They've also been getting progressively more irresponsible and transparent in their attempts to reward the very institutions that enabled the housing bubble in the first place.

Let's go through a selection of recent bailout-related developments.

Of course, everyone heard about the Federal Reserve's offer to guarantee $29 billion of investment bank Bear Stearns' debt. "Debt," here, includes the questionable and probably worthless mortgage-backed securities of exactly the type that brought Bear Stearns to the very edge of bankruptcy. This was nothing less than a public bailout of the reckless and overleveraged Wall Street firms that for years had pulled in huge profits by feeding the real estate mania.

This action was deemed necessary by our fearless leaders to prevent a financial market panic that might have occurred if Bear couldn't pay off its creditors or counterparties, the latter being the term for the folks on the other side of a derivatives trade. Now, more established Nerd's Eye Viewers may recall that I wrote a piece back in 2006 describing the risks that buyers of credit default swaps, which are derivatives that insure their buyers against loan defaults, might not get paid back in the event of default because the flawed models employed by default swap issuers. Many others were warning of this risk as well, but we were pretty much collectively ignored.

Well, the Bear Stearns bankruptcy was it -- a huge derivative counterparty failure. Instead of allowing it to happen, however, the Fed (one of the main parties doing the ignoring back in 2006) bailed out Wall Street by taking on the risk for itself.

"Itself," here, means the taxpayers, who are of course the ultimate source of funding for the Federal Reserve. Enjoy Bear's worthless mortgage-backed securities, because you are now effectively their proud owner.

The Fed also invoked an emergency provision in order to start lending directly to investment banks, many of which are now suffering due to their heavy involvement in the mortgage-backed securitization boom about which I wrote in detail a while back. Go ahead and read that article and then ask yourself whether these companies really deserve to be lent public funds to make things easier for them after they took such huge and obvious risks (and made a killing doing so, at least for a while).

This is all serious stuff. None other than former Federal Reserve chairman Paul Volcker recently expressed concern that the Fed's actions "extended to the very edge of its lawful and implied power, transcending certain long-embedded central banking principles and practices."

Volcker was presumably referring to the Bear deal and the lending to investment banks. His statement didn't even address the fact that the Fed's target rate has been forced down well below the rate of inflation, so that savers across the nation can watch the real purchasing power of their savings disappear for the benefit of the housing bubble participants.

The Fed is certainly breaking out the big artillery, but other members of our government are hard at work on the bailout as well. In addition to raising the limit on conforming mortgages underwritten by Fannie Mae and Freddie Mac, regulators gave those two enormously leveraged operations the green light to go further into debt. (As I explained in the January installment, U.S. taxpayers are the implicit guarantors of this now-increased debt).

Also, the Federal Home Loan Bank system, a somewhat obscure quasi-government agency that was created during the Depression, has been lending billions (and has been cleared to lend a lot more) into the mortgage market. The FHLB, like Fannie and Freddie, isn't explicitly guaranteed by the government. But if said government won't even allow a private enterprise like Bear Stearns to fail, do you really think they will let a huge government-sponsored entity fail? The point being that the taxpayers are almost certainly on the hook for this money as well.

Finally, we have the "Foreclosure Prevention Act," or as I like to call it, the "Keep Homes Unaffordable Act," or possibly the "Give Taxpayer Money Directly to the Exact People That Caused The Problem Act." This legislation was already passed in the Senate. It includes, among others, the following fantastic ideas:

* Over $25 billion in tax breaks for home building companies.

* $4 billion for communities to buy up foreclosed homes.

* A $7,000 tax credit for anyone who buys a foreclosed home.

I hope it's clear that most of these bailouts benefit not struggling homeowners, but the housing and financial industry companies that were big and hugely profitable players in the boom.

In general, trying to keep far-underwater homeowners in their homes is often of little help to them. People who owe significantly more than their homes are worth would in many cases be better off walking away and freeing themselves from a potential lifetime of overindebtedness. Keeping them locked into their unreasonably huge mortgages benefits the lenders more than the homeowners.

But much of the Foreclosure Prevention Act is even more blatant in that it targets taxpayer money directly at the homebuilders and lenders. The first item noted above, the tax break for homebuilders, is pretty self-explanatory. And the second two, the subsidies for buying foreclosures, increase the demand for foreclosed homes and thus help the lending institutions that own those homes get a better price. As an added bonus, this artificial demand also keeps foreclosed homes from returning to price levels that people would be able to afford without government subsidies.

I try to stay off the soapbox but this is getting a bit out of hand. I am astonished at the level of complacency on display as responsible people's earnings and savings are plundered with the express purpose of keeping homes unaffordable and rewarding the institutions that both contributed to and profited enormously from the housing bubble.

If you think this is all as ridiculous as I do, write your Congresscritters and let them know you don't want any part of it. I promise it will be off the soapbox and back to the charts after this.

busted said...

... then you're a pathetic fuck. You sound like you're angry & waiting to die.

OK, Buster? As Brucey would say: Flame on, motherfucker. Really. Flame on.


YES!! FINALLY!!! Giving Buster back .0001% of what he dishes out. He BUSTED. LOVE IT.

BAMMM! How does that taste, Mr. "Big Mouth" Buster?

That there was a thing of beauty, Homie. I need a cig.

IHateToBurstYourBubble said...

Another great piece on why Don't Pay, Walk Away will sweep the country:

Walking Away From Foreclosure Becoming Socially Acceptable
Peter G. Miller

There’s a certain glue that holds societies together and in the U.S. one of those unwritten standards is the idea that you don’t walk away from your home.

Such community standards actually have a financial value. If walking away from a mortgage becomes socially acceptable then lenders will have more risk, interest rates will rise, monthly mortgage costs will increase and foreclosure levels will shoot up.

Unfortunately, there has been an increasing willingness by consumers to simply abandon their homes in the face of rising mortgage costs, a willingness that has not gone unnoticed. Fitch Ratings says that “the apparent willingness of borrowers to ‘walk away’ from mortgage debt has contributed to extraordinarily high levels of early default, which is particularly noticeable in the 2007 vintage mortgages.”

While there are no scientific studies regarding the matter, there’s little doubt that the idea of “walking away” from a mortgage has begun to gain traction. As 60 Minutes explains, when it comes to foreclosure “there is a certain cold logic to just walking away.”

Changing Standards
The usual barriers to walking away from a mortgage are not only social, they are also practical and financial. However, these barriers have begun to fall in the past few years, making “jingle mail” (when keys are mailed back to a lender) and “trashouts” (when homes are abandoned with faucets running and garbage everywhere) more common.

How can this be?

A foreclosure is not a minor one-time event, an experience somewhat akin to a flu shot. Foreclosures instead have traditionally been life-altering experiences with negative consequences that can stretch for years and even decades.

However, in the past few years the nature of the foreclosure process has changed in ways that have made walking away more palatable and easier to rationalize.

Federal bankruptcy rules traditionally allowed courts to modify mortgage contracts.

However, with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act the standards changed: Judges no longer had the right to modify mortgage agreements, meaning that consumers lost important leverage when contesting lenders. While judges could change the terms of financing for yachts and second homes, revisions to loans for prime residences were suddenly off the table.

No less important, the 2005 law also required homeowners to obtain credit counseling six months before filing for bankruptcy. In many jurisdictions foreclosures can be completed well within a six-month period so that by the time a borrower could even go to court their home had been auctioned.

The 2005 changes to the bankruptcy law were widely seen as nothing but a sop to the lending industry by political allies in Washington. In fact, the proposed revisions were regarded as so unfair that ING Direct, a bank, took out a major ad in the Washington Post which said the bankruptcy reform bill then before Congress "fails to encourage and enable America’s savers as it’s written today. It doesn’t even protect them. In fact, the only real protection it offers is to lenders, institutions that have little interest in a saving public.”

With great foresight, ING said “we believe that lending institutions should share responsibility with the people to whom they lend. Through aggressive marketing, irresponsible lenders create their own problems. When something goes wrong and irresponsible lending has played a role, lenders should shoulder their share of the consequences as surely as they do the profits of that lending. It’s only fair.

“As originally envisioned more than a century ago, our bankruptcy laws were intended to allow hard working Americans to make a new start. Bankruptcy doesn’t just happen to people who are careless or deliberately irresponsible. It also happens to people who work hard, save their money, and despite this simply have more bad luck than they can afford. If the Bankruptcy Reform Bill fails to protect them, it robs America's savers of the hope that makes them strive for financial independence.”

Imputed Income
For many decades one of the great oddities of the tax code has concerned something called “imputed income.” Virtually no one was impacted by this obscure rule — except homeowners who failed to repay their mortgages.

Imagine a situation where Smith gets a $300,000 loan, loses his job at a time when home prices are falling and is then only able to pay $250,000 to the lender. This is essentially what happens with a short sale — or a walk away.

What happens next is that the property owner gets a form at the end of the year explaining that the lender has reported to the IRS that he has received income worth $50,000. Income? The money not paid to the lender — the money the borrower didn’t have and never received — is now regarded as taxable income.

Now, under the Mortgage Forgiveness Debt Relief Act of 2007, imputed income from unpaid mortgage debt on a prime residence is no longer taxable. While this new legislation makes enormous practical sense — the government had little hope of collecting the tax under the old rule — it also creates an unintended consequence: The ability to walk away from a mortgage and not worry about a tax bill from Uncle Sam.

State Laws
Foreclosure practices vary enormously by jurisdiction. One by-product of these distinctions is that in some states it can take six months, a year or even longer for a homeowner to lose title to their property once the foreclosure process begins. For instance, figures from RealtyTrac show that a typical foreclosure takes 445 days in New York, 300 days in Illinois and 290 days in Wisconsin.

Nicolas Weill, Chief Credit Officer with Moody’s, says “current losses are still low in part because the loans remain relatively unseasoned and in part because foreclosures are taking longer than in previous years for those mortgages that have already fallen behind.”

If walking away is seen as increasingly acceptable, then — goes the thinking — why not stay as long as possible and not pay the mortgage? In effect, lengthy foreclosures can mean free rent for 10 months or longer in some jurisdictions.

California: The Special Case
In California, the nation’s biggest real estate market, a “purchase money” mortgage is generally a “non-recourse” loan under state rules. In other words, if Jenkins borrows $500,000 to purchase a home and must sell for $400,000, the lender has no right to pursue the borrower for any repayment shortage because the extent of the homeowner’s obligation is limited to the value of the home. This arrangement does not apply when a home is refinanced, to second liens or when a loan is originated on the basis of fraud.

The California rules create an unusual ripple: Imagine that Williams owns an $800,000 California house, has good credit but faces a mortgage re-set in a year. Williams places his home for sale, buys a $400,000 replacement home and moves from the first property. The first property does not sell and goes into foreclosure. Williams, however, already has a replacement prime residence with a new mortgage. He has a new home, no deficiency judgment and a smaller mortgage. As to the foreclosure, after a few years it will have no impact on his credit.

Negative Equity
The most significant reason not to walk away from a mortgage is the simple reality that for most borrowers during the past few decades a home has been a growing storehouse of value, something to keep if at all possible. However, in today’s market two factors have changed this equation:

First, recent buyers may well have bought at the top of local markets. In Florida, as one example, condo investors often placed deposits on units that were not scheduled for completion for 18 to 24 months. Given recent price declines, these borrowers have no equity to lose. Borrowers in many markets with little or nothing down are in a similar situation.

“Some subprime borrowers with ARMs, who may have counted on refinancing before their payments rose, may not have had enough home equity to qualify for a new loan given the sluggishness in house prices,” says Ben Bernanke, Chairman of the Federal Reserve. “In addition, some owners with little equity may have walked away from their properties, especially owner-investors who do not occupy the home and thus have little attachment to it beyond purely financial considerations.”

Second, many toxic loans allow negative amortization. With negative amortization low monthly payments are possible during start periods because not all interest is being paid. Instead the interest cost not covered by monthly payments is added to the loan balance. Combine negative amortization with little down and falling home values the result can be a borrower with loan debt which is substantially larger than the home's fair market value.

The Sting of Walking Away
Kenneth Lewis, Bank of America’s CEO, told the Wall Street Journal that “we’re seeing people who are current on their credit cards but are defaulting on their mortgages. I’m astonished that people would walk away from their homes.”

The idea of walking away from a mortgage remains far beyond the norms of either socially-acceptable or financially-responsible behavior. No less important, the act of walking away has substantial consequences.

For most borrowers the threat of a monetary judgment cannot be ignored. Under federal rules, judgments can remain on credit reports for seven years or “or until the governing statute of limitations has expired, whichever is the longer period.”

In many states, judgments remain in force for 10 years — a period which can be extended for an additional 10 years if the judgment is renewed.

Not only do judgments remain on credit records for many years, lenders routinely require that judgments must be repaid before new credit will be granted for larger loans, such as those used for cars and homes.

The result is that those who walk away from mortgages may be pauperized for decades because they will be unable to get credit at reasonable cost — if they can get credit at all.

“In the same way that we expect lenders to meet baseline standards of conduct, we must also have the same expectations with borrowers,” says James J. Saccacio, chief executive officer of, the online foreclosure site that receives more than three million visitors each month. “The idea that walking away from a mortgage is somehow acceptable should be seen for what it is: A destructive notion that will result in sharply-higher mortgage rates for all borrowers, something any thinking person should vehemently oppose.”

IHateToBurstYourBubble said...

Folks, I copied these pieces here to question the idea that This Thing Is Over, that the bubble has deflated & we're on our way back up.


It's not over by a long shot. Everyone seems to think it's over, because the telltale indicator of calamity, the stock market, has not imploded.

This entire country has been caught in a frenzy of speculation, that has boosted asset prices by trillions. And these trillions are directly tied to debt, debt that will not be paid back, ever.

So what happens?

Well, first and foremost, there will be MILLIONS of people caught with the stigma of wasted credit.

To draw a parallel, the whole of America will become like Hollywood: full of down & outers, with little if any prospects, with a few high-profile glitteratti.

There will be illegal immigrant backlash. Increasingly there will be low-level jobs that downtrodden Americans will do.

Some "new" form of financial institution will be born. What it is, I don't know, but these millions of people will fail the credit report part of things, and they will need a place to go without such a requirement.

There may be a New type of credit reporting system, something that focuses on this downtrodden subset of defaulters. This could be huge.

Barter will make a comeback. Bazaars, maybe. Mix this in with the internet & there's gotta be something good there.

This country will watch TRILLIONS disappear. Poof, just gone. So will the World.

And those who own these debt claims will lose TRILLIONS. BUT they will, as always, be first in line to get whatever money is being produced. Equity owners (ie stock holders, home owners) will get decimated. So the entirety of the World will be taken down a peg or two.

But the difference between 1 peg or 2 will be enormous. We will go down 2. China will go down 1. We will turn into a 2nd rate quasi-superpower. China is gonna run this dirtball in a few years.

THAT is yet another area to capitalize on? Learning Chinese? Who knows...

I do know one thing: California has been the biggest beneficiary of the past 30 years speculative frenzy that has gripped this country, and they will fall farther & harder than anywhere. GUARANTEED. San Fran... 20 years DOWN.

Where will they go to escape the implosion? My guess: The Midwest. I know, it's fucking weird. But the Midwest will seem like a last bastion of sanity, and a lot of people will think about going there.

So what to do? But farm land on the outskirts somewhere? Froo froo coffee shop in Wichita? Who knows what the fuck Cali-bangers out of their element will want.

IHateToBurstYourBubble said...

Actually, I think the stock market is having a hard time discounting this thing. Usually, whatever the problem is, if it can be quantified financially in some containable way, the stock market will fall & rise back up in short order. There's a discovery process, and the shorter, the better.

This thing has a discovery process that seems to be unending. Here we are in the 3rd year, and the malaise has spread to Bear Stearns collapsing. There's a freakin RICE SHORTAGE for Gods sake! Dunc has lost his HELOC. I mean, what else can go wrong?

Well, I think A LOT. I think entire SPECULATION BASED INDUSTRIES, VC being the primary one, will go under. The repercussions of THAT directly impact Bend. When California gets gonorrhea, Bend gets The Fucking AIDS. The whole conveyor belt of California wealth transplantation has ground to a halt. Bend is Ground Zero for taking the impact of that trend smack in the face.

We're dead. And not HAPPY QUANTIFIABLE Dead, where we're brought back to life. But Dead DEAD. Where the malaise NEVER ENDS. Where we actually get population OUTFLOW cuz people want to escape Bends Economic Implosion. Where medians go to $175K, and still no one buys.

Except maybe Buster, since he's just joined COBA.

Anonymous said...

Hey how can you guys sit around and do nothing while I work hard to get my next invention up and going?

IHateToBurstYourBubble said...

Where would I go?

Well, you'll like this Brucey...

I would initially think places like Texas or Oklahoma, where oil-fueled income prospects don't seem horrible, and costs are still incredibly low.

But I actually bought into Gore's Inconvenient Truth to some extent, and I think that cooler climes will beat out hot-houses like Texas.


Oil-rich & cooler. Go inland though. If we do have a climatological catastrophe, you don't want to be under water in Juneau... or NYC, Miami, or LA.

50 year plan though. Only matter after we're all dead, maybe.

IHateToBurstYourBubble said...

Another f-d up trend I didn't see coming?

Freakin' methers pilfering building sites & other electrical equipment for copper!

How messed up is that? I just read an article that you shouldn't throw away old, crappy cellphones, cuz the metals in it are actually now worth quite a bit.

People stealing at the pumps. Suicides. Methers trucking out to Christmas Valley to steal copper. Food rationing.

This thing is going to get far weirder than we thought possible.

Anonymous said...

I seem to have read all of the same articles as you of late.
I agree that Bend will be quite DEAD. I suggest your RIP list be updated to include other businesses as they die. Like the Painted Pony, Hans', 80% of the lenders, Realtors(TM),small coffee huts, gas stations, rice dealers, Goody's is really struggling right now(3 locations).
Can anyone add to these? As you drive around town, report any new vacant store fronts.

Anonymous said...

Oh, you better put a REAL lock on you gas tanks. In Cali any car parked on the streets are losing their gas and catalytic converters.

Anonymous said...

Hey Dunc,
Looks like you got the old noggin a workin like the RE folks. Great FREE PR & Marketing in the BULL today about your free comic day. Bet all the Realtors will show up as comicis are more fun to read that sales statistics.

IHateToBurstYourBubble said...

Goody's is really struggling right now(3 locations).

How do you know that?

Goody's was for sale forever... I'm not sure if they got any takers. I think they have (had?) a great little "franchise" as The Ice Cream spot in Bend, a good place to treat the kids to something on a hot Summer day. Although if I were them I would concentrate less on candy & stuffed animals, and push ice cream. They've got good ice cream. Too expensive though. Maybe crappy lease deals? Goody's is a great example of a pretty good business with good product that might die of undoable lease deals.

