A Few Things...

I haven't watched color TV outside of a Celtics or Patriots game in God knows how long.

BUT I caught that show last night on the tube and found it passable.

Having spent more than my share of time sitting, thinking in bars....I found this guy's insights pretty interesting.

On an another note...

Naples, Florida is truly a beautiful place. In four words it's sunshine, golf, Christians, and homeschooling. So there lurks considerable appeal to me!

BUT there are really no jobs - not for most people anyway, and not compared to larger cities (excepting Boston).

Of course that doesn't mean there's no economic opportunity here. There certainly is.

Guess what folks, the real estate market down here (as it is elsewhere) is getting a little bit bubbly yet again, in my estimation.

Sure, it's not like 2005.

But I heard a guy the other day talk about *buying lots for 600k, building for 600k,...and flipping for over $2 million* in the nicer sections of Naples. That's a pretty good deal if you can pull it off - even once. Building time is only like 7 months.

I went for a run this morning and in 5 blocks saw no less than at least 8 *spec*/*new* homes going up.

I maintain the worst is still yet to come for house prices. Eight years after the Floridian top we still haven't fallen. Places like NYC, Washington, and other pockets have not even really gone down more than a half a notch.

*Speculation* was the culprit before.

Now it's artificially manufactured low interest rates and an inflated stock market. Once the Dow takes a nosedive, all these fossils will shudder. The bull equity run has effectively distracted all the 'old coots' from their loss of *interest income*. They'll take more notice when stocks slide, as they have been known to do.

Think I'm crazy, still calling for a stock crash after all these years?

Well, then, stay long. Sleep tight.

Oh yeah, I also had a fossil in the building tell me that he bought his condo for 108k in 1997 or so.

And he quickly added that that was the price they sold for....BACK IN 1982, as well.

My cousin in Connecticut posted that pic on Fbook.

What do y'all know about *projectors*?

I need to buy one for my classroom teaching - I think.

I'd love to just be able to project questions up on a screen or a wall from my laptop instead of printing everything out. I basically kill entire forests, single-handedly with my math teaching.

Do any of y'all have one? What do you recommend I buy? Thanks in advance

My daughter last week, on Marco Island.

Real Estate, Bottomless Cheapness?

My buddy who traffics in Naples real estate just sent me this listing.

Only 80k for 1,000 square foot condo in the development we stayed in January 2009!!!

It's a pretty good location; very, very close to Vanderbilt Beach and major roads; in northern Naples so close to the airport; there's a pool; etc.

It's also a bank sale so buyers won't have to pay any back taxes, utilities, or HOA fees.

It sold for a ridiculous $255,000 back in September 2006.

At this price I could ALMOST justify buying because the annual upkeep wouldn't be much more than only two months of snowbirding (5-6k).

Almost. I'm going to keep waiting. I'd rather buy when rates are higher, regardless of the market price - and after the stock market crashes.

(Note this place also sold in 1988 for 67k. Of course back then gas was $1 per gallon and America wasn't $16 trillion in debt.)

Les Christie Is A Moron

On CNN.com they just ran some reality-inverting article that asserts buying a home today is cheaper than renting.

There were several INSANE assertions in the article (who wants to live in Detroit's cheap crack-houses?) but my favorite was:

Kolko pointed out that places like Honolulu, San Francisco and Boston have strong long-term growth prospects.

Hah! Strong long-term growth prospects in Boston?

And they say *blogs* don't produce quality content!

A Little Different Than Cafeteria Swapping

Yeah, she is indeed homeschooled! Article here.

Thanks to Heather for this one.

Stealing The American Dream

Hah!

A buddy/old-neighbor of mine up on Boston's South Shore just sent this to me...

Looking at the picture and the headline I thought for a split-second that it was my old a$$hole landlord!

But then I saw that it was in Maryland; and that it was ONLY $1 million worth of delinquency.

My landlord, as far as I know, still has 3-4 properties that totaled over $4 million in *non-performing* debt.

And he stopped paying everything, 4.5 years ago...

One quick excerpt:

"How is it people can stay in a house for five years without ever making a mortgage payment?” said Thomas A. Lawler, a former senior vice president at Fannie Mae who now runs his own consulting firm in Loudoun County. “That’s a screwed-up process. It’s an example of how the process is broken."

