Here is Housing by the numbers:
of new mortgages and home equity loans in 2005 were interest only, up from 0.6%
• 43% of first-time
home buyers in 2005 put no money down.
• 15.2% of 2005 home
buyers owe at least 10% more than their home is worth.
• 10% of all home
owners have no equity in their homes
• $2.7 trillion in loans will adjust to higher rates in 2006 and 2007.
• 70% of borrowers who took out pay-option ARMS in the past year have loan
balances larger than their initial loan.
• Homeowners face higher payments as mortgages are reset. Generally,
monthly payments rise between $200 and $500 depending on the size of the
• According to Reality Trac, August foreclosures were up 23% over July and 53%
over a year ago.
• The number of homes for sale is at record highs, and inventories are 59%
higher than a year earlier.
• New home sales are down 22% and existing home sales down 11%.
• The NASB housing market index has recorded an all-time decline.
• The housing affordability index is at a 15-year low.
• The house price-to-income (rents) ratio is off the charts. According to HSBC,
in 18 states accounting for over 40% of national home values, the
price-to-income ratio is 3.6 standard deviations above the mean.
• The OFHEO index of house prices deflated by the consumption price deflator
has soared to a record high of 350 from 250 in 2001. From 1976 to 1996 it
never was above 220.
• According to the NAR the year-to year prices of existing homes are now
flat. A short time ago they were rising at a yearly rate of 16%.
• Nationally, home prices have not declined on a year-to-year basis since
1933. Recently, however, prices have been dropping in the North East,
West and Mid-West.
Sales incentives are now estimated at 3% to 7% of selling prices.
Wow — that is some soft landing you got there . . .
The Hard Landing For Housing is Already
Thursday, September 14, 2006
What do you think of the new Zune?
That question led to fascinating discussion about Microsoft on Thursday. What they do, how they work, brainstorm, etc. It also covered how Microsoft develops new products (notice I didn’t say innovate).
A few quick thoughts on the Zune: The coolest thing is its owners ability to zap songs back and forth via a Wi-Fi
connection — but those songs expire after "three plays or three days, whichever
comes first," which is kinda poor. The 3 inch screen versus the 2.5 inch on the iPod also looks pretty nice. Other than that, its not a particularly compelling piece of hardware.
Brown? How long til that gets cancelled?
We don’t know the price yet, but I expect it to be in the $249 – 349 range, and a function of how much MSFT is willing to lose/subsidize each unit.
What I found most fascinating about "This Week in Microsoft" were the 3 separate products that leaked out over the past few days:
• The Zune iPod challenger (in classic "steal the other guys thunder" following Apple’s event)
Let’s get a few things straight about Mister Softee. First, forget all the chatter coming from Redmond about innovation. They are now and have always been uttery shameless copycats. They do not innovate; They do not create cool products; They are boring code writing cubicle dwelling drones — and that’s what they should be.
The second thing you need to know about Microsoft: They print money like they were a branch of the U.S. Treasury Department.
That is the bottom line for investors, and the cash ain’t coming from all these other products attempting to recapture lighting in a bottle. Its Windows 1st, Office 2nd, and then a big 4 way tie for SQL, Hardware (mouses etc.) Server SW, and then everything else. All these other products — including Xbox, hotmail, MSN, etc. — are what happens when you have more money than God and still want to be one of the cool kids.
And, they’d probably get just as much criticism if they didn’t make all these attempts at imitating other successful innovators. Otherwise, they would just be a mature company milking their monopoly products until the next paradigm shift came along.
Understand my complaint about Redmond: I don’t begudge them these many attempts to stay relevant and hip, to keep pressing buttons until they find the next thing that works. Hey, after you become one of the most successful firms in the history of Capitalism, it becomes hard to repeat that performance every quarter.
I’m just tired of the bullshit about all their terrific innovations (Spare me the techno-babble about multithreading processors or dynamic ram usage).
To understand how Microsoft got to be the "innovator" it is today, you need to have some background into the psychology of its leadership. My favorite example comes via Robert Cringely
If there is a reason, it has to come from the competitive nature of Bill
Gates as Microsoft’s spiritual and ethical leader. Everything is a competition
to Bill, and every competition has a winner and a loser. Microsoft people have
always been encouraged to see the game, not the consequences, and to win the
game even if winning this way makes no sense.
Let me give an example of this behavior. In the early days of Microsoft, one
of the popular games was to see how late the boys could leave work for the
airport and still make their flights. These weren’t people who were habitually
late, they were playing a game. The eventual winner was Bill Gates, of course,
but to win he had to abandon his car [a new Porsche 911] at the departures curb.
Tht pretty much says it all. They are competitive to a fault — its in their DNA. Its also why they have been such a vast money machine. But please: Spare us the sanctimonious garbage about Microsoft the innovator, and keep the focus on Microsoft the moneymaker.
Here’s some more recent ideas out of the innovation factory: