Irvine Housing Blog

Your MBAA link is a week old and the new data shows purchase apps at their highest level in almost 6 months

Bob Rubin???  The guy behind deregulation, who worked to stifle Brooksley Born (who wanted to regulate credit-default swaps and other derivatives).  Board member of Citi and general cheerleader for Wall St.  There are few less qualified to be instructing us as to what is or is not in our general best interests.

The thing that would happen before our interest rates rose considerably - more than the quarter point mortgage rates have risen - is the the dollar would weaken.  China is committed to a strong dollar policy, so if US gov debt were being dumped by some foreign country, China would more than buy it up.  It’s not a sustainable situation, but it is where we’re at today.  A weaker dollar would accurately reflect our trade situation, help exports, hurt imports, and work to bring our trade back into balance.

If those abroad sell US treasuries, they still need to Park their money somewhere. Where to park it? In Asia with the Korean thing going on? In Europe with the Greece, Ireland, and maybe Portual and Spain thing going on?  Buy gold at sky high prices?
Buying some US asset (Treasuries, stocks, or real-estate) doesn’t look so bad by comparison.

China, Russia quit dollar
By Su Qiang and Li Xiaokun (China Daily)
Updated: 2010-11-24 08:02

St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

“About trade settlement, we have decided to use our own currencies,” Putin said at a joint news conference with Wen in St. Petersburg.

Once clear direction in the market is found (not peaks and valley as we’re seeing today) base mortgage rates will again come down to the lows seen in mid October. The Fed isn’t going to let mortgage rates rise and kill off any meaningful recovery. Those who do refinance are putting most of their monthly savings into the bank or paying off debt. People aren’t spending it as we did in the past, but at some point those savings and that monthly cash will translate into spending.

Will be interesting to see what the real numbers are for Black Friday and the remainder of Christmas. Unfortunately CNBC and their ilk will compare 2009 (terrible) to 2010, when we really should average spending over time to see if we are spending more or simply treading water. My guess is that we’re treading water. Most of the economic news today (Durable Goods, etc) was absolutely terrible. Sure, consumer confidence was higher what with the election going the way it did, and Unemployment appears to be improved (lot’s of seasonal hiring skewing the numbers) but overall most of the future looking economic news has been less than stellar which translates into stable rates. My guess is a 4.5ish ceiling and a 4.0% floor for some time to come.

My .02c

Soylent Green Is People.

I think the new buzz-word in 2011 will be “frugality fatigue.”  You’re starting to hear it now.  Those people fortunate enough not to have suffered income disruption over the past few years have been spending much less, but it gets progressively harder to resist upgrading the TV, laptop, or car.

IR, I’m surprised you didn’t grade this home-debtor an F.  What more would s/he have to do to earn that grade?

I’ve been away for a while (things got crazier than usual), but I had to come back to see what latest insanity had made it to this blog.

This house is a total fricking nightmare.   It’s also a great example of how people went nuts at the thought of “free” money.

My brother is a contractor.  Recently he did some work for a couple who live in Scottsdale, in a home they bought back in 2006, just off the peak.  The last inspection revealed that, among other things, the previous owners had taken out the insulation from several of the rooms, taped the drywall back, and repainted so nothing showed—the inspector only noticed it because he kept hearing a sound like wind blowing through a window.  The house they bought for $360K has cost them an additional $80K in repairs—and the house itself has lost value to the point where they’re almost 50% underwater.  They can’t refinance.  They’re stuck.

Luckily they have the money to pay for it, but they told my brother that if they didn’t have the funds, they wouldn’t have bothered with any repairs—they’d have focused on shoveling cash towards the mortgage to get it off their backs.