It is dead quiet in Phoenix. Obviously the same in Florida. If you are developing on the fringe…you might as well be a leper.
Toronto and New York may be a little better, but there is a whole slew of real estate problems that are brewing as the market stays closed to new deals and restructures.
In talking to many of my friends in Phoenix, there is a massive disconnect.
When the Nasdaq/telco bubble burts, even though Yahoo was down 50 points, there was a BID to hit. In real estate, there are no bids. My newbie friends can’t hit bids and if there were bids, they would probably scoff. I don’t think the fringe newbie developer has the staying power for riding out the overhoused America.
Lenders are busy rewriting their criteria. In the meantime, nothing gets done.
This financial meltdown has been amazingly well contained so far. China is rocking and tech stocks are doing well. The all-time high list has some new names.
I wish we could fast forward and move on, but we can’t. I will continue to do less and work on other projects. This meltdown will take much more time to heel. Continue to do less and focus on your sell discipline.
I am not re-interested in being involved quite yet in housing, but rich people are. They are starting to move fast.
Blair and I are getting a few emails a day to participate in buyout/up funds to take down troubled portfolios. Money is available and already loosening up in trust of the Fed and just the total liquidity.
This is genius (according to Blair):
As you have heard in the media, the mortgage market is in the midst of a liquidity and closure crisis, leaving the transactions of many home buyers in jeopardy. Western National Bank, in an effort to surmount this problem, has created the $50,000,000 Emergency Mortgage Solution program that offers qualified home buyers short-term, quick-close financing with attractive rates and no discount points or origination fees. This will enable prospective home buyers to meet the timeline established in their purchase agreements and avoid the loss of their earnest deposit with relatively low closing costs. The borrowers are offered incentives to refinance shortly after the close of this loan. However, there are no hooks to refinance with Western National Bank.
These guys are a small local bank and good friends of mine. This is the kind of stuff that I would participate in for a good yield.
Core Phoenix is just too good to really worrry and unlike other cycles, the rich are super super rich and insatiable. FURTHER, the bottoms fell so completely out of deals so fast that good deals are already surfacing for those that act fast.
Blair and I do wonder where they are getting their quick liquidity from. Than again, the printing machine has been on for quite some time.
Even my lowly Meritage has got very smart investors slurping up the stock big time . Robert Sarver has been long gone from the stock and is the majority owner of The Phoenix Suns and major banker and real estate developer. Today’s price just may look cheap a few years out. Sarver putting up $40 million for stock as a director tells me he is comfortable with the blance sheet. We will see.
Really all that’s left now is to chase down the obvious thieves and liars. Look no further than the insiders and leaders at Countrywide . I wonder how many times, management was on CNBC the last three years, selling, while it flatlined before the tank job. Hat Tip Eddy .
Tonight, it is further playing out as usual. The rise, the distribution, the fall and the denial. Through it all, shameless promotion and lies. In the end, millions of small shareholders will own 100 share lots of Beazer that their broker sold them on ‘Value’. They will replace the thousands of insiders and bankers that created the paper during the long rise.
The uptrend ended a while back.
It was time to take Beazer off your screen 40 points ago (unless you truly know how to trde and short stocks and do it for a living).
So many great lessons in just this one stock chart:
You don’t have to catch the beginning of an uptrend or downtrend to make money.
Steve Hilton is enjoying the Phoenix Suns from the ground floor. Since they are destroying teams like never before, I think it’s more fun to talk about them. So does Steve.
I love our interview series because we are in control of the questions and I trust my instincts. There are plenty of places around the web to get buried in data about the homebuilding stocks, so you don’t need that from me. His outlook is what’s important. Here it is: He is bullish on the Southwest!
I don’t need to ask him about the stock. He can’t control it. In 1999, the stock was in the single digits and Meritage the COMPANY was CRANKING. The market could care less. At $90 and a fed funds rate of less than 1 percent, everybody wanted to own the stock. I am sure every ANAList had a strong buy. Price targets were being raised and no one would have listened if Steve had yelled fire.
What Meritage offers in hindsight is a classic trend following stock that always seemed too expensive on the climb to $99 and at today’s $44 baffles the value hunters by drifting lower. Here is the LIFETIME CHART. If you bought the stock in 2001 after when it hit it’s first all-time high in 10 years, you were about to catch a monster long. It had more than doubled from it’s lows just to get there. You likely would have thought that the move had been made. NOT!
Phoenix and the Southwest remain on fire despite the crack in homebuilder stocks. Humans chase the sun. That won’t change. BUT, if you are a long only trend follower (like me), the homebuilding stocks are broken. Lay all the data you want on bounces and bottoms and PE’s and charts and you come to the same conclusion. The stock would have to take out it’s all-time high in the 90’s before it would garner MY interest. That does not seem likely to me so…..back to the Sun’s .
