The Crack of Doom – Week of Feb 19, 2007

The subprime story hit the MSM hard last Thursday [1] when The Economist got into the act. This likely marked the moment when mainstream sources were forced to take the macro aspects of the housing bubble seriously.

Whether it’s subprime, Alt-A, inventory, or British flippers in southern Cyprus, Doom needs to hear about it. Please drop your links, hints, and comments into the Reply box, and don’t forget to feed Igor his magic word. Twist and I expect yet another Doomish week coming up, and we need your continuing help.

________________________

Notes and References

[1]: Reference at note [2] on Saturday’s Doom post "Who Owns Subprime Now?".

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26 Comments for this entry

  1. jan-martin feddersen says:
    February 19, 2007 at 5:15 AM

    Qatar’s $40 Billion Fund May Seek 10% Stake in EADS / petrodollar impact

    http://immobilienblasen.blogspot.com/2007/02/petrodollar-impact-qatar-40-billion.html

  2. jan-martin feddersen says:
    February 19, 2007 at 5:18 AM

    freddie and fannie

    risk premiums are at new lows….

    http://immobilienblasen.blogspot.com/2007/02/more-evidence-risk-premiums-are-little.html

  3. twist says:
    February 19, 2007 at 8:07 AM

    I thought this one was interesting: [hat tip L!]

    Report finds residential real estate underperforms other assets

    Don’t count on home equity to come through with a significant portion of retirement funding, cautions a new report by Fidelity Investments. According to the study, home values underperformed stocks and bonds over every five- and 10-year period from 1963 to 2005. Home values have been slightly above the returns on treasury bills during the same time, according to the report, "The Equity You Live In: The Home as a Retirement Savings and Income Option."

     

  4. jan-martin feddersen says:
    February 19, 2007 at 8:45 AM

    uk kome-price inflation accelerates on property shortage

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a4tm4DghzSHE&refer=home

  5. jan-martin feddersen says:
    February 19, 2007 at 8:58 AM

    wanted to add something to the petrodollar link

    here is a very good interview with the sheikh of qatar on petrodollars

    http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vDmGNihdPLYU.asf

  6. jan-martin feddersen says:
    February 19, 2007 at 11:15 AM

    Subprime Market Datapoints

    http://bigpicture.typepad.com/comments/2007/02/subprime_market.html

  7. NVmike says:
    February 19, 2007 at 11:49 AM

    Report finds residential real estate underperforms other assets
    …
    Over the more than 40-year period, real compound returns on stocks outpaced that of residential real estate, according to the study, with 5.95% average annual returns on stocks compared with 1.35% in realty. …

    The median price of new homes in the United States has risen since the early 1970s, with an average annual appreciation rate of 5.9% since 1963.

    ?? How could a house appreciate by 1.35% when median price was growing by 5.9% over the same time frame?

    There’s something wrong with the math or the wording.

  8. John M. says:
    February 19, 2007 at 11:51 AM

    Jan-Martin (comment #6) -

    I see you put up the following comment at MrBIG’s under that post. I find it disturbing the big GSEs could really buy that much sub-prime paper Whatever are their financials going to look like if they ever catch up??

    …
    i found this also surprising/shocking

    Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, Md.-based publisher that covers the home loan industry.

    In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.

    Three big lenders, NovaStar Financial , Deutsche Bank and BNC Mortgage, part of Lehman Brothers , sold more than half of their subprime MBS to Fannie and Freddie this year, said Andrew Analore, editor at Inside Mortgage Finance

    Looking forward to more info at Immobilienblasen. Have we missed any previous posts on this?

  9. John M. says:
    February 19, 2007 at 12:25 PM

    NVMike (comments ##3,7) -

    As Mrs. M might say: “If this author came in soaking wet and said it was raining, I’d still check.” Ms Hoak has written some really awful articles over the last several months, but she gets massive exposure in the MSM. Indeed she has the honor of exposing perhaps Doom’s original egregious REIC quote: “The downside of real estate is better than the downside on just about anything else”, that written last August in a story almost perfectly backwards from the present one.

    Returning to business, that 5.9% figure fails the smell test. There’s no hint how that figure was arrived at. I think you’d get something close to that if you added all the nominal increases going back to ’63 and divided the sum by 44, but I’m only guessing. Her alluding to the three down-periods might suggest a calculation that brain-dead.

    ——————————

    “Report finds residential real estate underperforms other assets”, by Amy Hoak, MarketWatch / Yahoo Finance, February 14, 2007.

    The median price of new homes in the United States has risen since the early 1970s, with an average annual appreciation rate of 5.9% since 1963. But there have also been sharp corrections three times during the time period. It’s one thing if the homeowner is able to “ride out” the sharp downturns; it’s another if they’re considering the home as a potential retirement asset in the near future, the report said.

  10. John M. says:
    February 19, 2007 at 12:38 PM

    The complete earlier Hoak effort is no longer available from the link above, but it is still proudly displayed on the Wall Street Journal’s site. It needs to be seen to be believed.

