Housing Bubble News Links

[tombldr]

patrick.net/housing/crash.html#links

this is a rich list of articles related to the housing bubble and it's imminent decline. Here's a sampling, check the link above for hotlinks to all these articles, updated with new articles daily.

Housing Bubble News Links:

Sun Apr 17 2005 Would Floating the Renminbi Solve Anything?
Sun Apr 17 2005 Buy it, own it, sell it; do it all again tomorrow
Sun Apr 17 2005 In Real Estate Fever, More Signs of Sickness
Sun Apr 17 2005 Irrational exuberance will bring houses down
Sat Apr 16 2005 Prices of new, resale houses take a fall (Las Vegas)
Fri Apr 15 2005 Is Housing a New Bubble?
Fri Apr 15 2005 Is there a bubble in the housing market? (audio)
Fri Apr 15 2005 Housing market may be cooling
Fri Apr 15 2005 Frenzy feeds on itself
Fri Apr 15 2005 Mortgage default increase predicted
Fri Apr 15 2005 Flipping: Risky Strategy More Common Now Than At Any Time Since 1989 (reg req)
Fri Apr 15 2005 Curtain call for housing
Thu Apr 14 2005 The Sweet Spot
Thu Apr 14 2005 Mortgage scams cost Americans 'tens of millions of dollars each year
Thu Apr 14 2005 Sub-Prime Mortgages Pose Unknown Risk Level
Thu Apr 14 2005 Congress Passes Bill Making It Harder to Wipe Away Debt
Thu Apr 14 2005 The FBI Statistics on Mortgage Fraud (PDF)
Thu Apr 14 2005 Mortgage fraud: Real estate's white-collar epidemic
Thu Apr 14 2005 Bad loans more than double at GMAC
Thu Apr 14 2005 Searching For Jobs
Wed Apr 13 2005 Housing bubble will pop
Wed Apr 13 2005 More homeowners on borrowed time
Wed Apr 13 2005 Riskier loans stir up interest
Tue Apr 12 2005 Illegal Appraisals Inflate Housing Bubble
Tue Apr 12 2005 Falls Church, Virginia Buyers Step Back From Unrealistic Pricing
Tue Apr 12 2005 Let's Get Real About Real Estate
Mon Apr 11 2005 Rental prices hint at whether a housing market is riding on fundamentals or speculation.
Mon Apr 11 2005 Shanghai housing prices down on new measures
Mon Apr 11 2005 Firms saving instead of hiring in Silicon Valley (reg req use http://www.bugmenot.com)
Mon Apr 11 2005 House prices never go down in the Bay Area?

[Moses]

www.atimes.com/atimes/Global_Economy/GD20Dj01.html


Apr 20, 2005

By Mike Davis

Last February the sirens howled in Hollywood as the Los Angeles Police Department (LAPD) rushed reinforcements to the 5600-block of La Mirada Avenue. While a police captain barked orders through a bullhorn, an angry crowd of 3,000 shouted back expletives. A passer-by might have mistaken the confrontation for a major movie shoot, or perhaps the beginning of the next great LA riot.

In fact, as LAPD Captain Michael Downing later told the press: "You had some very desperate people who had a mob mentality. It was as if people were trying to get the last piece of bread." The bread-riot allusion was apt, although the crowd was in fact clamoring for the last crumbs of affordable housing in a city where rents and mortgages have been soaring through the stratosphere. At stake were 56 unfinished apartments being built by a non-profit agency. The developers had expected a turnout of, at most, several hundred. When thousands of desperate applicants showed up instead, the scene quickly turned ugly and the police intervened.

A few weekends after this tense confrontation in Hollywood, another anxious mob - this time composed of more affluent home-seekers - queued up for hours for an opportunity to make outrageous bids on a single, run-down house with a cracked foundation in a nearby suburb renowned for its good schools. "The teeming crowd," wrote Los Angeles Times columnist Steve Lopez, "was no surprise given the latest evidence that California's public schools are dropout factories."

Los Angeles' underfunded, overcrowded and violent schools, according to a recent report by Harvard researchers, currently fail to graduate the majority of their black and Latino students, as well as one-third of whites. Parents, as a result, are willing to make extraordinary sacrifices to move their children to suburbs with functioning public education. This gives the old adage of "location is everything" in real estate a new twist: housing in southern California is universally advertised and graded by the prestige of local school districts.

The southern California housing crisis, of course, has a sunnier side as well. In the past five years median home values have increased 118% in Los Angeles and an extraordinary 137% in neighboring San Diego. Homes, as a result, have become private automated teller machines (ATMs), providing their owners with magical, unearned cash flows for purchasing new sports utility vehicles, making down payments on vacation homes, and financing increasingly expensive college educations for their kids. Second mortgages and home refinancings, according to a Wharton Business School survey, have generated an astounding US$1.6 trillion in additional consumption since 2000.