And I thought they had 4 locations: 2 in Bend, Sunriver, and 1 in Idaho. Did 1 close?

IHateToBurstYourBubble said...

Free comics; Faster than a speeding bullet, Bend store to partake in annual giveaway

If anyone's got Dunc's promo from the Bulletin, feel free to post it.

News Junkie said...

You lost me in your analysis of the Cali market. Your prediction is based upon the flimsy “the bigger they are, the harder they fall” logic. Are you saying The Biggest Loser is inevitably the one who has the most to lose? Ya, but what statistical probability can you present that the loss will actually occur?

I think you have been fooled by randomness. Maybe you need to tone up with some more Intellectual Exercise with Taleb.

Anonymous said...

Beware the fine print in tax waiver law

IHateToBurstYourBubble said...

You lost me in your analysis of the Cali market. Your prediction is based upon the flimsy “the bigger they are, the harder they fall” logic. Are you saying The Biggest Loser is inevitably the one who has the most to lose? Ya, but what statistical probability can you present that the loss will actually occur?

Hmmm... that's not at all what I was trying to say.

Not even close.

Anonymous said...

IHateToBurstYourBubble said...
Goody's is really struggling right now(3 locations).

Didn't know about Idaho.
I have a longtime friend that works there at Xmas packaging orders to ship. They didn't need her this year and recently laid off another lontime employee that has said they are struggling.

Duncan McGeary said...

Beware the big floating toothy grinned head of Duncan.

Hey, Paul-doh. It's like you did double homework as make-up.

IHateToBurstYourBubble said...

And if you're at want for something to do this fine Sunday, might I recommend going to Tumalo Falls, whether by bike or not. I went there yesterday & it was absolutely excellent. They've closed the fence just after the bridge, but the walk to the falls is just awesome. That is a great place when the gate is closed, pretty devoid of people, and lots of snow. Not any on the road though, at least not where I was.

Anonymous said...

I hate Bush, he's a fuckin idiot. Did he bomb WTC with towel-headed maniacs to go into Iraq? Maybe. But the FAR MORE LIKELY theory is that towel-head fanatics learned to fly jetliners into buildings, cuz they wanted to nail 600 vestal virgins in the hereafter.

You omit a third possible explanation: That Bush and the neo-cons knew the WTC attack, or something like it, was about to happen and deliberately did nothing to stop it because it would give them the "new Pearl Harbor" they needed to advance their aims of conquest abroad and expansion of executive power at home. More and more this looks to me like the most plausible theory.

Anonymous said...

Please help me with this info, sound like you all are full of Sh*t. Please see the e-mail on the current health of the market. Should I trust Coldwell Banker?

""Dear Sawyer Five Clients & Friends,

I have great news for all of you that have been tracking the real estate market in the past year. There seems to be a real trend upward! IN Dec of 07 there were only 3 pending sales in all of Bend, including residential and residential w/acreage, in Jan 08 this number jumped to "4" - wow what a climb. However, in February we were at 33 and in March sale pendings flew up to 75. This is such a good sign!
Interest rates are low, there are great buys out there right now so keep your chins up and let's pray for an amazing upswing throughout the summer months.
I just read a great article from Chairman Dodd regarding a bill that he is trying to pass right now which makes great efforts to restore liquidity to the current real estate market. Senator Dodd is currently Chairman of the Banking, Housing and Urban Affairs Committee. The proposed “HOPE for Homeowners Act” allows those buying foreclosed properties a $7,000.00 tax right off, as well as applications for those going thru foreclosure. It also provides some tax relief for builders and other's business hit by the home market slump. Read the details here.
I hope you find this information helpful. As always should you have any questions please do not hesitate to call us any time regarding your real estate needs. ""

IHateToBurstYourBubble said...

Beware the big floating toothy grinned head of Duncan.

So what's the revenue model on this so-called "Free Comic Day", Dunc?

Do you pull the old Bait-N-Switch, eh? The Susquehanna Shuffle? The old Tijuana Cup-N-Ball? The Old Modesto Mombo? How 'bout the favorite Rattlesnake In The Pants?

My old Profits-At-All-Costs, The-Dingo-Ate-Your-Baby, Crush The Poor & Blacks Under My Corporate Jackboots Republican mind is stuck in a rut & just don't compute on this.

IHateToBurstYourBubble said...

Again, I will play into the conspiracy addled minds, just a bit:

What I thought to be the most damning evidence that someone knew something and was in a position to capitalize, was the pre-emptive & quite dramatic fall in stocks in the days preceeding the attacks.

Someone knew the shit was going to hit the fan, and THEY had HUGE amounts of money.

Did Bush/Cheney know? Who knows, those dumbfucks couldn't find a fag in Gay Parade. I did not give Saddam Hussein the benefit of being an WMD mastermind, and I won't do it for Bush either. Saddam & George Bush are birds of a feather: Incredible Idiots.

You needed look no further than Saddams hair to know he was probably NOT in possession of WMD's. He was a chubby, middle aged petty tyrant drunk on his own power & money having a middle-age crisis. WMD's were the last thing on his mind. GWB, same thing. Dumbshits. Except Bush is just stupid.

foz said...

>>Where would I go?<<

I did Texas for three year. I would stay away from the Southern border, and the heat is unbearable. I like Washington, no income tax, no capital gains, stable realestate market, stable employment.

I think what you are going to see is the slow de-mobilization of the baby boom generation. Most like me are just going to park ourselves now for the duration. One for sure bet that has paid off over and over is to figure out what the boomers are doing. That will continue for at least another 20 years or so.

timothy said...

>>Although if I were them I would concentrate less on candy & stuffed animals, and push ice cream.

Those stuffed animals are probably pretty high margin.

News Junkie said...

"the pre-emptive & quite dramatic fall in stocks in the days preceeding the attacks"

The theme of the day: Fooled by Randomness.

IHateToBurstYourBubble said...

The theme of the day: Fooled by Randomness.

You might want to read the book. It's clear you did not. Or you did, and don't get it.

Those stuffed animals are probably pretty high margin.

Capital tied up in slow-turning inventory though. I'd much rather turn the place 10X/year at 10% margins, than turn it once at 100% (extreme illustration). That's just me though.

News Junkie said...

I don't waste my time reading books that attempt to intellectualize by offering convoluted explanations of the obvious.

And I don't waste my time looking for conspiracies in the randomness of the world.

You're right. I don't get it.

IHateToBurstYourBubble said...

The theme of the day: Fooled by Randomness.

OK junky: I'll give you this, the fall in stocks pre 9/11 may have certainly been chance.

But stocks had a 5% fall in the 3 trading days prior to 9/11. Not a very unprecendented event, at all. Falling 5% in 3 days has probably happened hundreds of times. But the population of 3 day returns above -5% numbers in the many, many THOUSANDS.

So it may well have been coincidence. But to me it is a 1:100 coincidence. Not astronomic, not one in a billion... but certainly unlikely that not a single person capitalized on 9/11.

Dude, busting people with insider knowledge is predicated on "unusual" activity in stocks prior to Actual Announcement. Ask Martha Stewart. Is it a dead lock that someone is doing something illegal if there is unusual activity just prior to adverse events? No.

But it's a start, and when they DO start investigating, more often than not, they nail someone.

If I'm a betting man, I would take the bet that someone cashed in on 9/11. Is it a certainty? No. But I would still bet on it.

IHateToBurstYourBubble said...

I don't waste my time reading books that attempt to intellectualize by offering convoluted explanations of the obvious.



I'm glad to hear you've somehow made a pre-emptive strike on a book you've never read.

If there's anything else you don't know ANYTHING about, please refrain from posting it. I might make the same mistake I just did in the previous comment, and assume you know shit from shinola, when you don't.

Dude... you might wanna head over to BendBB. That might be more your speed. They arbitrarily take down stupid fucking crap, like what you just posted, whereas I leave it up & torment all future commenters with it for a full week.

Be kind. Rewind. And get the fuck out.

IHateToBurstYourBubble said...

My God, have I taken Busters place?

Buster, you out there. Come back, baby, I was wrong. We can work it out. Just come back and throw these stupid fuckers out, in the way that only you can.

C'mon, baby. I do right by you from now on... C'mon.... come back.

IHateToBurstYourBubble said...

Brucey, the main difference between you & me is that you give Bush FAR more than his intellectual due than I do. The man is a moron. He has the capacity to plan or somehow co-opt 9/11 for his own purposes about as much as a 3 year old girl.

Many 9/11 conspiratorists (sp, Timmy?) have IMPLICIT in their theories that Bush/Cheney have a brain cell to rub between them. My Lord, both are imbeciles.

I still cannot believe 9/11 or ANYTHING requiring the least scrap of strategic planning, could be the product, even peripherally, of The Bush/Cheney administration.

My God, it took them 5 days to get water to the Superdome.

These are not the droids you are looking for.

IHateToBurstYourBubble said...

From Dunc:

Wow. The 'Serial Deerkiller" story just keeps getting weirder.

This from the KTVZ. com.:

"He (Livermore) faces 22 charges, including one that alleges he did more than just kill deer.

"The last count is attempted sexual abuse of an animal" said Crook County District Attorney Gary Williams. Asked if he could elaborate on the charge, Williams said, "There is nothing I can say on that count."

OK, this is what I don't get about this story. They say this guy made this silencer clad gun, went out in the sticks, and shot when he saw the whites of their eyes.

OK, they want to claim that he killed almost exclusively pregnant does'(plural of doe), who he later fucked in the ass or some shit.

Something is wrong there: What the fuck are the chances that he would somehow end up killing a bunch pregnant does' in pitch black when shooting them when he sees their eyes?

I think does' are pregger about 101% of the time, cuz male deer & Prineville perv's love to fuck 'em in the ass... but still. What are the odds that this story is right? Something is fishy about how this story is being reported...

Anonymous said...

Hey I saw Martha Stewart in Sunriver yesterday and she told me to "buy ethanol".

LavaBear said...

>> IHateToBurstYourBubble said...
Brucey, the main difference between you & me

You seem to be having an ongoing conversation with Bruce yet...I haven't seen a Bruce post all day. Does that mean...could it possibly be true....holy shit COULD IT!!! You have implemented the Bruce filter we've all been pleading for??? You be genius.

Where do I find the settings tab for it? I'd like to allow some of the Juniper Ridge stuff and a little bit of the city council stuff then filter out the rest?

IHateToBurstYourBubble said...

You have implemented the Bruce filter we've all been pleading for??? You be genius.

NEVER! Were it not for Bruce, culturally iconic terms like "Capstone Buttplugs" would've never seen the light of day.

I love Bruce.

Besides he's the only person I know actually showing up to fight the good fight.

LavaBear said...

I love Bruce too. He's fightin the good fight, the bad fight, the down right weird fight, and the kook fight all at once and not afraid to write about it.

I'm hoping he takes his camera out and gets some pic's of the honey pots stacking up in town.

News Junkie said...

"Be kind. Rewind. And get the fuck out."

...In lieu of deleting posts.

Anonymous said...

Please help me with this info

How can anyone trust someone with soo much to lose if they don't sell homes.
Now is not the best time to buy!!
The stats they quoted were not made up. If they wanted even better news, we have over 135 pending homes for March and April. The problem is a huge percent will not close because the buyers won't get loans. Generally speaking 30% don't close. Now I would say it's close to 50% or so.
April sale are at 61 today and $270k med. We need to sell 29 homes in 3 days to beat March sales.

bruce said...

Re: u lost me in your analysis of the Cali market. Your prediction is based upon the flimsy “the bigger they are, the harder they fall” logic. Are you saying The Biggest Loser is inevitably the one who has the most to lose? Ya, but what statistical probability can you present that the loss will actually occur?

Here you go:

The Anatomy of a Credit Bubble
May 14th, 2007 by IrvineRenter in Analysis Financial markets represent the collective result of individual actions. To fully understand how our current housing bubble was inflated, one needs to understand how the actions of the individual market participants impacted house prices. In my last analysis post, Your Buyer’s Loan Terms, I discussed future interest rates and debt-to-income ratios and their impact on future housing prices. In that post, I made a blanket assumption that interest-only and negative amortization loans will simply not be available in the future. It is a debatable assumption. In this post, I want to show more clearly how these two loan types created this bubble and why I believe they will not be available in the future. In short, I will describe the anatomy of a credit bubble.

To illustrate how this loosening and tightening of credit creates housing market bubbles, I will examine the last two bubbles similarities and differences. I will demonstrate how the bubble from 1987 to 1990 was very similar to our current bubble from 2001 to 2004. The last two years of our bubble, 2005 and 2006, were uncharted territory created by "innovation" in the lending industry....Lenders faced high foreclosure rates in the early 90's because they were too aggressive with their lending practices in the rally of the late 80's: it was their own doing. As you can see from the above chart, the ultra-aggressive lending practices of the early 00's are just now starting to show up in the foreclosures. Just as in the early 90's, this is being caused by the past sins of the lenders: karma on grand scale. If does not take an expert to extrapolate from the chart above to see that foreclosures are going to shatter the old records set in the 90's...When prices crash, defaults rates will increase for all borrower classes. Prime borrowers will not default at the high rates of sub-prime borrowers, but they will still default at rates higher than in the past; therefore, interest rates will rise for prime borrowers as well. The crash in house prices will cause all mortgage interest rates to rise.

What Happens Next?

Over the next several years, interest rates will rise to at least 8%, 20% down payments will become the norm, and debt-to-income ratios will fall back to their historically "safe" levels for banks of 28%. What will that do to prices?...At some point in the future, the market will bottom near the values above. How it gets there will depend on the number of foreclosures. If there are a great many foreclosures, it will happen quickly, if there are fewer, it could take longer. Either way, the median prices shown above will occur, it is just a matter of when. I have constructed two different scenarios as to how and when: Predictions for the Irvine Housing Market and How Bad Could Bad Get?

The conditions for the above disaster are already in place. Right now, we are in the lull before the storm, but the storm is coming; there isn't much anybody can do about it.

Read the whole thing, with cool graphs and stuff that make you realize how far out-of-hand things got, here:

Re: 9/11, I made my last comment on the old thread. As far as profiting from foreknowledge, look into the put/call options ratio on directly affected companies like American Airlines. Another pretty odd thing showing that someone made a whole lot of money. For example, a jump in UAL (United Airlines) put options 90 times (not 90 percent) above normal between September 6 and September 10, and 285 times higher than average on the Thursday before the attack, while jump in American Airlines put options 60 times (not 60 percent) above normal on the day before the attacks, according to CBS News, on Sept. 26, 2001. The SEC investigated, along with the 9/11 Commission, and found nothing suspicious, just some coincidences with no conceivable ties to Al Qaida...

More detail here:

Everyone just move one, there's nothing to see here.

Anonymous said...

Nice to see you're starting to think about 9/11. You see right through the brattonaid, with a little research you'll start seeing right through the official-9/11-conspiracy-theory-aid.

Also nice to see there are at least a few people on here (anonymous peeps and bruce) that are on to the truth. I have much more respect for Bruce than anyone who calls MILLIONS of people who question the official version of 9/11 nuts and kooks. Yes, MILLIONS... cia personel, military personel, nobel prize winners, other gov'ts, professors, scholars etc... MILLIONS. It amazes me to see such ignorance on this subject. It's like Christians, Jews, Muslims... they all think they're right while EVERYONE else is wrong and they're killing eachother over it. Whether it's 9/11 or religion, that kind of ignorance is still abundant and it's just crazy.

And it's not just a Bush / Cheney thing at all. They're motherfuckin' puppets... same with the clintons... they're all MEMBERS OF THE COUNCIL ON FORIEGN RELATIONS. The fearful little fucks pulling the strings are the elitist bankers who created the fed reserve, funded both sides of almost every war, created the cia, assasinated kennedy, push for shit like the military commisions act, patriot act etc etc etc. Think Bilderberg Group, Trilateral Commission, Project for a New American Century...

It amazes me that when it comes to subjects like these, there are still so many americans that will continue to believe mainstream media, stuff thier fat fuckin' faces with bon bon's, stick thier head in the sand and watch amercian idol... asleep and oblivious to reality. I mean where is the spirit of our founding fathers?? True patriots question the gov't.

Perfect example on something a little less inflamatory: Our founding fathers warned against private banks running and regulating our money (Jefferson: If the American people ever allow private bankers to control and regulate thier monetary supply, they will wake up homeless on the streets of the country their grandfathers founded) and yet we have had a federal reserve (private bank creating money out of NOTHING and lending it to our gov't at an interest) since 1913. Today, the effects of this are OBVIOUS, and yet most people don't know or care. Like Bruce said, just move along, nothing to see here.

bruce said...

Will wonders never cease?

From the BULL today on the 3rd St. plan aka Central Area Plan:

Instead of that money, the city and its planners are trying to figure out a way to complete some of the work in-house rather than hiring outside consultants.

We need more of this kind of thinking.

B McMorris said...

Wow...what a rant...might set a new record. But I liked it. It is wickedly dead on.

RE: Cali RE. The ability of it to avoid reversion to the mean has been quite impressive. It is likely that at least in pockets of CA, there is something special that keeps the price above the national average. In coastal towns, it is obviously the ocean / beach. In southern CA, there is a lot of immigration, legal or otherwise, that skews demand. There may be a VC effect in the Bay Area, it does have a couple good universities and nice weather, so maybe that is enough to skew demand, and land IS limited directly along the Bay. But the interior valleys? No way that Merced or Fresno should be way above national averages. Here, the Flint reference may apply. Keep up the good work!

Anonymous said...

Went to buy new lawn mower today. So that I can help the economy. Checked the online ads at Lowe's and Home Depot. Found the model I wanted and headed to HD. Feeling like I might make a killer deal if I offered cash, I found the mower and it was on sale for less than I was going to barter for. On the way to the check stand I saw a sign "killer deals on reconditioned mowers". There was a better one there for $50 less. The model number was misrepresented, I got one with an electronic start...Bonus since they didn't know it was worth $100 more and it 2008 model not 2007. DOPES.
My mower was 22 years old and finally took a shit. Now I feel like I won the lottery!
When I shop, if I can buy for 30% off, I feel like my cash that is makeing 4.8% is worth more.
Coupons, the new wave of Bend. Don't forget the double coupons.

IHateToBurstYourBubble said...

My mower was 22 years old and finally took a shit. Now I feel like I won the lottery!
When I shop, if I can buy for 30% off, I feel like my cash that is makeing 4.8% is worth more.

May I wash your feet?

Anonymous said...

If washing my feet will make you feel good, it's OK with me :)

Was just at my neighbors to take his dog for a walk. He is a long or short haul truck driver. Just came back from Ohio. He said there are 18 wheelers left at truck stops all over the country. Most are hocked to the hilt. Drivers can't make it paying for fuel and loan payments so they are just walking away. The only ones staying on the road are paid for. He said he can name is price, since his is paid for, and keeps working 7 days a week.
We are in serious trouble. When ther are only a few truckers tha can haul, besides fuel, they will pay name that price.

bruce said...

