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Mort Zuckerman: "Home Prices Will Decline For Years"

Tyler Durden's picture





 

One can not blame Mort Zuckerman for being bullish on housing (or at least some segments thereof): after all the outspoken Obama critic just splurged $930 million on the John Hancock building (which recently went into foreclosure at a $660 million valuation, but Mort has a story about how improvements in the parking lot and somesuch are worth the 50% hike in price). Yet what the Boston Properties chairman likes in commercial real estate (and for a contrarian and somewhat more lucid view feel free to peruse comparable thoughts by Howard Davidowitz) he loathes in residential real estate, which would be bad news for Bank of America if the bank's real name wasn't Bank of Banana Republic. In an interview with CNBC's finest, the USNews editor said that the record shadow inventory is "what’s going to put downward pressure on residential prices. And in my judgment, that’s going to continue forat’s going to continue for several years. We’ve seen home prices go down now for four months in a row, according to the Case-Shiller Index , by 1.3 percent in the last month. So it’s an accelerating downtrend in those prices. This is on top of three to four years of declines.” Oddly enough, no mention of the fact previously discussed by Davidowitz that "we have 21 square feet of selling space for every man woman and child in this country" but then again that may not be too bullish for CRE. And at the end of the day everyone has an agenda.

Full clip:

 


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Mon, 01/03/2011 - 17:48 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

In regards to residential inventory, at least we built attractive and enduring designs with quality construction in sustainable locations that will not dramatically depreciate as they sit empty.  Or else we'd be screwed.

 

Mon, 01/03/2011 - 18:14 | Link to Comment Haywood Jablowme
Haywood Jablowme's picture

In regards to residential inventory, at least we built attractive and enduring designs with quality construction in sustainable locations that will not dramatically depreciate as they sit empty.  Or else we'd be screwed.

 

"quality" construction.......yeah, that's a good one.  You mean the kind of "quality" construction done by outfits who are comprised of 80% illegal immigrants whose bosses decided to chase even more profits by using the shit drywall made from China only to be replaced by dooped homeowners a couple years later? 

The USSA baby - Where "quality" is job #1!

 

Mon, 01/03/2011 - 19:57 | Link to Comment philgramm
philgramm's picture

he was being sarcastic, sir

Mon, 01/03/2011 - 20:03 | Link to Comment outamyeffinway
outamyeffinway's picture

Some people take all this too seriously! lol

Mon, 01/03/2011 - 19:58 | Link to Comment Jerry Maguire
Mon, 01/03/2011 - 20:09 | Link to Comment glenlloyd
glenlloyd's picture

Yes, it's all such a pretty shade of....beige, and when your neighbors house burns the siding on yours melts too. And when people want to break in to your house all they need is a serrated knife, because they can just cut their way in.

The worst is perhaps the wide garage door mouth that's front and center, and in some cases there are several garage doors, and along with that is the pretty sight of an overstuffed garage with junk whenever the door is opened.

Tue, 01/04/2011 - 09:51 | Link to Comment blindfaith
blindfaith's picture

a very well known and respected architect and builder in Charleston SC told me that the more the house is a stage front, the more people seem to like and buy them.  Quality, who needs any stinking quality when the front of your General Electric Refrigerator that is 3 years old is a total rusty mess, and your Jenn Air Range is a piece of shit.  Jobe secutiry is building crap so it need to be replaced ASAP, that is how we will jump start the new world.

Tue, 01/04/2011 - 04:13 | Link to Comment bankonzhongguo
bankonzhongguo's picture

 I would just make a paranoid observation about housing for 2011.  I think the macro model may be to drive people out of home ownership and thus become a nation of renters.  Sure, the economy used to predicated on home construction/ownership, but many banks have seen that it is more profitable to rent property than to issue a mortgage and/or hold it on the books.  I know its more complicated than that, but there have already been numerous bubbles of news of repealing the mortgage interest tax deduction and now that Jerry Brown is back in California they are already talking about killing Prop 13.  Between possible higher prop taxes ("save our schools!"), future higher interest rates and well if Congress nukes the mortgage interest ("austerity" and "temporary emergency debt reduction") , well aside from the safety of "owning your home" why wouldn't TPTB want to revert to a peasant-landlord economy. If industry is not in the cards, well its a whole lot of burger flipping Facebook proletariat.  If the shadow inventory does not reduce and traditional mortgage rates rise with the 30 year, the incomes in a 20% unemployed country cannot support the emerging overhead of home ownership.  If the second dip had some teeth and prices dropped another 20% for two years you would have a chance to recover the status quo, but the Fed and OCC have let those banks hold those OREO for years.  Rent pays better than bonds.  Just pay attention.  Once you leave your home to rent because its cheaper, you may never be able to buy another home.  If you buy something, makes sure it can produce some income.