The great American housing bubble, like its obese counterparts in the United Kingdom, Ireland, the Netherlands, Spain and Australia, is a classical zero-sum game. Without generating an atom of new wealth, land inflation ruthlessly redistributes wealth from asset-seekers to asset-holders, reinforcing divisions within as well as between social classes. A young schoolteacher in San Diego who rents an apartment, for example, now faces an annual housing cost ($24,000 for a two-bedroom in a central area) equivalent to two-thirds of her income. Conversely, an older school-bus driver who owns a modest home in the same neighborhood may have "earned" almost as much from housing inflation as from his unionized job.

The current US housing bubble is the bastard offspring of the stock-market bubble of the mid-1990s. Housing prices, especially on the west coast and in the east's Bos-Wash (Boston-Washington, DC) corridor, began to rocket in the second half of 1995 as dot-com profits were plowed into real estate. The boom has been sustained by sensationally low mortgage rates, thanks principally to the willingness of China to buy vast amounts of US Treasury bonds despite their low or negative yields. Beijing has been willing to subsidize US mortgage borrowers as the price for keeping the door open to Chinese exports.

Similarly, the hottest home markets - southern California, Las Vegas, New York, Miami, and Washington, DC - have attracted voracious ant columns of pure speculators, buying and selling homes in the gamble that prices will continue to rise. The most successful speculator, of course, has been George W Bush. Rising home values have propped up a stagnant economy and blunted criticisms of otherwise disastrous economic policies. The Democrats for their part have failed to address seriously the crisis of millions of families now locked out of home ownership. In a bubble city such as San Diego, for instance, less than 15% of the population earns enough to finance the cost of a median-value new home.

Accordingly, if "values" were the basis for the Bush victory last November, they were property values, not moral principles or religious prejudices. In the face of the perverse housing bubble, the John Kerry campaign, as with health-care costs and the export of jobs, was simply running on empty. It offered no compelling alternative to the status quo. But the Republicans have more serious things to worry about than Democrats. As the real-estate bubble reaches its peak, George Bush may discover that he has been surfing a tsunami and that a towering cliff looms ahead.

The bubble has already burst in San Francisco, and the April 11 issue of Business Week headlined fears that a general deflation - perhaps of international magnitude - is nigh. What will life be like in the United States (or Britain or Ireland) after the home-equity ATM shuts down?

The business press, as always, reassures passengers that they are headed for a "soft landing", a slowdown rather than a crash, but even a mild jolt may be sufficient to end the current anemic recovery and throw all the dollar-pegged economies into recession. More ominously, some eminently respectable Wall Street economists, like Stephen Roach of Morgan Stanley, have been warning of a dangerous negative-feedback loop between the foreign-subsidized housing bubble and the huge US trade and budget deficits. "The funding of America," he has written, "is an accident waiting to happen."

At the end of the day, US military hegemony is no longer underwritten by an equivalent global economic supremacy. The housing bubble, like the dot-com boom before it, has temporarily masked a mess of economic contradictions. As a result, the second term of George W Bush may hold some first-class Shakespearean surprises.

---

Mike Davis is the author of Dead Cities and the forthcoming Monster at the Door: The Global Threat of Avian Influenza (New Press 2005).

(The article has appeared on TomDispatch.com and has been posted here by permission)

[tombldr]

Moses said:

www.atimes.com/atimes/Global_Economy/GD20Dj01.html
The bubble has already burst in San Francisco, and the April 11 issue of Business Week headlined fears that a general deflation - perhaps of international magnitude - is nigh. What will life be like in the United States (or Britain or Ireland) after the home-equity ATM shuts down?

I would debate that the "bubble has already burst in San Francisco". Not that things haven't leveled off there, but "burst" is certainly too dramatic a choice of words. This was near and dear to my heart as I'm from SF, and my mother passed some property there to my siblings and I when she passed on in '95. The siblings and I continued to co-own and manage it for the next 9 years, when last year, as the most "awake" to what's going on, I insisted we sell, which we did in November. But it was like pulling teeth from my end, as two siblings were solidly against selling, and I was openly making arrangements to retain an SF real estate lawyer to file a "separation action" which would have surely resulted in a judge's order to sell... when the resistant siblings consented to sell. I'm completely confident that hindsight will prove this to be a good choice at a good time.. but so far the market there hasn't "collapsed" per se, it's just stopped moving ever higher.. what hindsight will surely mark as the "top".

While I haven't seen solid recent numbers, I would expect that SF's less glamorous neighbors like San Jose, Oakland and other Bay Area cities, probably have begun to decline. In my travels I've come across some people who've said they want to live in SF because it would be a sanctuary from the fascism the US is otherwise emersed in, due to it's liberal climate. But I don't believe SF will be spared the economic collapse we face, or the social effects of large populations of desparate people... ALL big cities, whether historically glamorous/librul or not, are not going to be my choice of where to live or own property in the years looking forward.

