Somethin’ Stupid — Frank and Nancy Sinatra

Do you think speculators who bought at the peak are feeling stupid right now?

sun soaked? Look at the surrounding walls and buildings. That courtyard will feel more like a cave than an open patio.

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Paid peak prices past the peak. Check…

Watched prices drop 20% since then. Check…

Asking for a profit despite market conditions. Check…

Praying for a greater fool to come along. Check…

Preparing for a short sale. Check…

Feeling stupid. Check…

.

I know I stand in line until you think
You have the time to spend an evening with me
And if we go someplace to dance
I know that there’s a chance you won’t be leaving with me
And afterwards we drop into a quiet little place
And have a drink or two……
And then I go and spoil it all by saying
Something stupid like I love you

I can see it in your eyes that you despise
The same old lines you heard the night before……
And though it’s just a line to you for me it’s true……
And never seemed so right before
I practice everyday to find some clever lines
To say to make the meaning come true……
But then I think I’ll wait until the evening gets late
And I’m alone with you
The time is right your perfume fills my head……
The stars get red and on the nights so blue……
And then I go and spoil it all by saying
Something stupid like I love you

Somethin’ Stupid — Frank and Nancy Sinatra

Heartlight — Neil Diamond

Are the rich foreigners going to come buy our overpriced real estate? Not if they are from this planet. Perhaps ET and his buddies will come down to save us?

Did you notice how they wet the pavement and sidewalk to get a better picture, but they did it in the mid afternoon when it dries to quickly and you don’t get the reflective effects?

I imagine this is a nice property, although I can’t tell because there are no pictures. $639/SF? WTF? If you look at the comps on Redfin, you can quickly see this property is $500,000 overpriced. Who knows, perhaps ET will phone home and see if mortgage brokers on his planet will finance the deal…

.

Come back again
I want you to stay next time
‘Cause sometimes the world ain’t kind
When people get lost like you and me

And home’s the most excellent place of all
And I’ll be right here if you should call me
Turn on your heartlight
Let it shine wherever you go
Let it make a happy glow
For all the world to see
Turn on your heartlight
In the middle of a young boy’s dream
Don’t wake me up too soon
Gonna take a ride across the moon
You and me
Turn on your heartlight now
Turn on your heartlight now

Heartlight — Neil Diamond

Three weeks ago in the open thread of 6-28-2008, I suggested that maybe oil would top and the market would bottom. It is too early to tell if this weeks market action saw both of those occurences, but both of these markets have certainly put in a short-term top and bottom. Only time will tell if it lasts longer. Calculated Risk had an interesting post this week on the economy. In it, he suggests that the difference between a moderate recession and a severe recession is going to be the price of oil. If the price of oil drops, inflation will subside, the FED can keep interest rates lower for longer, and the recession will not be as severe. I think he is right. I also think this is what the stock market is betting on. As long as oil does not rally to new highs and stay at elevated levels, the stock market will probably rally — this isn’t investment advice, just an observation… BTW, I also believe the bullish action of the last few days in financials and homebuilders was short covering and both of these groups will make fresh lows — but I could easily be wrong…

There is no particular theme for the music today, I was just in the mood for Paul McCartney.

What are your observations of the housing market? Are there any interesting properties you are watching? Tell us what you see.

Summertime Blues — Blue Cheer

Do you remember the predictions post from January 1st. Well, we saw our first major bank failure this week as IndyMac bit the dust. With all of the Alt-A crap on their balance sheet, this shouldn’t be terribly surprising. The only thing that surprises me is the fact that most of the Alt-A loans have not reset yet. The toxic waste they own is going to get much more toxic.

The toxic waste is even starting to poison Freddie Mac and Fannie Mae. The GSEs will be saved, and it is the mechanizm for getting the American Taxpayer on the hook for the housing debacle. I can’t say I am too surprised about that one either…

I enjoy looking back on some of the nonsense and denial among the bulls. I came across this one recently: Was there a Housing Bubble?

If you can’t see a housing bubble in February of 2008, you are truly blind. Here is my favorite piece of analysis, “Prices will probably drop some more but personally I don’t expect to
ever again see index values around 110 (referring to Case-Shiller). Do you? If we don’t see the
massive drop back to “normal” levels then the run up in prices should
be described as a shift to a new equilibrium – much as happened during
World War II – see the chart. (It’s an important question to ask what
changed and why?). In the shift to the new equilibrium there was some
mild overshooting, especially due to the subprime over expansion, but
fundamentally there was no housing bubble.”

His argument or observation shows the wanton ignorance of real estate economics displayed by most purchasers during the bubble. He examines a chart showing a stable, 50-year trend in house prices, and makes the assumption that this is not based on fundamentals, and there is some new fundamental out there that is going to establish an equilibrium at some higher price level. He asks and fails to answer the key question “What changed?” The answer is a wild expansion of credit and a total abandonment of lending standards while simultaneously embracing unstable loan programs. In short, a bubble. His failure to recognize what happened is why he cannot fathom a price drop back to the fundamental price levels stable for the previous 50 years.

It reminds me of a bullish post I saw over at the OC Register Blog some time ago. One of the posters was chiding Peter Schiff by saying that anyone who predicts a 50% decline in home prices has lost all credibility because such a price decline was simply not possible. Oh really? I remember the indignation of the poster — or was it ignorance — I guess it is all the same for bubble bulls.

Let’s take a trip down memory lane. Tell us about the most ridiculous bullish comments you heard during the bubble, or post links to bullish articles and prognostications that have proven to be totally wrong.

I might be wrong
I might be wrong
I could’ve sworn I saw a light coming on

Never look back
Never look back

I Might Be Wrong — Radiohead