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Drive by commentary: Street of Dreams, I’m not digging any more post $#%!! holes, Red Sox, market, other stuff.

© Tim S. Kane 2007
Click to enlarge – © Tim S. Kane 2007

It’s drizzling, my body is extremely sore from digging post holes for 1,600 lineal feet of fencing and I’ve got about 40 feet to go, so I’ll take this opportunity for my Seinfeld (mostly about nothing) market commentary. And before you all laugh at me as a homeowner dumping money into my fence, I’m saving over $10K in labor. And no, I’m not getting ready to sell. Ok, so it’s taken me all of July to do it. Oh, it’s Aug. 3rd?

  • Anyway, so my wife is fixing her hair this morning and says: “what the heck is going on with all these lenders going out of business?” No, it’s not that she is unaware of the situation, far from it, but more so it was a remark of “this is crazy.”

  • Late last year and early this year we had escrow transactions fail to fund with some lenders that are now RIP. I don’t know if too many people were paying attention like I was, but that was a clear indication to me that something was wrong, back then. A while back chief RCG mortgage correspondent, Rhonda Porter and I discussed New Century and her conversation with an New Century Account Exec. indicating that all was well. We both know the result.

  • Many of the readers on this board are significantly more astute in investing in the stock market than I, and some may be experienced at shorting stocks. Personally, I’ve got less than 5% in the market because I equate investing in the stock market in some cases like gambling. I never win in gambling. Ever.

    That said, I would watch the action of title companies with closer scrutiny. Because of the market turmoil there has been an upward increase in title claims due to ….drum roll…fraud, etc… That hurts earnings. Furthermore, I get the sense that a major title insurance player could merge or gobble up another. Consolidation is highly active in this environment and was during the last downturn.

  • Speaking of home improvement, one of the best ways I know of to hedge against a market downturn is to learn how to do improvements to your house, as a do-it-yourselfer. Owning can be expensive with unknown things cropping up: heating system, drive by mail box bashers, plumbing issues, you name it. I’ve saved tens (more, but I can’t publish it here because it is a closely held secret) of thousands because I rarely pay retail labor costs. Sure I’ve made costly mistakes, but I’ve saved much more.

  • The refinancing gravy train has slowed down. A lot. LOT.

  • I have access to Street Of Dreams discount ticket coupons ($3 off) for WEEKDAY only visits. I thought it was really good this year with lot of emphasis on woodwork (the good houses) which is my style being that I grew up in a 1906 Craftsman on Capitol Hill in Seattle. The show is through August 19th. If you’d like a coupon, please e-mail me at tim@legacyescrow.net and I’ll get them into the mail to you.

Have a good weekend and I’ll see you at the Red Sox game tomorrow. It’s my son Andrew’s ninth B-day tomorrow and if you wish him happy birthday here at Seattle Bubble, he’d get a kick out it thinking he’s famous.

– S-Crow


About S-Crow

"S-Crow" (Tim Kane) is co-owner (with spouse Lynlee, LPO-Designated escrow Officer) of Legacy Escrow Service, Inc., an authentic independent escrow firm closing residential purchase/sale and refinance transactions.

34 comments:

  1. 1
    biliruben says:

    Happy Birthday, Andrew!

    Enjoy Matsuzaka. I have a ticket for tonight and tomorrow, but I won’t be able to make it so gave them away. ;(

  2. 2
    softwarengineer says:

    HI S-CROW, I SAW A COMEDIAN LAST TUESDAY WHO GAVE A JOKE ABOUT THE STREET OF DREAMS

    He said, “Why would we pay $13 admission to go into some rich person’s $1.5M house to find out what we’ll never have anyway?”

    He went on, “Hades, I’d only charge $3 to visit my normal family house and the tour would be here’s where my scratched coffee table is with the Cragmont Soda Blue flavor sits…”

  3. 3
    S-Crow says:

    Soft- good stuff. LOL.

