Friday, March 31, 2006

The Mica Condo Developers Must Love Me

If you do a Google Search for 'Mica Condos' you get the following first returns:

The Bubble Meter Blog is number 1, and the official website of Mica Condos is number 10th. I bet the condo developers just love me. Super. Let the truth be told that these condo units are overpriced and are not selling well. The condo market in the DC area is bubblicious.

Mica Condos in SIlver Spring

Front: Mica Condos Sales Postcard.
Notice the free 42' Plasma TV 1 Free Yr of Comcast Cable TV.

Rear: Mica Condos Sales Postcard.[Click on image for larger version].

Notice the: "studio, one-bedroom, two-bedroom, three-bedroom and penthouse condominiums frtom the $290s to the high $900s!" Studios starting at 290K? That is way overpriced. Buying a condo at the Mica is a bad investment.

Thursday, March 30, 2006

Ask Yahoo: How many "homeowners" own their homes outright?

Yahoo has this section called Ask Yahoo. On it I found this question and answer.

Dear Yahoo!:

How many "homeowners" own their homes outright?

Joplin, Missouri

Home ownership is the American dream. Unfortunately, soul-sucking mortgages are often the reality. At the risk of pointing out the obvious, there's a big difference between owning a home outright and slaving away over a 30-year fixed. So, of all the so-called "homeowners" in the United States, how many actually own their homes?

Maybe we're just pessimistic, but the number was higher than we expected. According to a 2001 study by the Census Bureau and the Department of Housing and Urban Development (HUD), "nearly 40 percent of all residential properties in the United States, owner-occupied and rental units, are not mortgaged but are owned free and clear." For a country so often criticized for its debt, that's not a bad figure.

Those who wish to learn more about the demographics of the average American homeowner (be it person or corporate entity) can skim the report's 368 pages of scintillating facts and figures. One factoid that stood out to us -- from 1991 to 2001, the amount of outstanding mortgage debt on single-unit properties rose from $1.62 trillion to $3.48 trillion. America's housing boom was apparently a good time to be in the mortgage business. Go figure.

Corner in Northern Virginia

Right near the Bubblicious Bench.

Wednesday, March 29, 2006

Who is to Blame?

One of the big questions is who is to blame for the housing bubble. Here is my list:

  • Greenspan & The Fed Reserve Board for the cheap money supply (low interest rates) for such a long time

  • Parts of the Real Estate Industry for cheerleading the bubble

  • Irresponsible Lenders for predatory lending. If you make 40K and have no savings you should not be able to get a 325K loan.

  • Fannie Mae & Freddie Mac

  • Asian Central Banks, hedge funds & others for buying all these risky bundled loans

  • Speculators & Flippers ( for being greedy and fueling this mania)

  • Some homebuyers for buying beyond their means and being ill informed.

  • Parts of the Media for not informing the public about this issue sooner (finally they are communicating this)

  • Others (yet to be determined, please discuss)

This list is NOT in any particular order. Enjoy.

Tuesday, March 28, 2006

As Expected Fed Raises Rates to 4.75%.

In a widely anticipated move the Federal Open Market Committee raised federal interest rates by .25% to 4.75%.

The slowing of the growth of real GDP in the fourth quarter of 2005 seems largely to have reflected temporary or special factors. Economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace. As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. Still, possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.

The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.

So what happens during the remaining months of the year?

The Federal Reserve will not raise interest rates above 5.5%. The feds are probably scared that raising rates higher the 5.5% will send the economy into a recession.

'On the fringes of Brooklyn, some doubts creep in'

Solid article about the real estate market in Brooklyn. It starts out "There's no doubt about it: Brooklyn remains hot. But while the flames that fanned this market keep core areas warm, a cooling can now be found in the borough's more farflung neighborhoods, which had been embraced by many as up-and-coming places to buy a home."

Trump Tower in Chicago

Check out the Trump Tower that is under construction in downtown Chicago. It will be completed in 2008. The image on the right show what it will look like when complete. One can purchase condominiums or hotel condos (condotels) Check out the brochure.

New Realtors Ad

The Realtors are out with a new TV advertisement telling people to use a Realtor when selling their home.

As spring approaches, home buyers’ and sellers’ thoughts turn to the real estate market. Today, with the premiere of television advertising spots titled, “Don’t Try This at Home,” the NATIONAL ASSOCIATION OF REALTORS® encourages home sellers to protect what could be their largest investment by enlisting the help of a professional.

“Selling a home is like climbing Mount Everest,” said Thomas M. Stevens, NAR president and senior vice president of NRT Inc., from Vienna, Va. “If you don’t prepare correctly, you’ll never achieve your goal. Getting a signed contract is like reaching the peak, but that’s only half the journey. Many things can happen on the way back down the mountain. Savvy sellers know to hire a REALTOR® to protect their interests and guide them through.”

Home owners who try to sell their home without professional help must overcome a number of hurdles,

"Selling a home is like climbing Mount Everest" Really?

You missed the peak. Should have sold last summer in the bubble markets as one would have recieved a very high price. It is downhill from there for awhile.

Monday, March 27, 2006

BubbleSphere Roundup

Its that time again. Time to take you beyond the confines of this bubble blog. There is a whole world of housing related blogs out there.