Met a couple of interesting folks yesterday on my errands. Been looking for a ladder at a killer price lately, so went to a garage sale over in Eastern Siberia that advertised one.

Dick, the guy selling all his drywall gear, moved back to Portland a few weeks ago when his union shop offered his old job back. He came to Bend to make money and lost everything, "even my retirement money". But at least he had an out, and is a lot happier for it. I helped him figure some stuff out on his new giant laptop--Vista is the next step in user-friendliness from not-so-Microsoft, you know.

We got to talking he he told me about both his kids getting hit on their bikes by Cali's in Beemers or Mercedes (one kid, about 22, was there and told me the whole story from the guy getting hit point of view) and neither stopped. And of being rear-ended so hard on Galveston in hi Mini by a big Dodge pickup that it knocked both him and his son riding along unconcious. He said he didn't really like the way Bend had become.

Went and got my haircut at the new sports/haircut place out by Trader Joe's, as they sent me another freebee coupon. I may actually go pay them real money, as they do a good job and are only a few bucks more than my normal cheapie places (I only have half of a head of hair anyway) and it's a nice atmosphere with all the flat screens to watch.

The gal cutting my hair, "Michelle", has lived in Bend for a long time and likes the bigger city feel, as she came from Long Island. Mentioned the Obama thing last night and she is a BO supporter, and is aghast at some of the racial comments she hears from her friends. I'm still bummed about mot finding that party last night.

Anyway, young "Michelle", maybe 25, turns out to have a most interesting past. She is the offspring of a Saudi Arabian prince and an Italian scientist who met in college in Las Alamos. She said her father, whom held her shortly after birth and whom she has never met since, tried to get her mother to give birth in Saudi Arabia, but her mother figured out how few rights women have there and managed to get out shortly before she was born. Stated that women are not even allowed to use forks and knives to eat. Etc.

A fascinating story from an absolutely beautiful young woman.

Tales of Bend...

bruce said...

Re: He said there are 18 wheelers left at truck stops all over the country.

That's fucking sobering.

Anonymous said...

, I noticed that while we have a tendency to just hammer away at some of the local RE schill's, and that some of that "bile" has seeped into hammering away at Bend in general. Seemed like we were starting to beat the shit out of each other.


This blogsite is quite representative of the average fucking 'moron schill' you wish to beat, at least the moron schills, risked bought high and got fucked. 80-90% of the dweeb ass fucking renter losers on this site have never even owned a home.

Are 90% of the people in Bend schills? Hell yes.

Are 90% of the people on this blog-site renter-losers?? Hell yes.

Homer suggests we not beat down his loyal followers, the great leader of a village of fucking idiots. Whats worse is the people on this blog are quite possible the best and most informed.

More insulting to injury is our own bruce-pussy is probably more able to run city-hall than any of the man-twat currently electable.

Scary fucking shit is Bend.

Am I an ASSHOLE. YES, a big 10-4.

Are the majority of the people in Bend amenity-parasites? Are the people on this blog loser-renters?

Beating the shit out of each other? Like were supposed to treat our bruce-pussy and his ILK with kid gloves?

I am a darwinian socicalist, and the majority of you man-twats are going down.

The great BEM worked his ass off over a month ago on a post of how to fix Bend. What was the essence? That what I wrote here 1-1/2 year ago. "First step: Admit you have a fucking problem"

Yes, Homer this town is going down. Why? Because nobody gives a fuck, and the town is occupied by losers. The gold-rush is over, and we're headed towards being a ghost-town.

The majority of the people on this blog I know all too well after a year, they completely typify the average Bend loser.

Homer says its ok to bash the boss-hoggs but not each other, hell some of these man-twats here could be boss-hoggs who is to know?

Look at the insipid shit posted here. Sixty posts today, and most of it by Homer.

There was "Lord of the Rings", Lord of the flys, and now lord of the man-twats.

Homer says don't pick on my man-twats. They're all he his, his flock. Like the baby-jeebus, Homer preaches to his flock every fucking sunday.

Somebody points out that Homer & his flock are all full of shit, and the lord say "This shall not be".

I concur with BEM, know thyself, and know what the fuck is really going on. The first step is to admit you have a fucking problem.

bruce said...

Buster's back!

And yes, Buster, I not only noticed BEM's fixes, I commented on them.

What's your opinion of my 2% restaurant tax idea? I never got any feedback at all about it.

FYI-when I went out and toured the treatment plant, their was one funny thing--in the last tank, right before the water is either sent to Pronghorn or pumped out to the desert, there is still a noticeable amount of fat that is sticking to the sides at the top of the waterline. The guy who heads up the facility said it's because of the restaurants, they send so much fat and oil into the system that it fucks everything up from start to finish.

My idea is to institute a tax, like Ashland, to pay for capital improvements relating to wastewater. After some thought, I've modified my initial proposal a little: 2% on every restaurant, plus 1/2% more on restuarants that don't join a community oil recycling effort. Work with one of the biodiesel folks to collect and recycle.

So, flame away and tell me what you think ;)

bruce said...

PS Buster, you can treat me with kid gloves or with explosives. I really don't give a shit.

I used to blow things up for a living, after all.

bruce said...

I love this line from the Homeless On The High Desert blog:

Rapture Is Not An Exit Strategy

Kind of says it all.

bruce said...

BTW, this post is really good:

It strikes at the heart of what we are doing here.

IHateToBurstYourBubble said...

she is a BO supporter

Then she'll love me... I haven't showered for days.

There was "Lord of the Rings", Lord of the flys, and now lord of the man-twats.

Yeah, that's the stuff....

Beating the shit out of each other? Like were supposed to treat our bruce-pussy and his ILK with kid gloves?

... but I am curious why you would capitalize "ilk" in this sentence.

A fascinating story from an absolutely beautiful young woman.

Why is she cutting hair in Bend?

bruce said...

Re: Why is she cutting hair in Bend?

I wondered the same thing, but ran out of time to ask.

IHateToBurstYourBubble said...

Homer says don't pick on my man-twats. They're all he his, his flock. Like the baby-jeebus, Homer preaches to his flock every fucking sunday.

Flame on dude. Have at 'em.

I was actually trying to impress on you that in my daily life in Bend, that I don't run into a lot of people I loathe, either on this blog, at work, or elsewhere, that quite deserve some of the "bile" we send at them.

Even the local luminatties... some are OK.

Or maybe I just experience short pangs of guilt when I whale the hell outta someone, then meet them in person, and they are not Satanic in Their Selfish Quest for Evil.

They're just fairly hum-drum people.

Don't mean I won't whomp the shit outta them every week from now on, though. Cuz I will.

Anonymous said...

"A fascinating story from an absolutely beautiful young woman."

How about some boring stories from an absolutely ugly guy?

Or is that what we have been getting from Brucey-pussy?

IHateToBurstYourBubble said...

How about some boring stories from an absolutely ugly guy?

Now that's funny!

bruce said...

Re: How about some boring stories from an absolutely ugly guy?

That was one paragraph above, in case you didn't notice. Dumbass.


IHateToBurstYourBubble said...

Speaking of the Biggest Dumbfuck In The Known Universe, Pamela "The Incredible Hulce" Andrews of Cascade Business Buttbangers had this line in her weekly editorial, "Is there a Rumbling Real Estate Bubble" (I know, she's ahead of the times):

In the special real estate section of this issue realtors (sic) talk about the great opportunities to buy properties all over the region at significant bargains.

At the same time RE/MAX in Portland says there is a new real estate bubble forming. Local brokers in the metropolitan area report sales are steady and, in fact, have increased 27 percent since January.

While these reports are promising, there are also concerns regarding challenges of closing the deal. The national media continues to project a real estate crisis causing buyers to wait to react. Data shows us that people want to buy, however, various factors (such as contingencies and unavailability of financing) limit their ability to do so. Still many realtors are optimistic that there is a new real estate bubble that is growing fast under the radar.
" [Emphasis mine]

Honest to God. 3 contiguous paragraphs, not taken out of context. Seriously.

But it gets better. There is an interview of Norma DuBois, Super Realtor. Here is one of the questions:

Q: What was the worst thing that happened in your company and/or industry?

A: The tremendous spike in and land prices, which began in 2004, followed by the sharp decline in mid 2006. It would have been far healthier had the market continued to increase at the "more normal" six to seven percent pace per year. The poor lending practices of some financial institutions have now led to record foreclosures and short sales. Those people who used their homes as ATM (sic) and borrowed equity from their homes are now finding they owe more on their homes than they can sell them for.

Hmmmm. So The Incredible Hulce says "Bubble Good", while Norma DuBois says "Bubble Bad, in fact Bubble Worst Thing To EVER Happen To Me Or My Industry."

Same issue, hand to God.

Norma's estimate that Bend's incredible 25 year run of 7% yearly appreciation from dead rock-bottom RE market to the most overvalued RE market in the country as some sort of sustainable figure demonstrates how myopic such an event can even make an old-timer like DuBois. Norma, 7% a year ain't normal and it ain't sustainable.

IHateToBurstYourBubble said...

The national media continues to project a real estate crisis causing buyers to wait to react.

Why is this woman confused that she is a writer? WHY!

Dude 1: Dude! Look at the real estate crisis over there!

Dude 2:

Dude 1: Why aren't you doing anything?

Dude 2: Dude, I'm going to wait to react.

Dude 1: What? Why?

Dude 2: Cuz I'm stupid & I just smoked a lot of pot.

bruce said...

Re: Pam Hulce

That is truly fucking funny.

IHateToBurstYourBubble said...

Data shows us that people want to buy, however, various factors (such as contingencies and unavailability of financing) limit their ability to do so.

Huh. So according to The Incredible Hulce, this thing is the fault of The Banks Who Won't Loan To The Average Joe!

Hulce: Listen Cessna, I need a Cessna 400 and I NEED IT NOW!

Cessna: Ummm, OK, give us the money.

Hulce: WHAT! You greedy fuckers want MONEY? What the fuck sort of scam IS THIS!

Cessna: Listen, we're calling the cops cuz you're a dangerous psychopath.

bruce said...

Especially the "far healthier" part, in retrospect.

IHateToBurstYourBubble said...

Is Timmy on vacation?

IHateToBurstYourBubble said...

Free Comic Book Day.

Does this strike anyone else as having subliminal sexual overtones?

"Free Com In Booty" or something? Does this explain it's popularity?


Duncan McGeary said...

Sometimes a free comic is just a free comic.

IHateToBurstYourBubble said...

Sometimes a free comic is just a free comic.

Well, sometimes.

Does this thing draw confused single women? I'm just asking...

Duncan McGeary said...

Do not soil that which is pure.

IHateToBurstYourBubble said...

Do not soil that which is pure.


I respect all people's religion.

IHateToBurstYourBubble said...

Apr 28, 9:34 AM EDT

Pink slips for one out of every 8 Lane County employees

FLORENCE, Ore. (AP) -- Lane County's anticipated budget for the coming year will be released this week, but the numbers have already been announced - and they're not pretty.

Because of the loss of federal timber money, the document will reflect a spending reduction of about $70 million and the loss of 188 full time equivalent employees. That's equal to one-eighth of the work force.

The Board of Commissioners has already issued a directive that layoffs and budget reductions will begin May 29.

The first hearing on the $456 million document is Tuesday.

It all wraps up May 15 with final budget committee deliberations, then the Board of Commissioners take final action.

IHateToBurstYourBubble said...

Interesting piece in the Bulletin today:

In east Bend, it’s groceries vs. SDCs


“SDCs have to be reasonable, but the levels they are at right now are crippling,” said Steele. “It’s an unfair tax.”

“There are national retailers that have looked at Bend, and when they look at land and development costs, they choose to select other cities because it’s cheaper to develop in other cities, although we may have better demographics,” Keba said.

Now that we're screwed economically, Bend is charging reasonable SDC's, and of course everyone perceives that as "UNFAIR" taxation, when in fact it is somewhere close to fair, after years of just ridiculous undercharging.

On the flip side, charging FAIR SDC's is really a deal killer, and it pisses of developers in Bend, cuz they are pretty used to getting their way.

This goes to BEM's idea of raising taxes: Do we lower taxes for everybody, and temporarily raise revenue, but leave ourselves completely screwed when it fnally becomes apparent that we're a town of nearly 100K, with the infrastructure of a town 1/3rd that large? Or do we raise taxes to fair levels, and basically kill all development?

THIS is why Bend was the poster child Boom Town: Give away the farm with respect to SDC & other fees, and developers will come. And it puts the money in THEIR pocket.

The guy in the piece wants his SDC's lowered from $500K to $250K, because he says it'll help him "lease" the place. Uh huh. It puts $250K right in his pocket. That's all.

This what I mean when I say we are damned if we do, and damned if we don't. This is what YEARS of financial mismanagement by the City will cost us. NOW we are going to pay.

Anonymous said...

"Yes, if your an intelligent investor, and your young, and you like to fix shit, there has NEVER ( in 25 years ) been a better time to buy in Bend.

Only fools can call a bottom, and you don't want to compete with man-twats on after the trough, thus right now when all the man-twats are panicking is a great time to buy." - buster

I mean, what the fuck, did you join COBA this week? Bitch you been talking this thing DOWN 90% at times (remember $0.0006/ac?), and with medians down to a wimpy $275K or so, it's the best time to buy in 25 years? Are you fucking kidding me? - Homee


Homer, I just tell the truth. I ONLY write here to educate, humiliate, and amuse. Have you ever thought for a fucking moment that people that are wealthy see the world a little differently than the average Bend man-twat on this forum??

All along HOMEE I have told the truth about how I see Bend, and how Bend has changed. Hell yes, Juniper-Ridge cost 0.06 cent/acre, and is worth that, so fucking what. Your 'schills' were paying $1.2M/acre for desert land in 2005. Yes, the kool-aid brain-fucked our man-twats.

A smart kid with some money today at 25, could be set for life risk-free by 40, what the fuck is wrong with the truth homee?? Whats your fucking agenda? That everyone remain a pauper renter all their lives like the majority of your flock?? Like You!

All along here I have said Bend is like the blind men and the elephant we all see something a little different. I was a poor kid, that stole to eat when I was 10-12, by the time I was in my early 20's I was a millionaire. I started 1/2 dozen high-tech companys in the 70's, all along I put all the profits into real estate. Why? I didn't know any better. I travel all over the world, every time I saw a good price I paid cash. The only time I even think about this shit is when I get tax bills yearly.

We all see the world a little different. I can easily move back and forth, Walmart or Merenda. I despise almost everyone in Bend. I was raised poor so I can meld with them, I can afford anything, but being near the 'rich' makes me puke.

What is the fucking problem? I like you because you let us all say what we want. I think this is a good thing.

For the past six months I have demanded we change the subject to fixing Bend, and only BEM seems to give a damn.

I was angry a year ago, you know that, I was angry because city-hall was turning Bend into a Real Estate Whore-House ( REHO's ). I look at the BIG fucking picture. A young kid thats in it for the long haul, who buys shit today, with low-ball offers could clean up in fifteen years. Am I going to do that? No I'm done. Am I going to suggest the world is going to shit? Hell no, 98% of all humanity is too fucking lazy to follow my advice, I'm only trying to reach out to the 2% of Bend, that has something between their ears other than a man-twat brain.

What you call a 'schill' I call a man-twat. 90% of this blog is man-twats, I'm trying to educate the mother fuckers. But all they want to do 24/7 is stupid.

I was raised in poverty, from the time I was five, I read, and figured how to get out. You bless stupidity, and renting, and poverty, all wrapped with the ideology of an MBA, but I still love you.

I have been consistent since day-one. Let's quote W-Buffet. "When people are selling I buy", "When people are buying I sell", Today in Bend the man-twats are panicking. So, yes the Buffet's of Bend should be buying. If your capable of thinking like a Buffet.

In summary 'MARGE' ( who Ned Flanders suggests is really a man ), started this subject by asking "Why would investors buy in todays market". I answered the fucking question, and it went against party line. So fucking what, as a contrarian for over six months in this forum I have said its time to fix Bend, and start thinking about the upside.

Sure its going to be 2-3 more years before extreme bottom, the last two years has gone by fast. Bends man-twats are now panicking, they'll take low-ball offers, young people who don't want to end up being a middle age renter should get their ass in gear.

What is the fuck is wrong with the truth homer??

Anonymous said...


Another comment on it being a good time to buy. As I have pointed out here from day-one, as we approach the bottom, loans will become NIL.

Today 90% of all loans are denied in cali, because people don't have 20% down, 800 fico's, and a 4X income ( job ). Bend is Cali.

When I reach out to 25 year olds that aren't man-twats and suggest that this is a good time to buy, I'm only talking to 2% of Bend.

Nobody can fix Bend today, its all man-twats, and 90% of them couldn't buy a home if they wanted to, we have 10-30 years of inventory in the tri-county ( cent OR ). All along I have said, location, location, location, low-ball, ... 'best of times'. They're here now, but ONLY available to people who aren't man-twats, given that +90% of this group are man-twats, its like talking about Hamiltonian-Tensors to the Walmart crowd. I'm just assuming that somewhere out there, there is someone who is NOT a man-twat, and doesn't want to spend their life as a pauper.

IHateToBurstYourBubble said...

OK Buster, I sorta see where you're coming from, after all I've already run a "Best Buys Per Price Point" crap, where I declared my love for that log monster in Saddleback West.

It may be a good time to buy, but you can't pay within even 30-40% of almost all ask prices in Bend. People are still drinking the Kool-Aid in VAST QUANTITIES. As I've said before, you're low ball better cause a low-grade stroke in the victim, or it's too high.

I think people should completely IGNORE ask prices, compute your own price that pencils, and finally look at the ask & see if it's within 10%, and if not, move on. That would eliminate 99.9% of all Bend homes.

I would rather swim with the tide, and buy for 50% down at the bottom, when things don't need to pencil with a hyper-sharp edge... but when stuff easily pencils with wide, WIDE margins and even under bad scenario cases, things still aren't financially disastrous. This has worked for me, and worked well.

Call me a Loser Renter if you will... but I am watching it pile up now so that I can nail the buy of a lifetime when the time if right....

Anonymous said...

Would you rather lowball a $400k list house at $249k or wait until it lists for $200k and have to pay 10% more than list when other people bid it up? I'll wait.

LavaBear said...

Hello, my name is Lavabear and I too am a Loser Renter.

In 06 we sold our house because the kids are older, we needed a bit more room and the price was fucking unbelievable. Found a great deal on a rental as we searched for something to buy. Two years later I couldn't be happier with the decision.

I also sold a duplex I owned on the Westside late 06. I also sold the house I bought for my mom in Chandler, AZ after it had DOUBLED.

So not only am I a Loser Renter but I'm not a Winner landlord anymore either. Damn happy about it.