Tue, 01/04/2011 - 05:06 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Interesting observations.

Accounting rules changes plays into your scenario. By allowing the banks to hold REO on books at high valuations it is in the banks interest to rent out properties and recover their losses with rent.

Of course, this is all predicated on return on rents being equal to or better than home ownership costs. Congress could shift the focus of residential ownership from individuals to banks with some changes in tax breaks from individuals to banks.

With ownership costs rising with the ten year, more people will be priced out of ownership.

If banks are going to own and rent out large blocks of residential real estate a large market may develop for residential management and they would be hiring or sub contracting large numbers of 'maintanence workers' to keep the banks properties in rentable condition.

If this develops hiring in property management/property maintainence (employment) might catch an uptick.

This is no crazier than leasing autos...which when it first began was seen as a rediculous proposition...in fact, to me it still appears rediculous.

All speculative, of course.

Sat, 01/08/2011 - 12:26 | Link to Comment dizzyfingers
dizzyfingers's picture

I've been wondering if it's true that the banks don't want to unload because their bottom lines would be busted or if something else could be the reason. With fewer people able to buy, congress probably wouldn't have a problem killing the mortgage tax deduction or changing it so it's only for new owners for a limited time period. Landlords would be in charge. Emphasis on "Lords".

Fri, 01/07/2011 - 18:12 | Link to Comment dizzyfingers
dizzyfingers's picture

Is it too crazy to think that money could be made from those pits somehow...?

Mon, 01/03/2011 - 17:35 | Link to Comment Glasgow Gary
Glasgow Gary's picture

As usual, no news here. Just the news that it's allowed to be said, on TV.

GG

Mon, 01/03/2011 - 17:36 | Link to Comment jtmo3
jtmo3's picture

But the stock markets gone up 165% in the last week, so who gives a fck about home prices? Party on. Don't you have that great feeling that usually follows a healthy shit?

Mon, 01/03/2011 - 17:42 | Link to Comment Flapjackmaka
Flapjackmaka's picture

+90 today on dow. More POMOs and it will reach 12500 by the end of the month. not a good sign

Mon, 01/03/2011 - 18:01 | Link to Comment Boilermaker
Boilermaker's picture

...and financials and REITs?  You have to plug the most gaping holes first.

Mon, 01/03/2011 - 19:17 | Link to Comment velobabe
velobabe's picture

boston proper really does need 2000 more parking spaces. i think parking lots are the new dot.com.

Mon, 01/03/2011 - 17:38 | Link to Comment the rookie cynic
the rookie cynic's picture

No recovery in housing or jobs = no recovery. (Except for Wall Street, they'll be just fine. The Fed is on there side after all.)

Mon, 01/03/2011 - 17:37 | Link to Comment bronzie
bronzie's picture

according to Martin Armstrong's cycle work the current real estate downtrend will end in 2032 so only 21 more years of declining home prices left ...

Fri, 01/07/2011 - 18:14 | Link to Comment dizzyfingers
dizzyfingers's picture

....bbbbbbut I may need to sell my house in order to move to a nursing home before that... waaaaaaahhhhhhhhhhh!

Mon, 01/03/2011 - 17:41 | Link to Comment Problem Is
Problem Is's picture

US News & World Report is Dinosaur Corporate DickWeed Media
The sooner the worthless government welfare whore teat sucking Z-Suckerman eats shit and goes bankrupt...

The better for the Amerikan Public...

ZH et al have proven these corporate rags as worthless fabrication generators...

A little less A-hole Wall Street propaganda a foot...