  4. 4
    Joel says:

    Jim Cramer is panicking. I would guess that his attitude is a reflection of his broker friends.

  5. 5

    SCrow-“Chief RCG Mortgage Correspondent”…I think I’ll add that to my business cards! I do remember talking with you about New Century. That was just the beginning…now we have American Home Mortgage as the most recent casualty.

  6. 6
    EconE says:

    Happy Birthday Andrew. Your dad just wasted 5 of your 15 minutes of fame here on a blog. Good goin’ dad. ;o)

    Now hit your dad up for an allowance raise.

  7. 7
    finance says:

    I met Jim Cramer on Monday (7/30) and he was wearing this exact shirt and tie! I was visiting the NYSE and randomly saw him walking down the street (right after he got off TV) and got a quick picture with him (as in why the hell are you bothering me quick), but it was good, boo ya!

    Cramer does know whats going on, yet he is always one step ahead of what he says on TV, as he has to consult people on The Street before anything is published…Did we all know this credit bubble was going to pop, of course, but its easier/more profitable to continue on as long as possible.

  8. 8
    Chris says:

    That video of Cramer is insane.
    But I guess that is standard for him.

  9. 9

    For those who have been watching this thing obsessively – – I started in 03 because a job loss forced a move from Seattle to CA where the insanity way already in full swing – – this was finally the week!
    Years of watching paint dry… then finally the lenders stopped the party. Go to the forums on the mortage broker boards: brokeroutpost.com. After literally years of talk and no action… the faucet to stoopid $$$ is actually being shut off!

    No jumbo, interest only, negative am, 100%+ LTV, stated, no-income-no-assets = California housing market stops dead = coming to a neighborhood near you!

    When the data comes out for home sales from this point forward – watch out below.

  10. 10
    S-crow says:

    Econe-

    Allowance? Shhhhhh. I knew this was going to backfire!

  11. 11
    mini S-Crow says:

    EconE-

    thank you very much!

    -andrew (mini- S-Crow)

  12. 12
    Conrad says:

    Happy Birthday, Andrew! Tell your dad to start saving for a car, ’cause you’ll be driving before ya know it!

  13. 13
    Katie of Germany says:

    Happy Birthday Andrew! Nine is a great age, as it’s the last year before you get 2 digits in your age. Enjoy the game with your dad, and have a great day!

  14. 14

    Correction to “This is it folks”: My mistake – you need a password to go directly on the brokeroutpost.com forum.

    You can get to the broker outpost through Piggington.com. Here’s the link: http://piggington.com/broker_outpost

    The loan officers are writing in about all the loans that are getting eliminated. You gotta read this!

  15. 15

    I’m surprised that Eleua hasn’t raised the defcon level. From my vantage point, it went up on Friday.

  16. 16
    Garth says:

    Show me any data that make 50% a reasonable statement to make, it is just as foolish as saying a home is always a good investment.

    Alt A loans will be missed by sole proprietors and most people with credit scores under 685 can improve them with a limited amount of work.

    People will always want to do things they not ready for and financial instruments like credit cards and mortgages will be designed to take people right up to the edge.

    Many of the peers of the companies that have been adversely affected by subprime did better selling the same type of loans by hedging against subprime loans better.

  17. 17
    Matthew says:

    Jillayne,

    The only Crash-Con level left is Crash-Con 1. We are already at crash-con 2. I wouldn’t expect crash-con 1 to hit until we are deep in recession, and the mainstream American (to include Garth and Meshugy) truly realizes just how bad the housing market has become.

    But one can never truly predict exactly when the President for the Institute of Economic Reality is going to issue his warnings!

  18. 18
    Matthew says:

    Garth,

    Google this:

    Tokyo Japan housing bubble.

    50 % on the dollar could be a low estimate.

  19. 19
    Peckhammer says:

    I enjoyed this rare dose of reality in the Seattle Times today: http://seattletimes.nwsource.com/html/businesstechnology/2003822411_jobspay05.html

    All the editors must have been at Seafair today, so this little gem slipped through the filters.