I'm not going to beef up the RE portfolio until this thing over corrects. Buy of a lifetime coming to a neighborhood near you as long as you are ready.

Anonymous said...

You omit a third possible explanation: That Bush and the neo-cons knew the WTC attack, or something like it, was about to happen and deliberately did nothing to stop it because it would give them the "new Pearl Harbor" they needed to advance their aims of conquest abroad and expansion of executive power at home. More and more this looks to me like the most plausible theory.

Bush's Reichstag Fire, in a sense.

By the way, I saw a truck for sale over in Newberg with its catalytic converter missing. The tweekers aren't just in CA, there are plenty of 'em in the Willamette Valley. Have a look at the jail roster in Yamhill County... tweekers.

Anonymous said...

A little-known and privately-held aircraft leasing company created by the Israeli military intelligence is connected to the Mossad-run airport security and passenger screening company at the center of the "false flag" terror network of 9-11.

I am not like those who claimed to be 9-11 researchers, but who now say they have "moved beyond 9/11."

How can anyone abandon the pursuit of the truth about 9-11 before the crime has been solved?

Six years after the terrorist attacks in which some 3,000 innocent people died, not one victim's lawsuit has yet gone to trial. As a nation, Americans can not allow 9-11 to go unsolved.

How can we forget the hundreds of people who were roasted alive in the burning twin towers?

How can we ignore the death and destruction that we, as a result, have wrongfully inflicted on the innocent people of Iraq, Afghanistan, Lebanon, and Palestine?

Who can accept an unelected administration dragging our military from one illegal war to another in the utterly fraudulent "war on terror," which they have promised will last for generations?

Vice-President Dick Cheney has said that the US must be prepared to fight the war on terror for decades.

bruce said...

Re: I'm just assuming that somewhere out there, there is someone who is NOT a man-twat, and doesn't want to spend their life as a pauper.

That's just a fucking stupid comment. Paupers don't save, and many of us do. Hell, we have his and hers savings accounts.

When the median gets under 4X, I'll start thinking seriously about buying. At 3X, I'll have been waiting and ready. And make no mistake about it, that's where prices are going.

About 11 months from now is going to be a hell of a lot better time to buy then now. Maybe longer.

Until then my 1300 sq ft or so for $850 a month with no maintenance, PITI, etc. sits just fine with me.

bruce said...

For the stated need for a "new Pearl Harbor", see page 51 of this: "Rebuilding America's Defenses", published in September, 2000.

And then look here to see who is behind the organization that published it:"Statement of Principles".

Names like Cheney, Rumsfeld, Lewis Libby, Jeb Bush, Elliot Abrams, Paul Wolfowitz, etc.

These guys seem to think creating an American Empire in support of a Jewish homeland at the point of a B1 bomber is perfectly fine.

Which frankly fucking scares me.

And if you want to really start wondering WTF, google around about Dov Zakheim, the Dept. of Defense, and SPC...

IHateToBurstYourBubble said...

Vice-President Dick Cheney has said that the US must be prepared to fight the war on terror for decades.

See, that sounds like a rationalization for a never ending war. I just to kill the fuck outta Osama & his brothers.

And then stay vigilant, but stop waging war. We have fallen prey to those fuckers tactics if we spend $100 defending ourselves for every $1 they spend attacking. If we keep doing that, we'll ultimately go bust, and they'll have won. And it's a war of attrition they want.


1) Kill the fuck outta Osama & Co.
2) Then resign ourselves to the fact that we cannot defend against every threat everywhere without turning into a military bunker.

A war on terror can't effectively be won.

Anonymous said...

Anonymous said...
Whoever posted, please self delete (no censureship) comment 7:39am asap, and then this one.

Otherwise, this week will be WTF 7 about WTC 7, 24/7. Please don't feed the Brucey fire.

April 27, 2008 7:54 AM


Well, so much for putting that genie back in the bottle.

Perhaps this blog should now be called: "The idiotic rantings of Brucey-pussy, 24/7".

Every Village has one, and in this Village his name is Brucey-pussy.

IHateToBurstYourBubble said...

Well, so much for putting that genie back in the bottle.

Dude, we're all just malcontents whose shit wouldn't fly over on BendBB. Your shit, my shit, Brucey's shit... it's all basically fucked up.

Anonymous said...

"Your shit, my shit, Brucey's shit... it's all basically fucked up."


You have a much better new name for this blog than the name I proposed.

"All the fucked up shit that's not fit to print anywhere else."

LavaBear said...

BEND, Ore., April 28 /PRNewswire-FirstCall/ -- The Board of Directors
of Cascade Bancorp (Nasdaq: CACB) approved payment of a $0.10 per share
quarterly cash dividend. This regular dividend is payable on May 16, 2008,
to shareholders of record as of May 9, 2008.

"This quarter's $0.10 per share dividend was granted as an exception to
the board's present payout guidelines and was carefully scrutinized in
light of the challenging real estate cycle," said Patricia L. Moss, CEO.
"At this time, because of our profitability, capital and reserve levels, it
was deemed appropriate to continue the dividend at its current level." The
board could adjust the dividend amount for future quarters based upon its
evaluation of economic and business prospects.

IHateToBurstYourBubble said...

heya marge... how's April looking now?


IHateToBurstYourBubble said...

"This quarter's $0.10 per share dividend was granted as an exception to
the board's present payout guidelines and was carefully scrutinized in
light of the challenging real estate cycle," said Patricia L. Moss, CEO.

I wonder just exactly these payout guidelines are?

"Don't continue to pay a dividend that exceeds our long-term ability to pay it"?

bruce said...

Re: I wonder just exactly these payout guidelines are?

The same kind of save your ass guidelines the City is trying to pull off...

On a happier note, I just picked up takeout from Typhoon (first time ever, it's good but a bit pricey) and the place, along with the lack of parking spots, seems to show downtown is hopping.

We keep bringing in tourist bucks, we might survive. I still think we should explore spending some of that COVA ad money on things like fixing the fucking potholes in front of Cascade Brewery.

LavaBear said...

>>I wonder just exactly these payout guidelines are?

Are they really saying it's an "exception" to keep the divided at the "current level"?

We're not completely fucked at this moment but we know it's coming?

IHateToBurstYourBubble said...

I just saw a piece on Juniper Ridge on KTVZ, which I hope will make it online soon.

Basically stated what we've all known for many moons... JR is screwed. Unless, somehow, magically we end up with $40MM dumped in our laps.

Or maybe that's $60MM since we're already behind $20MM as is.

IHateToBurstYourBubble said...

U.S. Home Vacancies Rise to Record on Foreclosures

By Kathleen M. Howley

April 28 (Bloomberg) -- A record 18.6 million U.S. homes stood empty in the first quarter as lenders took possession of a growing number of properties in foreclosure.

The figure is 5.7 percent higher than a year ago, when 17.6 million properties were vacant, the U.S. Census Bureau said in a report today. The vacancy rate, the share of homes empty and for sale, rose to 2.9 percent, the highest since the bureau started keeping count in 1956. About 2.3 million empty homes were for sale, compared with 2.2 million a year earlier, the report said.

The worst U.S. housing slump in more than a quarter century is deepening as falling values encourage buyers to delay purchases in hopes of getting a better deal. The median U.S. home sale price may drop 5.8 percent in 2008, the most on record, followed by another 4.7 percent decline next year, Fannie Mae, the world's largest mortgage buyer, said April 7.

``We think it unlikely that prices begin to stabilize until vacancy rates start declining,'' Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said today in a report for clients.

There were 129.4 million homes in the U.S. in the first quarter, the study said. In addition to homes for sale, the report counted 4.1 million vacant homes that are for rent and 4.7 million that are seasonal.

Most foreclosures are contained in the report's ``other'' category, which includes homes tied up in legal proceedings as well as homes that are empty because the owner is renovating and living somewhere else, according to the Census Web site. There were 7.5 million such homes that were vacant, up from 7.3 million a year earlier, the report said.

Midwest Region

The U.S. homeownership rate was 67.8 percent, down from 68.4 percent a year ago, the study said. The rate has fallen or remained unchanged for six consecutive quarters.

The Midwest region of the U.S. had the quarter's highest homeownership rate, at 72 percent. It was followed by the South, at 69.7 percent, the Northeast, at 64.7 percent, and the West, at 62.8 percent.

New foreclosures have risen to an all-time high, led by defaults in adjustable-rate loans to people with poor or limited credit histories, according to the Mortgage Bankers Association. Home-price declines and tougher lending standards are making it difficult for owners who fall behind on their mortgage payments to sell or refinance into better loans.

To contact the reporter on this story: Kathleen M. Howley in Boston at

IHateToBurstYourBubble said...

18.6MM vacant/129.4MM total is 14.4% vacancy rate total.

THAT is brutal.

IHateToBurstYourBubble said...

Good piece on why you should look at foreclosures as better buys:

Resales of homes a house divided

San Diego County's unprecedented housing downturn has created a sharp split in the resale market, with foreclosed properties selling at steep discounts while other homes take a much smaller hit.

Although values are down in all categories, the variance between the resale prices of foreclosed and regular properties is dramatic. An analysis performed by DataQuick Information Systems at the request of The San Diego Union-Tribune showed that during the first three months of the year:

Countywide, the median price paid for foreclosed houses and condominiums was $325,000 – 28.3 percent below the $453,000 median for nonforeclosure sales. That compares with a peak of $515,000 in the fourth quarter of 2005, when foreclosures were almost unheard of.

Single-family houses in foreclosure sold for a median price of $365,000, compared with a median of $500,000 for nonforeclosures. The 2005 peak in that category was $565,000.

Condos in distress sold for a median of $230,000, while the figure for nonforeclosures was $360,000. The median at the 2005 peak was $400,000.

Analysts say banks' eagerness to get houses off their books even if they have to slash prices could continue to be a drag on the market for some time, with discount foreclosure sales putting downward pressure on prices in surrounding neighborhoods.

At the same time, optimists see reason for hope that overall price levels in the county will stabilize once the distressed properties are sold off, though that process could continue well into next year. Foreclosed properties made up 35.2 percent of all resales in January, February and March.

“Remember, all of this foreclosure pain we've seen so far has come amid an economic backdrop that, until recently, wasn't that bad outside of real estate,” DataQuick analyst Andrew LePage said.

He recommended that buyers and sellers pay attention to areas with unusually low sales counts where post-foreclosures sales dominate.

“The median price could pop back up once we see a more normal level of sales activity across all neighborhoods and home types,” LePage said.

Alan Nevin, chief economist for the California Building Industry Association and San Diego-based MarketPointe Realty Advisors, predicted foreclosure sales could account for as many as 15,000 out of 25,000 total sales this year. But at some point, the foreclosures will drop off, he Nevin said.

“Anybody who's going to walk away from a house or condo has already done it,” Nevin said. “Now it's just a matter of the pig going through the snake.”

Alan Gin, an economics professor at the Burnham-Moores Center for Real Estate at the University of San Diego, said the DataQuick figures reveal a direct relationship between foreclosures and the prices that homes command.

In areas with no foreclosure sales, the median house price dropped 5.3 percent on average in the past year, as measured by price per square foot, Gin said. But for every 10 percent increase in the percentage of transactions that were foreclosures, the median price per square foot dropped an additional 3.6 percent.

For example, in La Jolla, which had no foreclosure sales in the first quarter, the median price per square foot on 42 sales was $698, a figure 5.7 percent lower than a year ago. In National City, where nearly half of the 30 houses sold in the first three months of 2008 were foreclosures, the $268-per-square-foot price was down 32.7 percent over the past year.

“We're sort of in uncharted territory here with the number of foreclosures being so high, particularly as a percentage of total sales,” Gin said. “And so it could be that we've got some distortion in the market at this point.”

It's no mystery why foreclosed properties generally sell for less than nonforeclosures, said Peter Dennehy, senior vice president of Sullivan Group Real Estate Advisors in San Diego.

“In general, the banks are not like homeowners hoping to make a profit,” Dennehy said. “They have no interest in owning real estate, especially when they're owning more and more of it. They're the extreme form of a motivated seller.”

In some cases, lenders will spruce up vacant, abandoned houses with a new coat of paint, carpeting and new appliances in order to command prices competitive with the overall market, said agent Rose Avedisian, a foreclosure specialist who has an inventory of 150 bank-owned properties she is trying to sell.

“The banks that choose not to have that philosophy and want to get the houses off their books are willing to sell them at below market value,” Avedisian said.

While foreclosed homes tend to be in worse condition than those that are privately owned, that's not always the case, agent Linda Ring said. Ring has sold a number of houses in eastern Chula Vista, where many first-time buyers had stretched beyond their means to buy.

The typical foreclosure house in that area is two stories with three to four bedrooms and two to three baths on a 3,000-square-foot lot. Many have upgraded kitchens, Ring said.

“The banks don't want to attract a fire sale, so they price them the same as the neighbor across the street,” she said. “But once it hits the 120-day mark, the price becomes pretty flexible.”

At the neighborhood level, the correlation between foreclosure levels and resale prices varied widely.

In the 91914 ZIP code of northeastern Chula Vista, where 79 percent of house sales were foreclosures, the distressed properties actually sold for 26 percent more than nonforeclosures. But in Spring Valley, where 58 percent of house sales were foreclosures, distressed homes sold for 20 percent less than regular homes.

Downtown San Diego, which attracted a flood of investors during the recent building boom, recorded particularly big price differences between foreclosure and nonforeclosure sales in the last quarter.

The median sales price of a bank-owned condo in the 92101 ZIP code was $385,000, compared with $625,000 on a nonforeclosure condo, according to DataQuick.

Agents there speculate that the condos taken back by lenders typically are smaller, were conversions and may not have the upscale finishes and amenities of the nonforeclosure units.

“It's not surprising that when the market gets difficult that these units are in foreclosure,” said real estate broker Jim Abbott, owner of ARG Abbott Realty Group in downtown San Diego. “These are the less-desirable units.”

Even in the same downtown high-rise, though, a foreclosure condo can sell for a significant discount, said his son Dustin Abbott, also a real estate agent. Dustin Abbott said that in Acqua Vista, a Little Italy high-rise, a one-bedroom, one-bath condo in foreclosure recently sold for $200,000, compared with $275,000 for the same model a few months earlier, which wasn't a distress sale.

The Sullivan Group's Dennehy said that as the number of foreclosures mounts, prospects for a quick end to price discounting dim.

“The housing market will not stabilize until we get the inventory cleaned up, and with this level of units on the market, it's not good,” he said. “It would be a lot more stable if we didn't have the foreclosures, I can tell you that.”

IHateToBurstYourBubble said...

Of course this piece may also just be illustrating the perils of loaning money to poor people.

IHateToBurstYourBubble said...

In the 91914 ZIP code of northeastern Chula Vista, where 79 percent of house sales were foreclosures, the distressed properties actually sold for 26 percent more than nonforeclosures.

There's the ticket! Push 100% of our homes into foreclosure!

That is just a strange statistic, the higher price in a place with 79% of sales are foreclosures.

And 79%! What the hell! That is really unbelievable.

IHateToBurstYourBubble said...

A very cool interactive chart of housing inventory, jobs outlook, price changes, nationwide:

IHateToBurstYourBubble said...

Good things from the Bust...

The Brighter Side of Housing

Amid Downturn,
Is Within Reach
April 24, 2008; Page D1

And now for the heartwarming side of the housing bust: It's helping some people buy homes that they couldn't afford a couple of years ago.

Michelle Dudley for years commuted 50 miles each way to her job as a civil servant in Anaheim, Calif., because she and her husband, Don, didn't feel they could afford a home near her office. This week, though, the Dudleys moved into a three-bedroom house in Anaheim that they recently bought for $390,000, down from the original listing price of $445,000 in November. Similar homes in the area were selling for as much as about $600,000 two years ago, says Erin Eckert, an agent for Redfin, an online real-estate brokerage that represented the Dudleys.

Still, many potential buyers are holding out for better deals. The Wall Street Journal's quarterly survey of housing-market conditions in 28 major metro areas points to continued downward pressure on prices in much of the country.

As usual, there is huge variation from town to town. In most of the country, inventories of unsold homes are no longer growing quickly, as they did in 2006 and 2007, but remain huge. The supply has shrunk modestly in Boston and Denver over the past year. But the number of for-sale signs continues to rise swiftly in the Portland, Ore.; Seattle; Raleigh-Durham, N.C.; San Francisco; and Washington areas.

The biggest gluts are in Florida. In the Miami-Fort Lauderdale area, the supply of single-family homes and condominiums is enough to last 34 months at the average sales rate of the past year. That months-supply figure is about 21 in Orlando, 18 in Tampa and Las Vegas, 17 in Detroit and 14 in Phoenix. A six-month inventory is generally considered a rough balance between supply and demand.

For condos alone in Miami-Dade County, the supply would last 45 months at the current sales rate.

Prices are coming down fast. Real-estate data company estimates that the median value for all homes in the 12 months ended March 31 fell 25% in the Las Vegas metro area, 19% in Miami and Orlando, and 16% in Phoenix. The typical value is still rising modestly in a few places, including the metro areas of Raleigh and Charlotte, N.C., Dallas and Houston. One hitch for house hunters, though, is that mortgage lenders have become much more restrictive with loans. And even buyers who can get financing still face a tricky question: Should I wait for a lower price? Buying now, with home prices generally falling, is "a gamble," says Ms. Dudley, who just moved into her new Anaheim home. But, she says, home prices will rise again at some point. Meanwhile, she was tired of her long, expensive commute.

Kevin McCleary, a computer-security consultant, remained a renter through the housing boom even though he could afford to buy, because he believed prices were reaching unsustainable levels. In October, though, he and his fiancée finally decided to buy a foreclosed home in Herndon, Va., and negotiated a price of about $443,000. The same home sold in 2005 for $645,000. "I don't believe we hit it at the perfect time," Mr. McCleary says. On the other hand, he says, "we were just tired of putting our lives on hold."

During the boom, home prices rose far faster than incomes. Home prices as measured by the S&P/Case-Shiller national index shot up 74% in the six years through 2006, while median household income rose 15%. (Neither figure is adjusted for inflation.) Now prices in many areas are adjusting back toward more affordable levels, a process that could take several years.

In an analysis of 330 metro areas in last year's fourth quarter, National City Corp., a banking concern, and Global Insight, an economic research firm, found that home prices were sharply overvalued in relation to household income and other factors in 21 metro areas, down from a peak of 58 metro areas in the second quarter of 2006.

Economists at the two firms look at home prices in relation to household income and other variables, including population density (an indication of how much land is available) and past differences in prices caused by factors like climate and schools. They then classify as "overvalued" metro areas where home prices are more than 33% above a level that could be explained by fundamental drivers of housing costs. Among areas where this analysis finds that home prices are still too high are Bend, Ore., Atlantic City, N.J., Miami, Honolulu and Portland, Ore.

In most of the country, "we're getting a return to normalcy" in the relation between home prices and incomes, says Richard DeKaser, chief economist at National City. But, he adds, prices may overshoot on the down side.

Economists at Goldman Sachs say home prices are likely to level off by late 2009. They also point to improving affordability. Goldman's chief U.S. economist, Jan Hatzius, says the share of a typical family's income needed to pay mortgage payments on a median-priced home averaged about 17.5% from 1993 to 2003, before jumping to 26% in 2006. The figure now has fallen to 20% and is likely to keep declining as home prices fall.

Mr. Hatzius estimates that average U.S. home prices have fallen 15% since the second quarter of 2006 and projects they will fall an additional 10% before stabilizing late next year. But he also sees a risk that home prices will fall further, particularly if the foreclosure problem proves worse than already expected.

Goldman estimates that foreclosures will add 1 million to 1.5 million homes to the for-sale market this year, compared with less than half a million a year before 2007.

During the first quarter, homes acquired by lenders through foreclosure accounted for 33% of all sales of previously occupied homes in California, up from just 3.2% a year earlier, according to DataQuick Information Systems, a research firm in La Jolla, Calif.

Homeowners hoping to avoid a foreclosure are adding to downward pressure on the market, says Daniel R. Odio, owner of DROdio Real Estate Inc. in Alexandria, Va. Such people often seek to unload their homes through a "short sale," in which the price is less than the amount owed on the mortgage and the lender agrees to forgive the difference. Homeowners hoping to do a short sale sometimes advertise very low asking prices to lure buyers, even if there is little chance the lender would accept bids at that level, Mr. Odio says. The "fictional" asking price, in turn, misleads potential buyers about the value of nearby homes.

The supply of lower-priced homes has surged in some areas. Steven Thomas, president of Re/Max Real Estate Services in Aliso Viejo, Calif., says there are about 1,260 condos available for under $250,000 in Orange County, Calif., or about triple the year-earlier total.

IHateToBurstYourBubble said...

They then classify as "overvalued" metro areas where home prices are more than 33% above a level that could be explained by fundamental drivers of housing costs. Among areas where this analysis finds that home prices are still too high are Bend, Ore., Atlantic City, N.J., Miami, Honolulu and Portland, Ore.

Move along, nothing to see here...

IHateToBurstYourBubble said...

Economists at the two firms look at home prices in relation to household income and other variables, including population density (an indication of how much land is available) and past differences in prices caused by factors like climate and schools.

Climate? Like the last Ice Age?

IHateToBurstYourBubble said...

Three Reasons Why a Mortgage Bailout Is a Terrible Idea
Apr 25, 2008

An open letter to lawmakers and taxpayers who think a mortgage bailout is what we need to solve the housing crisis.


Multiple polls have shown that the majority of people are against a government led bailout of mortgage borrowers and lenders. Nevertheless, lawmakers have been forging ahead, looking for new ways to bail out the irresponsible parties that created all of the problems.

The worst part is that they are actually receiving support and encouragement from lobbyists, consumer activists and other people who are all too content to throw innocent taxpayers to the wolves.

This article is a plea to all of those people who think that a mortgage bailout is what this country needs right now and to the groups that want to punish responsible people for their own personal gain.

Three Reasons Why a Mortgage Bailout Is a Terrible Idea

1. Home Prices Should Fall

Every time a bailout is mentioned, there is talk about slowing the decline in prices. Everyone wants to keep the bubble inflated, keep the good times rolling. But it's time to face facts: home prices are too high and need to come down.

Home prices in the U.S. increased 85 percent when adjusted for inflation from 1997 through 2006, according to Yale economist and noted bubble expert Robert Shiller. Income increases came nowhere near this figure. Since mid-2006, home prices have fallen only 15 percent, leaving potential buyers priced out of the market.

Incomes are not going up. They are going down. In order for people to be able to reasonably afford a home, prices need to come down too. It's simple math. A bail out won't change that. In fact, it could make it worse by delaying the inevitable correction.

2. Some Borrowers Should Be Renters

Bailout supporters argue that a bailout is needed to 'keep people in their homes.' Let's think about this for a minute. What is the point of keeping someone chained to a depreciating asset that they can't afford?

Data has shown that people aren't defaulting in increasing numbers because their payments are readjusting. Most of the defaults are occurring before a reset. The fact is that there are hundreds of thousands--if not millions--of people who bought more house than they could reasonably afford because home prices were too high.

Giving these people a prime rate instead of a subprime rate or a fixed rate instead of an adjustable rate isn't going to change that fact. These homeowners would be better off getting rid of their dead weight ASAP and renting a comparable home for less money for the next few years.

3. There Should Be Consequences

A mortgage bailout that utilizes taxpayer money or any other money that would be better spent elsewhere is downright unethical. While there are people who are struggling with default because of job loss, a death in the family or some other tragedy, most are in trouble because they made a poor financial decision.

Bailing them out at the expense of others is just plain wrong. Poor financial decisions get made every single day. People charge too much on credit cards, they gamble their grocery money away at the slots, they buy a brand new SUV when they should have bought a used Chevette and they spend their daycare fund on crack. Do we bail these people out? Of course not.

The same philosophy should be applied to housing. While it's true that not everyone was a speculator--some people just wanted a home for their family--they all had a chance to weigh their decision and READ the contract they were signing. If a poor decision was made, it should be no surprise that there are consequences that must be faced.

By the way, this 'consequence theory' also applies to the lenders, builders and others in the housing industry that made bad business decisions. They are the last people who should be helped by a bailout.

bruce said...

Dude, you drinking expresso tonight ;)

LavaBear said...

This is my favorite bubble article of all time. The dude is divorced and completely underwater but......she is 22 and HOT. Sometimes I just wanna be him.

bewert said...

I was googleing tonight for geke and benm and i fouhd htis siet.

I' not so much a geek, butt you kno a chickin is very simular to a humen puss

So i say maybe i make ferns on thes site who want other geeke to saare chcienken?

Wear do you geke s meat in gemd? I willd lov to haheg out wita all forrr nits or whel, i red a lot daweb i near der way, me hinksme wid em orn epeep oni is log.lovers bewert

IHateToBurstYourBubble said...

Johnny's girlfriend, Amanda Jasin, wearing long blond hair and a red party dress, just turned 22 and studies at the University of South Florida. The two met when Johnny's buddy hired Amanda as a cocktail waitress for a poker party. Johnny kisses her a lot and bought her a stuffed buffalo head for Christmas.

Buffalo head: That there is real love.

LavaBear said...

>>Buffalo head: That there is real love.

Fuckin A. I love my wife and kids but damn. If you'd of told me it would cost $500k and a buffalo head to set me up with a 22 year old in a Tampa condo...I'd at least have to think about it. Spitzer paid more in relative terms.

bruce said...

Re: buffalo head

He's in deep.

bruce said...

Yes, "bewert" has been my name online for years. Bruce just popped up here because of Blogger.

But whatever that gibberish is I have no clue. Guess someone is trying to give me shit. Wish he at least knew how to spell pidgin English.

bruce said...


Another new term. It kind of fits right in around here. As in "You see that tanorexic cougar at Newport yesterday?"

But actually, she's a bit chunky for a 22 year old. Sure ain't no Molly-size.

IHateToBurstYourBubble said...

Repetition, you see, is key to running a good cult...

Destination: Sunriver

Other projects, including a $2 million runway expansion at Sunriver Airport in 2009, are needed to compete in an increasingly competitive Central Oregon resort climate, which has fueled the region’s estimated $542.5 million tourism economy, according to Luersen...

IHateToBurstYourBubble said...

Critical Information

You have been banned from this forum.
Please contact the webmaster or board administrator for more information.

Ahhhh yes. BendBB finally got me.

I haven't posted there in many months because I only go anonymous proxy, and that somehow screws up your posts.

Can't even LOOK at the site, they want your IP so bad.

BendBB... just what the hell do you do with that info? WHY? People can't even LOOK?

IHateToBurstYourBubble said...

Here's that Juniper Ridge piece from KTVZ. I love the line, "optimistic, but realistic..."

Juniper Ridge: Big vision, big road-fix price tag

Posted: April 28, 2008 10:52 PM

$40 million traffic project must come before development

By Amy Easley, KTVZ.COM

After nearly three years of planning and controversy, the city of Bend is still having trouble getting the Juniper Ridge Development going.

For those of you who don't exactly know what Juniper Ridge is, you're not alone (if you do, you can jump down after the next cuple of paragraphs).

It can all be summed up in one word, one that some Central Oregonians dread, "growth."

First things first: Juniper Ridge is 1,500 acres of city-owned land located at the northest edge of Bend. And it's being built in two phases. The first is industrial, with retail shops, office space, and hopefully someday, a four-year university. The second phase will consist primarily of housing.

But it could be several years before we see any of this, beyond the Les Schwab Tires headquarters due for completion in coming months.

Since the project got going, the city has overcome several obstacles, but one big one is still standing in the way. And that is the needed expansion to the traffic-choked intersection of Highway 97 and Cooley Road.

Juniper Ridge Manger Jerry Mitchell says the price tag could be huge: "Right now, the estimated cost is about $40 million. That's a very rough estimate, but we think it's in that magnitude."

Mitchell adds funding could take more than a year to come up with, and the construction take around 18 months. The idea is to have developers in the area pay toward the cost of the traffic improvements.

Here's a summary of the city's current plan for the intersection. The new design would take Cooley Road under the railroad tracks and under Highway 97. Then, new connecting ramps would be built from the highway to Cooley Road.

Mitchell is hopeful: "We would like to have a funding package in place for this project by the fall of this year." He added that he might be optimstic, but realistic: "That's our target, and so far we're on track."

"cuple"? Oy! Run your spell checker! It's OK for a stupid blog... you're a TV station!

IHateToBurstYourBubble said...

Hell, that $40 million might as well be $40 billion. We don't have that.

Be interesting if City Council decides to bankrupt us over a $1 chunk of scrub.

Make a good book:

"How we turned a $1 payment for 1,500 ac into 100% bankruptcy, AND YOU CAN TOO!"

IHateToBurstYourBubble said...

4th Tuesday of the month, and that means Case-Schiller is out. Of course, it's GREAT news! (Barcelona) - Standard and Poor's / Case Schiller Housing Prices Index has declined in February, with 17 out of the 20 cities polled posting record low annual declines, according to the latest report by the private institute.

The 20 city composite has posted a 12.7% decline in February, following a 10.7% fall in January. While the 10 city index posted a record low 13.6% decline.

Las Vegas and Miami have posted the largest declines -22.8% and -21.7%, respectively, casually, both cities recorded the largest price increases in the 2004/2005 period with rates peaking above +50% and +30% respectively.

IHateToBurstYourBubble said...

I encourage you to go to the Case Schiller site, scroll to the bottom & get the Excel spreadsheet of prices... and graph up the last 2-3 years.

It ain't pretty. And it sure as hell ain't "leveling off". If anything it is accelerating down, HARD.

But the good news is, the harder & farther the fall, the quicker the recovery.

Anonymous said...

Ahhhh yes. BendBB finally got me.

Nope, it looks like a hacker finally got into the Bend Economy Bulletin Board and is playing a trick on us. I'll try to get it fixed today.

-- bendbb

IHateToBurstYourBubble said...

Think we're the only country with a Countrywide-style debacle? Hell no!

HBOS to tap shareholders for $8 billion
Write-downs surge in first-quarter; interim dividend to be paid in stock
By Simon Kennedy, MarketWatch
Last update: 9:34 a.m. EDT April 29, 2008

LONDON (MarketWatch) -- HBOS, Britain's biggest mortgage lender, said Tuesday that it plans to raise 4 billion pounds ($7.95 billion) through the sale of stock to existing shareholders as it battles against rising write-downs and tighter lending margins.

The announcement made HBOS the second major U.K. bank to announce a so-called rights issue in recent days after Royal Bank of Scotland said it needed to raise 12 billion pounds to repair its balance sheet.

HBOS also said Monday it has taken 2.84 billion pounds of write-downs so far this year. Of those, 970 million pounds were on its trading book and the remaining 1.87 billion pounds is on the banking book and won't impact either its regulatory capital or reported profit. The bank said it still expects the write-downs to reverse over time.

In 2007 HBOS took write-downs of 227 million pounds against its trading book and 509 million pounds against its banking book.

The rights issue and write-downs were broadly in line with market expectations after reports over the weekend that the bank was planning the move.

Shares in HBOS slipped 1.1% in afternoon trading -- a modest decline compared to some of the volatile sessions the stock has had in 2008.

In mid-March the bank's shares slumped as much as 17% in a few hours amid rumors it needed an emergency loan from the Bank of England. That slump helped trigger an investigation by the Financial Services Authority and could lead to new powers for the regulator.

Deutsche Bank analyst Jason Napier said HBOS' move means it will have a strong capital base and be relatively cheap, but he cautioned that the bank is facing slowing volumes, difficult margin conditions and rising impairments.
"We expect substantial pressure on earnings forecasts to keep long-only investors cautious, but think it will become increasingly difficult to justify maintaining short positions," Napier said.

Investors appear to have built up their short positions in HBOS in recent months. The latest stock lending data from Euroclear -- which gives an approximate view of short-selling activity -- shows an aggregate of 11.2% of HBOS stock was out on loan in March, up from 6.9% in February and 4.2% in November.

The March stock-lending figure was higher than rivals RBS and Lloyds TSB at 6.8% and 7.9% respectively, but well below the 29.2% of shares in mortgage lender Alliance & Leicester that were loaned in the month.

Two-for-five deal

Under the terms of the plan, shareholders will be able to buy two new shares for every five they own at a price of 275 pence per share, representing a 45% discount to Monday's closing price of 496 pence.

CEO Andy Hornby told an analyst conference that the decision followed a "step change" in the board's thinking. He said the board believes well-capitalized banks will have a significant advantage over their peers for the next three or four years.

"We are planning for a more challenging environment ahead and the proceeds of the rights issue should ensure that we benefit from strong ratios even if the macroeconomic environment deteriorates further," he said.

Analysts at Bear Stearns said that unlike RBS, which needed to fill a hole in its balance sheet, HBOS is making a precautionary move that could also help it fund some growth in the future.

Hornby said the bank will look for growth opportunities, but won't make any significant moves until the securitization markets re-open, which he predicted won't occur until sometime in 2009.

Dividend to be paid in stock
HBOS also plans to cut its dividend payout ratio to 40%, from around 46% and to pay its interim dividend in stock.

The final dividend for 2008, will however, be paid in cash, the bank said.

Expanding on the detail of the bank's write-downs, Group Finance Director Mike Ellis said it has marked-down the value of its Alt-A mortgages holdings -- which sit between subprime and prime in terms of risk -- to 80 cents in the dollar.

The mark-down is significantly less than RBS took on its Alt-A portfolio, but Ellis pointed out that the vast majority of its holdings still have the highest possible credit rating.

He said the bank marked down the prices because of liquidity problems and that there haven't been any credit impairments on the portfolio, leaving that bank confident that the adjustments will reverse over time.

IHateToBurstYourBubble said...

Nope, it looks like a hacker finally got into the Bend Economy Bulletin Board and is playing a trick on us. I'll try to get it fixed today.


IHateToBurstYourBubble said...

I owe you a burrito dude.

IHateToBurstYourBubble said...

Now you know why I don't try to time the markets. :-)

Long-term I usually get it right... but STILL end up paying. Dang it.

Anonymous said...

I owe you a burrito dude.

Let's call it even. You were right about the median falling below 300K, just a few months early on when it would cross the threshold. Premature extrapolation perhaps.

-- bendbb

Anonymous said...

IHateToBurstYourBubble said...
heya marge... how's April looking now?

We are at a solid 69 sales so far in April. Looks like we need 23 more to close in order to tie March. Median is $283,900.
DOM are 193 and there are 1404 active listings.

Anonymous said...

Whats up with BEBB, message says I am banned. How do you contact him to see if it is for real.

bruce said...

1400/75=18.67 months inventory.

I think we will be seeing sub-250K medians within 90 days.

When BEBB fixes the hack, we'll get a handle on new listings, which should be skyrocketing as the weather gets nice.

Anonymous said...

Of the 1404 active listings 498 are vacant. YOW !!

timothy said...

>>When BEBB fixes the hack, we'll get a handle on new listings, which should be skyrocketing as the weather gets nice.

Perhaps. or perhaps not.

Maybe the dark matter will stay dark as potential sellers get the "listing your house now is nearly hopeless" message.

timothy said...

>>Of the 1404 active listings 498 are vacant. YOW !!

I wonder how many total vacant houses we have in Bend. There are probably plenty of empties that aren't in the MLS for one reason or another.

Anonymous said...

I am sure there are a couple or so hundred vacant houses that MLS can't track. Foreclosures that are not in MLS yet. All the spec house that aren't listed, Aspen Rim? and many others.

Anonymous said...

The sit hits the fan in Bend-Lapine School District - Bart

son: "Mom are we losers?"

mom: "Where the fuck did you hear that?"

son: "School, the kids say that a middle age guy thats rent a home is a loser, and that make dad a loser"

mom: "No son, we're winners, homer tells us so"

son: "What you mean mom?"

mom: "Remember the Bend prayer, I tell you every night", "The baby jeebus loves us so, because homer tells us so"

son: "Mom, the kids at the school say that homer is a false prophet, that he is leading his lemmings off the financial cliff"

mom: "Oh, no Homer has an MBA."

son: "The kids say that buster says that they should buy a home when they're young, so they can have it paid off by the time their forty."

mom: "That buster is full of shit, Homer tells so.", "Its ok to be a renter until your say 80, then you live in a poorhouse, and die"

son: "But mom, what happens to us, if you go to live at the poorhouse?"

mom: "Homer hasn't told us yet, but I'm sure he has a plan for all of us"

son: "Buster says that Homer is a POVERTY-PIMP, that people who buy into his proselytizing will become perpetual losers, and there children such, and the poverty cycle will never end"

mom: "Son, money isn't everything, we're all a family here, this is Bend we're exceptional. I'm sure all of Homers flock we'll be sharing the little food we have when times get really tough"

son: "So self reliance is completely thrown out the window? We're basically in the lines at the gallows waiting for homer to tell us what to do?"

mom: "Homer tells us that the baby-jeebus works in strange ways"

son: "I'm getting the hell out of Bend, and I'm going to buy a house, and pay it off on a 15yr fixed, and I'm not going to raise my children to be part of an endless poverty cycle"

mom: "Son your speaking blasphemy, do you realize that Homer could have us excommunicated from his flock for such talk"

son: "Fuck Homer, he's a loser"

[ All heard by Bart ]

Duncan McGeary said...

The bitch has looked down upon her progeny and decided they are tainted. She's decided to devour the litter.

Sorry to disappoint you, Bilbo.