The Matrix Blog is high quality. Lots of solid information here. Check out 'A La Mode: Whats So Mean About Median Sales Price?' :-)

Thanks to DC Bubble for the compliments. Compliments from an outstanding blogger means that much more. Thanks again.

Check out Socket Site which reports out of bubblicious San Francisco. Many great pictures.

The Jersey Shore Bubble has a solid chart showing increasing inventory in that locale.

Don't forget relative newcomers:

Thats all folks. :-O

Houses Sitting in Washington, DC Area

WASHINGTON (AP) - Things have really changed for the Washington area's housing market.In Loudoun County, where homes were the median home price last year was $535,000, it now takes an average of 78 days to sell a home there. That's more than six weeks longer than it took last year.

Homes closer to Washington in Virginia and in Montgomery County (website - news) are staying on the market for an average of two months before they sell, while homes in Prince George's County last for an average of 38 days.

According to the real estate listing service Metropolitan Regional Information Systems, there were nearly 27,000 houses for sale in the Washington area at the end of February, up from about 9,400 a year earlier.

Real estate experts say homes are now more likely to sell faster if sellers are more willing to negotiate. Some have been lowering the asking price, offering to pay closing costs or being more flexible about move-in dates. [ABC 7 News, March 27, 2006]

Bubblicious Bench & Flippers

The bubblicious bench was photographed on Sunday, March 26, 2006. It is now a receptacle for flippers' key lockboxes. These flippers / investors are trying to sell their respective units in the building. Each lockbox represents a condo unit that is for sale or for rent. The condo project is called Halstead at Dunn Loring. It is located in Northern Virginia (Washington, DC suburbs). The iron bench is located on the west side of the condo building. There are about 220 units in this condo building. Across the street, Merrilee Dr, there is the second phase of this condo complex being built. The building is located at 2655 Prosperity Avenue, Fairfax, VA.

There are 47 lockboxes on this bench.
[The image can be freely copied to other sites as long as credit is given to this blog. Click on image for larger version].

12 on the north arm & leg
18 In the middle section
17 on south arm & leg

Number of lockboxes on this bench:
2/5/06: 26
3/18/06: 44
3/25/06: 47

This most bubblicious site was found by one of Bubble Meter's citizen-reporters who emailed me. It is an incredible picture.

Sunday, March 26, 2006

Confused Real Estate Post

This is the most confused Craigslist posting I have seen in a while.

$549997 - Capitol Hill Home 5 Blocks from Catholic U in Brooklyn"

There is no DC neighborhood called Brooklyn, they must mean Brookland. Secondly, the house is not a "Capitol Hill Home" as this neighborhood is certainly NOT Capitol Hill or even an adjacent neighborhood. The wrong information in this Craigslist Ad is PATHETIC.

The house is located at 1305 Girard Street NE. MLS #: DC5532344. It is listed at 549K.

Watergate Complex in Washington, DC Retail Area

Watergate Complex in Washington, DC Retail Area

Friday, March 24, 2006

Bubble Meter Mentioned in Salon

Salon magazine has this article about the housing bubble blogosphere aka bubblesphere.

Yes, that's right, just as the Web is home to vivacious communities of peak oil doom-and-gloomers, gleefully sharing notes on the latest signs of the coming apocalypse, so too does the Internet offer its welcome arms to hordes of obsessive real estate watchers, busily fixating on every last bit of data that might indicate the great U.S. real estate boom of the 21st century has finally imploded. (There are scores of such sites -- check out the right-hand column of Bubblemeter for a starting point.)
Thanks for the mention. Bubble Meter Blog tries to mantain a comprehensive list of active bubble bloggers.

Massachusetts Sees Year Over Year Home Price Decline

Thanks to Northern New Jersey Real Estate Bubble for finding this gem:

From the Boston Herald: House prices still in slide: Realtors report drop in median

Bay State house prices are falling on an annualized basis for the first time in a decade as Massachusetts housing continues to cool - bucking a national uptrend.

The Massachusetts Association of Realtors reported yesterday that median house-sale prices dropped to $339,450 last month, down 0.2 percent from February 2005.

The decline marks the first time since June 1996 that prices have fallen for any 12-month period as a whole"
More states and metropolitan areas will be joining Massachusetts, in having YoY (Year Over Year) median home price declines, in the coming months. Stay tuned.

Thursday, March 23, 2006

Most Bubblicious State

Which is the most bubblicious state of them all? Why?

Update: 1602 Isherwood Street NE

The two condo properties located at 1602 Isherwood Street NE still have not sold.

The price needs to be reduced.

Wednesday, March 22, 2006

New Rule About Anonymous Posters

Many valuable comments have been posted by anonymous posters. That being said it is confusing for people to respond to anonymous posters. If you do not have a blogger account you can STILL post without having to register but please click the 'other' button and then choose a name.

Thanks so much. :-)

FSBO: Blaming The Realtors

Check out this Craigslist Listing. "This apartment is selling below appraisal. If you are purchasing any 2br for over 700K you should at least check this out to compare. It must be seen in person to capture advantages. It's a commissioned 'for sale by owner' that is mainly advertized on Craigslist and it was incorrectly posted on the MLS and realtor until now (Mar 6), it is in the process of updating. Terrible advertising and exposure to date; a total of only 6 buyers have seen the place as of Mar 5 from listing date. i.e. Days listed is not a reflection of demand."

