Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
Friday, February 03, 2006
Weekend Topic Suggestions
Please post your ideas for weekend topics here! As some have suggested, topics related to the changing of the guard at the Federal Reserve would be timely.
Since you track SoCal, I wanted to suggest a topic but I want to get into the details of the last SoCal collapse that has (to date) been blamed on the Aerospace industry collapse.
Is there a job loss scenario for SoCal that mirrors 1990?
There have be oblique references to losses in the mortgage, banking and construction industries that seem to be the most likely candidates, but I also have an example that occured to me through personal experience.
I have a relative in Atlanta that has been working in the mortgage industry for the last five years. He owns a condo, but has been also been buying and flipping properties. He knows appraisers who will appraise for 'whatever he wants,' he can arrange for them to get the loan, and walk them through the application so that they don't 'hit any snags.' I am a lawyer and advised him this is really a bad idea, filled with conflicts of interest and possible fraud, but he advised me that this is standard operating procedure.
This seems to me a very overlooked area of froth (as a shout out to the departing Mr. Greenspan) which might account for some uncertainty in possible housing devaluation.
The battle between the banks and the National Association of Realtors over what the Fed regulators allow banks to do involving real estate transactions.
I want some one subject only threads. That and a little more restraint. When the subject is unoccupied Phoenix housing Boston condo cancellations don't belong in the comments section. Ben will get around to that, be patient.
Single Subject suggestions can mean limited to just one geographic area and let fly, say San Diego or Maryland. It can mean outrageous incentives, free SUV, etc. It can mean a contest for who can show ziprealty or realtor.com the highest price per square foot. Just so long as I don't have to wade through another stupid neighbor buying a boat with a HELOC when the subject is what happens after the super bowl.
I suggest people go out and get photos of things that suggest the end of the bubble and upload them to Flick with the tag housingbubble
There are only four photos with that tag right now and Ben can add one of those Flickr web page inserts that show the latest images for a tag. Go here.
We'd have a constantly updating look at the bubble and it'd be simple to do.
Which institutions are holding GSE-issued or private MBSs and CMOs (asian banks vs. American mutual/retirement funds)?
Do asian central banks own more of the stuff, or do Americans (through their mutual/retirement/401K/IRA funds)?
While GSE-issued debt is fairly easy to spot on a prospectus/annual report (look for Fannie & Freddie), how can you tell if your mutual fund also owns PRIVATELY-issued MBSs or CMOs?
I, too, am interested in job loss scenarios for SoCal.
A few years ago Big Pharmaceutical got hit pretty hard, though I'm not sure what the real cause was. It might have had something to do with the dot com bust and the Nasdaq decline generally. I know of one chemist who was laid off at that time and only recently got a "real" job again, at Genentech in San Francisco. He subsisted by teaching intro chemistry at a local community college (I was in that class.)
I'd be curious to know why the downturn in Big Pharm, and could it happen again. After all, they are not profitless tech startups. A big slump in pharm would have a huge effect on the northern bay area and San Diego, if so.
I'm not sure what the big employment drivers are in the LA area, to be honest. There are a number of smallish tech startups. There is also the movie industry. The major studios are already asking big stars to take pay cuts and they are planning on putting out less product for the next few years (not sure if I read that on IMDB or not).
In my area, much is made of the fact that The O.C. is filmed in Manhattan Beach. Big deal - one friggin TV show. Yet an unbelievable amount of froth has been generated around it.
I am only half-joking when I say that the local economy here consists of selling real estate to each other and teaching each other yoga.
Have you used Weiss Ratings for bank safety ratings? Nobody is as conservative as Weiss when it comes to rating financial institutions. He has a much better track record than AM Best, Moody's, Fitches, etc, when it comes to warning subscribers of impending bank failure BEFORE the failure.
Just last night we got our annual Weiss ratings book in the mail. A number of banks no longer have the A+ rating - probably because they are exposed to local bubbly real estate markets.
Fortunately Farmer's and Merchants bank, right in Southern California, is one of the best banks in the country, at least by Weiss's standards. Even better, they know about their rating and work hard to maintain it.
My survival strategy has largely consisted of having a Treasury Direct account wired to my F&M savings account. I won't mess with any Treasury money funds from a mutual fund company that might have to go through a bank that... you get the idea.
Here's one a reader emailed.
ReplyDeleteSince you track SoCal, I wanted to suggest a topic but
I want to get into the details of the last SoCal collapse that has (to date) been blamed on the Aerospace industry collapse.
Is there a job loss scenario for SoCal that mirrors 1990?