Duncan McGeary said...

Bruce made a comment about downtown really hopping.

I'm beginning to believe downtown may be the exception.

Oh, there'll be plenty of hurting businesses, even businesses that leave, but they'll be immediately replaced.

Makes a certain sense -- since tourism is the only industry left in this town.

Duncan McGeary said...

I've got a theory (theories are all I got, folks) that downtown is like one of those African watering holes in the dry season, where all the surviving animals congregate and wait for rain.

My theory is that Greenwood rents have probably always been tied to downtown rates -- let's say, for argument sake -- around 65%. But as downtown rates get higher and higher, the 65% rate no longer works.

You can go ahead and pay 120% too much downtown for 100% potential, or pay 120% too much on Greenwood for 65% potential.

Anonymous said...

Folks, I just saw a solar-powered flying cocoon car go by my house, with "Rich Dad, Poor Dad" on the dash right next to a book on Hamiltonian Tensors. The guy driving it was about 50 and had a Stihl chainsaw on the front passenger seat. Any idea who that could have been?

Anonymous said...

>>Any idea who that could have been?

Did the car have a "Best Time to buy in 20 years if you are 25 and can afford a 30% down payment" bumper sticker on it?

Anonymous said...

Anyone else get banned recently from Buster's site? Tried to get on today, but it says I've been banned. Pretty darn funny since I've never once posted anything over there. Nazi...

Anonymous said...

EVERYONE has been banned from the site, because someone hacked it (?). It's not intentional.

IHateToBurstYourBubble said...

son: "The kids say that buster says that they should buy a home when they're young, so they can have it paid off by the time their forty."

mom: well son, some mother fuckers never go anywhere & actually have to travel CLEAR across the street to get to their 50th High School Reunion. But most people actually travel beyond motherfuckin' Burns Oregon, and decide to live elsewhere than the town 72 generations of their family has lived.

And son, sometimes 25 years of appreciation piles up in just 5-6 years, and you'd actually be far better off not owning a home at those times, because the giveback is what will actually send you to the poorhouse. At those times you RENT AND INVEST THE DIFFERENCE while Bubble Believers go down in flames TRYING TO GET YOU TO BUY THEIR RENTAL HOME INVENTORY.

IHateToBurstYourBubble said...

We are at a solid 69 sales so far in April. Looks like we need 23 more to close in order to tie March. Median is $283,900.
DOM are 193 and there are 1404 active listings.

Hmmm... only 5 hours, 41 minutes to hit 23 sales.

Anonymous said...

I would love to put up some rant about BRATTON DAY since it seems it have completely turned upside down. Guess his koolaide got to him. If anyone thinks this will "turn around" anytime soon they are delusional and hoping for some fairy to drop a paycheck in their lap.
Stats today don't bode well for scuba divers.
To date in April 08:
Sold Residential in Bend 77 @ $270k
Same parameter for March:
Sold 86 @ $284k
Of course this may change as the snoozer brokers get round to reporting solds.
Doesn't look very good. If we slide fast enough though we may be able to recover faster. Except our feeder markets are tanking and that will continue to shut us down.

My latest theory is there is going to be a fine line between declining prices and rising interest rates. At some point, prices will be low enough to buy before interest rates get out of control and shuts out more buyers.
You know it's going to happen. Today may be a good time to buy compared to a year from now when interest rates climb to 7.5% All are going to have to weight these things.

Anonymous said...


It's interesting to see what kind of real estate coverage you get when it's not edited by the arrogant "editor-in-chief" gasbag at The Bulletin.

God -- isn't that jerk up for retirement soon?

Written by David Fisher
Wednesday, 30 April 2008
The Old Mill area's Mercato is one of several mixed-use projects that has ground to a halt amid the housing and credit crises.
The Old Mill area's Mercato is one of several mixed-use projects that has ground to a halt amid the housing and credit crises.
Stephen Trono had grand plans for his new project, The Mercato, when he unveiled it back in the heady housing-boom days of mid 2006.

Five buildings soaring as tall as 74 feet, with brick facades and top-of-the-line interiors. A bustling ground-floor mixture of restaurants, bistros, food shops and kitchen stores. Offices on the middle floors for lawyers and architects, engineers and designers. And, capping it all off, a series of top-drawer condos, complete with million-dollar pricetags and sweeping views of the mountains beyond and the Old Mill District below.

That’s still the dream, Trono says.

But here in the muddy days of 2008, with the housing market in the tank and the banks running scared from speculative real estate deals, Trono says his land – the former site of the Brooks-Scanlon Mill’s hulking red crane shed – is likely to remain just what it is for another year: A flattened field of weedy gravel, waiting for better days.
“There is so much fear in the residential market, I’m glad I don’t have product out there right now,” Trono said last week. “I haven’t seen a market like this since the early 80s. There is a lot of confusion. A lot of fear.”

Enough so that most of the Field of Dreams ideas that flooded Bend in the latter years of the housing boom seem destined for a long wait before their first bricks rise above the ground.

Old Mill District developer Bill Smith doesn’t claim to have any insider knowledge of the big projects that are lagging around town. But the source of angst seems pretty obvious – after the collapse of Wall Street’s investor-based credit markets last summer, financing of all types has become tougher to get, and developers who can get it are finding that it’s coming with a lot more strings attached. Particularly on big projects that depend on residential condos to make their profit and cash flow scenarios work.

“Financing is just really tough right now,” Smith said. “Boy, it’s just really tough. That’s not saying it’s impossible, but if the project depends on selling condos to succeed, you’ve got a rough road ahead.”


The pockmarks of projects that started with great fanfare, then slowed to a crawl or ground to a halt, are scattered throughout town.

There’s the scraped dust that surrounds the Bend Brewing Company’s restaurant and pub on downtown Bend’s Brooks Street. Once slated to be the site of high-end condos and retail shops, it sits empty with a “for sale” sign on it, the victim of protracted battles with City Hall and the slumping real estate markets.

Empty lots dot both ends of downtown’s Bond Street. Major projects on both sides of the Old Mill District – a $127 million hotel/condo proposal on one end, and a sprawling retail and residential condo project on the other – remain unstarted.

And in east Bend, the backers of an ambitious new retail and office project with 800 proposed condos, townhomes and apartment units at the intersection of 15th Street and Wilson Avenue are taking their time getting city approvals, partner and real estate broker Sandy Garner said, hoping to come out of the ground in better times.

As land and construction prices rose during the housing boom, particularly in the downtown corridor, residential condos became a sort of magic elixir that could make projects pencil out even as costs escalated beyond the point at which commercial rents and leases could justify them, Compass Commercial Real Estate Services principal broker Bruce Kemp said. The condo portion let the developer, in effect, sell a piece of the building, recouping equity and defraying some of the cost of building office and retail space for lease on the lower floors.

In projects like Garner’s planned community in east Bend, condos and townhome sales promised to provide quick buildouts and sales, keeping cash flows up while longer-term commercial projects were completed in the core.

That all, of course, depended on the ability to sell residential condos, and the example set by a couple of major projects set a chill on that prospect as the housing boom of early 2006 withered into the market frosts of 2007.


Franklin Crossing, the five-story retail, office and condo complex at the corner of Bond Street and Franklin Avenue in downtown Bend, was the first mixed-use building in town to come onto the market with luxury residential condos when it gained legal approval to sell them in December 2006.

The prospects for the building’s eight upper floor units looked great when real estate agent Norma DuBois solicited “reservations” in the spring of that year. Investors and second-home buyers lined up two and three deep to put their names – but no cash – down for each unit, despite initial pricetags that ran between $500,000 and $1.4 million.

By the time all the legal paperwork was in place to finalize sales in December, though, the market had turned, DuBois said. It has taken more than a year and a quarter now to sell five of the eight units, at greatly reduced prices. One unit, once listed at $525,000, actually sold for $370,000. One of the three that remains for sale was once listed at $650,000. Now it’s priced at $590,000.

“We’re probably doing better than most of the rest of the condo projects are,” said Patrick Oliver, a commercial real estate broker and one of the building’s developers, “But I’m glad we didn’t build any more than eight of them.”

About a half a mile to the south, in the heart of the Old Mill District, real estate broker Becky Breeze and her husband, developer Tom Wurzel, did build a lot more than eight, betting, as Breeze said in 2006, that second -home buyers and retirees would flock to buy into a high-rise condo project with units on single floors and sweeping views of the Old Mill District and the Cascades.

If county records are any indication, they bet wrong.

With only four of 42 units sold by late 2007, trouble arose when a collection of contractors and subcontractors filed liens on The Plaza, the towering condo project on Bluff Drive that Breeze and Wurzel’s company, Harvest LLC, finished in July, according to records on file in the Deschutes County Clerk’s Office.

By February, Breeze and Wurzel had deeded over their interests to Plaza Bend LLC, an entity controlled by the Seattle-based real estate investment firm Goodman Real Estate.

Goodman washed Umpqua Bank out of the deal, county record trails show, taking over the $20.316 million line of credit the bank had set with Breeze and Wurzel for only about $7 million.

Breeze and Wurzel failed to return multiple phone messages left by The Source last week. But Goodman asset manager Julie Clark said Plaza Bend LLC plans to finish the interiors of the remaining condos and continue to market them to the same demographic sectors that Breeze and Wurzel were aiming for in the first place.

This time, according to county records, Plaza Bend will be armed with a $12.6 million line of credit from Australia-based Macquarie Bank Lmtd. Umpqua released its last remaining interest in the building to Plaza Bend on March 25.

“It’s a unique product,” Clark said. “An iconic product in the heart of Bend. It’s not sitting in downtown Portland competing with hundreds of other projects just like it.”

It’s also a product that was picked up, if the county records are any indication, at a price below its final production cost, a factor that will significantly reduce the risk for its new investors.

And a factor that goes a long way towards explaining why most banks, not to mention developers and equity investors, are growing considerably more cautious before they will jump into a new speculative project that includes condos in the mix.

Even if they are inclined to jump back in someday.

“The Bend market has been hit hard, there’s no question about it,” Umpqua President Ray Davis said, refusing to discuss the hit his bank took on The Plaza or on any other specific Central Oregon projects in recent months. “Still – this is just my crystal ball, and it’s no better than any other crystal ball – I think Bend will be one of those markets that will bounce back faster than most because of the overall intrinsic quality of living rhere.”


The national credit pinch is making itself felt on Bend’s big projects in a couple of ways, Trono said.

Equity investors – whether they are wealthy individuals or investment consortiums – are generally demanding bigger profit potentials before they’ll jump in, he said, which means they are demanding more equity for less money, jacking the typical “internal rate of return” up from the 15 percent or so they would settle for last summer to 25 or 30 percent this year.

Depending on the projects, banks are demanding higher rates of preleasing on retail and office components, Trono said, and they are slapping much tougher restrictions on the original developers’ ability to operate, requiring, for example, that no condos be sold below a certain price without prior bank permission.

“Their underwriting requirements have become such that it’s very prohibitive to do a deal,” Trono complained. “What they are really doing is taking away your tools.”

Big, speculative projects are also facing stiff competition for investor dollars from a seemingly unlikely source, Kemp said – the residential land market. With subdivisions selling off, in some cases, for 50 to 60 cents on the dollar, investors can lock in big potential gains by buying distressed properties rather than sinking their funds into as-yet unproven mixed-use projects in the city’s trendiest neighborhoods.

So that is leaving the region’s big-project developers to muddle through as best they can.

Trono said he has abandoned his initial plan to develop The Mercato himself with help from consultants in favor of looking for a development partner who has experience with similarly large projects in other markets – in other words, a big equity partner who comes with their own financing sources and a track record that could help calm the fears of other potential lenders and investors.

He said he expects to break ground late this year to make curb cuts and pull utility lines into the project. That will produce enough work on the site to keep the project’s city approvals from expiring, he said, but building won’t begin in earnest until at least 2009, shooting for a completion date sometime in 2011. If it takes longer, that’s OK, Trono said – he’d rather wait than change the project’s basic design.

“The reasons we set out to do The Mercato still exist,” he said, “but now is too restrictive a time.”

Over on the east side, Garner said she and her partners plan to file for their city permits in a month or so. If they win approval, the partners will likely start with the commercial components first, she said, rather than jumping straight into the residential fray.

Meanwhile downtown, where the old City Center Motel stood on Franklin Street, Rick Skinner and his partners are trying to come up with a new idea for their now-empty lot.

They originally planned to build more than 80 residential condos in a five-story building on it, with some retail space on the ground floor, according to plans filed with the city in April 2006. Today? It could become an office complex, Skinner said. It could get some condos if the residential markets turn around. The partners have discussed making half of it into a parking garage to help ease the downtown’s on-street parking crunch.

The partners on the City Center site have at least eight months to decide what to do with the lot before their city permits threaten to expire, Skinner said. Nothing is likely to happen before that, he said, but he said that he, too, is unlikely to cut loose from his land.

“Some of these guys are sticking their heads between their tails and running...,” Skinner said. “I have no doubt that Bend is still going to be ahead of the game, once things start to pick up.”

That may be, said the Old Mill’s Smith, who had spent a long career in real estate even before he bought the old Brooks-Scanlon Mill in the 1990s and started its transformation into the iconic retail and office center it is today. But it will take money to play.

“It’s always nice when there are lots of lenders, " Smith said, adding “The market is saying there is more bad news to come.”

So are we going to be looking at gravel lots for awhile yet?

“I’d hope not,” Smith said. “But that’s my bet.”

Anonymous said...

“Still – this is just my crystal ball, and it’s no better than any other crystal ball – I think Bend will be one of those markets that will bounce back faster than most because of the overall intrinsic quality of living rhere.”


Holy shit, these fuckers are ALL newbies, we're 18 months behind the curve. Hell Atlanta collapsed over a year ago, and they're probably already to go up, Bend hasn't even hit bottom. That is late 2009, or 2010, then its 18 months after that.

DF needs to be harder with this shit, we're 18months late, and our correction and rebound will be 18 or months late.

There is nothing sacred about Bend. The 'lifestyle' here is as only good as the cash left in a few 401k's, and that ain't pretty.

DF must be loving this, finally able to tell a story, albeit still not hard-core. At least he's getting the big-wigs ( smith ) to talk-the-talk, perhaps they hope some stupid fucking investor is listening?

It's going to be a long time, everybody is chasing a very slim picken of fools, the depth of fools with money is so fucking shallow, but its a dream, they're all still dreaming of a cali guy on a white horse coming to Bend, and blow his wad.

Those fools are gone, and Smith, and buddy's may very well lose the farm, as they all bet, and doubled their bets all the way up.

Even Hollern don't talk this shit, Smith knows better, this is sucker talk, which shows that once again DF is still a man-twat working local power brokers.

Anonymous said...

Today may be a good time to buy compared to a year from now when interest rates climb to 7.5% All are going to have to weight these things.


Thanks marge, a voice of reason. A year form now, Bend will be so fucking toxic, there will be a 5pt 'Bend-Tax' just to pay-to-play.

Wall-Street everyday is begging for a Volker ( 20% interest ), yes next year +8% for 30yr, and there will be NO money for Bend, unless its 800+ fico, 20% down, and a 4X job. Appraisals? You better hope that your paying less than $200k for a 3k-sqft home.

It's the best time to buy, the man-twats will panic and sell, and a year from now money will be dear, and next to impossible to get.

It's the last 1970's all over again, the WSJ has been demanding this for months. 22% interest rates, for those who were old enough to remember.
This is what we must do to bring back the dollar, otherwise it will become worthless. Hell this time it may not work, last time it was post-vietnam war, ... this time the war is more bucks, and the US is more despised, hell it might even take 30% interest this time, god forbid those this cycle sitting on variable rate loans.

The WSJ vultures and circling, and the poison arrow quivers are being set to get man-twat, or man-flesh as we say in Lord of the Rings.

LavaBear said...

>>Today may be a good time to buy compared to a year from now when interest rates climb to 7.5% All are going to have to weight these things.

Marge, I've been weighing these things for some time now. My conclusion so far is...I can refinance out of a bad interest rate when rates improve but if I purchase wrong I can't fix that no matter what I do.

timothy said...

>>Today may be a good time to buy compared to a year from now when interest rates climb to 7.5%

I think high interest rates will force down prices to compensate. In the long run, affordability must be maintained.

So buy when rates are high and prices are low, then refinance later when rates drop.

When my parents bought, rates were crazy high and prices were low as a result. Wage inflation brought down their effective payments, and when rates dropped they refinanced. They made out like bandits.

LavaBear said...

>>So buy when rates are high and prices are low, then refinance later when rates drop.

Yeah, what he said.

Anonymous said...

>>So buy when rates are high and prices are low, then refinance later when rates drop.

Yeah, what he said.

Wrongo, bucko.

Buy when interest rates are high?

The refi later?

Wrong, since when you buy when rates are high, you can't buy much. When rates where 19%, the big house you wanted to buy for you and your family of four kids was not affordable... the loan you qualified for was for a family of you and your small dog, not a family of four kids.

Read: buy a 5 BR / 2 and a half Bath, but interests rates so high that you can only can afford a 1 Br / 1 BA condo.

PopGoesBend said...

Buy when interest rates are high?

The refi later?

Wrong, since when you buy when rates are high, you can't buy much.

Acutally, he's right.

In your scenario of only affording a 1 br / 1 bath condo because interest rates are high there better be an ass-ton of condos because everyone will be paying 19%.

Oh yeah, that 5br / 2 bath will still be on the market. If they have to sell it will have to be at a price that people can get a mortgage on. If a much higher percent is interest than the sell price has to be lower. It's basic economics - supply and demand. If all buyers have the same limitations then sellers will have to cater to those demands.

If rates are sky high then prices will be dirt low. Buy then and refi later.

Don't be scared of the boogeyman of high interest rates. Yes, when they first go up there will be a lag time where prices are sticky, but wait 6 months later and see where they go.

Anonymous said...

Actually, the threat of higher interest rates is one of the reasons I decided not to buy now.

If I were to buy now when rates were low and had to sell when rates were high I know I would have to take a bigger hit to be able to sell it.

Given the option to have the same house and same payment I would rather pay less for the house and have higher interest rates. Monthly it may be the same but when you sell it will definately not be the the same.

bruce said...

Re: Monthly it may be the same but when you sell it will definately not be the the same.

And that monthly payment is what the bank is looking at in relation to your real income. Prices always have to reflect the prevailing interest rates in the regular world. There is a great post specifically about this here: It has tables showing predicted medians given various higher interest rates. Same as before, same as always, except when Greenbubble is pumping money out like nobodies business.

Actually, that blog is hilarious, too. The latest post includes Randy Newman's song "Short People" as a riff on short sales:

Short sellers got no reason to hope. They got little houses, little pets, they go round borrowing great big debts. They got little kitchens, little stoves, granite counters; they are selling in droves. Don't want no short sales, don't want no short sales round here.