"The owner seems convinced it is the Realtor’s fault the condo isn’t selling. He doesn’t seem to think it is the outrageous price, the views (of a brick wall) and the location (above the entrance to the new Adams Morgan parking garage – probably the noisiest spot in the entire neighborhood on a weekend evening.)" Thanks to my reader who sent this finding in.

Update: It was bought by the current owner on 2/17/2004 for 499K. It is for sale at 719K.

Fed Funds: How High Ben?

Originally uploaded by djack23.
Currently, they stand at 4.50% and are almost certainly going to be raised to 4.75% at next week's Federal Open Market Committee March meeting.

How high will interest rate go on the Fed Funds during this year?

Please post your predictions and why!

Tuesday, March 21, 2006

Lereah At New England Realtors Conference

“We have had five consecutive record years, and you can't sustain that forever,” David Lereah, chief economist for the National Association of Realtors, said at the New England Realtors Conference held in Boston yesterday. “2006 is a year to catch our breath.”

Lereah said predictions reported by some economists that a real estate bubble is on the verge of bursting are misleading.

“It's more like a balloon that inflates and deflates,” he said. “The air is coming out of the balloon, but the bubble is not bursting.”

Lereah said most local housing markets are healthy, though home sales in 2006 will likely not be as strong as in recent years. But sales could bounce back in 2007 and for the rest of the decade. ( Lowell Sun 3/21/06)

Bubblicious Bench

Originally uploaded by djack23.
The bubblicious bench was photographed on Saturday night March 18, 2006. The condo project is called Halstead at Dunn Loring. It is located in Northern Virginia (Washington, DC suburbs). The iron bench is located on the west side of the condo building.

One of Bubble Meter's citizen-reporters states "As you can tell, it has been converted from a seating area to a receptacle for flippers' key lockboxes. FYI, when I visited this condo building on Super Bowl Sunday, there were 26 of those lockboxes. As of 3/18, there were a total of 44 lockboxes. That's quite an increase in only a couple of months! "

Monday, March 20, 2006

Real Estate Future Contracts

The CBOE Futures Exchange will be launching futures contracts based on NAR Data:

The CBOE Futures Exchange (CFE) announced Friday that it plans to launch futures contracts based upon median prices in the NATIONAL ASSOCIATION OF REALTORS®' existing-home sales data.

Through a licensing agreement with NAR, CFE has created five new futures contracts designed to track the median price of existing-home sales nationally and in four distinct regions within the United States. CFE plans to launch the new contracts in the second quarter of 2006, pending regulatory approval.

“With the U.S. housing market valued at nearly $20 trillion, real estate is not only the hottest topic of conversation, it is an asset class unto itself that is arguably one of the most important segments of the U.S. economy,” said CBOE Chairman and CEO William J. Brodsky. “CBOE gave careful consideration to the development of this contract to ensure that it had practical application for hedging as well as speculating, offering a chance to participate in the real estate market to a wide range of investors — whether your outlook is regional or national, bullish, or bearish.”

“The launch of the NATIONAL ASSOCIATION OF REALTORS® Existing-Home Sales Median Price futures contracts marks an important milestone in the evolution of housing as an investment. Now investors, including home owners, real estate professionals, and companies in the real estate business, have a new way to participate in the housing market. In partnership with the CBOE, NAR is proud to be playing a central role in the creation of this new marketplace,” says Thomas M. Stevens, NAR president.
Yikes! The NAR was the same people who produced the infamous Anti Bubble Reports.

Northern Virginia Average Housing Sales Price Index

In this chart 100 represents the average sales price for Northern Virginia for March for a given year. The 100 figure is the base price for the housing index. Hence, if the average sales price was 300K in March 1999 and had risen to 315K by April 2005 the price index would be 105 [ [(315 /300) * 100] for April.

The current price index, the yellow line, is much weaker in terms of price appreciation then the previous two years.

BubbleSphere Roundup

In the past few days I have neglected this blog, as I have had a busy weekend. The dearth of posts will stop and there will be lots of new material this week.

At Bubble Markets Inventory Tracking there is an interesting post about the percentage of reduced price listings in each market. Phoenix wins "12,845 reduced / 38,602 total inventory = 33.3%." More evidence that Phoenix maybe the most bubblicious metro area in the US.

Housing Panic takes on the National Association of Realtors (NAR) in this most excellent post. The NAR cannot be trusted.

Great posts of overvalued houses at Overvalued Blog.

Northern Virginia Bubble Blog
has a very solid post regarding Northern Virginia market where "Average sales prices are down to $514,116, a whopping 45,674 off the peak set in July 2005. This erases all the appreciation since April 2005, and brings prices back almost to March 2005 levels. As a result, the year over year appreciation for February 2006 was only 6.09%.

The Sacramento Land(ing) Blog does a wonderful job detailing the housing market in the Sacramento area. Well worth the read. :-)

Last, but certainly not least, the Blog states "I find it not coincidental that all of a sudden, people are shocked--SHOCKED!--to find that there're unscrupulous realtors and brokers out there, just as the market is sagging and rates are increasing. Where was all this dogged journalistic reportage five years ago?" Nice.

Thursday, March 16, 2006

Months Supply in Greater Northern Virginia

These numbers are calculated by taking the number of active listings and dividing by the number of housing units sold for that month. These numbers combine both condos and single family homes.