There have be oblique references to losses in the mortgage, banking and construction industries that seem
to be the most likely candidates, but I also have an example that occured to me through personal experience.
I have a relative in Atlanta that has been working in the mortgage industry for the last five years. He owns a condo, but has been also been buying and flipping properties. He knows appraisers who will appraise for 'whatever he wants,' he can arrange for them to get the loan, and walk them through the application so that they don't 'hit any snags.' I am a lawyer and advised him this is really a bad idea, filled with conflicts of
interest and possible fraud, but he advised me that this is standard operating procedure.
This seems to me a very overlooked area of froth (as a shout out to the departing Mr. Greenspan) which might
account for some uncertainty in possible housing devaluation.
The battle between the banks and the National Association of Realtors over what the Fed regulators allow banks to do involving real estate transactions.
ReplyDeletehttp://www.realtor.org/PublicAffairsWeb.nsf/Pages/StopBanksinREProjects?OpenDocument
David
Bubble Meter Blog
I want some one subject only threads. That and a little more restraint. When the subject is unoccupied Phoenix housing Boston condo cancellations don't belong in the comments section. Ben will get around to that, be patient.
ReplyDeleteSingle Subject suggestions can mean limited to just one geographic area and let fly, say San Diego or Maryland. It can mean outrageous incentives, free SUV, etc. It can mean a contest for who can show ziprealty or realtor.com the highest price per square foot. Just so long as I don't have to wade through another stupid neighbor buying a boat with a HELOC when the subject is what happens after the super bowl.
I suggest people go out and get photos of things that suggest the end of the bubble and upload them to Flick with the tag housingbubble
ReplyDeleteThere are only four photos with that tag right now and Ben can add one of those Flickr web page inserts that show the latest images for a tag. Go here.
We'd have a constantly updating look at the bubble and it'd be simple to do.
Which institutions are holding GSE-issued or private MBSs and CMOs (asian banks vs. American mutual/retirement funds)?
ReplyDeleteDo asian central banks own more of the stuff, or do Americans (through their mutual/retirement/401K/IRA funds)?
While GSE-issued debt is fairly easy to spot on a prospectus/annual report (look for Fannie & Freddie), how can you tell if your mutual fund also owns PRIVATELY-issued MBSs or CMOs?
I'd like comments from owners/rentors who actually live in these hi-rise condos so we could have first hand knowledge of the pros and cons.
ReplyDeleteIn response to requests:
ReplyDeleteFYI Breaking News/This Just Out
FYI New Resource
FYI Anecdotes
FYI Thanks Ben/Misc/OT
Seems I hit a sensitive issue for many of us.
Ben,
ReplyDeleteI, too, am interested in job loss scenarios for SoCal.
A few years ago Big Pharmaceutical got hit pretty hard, though I'm not sure what the real cause was. It might have had something to do with the dot com bust and the Nasdaq decline generally. I know of one chemist who was laid off at that time and only recently got a "real" job again, at Genentech in San Francisco. He subsisted by teaching intro chemistry at a local community college (I was in that class.)
I'd be curious to know why the downturn in Big Pharm, and could it happen again. After all, they are not profitless tech startups. A big slump in pharm would have a huge effect on the northern bay area and San Diego, if so.
I'm not sure what the big employment drivers are in the LA area, to be honest. There are a number of smallish tech startups. There is also the movie industry. The major studios are already asking big stars to take pay cuts and they are planning on putting out less product for the next few years (not sure if I read that on IMDB or not).
In my area, much is made of the fact that The O.C. is filmed in Manhattan Beach. Big deal - one friggin TV show. Yet an unbelievable amount of froth has been generated around it.
I am only half-joking when I say that the local economy here consists of selling real estate to each other and teaching each other yoga.
Cereal, Nobubblehere,
ReplyDeleteHave you used Weiss Ratings for bank safety ratings? Nobody is as conservative as Weiss when it comes to rating financial institutions. He has a much better track record than AM Best, Moody's, Fitches, etc, when it comes to warning subscribers of impending bank failure BEFORE the failure.
Just last night we got our annual Weiss ratings book in the mail. A number of banks no longer have the A+ rating - probably because they are exposed to local bubbly real estate markets.
Fortunately Farmer's and Merchants bank, right in Southern California, is one of the best banks in the country, at least by Weiss's standards. Even better, they know about their rating and work hard to maintain it.
Weiss Ratings
My survival strategy has largely consisted of having a Treasury Direct account wired to my F&M savings account. I won't mess with any Treasury money funds from a mutual fund company that might have to go through a bank that... you get the idea.