Friday, April 06, 2007

SL's Water Cooler - April 2007

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15 comments:

anon1137 said...

I work for the State and the Dept of Admin is having "seasoned real estate professionals" visit various agencies to explain the advantages of having "income real estate" as part of your diversified investment portfolio. Can you imagine encouraging state employees to put their savings dollars into the real estate market just as it's starting to collapse?

Why would the average state employee, who probably already owns their own home, want to invest the rest of their meager savings in real estate? How is that diversification? I guess the real estate industry must have $ome good friend$ in the Governor'$ office:

Asset diversification does not end with stock and bond portfolios, income real estate can also serve as a valuable tool in growing your wealth. However, as with any investment, success or failure can hinge on the investor’s research and knowledge of favorable opportunities. Prepared in concert with a seasoned income real estate professional, this workshop will outline examples of what makes income property investing attractive . . .

Next thing you know, DPA will send over some Nigerians to give presentations on getting rich by helping their citizens move money to the US through our bank accounts.

SCProfessor said...

Hey, this goes in concert with those of us who were foolish enough to trust CalPers and get on the hook for their Long Term Care Insurance. At sign up time there was no mention about the potential for a premium increase. Just the benefits of having "inflation guard" that would automatically raise the benefit.

Well since I started paying permiums 7 years ago, the benefit has gone up $16 and yesterday I received my second notification that premiums are going up (had one about 3 years ago). This time the premium increase is 46%. Way to go CalPers. Wasting our premium dollars on wonderful investment opportunities like high rise condo towers that will never be built.

My guess is CalPers and CalSTRS are heavily invested in mortgage backed securities. Remind me not to put too many eggs in the Public Employee retirement baskets.

Cmyst said...

Be careful with LTC insurance. Many companies will deny claims, tell people that they don't meet conditions of their contract, etc. They play a waiting game, because LTC insurance is typically used during the last months/years of a person's life. I work in health care, and I've seen many people burned by the LTC insurance scams. Sometimes I wonder if any kind of ponzi scheme, bait/switch, and outright stealing of money is A-OK as long as it's done by "respectable businesses" who give a lot of political donations.

In housing bubble/blog related news, my property management company is getting a very lengthy list of homes it is trying to rent out. I periodically check their listings, to see what's available and to make sure my rent is competitive with other properties. Lots of these places are brand new.
A couple weeks ago, they had a property that can only be described as a luxury estate for rent up in the foothills somewhere. IIRC they were asking around 4k/month for it, which honestly sounded cheap for the place. I can't begin to describe it. It isn't listed any longer. But most of the properties in the upscale category are renting between 1200 to 2000 per month, easily half of what the payment would be if one was buying.

anon4567 said...

Hope this is an appropriate place to ask this . . . can anyone help me understand something about previous sale listings? In poking around, I often see properties with histories like this one:

9270 PINEHURST DR ROSEVILLE, 95747 Residential 2006-09-01 $815,000
9270 PINEHURST DR ROSEVILLE, 95747 Residential 2006-08-09 $879,132
9270 PINEHURST DR ROSEVILLE, 95747 Residential 2005-11-09 $828,000
9270 PINEHURST DR ROSEVILLE, 95747 Residential 2004-01-30 $480,500

Am I reading it correctly that the house sold in 8/2006 for $880K and then one month later for $815K? I can't understand why this would happen; the house must have gone into escrow again immediately after the previous one closed. Why would someone flip this house at a loss without (apparently) trying to sell it at a profit? I see this pattern often enough that I figure something must be going on, but I don't know what.

Jeff said...

SCProfessor: Don't whine too much. While the rest of us in the private sector pay your salaries, we also pay for your pension, for what reason, I don't know. Most of us in the private sector, including me, won't receive a pension, we're on our own for retirement so you guys have it really good. CalPers is fine, don't sweat it they have plenty of $$$.

waiting_for_the_fall said...

anon4567, I think it's bank repos. When a bank takes a home back, it's listed as a sell. It usually sells for what is owed on the mortgage. When the bank sells it a month later (if they're lucky), it's usually at a discount.

anon1137 said...

Housing Slump Pinches States in Pocketbook
http://www.nytimes.com/2007/04/08/us/08housing.html

State tax revenues around the country are growing far more slowly this year and in some cases falling below projections, a result of the housing market slowdown that has curbed voracious spending on real estate, building materials, furniture and other items.
...
In California, where income tax receipts in January were $1 billion less than forecast, a nonpartisan legislative analyst has urged budget cuts and warned that the state could have about $2 billion less in revenue this year and next than Gov. Arnold Schwarzenegger has projected.
...
Chris McCarty, survey research director at the Bureau of Economic and Business Research at the University of Florida, said it would be foolish to “underestimate the effect that the inability to extract equity from homes is going to have.”
...
[% of new car purchases being made with home equity loans] In California, the percentage was even higher — about 30 percent, . . .