NVAR: February Market Summary

The NVAR (Northern Virginia Association of Realtors) just posted their market summary numbers for the month of February:

Although the volume of single family homes and condos sold in February 2006 in Northern Virginia was 20 percent below the units sold totals for February 2005, average sales prices have increased 6 percent, to $514,116.

More than four times as many active listings were on the Northern Virginia market in February 2006 than February 2005, up 316 percent from 1,584 to 6,588.

February 2006 sales volume in the Greater Northern Virginia region was also more than 20 percent below volume in February 2005. Sales prices, however, have increased 9 percent, to $483,872. Greater Northern Virginia includes Fairfax County, Fairfax City, Arlington County, Alexandria, Falls Church, as well as Prince William, Loudoun, Fauquier, Culpeper, Madison, Clark, and Rappahannock counties.

Active listings in the Greater Northern Virginia area were significantly higher in February this year than in 2005. February's total of 14,662 active listings were more than 250 percent greater than the number last year, which was 4,173.

But here is where it gets interesting:

These numbers here are for single family homes, condos & coops sold in Northern Virginia. Which include "Counties of Fairfax and Arlington, and the cities of Alexandria, Falls Church, Fairfax, and the towns of Vienna, Herndon and Clifton"

Please note that the 2005 YTD (year to date) Avg Sales Price number (blue square) which is 479,321 does not match the number listed in the February 2005 Northern Virginia Report which is 479,935. When you do the math for the numbers, the 2005 reports makes sense as
$1,659,616,463 divided by 3,458 equals 479,935 and not 479,321. There is an error here in the NVAR data. The difference between the numbers is only $614.

In Northern Virginia, for January 2006 the YoY (year over year) average percentage price increase was 10.03% which is more then the February 2006 YoY average price increase of 6.09% (red circle). As we move further into the year, the year over year percentage increase continues to fall. The same pattern has happened for the Greater Northern Virginia area.

By April 2006, the YoY sales price increase will be NEGATIVE for Northern Virginia. There will be no spring boom this year.

Wednesday, March 15, 2006

Standardized Credit Score Is Unveiled

Standardized Credit Score Is Unveiled

(March 15, 2006) -- In an effort to make it easier for lenders and borrowers to understand consumer credit scores, the three biggest U.S. credit-reporting firms — Equifax Inc., Experian, and TransUnion — have banded together to standardize the method of calculation.

The three firms have long used their own formulas to calculate credit scores, with varying grades sometimes resulting.

The joint system, VantageScore, bring consistency to the process and will make it easier for consumer to understand their score. VantageScore will offer ratings ranging from 501 to 990, with those over 900 earning an "A" rating.

Though the credit-reporting firms will use the same exact formula to calculate the scores, they will continue to collect credit data individually.

VantageScore reportedly will make it easier for consumers with limited credit histories to obtain financing. Just like the traditional FICO credit-scoring system by Fair Isaac Corp., borrowers will score higher by making timely bill payments, keeping balances low, and showing a history of paying different types of debt.
Source: Los Angeles Times, Kathy M. Kristof (03/15/06)

Half a House in DC

Half a house! Is it affordable?

Monday, March 13, 2006

Days on Market in Northern Virginia 2005 vs. 2006

Generally, in February 2005 housing units that did sell had been on the market a relatively short period of time. A full 79% of houses that sold in February 2005 in Northern Virginia had been on the market for 30 days or less.

During February 2006, 35% of houses that sold had been on the market for between 1 - 30 days. Houses are sitting on the market longer and longer.

Hurricanes Don't Stop Florida's Largest Landowner

Hurricanes Don't Stop Florida's Largest Landowner (March 10, 2006) --- The St. Joe Co., the largest private owner of land in Florida, isn’t going to let a few hurricanes stop it from developing key stretches of the 838,000 acres it owns, St. Joe President Kevin Twomey told investors at the Raymond James & Associates meeting in Orlando.

Most of the projects on which St. Joe is concentrating are on or near the cost, including a 4,170-acre residential, retail, and commercial project south of Jacksonville on the St. Johns River that St. Joe has won approval to break ground on shortly.

People still want to live on or near the beach, Twomey says. “I’m not spooked myself,” Twomey told the audience, noting that after hurricanes Charley, Frances, and Jeanne in 2004, he personally moved to a “bigger beach house.”

The Competition Across the Street

Two houses for sale across the street from each other in Deerfield, IL.

Lereah's Book & Opinion

The San Francisco Chronicle has this article about David Lereah's (cheif economist of the National Association of Realtors) new book and his opinions on the housing market:

But the doomsayers, Lereah says, are mistaken in their dire predictions. Their big mistake, he says, is basing their forecasts by comparing housing appreciation with income growth. Instead, he says, they should look at the percentage of mortgage debt as it relates to income.

Lereah says it would take a "perfect storm" to swamp the real estate industry. There would have to be a slumping economy, job losses, a large inventory and a significant increase in interest rates to create that storm. The closest and most recent example of that occurring, he says, is Boston, which lost 15 percent of its labor force in 1990 and '91.

He sees no such storm gathering in the distance. Instead, he sees a slight contraction in the real estate balloon throughout 2006 and a healthy expansion in 2007.

And that, he says, is more important than most people realize.