Can you believe this effin' guy quoted in the article???!!!

HE WORKED FOR FANNIE MAE - WHERE IT WAS THEIR POLICY TO NOT EVEN LIST A LOAN AS 'DELINQUENT' UNTIL IT WAS 2 FULL YEARS IN DEFAULT.

Fannie, his company, loses hundreds of billions, he goes out scott-free to run his own *consultancy*....and then waxes outraged at his own former boondoggle!

Warren Buffett - A Housing Moron Too!

Apparently in the past he said that housing would have bottomed by now.

Single family homes only look cheap in Florida and other places that have been over-developed. And they only look cheap because of record-low, unsustainable mortgage rates.

NYC had 3 housing crashes in the 1970s alone. Meanwhile all these bull-market housing Morons think that today, somehow, the housing market correction is going to happen without NYC-area real estate dropping hardly at all - which it hasn't!

Here's the link for his latest.

See also - Warren Buffett - STEALING From Taxpayers!.

Calculated Risk's Bill McBride - Still A Moron!

You can read the nonsense for yourself if you like - but it's a waste of time.

I'll sum it up for you. This Moron says that housing prices are bottoming RIGHT NOW (March 2012).

Of course the fool doesn't even mention RECORD LOW MORTGAGE RATES in his *analysis*. So implicit in his stinky bottom pick is the assumption that sky-high bond prices NEVER drop - at least not in the next 20-30 year lives of mortgages written today.

See also:

Marginalizing Calculated Risk

Marginalizing Calculated Risk, Again

Look, the banks/government ARE NOT FORECLOSING on homes. All of today's optimism has been manufactured by incumbent politicians, the 'old coot' lobby, and sleight of hand finance (i.e. money printing).

I'm not kidding either. Just you watch when NYC home prices inevitably fall...

Check this out:

On February 7, 2012 there were a total of only 242 repossessed properties on the active MLS in Queens according to foreclosure.com. This is a borough with a population of 2.2 million.

If you believe there's really only that many distressed properties in all of Queens....well there's a bridge not far away that perhaps you and Bill McBride should bid on!

Real Estate Insanity Bubbling Again

It's truly astounding how many Morons haven't learned their lessons - despite all the fresh blood.

Real estate remains a complete suckers' bet. Taxes, utility costs, artificially low interest rates, and unrelenting over-supply have conspired to separate all these fools from their money.

I mean I know people, plenty of people, who got their butts kicked and STILL they figured out some way to re-invest, if not physically, then mentally, in a sun-will-come-out-tomorrow real estate fantasy.

My real estate buddy down here in Naples informed me the other day that one of his clients wanted *in* on a new construction development....so he had to have someone stand in line for say 8:30am one morning to get a choice of lots.

And guess what...

At around 7:30pm the night before there were already 7 Morons waiting in line!!!

So we are staying in this very nice 3 BR 2.5 Bath unit in Bridgewater Bay...

It's going for around $220,000 these days which sounds rather cheap.

BUT IT IS NOT.

Doing the math on carrying the mortgage, HOA's, taxes, etc. I come up with about $19,000 per year - or nearly $1,600 per month, EVERY MONTH, for 30 years.

You could argue that it makes sense as a primary residence, which I won't argue.

But as a secondary one it most certainly does not.

It's better off to rent, still, by a long shot.

I mean why would ANYONE camp-out out for a run-of-the-mill new construction home here in Florida, in 2012, when there are 5-7 years of supply of homes owned by the banks and federal government?

Apparently 60+% of new buyers in Florida these days are buying with *all cash*.

That must imply strong healthy demand, that must imply that there's no bubble forming, right?

WRONG.

All it means is that deposit interest rates are ZERO. I'm sure that many people could have paid all cash in prior years (esp. for cheap FL housing) it's just that they were getting more than .25 % on their money in the bank.

Dear CaptiousNut,

Well, my bank puts are gone now (this month)....and I'm not planning on buying more (but you should!).

If inflation picks up steam....rates will rise and housing will crash. Actually it's still so astronomically high, and over-supplied and under-demanded to the extent that it will crash EVEN with continued low rates.

Yeah, inflation can theoretically raise the price of homes...but you need *wage inflation* and sinking rates for that to happen which is unfortunately the opposite of current economic reality.

Also, inexorably rising property taxes and energy prices are working and will continue to work strongly against home prices.  Don't underestimate this phenomena like EVERYONE else is.

Inflation and deflation rarely permeate across all segments of the economy at the same time.

For example, from the mid-90s to the mid-00s' we had very low commodity inflation.....BUT we had ridiculous inflation in healthcare and education - two effin' big budgetary nuts for most households.

Yeah you can certainly lock in a very low long-term mortgage rate at the moment.

But I submit it's nothing short of a TRAP. Once rates climb (which they certainly will at some point over the next 30 years!) it will be *game over* for the entire real estate market/stock market/economy. And while you may be locked in at a low monthly rate.....that same piece of property will be on sale for a much lower sticker price but at a similar monthly cost of carry to whatever you are paying. But the guy who buys then will benefit from the massive appreciation of his house if/when rates drop again.  So my advice is to wait, horde your cash until there really is blood in the streets.  Unless of course the house is something you are 1,000% sure you want for the rest of your life and you have the means to think of it as a *sunk cost*.

Believe me....once real estate crashes everyone is simply going to stop paying the bank, squat and/or mail their keys back to the bank/government - a la my old landlord in Massachusetts who's still in his house despite having stopped paying the mortgage  AND property taxes 4.5 years ago (thanks GMAC, er taxpayers)!

Flying South?

I honestly haven't thought much about wintering in Florida this year. Maybe that's because it's been unseasonably warm the past two months? Or perhaps it's because living in New York now we are just so much busier?

Anyways I've tossed out a handful of lowball bids for unrented places in Naples the past couple of days.

We'll see if anything comes of it.

Of course I'd like to go, but my wife gives me such a hard time about taking the kids away from her for a couple weeks that it really mitigates the fun in the sun.

Either way I win. If I don't go....we'll save the $3,500-$4,000 total cost of the trip.

On the same subject, I am actually thinking about buying a place down there in Naples. It's not time yet, but it's getting close.

For less than $100,000 you can get a 2 bedroom place very close to Vanderbilt Beach now. At that price, the total annual cost of ownership (mortgage + taxes + HOAs) is only about $8,000 per year.

You could theoretically rent it out for just March and April for 4k+ and have half of that yearly nut covered.

Like I said, it's not time yet.

Those units are headed to 50k when the stock and bond markets revert to reality.

NYC - Going Down...

This may shock Floridians, Nevadans, and the 10 people still left in Detroit...

But New York City hasn't really experienced any economic woes yet. Due to its political connections and access to Bernanke's runaway printing press, Wall Street has continued to quietly boom.

HOWEVER, recently, and I mean very recently like in the past 1.5 months, commercial *for rent* signs have appeared everywhere.

Again, Floridians by now are accustomed to half-filled plazas and malls but it's a new and scary development here on Long Island where I live. Certainly, when NY topples it will mean another leg down for everyone else - no matter how deluded they are that they already saw the bottom!

Of course retail rents are waaaay too expensive and store space is waaaay over-supplied, still. Tiny stores need to make $200 IN PROFIT, EVERYDAY, just to cover the rent, never mind pay the utilities, insurance, the workers, etc. Obviously the spate of store closings implies that consumers in these parts are cutting back.

Even the oldest yacht club in the country, right down the street for me, is boarded up and for sale:

$4 million bucks?

I figure you'd need 400k a year in income to carry a property like that. Obviously it's already failed as a social/yachting/pool club but that's what it's designed for. PLUS right next to it are two other, similar yacht clubs including the one my first wife and I were married in.

Hmmmmm....

$400,000 per year divided by 12 months = $33,333 per month in overhead.

It's a terrific location for say a new private school. I could charge 20 kids $1,500 a month (cheaper than daycare!) or more...

I could pimp out the facility for a wedding or two per month for another $10,000...

I could rent the moorings out if there are any boaters left....and maybe even run a for-profit pool club in the summer - although there are a million pools out here already.

For all that risk, maybe, MAYBE I can earn 100k per year.

Obviously a lower purchase price is needed. Or I'd need some wealthy benefactor to donate much of the purchase price. I'd happily call it Old Coot Academy!

Whatever. There's going to be a whole lot of tantalizing retail/commercial renting opportunities in the next few years - as NYC real estate drops 30+%.

