eBay Goes Political
I had no idea that eBay was a topic on the presidential campaign trail. Earlier this month, Vice President Dick Cheney was stumping in Cincinnati when he brought up eBay as an example of why economic data isn’t fully factoring in a robust recovery. “That’s a source that didn’t even exist 10 years ago,” he said, pointing out that the data munchers aren’t accounting for the fact that “400,000 people make some money trading on eBay.” Sensing that it was something worth pouncing on, the person angling to replace Cheney as the country’s VP took aim. “He said people are selling a lot of stuff on eBay,” John Edwards said. “When we count the bake sales and lemonade stands, we’ll have a roaring...
Read MoreTop Housing Markets
CNN/Money has published a list of the nation’s top housing markets for the second quarter of 2004. The list is… interesting. For one thing, they’re apparently referring to Orange County as “Anaheim-Santa Ana”. An odd choice to say the least. I’ve got nothing against either town, but it’s beyond the pale to suggest that Anaheim or Santa Ana is representative of an area with the highest median home prices in the country. Orange County’s real estate values are skewed northward because of places like Newport Beach, Laguna Beach, and Irvine where even miniscule condominiums sell for more than $650,000. Anaheim and Santa Ana are the cheapest places to buy a home in Orange County. They push the median down, not up. ...
Read MoreA Modest Proposal
I hope Ken Lay, Dennis Kozlowski, Bernie Ebbers, and others of their ilk are reading this. BEIJING (Reuters) – China executed four people, including employees of two of its Big Four state-owned banks, for fraud totaling $15 million, the state Xinhua news agency said Tuesday. The executions occurred in the midst a high-profile government campaign against financial crime. They followed a string of arrests in white-collar crime as China prepares to sell shares publicly in its big banks. The story goes on to detail the method of execution: a gunshot to the back of the head. Now, if this is the punishment for $15 million in fraud, what kind of penalty would Kenneth Lay — who saw more than $1 billion worth of securities and wire fraud on his watch —...
Read MorePop Goes the Bubble
CNN/Money posted a great article today on the state of the housing market. Though it looks at the market on a nationwide basis, Orange County gets a special mention: Last week, real-estate tracker DataQuick said home sales in Orange County, Calif., the No. 2 U.S. market, slumped 17 percent from a year ago. The No. 3 market, Riverside-San Bernardino, Calif., was holding up very well, thank you, but sales fell in San Diego and Los Angeles, No. 4 and 5, respectively. The article also notes that home sales in Las Vegas, previously the hottest market in the nation with a 52.4% increase in a single year, are “suddenly dead in the water“. I look at this as a positive thing. With any luck, it will slow the rampant speculation that’s been driving home...
Read MoreReal Estate Speculation
Visitors to the Golden State like to joke about “The Big One” turning Las Vegas into oceanfront property. But what if the “Big One” was an economic earthquake rather than a physical one? Like a salmon swimming upstream, I figured I was the only person to raise an eyebrow when Alan Greenspan stoked the flames of adjustable rate mortages by suggesting that Americans were making a mistake in selecting fixed-rate loans over ARMs. Since I panned one of Washington Monthly’s columnists recently, I thought it might be worth noting that I don’t always disagree with them. In fact, Benjamin Wallace-Wells’ article is one I could have written myself. I’ll save you the time and myself the effort by just linking to his...
Read MoreIs The Housing Market Cooling Off?
The money mavens at CNN seem to think so. I’m not sure I’d classify a 6.6% year-over-year increase as “cooling off”, especially when inflation is less than 3%. No, I’d put it more into the category of another irrational jump in a real estate market that’s already every bit as crazed as the NASDAQ composite at the turn of the century. The inflation number is something I’d take issue with, actually. This 3% nonsense is insulting. There are so many caveats, exclusions, and astrisks attached to the Consumer Price Index that it might as well be tracking prices on Fantasy Island. It doesn’t include real estate, energy, food, college tuition, certain taxes, and automobiles. Think about how much of your income goes...
Read MoreThe Housing Bubble
I recently came across an excellent study by the Center for Economic and Policy Research. It’s fifteen months old, but I think it’s just as valid now. Maybe more so, because real estate prices have continued to escalate since that time. Mr. Baker and I are in violent agreement about quite a few things. His study gives hard numbers to back up what I wrote here and here.
Read MoreGoodbye Thanksgiving, Hello Christmas
And how was your Thanksgiving? No knock-down, drag-out family arguements, I hope? Lesley and I spent a simple but pleasant day together. We didn’t even cook–we ate out! Scandalous. It’s the first time I’d ever done that, and it was actually fun. Leaving the kitchen duties to someone else allowed us time to relax, laugh, and think about what were thankful for. Sounds hokey. But with all the cooking, preparing, decorating, and traveling that most folks do, the “core” of Thanksgiving can get lost in the static. So it was refreshing to spend Thanksgiving just being Thankful. Earlier in the day we had a light brunch in Costa Mesa, then walked around Balboa Island and admired the holiday decorations. Lesley pointed out that...
Read MoreThe Frenzied Housing Market Redux
A few days ago I wrote about the growing imbalance in many residential real estate markets and theorized that housing prices were going to have to decline sooner or later. But I couldn’t figure out exactly what would cause this “irrational exuberance” to snap. Obviously a huge spike in interest rates would do it, but how would such a thing come about? I think I found my answer in a Reuters article about foreign money coming into U.S. financial markets. Unfortunately I can’t find the article now–it was on my Palm VII PDA–but others have voiced basically the same thought. The United States accounts for about 30% of the world’s wealth, but we consume about 80% of global capital. This makes sense, because not only has the...
Read MoreThe Frenzied Housing Market
Mathew Emmert’s commentary Housing Still Frenzied is a good read. I agree with most of what he says, but there were two glaring omissions. First, in the “Equity Schmequity” section, he misses the point of people’s argument when they say owning is superior to renting because you build equity. There are two ways to build equity in a home. One is by paying down the principal balance. As he noted, that doesn’t happen until many years after inception. The other way is through price appreciation of the home itself. In the last few years, most major metropolitan areas have seen unprecedented price spikes. That’s where most people’s equity comes has come from. While I don’t believe this can continue, over the long...
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