"The only way to build wealth, for 80 percent of Americans, is real estate. If the balloon bursts, then 80 percent of Americans will have trouble with retirement."

Sunday, March 12, 2006

Chicago Housing Market

Reporting Live from Chicago:

The Chicago market is quite fascinating. According to the OFHEO 4Q 2005 Report the 5 year price appreciation for homes in the Chicago area was 49% and the one year rate stood at 10.6%. Chicago's price appreciation rate is strong but not stratospheric like many metro areas in California or Florida. Like many other parts of the country job and wage growth over the past five years has been anemic (weak). The price appreciation rate is quite varied depending on the neighborhood and type of property.

The Chicago Tribune had this to report:

The Chicago area fared only slightly better, with single-family sales down 4.8 percent from January 2005 and condo sales down 2.8 percent. ....

They jumped by 11.5 percent in the Chicago area, to a median $234,000 for single-family homes. Chicago condos went up 8.2 percent, to a $211,000 median

In the Chicago area the Multiple Listing Service of Northern Illinois said it could not track year-over-year inventories, but reported that 22,560 homes and condos went up for sale in January, up from 18,337 new listings a year earlier.

In the past few months the Chicago residential market has declined in terms of sales, while at the same time the inventory has increased substantially. The Chicago Real Estate Bubble Blog is reporting that "Inventory crossed 100K for the first-time in Chicago area." While driving around the northern suburbs there was lots of inventory available for sale.

The condo market is weaker then the single family housing market. Condos have sprouted like weeds in the metropolitan area.

Deerfield real estate agent Honore Frumentino described the current market as "strange."

"On the very high end, we have two and three and four years of inventory on the North Shore," Frumentino said. "The break point is $3 million. It's really tough over $3 million. That's where the air gets really thin on the North Shore.

"I think it's the same in the western suburbs, where a lot of stuff in the $1 million to $3 million range is just sitting."

The pictured under construction house is located in an unicorporated area between Winnetka and Willmette not far from Deerfield. These suburbs are very wealthy areas along the north shore.

So what will happen with prices in the next 3 years? Is Chicago a bubble market?

Overall I do not think the Chicago metro area is a bubble market. The typical houusing unit is unlikely to decline in price by 20% in real dollars from its peak price in the next 3 years. However, condos especially in the city itself are likely to fall by over 20% in real dollars within 3 years. Certain 'hot' neighborhoods that have experienced very strong price appreciation may fall more then 20% in real dollars. Chicago, is certainly not bubblicious like San Diego, nevertheless declining real prices will be a reality for the Chicago metro area in the coming years.

Friday, March 10, 2006

Update: House For Sale in Skokie, IL

This house in Skokie still has not sold. See the original post titled Falling Sign, Falling Price.

Back on January 1st, 2006 the house was priced at 699K after a price reduction. I had written at the time "Despite its price reduction it is significantly overpriced. They should reprice it to 625K and see if it will sell."

The hefty 699K price tag still stands as there have been no more price reductions. It has a new MLS number of 06003346.

Will it sell at 699K?

H*ll No!

[Ok. Maybe if they wait 10 years]

Thursday, March 09, 2006

Vacation to Chicago

Today, I am traveling to Chicago to visit family, friends and city. I will be there until Sunday night. An on location report regarding the Chicago housing market is scheduled. The blog will be updated while I vacation although posts will be less frequent.

ARM 5/1 Rates Going Up

ARM 5/1 Rates Going Up.

Northern Virginia Bubble Blog

Check out this new blog called Northern Virginia Bubble. Super! Another bubble blog from the Washington, DC area. :-) Welcome.

Wednesday, March 08, 2006

Time Magazine: 'What Real Estate Bubble?'

Time Magazine in a web exclusive has an article titled 'What Real Estate Bubble?' which takes a stab at the notion that there is a bubble. Thanks to the NY Times Walk Through Blog for finding this article. In the article it quotes a 'favorite expert' David Lereah who states "This looks like we're touching down for the soft landing we've been expecting."

Later this year, there is likely to be a front page cover story in Time Magazine featuring the housing bubble and the economic fallout.

Time will tell.

Hot Commercial Corridor in DC

The H Street Commercial Corridor located along H Street NE between 2nd Street and 15th Street is a hot commercial corridor that is being redeveloped. There is a critical mass of commercial establishments that are geared towards the yuppie crowd. Large office and condo buildings will soon be built here. In the surrounding neighborhoods, lovely rowhouses are being rehabbed and renovated. The area is getting wealthier as the yuppies move in. The newly reopened H Street Playhouse is shown in the picture. (credit: Old City Neighborhood Capitol Hill Association). Some boosters are claiming it will be the next 14th Street, U Street or even M Street (in Georgetown).

Tuesday, March 07, 2006

Selling at Mica Condo in Downtown Silver Spring

Here is a condo unit for sale in the Mica Condominiums which is located in downtown Silver Spring, MD . The original structure was built 1968 as an apartment building. Now its being converted to condos.

The 2br / 2ba, unit #305 which has 1,345 sq. feet is being sold for 469.9K. "Mica! At silver spring metro. 151 all new units deliv proj may thru nov. Studios/1br/2br/3br/ph. Spacious layouts. Parking included on 2br/ba &3 br's. Granite, stainless, wood floor option, great views, balcony's. Pool/media room/club room/fitness ctr. New windows. The list goes on. Fee includes all untilities. Great builder incentives. 42 inch plasma tv" The condo fees are $645 a month. Yikes.