Mon, 01/03/2011 - 19:58 | Link to Comment Freddie
Freddie's picture

Zuckerman is a POS and former friend of Obama.  He loved him and now he said he made a mistake voting for him. Zuckerman is a whore, friend of the Fed bankers.

Mon, 01/03/2011 - 20:27 | Link to Comment Pants McPants
Pants McPants's picture

Play the ball, not the man.  Does the fact that he loved Obama (as you say) diminish anything he says in the interview?

Mon, 01/03/2011 - 20:47 | Link to Comment tamboo
tamboo's picture

at least this parasite is aptly named,
wonder if he lives up to it when he hits the gay sex clubs with his fellow yid the kenyan.
http://fellowshipofminds.wordpress.com/2010/05/27/washington-insider-oba...

Mon, 01/03/2011 - 22:52 | Link to Comment Whore_of_Babylon
Whore_of_Babylon's picture

I've never met anyone whose obsession with someone's sexual proclivities (implied or imagined) to be anyone who hasn't some serious unmet sexual desires.

 

Tue, 01/04/2011 - 00:34 | Link to Comment Oh regional Indian
Oh regional Indian's picture

+++ Very good observation WoB!

ORI

Mon, 01/03/2011 - 17:40 | Link to Comment buzzsaw99
buzzsaw99's picture

Prognostications from Madoff's best friend. Whatever.

Mon, 01/03/2011 - 18:23 | Link to Comment gloomboomdoom
gloomboomdoom's picture

I have gotten DEATH THREATS on the phone for speaking my mind on Facebook.

People don't like being wrong on forecasting (They try and hide it)... or else they delete you.

Selling the latest scam to granny. Soon we will rip all the old people from their homes and force them to do manual labor to pay back the TARP money.

Ever seen Happy Gilmore?

Mon, 01/03/2011 - 18:43 | Link to Comment buzzsaw99
buzzsaw99's picture

The scene with bob barker was da bomb.

http://www.youtube.com/watch?v=QnJQ9U9pW9Q

The price is wrong bitch(ez)!

Mon, 01/03/2011 - 21:07 | Link to Comment gloomboomdoom
gloomboomdoom's picture

Did Drew Carey get booted? Sorta like Conan? I am too lazy to google that information

Fri, 01/07/2011 - 18:17 | Link to Comment dizzyfingers
dizzyfingers's picture

Some grannies...you won't know which ones 'til too late...are likely to be packing a 44 mag and a shotgun. Be careful....

Mon, 01/03/2011 - 17:40 | Link to Comment Flapjackmaka
Flapjackmaka's picture

What's everyone's thoughts on where the dow will end up at the end of 2011?

 

Home prices drop 12%? More Americans on welfare? yay

+120... -stocks

Mon, 01/03/2011 - 17:49 | Link to Comment plocequ1
plocequ1's picture

Im confused. Does Apple and Google build houses? If not, Rally on.

Mon, 01/03/2011 - 17:53 | Link to Comment flattrader
flattrader's picture

and Facebook is worth 50 bn.  Equal to Boeing.  At least the Squid thinks so.

And it makes what exactly?

Mon, 01/03/2011 - 17:57 | Link to Comment traderjoe
traderjoe's picture

All of these purchases - trophy buildings, so-considered trophy companies - imho are done with other people's money and allow these buyers to use these valuations to 'mark' the other parts of their portfolio to some ridiculous level. So, Morty buys a building up 50% from trough - and then gets to claim the rest of the BXP (and his own) portfolio is up 50% from bottom. Shazam! Bonuses for all of management! 

Mon, 01/03/2011 - 18:10 | Link to Comment pitz
pitz's picture

Yup.  And the opposite is done with the stock of productive companies.  Its bizarre watching, for instance, Barrick Gold, lag the GLD ETF by over 50%, in the past 2 years. 

Same is done with the salaries of producers such as engineers.  Top talent, when they apply to jobs in the US, has to 'compete' with barely literate people who are called 'engineers', and are asked to take salaries comparable to the barely literates. 

 

Fri, 01/07/2011 - 18:19 | Link to Comment dizzyfingers
dizzyfingers's picture

Atomic spitballs for him. Ready, aim, chew, fire...