Arizona, California, Florida and Nevada, the chief beneficiaries of the housing rush, are also expected to suffer disproportionately from the slump. From late 2005 to late 2006, existing home sales fell by 21 percent in California . . .

It is still too early to know how most states’ fiscal years will end — this month’s income tax filings will be crucial
...

Perfect Storm said...

On FOX yesterday Wayne Rogers the guy from MASH who played Trapper John, told some pro housing bull commentator that she was nuts that the housing market has hit bottom.

The funny thing she said was that foreclosures are small in number compared to the overall market and that most people who have a house to sell do not have to sell.

I guess she has never been to Sacramento where 40% of the home listed are empty. I guess having an empty home for sale cries I like losing money everday.

Sippn said...

PS - 40% are empty, that is a fact. What is normal?

I get all my good financial data and plan my future around former sit-com stars opinions.

Of course, triple x for x-pert!

Perfect Storm said...

You probably know Wayne Rogers from one of the all-time hit TV shows, M*A*S*H. He gained international fame as Army doctor "Trapper John" McIntyre, and then went on to great success in many other acclaimed plays and movies, including "The Tea House of the August Moon" and "Bus Stop."

But what you may not know is that Rogers is also a world-class investor. That is why in December 2004 FIR took the opportunity to interview the savvy businessman.

In 2003, Roger's average investment pick was up a huge 47 perecent. In fact, Rogers won the annual competition for the best-performing portfolio among top stock experts who appear on Fox News Channel's "Cashin In", a financial news program that airs each Saturday.

Wayne Rogers Beats the Market - So Can You!

Sippn said...

Everybody who put 5% down on a home in California in 2003 and sold in 2004 BEAT that number. They're all brilliant, too. One year is a fluke.

More on Wayne Rogers:
"In our interview, you'll also discover: ... but why it's a mistake to count real estate out as a great investment elsewhere ..."

Actually after googling him, he sounds pretty smart and worth studying! Works in stocks and commodities. Good story. I owe you 1/2 apology.

Perfect Storm said...

Wayne is very smart and gives practical advice, has been around the block several times. He is 74 years old, but does not look it, I trust him, because I feel his advice is un-biased, unlike that Kramer freak. I would never trust Kramer and his show sucks. I like getting advice from people who are over 62 years old.

Perfect Storm said...

That figure, an often-overlooked measure of how many homes for sale in the country are empty, has climbed to its highest level since the Census Bureau began tracking it four decades ago. Last week, the bureau said that in the final three months of 2006 there were about 2.1 million vacant homes for sale.
That brought the national homeowner vacancy rate to 2.7%, up from 2.0% a year earlier. Before 2006, the number had never risen above 2.0%. Like the housing economy more broadly, the measure varies by region: The South had a homeowner vacancy rate of 3.0%, the Midwest had a rate of 2.9%, the West had a 2.4% rate and the Northeast had a rate of 2.0%.

The number of homes for sale that sit empty is at a ll time high.

a_builder said...

Speaking of vacant homes...I just cruised through Lincoln Crossing this afternoon to check out the carnage wrought by flippers with no money. Holy crapolie! I think its getting worse! I saw two guys hastily loading a uhaul, and TONS of vacant houses. THe "no signs in the front yard" rule seems to have gone out the window, too LOTS of signs! Lots of "For Rent" signs too. Also, saw 3-4 "Vision Capital Financing" signs right next to the RE signs... hmmm- wondering if these are Vision's REO's??
I forgot my camera, but next time i go out there to the Lincoln Home Depot (Which was damn near DESERTED today- didnt have to wait in line, lots of employees standing around too) I'll take some photos. They are framing 3 new houses right now which seems odd given their standing inventory. I am guessing, mebbe a slight exageration due to my quick drive through, that there is a 70% vacancy in that tract!

Steven said...

This month's essay from PIMCO's Bill Gross is availble at PIMCO's website.

He goes into a lengthy discussion about housing and argues that the housing market will force the Fed to lower interest rates.

I'm not sure what to make of it. Obviously he is trying to sell bonds. Does anyone here believe the Fed will lower interest rates anytime soon?