Steve is a star in the Phoenix community, building a $3 billion (sales) homebuilder and being a partial owner of the Phoenix Suns. He is charitable and accessible. He is pretty no nonsense so I had no plans of fooling around. When in doubt, talk about the Sun’s.
Steve and I have a few things in common. We both have kids and own a home , we love the Suns and hate the Mavericks and if we could short Mark Cuban, we would . His home is nicer and his Sun’s tickets are better but those are details.
One thing I disagree with Steve – he is long real estate agents and I am short agents and long Zillow .
Real estate agents are a favorite pet peeve of mine. They mainly suck. Period.
It was the same story for travel agents and stockbrokers and they have become dinosaurs, those remaining offering much different and BETTER services than the old days.
The markets have had a nice little rally the last few months. If strength continues I am looking for large caps and healthcare to continue to lead the way. One person happy to see the summer go is TraderTim . His bearish look at the markets is always entertaining.
I am long some Ebay, Adobe, Akamai and Apple and Yahoo tech big cap. I own some Rydex healthcare, XLV and Ambien maker SNY. I am not short anything at the moment in my accounts. I am not as happy as Tim to see the summer go
About a year late with this information, Barron’s has an article on housing entitled : “R.I.P., housing market?” . The shame is they cover their asses still by adding a question mark. No longer it is only a magazine worth skimming these days.
If you can’t eneter the site – here are the key paragraphs and links:
If you’re trying to buy or sell a home, chances are you’re taking the market’s pulse on a daily basis. For the rest of us, the Housing Bubble Blog (www.thehousingbubbleblog.com) might be a good place to start. Blogmaster Ben Jones posts several times daily, penning lengthy tomes with lots of links to regional and national housing-related stories. On Aug. 24, the day after the Commerce Department announced that existing-home sales were down 4.1% in July, Jones pulled in links to related stories from publications as varied as Fortune, the Reno Gazette-Journal and the Marco Island Sun-Times. These links take you to the full story.
Jones does a good job of spotlighting not just the major real-estate markets, but housing issues around the country. He offers illuminating anecdotes about a market seemingly in meltdown mode, such as the one about the woman who offered to throw in a Jeep Wrangler free with the purchase of her home at the asking price. The ploy didn’t work; she subsequently lowered the price. Then there’s the real-estate developer in Southwest Florida whose net income has fallen nearly 70% since 2005. The Housing Bubble Blog offers much of interest to real-estate specialists and non-specialists alike.
ON AUG. 24, when the numbers were released, Calculated Risk (calculatedrisk.blogspot.com) supplied viewers with charts and tables illustrating housing-market conditions, including sales prices and inventory levels, and specifics about the disheartening home-sales news. Links take viewers to sites such as Econbrowser (www.econbrowser.com), which offers analysis of economic conditions and policy.
The anonymous blogmaster at Calculated Risk describes himself as a retired senior executive with a background in investing, finance and economics. Once he had the chance to digest the announcement about July’s sales decline, he passed along a tip from a company insider about significant layoffs that could be coming at one of the nation’s largest home builders. He (or, perhaps, she) also linked to gloomy comments from economists and other industry insiders. Like all blogmasters, housing scribes have their biases, and many are none too cheery these days.
Other housing blogs worth a look include HouseBubble.com (www.housebubble.com), which posts links to key housing stories daily, and Housing Panic — The Bubble Blog with Attitude (housingpanic.blogspot.com), hosted by a “former homeowner” and “expat,” or expatriate. As promised, attitude abounds — about housing, politics, the Middle East and more — along with comments from readers. There’s some intelligent discussion here, but this blog is not for readers easily offended.
You won’t learn anything from watching CNBC or social stock picking networks. NOISE. You don’t need to pay big fees for walled stock market picks and pans.
You can learn from my market blogroll. Pretty much everything you need. No subscription costs.
It is hard to see a bubble when it is occurring. It is hard to imagine that we had back to back bubbles so close to themselves. Nasdaq – and now the unwinding of the housing bubble. The housing one is a scary one that no one seems to be talking about lately. I am actually shocked. Talk has turned instead to technology stocks. It is likely a big headfake. Just too much real damage and deflation in the industry to ever really make a comeback as a whole.
It is not a 300 page history book filled with boring dribble. it is a good 10 minute read that will walk you through all the thinking and signs and the fall. THAT IS – UP TO TODAY.
The rest is a mystery. Maybe we go back to all-time highs, maybe Armageddon is on it’s way now that interest only loans will be ratcheted up. Who the f@#ck knows. I do know that history suggests that what led the previous cycle will not lead again.
If you were not caught in the hype, you were o.k. If you don’t bottom fish, you may miss out on opportunity at best.
I take the signs as they come. For now, commodities are still trending and certain health care areas are strong.
Today’s assignment is to print out Bill’s post and all the links and remember the blueprint. They all look the same.
.