The MLS # is MC5533202. Will it sell for 469.9K?

It won't sell at that price.

Update: Originally, I had posted this was a flipper selling. Correction, as this is not a flipper selling but rather a sales agent of the developer. The units in the Mica Condos are selling poorly and the sales agent went so far as to list the new units in the MLS.

Realtors' Preemptive Strike

The Realtors are worried that in the near future they may be seen by the general public as less trustworthy then used car salesman. That is why they are launching a preemptive strike using advertisement spots to quash any notions of dishonesty.

For nearly 100 years, Realtors® have subscribed to one of the oldest codes of ethics for trade groups in the country. Today, with the premiere of advertising spots entitled, ‚“Someone You Can Trust,” the National Association of Realtors® explains how its Realtor members‚’ adherence to that code serves and protects the public.

Will it work? Doubtful. The fallout from the housing bubble will induce many people to blame all sorts of people, but significantly real estate agents. The public will remember Realtors who claimed "Real estate always goes up." With such cheerleader clowns like David Lereah and Leslie Appleton-Young as leaders of the real estate agents, the reputation of real estate agents will most likely emerge badly tarnished. The real estate agents are worried.

Monday, March 06, 2006

AP: 'Housing Slowdown Ripples Through Economy'

The Associated Press reports that 'Housing Slowdown Ripples Through Economy.' It is more then just a 'housing slowdown' it is a declining market.

Who are the 'experts' that the AP quote?

  • William Mack, a housing analyst for Standard & Poor's, predicted "a soft landing. The overall market is just taking a step back."

  • "We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed," said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation's largest private builders.
  • David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, D.C., area "have the largest potential for a price slowdown." ... The rising prices in those markets were fed by speculators who bought homes intending to "flip" or sell them for a quick profit, Seiders said. "The biggest fear I have is investor-owned units coming back on the market in large numbers," he said.

  • I've never seen a market as good as this," Mike Mishler said as he took a break from making finishing touches on a $1.6 million lakeside home near Dallas. "Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes." .... Mishler, president of the local builders association, says Texas markets are holding up because they are affordable _ the median price in Dallas is $145,000 compared to the national average of $213,000. But even in Dallas, the inventory of unsold homes rose to a record in the fourth quarter.

  • Asha Bangalore, an economist for The Northern Trust Co. in Chicago, estimates housing created 43 percent of all new jobs from late 2001 until mid-2005. That included the obvious, such as jobs in construction and mortgage services, but also retail and service jobs that were created because consumers tapped their rising home equity to buy more things. "The housing slowdown that we are seeing is very modest, not alarming, but I think the ripple effects are going to be enormous because of the employment factor," she said.

  • "This will either be our most profitable or our second-most profitable year in the company's history," Joel Rassman, chief financial officer of Horsham, Penn.-based Toll Brothers, told investors this week. Its profits rose about 50 percent in 2004 and nearly doubled last year.

  • Alex Barron, an analyst in San Francisco for JMP Securities, said builder stocks have been trading at relatively low multiples of their earnings since the late 1990s because investors always believed the strong housing market was too good to last.
    "Investors kept saying, 'Next year housing will go down,'" Barron said. "I guess they're finally right."
Thus, 4 out of the 7 'experts' salaries are paid by those who have directly benefited tremendously from the housing bubble. Where are the independent economic voices like Robert Schiller or Paul Krugman?

Then there are two links in the article at the bottom:

On the Net:
National Association of Realtors:
National Association of Home Builders:

How about some independent sources for information? The article does a poor job of presenting the reality of the declining housing market.

Bubblesphere Roundup

As always, there is so much great material at the Housing Bubble Blog which continues to have so many wonderful articles. Plus there are so many comments on each post. It can almost be overwhelming sometimes.

'Bubble Momentum Getting Media Help' points out The Boy in the Big Housing Bubble. Very solid.

The NY Housing Bubble Blog has not been updated since November 22, 2005. The link has been removed from my site. Rest In Peace.

At the Overvalued blog there are great posts detailing POS (Piece of Sh*t) properties available to a flipper who has not recieved the new memo.

Plus from the middle of the Pacific Ocean, we have the Hawaii Housing Bubble.

Sunday, March 05, 2006

Mortgage Scum Ad on Craigslist

This mortgage ad on Craigslist:


Great news for everyone in need of a Mortgage! The loan program with the low 1.25% payment plan!

Remember, your payment at 1.25% is only $300 a month on every 100k borrowed versus $625 if you select a 30 year mortgage at 6.50%. It takes a little over five years for your 30 year fixed mortgage to begin reducing your principle balance so the 1.25% payment allows you to spend your extra money per month on investments that can increase your monthly income and net worth substantially.

If your home loan is 250k and your payment is running $1,500 a month or more, we can refinance your home on the 1.25% payment plan and your payment will run only $750 a month. Over five years, that equates to $45,000!

Only a very few will ever pay off a mortgage so why bother throwing away so much money away every month when you don't have to?

Please contact me if you are ready to refinance, get cash out or buy a new property. No up front fees, zero origination and discount points. Stated income and minimum FICO score of 660 required. Minimum loan amount 200k. and can close your loan in as little as fifteen business days.