Today's featured property is a typical 100% financing deal gone bad. There are two types of distressed properties that have caused the 20%+ declines we have seen in the last year: 100% financing deals and HELOC abusers. We have profiled many of each type. They have set the stage for the next wave of foreclosures when all the ARMs begin to explode. We haven't begun to see the fallout from that problem yet...

IHateToBurstYourBubble said...

I'm still "banned" from BendBB. Is it still hacked?

IHateToBurstYourBubble said...

When my parents bought, rates were crazy high and prices were low as a result. Wage inflation brought down their effective payments, and when rates dropped they refinanced. They made out like bandits.

I wonder if that's a holding period peculiarity. Especially the "wage inflation" part. Was it job advancement, or true wage inflation where everyone got more money?

I have a funny feeling we're about to get a good old dose of 70's style stagflation... but the wage push is questionable. No more Unions, no more concerted effort to push wages higher. Hard to say...

IHateToBurstYourBubble said...

You better hope that your paying less than $200k for a 3k-sqft home.

$66/sf sounds better than buying at todays prices... regardless of interest rates.

timothy said...

>>Wrong, since when you buy when rates are high, you can't buy much.

And neither can other people, so prices come down to offset.

IHateToBurstYourBubble said...

The Fed's Financial Bailouts Will Rob Americans of Their Future

(NaturalNews) On March 31st, Treasury Secretary Paulson announced a plan to police the financial markets to curtail the possibility of future financial disasters such as the sub prime mortgage meltdown now rocking America. And he did it with a straight face. This plan, that sounds so good on the surface, in fact lays the groundwork for the next big financial bubble, heralds a new era of hyperinflation, and assures further runs on the U.S. dollar.

Commentary on the plan centered on the extension of the powers of the Federal Reserve to supervise non-bank financial houses like stock brokers, derivative dealers, insurance companies, private banks, and even hedge funds. At least this is how it is being packaged for the public. The cynical point out that this restructuring and massive increase in the powers of the Fed is like locking the barn door after the horse is gone.

What is not being pointed out to the public are the revolutionary implications of the Fed's new supervisory position. For as it stands above these financial institutions as regulator, the Fed now also stands beneath these institutions as lender of last resort.

Financial Institutions standing on the precipice

In the middle of March, America faced a systemic collapse of its financial system that threatened to quickly spread to the rest of the developed world. Secretary Paulson and Fed Chairman Bernanke crafted a quick fix for Bear Stearns and other troubled brokerage houses, but this was an emergency action which could only postpone disaster, not prevent it.

A chance at long-term survival of these institutions requires a lender of last resort with enormous resources. But even the 800 billion dollar balance sheet of the Federal Reserve is not enough to anesthetize the credit explosion in the real estate market alone, which stands at around 12 trillion dollars. To say nothing of the commercial real estate, auto loan, and credit card markets.

Paulson turns to the American people as the only viable lenders of last resort

What the Treasury and the Fed have realized is that in the last 40 years, they have pumped so much money into the system that excessive leverage has become a way of life. Almost every individual, and institution holds assets of which their real ownership is minimal. In other words, everybody is in debt up to their eyeballs.

Most of this debt has been packaged into derivatives by the wizards who operate in the back rooms of the capital markets. The result of this huge leverage is that the government no longer has the funds to avert a systemic financial disaster. The sort of money it would take to do that could only be captured from the future earnings power of the American people and the debasement of their currency.

Paulson's plan is being sold to us as a responsible act of government looking out for us, in an attempt to save us from our own irresponsibility. We like government to look out for us and save us from ourselves. We don't want to be forced to accept the consequences for creating this huge debt overhang, so we are all too willing to accept his plan without looking behind the curtain.

If we did take a look, we would see that Paulson's plan is really a huge mortgage on our future and the future of our children. In the final analysis, the Fed is financed by the Treasury, which is financed by borrowing, taxing Americans, and robbing them by the debasement of their currency.

In the words of Peter Schiff in his column Paulson's 'Civic Robbery' To Finance Hyper-Inflation, "Instead of allowing the free market to punish speculators, Paulson is now asking Congress to force the American people to stand as a lender of last resort, via the Fed, for the speculators on Wall Street, insurance companies, derivatives, and most amazingly, the most speculative of all rich investors – hedge funds!"

How to trick the public into accepting Paulson's idea

The best way to trick people is by getting them absorbed in something else so they are not paying attention to what you are doing. So how will the government divert our attention while they crank up the printing presses?

Going green might be particularly politically correct. We could search for new alternative energy sources. In fact, this movement is already underway. Or maybe there will be another terrorist attack.

Then you will begin to see the announcing of massive government programs to the tune of several trillion dollars as hyperinflation really kicks in. Maybe something like the WPA of the 1930's.

What to Expect

While these programs get rolling, look for direct aid to continue being doled out by the Fed to the needy on Wall Street.

This will include loosening of the requirements for financial institutions to 'mark to market' their investment portfolios. The mark to market process means that at the end of each day, the values of these portfolios must be calculated based on market closing prices that day for each of the securities held. Marking to market and publishing the values daily insures investors an accurate and timely accounting of their investments. When this process is allowed to be discontinued, the result will be that technically insolvent institutions will be able to continue to rake in profits from operations.

The investor, particularly the small investor who is not privy to inside information, will be left in the dark as to the true value of his investments. In other words, the small investor will be left holding the bag. When prices for securities are not calculated and publicized daily, an investor has no way of knowing what the securities he holds are worth, so he has no way of knowing if he is getting a fair price for them.

Expect further erosion in the value of the U.S. dollar as interest rates continue to be lowered by the Fed in its attempt to save up from economic collapse. As hyperinflation picks up steam as a result of the printing of money needed for the institutional bailouts, few buyers for the dollar will emerge, see ( .

If you are lucky enough to have any money to invest and can tolerate high risk, look to the companies that create the products that are required for the government sponsored diversion. If it is going green, you might look to the companies that make green products. If it is a terrorist attack, look for the same sort of companies that profited after the 2001 attack. When you figure out what the diversion will be, go for the products involved.

But if you choose to be an investor in anything, be aware that the markets are now stacked against you. Effective July 6, 2007, the uptick rule was eliminated by the Securities and Exchange Commission. Established following the great stock market crash of 1929, the uptick rule was designed to restrict short selling by permitting short sales only following a trade where the traded price was higher than the previously traded price (uptick). The purpose of this rule was market stabilization and the prevention of a downward spiral in prices. Without this rule in place, hedge funds and speculators can repeatedly short a stock, commodity or any exchange traded instrument until they create a self serving price crash.

The markets are now stacked against the average investor like never before.

Whether Congress will fund this bail out soon enough to avoid the current recession turning into a depression remains to be seen. However, it is clear that the plan is to leave the bill for the reckless conduct of Wall Street and the American consumers to future generations.

IHateToBurstYourBubble said...

U.S. Credit Card Debt Soars to Unprecedented Heights
Published on Monday, April 28, 2008.

WASHINGTON—Studies indicate that credit card defaults and related write-offs increased drastically since 2006. Today, lenders write off 33 percent more in credit card debt than they did two years ago.

Statistics show that about 35 percent of all credit card holders are already exhibiting signs of possible default. Late credit card payments result in fees many consumers can't afford.

Credit card debt accelerated to unprecedented heights since bank loans began to dry up due to mortgage defaults. Total U.S. credit card debt reached almost $800 billion in November 2007, up from around $680 billion in March of last year, according to the latest available government statistics.

In the aftermath of the U.S. mortgage crisis, the credit card bubble may be next to burst. In the past few years, banks have aggressively marketed credit card ownership and usage to consumers with limited income and low credit scores. Credit card standards remain lax, while loan standards have tightened to a degree.

More than 50 percent of senior loan officers said in a January 2008 Federal Reserve survey that they performed a more rigorous analysis before approving a mortgage or car loan over the prior three months. Only 14 percent said so in a mid-2007 survey of the same nature. Banks and lenders have tightened their lending standards following the collapse of the subprime market.

With borrowing venues drying up, American consumers may be drawn to credit card debt, creating defaults similar to those in the mortgage market. Credit card debt—much like mortgages—are bundled and sold by investment banks as asset-backed securities.
The Next Credit Crisis?
"Rising credit card debt since April 2006 amid the decrease in the mortgage expansion rate resulted in a substantial shift to credit card borrowing from mortgage debt," according to a recent report titled "House of Cards: Consumers Turn to Credit Cards Amid the Mortgage Crisis, Delaying Inevitable Defaults." The report was published by the Center for American Progress (CAP), a nonpartisan Washington, D.C.-based research institute.

The rules of the credit card game usually aren't transparent and are difficult to follow even by many sophisticated consumers. Just take any credit card agreement: Caveats are written in difficult-to-understand "legalese." Words like "late fees, annual fees, over-limit fees, cash-advance fees, balance-transfer fees, annul fees, setup fees, fees to pay balance by telephone," and so on, are confusingly sprinkled throughout the contract.

"Credit card debt tends to carry substantially higher costs than other forms of credit, due to myriad fees in addition to high interest rates. The result is that many borrowers unwittingly slide deeper and deeper into debt as they fall prey to the lack of transparency in credit cards," said CAP staff.

"Double-cycling" billing is one of the most abused features by some credit card companies. For example, the cardholder charges $500 to the card, then repays $400 and leaves a $100 balance on the card. In "double-cycling" billing, the interest charge accrues not only on the $100 balance, but on the full $500 for the month. The terms are hidden somewhere in the initial credit agreement.
Students Most Vulnerable
University students are the most vulnerable victims of unscrupulous credit card tactics, according to a survey conducted between October 2007 and February 2008 by U.S. Public Interest Research Group (PIRG), a Boston, Mass.-based public interest advocate.

The study found that 66 percent of surveyed students have a credit card, 55 percent rely on credit cards for their daily needs and school supplies, and 30 percent have their charges paid for by their parents.

About 74 percent of surveyed students want credit card companies to curtail their marketing practices and establish monthly limits on how much the students can charge. They also would like universities to stop providing personal information—such as home address, e-mail address, and phone numbers—to credit card companies.

Credit card companies also offer student event funding and other "freebies" to campus associations and students.

Students are beginning to fight back and file complaints through legal and other venues because of "cards with unfair terms or 'tricks and traps' that result in massive penalty fees and the imposition of punitive interest rates at APRs [annual percentage rates] as high as 36 percent or more," according to the PIRG report.

The report included a solicitation letter from a credit card company to The University of Iowa Alumni Association playing on the emotional side of the student in the first sentence: "Imagine the convenience of being able to purchase supplies for your classes, without worrying about carrying a lot of cash."

The University of Iowa alumni leaders told PIRG that they earned around $1 million annually from Bank of America in credit card purchases by their members. They turn over $200,000 to the university; however, "some of the money given to the school is payment for $145,600 worth of football tickets used by Bank of America Representatives and others."

Taking Action Against Predatory Marketing

Sen. Robert Menendez (D-NJ) initiated legislation in March 2008 called "The Credit Card Reform Act of 2008" that aims to stop predatory credit card marketing. So far, 11 consumer groups and unions have co-signed a letter in support of this legislation.

"We cannot allow predatory and deceptive practices in the credit card industry to continue as we did in the subprime mortgage market. We cannot allow the credit card problem to become the next foreclosure crisis," said Menendez in a press release.

Rep. Carolyn Maloney (D-NY) and Rep. Barney Frank (D-Mass.), the chair of the House Financial Services Committee, introduced H.R. 5244, the "Credit Cardholder's Bill of Rights" in February 2008.

New York Attorney General Andrew M. Cuomo charged First Premier Bank, based in South Dakota, with credit card fraud and fined the bank $105,000 in penalties last year. This bank also must make $4.5 million in restitution payments to customers it defrauded through its credit card program.

IHateToBurstYourBubble said...

Just more proof that the idiocy of the US Government knows no bounds:

Recasting a housing rescue
High cost of ownership argues for plan to boost rentals:

By Ruth Mantell, MarketWatch
Last update: 12:43 p.m. EDT April 30, 2008

WASHINGTON (MarketWatch) -- Home may be where the heart is, but it can also bleed a dweller dry. Especially in markets that experienced a significant housing bubble, homeownership costs can far exceed those for renting today, a trend that has implications for housing-rescue legislation under consideration in Congress.

Take the nation's capital: Property values are so high that it can cost two to almost three times more to own than to rent, according to a recent homeownership report from the National Low Income Housing Coalition and the Center for Economic and Policy Research.

Los Angeles and Boston are in a similar situation.

"In these markets, encouraging people to remain as homeowners, even with substantial write-downs from their original mortgage terms, is likely to lead to situations in which they pay far more of their income in housing costs than necessary," according to the report.

In markets where prices are way out of line, "almost anyone" would be better off renting, said Dean Baker, CEPR's co-director and co-author of the homeownership report. For example, the report estimates monthly rental costs in Washington of $1,185 are eclipsed by ownership costs ranging from $2,303 to $3,094.

Renting is probably a better fit for younger people who don't have a stable family situation or a stable employment situation, Baker said.

"Also, it does depend on your credit record. If the only loan you can get is a high-interest loan, then it's likely you'll end up worse off by owning," Baker said. "If you are paying 8% or 9% interest, that's almost certainly more than what you pay for rent."

Proposals in Congress would use up to about $15 billion in grants and loans to buy and rehabilitate foreclosed properties that could be sold or rented -- a move supporters say would stabilize housing markets and make sure that renters who would otherwise be displaced continue to have a home.

But the plan has been threatened with a veto threat from the White House, and could have a tough time making it into Congress' final housing package.

A report released Wednesday by the Joint Center for Housing Studies at Harvard University shows that the uptick in foreclosures is prompting more households to compete for low-cost rentals. Also significant is the number of renters who face sudden eviction when properties they're living in are foreclosed on.

Without intervention, repossessed units may linger vacant without converting to rental, according to the CEPR report, which added that bubble markets have fewer rentals because some were converted to ownership units during the housing boom. In Washington, there was a 6.0% rental vacancy rate in 2006, while there was a 5.4% rate in Boston and a 4.1% rate in Los Angeles, according to the report.

"The rental market will most certainly grow tighter for the foreseeable future in these markets as demand increases and the conversion of stock lags," according to the CEPR report. "A policy that does not encourage these units to quickly return to rental or only provides subsidy for them to be resold as owner-occupied units will lead to tighter rental markets and an exclusion from assistance of a significant portion of the families affected by the crisis."

Congress working, administration threatening veto

On Wednesday, members of the House Financial Services Committee began work on a bill that would allow the Federal Housing Administration to back as much as $300 billion in refinanced loans for homeowners who are facing foreclosure.

While many struggling borrowers could be helped by efforts to make mortgages more reasonable, there should also be a focus on making sure that there are suitable rental options for current homeowners, according to the CEPR report. Such a proposal could be particularly helpful given that about 40% of recent foreclosures are rentals or non-owner-occupied homes, according to CEPR.

"In most cases, renters in these units are threatened with eviction," according to the CEPR report.

The administration opposes providing billions of dollars for states to buy abandoned and foreclosed homes. In a recent letter, Roy Bernardi, acting secretary of the Department of Housing and Urban Development, criticized funds to buy foreclosed properties as a "costly bailout for lenders and speculators."

There's also a veto threat on housing legislation that would include funding for state and local governments to redevelop abandoned and foreclosed homes. The administration reasons that mortgage lenders will be less likely to help borrowers work out mortgages if they believe that the government will intervene.

"In addition to being extremely costly, this new program would constitute a bailout for lenders and speculators, while doing little to help struggling homeowners," according to a statement of administration policy. "This new program would also be slow to expend money and thus would not provide timely stimulus or immediate relief. In fact, it is more likely that this proposal would prolong the time it would take for the housing market to recover."

IHateToBurstYourBubble said...

Hmmmm... maybe Buster is right.

Buy Now

We are instituting a Bust-Proof economy, where every speculative mistake is promptly bailed-out.

IHateToBurstYourBubble said...

Proposals in Congress would use up to about $15 billion in grants and loans to buy and rehabilitate foreclosed properties that could be sold or rented -- a move supporters say would stabilize housing markets and make sure that renters who would otherwise be displaced continue to have a home.

Hmmmm. "Supporters". Always be wary of these unnamed lunatics.

So now we need BILLIONS in taxpayer dollars to REHAB foreclosures into rental properties. Yet Another Special Interest Plan so riddled with internal inconsistencies, it's hard to know where to start.

Everytime I read something like this it extends my Time To Recovery just a little longer. These BAILOUT plans actually just delay the Day Of Reckoning. And actually make the problem worse by temporarily inflating prices.

Woof. We are screwed.

IHateToBurstYourBubble said...

"In most cases, renters in these units are threatened with eviction," according to the CEPR report.

"CEPR". I smell another deluded bunch of liberals who smell a hero-fantasy in this bubble bursting...

LavaBear said...

This guy is one of those CEPR research fellows.

Four mega-dangers international financial markets face

Dennis J Snower
30 April 2008

The financial turmoil has been worsening as lagged adjustment processes play out. This column outlines economic dangers that may arise as they unwind, including a scenario in which the United States suffers extended stagflation.

Day after day new, alarming news emerges from the world’s financial markets, and day after day the public is surprised by how bad it is. But instead of wringing our hands, let’s ask ourselves an important, unconventional question: What is more surprising: that financial markets have turned from bad to worse, or that we continue to be surprised by each successive piece of adverse news?

I suggest that our repeated surprise should be more surprising. This issue is important, because if we were better at recognising the financial risks we face, we could do more to avoid them. If banks, investment houses, and American homeowners had done a better job in recognising the risks in the subprime mortgage market, we could have spared ourselves the current crisis.

Why does the public repeatedly underestimate the repercussions of the present financial crisis? The answer is simple: most of us are short-sighted; we can’t imagine a future that is radically different from the present. In particular, most of us don’t understand that economic events often unfold gradually due to the operation of important lagged adjustment processes embedded in the economy. The public, the media and politicians would do well to give them close attention. Lagged adjustment processes. After the Titanic’s hull was punctured, it took hours for its hull to fill with water; thus the passengers couldn’t imagine that it would sink.

In my judgment, there are currently four major dangers facing the world economy, and all of them are currently obscured by the fact they play themselves out slowly.
Four dangers

The first danger we have witnessed since August 2007: The subprime mortgage crisis gave rise to a liquidity crisis in the international banking system, due to uncertainty about who holds the losses. This is leading to reduced lending to firms and households. But that is not the end of the story, because the reduced lending will lead to reduced consumption and investment. With a lag, reduced sales of goods and services will reduce stock market valuations. And, with another lag, the lower stock market prices will – in the absence of any favourable fortuitous events – intensify the banks’ liquidity crisis.

