Fed Admission and Updates on Some Favorite Marin POSs

Kudos to the Housing Panic blog for this find.

Apparently, one Fed member admits that the Fed caused the housing bubble. This is news-worthy to me only because back in August the Greenspan Fed published a very academic paper that they used to pull a Pontius Pilate on us -- to wash their hands of any responsibility of causing the housing bubble.

In an apparent and rare in-house critique, the president of the Federal Reserve Bank of Dallas said that because of faulty inflation data, the Fed kept interest rates too low for too long earlier this decade, fueling speculative housing activity.

Mr. Fisher noted that subsequent revisions show PCE inflation was actually a half a percentage point higher than originally estimated. "In retrospect, the real Fed funds rate turned out to be lower than what was deemed appropriate at the time and was held lower longer than it should have been," Mr. Fisher said.

"In this case, poor data led to a policy action that amplified speculative activity in the housing and other markets. Today...the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country. It is complicating the [Fed's] task of achieving...sustainable noninflationary growth."

Greenspan was recently heard muttering these words which the NAR has made much ado about:

"This is not the bottom, but the worst is behind us"

He must be talking about the rest of the year. If so, I have to agree with him. But what happens when houses come back on the market early next year? Will buyers' opinions have changed? Will suicide loans look good again? Will those million dollar Mill Valley POSs look like a good deal again? I don't know; anything could happen. I do expect a "dead cat bounce" in Marin next Spring. But that's just me.

Later, this was dropped on us:

Greenspan also touched on the potential adjustment in loan costs for home buyers with nontraditional mortgage products.

While some individual buyers may feel the pinch as their payments rise, Greenspan said those changes were "very unlikely to have a macroeconomic effect."

I don't know if Greenspan used the word "pinch" or if it was chosen by the writer of the article, but either way I don't think the people who are foreclosing on their homes would consider themselves "pinched" exactly. But I am sure he is right that there won't be much of an impact of these "pinched" buyers on the broader macroeconomic scene. Just MHO.

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Remember this beaut in San Rafael? The one that overlooks the San Rafael industrial landscape? You know, the one that was featured in the New York Times so long ago? Well, despite the fact that we are in the "off season" it is still on the market with yet more price reductions. So I guess that "job transfer" to Atlanta wasn't all that urgent or are they holding two mortgages now?

Price Reduced: 06/06/06 -- $1,695,000 to $1,649,000
Price Reduced: 07/06/06 -- $1,649,000 to $1,625,000
Price Reduced: 07/12/06 -- $1,625,000 to $1,575,000
Price Reduced: 07/27/06 -- $1,575,000 to $1,535,000
Price Reduced: 09/03/06 -- $1,535,000 to $1,499,000
Price Reduced: 10/02/06 -- $1,499,000 to $1,395,000

That's a drop of 18% from the original asking price. Not much. I expect ultimately twice that. But anyway, sellers can ask whatever the heck they want. What it actually sells for is another matter. Buyers set the selling price, not the sellers.

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And my all-time favorite yellow POS on Shoreline (the one across from the 7-11) is still for sale too. What a surprise. They haven't lowered the asking price since the last time I blogged it but that is no doubt due to the fact that the asking price is still right around their break-even point which is way more than a sane person wants to spend for that dinky, noisy shack.

So Mr. Seller: what's it like fearing that you will never sell that piece of shister without taking a loss? Are you praying each and every night, making solemn deals with God (or in Mill Valley is it Buddha, Krishna, purple crystals, or whatever?) to be a better person and all that as long as He gets it sold? Are you doing the whole St. Joseph thing now? Inquiring minds want to know what it's like to be another Marin FB. After all, this is God's Country dontchya know. Not being able to sell overpriced housing is not supposed to happen here.

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And finally, this one is still on the market too. Same asking price. Hasn't budged. Same story -- they are at their break-even point and can't go any lower without taking a loss.

Mr. Seller: same questions to you as above.

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Yep, I'm definitely in a belligerent, irreverent mood tonight.