First off this mortgage ad was place in the real estate for sale part of the Baltimore's Craigslist. It should not be placed there. It will probably be flagged and removed pretty quickly. Secondly this mortgage broker states "It takes a little over five years for your 30 year fixed mortgage to begin reducing your principle balance" which is false. From, the very first monthly payment on a 30 year fixed mortgage the principle is reduced (albeit by a small amount). The ad is downright scummy.

Desperate Flipper

Check out this Craigslist Listing. In the Craigslist listing there are 6 properties available for sale. Here is an excerpt which screams "INVESTMENT PROPERTIES FOR SALE, BELOW MARKET":

11432 Washington Plaza West, Reston, VA 20190
2 bedroom 1 bath condo
tenant pays $1400/month currently on month to month lease
Asking $300k, Value -- $330k
Condo fee -- $848/month includes all utilities


The 300K for a 2br condo seems alright for a real lovely condo. But wait, then there is a $848 a month condo fee. Ouch! That is 10,716 a year for just condo fees (includes utilities). The tenant is paying 1,400 a month. Thus the condo free represents 60% of the total rent for the unit. Yikes. No wonder the flipper wants to sell. The seller seems desperate.

Feedback Welcome

It would be really appreciated if my readers could provide some feedback. Here are some areas of feedback I would like to see:

1) What you like about this blog
2) What you don't like about this blog
3) Topics you want me to write more about
4) Other stuff

Please comment in the comments section. Thanks so much.

Friday, March 03, 2006

Newly Constructed House for Sale

This newly constructed home is available for sale in a long neglected neighborhood in Northeast Washington, DC. Along 56th Place just north of East Capitol Street. The house is very large compared to the nearby homes. Due to the housing bubble many more houses like this have gone up in these long neglected neighborhoods.

Boarded Up House for Sale in NE Washington, DC

Bubble Meter Blog Mentioned in the Washington Post Express


"My fellow Americans, it is time we all think more long-term. Good things come to those who .... wait and save." thinks Americans' lust for short-term "joy" is putting the nation into deep debt.

The Washington Post Express is a free weekday commuter newspaper published by The Washington Post. It has a section called 'The Blog Log' where quotes from the blogosphere get published.

Low Interest Rates & Foreign Central Banks

As interest rates rise in foreign countries that puts additional updwards pressure on interest rates in the US.
The European Central Bank (ECB) announced an interest rates hike by 25 basis points from 2.25% to 2.50%, a move largely predicted by markets.

It has been the second augment of that size in four months and it means that the deposit rate edged up to 1.50% from 1.25%, and the marginal lending rate to 3.50%, versus 3.25% previously. (; March 2nd, 2006)
Additionally, "The Bank of Japan is also expected, as soon as this month, to end years of an ultra-loose monetary policy of pumping cash into its banks and pinning market interest rates at zero (Reuters, March 2nd, 2006)."

As foreign central banks increase short term interest rates it means that there is growing competition for the slosh of international investment funds. Other things being equal this helps raise interest rates on US mortgages. As foreign and US based investors demand higher returns for their mortgage backed securities (MBS), mortgage rates will increase.

Thursday, March 02, 2006

The New American Dream: Mortgaging the Future

The promise of the future is being mortgaged for short term 'joy'. This phenomenon is not just apparent with regards to the housing bubble but it runs across many areas of life. Here are just a few examples:

Government: The US national debt is now at 8.2 Trillion or 8,200,000,000,000. The estimated population of the United States is 298,265,468 so each citizen's share of this debt is $27,423.28 ( US National Debt Clock ). "After four years of budget surpluses, the government fell back into a deficit in fiscal 2002, after which the deficit climbed to $378 billion in 2003 and $412 billion in 2004. In 2005, the tide of red ink receded to $319 billion" Much of the federal deficit can be ascribed to the huge tax cuts enacted by the Bush administration. The short term economic gains that are ascribed to the lower tax rates will be followed by a period of painful policy choices. The long term fiscal outlook for the United States is being sacrificed on the short term.

Corporate: Too many corporations are thinking about the short term profits. Think Ford and GM who were focusing on sales of large SUVs, then the high oil prices came. They neglected to think long term.

Personal: For the past 7 months US households actually had a negative savings rate. The money will have to be payed back. The long term being mortgage on the alter of "I want it and I want it now." You sound like 3 year olds. Grow up! It is absolutely pathetic. Or someone who wants to buy a house and says 'what can the lowest monthly mortgage payment be?'. Sure a interest Only, no down payment, adjustable rate mortgage sounds great. They don't think long term about what happens when it adjusts in a few years.

The long term is being neglected or mortgaged for the short term.

Is this the new America Dream?

It sures seems so. :-(

My fellow Americans, it is time we all think more long term. Good things come to those who investigate, plan, save, and wait.

Problems with OFHEO Housing Data

Here are the some known issues with OFHEO Housing Price Index (HPI) Data:

It only uses data from Fannie Mae and Freddie Mac: "The HPI is published by the Office of Federal Housing Enterprise Oversight (OFHEO) using data provided by Fannie Mae and Freddie Mac."

