Thursday, November 16, 2006

Where is Honesty in the US?

The Record reports from New Jersey. “When the housing market gets tough, sellers offer incentives. In Demarest, builder American Properties of Iselin is offering to park a Maserati (worth about $125,000) in the garage for any buyer who forks over $2.2 million to $3.6 million for a new luxury town house in a 34-unit complex in a French chateau style.”

“Offering the car is better than simply cutting the house price by $125,000, said spokeswoman Karen Kessler, because ‘our buyers are not looking for a bargain; they’re looking for some pizazz and some excitement.’”
So is that how the wealthy think? Now we know. They don't care about how much they spend on something (like houses); they're too bored; they just want pizazz. Now we know why the median sales price is such a useless measure in Marin.

* * *
Why can’t we in the US get some of this honesty (emphasis mine):
Banks told to predict effects of a 40% crash in house prices

BANKS in the UK have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 per cent.

The instruction to include a housing slump scenario in their stress-testing models comes after the Financial Services Authority found that some banks were failing to include gloomy enough assumptions in their modelling.

The FSA said yesterday that an “appropriate” benchmark was to assume property prices fell by 40 per cent and that 35 per cent of mortgages in default ended with homes being re-possessed.

It stressed that this was not a forecast but a “severe but plausible scenario” and one that banks should examine when deciding how robust their balance sheets were.
Or maybe some of this honesty (emphasis mine):
‘South Korea’s finance minister apologized Wednesday for the failure of the government’s real estate policy. In a press conference, Minister of Finance and Economy Kwon O-kyu unveiled another set of measures to cool down the real estate market. ‘I would like to take this opportunity to apologize to the public and the people who do not own houses for the recent surge in housing prices,’ Kwon told the nationally televised news conference…
I guess for honesty in the US we just have to make do with this: David Lereah (National Association of Realtors chief (so-called) economist) says price drops of as much as 40% in California and other bubble markets are “nonsensical” yet he can’t offer his own prediction (of which he has never been short of before so what's the problem now?), while at the same time saying that one has to look to the Great Depression to find a housing market as unique as our current market.

Did Lereah actually equate today’s housing market to that of the Great Depression? That makes sense given how well the economy supposedly is yet housing is faltering in pretty much all bubble markets. I mean, if this market is as good as it gets now when times are good, what happens when the economy goes bad as it eventually must? Do you really want to be holding on to over-priced housing when the day of reckoning comes a knockin'?

11 Comments:

Blogger sf jack said...

"‘South Korea’s finance minister apologized Wednesday for the failure of the government’s real estate policy. In a press conference, Minister of Finance and Economy Kwon O-kyu unveiled another set of measures to cool down the real estate market. ‘I would like to take this opportunity to apologize to the public and the people who do not own houses for the recent surge in housing prices,’ Kwon told the nationally televised news conference… "

*******

Interestingly, this is just the opposite of the "I've got mine, so fuck you!" attitude that is so prevalent in Marin County, but has recently spread through much of the nation.

Nov 16, 2006, 10:12:00 PM  
Anonymous seattle price drop said...

Both of those articles really struck me the past couple days.

The South Korean apology, as they try to get a handle on their bubble, is so responsible and rational!

And yes, honest too, as you point out. Certainly more honest than this constant blather of "There's no bubble here" that we've been treated to in the US the past several years all the while any idiot can see that houses are WAY too expensive in relation to incomes.

And now that UK article today. Please tell me that some oversight agency in the US will be stepping up to the plate soon and giving the banks what-for.

BTW, that "I've got mine, so f*ck you" attitude has been so rampant during this housing catastrophe, I'm sure a lot of Americans would see those remarks by the South Korean as somehow contrary to our "values" as Americans. Really sad.

Yep. Honest Abe was a total chump.

Nov 16, 2006, 11:18:00 PM  
Anonymous Anonymous said...

Marinite--

i like this entry and I wish I had the foresight to have the breathe of knowledge you have....

Nov 17, 2006, 12:14:00 AM  
Anonymous Muldoon said...

Abe would be crying about this situation.

This is so sad.

Marinite, I thank you for putting your time and energy into this blog.

You are making a difference.

Nov 17, 2006, 1:27:00 AM  
Anonymous David Lereah said...

Yes I said this market is like the Great Depression. But you take it out of context. It's all relative. Don't you get it?

Nov 17, 2006, 6:13:00 PM  
Anonymous bozonian said...

Yes, the "Let them eat rent" Marie Antoinette home owners will be quite shocked when it's their heads dropping into the bucket.

Nov 17, 2006, 9:28:00 PM  
Blogger MortgageTop said...

This comment has been removed by a blog administrator.

Nov 18, 2006, 4:38:00 AM  
Anonymous Anonymous said...

Michael/MortgageTop: Stop advertising on blogs. That is pathetic. Pay for your advertising like the others do. Perhaps this is a sign of how desperate mortgage brokers are becoming?...

Nov 18, 2006, 9:28:00 AM  
Blogger MassBile said...

This comment has been removed by a blog administrator.

Nov 18, 2006, 9:31:00 AM  
Blogger Marinite said...

Perhaps this is a sign of how desperate mortgage brokers are becoming?...

I wouldn't go that far but there has been an increase lately.

Nov 18, 2006, 10:34:00 AM  
Blogger marin_explorer said...

Regarding honesty, allow me to submit this historic quote by J. Robert Oppenheimer, taking ownership for our nuclear legacy.

While our financial debacles are never quite so apocalyptic, has Wall Street, bankers, or industry pundits taken any heartfelt ownership for the impending credit/housing meltdown? It's disgusting how they continue to egg on consumers to buy--despite the now blatant realities of the market. After we hit bottom, I'm sure they'll pretend they had no role in this fiasco, passing the buck to "market forces".

Nov 18, 2006, 6:00:00 PM  

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