[Moses]

I heard the bubble guy (the one from Yale who called the stock market one -- forget his name) on NPR (a propaganda outlet that is usually intolerable, but this guy has cred so I kept it on) talking about San Francisco, specifically.

San Francisco was highlighted, I think, as one of the worst of the bubbles-- the average home apparently sells for 10-15 times average annual earnings. He said that people were going to ask themselves whether it is worth it to buy a house worth 10-15 years of your total earnings, when you could go somewhere else and buy a house for 2 years earnings. This is especially true if the house isn't appreciating, or is appreciating slowly. That was the gist as I understood it.

[Moses]

www.Cathead.biz/

Former St. Louis Couple Leaves Corporate Life To Open Blues and Folk Art Store in Mississippi

CLARKSDALE, MS. - July 29, 2002 -- "When we tell people what we're doing, we usually got one of two reactions," said former St. Louis resident Roger Stolle. "'Wow, I'm jealous.' Or, 'Are you crazy?' I guess we've chosen a path less traveled."

After 7 years of Delta journeys and a year of intense planning, Roger and his wife Jennifer left St. Louis to start Cat Head Delta Blues & Folk Art, Inc. in small-town Mississippi. Both left comfortable marketing careers of 10-plus years, with Roger in a lucrative management position. "A year ago, I was meeting with the CEO of May Company and traveling to Hong Kong on business," explained Roger. "Last week, I booked a blues musician named T-Model Ford for our grand opening and set up a store display that included a chair made out of painted cow bones. You tell me which sounds more fun."

Cat Head Delta Blues & Folk Art, Inc. is a 6-day-a-week store that features a full selection of blues CDs, videos, DVDs, books and collectibles as well as an affordable mix of Southern self-taught, folk and outsider art. "It's kind of like shopping in a juke joint," Roger said, describing the building's rustic interior, colorful artwork and down home music. "It's the kind of store we always dreamed of finding in our Delta travels but never did."

Roger is quick to acknowledge that it's not all fun and games. Starting a new, untested business out of state is a challenge enough, but add to it the unique culture that is "the South," and it becomes too much of a risk for most people to consider. "We didn't do this to get rich. It's definitely a labor of love," offered Jennifer. "We were at a crossroads in our lives," Roger continued, "We could either keep working those crazy corporate hours in the big city, trying to buy happiness, or we could do what we wanted to do and try to make a difference. We chose the latter."

As former tourists themselves, the two Delta transplants believe they can make a positive difference by marketing the Delta to the rest of the world, bringing more recognition to the region and its people. "Hopefully, this will translate into more visitors coming here which benefits everyone," said Roger, "Believe it or not, Clarksdale, Mississippi has a lot to offer. Great blues music. Wonderful art. Even Tennessee Williams spent time here. It's also in a great location, within an hour or less of Memphis and Tunica."

According to Roger, tourists from all over the U.S., Europe and Asia already come to the region in search of the "land where blues began" and honest artwork from living folk artists.

The first big test for the new store will come during its grand opening celebration, August 8 through 11. "We'll be featuring 4 days of great art, 'live' music and door prizes in store," said Roger. "We want
this to be a special introduction to a one-of-a-kind store." The store's grand opening will also play host to a couple of St. Louis reinforcements: North St. Louis blues legend Big George Brock and Soulard blues painter Tim Mancinas. In addition to the store's free events, Clarksdale will hold its 15th annual free Sunflower River Blues & Gospel Festival two blocks away on August 9 and 10, featuring Bobby "Blue" Bland, Big Jack Johnson, Alvin "Youngblood" Hart, Charlie Musselwhite and others.

The store's location at 252 Delta Avenue in downtown Clarksdale places it within walking distance of the blues festival grounds and Delta Blues Museum, plus actor Morgan Freeman's Ground Zero blues club and Madidi fine restaurant.

Freeman lives in nearby Charleston, Mississippi and dropped by the store recently to wish the new store owners luck in their endeavor. The St. Louisans' relocation has been the big news around town lately, so "luck" is something a lot of people are wishing and something Roger is happy to accept. "We're here for the long haul. No matter how this ends up, there will be no regrets."

[karpomrx]

Wow!
I am a Blues nut/player/fanatic.
These people have some music I have been looking for in all the wrong places.
While I wait for the buble to burst,
I'll play the Blues,
Ol' economy does it's worst.
I'll 'member- I was born without shoes!

[Moses]

They just had their 2nd annual Juke Joint Festival last weekend! (I think they might be having something in August?)

Which musicians or music did you find that particularly interests you?

[Ropegun]

You know.....
I grew up listening to Chicago blues alot.
I love that delta stuff!

As a side note, a band I'm in just released a cd, and if any of you are interested, I'll be happy to send you a copy. It's more in the alt/country style, but definitely blues influenced.

"like a delta hurricane!"

[Moses]

Are people doing the MP3 download a song thing? I heard about it, but haven't caught up.