Mon, 01/03/2011 - 18:09 | Link to Comment I am a Man I am...
I am a Man I am Forty's picture

no doubt, and has everyone forgotten about fannie and freddie, the ultimate get out of jail for free dumpster for mortgages??  geez, who gives a shit if you can stop paying your mortgage and the bank can just toss it over to the good ole taxpayer via fannie and freddie, party on....

Fri, 01/07/2011 - 18:26 | Link to Comment dizzyfingers
dizzyfingers's picture

I began reading Robert Pozen's book Too Big To Save, his idea of 'how to fix the u.s. financial system' involves keeping the swindle going ('cause there's too much money to walk away from) but with tight regulation. I puked on the book. Didn't we believe we HAD regulation? Aren't we paying government parasites to do such jobs?

Mon, 01/03/2011 - 17:44 | Link to Comment Instant Karma
Instant Karma's picture

I didn't know John Hancock sold his building to Mort. That's my favorite building in Chicago. Great observation deck. Next to Water Tower. Right on Michigan Ave.

Mon, 01/03/2011 - 17:47 | Link to Comment Instant Karma
Instant Karma's picture

I'm confused. I just watched the video and the John Hancock building is in Boston? Must be two of them.

Mon, 01/03/2011 - 18:01 | Link to Comment spongeBOB
spongeBOB's picture

This not the Chicago JH. There is one in Boston also and this was in 2009:

http://www.boston.com/business/articles/2009/02/10/hancock_tower_faces_f...

Mon, 01/03/2011 - 18:02 | Link to Comment NotApplicable
NotApplicable's picture

Or perhaps one is a forgery?

Fri, 01/07/2011 - 18:30 | Link to Comment dizzyfingers
dizzyfingers's picture

I think the Boston one is http://www.johnhancock.com/

 

Mon, 01/03/2011 - 17:47 | Link to Comment Dixie Normous
Dixie Normous's picture

That's it! There's your bottom!

Mon, 01/03/2011 - 17:48 | Link to Comment lsbumblebee
lsbumblebee's picture

It's good to hear a wealthy white man's opinion for a change. Thanks CNBC.

Mon, 01/03/2011 - 17:57 | Link to Comment Quigs
Quigs's picture

Does that John Hancock purchase smell like one of those deals William Black talks about?  +50% in good will value seems a bit steep.

Mon, 01/03/2011 - 18:00 | Link to Comment Boilermaker
Boilermaker's picture

REITs double the broader market gains today, as usual.  RMZ and IYR go fucking ballistic!

TA-DA!!!!

 

Mon, 01/03/2011 - 18:00 | Link to Comment High Plains Drifter
High Plains Drifter's picture

Maybe Morty and some of his pals want to scarf up on some cheap housing for some reason , at pennies on the dollar.........

Mon, 01/03/2011 - 18:00 | Link to Comment NotApplicable
NotApplicable's picture

What everyone seems to be forgetting is that one man's housing glut is another's political opportunity.

Fedgov will likely eliminate all affordable housing in the name of eradicating urban blight. After all, if there are millions of empty houses owned by Freddie/Fannie et al., why not "Do something!" productive with them.

As I've said here before, Dodd's "Livable Communities Act of 2009" paves the way for a complete takeover of the residential real-estate market. It contains everything needed from rezoning (aka override existing local laws in order to make homogenous regions) to mortgage funding/processing. Then there is the huge new bureaucracy needed, so it ends up creating "jobs" too!

Mon, 01/03/2011 - 23:17 | Link to Comment RmcAZ
RmcAZ's picture

"...why not "Do something!" productive with them"

Obama should just order that any home that is underwater should be bulldozed, and then give out money for everyone to buy new homes. This is a unique and revolutionary idea that has never been tried before...

... oh, wait.

Fri, 01/07/2011 - 18:32 | Link to Comment dizzyfingers
dizzyfingers's picture

Been thinkin that too. Why else Fannie/Freddie still around?

Mon, 01/03/2011 - 18:03 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

This will surely send gold higher

Mon, 01/03/2011 - 18:10 | Link to Comment gloomboomdoom
gloomboomdoom's picture

If Hyper-Inflation is coming... why didn't Gold soar to the moon today like the DJI?