Watching A Bubble Pop in Slo-Mo

Old buddy Mr. Mortgage recently poked his head out of his bunker and offered up this:

In final, I am always asked about my predictions for total Foreclosures stemming from the bubble years. And I have said the same thing for years.

In short, there have been 3.5 million foreclosures and short sales to date stemming from legacy loans. There are presently ~7.5 million borrowers delinquent, defaulted, or in Foreclosure at present — grows by 100k to 125k per month — of which 75% to 80% will ultimately be liquidated. If another 7.5 million defaults — and modification redefaults — occur over the next three to five years then a total of 12 million to 15 million Foreclosure, short sale, and deed-in-lieu liquidations will occur, meaning we are now ~25% complete in cleansing the infamous 2003-2007 Bubble-Year’s toxic lending cesspool.

So figure the housing market has been in the $hitter for 2-3 years now...

So he's predicting ANOTHER 6-9 YEARS of housing market pain.

That time frame sounds about right to me - at a minimum anyway.

Of course unless Big Government withdraws a large percentage of *entitlements*....this whole economy is headed in the same direction as housing bubble prices....right into the $hitter!

FYI - As far as I can tell, NYC and its tony suburbs haven't even really been hit by a real estate price decline.  Seriously.  Neither has Washington DC.

The Donald!

I just read and thoroughly enjoyed the classic bestseller - Trump - The Art Of The Deal.

He's one of these (numerous) guys/gals that you might know who he is....but really aren't aware of exactly how they became famous.

Trump made his fortune in real estate, but this auto-biographical work gets a whole lot more specific on the deals that launched his career: Swifton Village (Cincinnati, OH), Javits Convention Center, Trump Tower, The Commodore Hotel, etc. Yeah, he was indeed lucky, but he was also pretty bright and highly motivated. Seeing how this book was written 23 years ago I'd love to read about what he did for his second, third, and fourth acts before The Apprentice (actually never seen an episode).

Okay, I just read a primer on what he did after The Art Of The Deal on Wikipedia. Check it out. The man was certainly all over the place financially, flirting with bankruptcy more than a couple of times, serving up some spectacular business failures, and yet somehow managing to amass a $2-$3 billion net worth.

I'll never forget my grandmother telling me, way back in the late 80s(?), how she would no longer play the slots at one of Trump's casinos in Atlantic City.

Why?

Because he cheated on his wife with Marla Maples!

Screw Zillow.com

I could be wrong/blind but it appears as though Zillow.com has done away with its best feature - Sales Price History.

Obviously it's an attempt to placate and solicit ads from those unctuous realtors. God forbid any prospective buyer find out that homes can be disastrous *investments*...

Yet another triumph for *opacity*!

Here's hoping the website DIES and its owners get foreclosed upon.

UPDATE - It appears that I am wrong/blind. An intern from Zillow.com informed me in the comment section that *sale history* is still being duly reported on their website.

Look. I most certainly did not imagine this. I'd been looking at *sale history* on that site for a few years before without any trouble. Then all of a sudden I couldn't find that data on the last bunch I pulled up. And it could be because I started searching an area (NY?) that simply didn't have much published sales price history. I don't know. But this morning, BEFORE running this post I did a quick Google of the question and came upon this:

That complaint was not only curiously unanswered, it was ON THEIR WEBSITE. One might think they would address those critiques before coming here...

I simply combined my frustrated personal experience with that corroborating link and a dollop of my trademark cynicism in penning the post. I can't well research everything to the N^th, now can I?

I think they may have removed the explicit link to *sales history* and folded it into their ridiculous estimated *price history* (at the behest of advertising brokers?). So if you click on price history it should be there, although it's *buried* by the laughable and infinitely useless *5 year* default time range. You'll have to expand it.

Note that most real estate brokers today LOVE the *5 year* time-line as well!

Pooped From Paganized Christmas Festivities

I just got home today from 4 days at my parents' place in arctic Massachusetts.

I was met by 2 feet of snow in my driveway that needed to be shoveled.

That was on top of the 12 inches I had to help remove from my parents' house; AND I also helped shovel out my BIL's cars in Connecticut this afternoon. He had thrown out his back.

1.5 weeks ago I picked up my brother at the airport and since then it's been non-stop eating, drinking, entertaining, shopping, wrapping, unwrapping, and driving all over the place.

