Friday, December 28, 2007

A Bearish Sign on N.Y. Home Prices - December 27, 2007 - The New York Sun

A Bearish Sign on N.Y. Home Prices - December 27, 2007 - The New York Sun:

New York City's status as a rosy exception to the nation's slowing housing market may be starting to come to an end.
Right now, most residents of NYC think that they are immune to the housing crash slump, but I'm not so sure.

Some real estate analysts say that despite the country's overall slowdown, Manhattan apartment prices will maintain an upward trajectory in the fourth quarter. "Our fourth quarter report is coming out next week and we expect price growth will continue," the chief economist at Halstead Property, Gregory Heym, said. "Several new condo developments are starting to close, such as the Plaza and 15 Central Park West, which will help push up prices."

In addition to apartment closings at new developments, where prices are often high, there are many larger units that are also closing, Mr. Heym said. Despite the market turmoil, Wall Street bonuses at many firms are expected to be solid, and with a weak dollar, foreign buyers continue to flock to Manhattan.
I guess in a few years Manhattan is going to consist of nothing but Wall Street executives living amongst a bunch of empty foreign owned apartments that are only used a couple of weekends a year.

Sunday, December 23, 2007

Seven things

Seven things at Joanne Jacobs

So Joanne tagged me. Normally I don't participate in these sort of things, but as you may of noticed, I have been slack about blogging. So without further ado, seven random things about me:

1. I have lived over half my life overseas, in New Zealand and Europe.

2. I am planning a trip to Vietnam this year to help my brother find his birth father.

3. I divorced my first wife twice.

4. While living in Europe, I got involved in Hashing.

5. I have had the same best friend since 7th grade.

6. I hate horror movies.

7. I have two 1959 Vespa GS150 scooters in my garage that I am restoring (very very slowly).

This branch of seven things will die with me, since most of the blogs I read have already been tagged.

Sunday, December 02, 2007

Multiple Choice Question

EXCLUSIVE: Paulson 'Optimistic' on Subprime Plan:

Paulson said the plan will not be a government-run bailout of subprime borrowers, and the banks that loaned them money. Instead, Paulson said, the government is just providing an industry-sponsored solution to borrowers who can afford to own a home but would have trouble making their mortgage payments after a reset.

'This is not a government subsidy that we're talking about here,' said Paulson.

'This is something that the industry will do where it makes sense.'

The plan would establish guidelines for lenders to freeze payments for homeowners who qualify for the program. Paulson said the program would be completely voluntary, and only some borrowers would qualify.

He said homeowners who can handle an increase in payments and those who don't 'have the financial capability to own a home' will not be offered an interest-rate 'freeze. [emphasis mine]
Once upon a time their were three families who both bought a home June of 2006. The families were identical in every way. They had the same credit rating, the same amount of debt, the same income, the same number of kids. For all practical purposes they were mirror images of each other, except for one thing...

The first family decided to buy a 3 bedroom, 2 bathroom starter house in a decent neighborhood using a fixed rate interest loan which they were able to get because they had been saving up for a down payment for several years. They made sure to take out a loan that they could afford and because they already had some built in equity, they weren't to worried about the housing market.

The second family decided to buy a 4 bedroom, 3 bathroom executive home in a great neighborhood. They did take out an adjustable rate loan, but they weren't to worried since they made sure that the house wasn't so expensive that they couldn't afford the reset if for some reason they were unable to refinance in a couple of years. It would be tight, but they figured they would be ok, especially since their payments were exactly the same as the first family and they had a bigger and better house.

The third family decided to buy a 5 bedroom, 3 bathroom McMansion instead. They knew they wouldn't be able to afford to the reset, but figured what the hell, they would always be able to refinance, because after all "housing prices always go up." They can afford their current payment, but it is tight.

Multiple Choice Question: Which family will soon get a helping hand?

The first family is living within their means, they made good decisions, and are financially sound... they won't be getting anything from the government.

The second family is still OK. They might be overstretched, but at least they were smart enough to make sure they could afford the reset. The government doesn't give a crap about them either.

The third family is living it up, living far and above their means. Yes... this family will be getting a helping hand from President Bush and the rest of the crooks that run the predatory mortgage companies.

Can you say Moral Hazard?

Moral Hazard is the prospect that a party insulated from risk may behave differently, for example, that an insured party's behavior will be more risky than it would without the insurance. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.

U.S., Banks Near A Plan to Freeze Subprime Rates

Free Preview -

U.S., Banks Near A Plan to Freeze Subprime Rates

By Deborah Solomon and Michael M. Phillips
Word Count: 1,346 | Companies Featured in This Article: Citigroup, Wells Fargo, Washington Mutual

WASHINGTON -- The Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans, according to people familiar with the negotiations.

An accord could reassure investors and strapped homeowners, both of whom are anxious as interest rates on more than two million adjustable mortgages are scheduled to jump over the next two years. It could also give a boost to the Bush administration, which is facing criticism for inaction amid the recent housing turmoil.

It's pretty sad when even the Republican party is turning into market manipulating, welfare state supporting, gutless panderers.

And the main stream media wonders why people support candidates like Ron Paul. I will never ever vote for a single politician who supports this plan.

Next year for an encore they are going to pay off debts for anyone who files for bankruptcy. Go ahead, don't worry about your credit rating, take out some bad loans, be late on payments, buy that third house on a subprime loan, the government will be hear to bail you out.