Mon, 01/03/2011 - 18:15 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Home price hyper-inflation?

Mon, 01/03/2011 - 18:20 | Link to Comment gloomboomdoom
gloomboomdoom's picture

Cash is king??? Or is it that we are just plain STUCK with the system... no escape

Gonza Lira or whatever his name is doesn't factor in that 90% of all our transactions are non-physical currency.

Unless Social Security collapses... no Hyper-Inflation. No Deflationary Depression.

Mon, 01/03/2011 - 18:35 | Link to Comment ZEITGEIST
ZEITGEIST's picture

go get a dictionary..and look up ..the word....MANIPULATION...

Mon, 01/03/2011 - 19:02 | Link to Comment gloomboomdoom
gloomboomdoom's picture

You are aware Zeitheist is a Neo-Communist movement, correct?

Mon, 01/03/2011 - 19:20 | Link to Comment Max Hunter
Max Hunter's picture

Labels... Labels... Labels... Makes things so much easier doesn't it?.. No critical thinking required...

Mon, 01/03/2011 - 18:03 | Link to Comment huckman
huckman's picture

The same philosophy zuck applies to commercial holds true to certain extent in residential as well.  The neighborhoods that have sustained their highly disirable attributes through this correction will continue do much better than the market as a whole.  Some neighborhoods have already recooped to 2007 prices.   

Mon, 01/03/2011 - 22:47 | Link to Comment traderjoe
traderjoe's picture

Can you name any market that has re-cooped 2007 prices? I'm pretty skeptical of that.  

Mon, 01/03/2011 - 18:07 | Link to Comment Gimp
Gimp's picture

In the big apple in 2005 and was told by big money men that they expect to pick-up residential real estate for 25-30 cents on the dollar over the next decade. Looking back, how did they know???

Tue, 01/04/2011 - 01:06 | Link to Comment Rogerwilco
Rogerwilco's picture

John Templeton clued them in. CRE and residential are nowhere near the bottom yet.

Mon, 01/03/2011 - 18:10 | Link to Comment gloomboomdoom
gloomboomdoom's picture

When the bond bubble breaks (if) people will not care about thy neighbor. When Rome burns everyone will just scurry to protect their own.

Don't surrender to another Great Depression. FIGHT IT! Stop it DEAD before it comes!

http://tarpley.net/five-point-program.pdf

 

Mon, 01/03/2011 - 18:23 | Link to Comment monopoly
monopoly's picture

My goodness, what is wrong with you people. Gold is down 7 dollars and you are all bailing. 4 days it closes above 1,400 and again you are calling a top. This is a perfect bull market, just a steady climb up with minor bouts of selling so far. I am used to 10-20% corrections in this market. Now it corrects 2 to 5% and starts up again.

We have years to enjoy this market all, and then when gold is part of a global currency, it may not go down much at all. Patience, or buy AMZN PCLN CMG NFLX and BIDU if you think this is structural growth.

You keep this up and I will believe the JPMorgue and the Bernank are actually convincing you that QE is working. Mannn.

Mon, 01/03/2011 - 18:25 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Eliminate the Mortgage Interest Deduction !

Mon, 01/03/2011 - 18:28 | Link to Comment gloomboomdoom
gloomboomdoom's picture

nothing is "wrong"... It is just extremely difficult making bets on when the END OF THE WORLD is coming.

If you are like me... you accept the event already happened.

2001: A Space Odyssey (figure out what your Odyssey is).

Need more insight from Tyler Durden... The Illusion of Safety... lol

Mon, 01/03/2011 - 18:48 | Link to Comment monopoly
monopoly's picture

ok, but we are not talking about the end of the world. Our place in the sun is over, that is it. We will move down the scale to a less desirable country to invest in, trust in and believe in. We blew it. Does not mean we need shotguns, extra cans of peas and cases of TP, just that it is over for us long term. Our dollar will collapse, maybe not today or this year, but how is it possible to ever pay back soon to be 15 T in current debt with entitlements moving that number to infinity, growth of the economy? what a joke.

Recently a poll was completed that most Americans want the debt problem solved but......do not take anything from me. Go figure. Cities, states, pensions, QE, corruption. You all know the truth as posted here.