To say that my *productivity* suffered is to put it mildly. And I'm freakin' exhausted.

I'm supposed to be on the road to Miami now except that I haven't been able to secure a place to my liking as of yet. Of course there are tons of places to rent down there - given the imploding economy and the *overdevelopment* - except that these condo owners mortgagers are too Moronic to consider reality-based bids.

For example:

I emailed some guy - actually a bunch - with my standard questions, "Do you have internet?" and "If you would consider $2,500 for the month of January, please let me know."

The knuckle-head CALLS me back:

CaptiousNut - Wait, I've contacted a lot of people. How much are you looking for?

KnuckleHead - It's $3,200 for January.

CaptiousNut - I'm sure in my email I told you my price point was $2,500.

KnuckleHead - Well, you're never going to find a 2 bedroom for $2,500....maybe a studio...

CaptiousNut - Okay. It's December 26th, right? And you're not rented, right?

KnuckleHead - Yeah.

CaptiousNut - How about considering that YOU'RE NEVER GOING TO RENT YOUR CONDO, for January, for $3,200?

What pissed me off as much as his demonstrable stupidly was the fact that HE CALLED ME. The whole point of my emailed bid was to avoid conversations like that.

Then I had another one right after him. It was some woman who wouldn't answer any of my questions "Internet?" and "What price?" over email. She's just like my MIL. They do this so they can *screen* people over the phone. Whatever. I took her call and eventually she got around to telling me how much she wanted for her 2 BR condo on Key Biscayne:

DumbRealEstateWoman - It's $4,000 for the month.

CaptiousNut - Well, I'm looking to spend only $2,500 a month....my wife has me on a budget. (laughing)

DumbRealEstateWoman - It's *the season*. That's what it costs.

CaptiousNut - But the place is unrented still for January, right? It's December 26th...

DumbRealEstateWoman - I have two other people that are very interested. One is just about to take it.

CaptiousNut - So it sounds like you're all set then. You don't need me. (I'm trying to get off the phone)

DumbRealEstateWoman - Listen, I'm in the real estate business. It's THE SEASON. $4,000 is the going rate...

CaptiousNut - But you're not rented right? (still trying to hang up)

DumbRealEstateWoman - I'm a broker. I've been in real estate for 17 years.

CaptiousNut - So what? I've been in the real estate business for many years also. (slight embellishment!)

CaptiousNut - Look, keep my number and if you change your mind call me back. My price is $2,500. Thanks.

These fools would rather be unrented than step down in price!!!

The thing is, any deal they give a last-minute lowballer like myself would COST THEM NOTHING. It'd be a 100% private transaction. They could still hold out for their fantasy rates going forward.

For point of reference, 2 years ago I paid $2,200 for a typical 2 BR condo in Naples for the month of January - another last-minute, lowball situation.

Now Miami is more expensive than Naples, by a little, and I could very easily pay the *going rate* for a month down there.

But I always have my price points and I stick to them. Heck, an extra $1,000 is 5 days at Disney or a new computer for my Princess. Or new golf clubs for me!

A month in Miami is surely worth 4k but I can't pay it, not on December 28th, to one of these buffoons, on principle alone!

I'll talk more about this process as it unfolds.

Right now I'm going to try to get some rest.

More Evidence: Real Estate Brokers = Morons

Read this - from a sob story on tony Rumson, NY - and tell me where the *analysis* falls flat:

"People don't have the money they used to have," says Richard "Ric" Martel Jr., a broker in the Rumson office of Prudential Zack Shore Properties. "The scenario could be a banker who was making $1.5 million, and now their company went under -- like Lehman Brothers or Bear Stearns -- or they have seen their comp cut to $750,000, and the house they bought in 2005 for $1.6 million is now worth $1.1 million, and . . . the mortgage is $1.280 million."

Residents are "still owning nice cars and belonging to beach clubs and country clubs, and they're asking themselves, 'Where can I cut my monthly nut?' The answer is to put their home up for sale."

First correct answer scores a n@ked C-Nut bobblehead doll...

NYC Real Estate Stubbornness

This young lady did a *trade-up* in Manhattan. She listed her triplex in Gramercy and bought a penthouse somewhere else in the City.

Only she never did get rid of the first place!

In the video, note her conspicuous dumbness.



I feel like putting it down in the sevens is completely DEVALUING the apartment...

Of course it's actually the *market* that's devaluing the apartment.

It's hard to believe that this Moron lives (for now) in a penthouse apartment.

People thought Florida was devastated when its housing prices dropped 60-70%...

But just wait until NYC prices are down a mere 25%, on their way to at least a 40% peak-to-trough decline.

Raising Prices In A Declining Market

The above house in Hingham, Massachusetts recently was put up for sale.

I got a nice laugh out of that MLS *alert*.

You see, 3 years ago, after languishing unsold for 2+ years, my wife and I gave that suffering speculator his FIRST bid. We bid 700k when it was listed at around 815k. He scoffed at us, countering at 810k.

8 months later, he did in fact unload the house at $767,500 - though I heard from the broker that the sale price included a *large incentive*. In other words, he kicked back a chunk of change to the buyer so they could manipulate the *% down* on their mortgage application. Thus the house probably sold for, net, a number a lot closer to our 700k bid.

Now I know this house inside and out. It's a McMansion not only in a *bad neighborhood*, but also RIGHT ON THE TRAIN TRACKS. The train literally zooms by, a few hundred feet away, at something like 80 mph (I estimate). Furthermore, though the house is large, probably 5,000 square feet including the basement and usable attic, it still only has 3 dedicated bedrooms. Another major demerit for this place is that it has *propane heat* - which is only a half a notch better than budget-crippling electric heat. Who in their right mind wants to heat a 5,000 square foot house with propane?

Don't get me wrong, the house has some nice, modern attributes. Otherwise, we'd never have bid 700k for the place.

So two years after buying the abode at say, roughly, 725k, the current owners want out. Guess what, they listed it at a counter-logical $879,000!!!

The only things they could have possible done since we vetted the house are: finish the almost-finished attic, finish the almost-finished basement, and carpet the master bedroom. And there's no way that could have cost more than 50 grand altogether - never mind that it, like all home improvements, doesn't add a 100% ROI to the value of the house. Where exactly do they get off thinking that a house, ON THE TRAIN TRACKS, that only had two bids on over the course of 3 years....HAS GONE UP IN VALUE by 100 grand between 2007-2009 when the rest of the national housing market has been plummeting?

I say good luck to them!

Recall that we bid on two different homes in Hingham three years ago. Both of them sold about a year after our insulting lowball bids were rebuffed. And BOTH OF THEM hit the open market again in the past few months. The other one was about to be sold but then the (new) owner decided to rent it out.

Why, if I may ask, do people buy homes and (try to) sell them only two years later?

I presume the explanation is usually *job-related*; though the rental above came about because of a *divorce*; and I've read that *medical issues* are also a leading factor for distressed real estate situations.

See also - Real Estate Autopsy.

Indebted = Rich?

Hah! This is precisely the kind of headline I would expect for this story from those indefatigable class-war mongers?

Of course it's inaccurate. Just because the default rate on jumbo ($1 million plus) mortgages is now greater (at 14%) than that of other, lower mortgages....that doesn't necessarily mean it's *rich * people who aren't paying the mortgage.

For example, consider my landlord. That scumbag deadbeat had, and defaulted on, mortgages on three homes in my old neighborhood: $1 million, $1.2 million (on my house), and a $1.8 million note.

Of course he also had several hundred thousand in credit card debt and sundry other liabilities. Recall his bankruptcy filing where he declared only owning a $400 watch and having $10 *cash on hand*.

But according to the agitating New York Times....he must be counted among the reviled *rich* - three times to boot!

Attention NYT - Genuinely rich people don't have mortgages!

A Window Into The Empty Lives Of Wealthy People

I caught some new(?) show on HGTV the other day.

Selling New York is a unique series for that channel in that it really only focuses on high-end real estate. What else is there now in NYC? In fact my wife can't stand watching its *My First House* programs - mostly on account of how dumb the buyers are, with their *it has to be good for the dogs* and their maxed out borrowing.

But the voyeur in me really enjoys Selling New York.

I couldn't find a decent short clip, so here's a *full episode*. You might want to skip ahead a bit:



I actually thought $12 million for that 5th Avenue penthouse was cheap. But what do I know about that world?