    —————————–

    “The Benefits of Buying a Home In a Cooling Real-Estate Market”, by Amy Hoak, MarketWatch / Wall Street Journal, July 31, 2006.

  11. jan-martin feddersen says:
    February 19, 2007 at 3:54 PM

    hi john,

    i´ve made a post in back in september.

    to be honest i´ve really forgotten this data and have only found it putting up the new fnm and fre post.

    have to read it twice this morning……

    http://immobilienblasen.blogspot.com/2006/09/fannie-mae-could-be-hit-hard-by.html

  12. jan-martin feddersen says:
    February 20, 2007 at 12:41 AM

    Rip Van Winkle…vs cramer / hussman

    for once i put up my link first. have put some extra footage from cramer and “spiced” the polite hussman a little bit up.

    http://immobilienblasen.blogspot.com/2007/02/rip-van-winklevs-cramer-hussman.html

  13. jan-martin feddersen says:
    February 20, 2007 at 12:42 AM

    Rip Van Winkle / hussman

    http://www.hussmanfunds.com/wmc/wmc070220.htm

  14. jan-martin feddersen says:
    February 20, 2007 at 12:56 AM

    Vulcan to Buy Florida Rock for $4.6 Billion to Get Raw Material

    45%!!!!

    Florida Rock shareholders will receive cash and stock valued at $68.03 a share, a 45 percent premium to the closing price Feb. 16,

    http://www.bloomberg.com/apps/news?pid=20601087&sid=axIilGGGaiAw&refer=home

  15. jan-martin feddersen says:
    February 20, 2007 at 1:48 AM

    The New Road to Serfdom

    http://www.itulip.com/forums/showthread.php?t=966

  16. jan-martin feddersen says:
    February 20, 2007 at 4:56 AM

    Fed’s Inflation Analysis Ranks With Zimbabwe’s: Caroline Baum

    http://immobilienblasen.blogspot.com/2007/02/feds-inflation-analysis-ranks-with.html

  17. John M. says:
    February 20, 2007 at 7:22 AM

    I’ve been away from the US for nearly forty years, and found this deeply shocking. Is this, like, normal?

    ———————————-

    “The Theme-Parking, Megachurching, Franchising, Exurbing, McMansioning of America: How Walt Disney Changed Everything”, by T. D. Allman, Photographs (in the magazine itself, although a telling one heads the online version) by David Burnett, National Geographic, March 2007.

    The megachurch is the culmination, at least so far, of the integration of religious practice into the freeway-driven, market-savvy, franchise form of American life. The emergence of Orlando’s largest megachurch, the First Baptist Church, from a small congregation into a powerful, wealthy organization, parallels Orlando’s own transformation. The turning point came, as in many Orlando stories, when a sense of mission intersected with a real estate opportunity.

  18. jan-martin feddersen says:
    February 20, 2007 at 7:29 AM

    Home Depot Has Biggest Decline in Profit on Housing

    http://www.bloomberg.com/apps/news?pid=20601087&sid=alOGxhXUEi0Q&refer=home

  19. jan-martin feddersen says:
    February 21, 2007 at 2:33 AM

    signs of a market top :-) / kass

    http://immobilienblasen.blogspot.com/2007/02/signs-of-market-top-kass.html

  20. jan-martin feddersen says:
    February 21, 2007 at 5:34 AM

    commercial property madness / details on the eop/blackstone manhattan sale

    http://immobilienblasen.blogspot.com/2007/02/commercial-property-madness-numbers-on.html

  21. jan-martin feddersen says:
    February 21, 2007 at 5:35 AM

    lbo madness / refinancing within months…..

    http://immobilienblasen.blogspot.com/2007/02/lbo-madness-refinancing-within-month.html

  22. John M. says:
    February 21, 2007 at 6:23 AM

    Jan-Martin (comment #21) -

    When credit starts tightening up again, how in the world are they going to unwind all those nutty deals? :(

  23. jan-martin feddersen says:
    February 21, 2007 at 7:03 AM

    Citigroup Property closes $1.29 billion fund

    http://www.marketwatch.com/news/story/citigroup-property-closes-129-billion/story.aspx?guid=%7BFF2DC700%2D0EB9%2D499F%2DAC8B%2D2DDEF7918DF9%7D

    that is really the big big ?

  24. jan-martin feddersen says:
    February 22, 2007 at 1:56 AM

    Pricing Risk / mish

    http://globaleconomicanalysis.blogspot.com/2007/02/pricing-risk.html

  25. jan-martin feddersen says:
    February 22, 2007 at 2:19 AM

    U.S. Current-Account Deficit Deserves Some Noise

    http://www.bloomberg.com/apps/news?pid=20601039&sid=aWuQCgZ0ewDU&refer=home

  26. jan-martin feddersen says:
    February 22, 2007 at 3:25 AM

    speechless…….watch this stock move

    http://immobilienblasen.blogspot.com/2007/02/speechlesswatch-this-stock-move.html

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