The govt. will take care of themselves and throw us a few crumbs, does anyone here think they will do the right thing to help correct 25 years of excess spending. We are still 70% of the economy with very little manufacturing left to help us. It just goes on and on.

We need to help our kids as I do not think it will be better for them.

 

Sat, 01/08/2011 - 10:25 | Link to Comment dizzyfingers
dizzyfingers's picture

I agree, I don't think we were out-worked, out-thought, or out-smarted but that we've committed slo-mo suicide and will be taking "our" kids and grandkids with us. 

When we sent our major nation-supporting industries packing that was the beginning of the end; if we had kept our industries and the jobs here along with the technologies that drove them, other countries might not now constitute such tough competition, though that's debateable. US goods were expensive, and tariffs hurt trade balance. But hindsight is too late. Those who sounded alarms at the time were insulted and ignored. It's human nature to think "change" means something better. Sheeple never learn, but hey, let's watch the game, everything will work out as long as we have football (baseball, basketball, golf, etc.).

 

 

Mon, 01/03/2011 - 18:49 | Link to Comment Buck Johnson
Buck Johnson's picture

I don't think commercial property is going to get any better than residential.  Where still losing jobs.  And without an uptick in business and less unemployment, you won't have the people to keep said commercial property from defaulting on loans.  I think that Mort Zuckerman has an inside track that the Fed will start to buy up commercial properties also like they did for MBS's.

Mon, 01/03/2011 - 19:29 | Link to Comment Lucius Corneliu...
Lucius Cornelius Sulla's picture

Possibly.  But one thing he mentioned several times in the interview is his target market.  I think his strategy makes sense considering that.  Overall he sounded very bearish.

Sat, 01/08/2011 - 10:27 | Link to Comment dizzyfingers
dizzyfingers's picture

In Eastern Europe the Soviets expropriated all successful businesses, even down to grocery stores, and gave them to their favorites to run into the ground. Sounds like what's in the wind here.

Mon, 01/03/2011 - 19:24 | Link to Comment velobabe
velobabe's picture

well, i noted that the new seated congress repub's this wednesday, just want

seats, bitchez.

Sat, 01/08/2011 - 10:32 | Link to Comment dizzyfingers
dizzyfingers's picture

Congress is the axis of evil; it's where the shiteballs are lobbed outward to the folks.

Mon, 01/03/2011 - 19:24 | Link to Comment Pretorian
Pretorian's picture

How is posible home prices to decline further when construction materials and commodites rise every day. I guess if you have to build one you going to do it out of cartoon.

Mon, 01/03/2011 - 23:35 | Link to Comment RmcAZ
RmcAZ's picture

Good point... Fast Money had Peter Schiff on the other day talking about just this. More or less it comes down to either prices will have to fall due to oversupply and lack of demand, or they would "flounder" depending on commodity prices. But eithr way, prices will fall nominally or in terms of commodities (gold).

http://www.youtube.com/watch?v=Uf52xa5RDV8

Tue, 01/04/2011 - 01:13 | Link to Comment Rogerwilco
Rogerwilco's picture

@pretorian

It's easy to explain. Rising interest rates and several years of unsold inventory tend to force prices lower. The only new residential construction these days is by retarded-optimist builders using private funding or some government boondoggle.

Tue, 01/04/2011 - 05:35 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Only an idiot would 'have to build one' when there are two years overhang of unsold residential real estate.

Any area of residences that I drive through I see untold 'For Sale' signs in front of homes.

Of course, if one is among the 1% of the very wealthy I suppose one might think they 'have to build one'... probably due to ego.

Sat, 01/08/2011 - 10:38 | Link to Comment dizzyfingers
dizzyfingers's picture

2.8 million excess housing units that aren't moving is how. Criminals who perpetrated the housing swindle shot the world econ in the heart.

Mon, 01/03/2011 - 19:28 | Link to Comment Lucius Corneliu...
Lucius Cornelius Sulla's picture

Zuckerman's evaluation seems sound.  But Sam Zell's selling of Equity Office at the top in 2007 makes him the true RE master.  The one question I would ask about the John Hancock aquisition is, "What would Sam do?".