  20. 20
    Garth says:

    Japan is a terrible example, there were too many other factors in that crash to even compare.

  21. 21
  22. 22
    Matthew says:

    Yakuza = modern day US mortgage broker.

    It’s like going into a lender’s office and stating that you want a 30 year fixed. What does the average lender do these days? He tries to pimp some other product on you. They tell you how much more of a house you can buy if you go with an IO, neg AM, or some other kinky product.

    Two of my co-workers both went to lenders and basically had to argue with them in order to get a 30 year fixed. My brother in law (works for countrywide) sold my other brother in law, on the idea of getting an IO loan.

    Our situation will seem more and more similar to Japan as this thing starts to unravel, mark my words.

  23. 23
    Garth says:

    Unless there is massive nationwide crime group committing organized public works corruption here that I am not aware of, your theory has no chance. Commission sales people sell whatever they make the most commission on, but to compare todays mortgage brokers to the Yakuza shows a fundamental lack of understanding of two situations.

  24. 24
    explorer says:

    Does collusion to create a perfect storm count, Garth? Deliberate market manipulation, falsifying documents, no due diligence, takebacks on the sale price, etc.

    By that I mean wink winking of the perfect circle of RE agents, appraisers, lenders, and insurance companiies, and the people that KNOW they can get away with it, for awhile….

  25. 25
    Garth says:

    I don’t think overly aggressive sales tactics are the same as massive organized crime manipulation.

  26. 26
    Matthew says:

    Whether or not they use the same tactics is insignificant. It’s the impact that the tactics have, which is the same.

  27. 27
    Garth says:

    How are they the same?

  28. 28
    wtf says:

    Lessons from Japan’s melt-down.

    Fleckenstein posted this in May 2005, give it a read: http://moneycentral.msn.com/content/P116564.asp

    He sounds like Eleua.

  29. 29
    Garth says:

    That article still does not address the issue of massive public works fraud and mafia manipulation of real estate vs aggressive sales people (who will always exist). They are not the same issue.

    Look at parts of the US that have fallen this year for an idea of the worse case here for the next year, but looking at the worst real estate collapse of all time in a country much different than ours, caused in large part by organized crime makes no sense.

  30. 30
    Matthew says:

    Garth,

    Are you just being difficult or can you truly not see the similarities?

    While we are talking about two different factors that drove the market, the impact of both factors was identical. They both drove prices to unsustainable levels. How did they do this? By pressuring the buyer. An aggressive sales person may not be as intimidating as a member of organized crime, but if they get you to stretch beyond your means with creative financing, what does it matter?

    You state that aggressive sales people always exist. While this is true, never before have they existed in the market conditions that were the last 5 years in this country. With lending standards thrown out the window, sales people had free reign on the market, able to sell anything to anyone, regardless of price or income level.

    Obviously the similarities are not identical, but if you can’t see ANY similarities between the two, I don’t think you are looking hard enough.

  31. 31
    Matthew says:

    Fleck’s column yesterday compares modern the modern US market with 1990 Japan. Excellent article.

    http://tinyurl.com/35omxg

  32. 32
    Garth says:

    I am not being difficult, the scale of the run-up and the involvement of Japanese banking laws, keiretsus and even the Yakuza make them much different situation.

    Just two numbers make the difference pretty clear:

    The average Japanese stock at the time had a P/E of about 60, some banks as high as 100.
    The land on the island of Japan at the peak in 1991 was valued at over 20 trillion, which was five times the value of all the land in the US at the time, and is probably still more than all the property in the US is worth currently.

  33. 33
    Matthew says:

    So what? I’m not arguing that our bust will be as significant in scale as Japan, only that it will be similar.

  34. 34
    Matthew says:

    Certain areas in Japan’s financial district were 1/100th of their peak value… I’m only arguing that U.S. could see 50 percent declines…. Not unreasonable by any means.

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