The second danger lies in the dynamics of U.S. house prices. As more and more U.S. households find themselves unable to repay their mortgages, foreclosures are on the rise, more houses are put on the market, the price of houses falls further – with further lags – this leads to more foreclosures and declines in housing wealth. This dynamic process plays itself out only gradually, as households face progressively more stringent credit conditions and house sales gradually lead to lower house prices.

The third danger results from the interaction between wealth, spending and employment. As U.S. households’ wealth – in the housing market and the stock market – falls, their consumption is beginning to fall and will continue to do so, again with a lag. This decline in consumption is leading to a decline in profits, of which more is on the way, which in turn will lead to a decline in investment. The combined decline in consumption and investment spending will eventually lead to a decline in employment, as firms begin to recognise that their labour is insufficiently utilised. The decline in employment, in turn, means a drop in labour income, which, with a lag, leads to a further drop in consumption.

And that leaves the fourth (and possibly the nastiest) of the dangers, one that concerns the latitude for monetary policy intervention. As the Fed reduces interest rates to combat the crisis, the dollar is falling. This is leading to higher import prices and oil prices in the United States, putting upward pressure on inflation. The greater this inflationary pressure – which is currently in excess of 4 percent – the more difficult it will be for the Fed to reduce interest rates in the future, without running a serious risk of inflaming inflationary expectations and starting a wage-price spiral. U.S. firms and households will gradually recognise this dilemma and the bleak prospect of little future interest rate relief will further dampen consumption and investment spending.

Eventually, of course, the decline in spending will lead to a decline in inflation, but this will only happen with a lag. The longer the lag turns out to be, the longer the period over which the U.S. economy will endure stagflation, that is, a cruel combination of rising prices and falling aggregate demand. Much hinges on how persistent U.S. inflation is. More persistent inflation will inevitably give rise to higher inflationary expectations, leading gradually to higher inflation, and so on. It took central banks over a decade, in the 1980s and early 1990s, to get inflationary expectations under control, and the fruits of this battle are now in danger of being lost.
Global implications

The international financial crisis and the decline in the U.S. economy will inevitably have an adverse effect on the growth of the world economy. Europe and the emerging markets of Latin America and the Far East cannot fill the gap that the U.S. economy leaves. There exists no economic mechanism whereby a drop in the U.S. aggregate demand will be matched by a correspondingly large increase in aggregate demand elsewhere. Germany and other European economies highly exposed to the vagaries of international trade will certainly feel the pinch.

In the longer run, the prospects for the world economy look much brighter. Eventually U.S. house prices will stabilise, rising exports will help the U.S. economy recover, the fall in world demand for goods and services will reduce the price of raw materials, U.S. households will learn the importance of saving, and global imbalances will correct themselves. These rosy prospects lie in the mists of the future. Meanwhile, however, we are well advised to stay focused on the four dangers.

IHateToBurstYourBubble said...


That is a good article.

bruce said...

More from the Irvine blog, here

Lots of comments on things showing a slowdown in the economy there, from major decreases in traffic on I-5 to work in commercial vehicle sales. Large corporations and trucking firms have idled 10>15% (or more) of the vehicles they own. They just sit on the back fence, drivers laid off, fewer mechanics and support staff needed. Bankrupt firms have entire fleets in holding yards, banks desperate for buyers. Down go new and high quality used vehicle sales. Some trucking companies expect never to return to capacity...

Reading this is seeing Bend in 12 months, which is why I keep going back.

bruce said...

What is killing us, just like after 1973, is oil prices, which are not even factored into "core" inflation. Yet they affect absolutely everything we consume.

And this time around we have a significant amount of foodstocks being diverted into fuelstocks, rather than food. Which is going to make it even worse than the 70's.

Anonymous said...

You guys might want to read the Portland Housing Blog today. Or pick up a copy of this month's Oregon Business magazine.

bruce said...

From Oregon Business News website:

Builder, his firms file for bankruptcy

Slow sales - Tony Marnella unveiled townhomes in Happy Valley just as the mortgage crisis further slowed the market

Thursday, May 01, 2008JEFF MANNING The Oregonian Staff

The real estate bust has claimed another developer.

Clackamas County homebuilder Tony Marnella and three of his companies filed for Chapter 11 bankruptcy earlier this month.

Landing Development LLC, 550 Investments LLC, Tony Marnella Inc. and Marnella collectively owe about $24 million, the bulk of it to two lenders -- Sterling Savings Bank and MW Housing Partners III LP, an affiliate of timber giant Weyerhaeuser.

Susan Ford, Marnella's bankruptcy attorney, said slow sales at a Happy Valley townhome development were primarily responsible for the bankruptcy. Marnella unveiled his Volare at Eagles Crest, a 115-lot development, last July, just as the mortgage crisis worsened the already slowing real estate market.

Landing Development has built more than 25 homes at Volare. The rest remain empty lots.

Happy Valley is generally recognized as one of the most overbuilt communities in the metro area, along with parts of Clark County, Wash. The Clackamas County town has proven difficult territory for more than one developer because of super-heated growth in recent years.

Ford said she will attempt to negotiate some sort of agreement with Marnella's two lenders to give Marnella and his Volare development additional breathing room.

"He remains totally committed to the project," Ford said.

Marnella has been an active residential builder for two decades, with projects in Milwaukie, Canby and elsewhere in Clackamas County, as well as Portland's St. Johns district. He also blogs, at times taking the media to task for being overly negative on the real estate market.

"One of my biggest frustrations right now is the amount of FUD (Fear, Uncertainty and Doubt) being generated by the media about the state of the current real estate market and the local economy," Marnella said in a March 20 post.

"In my opinion, there is a lot of misinformation and a failure to acknowledge the positives about our local real estate market."

It's true that the Portland area remains vigorous relative to the weakness in much of the rest of the country. But the market in the area has slowed, as Marnella's own numbers show.

Marnella's various companies brought in $4.3 million in revenue in 2006 and $1.1 million in 2007, according to the bankruptcy filing. So far in 2008, the companies have generated revenue of $10,000.

Just don't want to stop drinking that KoolAid, it's tastes so fine.

Here's the link to the article referred to in the above post:

bruce said...

Fuel stolen from Central Oregon construction site
By The Associated Press

May 1, 2008
BEND — A Bend Oil Company trailer has been stolen from a construction site in the Central Oregon city of Sisters.

The Deschutes County Sheriff’s Office says the trailer contained 1,500 gallons of off-road diesel fuel valued at about $6,000. The construction firm Taylor Northwest owned the fuel.

The white trailer featuring the words “Bend Oil Contractors Services” was last seen Tuesday afternoon.

Taylor Northwest has offered a $2,500 reward for information leading to a conviction.

From the Willamette Valley Statesman-Journal, of course.

Anonymous said...

I'm still "banned" from BendBB. Is it still hacked?

Yes it's still down and there hasn't been any response yet from support despite multiple requests.

Here are the new listings numbers (all property types) for April 2008

Bend 497
Redmond 200
Sisters 62
Sunriver 33
Total 792

For comparison here's March 2008

Bend 449
Redmond 169
Sisters 56
Sunriver 31
Total 705

And here's April 2007

Bend 513
Redmond 227
Sisters 33
Sunriver 26
Total 799

-- bendbb

JIT said...

I know this is kind of tinfoil hat, but I wouldn't be surprised if the Bendbb was down at the request of someone in the Real Estate biz. Is it kosher to be posting all of the MLS results?

Their other forums appear to be working.


PopGoesBend said...

From: Oregon Business

A year ago, short sales made up just a sliver of the Oregon housing market. Now they’re becoming increasingly common, according to industry experts. Title companies do not track them specifically, but insiders say short sales are growing more prevalent from Happy Valley to Medford and are approaching 50% of all closings in Deschutes County, where real estate offices get phone calls daily from would-be sellers who owe more on their homes than they are worth.

Anonymous said...

Is it kosher to be posting all of the MLS results?

The answer would be NO !
And MLS doesn't like it and has tried to find out how he gets his data.

timothy said...

Wage inflation was about 8% during the 70s, I believe.

Agreed that the odds of such a thing taking place now are slim.

timothy said...

>>And MLS doesn't like it and has tried to find out how he gets his data.


People all over the country have been scraping MLS for years.

Anonymous said...

timothy said...
>>And MLS doesn't like it and has tried to find out how he gets his data.

That may be true, but MLS and COAR are one in the same. I don't know anything about the technical side of this issue.
Sales are still not strong for April.
81 sold @ $270k median
April 07
154 sold @ $365k median.
You know March 08
93 sold @ $293k median.
You do the YOY...Oweeee
Spank us!

bruce said...

When was the last time April was slower and lower than March? Ever?

Anonymous said...

bruce said...
When was the last time April was slower and lower than March? Ever?

Hey bud's, I, in 21 years can't remember that has ever happened. I hope someone can lend some info to this.
Yo, Mike, can you send some old stats to this?

PopGoesBend said...

According to Doug Farmer's numbers it was last year:

Mar 07

Listings Sold: 165
Listings Expired: 70
Avg Square Footage: 1957
Avg Days on the Mkt: 183
Avg Sale Price: $ 402,658.
Active Listings Mar 31: 1790

Apr 07

Listings Sold: 152
% of Inventory Sold: 8.49%
Listings Expired: 61
Avg Square Footage: 1973
Avg Days on the Mkt: 171
Avg Sale Price: $ 424,164.
Active Listings Apr 30: 1986

Stats at Realty Times

IHateToBurstYourBubble said...

Is it kosher to be posting all of the MLS results?

Banned from he own board. That shit's gotta hurt!

The worst kinda irony? CRUEL IRONY!

Come over to the Dark Side BendBB. It's aiiiiiight. What they won't let you say over on BendBB, you can say all day over here. We don't censor, and we won't give you up to the COAR Gestapo.

IHateToBurstYourBubble said...

81 sold @ $270k median
April 07
154 sold @ $365k median.
You know March 08
93 sold @ $293k median.

Damn. I remember when everyone got all hell bent to post local short sales 10-12 months ago, and Bend had practically none. The whole effort died, cuz they were too sparse. Now... almost half of all Deschutes County home sales? I mean, DAMN. Now it's too easy... no sport in it.

And that April YoY is DOWN 26%.

IHateToBurstYourBubble said...

BendBB -- is there any way to save the forum posts? Be a shame to lose all that.

You can post the Apr google spreadsheet URL here, if you want.

IHateToBurstYourBubble said...

So how does everyone like the Bulletin makeover?

I was just getting used to the horrific skankiness of the old site. The new one definitely appears more "professional" looking... take me awhile to get used to it.

IHateToBurstYourBubble said...

People all over the country have been scraping MLS for years.

Dude... this is Bend, and the local MLS Gestapo probably won't let you take a picture of them for fear it'll steal their souls.

They think that MLS data is the honeypot, and they should guard it with their lives. One thing they forgot is when you put that shit on the internet it'll get scrapped down to bare metal. And there'll be nothing to be done about it, TOS or not.

Don't worry BendBB... you probably won't do a lot of hard time. Just enough for Bubba The Wonder Cock to break you in a little. We'll send you Shawshank Redemption from The World if it makes you feel better.

IHateToBurstYourBubble said...

Wage inflation was about 8% during the 70s, I believe.

Agreed that the odds of such a thing taking place now are slim.

You can see that gov't stats are bullshit from our current situation. I don't give a fuck about CORE inflation or not, I KNOW I'm paying way more for EVERYTHING, not just food & gas. Current inflation figures are horrendously UNDERSTATED.

Inflation is an insidious bitch. Every economist & politician worth a crap would far rather have a recession than inflation. It practically took the purposeful inducement of a depression to get rid of it last time... and yet, HERE WE GO AGAIN.

Stupidity is GENERATIONAL. And stupid GWB don't remember the 70's cuz he was snorting blow. We're about to be the victims of our current politicians ignorance.


IHateToBurstYourBubble said...

Another Full Year
Of Housing Pain?

May 1, 2008 3:55 p.m.

Don't look for the housing market to improve until the daffodils bloom next spring.

For home sellers, the continuing pain means that that homes likely won't sell unless they are well-kept, priced below the competition and are marketed aggressively. Adding incentives like seller financing or lease-options can help bring in buyers who are having trouble getting conventional financing.

The latest S&P/Case-Shiller Home Price Index shows that new and existing home prices fell 12.7% in February from a year earlier.

According to economists who convened at the spring construction forecast conference of the National Association of Home Builders in Washington, D.C., last week, the trend will continue until early next year, dragging down prices.

The consensus view was far gloomier than a few months ago, when housing economists predicted the bottom would be reached in late summer or early fall. But now the U.S. is in a mild recession, although it hasn't been officially declared, and the pain is spreading to more parts of the country, according to the association's chief economist David F. Seiders. "Foreclosures keep getting worse," he said. "Where in the world does it stop?"

Foreclosures push homeowners out of their homes and simultaneously ruin their credit, making it difficult for them to become owners again, he said. The drop-off of demand from these owners, as well as would-be buyers who don't want to purchase while prices are still falling has become a "diabolical feedback loop," he said.

Home builders have put the brakes on building -- total annualized housing starts are down 34.5% to 1.035 million in the first quarter of this year and will likely stay at under 1 million until the middle of next year. But demand is still too weak to absorb this pace of building, according to Mark Zandi, chief economist for Moody's It would take 11 months at the current sales rate to sell the new homes now on the market.

Mr. Zandi expects three quarters of the country's major markets to experience new and existing-home price declines. In places that have been losing jobs, prices could drop as much as 40% from their peaks. "The coast is not clear," he said.

Eric Belsky, executive director of Harvard's Joint Center for Housing Studies, noted that declining home prices, which eroded the equity of many homeowners, "caught people by surprise." He expects to see more households doubling up in shared homes as job loss, foreclosures and the credit squeeze continues. "People are being forced to sleep on floors," he said.

But not all of the economists were as pessimistic about the coming year's prospects.

Nariman Behravesh, chief economist of Global Insight, said that while lack of regulatory oversight on Wall Street and interest rates that stayed too low, too long, helped create the current housing debacle, "the worst may be behind us." He noted that there's now a substantial amount of capital available to fix the subprime mess.

Economist James Glassman, a managing director of J.P. Morgan Chase & Co., said that the current quagmire is partly due to creditors overreacting to the subprime-mortgage crisis, leaving only good savers with enough cash able to buy homes. But overall, he said, the American economy is sound, and the crisis will eventually subside as credit becomes freer and home prices stabilize. "The wheels aren't coming off the wagon," he said.

IHateToBurstYourBubble said...

From this post & one from lava bear.

The consensus view was far gloomier than a few months ago, when housing economists predicted the bottom would be reached in late summer or early fall. But now the U.S. is in a mild recession, although it hasn't been officially declared, and the pain is spreading to more parts of the country, according to the association's chief economist David F. Seiders. "Foreclosures keep getting worse," he said. "Where in the world does it stop?"

Why does the public repeatedly underestimate the repercussions of the present financial crisis? The answer is simple: most of us are short-sighted; we can’t imagine a future that is radically different from the present. In particular, most of us don’t understand that economic events often unfold gradually due to the operation of important lagged adjustment processes embedded in the economy. The public, the media and politicians would do well to give them close attention. Lagged adjustment processes. After the Titanic’s hull was punctured, it took hours for its hull to fill with water; thus the passengers couldn’t imagine that it would sink.

Anonymous said...

Hmmmm... maybe Buster is right. - poverty pimp ( homer )

Buy Now


Buy Now, is NOT what I said.

What I have said for 1-1/2 year is ...

1.) 98% of the time its more prudent to be an owner than renter, I'm saying this as a land-lord.

2.) 4X, homes should cost no more than 4X income, that be 160-240k in Bend.

3.) Buy small, around 1100 sq-ft or less, fuel will kill you on mcMansion.

4.) Buy young, so your free&clear by 40.

5.) Buy rentals, and get man-flesh to pay your MTG.

6.) Don't wait for the bottom, because then NO MONEY will be available.

7.) Bend lags the national economy for 18months, ditto Oregon.

8.) Summer of 2008, will be a great time to buy, the man-twats ( man-flesh ) are panicking, and you can still get money if you have a 800 fica, 4X income, and 20% down.

9.) Low ball offers have and are being taken since last winter.

10.)There are lots of pre 1998 homes in Bend that people paid less than $120k, many of those people would be quite happy to get $160k in todays market from a qualified buyer.

11.) These cycles come to Oregon ( Bend ) every 20 years, if you havent' saved lots of money, in order to survive, then your just another fucking man-twat.

The above is basically what I have been saying.

- buster

Anonymous said...


Another thing I have said for the records, ALL, and I mean ALL remote Siberian STD's, e.g. crap-shacks more than 1-2 miles form the Bend City-Center 'Drake-Park' core will all be worth NOTHING.

NEVER buy a remote siberian STD in the desert. Never.

Bend will revert to sub-50k population. All these STD's will go to seed. These are the homes that will go short, and be abandoned.

BENDBB is an asshole, man-twat. INFORME.COM is a data-collection company for the New-Jersey mob. Anybody using that site is a moron. Collecting demographics based on interest, and selling the data to law enforcement.

Did anyone see that Microsoft is now selling a USB-Dongle to law-enforcement called "COFFEE", that can break passwords, and restore any deleted data, ... Nothing is sacred on computers, nor has ever been.

In 1998 in SF ( The Bay ) it became better to rent than buy ( 10X ), we're now entering the time where its better to OWN than RENT in SF.

Here in Bend it was better to OWN since 2002, and after 2006 it was BETTER to OWN. On average its always better to OWN. Fifteen YR fixed pay it off, and be done for life.

Today you can buy homes in nice parts of Bend for under $200k, if you low-ball a pre 2000 seller. These people paid less than $100k, and will sell for less than $200k.

Any fucking RENTER on this blog, who is still WAITING is full of FUCKING SHIT, and was ALWAYS a renter/loser in the first place.

That be HOMER, TIMMY, and ALL of the Board.

IHateToBurstYourBubble said...

This ability to CHRONICALLY UNDERESTIMATE will plague Cent OR for FAR LONGER than almost anywhere. Why? Right, KOOL-AID poisoning has be indoctrinated as a population pacification tool, and STILL to this day, many in Deschutes County think everything is fine.

It is most certainly NOT FINE. I know several people who own multiple homes, who are finally seeing that they cannot sell them OR rent them, and they are desperate to do either. And they are deeply regretting that they did not cut price last Summer when the getting was still relatively good.

The vicious cycle referred to in that last article is what's about to grip Cent OR real estate. The poor? Fuck the poor were squeezed out in 2004-2006. Now it's going to be The RICH who are fucked. Right, respectable business owners who huffed the RE crack, and are now going down HARD.

I say AGAIN: You think it's bad NOW? Wait a year... it'll be EVEN WORSE THAN YOU THOUGHT POSSIBLE. "Renting it out" till the pain subsides? You better get used to YEARS of negative cash flow. And still, you won't be able to get the price you want in 10 years.

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