Mon, 01/03/2011 - 19:28 | Link to Comment -Michelle-
-Michelle-'s picture

21sf for every human in the country?  That's a stall in the flea market for each of us.  Maybe the end game is a barter economy after all!

Sat, 01/08/2011 - 10:40 | Link to Comment dizzyfingers
dizzyfingers's picture

Black market works. The more the merrier.

Mon, 01/03/2011 - 19:40 | Link to Comment Rainman
Rainman's picture

Hardly anyone mentions those pesky Option ARM recasts going on through '12. Over 50% of those WMD loan products were written in CA and FL...secured by various McMansions.

A bunch of these ARM defaults have already moved through the sewer pipe, some sit vacant and off the MLS, others are still occupied by 21st century New Normal homesteaders who pay zero/month for years, and still others remain current for now....but the remainder won't last for long.

The banks are in the box for a decade twiddling all this inventory onto the MLS so they can book the loss over time in an orderly panic and preserve the value of their other secured properties in the surrounding hood.

The gimmick financing was primarily reserved for the bigger number deals. BAC and WF especially will be getting an arse whoopin' for years.

The law of gravity eventually prevails. Residential housing reflation is the joker in the deck for Ben. Ain't like he should be surprised.

Sat, 01/08/2011 - 10:46 | Link to Comment dizzyfingers
dizzyfingers's picture

Sounds like an interesting possibility: slo-mo justice over decades like Chinese water-drip torture with the end never assured? Meanwhile, how can the folks best not serve the purposes of criminal banks and banksters?

Ideas, anyone?

I'm starting to smile.

Mon, 01/03/2011 - 21:25 | Link to Comment thepigman
thepigman's picture

Zuckerman's nuance: "I think I might be able to get away with high end trophy locations. Everything else sucks goat gonads". Seems truthful.

Mon, 01/03/2011 - 21:27 | Link to Comment laosuwan
laosuwan's picture

i have looked at houses in the usa as an investment. some of my friends have bought condos in las vegas thinking they are getting a good deal now. i dont, here's why.

the houses in the usa are made of wood and drywall, which if its from china makes the house uninhabitable after a few years. wood attracts termites and mold. wood houses burn down so insurance is needed. they  are hard to cool in the summer and warm in the winter, so one needs insulation to help control the temperature but its not enough and it only makes the houses stuffy. you get very little land for your money and its the land that should have the most value not the improvement on the land. the taxes are high and could go higher. pay them late and you can lose your investment. anyone can try to sue you in the usa and force you to sell your house. its almost impossible to resale your investment and the rents return a yield lower than a basic dividend paying stock here in thailand. the usa is very corrupt in a different way than what we know and are used to here in asia. when i look at new zealand, australia, south america, even central america, I see much better buying opportunities for real estate in other places than the usa.

Tue, 01/04/2011 - 01:22 | Link to Comment Rogerwilco
Rogerwilco's picture

The real estate malinvestment bubble is world wide. Values have crashed in the USA and EU, and the same fate awaits the other countries you mention. Unlike the USA, they have no means to soften the fall, and the resulting deflation will take a decade or more to resolve.

Tue, 01/04/2011 - 02:12 | Link to Comment laosuwan
laosuwan's picture

Well, you may be right. Only time will tell. But I don't see how the fall in the usa has been softened, do you? The only ones whose fall was softened seems to have been the banks, not the people. In the countries I mentioned the governments and people have, overall, less debt and unemployment. Their economies are growing and are less service oriented. Money is likely to flee there from Europe and the USA, asia is investing there. I will stand by my feeling that these are better places to buy real estate. But if you are right and real estate does poorly, globally, I expect it will do less poor in these countries than in the usa. Finally, people in those other countries are not blogging about how their government plans to put them in concentration camps, enslave them, etc. They are less afraid to own things like real estate.