In 2006 only includes loans that are less then 359.65K: "Only mortgage transactions on single-family properties are included. Conforming refers to a mortgage that both meets the underwriting guidelines of Fannie Mae or Freddie Mac and that does not exceed the conforming loan limit, a figure linked to an index published by the Federal Housing Finance Board. The conforming mortgage loan limit for single-family homes in 2006 increased to $417,000 from $359,650 in 2005."

For more information check out the OFHEO HPI FAQ.

5/1 ARM Rates For the Past 3 Months

Wednesday, March 01, 2006

Mistake in OFHEO Data?

Is there a mistake in the 4Q 2005 OFHEO?

In the 4Q 2005 Report: "Average U.S. home prices increased 12.95 percent from the fourth quarter of 2004 through the fourth quarter of 2005. Appreciation for the most recent quarter was 2.86 percent, or an annualized rate of 11.4 percent."

In the 3Q 2005 Report: "Average U.S. home prices increased 12.02 percent year over year from the third quarter of 2004 through the third quarter of 2005. This represents a two percentage point decline from the previous four-quarter appreciation rate of approximately 14
percent. Appreciation for the most recent quarter was 2.86 percent."

Also look at page 15 in both of the reports.

The price appreciation for the most recent quarter was the same exact rate (2.86) as 3Q 2005. What is the chances that it will be exactly the same considering there are two decimal digits? Perhaps it is a mistake?

Purchase Price Data 4Q 2005 vs.3Q 2005 YoY Numbers

The main numbers for YoY Price appreciation one sees in the OFHEO data shows that the rate of YoY price appreciation increased in 4Q 2005 slightly compared to 3Q 2005 [this uses a "mix of data from refinancings and house purchase transactions"]:

4Q 2005 YoY Home Price Appreciation: 12.95%
3Q 2005 YoY Home Price Appreciation: 12.02%


4Q 2005: "Changes in the mix of data from refinancings and house purchase transactions can affect HPI results. An index using only purchase price data indicates somewhat less price appreciation for U.S. houses between the fourth quarter of 2004 and the fourth quarter of 2005. That index increased 10.81 percent, compared with 12.95 percent for the HPI."

3Q 2005: "Changes in the mix of data from refinancings and house purchase transactions can affect HPI results. This HPI report includes an index that is calculated using only purchase price data. The index shows an increase of 10.95 percent for the U.S. between the third quarter of 2004 and the third quarter of 2005."

Solely using the Purchase Price Data:

4Q 2005 YoY Home Price Appreciation: 10.81%
3Q 2005 YoY Home Price Appreciation: 10.95%

Thus, if we look at the just the purchase data the rate of YoY price appreciation stayed about the same in 4Q 2005 compared to 3Q 2005.

The Battle of the 4Q 2005 OFHEO Data

Some of the housing industrial complex will be using the using the 4Q 2005 OFHEO numbers to say 'long live the boom.' The numbers are very favorable to the housing boom cheerleader. For example:

Average U.S. home prices increased 12.95 percent from the fourth quarter of 2004 through the fourth quarter of 2005. Appreciation for the most recent quarter was 2.86 percent, or an annualized rate of 11.4 percent. The increase during 2005 is similar to the revised increase of 12.55 percent for the year ended with the third quarter of 2005, showing no evidence of a slowdown.

It will be difficult for us bubbleheads to claim that the numbers lend weight to our view of the housing market. This is a major piece of evidence that will get the housing cheerleaders all riled up. Get ready! We have another battle! We will win the war but this battle seems lost.

4Q 2005 OFHEO Numbers Released

The 4Q 2005 OFHEO Numbers have been released. Here is the excerpt from the report:


Price Index Shows Annual Rise of Nearly 13 Percent; Unprecedented Increases in 26 Metropolitan Areas

WASHINGTON, D.C. " Average U.S. home prices increased 12.95 percent from the fourth quarter of 2004 through the fourth quarter of 2005. Appreciation for the most recent quarter was 2.86 percent, or an annualized rate of 11.4 percent. The increase during 2005 is similar to the revised increase of 12.55 percent for the year ended with the third quarter of 2005, showing no evidence of a slowdown. The figures were released today by OFHEO Acting Director Stephen A. Blumenthal, as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends.

"Despite recent indications that a slowdown may be forthcoming, house price appreciation during 2005 continued to hover at near-record levels,"said OFHEO Chief Economist Patrick Lawler.

House prices continued to grow considerably faster over the past year than did prices of non-housing goods and services reflected in the Consumer Price Index. House prices rose 12.95 percent, while prices of other goods and services rose only 4.3 percent.

"While deceleration continues in some areas, appreciation generally is still extremely strong," said Lawler. "Mortgage rates climbed significantly during the second half of last year, but the effect of that increase on price appreciation so far appears to be limited."

There will be much more coverage of these number today and tomorrow on this blog. Stay Tuned. It would be great for readers to also post interesting findings. There is a lot of material to digest here.

OFHEO 4Q Numbers to be Released Today

The Office of Federal Housing Enterprise Oversight (OFHEO) will be releasing the 4Q 2005 Housing Price Index numbers at 10am EST today. Needless, to say Bubble Meter is very excited.

There should be lots of evidence of a declining market in the 4Q 2005 report. Especially interesting should be Boston, Las Vegas, San Diego and parts of Florida.

Income, Wealth, and Debt

The Mess That Greenspan Made has a very solid article titled 'Income, Wealth, and Debt'