Hazel

Reply:

Long-term, it doesn’t matter how much crap they buy, nor how low they push mortgage rates, because nothing will change the underlying problem with real estate–there’s too much of it. Inflation-induced temporary demand illusions do not change reality; they can, at best, only temporarily mask and postpone it.

“I want to buy SRS but I am having a difficult time finding an entry point right now.”

Found your entry point yet today? or is it sub-50?

General question for the crowd: just how much bad RE paper would Ben & Tim have to soak up to sink SRS’ prospects for a significant bounce as RE unwinds in 2009?

January 28th, 2009 at 7:46 am
And mortgage applications dropped like a stone last week, as the fragile economy responds severely to small changes in interest rates…a 40 per cent drop.

Reply:

But Bruce, how could the wizards of paper oz* not be able to put those damn rates where the hell ever they please?

Alas, whither the rates, this attempt at re-flation will end as badly, or worse, as the previous episode (2001-2005) of illusory value creation in the residential real estate market. The misallocation of capital will be more severe this time, though. Now all the banks are hiring mortgage loan processors for temp assignments to get through the crunch, which will likely not last through spring. Those folks could have better used the time to reconfigure their lives doing something else. This cat is dead, even if the wizards still have enough magic to make it bounce now and again.

*As many of you doubtless know, “oz” is the abbreviation for ounce, which is the standard means of measuring the price of gold and silver. In the book (not movie) “Wizard of Oz”, Dorothy wore silver slippers, walking on a street of gold. At the time the book was written, there was a huge and ongoing dispute about which metal should be the base currency for the US. Farmers and small businessmen, mainly debtors, wanted silver, because it would be inflationary, thereby making their debts more manageable. Wall Street bankers wanted gold. Dorothy was symbolically trouncing the bankers in favor of the farmers with her stroll down a gold road in silver slippers.

Did we already forget Monday’s job cut announcements? Did we already forgot credit card companies jacking rates up like crazy? (There was one posted here just yesterday going to prime+23.99% capped at 29.99%).

People aren’t going to spend it, they’re going to pay off debt. They’re addressing an old model that’s long since gone, not everyone has changed, but enough have had a sharp enough wake up call that the old boom days are never coming back. We need slow, steady and affordable growth and recovery after we reach a natural bottom, not this never ending stimulus crap.

This seems too much like giving Madoff 20bn to invest at the 11th hour just before he came clean – he can keep the scheme going for longer but delay the pain, but when it comes it will be that much bigger.

got friends who live in Bellaire. the # of houses on the market is pretty impressive. appears lots of energy/oil peeps are hurting. every street has signs up, usually several.

mom lives in the Heights and new housing there is still going. $850K+ monster going in next door to her and a $700K+ across the street is being finished. both homes are already sold.

we’re still seeing a lot of movement in housing out in Sugar Land/Missouri City, but i expect this to begin to dry up.

Houston metro-area is going to be hit, we’re just a little behind b/c of the crazy oil prices from the summer.

oh for $4/gal gas to return….

–bcd

Lots of for sale signs popping up and also for rent signs on pretty nice houses. Don’t know if they are still owned by individuals or are early repos. Even saw one offering owner financing and one saying price reduced. Nothing like it 6 months ago.

Was browsing rentals and saw a 3bed/2bath townhouse for $1850/mo in nice neighborhood. Sunday paper for sale showed an identical unit nearby asking $445k for sale. So it’s not sinking in with everyone.