Mon, 01/03/2011 - 21:25 | Link to Comment laosuwan
laosuwan's picture

i have looked at houses in the usa as an investment. some of my friends have bought condos in las vegas thinking they are getting a good deal now. i dont, here's why.

the houses in the usa are made of wood and drywall, which if its from china makes the house uninhabitable after a few years. wood attracts termites and mold. wood houses burn down so insurance is needed. they  are hard to cool in the summer and warm in the winter, so one needs insulation to help control the temperature but its not enough and it only makes the houses stuffy. you get very little land for your money and its the land that should have the most value not the improvement on the land. the taxes are high and could go higher. pay them late and you can lose your investment. anyone can try to sue you in the usa and force you to sell your house. its almost impossible to resale your investment and the rents return a yield lower than a basic dividend paying stock here in thailand. the usa is very corrupt in a different way than what we know and are used to here in asia. when i look at new zealand, australia, south america, even central america, I see much better buying opportunities for real estate in other places than the usa.

Mon, 01/03/2011 - 21:51 | Link to Comment gwar5
gwar5's picture

I agree with Morty on this one.

I read an article in 1998 that said the housing market would peak around 2011

Not far off. The Boomer magic would be winding down, oversupply expected

The subprime crises let the TPTB work the last dime out of that market pretty well

Sat, 01/08/2011 - 11:07 | Link to Comment dizzyfingers
dizzyfingers's picture

Yep. Boomers' exit over the next decades precedes expected net decline in US population. As among most "western" countries, the decline of live births has shot countries in their feet; slow population decline (death) proposed and embraced without thinking, changes demographics, also changing national priorities such as freedom, personal property, and etc.

Mon, 01/03/2011 - 22:06 | Link to Comment gwar5
gwar5's picture

Yes... we still have no bananas

What's been the real rate of housing increases anyway, not the nominal pricing?

 

Mon, 01/03/2011 - 22:20 | Link to Comment gwar5
gwar5's picture

Here we go. Link below. Got a ways to go from the bubble, especially on the Coasts.

But, then there's still the lack of jobs and no economy and we're overbuilt. Squatters dream

For the next twenty years you could take cross country road trips and never have to pay for a motel.

 

Housing Bubble Graphs: Charts of inflation-adjusted, historical home prices.

Mon, 01/03/2011 - 22:11 | Link to Comment ebworthen
ebworthen's picture

Mort Zuckerman?

$930 Million?

What has he added to that tobacco in the hookah, hashish?

Good God, delusion abounds.

Mon, 01/03/2011 - 23:09 | Link to Comment wisefool
wisefool's picture

Mort is saying his clients want that type of office space: An upscale building, in an upscale city, for upscale people, in upscale clothing, to show up to work for a few hours every day to play upscale grab ass with each other before hitting the links. Lawyers, Hedge Fundies, CNBC workers,etc.

He'll be fine. it is the defaults on the other 90% of commercial office space/parks & their industries spread around the country that are going to cause another massive crisis.

Tue, 01/04/2011 - 00:50 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Mort and Zell and their like play three skyscraper Monte. It's funny money for them. Big RE (not just CRE, big CRE) is largely a racket. Dirty money, dirty deals.

The big players get "anchor" clients given to them. One only needs to look at far as one D. Trump's case to figure out how ridiculous that whole market is.

ORI

http://aadivaahan.wordpress.com

Tue, 01/04/2011 - 03:18 | Link to Comment Temporalist
Temporalist's picture
Manhattan Apartment Sales Fall 7.2% After Tax-Credit Boost Ends

http://www.bloomberg.com/news/2011-01-04/manhattan-apartment-sales-fall-...

 

Shorty Morty gets no supporty.

Tue, 01/04/2011 - 03:56 | Link to Comment buzzard beak
buzzard beak's picture

The man is simply hoping to chow on QE like every smart bird in this situation. Distressed Manhattan office buildings are a great way to do that, for those who can afford the entry point. Obviously, the smarter bird was the one that bought it at foreclosure and sold to Mort.

Which hardly contradicts Davidowitz's very honest portrayal of the retail space segment. "CRE" is a very broad category and it should be no surprise that different segments and regions are moving in different directions. 

Tue, 01/04/2011 - 11:57 | Link to Comment Jerry Maguire
Jerry Maguire's picture

Zuckerman never says anything publicly until the ship has already left the dock.

Of course real estate will be depressed for years.  That may be putting it mildly.

See generall articles and posts on "money" and "debt".

http://strikelawyer.wordpress.com

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